Project Development and Optimisation System †MyAssignmenthelp.com

Question: Discuss about the Project Development and Optimisation System. Answer: Introduction In undertaking the Central Library Renovation project, a decision must be made in order to ensure the best value for money as well as improving the functionality and services provided at the library. In determining if the inclusion of a childrens library in the central library, the team has to decide on how to undertake the project, the feasibility of the project, and employ projct management principles, taking into consideration te principles of cost driven optimization of project design, and use accounting principles to determine the value of the project before making a decision. Deciding on a project is usually motivated by a need, and importantly, the evalutaion of available alternatives, before deciding to undertake a project. This entials a feasibility study and comparison with other competing or possible projects: once this is done, a decision is reached and the project executed. In this paper, the proposed renovation of the Central Library is undertaken, employing team decisi on making principles to determine if the proposed project is the right one. The problem will be solved collaboratively, employing team principles, accounting principles, and project management principles. The problem will be approached by evluating other laternative projects, in this case whther to introduce a kids section at the library, upgrade the furniture, or upgrade the computer/ IT system at the library. The evaluation will be done using accounting principles and economic concepts as well as a feasibility stuudy, bfore deciding, based on the analysis, the best project to undertake in renovating the library The possible projects to be undertaken at the library include the introduction of a kidds section, upgrading furniture, or upgrading the library computer system. Upgrading the computers is a good and refreshing idea; it will ensure fast and seamless operations that take advantage of advancements in information technology, as well as give users an improved experience,and providing information in a variety of mediums (Andrews Wright, 2015). Upgrading furniture is also a good improvement project aimed at ensuring comfort and ergonomics for library users and to give the library a nice feel. The Central library has been around a long time and a tchnology and furniture refresh and upgrade would be good improvements. Introducing a childrens section will also be a smart idea, given that it will enhance the reading culture among children and give parents options on keeping children busy, especially during holidays. Most Australian paents with children encourage them to read ('Australian Coun cil for the Arts', 2017). Further, many Australian children still struggle with reading, according to an international survey on year four students done in 2016 at 286 schools, with 6341 students participating in the survey (Buckingham, 2016). However, to decide on the best project among the three, a critical analysis ad evaluation needs to be undertaken. Cost-Driven Project Design Optimization Renovation projects incurr costs; these costs must be taken into consideration, Vis a Vis the envisaged benefits from the renovation project, as such, costing plays a very important role in decision making (Freedman, 2018). Some of the methods to use in cost driven project design optimization include accurate budgeting and capital asset pricing models. One of the biggest problems faced by managers is budgeting; ofetn, either the budget is excedded r underutilized by a significant margin (Lefevre, 2011). Apart from budgeting, othr aspects of fincnace and costs as well as cost benefits must be taken into considration in deciding on what project to undertake; this, therefore, requires an effective and integrated project cost management. Cost management entails the plannig, estimation, budgeting, and cost control processes so projects are completed within approved budgets (Lee, 2006). The increased demands placed on projects can result in catastrophic failure of projects, apart from resu lting in a project that has little or no value in the context of its benefits and resource usage. The main concern of projects is in creating value and the basis for this is through the optimization of the project. Knowing factors that make a project valuable for an organization enables the decision and implemengtation teams to increase gains from the project while at the same time, also reducing risks associated wth the project (Obaidat, O?ren Merkuryev, 2017). Projects must be appraissed in the context of their impact and place in future strategies of organizations. The scope of the project must be aligned with the strategy of the organization as well (Harrison, 2014). The design synthesis for the renovation project must be integrated in the early stages to determine the best project, taking into consideration the costs involved in alternatives (Park Chen, 2014). The evaluation will be undertaken based on asset capital budgeting model, which is a model used in determining an appropriate theoretical required rate of return and in making decisions on investments and project undertakings. Capital budgeting is a process by which the potential expenses and/ or investments for large projects are evaluated and determined and it entails evaluating the cash inflows and outflows for the project. Doing this helps determine is the potential retuns in undertaking the project meet the investment appraisal, in order to justify the project or choose between different competing projects (Levy, 2011). The CAPM model will be used in determining the net Present Value (NPV) of the project in which the difference between the present cash inflow value and the present cash outflow value over a given time period is determined (Gallo, 2014). In determining the NPV for the projets, estimations, through budgeting, will be made on the cost of undertaking the projects based on the work packages involved in the projets, as wel as their expected returns. The NPV will is determined alongside the Internal rate of return (IRR); IRR refers to the rate at which the NPV of all cash flows in a project, be they negative or positive, equate to zero. It is also a useful tool for evaluating investments and projects on its attractiveness. Te general rule is that the IRR of a project must exceed the required rate of return to make it attractive; IRRs that fall below the required rate of return mean the project should be rejected ('Corporate Finance Institute', 2018). The work packages for the project, with teir estimated busgets are shown below; Alternative projects and their projected Costs Computer Upgrading Furniture Improvement Introducing a Children Section Activity Cost in $ Activity Cost in $ Activity Cost in $ System Analysis 15000 Analysis and interior re-design 50000 Analysis and interior re-design 30000 Designing new IT Infrastructure 50000 Purchasing Furniture 240000 Purchasing Furniture 160000 Purchase and installation of equipment 200000 Labor 40000 Purchasing suitable books 150000 Labor 50000 Miscellaneous 5000 Labor 40000 Miscellaneous 5000 Miscellaneous 5000 Total 320000 Total 335000 Total 385000 The estimation technie used is factoresimation in which historical data, and is based on a limited project scope. This method uses the rule of thumb in addition to parametric models (Akintoye, 2000) Project Feasibility Study The project will be undertaken using project management principles, including in the feasibility studynand analysis, from which a feasibility report is generated. The feasibility study analyzes how successfully a project can be undertaken to completion, and in the process accounting for factors can affect the project, including economic, legal, technological, and scheduling factors. The feasibility study helps determine the possible negative and positive outcomes of a project before investing resources and time as well as money into the project (Munsaka, 2013). In undertaking the feasibility assessment, a fous step model is followed. The firts step acording to the four step method is examining the market and the general external environment; this is important in determining whether the project wil have benefits, and if the benefits will be taken up by customers/ the general public. This phase of the feasibility study needs to give a ralistic picture of the possibility of getting suff icient number of customers/ adopters to use the value generated from the renovation, and if they will be satisfied by it. The second step is an evaluation of the project technical requirements in order to determine the resource and related requirements for the project, including personnel, finance,and technical equipment. The next step entails determining the potential benefits of the renovation, including the financial benefits, for instance, will upgraded computers result in faster services and therefore, increase subscriptions? Will upgrading the furniture make the library more attractive to new members? Will adding a childrens center increase the number of members to the library and its paid users? Based on these analyses and the financial projections, a decision is then made on the most feasible project to undertake. The feasibility study starts by describing the service/ product to be offfered and their delivery method. A market feasibility is also undertaken along with a technical feasibility and a financial feasibility. An organizational easibility is also done. The technical feasibility describes how the porduct/ service will be delivered, incuding materials, labor, and technology needs (this is already done in Table I) above. The financial feasibility is done by projecting the required start up capital to execute the project and the expected returns; the required financing is alrady covered in table I; however, the expected returns from the various projects stil need to be undertaken. Project Financial Analysis The financial analysis will be done based on the capital budgeting model, with the net present value of the project determined. The NPV for computer upgrading will be based on the charges for using computers and revenues from that; the furniture upgrade will be based on revenues such as from hiring the venue, while in setting up a childrens section, the NPV will be based on merchandise revenues for the library. Further, a weighted analysis will be undertaken, taking into consideration other factors such as social impact, academic impact, and value added to the library and society, in additio to the financial analysis to help determine the best project to undertake. Based on annual reports for 2016/2017, a library of the size of Central Library earns revenue mainly from merchandise (of books, prints, State Library merchandise, and other sources, such as stationery, cards, fines, and gifts). For the 2016/2017 year, the revenues from these sources was $ 581708. addind a children library will create a new type of demand hat should increase the revenues from merchandise by 20%. This should increase annually on average by 10% (note that thee are some of the assumptions made in this project). The furniture should make the venue more attarctive and raise revenues for event hire and events revenues by 12% and should grow by 7.5% annually; for the 2016/2017 year, these revenues were $ 472278. The computers use will marginally increase revenues by about 5% of the venue hire and events revenues and will grow by 5% every year. Based on these figures, the NPV for each of the projects can be computed based on projected future cash flows; the NPV is computed for the next four years. In using the budgeting model for NPV, the future cash flows are estimated and then computed at present value. The future cash flows for the different projects are determined based on projected growth in revenues from each of the projects, and their projected annual growth. The discount rate is determined by using the central bank interest rate; this is the Reserve bank of Australia rate for lending money to commericla banking institutions; at present, this rate is set at 1.5% (White, 2018), which is wh at is used. The calculations for NPV and IRR were done in a spreadsheet and the results found shown below; Based on the findings above, from a financial perspective, the renovation project involving adding a chldrens section to the Central Library is the most feasible. Other aspects of social and educational impacts are also considered and weighted as shown below; The projects to be considered for the renovation of the Central Library are a computer system upgrade, improving the existing furniture, and adding a childrens corner. Evaluating the social impacts of the three projects, a computer upgrade will result in better services such as speed and efficiency, as well as a rich user experience. Further, it will enhance educatio throug efficiency and benefits of using IT. On the financal perspective, the project has a negative NPV of minus (-) $ 199311.53, with the IRR also being negative at -28.73%. This makes it the least feasible project; while it costs the least to execute, its benefits and economic impact is minus. For the furniture project, this improvemnt will result in greater bookings of the venue, and create a good ambience as well as more comfortable seating and reading infrastructure for library users. On an education perspective, these benefits are minimal, except for ergonomics. From the economic perspective, the furniture project alos has a negative NPV of - $ 129566, while its IRR is also a minus at -15.41%, meaning it has absolutely no economic value. The addition of a childrens corner will have immense educational benefits because it will enhance reading skills and introduce the much needed reading culture among Australian children (Buckingham, 2016). From a social perspective, the addition of the childrens section will encourage more parents to also visit the library and probably adopt a better reading culture as well; this has a highly positive effect in that it will enciurage the children to also adopt reading habits while helping parents improve and engage in enriching acts of reading (Gaiman, 2013). On the economics perspective, adding a childrens section is a good investment because it has a positive NPV of $ 53682, and a positive IRR as well of 6.74%. using these analyses in the weighting, the addition of a childrens section is a good project and should be proceeded with in renovating the Central Library. Conclusion The decison making for this project was team based and were made based on the principles of collaborative decision making. These pirnciples include being purpose driven; the purpose was to determine the best project to execute. It was an inclusive affair with everyone making a contribution; furthr, decisions were made on the basis of flexibility, accounatbility, and voluntarily, based on a time schedule. Based on the feasibility and financial analysis, and the tenets of project design optimization, the chosen project is adding a childrens section at the central Library; it is a beneficial project in the context of education and social perspectives, apart from being economically sound. References Akintoye, A. (2000). Analysis of factors influencing project cost estimating practice. Construction Management And Economics, 18(1), 77-89. https://dx.doi.org/10.1080/014461900370979 Andrews, C., Wright, S. (2015). 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Why do projects tend to exceed rather than come in within their budgets? What can I do about this?. Pm4all.be. Retrieved 9 April 2018, from https://www.pm4all.be/Content/En/Resources/Blogs/Blogs.aspx?Id=1 Levy., H. (2011). The Capital Asset Pricing Model in the 21st Century: Analytical, Empirical, and Behavioral Perspectives (1st ed., pp. 1, 7). Cambridge: Cambridge University Press. Munsaka, T. (2013). The Importance of Project Feasibility Study: With practical examples (pp. 5-6). Nordestedt, GERMANY: GRIN Verlag. Obaidat, M., O?ren, T., Merkuryev, Y. (2017). Simulation and Modeling Methodologies, Technologies and Applications. Cham: Springer. Park, H., Chen, J. (2014). A Cost Driven Design Optimization Framework (pp. 957-958). Hong Kong: The Association for Computer-Aided Architectural Design Research in Asia. Retrieved from https://papers.cumincad.org/data/works/att/caadria2014_522.content.pdf White, E. (2018). Reserve Bank of Australia holds interest rates at 1.5%. Ft.com. 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