Project management and decision analysis Essay Example

PROJECT MANAGEMENT QUESTIONS

Question one

Introduction

A work breakdown structure is a deliverable tool which organizes the overall project scope into smaller sub-components. This is usually a detailed piece of work that outlines all the activities that require being performed at the end of a given project. The various elements in a work breakdown structure are essential in enabling the project team and stakeholders to view the final product at the completion of a project. The tasked positioned at the lowest level in the structure is estimated tracked as this information is crucial in obtaining the overall costing and time required for a given project. The work breakdown structure dictionary provides the perfect description for each and every task and component of the structure (Turner, p.42).

Project phases

In our project, we will be analyzing the process of oil and gas decomposition as our main project. The project will be delivered in five main phases that include: project initiation, planning of the project, project execution, controlling and finally project closure (Kerzner, p. 20).

In project planning the idea of exploring the oil or gas in a given area is cross-examined. The main goal is to determine whether the project was worthy venturing into regarding the profits and benefits to the organization. The project team will then determine whether it’s a realistic task to handle (Kerzner, p. 21).

In project definition and initiation the plan of the project which is gas and oil exploration is put into writing with the main objective of the project being clearly identified and defined. An outline of the tasks to be accomplished during this phase is put in writing. The rough estimation of the project costs and schedule for completion are handled in this first phase of the projects (Kerzner, p. 23).

The third phase is the execution stage. In this phase, there is resource distribution regarding labor skill, materials and capital to the relevant departments. The various teams are informed of their respective responsibilities. It is also important to bring out any important ideas that may contribute towards the success of the project in this phase (Kerzner, p. 23).

In the performance control phase, the team ensures that the progress of the project is according to the set schedule during planning. If not necessary adjustments are made to cater for the loss in time. All the activities occurring are meant to keep the project on track (Kerzner, p. 23).

The final phase is project closure where after complete exploration of the oil and gas the conservation measures are put in place with impacts to the environments being assessed as well as the assessment of whether the primary goals of the project were achieved or not (Kerzner, p. 23).

Project deliverables

The key deliverables of the project are oil and gas that can be used as a source of energy for both domestic and industrial use after the exploration from the source. The oil may require further processing to form various forms of energy such as diesel, petrol and gasoline (Schwalbe, p.90).

Cost accounts

The table below shows a summary of some of the activities which will require capital investments. The cost will be dependent on the current pricing in the market.

	Description
	Aero/Land/Marine Survey, Data Processing, Exploitation and Exploration Study
	Drilling and Work over
	Drilling and Work over Material List
	Offshore Platform Facilities
	Other Offshore Facilities
	Onshore facilities
	Component List Facilities
	Platform Certification

Fig 1: a table is showing the list of activities and materials that will require some funds to be able to complete the project (Leach, p.35).

Work breakdown structure

Fig 2; an illustration of a work breakdown structure with all the project tasks included

Project scheduling

1 JAN 2018- 30 MAR	1 APR 2018-28 AUG 2018	29 AUG 2018 -6 JUNE 2019	6 JUNE-8 JULY 2019	8 JULY-10 AUGUST 2019

K EY

Initiation

Planning

Execution

Performance monitoring

Question two

Solution

Profits that will be realized by the deal

One barrel equals to thirty dollars profit

1000000 barrels = 1000000*30 = 30,000,000 dollars

Probability of getting license is 50%

Compensation per barrel is 10 dollars

Total compensation fee = 10*1,000,000 = 10,000,000 dollars

1. Waiting for the import license

Probability of getting license 0.5

Profits to be made 30,000,000 dollars

Probability of getting the contract 0.3

Monetary value of waiting for license

= (0.5*0.3*30,000,000)

= $ 4,500,000 dollars

The company will only realize 4,500,000 dollars as profit if it has to wait for the license

1. Purchasing the crude oil without the license

Probability of not getting the license 0.5

Fines incase of failure to acquire license in time

10 dollars per barrel for 1000,000 barrels

Fine charges will be 10,000,000 dollars from the max profits that can be realized.

Probability of getting the contract = 0.7

Monetary value

= (0.5*0.7*30,000,000)

= total money realized will be 10,500,000 dollars

However, there is a chance of fine hitting the company for contract cancellation. These are a total of $ 10,000,000

Therefore the only amount of cash the company may make as profit if the purchase the oil before obtaining their license will be:

=$(10,500,000-10,000,000)

= $ 500,000 as the profits realized

From this analysis, we see that waiting for the license before indulging in the purchasing and selling of the oil is the best option for the company as it earns the company $4,500,000 for every one million barrels compared to the other option which only makes $ 500,000 for every million barrels of oil. The best way to avoid the risk is by applying for import license wait for its approval before buying the oil.

Question three

Fig 3: Network diagram

Activity			Free float LF-EF	Total float LS-ES (except the critical path where total float = 0)
			0	0
				0
				0
			0	0
				0
			0	0
				0
			0	0
			0	0

Figure 3: Summary of the starting finishing times as well as the floats. In this instance when calculating total floats, the formula of LS-ES is applied with exception of those activities in the critical path whose total flat is taken to be zero (0).

Activities on the critical path are A, D, I, E, K, H, J, M

The minimum project time is (2+2+1+2+1+1) = 9 weeks

The activity should not be tracked back because it does not fall on the critical path, therefore, may not affect the overall costs and time for completion of the project (Verzuh, p.124).

Referencing

Turner, J. Rodney. The handbook of project-based management. Vol. 92. New York, NY: McGraw-hill (2014):45-98.

Kerzner, Harold. Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons (2013): 17-56.

Schwalbe, Kathy. Information technology project management. Cengage Learning (2015):89-123

Leach, Lawrence P. Critical chain project management. Artech House (2014):34-74

Verzuh, Eric. The fast forward MBA in project management. John Wiley & Sons (2015):123-162.