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The paper is based on controlling and monitoring of the project management areas of NutriStar. The company is producing line of vitamins as well as nutritional products. Due to growth and success in the market, the company decided to investigate an option to add around 10,000 square feet of the production spaces within Latin America. The cost of its production space development is approximately $5 million. The project is decided to expand with four of project management phases like concept development, planning, design and construction and finally start-up as well as turnover. The paper is focusing on the proposal of 10,000 square feet for its production space with a cost of $5 million, managing the risks and uncertainties in the project and schedule evaluation with its total completion time calculation.
NutriStar should add 10,000 square feet of their production space in firm facility within Latin America to expand their business from United States. The company got success in the market of US due to its product, Nutri-Sports Energy bar. The management of the company decided to expand in Latin America by designing of production space is to target profitability of firm as most people of Latin America have chances of following US. After analysing the behaviour and demands of the customers, it is seen that athlete will demand more for the product, Nutri-Sports Energy bar. The product will gain more profitability and popularity in the market of Latin America due to exclusivity of the product, EPA (eicosapentaenoic acid). Each bar of the product contains 50 milligrams of EPA, which help to reduce risk of cancer.
Nutri-Sam included EPA in sports bar as it is developed a process to refine EPA for line of fish oil capsules. The company has patent to produce EPA, therefore the market price of the product will increase among the athlete. Based on the market assumptions, the firm decided to expand their production space with an investment of $5 million.
In order to protect as well as manage risks in the design and development work of 10,000 square feet of production space of NutriStar, quantitative risk analysis is suitable to deal with risks. Probability and impact risk assessment will help to investigate likelihood of the project risks which would provide negative impact on project success. This risk assessment technique helps to determine potential influence on the project objectives like project schedule, budget, and performance in addition to quality (Huemann, 2016). Quantitative risk analysis helps to determine high priority project risks through risk rating. This particular process provides justification which includes risk attitude besides value management arrangement in creation of project reserves for estimated project budget. In order to manage risks, there should require to implement communication plan, understanding the project requirements and implementation of risk management strategy. The particular plan is a document which helps to identify possible design and construction risks, estimate its negative and positive impacts as well as provide risk responses (Kerzner, 2018). In the development work of NutriStar, the risk management plan is being developed to ensure that risk levels and its uncertainties are managed such that the project can finish on planned timeframe.
In order to perform scheduling of the project, three time estimation is used. It includes optimistic time, most likely time and pessimistic time. This type of schedule estimation is useful to estimate of beta distribution, variance as well as mean.
The expected time of the project, TE is calculated as: TE = (a + 4*m + b)/6.
Where, a = Optimistic time
m= Most likely time
B = Pessimistic time
This calculation provides an approximation of mean of beta distribution. Accuracy of the beta distribution reflects on actual project time as well as outcomes of project cost. The standard distribution of beta distribution is calculated as: σ= (b – a) / 6 and variance is calculated as: Var = σ2= ((b – a) / 6)2. It is assumed that range of distribution, b-a is covered with six standard deviations is significant (Kerzner, 2017).
The expected time for each of the project activities is shown in below table-
|
Activity ID |
Activity Name |
Predecessors |
Optimistic time (a) |
Most Likely time (m) |
Pessimistic time (b) |
Expected duration (TE)= (a + 4*m + b)/6 |
Variance= ((b – a) / 6)2 |
|
A |
Feasibility project estimation |
- |
1 |
3 |
8 |
3.5 |
1.4 |
|
B |
Project schedule and budgeting |
A |
2 |
3 |
6 |
3.3 |
0.4 |
|
C |
Detailed engineering work |
A |
3 |
12 |
15 |
11.0 |
4.0 |
|
D |
Development of staffing plan |
B |
1 |
1 |
2 |
1.2 |
0.0 |
|
E |
Procurement of product equipment |
C,D |
8 |
12 |
20 |
12.7 |
4.0 |
|
F |
Construction of facility |
D |
2 |
2 |
6 |
2.7 |
0.4 |
|
G |
Design of the production space |
F |
1 |
1 |
1 |
1.0 |
0.0 |
|
H |
Start-up and turnover |
E,G |
1 |
1 |
4 |
1.5 |
0.3 |
Figure 1: Activity on node diagram
Probability of Completing The Project on Time
The critical path of the project is: A-C-E-H
= (3.5+ 11.0 + 12.7+ 1.5) = 28.7 months
In order to evaluate the probability of the critical path, it will require to complete the project within 30 months after starting of the project plan. The probability is calculated by finding value of Z using the equation:
Where, D = desired completion time of the project
The numerical values of the above factors are μ = 28.7 months, D = 30 months and (1.4 + 4.0 + 4.0 + 0.3) = 9.7 months. The square root of 9.7 months is 3.11 months.
Z = (30- 28.7) / 3.11 = 0.41.
From the probability distribution table, it is analyzed that values of Z is 0.41, therefore the probability is 0.6591 and 65.91% that the path is to be completed on or before 30 months. Due to uncertainty, the project path is turned out to be critical and also caused project delays.
Conclusion
It is concluded that the design and construction project work of NutriStar is feasible and it is to be completed on scheduled timeframe. It will provide an investment advantage to the company so that their decision to propose 10,000 square feet of production space is perfect. The proposal should provide benefit to the company to increase in profit and achieve profitability in the business.
References
Huemann, M. (2016). Managing the project-oriented organization. In Gower Handbook of Project Management (pp. 493-506). Routledge.
Kerzner, H. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.
Kerzner, H. (2018). Project management best practices: Achieving global excellence. John Wiley & Sons.
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