Group Presentation - web based customer ordering system.pdf-Adobe Acrobat Reader
ID: 384197 • Letter: G
Question
Group Presentation - web based customer ordering system.pdf-Adobe Acrobat Reader DC e Edit View Window Help ome Tools Group Presentation.X ? Sig What process would you follow to make this impor- tant decision? Who needs to be involved? 1. Assume that your project team has been working for three a. months to complete the systems design of a new Web- based customer ordering system. Two possible options seem to meet all users' needs. The project team must make a final decision on which option to implement. The following table summarizes some of the key facts about each option. b. c. What additional questions need to be answered to d. Based on the data, which option would you recom- e. How would you account for project risk in your deci- make a good decision? mend and why? sion making Option 2 Option 1 $1.5 million $3.0 million $1.5 million $2.2 million 0.5 million $1.0 million Factor Annual gross savings Total development cost Annual operating cost Time required to implement Risk associated with project (expressed in probabilities) Benefits will be 50% less than expected Cost will be 50% greater than expected Organization will not/cannot make changes necessary for system to operate as expected Does system meet all manda- tory requirements? 9 months 15 months 20% 35% 25% 30% 20% 25% Yes YesExplanation / Answer
Ans 1: The process of decision making will involve assessment of net payoff in each option after taking into account all risks and probable outcomes and chosing the option with highest payoff.
Ans 2: The main stakeholders in the project are implementing team, costing team and key decision makers in the organization, responsible to make the necessary changes in the system. These need to be involved to have a clear view of the project horizon and development.
Ans 3: (a) Better assessment of probabilities. The probability of 50% less benefits or 50% more cost are less realistic. There should be slabs of benefits and costs like 10-20%, 20-30% and 30-40% with different corresponding probabilities. It will make a more realistic assessment of risk.
(b) The value of time in terms of money, i.e. the cost difference in the projects due to time delays ( one project takes 9 months to complete while the other 15 months)
Ans 4.
Payoff in case I ( In year 1)
Benefits - 1.5x 0.8+0.75x0.2 = 1.35 million.
Cost - 0.75x (1.5+0.5) + 0.25 ( 2.25+0.75) = 1.5+0.75 = 2.25
Risk payoff - Risk that the cost will be lost due to denial from organization
= 0- 2 x0.2 = (0.4)
Net benefit = 1.35-2.25 -0.4= (1.3) million.
Payoff in case II
Benefits - 3x0.65+1.5x0.35 =1.95+0.525 = 2.475
Cost - 3.2x0.7+ 4.8x0.3 =2.24+1.44 =3.68
Risk - 0-3.2x0.25 = (0.8)
Net payoff = 2.475-3.68-0.8 = (2.005) million.
The risk preposition in case I is less hence it is more preferable.
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