Channels Of Communication: It Has Been Estimated That Projec

Channels Of Communicationit Has Been Estimated That Project Managers S

Channels of Communication It has been estimated that project managers spend up to 90% of their time communicating and your position at Roto Air is typical. Calculate the number of possible channels of communication if the project team were to grow to nine members, including showing your work. The total number of stakeholders, including the project team, is estimated at 75 people. Calculate how many more possible channels of communication the additional stakeholders beyond the team members represent, showing your work. Roto Air plans to spend $1,000,000 on this project, resulting in a total savings of $2,500,000 over the life of the project. Calculate the Benefit Cost Ratio (BCR), showing your work. Also, consider another project requiring a $750,000 investment with an annual savings of $125,000 over 10 years; calculate its BCR as well, demonstrating your work. Ignoring the effects of the time value of money, compare the BCRs to advise on which project Roto Air should select. Next, calculate the payback period for both the $1,000,000 and the $750,000 investments, showing all work, and recommend which project Roto Air should pursue based only on payback period. Finally, compute the Net Present Value (NPV) of the $1,000,000 investment, assuming annual savings of $250,000 for 10 years and an annual interest rate of 3%, with detailed calculations.

Paper For Above instruction

Effective communication is fundamental to the success of project management. As noted by Kerzner (2017), project managers spend a significant portion of their time communicating, sometimes as much as 90%. This extensive communication effort underscores the importance of understanding various communication metrics, including the number of potential communication channels within a project team. This paper explores the calculations related to project communication channels, cost-benefit analyses, investment payback periods, and net present value, applying these concepts to scenarios relevant to Roto Air.

Calculating Communication Channels within the Project Team

The number of communication channels in a project team depends on the number of members involved. The formula used to determine the total number of communication channels (C) in a team of n members is:

C = n(n - 1)/2

When the team comprises nine members, the total number of communication channels is:

C = 9(9 - 1)/2 = 9(8)/2 = 72/2 = 36

This indicates that a team of nine members can have up to 36 communication channels, representing a highly interconnected network that warrants efficient management to prevent information overload and communication breakdowns.

Additional Stakeholders and Communication Channels

The total number of stakeholders, including the project team, is 75. The project team consists of nine members; therefore, the remaining stakeholders are 75 - 9 = 66. The total number of potential communication channels among all stakeholders (C_total) is calculated as:

C_total = 75(75 - 1)/2 = 75(74)/2 = 5550/2 = 2775

Since the communication channels among team members are already counted, the additional communication channels beyond the team are between the stakeholders outside the core team, which are:

Channels among stakeholders outside the team:

Remaining stakeholders = 66

Channels among remaining stakeholders:

C_remaining = 66(66 - 1)/2 = 66(65)/2 = 4290/2 = 2145

However, since the channels within the team are already accounted for, the number of additional channels representing interactions between the team and other stakeholders plus among the other stakeholders is calculated considering all pairs except those within the team:

Additional channels (excluding team's internal channels):

Channels involving the team and other stakeholders:

Team members with other stakeholders:

9 x 66 = 594

Remaining stakeholders among themselves: 66(65)/2 = 2145

Therefore, the total new channels created by additional stakeholders are approximately 594 + 2145 = 2739.

Benefit Cost Ratio (BCR) Analysis

The Benefit Cost Ratio (BCR) indicates the relationship between the benefits derived from a project and its costs. For Roto Air’s primary project, the calculation is straightforward:

BCR = Total Savings / Investment = $2,500,000 / $1,000,000 = 2.5

This means that for every dollar invested, Roto Air gains $2.50 in benefits. Similarly, for the alternative project requiring a $750,000 investment with annual savings of $125,000 over 10 years, total benefits are:

Total Benefits = $125,000 x 10 = $1,250,000

The BCR for this project is:

BCR = $1,250,000 / $750,000 ≈ 1.67

Comparing the two, the primary project offers a higher BCR (2.5 vs. 1.67), suggesting it provides a greater return per dollar invested, thus is the preferable choice if only considering BCR.

Payback Period Calculation

The payback period measures how long it takes for a project to recover its initial investment. For Roto Air’s primary project:

Annual savings = $2,500,000 / 10 = $250,000

Payback period = Initial investment / annual savings = $1,000,000 / $250,000 = 4 years

Similarly, for the alternative project:

Payback period = $750,000 / $125,000 ≈ 6 years

Given the shorter payback period, Roto Air should favor the primary project since it recovers its investment more quickly, reducing financial risk exposure.

Net Present Value (NPV) Calculation

The NPV considers the present value of future savings discounted at an appropriate rate. Using the formula:

NPV = ∑ (Savings / (1 + r)^t) - Initial Investment

Where:

  • Savings per year = $250,000
  • r = 3% (0.03)
  • t = year, from 1 to 10

Calculating the present value of an ordinary annuity:

PV = S * [(1 - (1 + r)^-n) / r]

PV = $250,000 * [(1 - (1 + 0.03)^-10) / 0.03]

PV factor = [(1 - (1 + 0.03)^-10) / 0.03] ≈ 8.53

Therefore, PV = $250,000 * 8.53 ≈ $2,132,500

Subtracting the initial investment of $1,000,000 yields:

NPV ≈ $2,132,500 - $1,000,000 = $1,132,500

The positive NPV indicates that the project is financially viable and adds value to Roto Air.

Conclusion

Analyzing communication channels reveals that expanding stakeholder involvement significantly increases potential interactions, emphasizing the need for efficient communication strategies. The BCR comparison illustrates that Roto Air’s primary project offers higher overall benefits relative to costs and recovers investments faster, making it the better choice based on financial metrics alone. The NPV further confirms its viability, providing substantial value addition. Effective project selection thus combines both quantitative analyses and strategic considerations to ensure optimal resource allocation and project success.

References

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  • Meredith, J. R., & Mantel, S. J. (2017). Project Management: A Managerial Approach. Wiley.
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  • Chin, J. (2018). Cost-Benefit Analysis and Project Evaluation. Journal of Economics and Finance, 42(3), 513-526.
  • Hopkins, W. G. (2013). Quantitative Skills for the High Performance Athlete. Human Kinetics Publishing.
  • Clough, R. H., & Sears, G. (2017). Construction Project Management. Wiley.
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  • Slack, N., Brandon-Jones, A., & Burgess, N. (2019). Operations Management. Pearson.
  • Albrecht, C., & Sack, R. (2015). Effective Communication in Business Projects. Journal of Business Communication, 52(4), 351-367.

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