Project Management for Professional

Project management for professional

In this paper, six projects have been given out of which one has to be selected. There are
three projects which are used for updating existing products of Handstar and the other three will
give different opportunities. These projects can assist the company to achieve its long term goals
as well as to gain leadership position in the market. As per my opinion, all the six projects should
be selected. All the projects will be profitable for the management of Handstar. The reasons are
enumerated below:
 It has been examined that each projects are temporary in nature. Each and every project
has an expected development time. The first project for example need 1250 hours for
development of the software.
 The projects also assist in producing unique products. For instance, the updation project
use to update the tracking applications related to expense.
 All the cases need resources, such as database, skilled employees, and funds.
 The main two founders who are also the sponsors of these project will also provide all the
necessary resources to complete the projects
 The potential customers of the company are users of the applications of Handstar.
But if we apply the NPV approach to evaluate the best project then result will differ. Not all the
projects will be selected only those projects will be chosen whose Net present value will be the
highest.
NET PRESENT VALUE APPROACH (NPV)
This approach is also used as an intrinsic value to determine the market value of any firm
or organization. The NPV approach is mostly used in selecting a project viable for business.
The NPV is determining after considering all the present value of estimated cash flows
and deducting it with the initial investment (Hopkinson, 2017).
The discounting rate of 12% has been considered to calculate the NPV of projects. The product
life cycle is 3 years. Discounting factors will be applied to determine the present values of the
project cash flows (Jagannathan, 2017).
Available development hours with four different software developers in a single year = 2500 X 4
= 10,000 hours.

Handstar Incorporation
Project Evaluation
Based on NPV Approach
Project 1
Integration of Calendar App with Email App
Hours required : 1250 Hours
Year
Estimated
Cash Inflows
(Note - 1)
Present Value
Factor @12%
Present Value of
Cash Inflows
1 750,000 1.1200 0.8929 669,642.86
2 675,000 1.2544 0.7972 538,105.87
3 607,500 1.4049 0.7118 432,406.50
Present Value of Cash Inflows 1,640,155.23
Less: Cost of the Project (1250 hours x $ 52 per hour) (65,000.00)
Net Present Value (NPV) 1,575,155.23
Note - 1
Computation of Estimated Cash Inflows
Particulars Amount in $
Year 1 Estimated revenue 750,000
Less: Decline @10% (75,000)
Year 2 Estimated revenue 675,000
Less: Decline @10% (67,500)
Year 3 Estimated revenue 607,500