Project Management Recommendation
Student Name
OPS/571
March 21, 2016
Rich Williams
Project Management Recommendation
RE: Project Management Email
Dear Mr. Gritsch:
My team has analyzed all three of the project proposals being considered in next week’s PMO Review as required by Mr. Deirelen. Based on our analysis, we recommend that Piper Industries Corp. invest in and implement the Palomino project.
Recommendation Reasoning
Ideally, we would have preferred to use the net present value approach to compare the three projects since it is the most accurate valuation method regarding capital budget problems (Pinkasovitch, 2016). However, given the information we had at hand, we could calculate the payback period of each project. This method seemed to make the most sense due to Piper Industries’ requirement of project completion and revenue generation within a 12 month time frame. The payback periods for each project all saw break-even points that fell into the second year of the investment, but at slightly differing points (within a 2.5 month span) during that year.
In light of this, our team decided to consider additional factors for the recommendation. The risk level of missing the project completion time, product life cycles, and total ROI for the projects were these factors. Although the Juniper project was very likely to meet its completion deadline, its product life cycle was the shortest at three years and it carried the lowest ROI. The Stargazer project did look quite promising, but our team felt it was too great of a risk for Piper Industries to take on at this time and would be better suited as a longer term project. This is due to the high likelihood that the project won’t be ready to take to market within 12 months, as well as seeing increased costs from the derivative product(s). We believe the Palomino project is the best fit in this situation due to having an acceptable break-even point, a favorable and consistent 5...