Data-Driven Decision Making Using Microsoft Excel Close 7 9t

Data Driven Decision Making Using Microsoft Excel Clos 7 9this Ass

Calculate the number of possible channels of communication if the project team were to grow to nine members. Important: show 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. Important: show your work. Benefit Cost Ratio (BCR) 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. Important: show your work. Ignore any effects of the time value of money. Roto Air also considered another project that would have partially satisfied their needs. It would have required a $750,000 investment and would result in a savings of $125,000 per year for 10 years. Calculate the Benefit Cost Ratio. Important: show your work. Ignore any effects of the time value of money. Comparing only the BCRs, explain which project should Roto Air should have chosen. Ignore any effects of the time value of money. Payback Period Calculate the payback period for the $1,000,000 investment shown above. Important: show your work. Ignore any effects of the time value of money. Calculate the payback period for the $750,000 investment shown above. Important: show your work. Ignore any effects of the time value of money. Comparing only on the payback periods, explain which project should Roto Air have chosen. Ignore any effects of the time value of money. Net Present Value (NPV) Calculate the Net Present Value of Roto Air’s $1,000,000 investment with a $250,000 annual savings for 10 years when the interest rate averages 3% annually. Important: show your work.

Paper For Above instruction

The effective management of communication channels is fundamental to the success of any project. As projects expand in scope, the complexity of communication multiplies, impacting the efficiency and effectiveness of stakeholder engagement. This analysis will explore different facets of project management decision-making, including communication channels, benefit-cost ratios, payback periods, and net present value calculations, specifically contextualized within Roto Air’s projects.

Calculating Communication Channels

The number of communication channels (C) in a project team is determined by the formula C = n(n-1)/2, where n is the number of team members (Kerzner, 2017). For a team of nine members, the total number of channels can be calculated as:

C = 9(9-1)/2 = 36 channels.

For the total stakeholders of 75, the total possible communication channels are:

C_total = 75(75-1)/2 = 2775 channels.

The additional stakeholders beyond the nine team members are 75 - 9 = 66. The increase in communication channels due to these additional stakeholders is:

C_additional = 2775 - 36 = 2739 channels.

These calculations elucidate how expanding stakeholder groups exponentially increases communication complexity, necessitating structured communication plans (PMI, 2017).

Benefit-Cost Ratio (BCR) Analysis

The Benefit-Cost Ratio (BCR) is a key metric in project evaluation, calculated as BCR = Total Benefits / Total Costs.

For the first project:

BCR = $2,500,000 / $1,000,000 = 2.5.

A BCR of 2.5 indicates that for every dollar invested, Roto Air gains $2.50 in benefits. This high ratio suggests a highly favorable project (Flyvbjerg, 2014).

The alternative project:

Total investment = $750,000.

Annual savings = $125,000 over 10 years, totaling $1,250,000.

BCR = $1,250,000 / $750,000 ≈ 1.67.

Compared to the first project, this project has a lower BCR, indicating a less efficient return on investment over its lifespan.

Project Selection Based on BCR

Since the first project exhibits a higher BCR (2.5) than the second (1.67), Roto Air should prioritize the initial project. The higher BCR reflects better utilization of resources, maximizing benefits relative to costs (Chen & Poon, 2017).

Payback Period Calculations

The payback period is the time required for cumulative benefits to recover the initial investment.

For the first project:

Payback period = Initial Investment / Annual Savings = $1,000,000 / ($2,500,000 / assumed lifespan)

Assuming the total savings are over the life of the project (say, 10 years), annual benefits are $250,000.

Payback period = $1,000,000 / $250,000 = 4 years.

For the second project:

Total savings = $125,000/year * 10 years = $1,250,000.

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

Based solely on payback period, the first project recovers its initial investment faster (4 vs. 6 years) and is therefore preferable.

Net Present Value (NPV) Calculation

NPV takes into account the time value of money. The formula is:

NPV = Σ (Cash flow_t / (1 + r)^t) – Initial investment,

where r is the discount rate; in this case, 3% (0.03), and t is each year from 1 to 10.

Annual savings = $250,000.

NPV = ∑_{t=1}^{10} [ $250,000 / (1 + 0.03)^t ] – $1,000,000.

Calculating this:

Using the Present Value of an annuity formula:

PV = P * [(1 - (1 + r)^-t) / r],

where P = $250,000, r = 0.03, t = 10:

PV = $250,000 * [(1 - (1 + 0.03)^-10) / 0.03] ≈ $2,154,254.

NPV = $2,154,254 – $1,000,000 ≈ $1,154,254.

This positive NPV confirms that the investment is financially viable when considering the time value of money.

Conclusions

Based on the preceding analyses, the project with the higher benefit-cost ratio, shorter payback period, and positive NPV is the more attractive option for Roto Air. Specifically, the initial project with a BCR of 2.5, payback period of approximately 4 years, and NPV exceeding $1 million indicates a more immediate and sustained return on investment compared to the alternative project, which has a lower BCR, longer payback period, and similar risk profile.

In addition to quantitative metrics, strategic considerations such as project scope, alignment with organizational goals, and risk tolerance should also influence the final decision (Meredith & Mantel, 2017).

References

• Chen, L., & Poon, S. (2017). Project Management Metrics and Methods. Wiley.
• Flyvbjerg, B. (2014). What You Should Know About Megaprojects and Why: An Overview. Project Management Journal, 45(2), 6-19.
• Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. Wiley.
• Meredith, J. R., & Mantel, S. J. (2017). Project Management: A Managerial Approach. Wiley.
• Pmi.org (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Project Management Institute.