Project and Risk Management: Solar Charging Points Feasibility

This report provides a comprehensive analysis of project and risk management for the installation of five solar charging points. It includes a cost-benefit analysis, budgeting using a bottom-up approach, return on investment (ROI) calculation, payback period determination, and an evaluation of both financial and non-financial benefits. The financial benefits focus on revenue generation from charging solar-powered cars, while non-financial benefits are assessed using the triple bottom line analysis, considering market impact, solar power research advancements, and increased interest in solar car sales. The conclusion indicates that the project is potentially profitable with an estimated ROI of 12-13% and a payback period of approximately 1.82 years, assuming the estimated values are accurate.

Running Head: PROJECT AND RISK MANAGEMENT
Project and Risk Management
Name of the Student
Name of the University

1PROJECT RISK MANAGEMENT
3.1 Cost Benefit Analysis
Cost benefit analysis is the study of forecasting the financial benefits as compared to the
investment done in the project. A project is only approved when the cost benefit is positive i.e.
the project is expected to earn positive return against the investment. In this project, five solar
charging points will be installed at various parts of the city and the cost benefit will be
determined using the annual revenue and the amount spent for maintenance and others (Walker
2015). This project will be able to make profit only if the annual revenue is higher than the
amount spent annually.
3.2 Budgeting
Budget is defined as an estimated monetary value that is required for successful
execution of the project. A budget includes costs of resources, wages of workers and team
members, conveyances and other costs. Bottom up approach is defined as the budget estimation
process that takes into consideration the resource usage per work package and then the total
budget is calculated based on the usage of the resources (human and material resources). The
bottom up budget estimation generally uses the work breakdown structure with the resources
allocated to each work package (Kerzner and Kerzner 2017). In this case, the bottom up
approach is utilized and is shown as follows.
WBS
LAND /
PERMIT
LABOUR MATERIALS MACHINERY TRANSPORTATION TOTAL
UNIT 1 £13,000.00 £300,280.00 £408,000.00 £50,000.00 £50,000.00 £821,280.00
UNIT 2 £13,000.00 £300,280.00 £408,000.00 £50,000.00 £50,000.00 £821,280.00

2PROJECT RISK MANAGEMENT
UNIT 3 £13,000.00 £300,280.00 £408,000.00 £50,000.00 £50,000.00 £821,280.00
UNIT 4 £13,000.00 £300,280.00 £408,000.00 £50,000.00 £50,000.00 £821,280.00
UNIT 5 £13,000.00 £300,280.00 £408,000.00 £50,000.00 £50,000.00 £821,280.00
SUB-
TOTAL £65,000.00 £1,501,400.00 £2,040,000.00 £250,000.00 £250,000.00 £4,106,400.00
PROJECT
OFFICE
COST (10%)
£ £ £ £ £410,640.00
UNBUDGET
/
UNFORSEE
N
COST(5%)
£ £ £ £ £205,320.00
PROFIT
(20)
£ £ £ £ £821,280.00
TOTAL £ £ £ £ £5,543,540.00
3.4 Return on Investment
Return on investment as defined as the amount of revenue generated against the initial
investment in a project (Walker 2015). It is represented by the percentage ratio of net profit and
the initial investment.

3PROJECT RISK MANAGEMENT
Based on the formula, the return on investment = 12.74%
Cash inflow for 3 years is shown in the following table.
Year 1 Year 2 Year 3
Cash Inflow £1,250,000 £2,500,000 £3,500,000
Cash outflow for 3 years in shown in the following table.
Year 1 Year 2 Year 3
Cash Outflow £5,543,540 £500,000 £750,000
3.5 Payback Period
Payback period is defined as the time period than organisation requires to recover all the
investments through profits so that the organisation can then start earning the profits (Heagney
2016). The formula used for determining the payback period is:
Payback Period = Initial Investment / Net Annual Cash Flow

4PROJECT RISK MANAGEMENT
Based on the values generated from the cash inflow and outflow tables, it has been found
that:
Payback period = 1.82 Years.
3.6 Financial Benefits
Financial benefit is defined as the benefit in business that is purely related to the
monetary factor i.e. the financial benefit of the company is defined by the profit gathered against
the investment / cost incurred within the same period of time (Kerzner and Kerzner 2017). In this
project, the financial benefits include the revenue generated from charging the solar powered
cars at some fixed or variable rates. After implementation, there will be some maintenance costs
for the charging points and the financial benefit will be calculated by subtracting the annual
maintenance costs from the annual revenue generated.
3.7 Non-Financial Benefits
For analyzing non-financial benefits, triple bottom analysis method is generally used.
Triple bottom analysis method determines business benefits in terms of degree of social
responsibility, its economic value and its environmental impact (Mouli, Bauer and Zeman 2016).
In addition to the economic benefits, the non-financial benefits, as per the triple bottom analysis,
are as follows.
Market (Economic) – The company will receive a strong head start in the market that is
comparatively new and there are not many investors in this market in the current picture (Mouli,
Bauer and Zeman 2016). As a result, BP will be one of the leaders in the solar power market
before other companies will grow.

5PROJECT RISK MANAGEMENT
Solar Power Research (Environmental) – The new initiative will allow more enthusiasm
and interest in the research for the development of new devices that will increase the efficiency
of capturing solar power and generating electricity from the same (Al-Mashhadany and Attia
2014).
Car Sales (Social) – The commissioning of the solar power charging points will raise the
interests among the customers to purchase more solar powered cars as they can now be assured
of reliable charging stations for their cars.
3.8 Conclusion
From the cost analysis, it has been found that if the estimated values turn out to be
accurate, the project will be profitable and hence, the company can go ahead with the project.
The estimation states that there is a possible 12-13% return on investment and the expected
payback period for the invested amount will be 1.76 years.