To successfully complete this week’s discussion, you will need to refer to Chapter 14, “Portfolio Project Management,” in your Project Management Best Practices: Achieving Global Excellence textbook.
Pay particular attention to Section 14.6, “Preliminary Evaluation.”
Please respond to the following in a substantive post (3–4 paragraphs):
Distinguish between a feasibility study and a cost-benefit analysis.
Explain why both of these preliminary evaluations must tie to the organizational strategic plan.
Summarize the cost-benefit analysis for your hypothetical e-commerce company.
Be sure to provide full citations and references, formatted according to Strayer Writing Standards.
Please respond substantively to at least one other post (1–2 paragraphs). Choose to respond to those who have few or no responses.
In your response to your classmate, consider questions such as the following:
What do you see as the strengths of your classmate’s cost-benefit analysis?
What is one suggestion you have for your classmate to improve his/her cost-benefit analysis?
What is one question you have about your classmate’s cost-benefit analysis?
What is one resource on feasibility studies and cost-benefit analysis that you would recommend to your classmate?
classmate’s post to respond.
The purpose of the feasibility study is to validate that the idea or project meets feasibility of cost, technological, safety, marketability, and ease of execution requirements. It is possible for the company to use outside consultants or subject matter experts to assist in both feasibility studies and benefit-to-cost analyses. A project manager may not be assigned until after the feasibility study is completed because the project manager may not have sufficient business or technical knowledge to contribute prior to this point in time.
If the project is deemed feasible and a good fit with the strategic plan, the project is prioritized for development along with other approved projects. Once feasibility is determined, a cost−benefit analysis is performed to validate that the project will, if executed correctly, provide the required financial and nonfinancial benefits. Cost−benefit analyses require that significantly more information is scrutinized than is usually available during a feasibility study. Such analyses can be expensive.
Estimating benefits and costs in a timely manner is very difficult. Benefits are often defined as:
Tangible benefits, for which dollars may be reasonably quantified and measured
Intangible benefits, which may be quantified in units other than dollars or may be identified and described subjectively
Costs are significantly more difficult to quantify, at least in a timely and inexpensive manner. The minimum costs that must be determined are those that are used specifically for comparison to the benefits. These include:
The current operating costs or the cost of operating in today’s circumstances.
Future period costs that are expected and can be planned for.
Intangible costs that may be difficult to quantify. These costs are often omitted if quantification would contribute little to the decision-making process.
Harold Kerzner.2018.Project Management Best Practices:Achieving Global Excellence.Page 525.
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