Project Management Risk and Reliability

This document provides an overview of project management risk and reliability. It includes an executive summary, project objectives, expected benefits, project requirements, costs, and major risks. The document also discusses the timescale of the project. Subject: Project Management, Course Code: N/A, Course Name: N/A, College/University: N/A

Running head: PROJECT MANAGEMENT RISK AND RELIABILITY
Project Management Risk and Reliability
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1PROJECT MANAGEMENT RISK AND RELIABILITY
Table of Contents
1. Executive Summary:....................................................................................................................3
2. Overview:....................................................................................................................................4
a. Purpose of the objectives of the proposal:...............................................................................4
i. Problem to be solved or need to be filled:............................................................................4
ii. Project conduction process and way of managing the same either through traditional or
iterative method:......................................................................................................................4
b. Best way to measure project success and appropriateness of suggested measures for
alternative measures:...................................................................................................................5
3. Expected benefits:........................................................................................................................6
a. Context and analysis:...............................................................................................................6
i. Organisational strategy or community expectations and alignment of the project:.............6
ii. SWOT analysis:...................................................................................................................6
iii. Quantitative analysis:.........................................................................................................8
b. Identification of expected benefits:.........................................................................................8
4. Project requirements:...................................................................................................................9
a. Requirements needed to carry out this project:........................................................................9
b. Possible assumptions for the project:....................................................................................10
c. Constraints for the project:.....................................................................................................10
5. Costs:.........................................................................................................................................11

2PROJECT MANAGEMENT RISK AND RELIABILITY
a. Cost estimation:.....................................................................................................................11
b. Ways of cost estimation:........................................................................................................11
5. Major risks:................................................................................................................................11
a. Identification of risks:............................................................................................................11
b. Ways of managing the identified risks:.................................................................................12
6. Timescale of the project:...........................................................................................................12
7. Conclusion:................................................................................................................................13
References and Bibliographies:.....................................................................................................14

3PROJECT MANAGEMENT RISK AND RELIABILITY
1. Executive Summary:
The focus of the business plan is to make smart watches in Melbourne, Australia. With
the growing advancements in technology, it becomes possible for the mobile owners to access
incredible amount of information within seconds. In the current era, smart phones receive and
send information quickly by providing instant access to data. However, smart watch is
completely a new piece of technology having different functions with each model providing
something new and unexpected to the customers. Unlike few technologies, smart watches are
easily affordable. The primary focus of the business plan is to come up with something new that
would act as an alternative to smart phones at a cheaper cost. Besides, the report would focus on
the ways through which the introduction of smart watches in Melbourne would benefit the
community by focusing on customer needs.

4PROJECT MANAGEMENT RISK AND RELIABILITY
2. Overview:
a. Purpose of the objectives of the proposal:
i. Problem to be solved or need to be filled:
Although smart phones provide various features to the users of the community; however,
it has a number of adverse effects as well. As commented by Aehnelt and Urban (2014), one out
of ten smart phone users uses the same in showers. Smart phone addiction, particularly among
children, is the altering the way of interactions. This is because the users are observed to be
involved more in digital interaction rather than human interactions. Hence, by introducing smart
watch and increasing its popularity in Melbourne, would assist in minimising this issue.
ii. Project conduction process and way of managing the same either through traditional or
iterative method:
Iterative technology denotes the current day technology used in the business houses for
production. With the help of modern mechanism, it becomes possible to increase the production
capacity and efficiency of the plant (Chittenden and Derregia 2015). On the other hand,
traditional methods include those that emphasise on increasing production in conventional ways.
However, this method consumes enormous time and effort. However, for the smart watch
business plan, the primary source is to electronic paper, which consumes less power. Therefore,
the targeted area is Melbourne in Australia. The technology utilised is a rechargeable lithium-ion
battery, which is needed for charging the smart watches. Moreover, as smart watches need
electronic or transflective paper, there would be lower power consumption and the same could be
reused for the future. Therefore, the project would be managed by the iterative method.

5PROJECT MANAGEMENT RISK AND RELIABILITY
b. Best way to measure project success and appropriateness of suggested measures for
alternative measures:
The success of any start-up business always relies on the utilisation of the project. Hence,
the success policy of smart watch project relies on the below-stated aspects:
 Smart watch is a sound replacement of smart phones and it is deemed to be eco-friendly.
 As it is an alternative energy generation source, it is projected that the community
individuals would like the product.
 There would be no initial costing associated with the business plan and thus, it is
economical to initiate with this project in contrast to the other projects (Chuah et al.
2016).
 The primary unique selling proposition of the project is maximum profit with minimum
investment. Therefore, the project would be valuable for the organisation along with the
community people as well.
By taking into consideration all the above-discussed aspects, the smart watch business plan
would be more useful compared to the other projects owing to the fact that it is budget-friendly
and in addition, it would draw additional customers largely. In a similar manner, as smart
watches are manufactured using a reusable energy generation source, it would assist the local
community and the business houses and they do not have to rely upon other sources (Hong, Lin
and Hsieh 2017).

6PROJECT MANAGEMENT RISK AND RELIABILITY
3. Expected benefits:
a. Context and analysis:
i. Organisational strategy or community expectations and alignment of the project:
The smart watch business is a business project, which is intended to meet the long-term
needs of the community in Melbourne, Australia. Since smart watches are developed from eco-
friendly products, the expectations of the community people from this project would be high.
Apart from this, the smart watches are easy to be afforded by majority of the individuals owing
to lower cost than smart phones, the middle-class individuals residing in Melbourne, Australia
would be benefitted from this project as well. However, for obtaining feedbacks from the
customers, it has been planned to start the project in the popular areas of the city. In addition, the
adverse effect of smart phones would be minimised, when people start using smart watches
(Beaver 2016). Thus, positive feedback would lead to rise in the number of new outlets selling
smart watches in the other Australian cities.
ii. SWOT analysis:
Before initiating the smart watch business, it is necessary to determine the strengths and
weaknesses of the same. Besides, the likely opportunities and threats are to be looked after by the
project manager as well. Therefore, SWOT analysis is used for determining the likely feasibility
of the project:
Strengths:
 Design and innovation
 5 language control
Weaknesses:
 New in the market
 Significantly lower profit margin

7PROJECT MANAGEMENT RISK AND RELIABILITY
 Useful to older persons and women
 Integration of hardware with numerous
open source software and operating
system
 Made in Australia
 Capability of marketing the brand
 Minimised cost of production
 Lack in own operating system and
software
Opportunities:
 New introduction in the market
 Increasing demand for quality
application processors
 Development of job opportunities for
the local community
 Varying needs or preferences of the
customers
Threats:
 Threat of competition
 Acceptance
 Rapid change in technology
 Variation in needs of the customers
Conceptualisation of smart watch business:
With the increase in globalisation, people are looking for alternatives to smart phones for
getting rid of the adverse effects. However, the same needs to be cost-effective and beneficial to
the community as well (Hsiao 2017). The people living in Melbourne, Australia have high
addiction towards smart phones and thus, the initiation of smart watch would be a step to
minimise this issue.

8PROJECT MANAGEMENT RISK AND RELIABILITY
iii. Quantitative analysis:
For starting this project, the initial investment is estimated to be $50,000. Based on this,
the organisation has forecasted its net cash flows for five years, in which the cost of capital is
assumed as 10%. The techniques used for analysing the investment include net present value,
internal rate of return and payback period. From the above table, it could be seen that the
organisation would have positive net present value of $60,027, which is a good indicator for
undertaking the project (Andor, Mohanty and Toth 2015). The payback period is calculated as
2.47 years, which is lower than economic life of the project. The case is similar in case of
internal rate of return as well, which is computed as 44% more than the estimated cost of capital
of 10%. Hence, from the profitability perspective, the project is deemed to be feasible and it has
sound business prospect (De Andrés, De Fuente and San Martín 2015).
b. Identification of expected benefits:
With the emergence of new smart watch models, the smart phone users would have
alternatives available, which are expected to have the following benefits:
Convenience:

9PROJECT MANAGEMENT RISK AND RELIABILITY
Since people likes to stay updated, smart watches provide the option of making and
receiving calls along with obtaining updates (Jeong, Byun and Jeong 2016). Moreover, it would
provide alerts, text messages and updates as well.
Affordability:
Unlike smart phones, smart watches could be afforded easily. Smart phones are
complemented largely owing to which the cell phone organisations are promoting and selling
them. Moreover, the increasingly anticipated models are greatly affordable.
Functionality:
There would be few smart watch models, which have built-in flash drives along with
cloud data, gesture control and built-in activity trackers (Kracheel, Bronzi and Kazemi 2014). By
looking at the smart watch, it becomes possible to determine whether any phone call needs to be
answered or not.
4. Project requirements:
a. Requirements needed to carry out this project:
The following are the major requirements needed to carry out the smart watch project:
 Land acquisition
 Human resources such as labour
 Raw materials and machinery
 Promotional and marketing activities

10PROJECT MANAGEMENT RISK AND RELIABILITY
b. Possible assumptions for the project:
For undertaking this project, the organisation has made the following set of assumptions:
 There is availability of land for plant set-up
 All raw materials and machineries would be available for the project
 The labour would be available at cheaper cost
 The organisation would have the needed experts in order to manage the overall
mechanism
c. Constraints for the project:
This business plan would have the following constraints:
Chance of imitation:
Since smart watches are not entirely a new concept, there is high chance that the models
designed by the organisation could be imitated by its competitors, which, in turn, would result in
reduction of net cash flows (Lyons 2016).
Low profit margin in the short-run:
Since Apple has captured a larger portion of market share, it would be difficult for the
concerned organisation to match up with the quality of smart watches provided by Apple Inc.
Therefore, the organisation has to minimise the selling price leading to fall in overall profitability
(Morabito 2016).

11PROJECT MANAGEMENT RISK AND RELIABILITY
5. Costs:
a. Cost estimation:
The overall cost of the project is estimated at $50,000. The distribution of cost of the
assumed project is discussed as follows:
Particulars Amount
Raw material cost $8,000
Labour charges $12,000
Land acquisition cost $9,000
Machinery repairs expense $7,000
Other expenses $14,000
Total cost $50,000
b. Ways of cost estimation:
In this case, it is estimated that the project would cost around $50,000 and no further
allocation would take place in future. Therefore, the budget amount of $50,000 would be
constant.
5. Major risks:
a. Identification of risks:
The following are the significant risks identified for the project:
 Risk of location
 Natural disasters

12PROJECT MANAGEMENT RISK AND RELIABILITY
 Financial risk
 Electrical and mechanical failure
b. Ways of managing the identified risks:
For managing location risk, the outlets would be opened in some popular areas of the city
having crowded community. In case of natural disasters, the organisation would set aside a
provision for catering to any likely damage (Ogbanufe and Gerhart 2018). For dealing with
financial risks like failure to repay debt or loan, provision for doubtful debts needs to be
maintained. Finally, in case of electrical and mechanical failure, the project manager would jeep
some funds aside in order to ensure adequate machine maintenance (Rossi 2014).
6. Timescale of the project:
The estimated timeline for project completion is within a year. The project is anticipated
to start from 1st April 2019 and it would be finished by 31st March 2020. The project manager of
the organisation needs to perform a series of activities, which are demonstrated briefly as
follows:
Date Activity
1st April 2019 Acquisition of land
15th April 2019 Buying raw materials and recruiting labour
force
15th July 2019 Appointing expert machine operator
15th September 2019 Setting up outlets
15th December 2019 Additional emphasis on marketing and

13PROJECT MANAGEMENT RISK AND RELIABILITY
promotion activities
31st March 2019 Completion of the project
7. Conclusion:
Based on the above discussion, it could be stated that the initiation of smart watch
technology would help in resolving the adverse effects of smart phones in Melbourne, Australia.
The project would benefit both the rich and the middle class segments of the society by keeping
in line with eco-friendly products. The products would be made up of environment-friendly
items and thus, it would curb the negative effects of the users using smart phones. For starting
this project, the expected cost to be incurred is $50,000. However, it has been evaluated that the
project would be favourable for the organisation, as analysed from the investment appraisal
techniques used. Finally, the project needs adequate human resources and time for providing
maximum benefits to the community.

14PROJECT MANAGEMENT RISK AND RELIABILITY
References and Bibliographies:
Aehnelt, M. and Urban, B., 2014, June. Follow-me: smartwatch assistance on the shop floor.
In International Conference on HCI in Business (pp. 279-287). Springer, Cham.
Andor, G., Mohanty, S.K. and Toth, T., 2015. Capital budgeting practices: A survey of Central
and Eastern European firms. Emerging Markets Review, 23, pp.148-172.
Beaver, L., 2016. THE SMARTWATCH REPORT: Forecasts adoption trends and why the
market isn't living up to the hype. Business Insider, pp.1-3.
Chittenden, F. and Derregia, M., 2015. Uncertainty, irreversibility and the use of ‘rules of
thumb’in capital budgeting. The British Accounting Review, 47(3), pp.225-236.
Chuah, S.H.W., Rauschnabel, P.A., Krey, N., Nguyen, B., Ramayah, T. and Lade, S., 2016.
Wearable technologies: The role of usefulness and visibility in smartwatch adoption. Computers
in Human Behavior, 65, pp.276-284.
De Andrés, P., De Fuente, G. and San Martín, P., 2015. Capital budgeting practices in
Spain. BRQ Business Research Quarterly, 18(1), pp.37-56.
Hong, J.C., Lin, P.H. and Hsieh, P.C., 2017. The effect of consumer innovativeness on perceived
value and continuance intention to use smartwatch. Computers in Human Behavior, 67, pp.264-
272.
Hsiao, K.L., 2017. What drives smartwatch adoption intention? Comparing Apple and non-
Apple watches. Library Hi Tech, 35(1), pp.186-206.

15PROJECT MANAGEMENT RISK AND RELIABILITY
Jeong, S.C., Byun, J.S. and Jeong, Y.J., 2016. The effect of user experience and perceived
similarity of smartphone on acceptance intention for smartwatch. ICIC Express Letters, 10(7),
pp.1613-1619.
Kracheel, M., Bronzi, W. and Kazemi, H., 2014. A Wearable Revolution: Is the smartwatch the
next small big thing?. IT ONE Magazine 2014, 7(December), pp.18-19.
Lyons, K., 2016. Smartwatch Innovation: Exploring a Watch-First Model. IEEE Pervasive
Computing, 15(1), pp.10-13.
Morabito, V., 2016. The future of digital business innovation: Trends and practices. Springer.
Ogbanufe, O. and Gerhart, N., 2018. Watch it! factors driving continued feature use of the
smartwatch. International Journal of Human–Computer Interaction, 34(11), pp.999-1014.
Rossi, M., 2014. Capital budgeting in Europe: confronting theory with practice. International
Journal of Managerial and Financial Accounting, 6(4), pp.341-356.
Singh, S. and Singh, N., 2015, October. Internet of Things (IoT): Security challenges, business
opportunities & reference architecture for E-commerce. In 2015 International Conference on
Green Computing and Internet of Things (ICGCIoT) (pp. 1577-1581). IEEE.
Wu, L.H., Wu, L.C. and Chang, S.C., 2016. Exploring consumers’ intention to accept
smartwatch. Computers in Human Behavior, 64, pp.383-392.