StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Dell Corporation - Project Estimating and Cost Management - Research Paper Example

Cite this document
Summary
This paper "Dell Corporation - Project Estimating and Cost Management" focuses on the company that has been awarded the project is MarketWorld Ltd. MarketWorld Ltd is a global market research company that was established on August 24, 2008. It is located in the United Kingdom. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91% of users find it useful
Dell Corporation - Project Estimating and Cost Management
Read Text Preview

Extract of sample "Dell Corporation - Project Estimating and Cost Management"

Market Research Project Table of Contents Table of Contents 2 4.0 Earned Value Analysis 18 Question The project that will be undertaken is market research project for Dell Corporation from January 2011. 1.1 Introduction Market research project for new brand of classic personal computers for Dell Corporation will be carried out within sixty (60) days beginning January 1, 2011. The company that has been awarded the project is MarketWorld Ltd. MarketWorld Ltd is a global market research company that was established on August 24, 2008. It is located in the United Kingdom. The research company has grown tremendously since it was established. Its client Dell Corporation is planning to develop a new brand of classic personal computers that will meet and exceed the needs of its high-end consumers. The management board of Dell Corporation would like to design and develop personal computers that will appeal to twenty-five to forty-five year old business executives. However, before the actual process of design and development commences, it became extremely important to contract MarketWorld Ltd to do a market research to determine the features of the new computers that will appeal to the business executives. In addition, the research is to identify the type and number of business executives who are likely to purchase the classic computers as well as the price they are willing to pay. This information will be vey important because it will dictate the number of computers to be produced in future, thus help Dell Corporation decide whether to produce new brand of classic computers or not. 1.1.1 Main features of the market research project The main features of the project include; research will be confirmatory and exploratory; qualitative and quantitative; sample size will be three thousand five hundred business executives; it will use desktop research, focus groups, interviews and email to collect both primary and secondary data. First, seventy percent (70%) of market research will be exploratory while the remaining thirty percent (30%) will be confirmatory. This is because Dell Corporation is seeking better ideas that will yield highly enduring and marketable personal computers. Secondly, sixty percent (60%) of the market research will be qualitative in nature while the remaining forty percent (40%) will be quantitative. Thirdly, data will be collected through use of focus groups, ethnographic observation, e-mail, telephone and personal interviews. Fourth, research will sample three thousand five hundred business executives in the United Kingdom. Fifth, eighty percent (80%) of the data collected will be from primary sources while the remaining twenty percent (20%) will be from secondary sources. 1.1.2 Principle objectives of the market research project There will be two principles objectives of market research project namely; 1. To determine demographic breakdown of the number and kind of people to purchase upcoming new model of Dell’s personal computers 2. To identify and assess elements of the personal computers that influence purchasing behavior of twenty-five to forty-five year old business executives 1.2 The high-level statement of work (SOW) for Market research project 1.2.1 The Organization breakdown structure for MarketWorld Ltd 1.2.2 Work breakdown structure The work breakdown structure of the market research project to be undertaken by MarketWorld Ltd is as follows: 1.2.3 Key Milestones of the Market Research Project To measure the performance and progress of the market research project, costs, performance as well as project time will be the most appropriate factors to consider. First, market research project cost will be one of the vital indicators on how the project will be progressing. MarketWorld Ltd will ensure that the market research activities will not go over the budget. Exceeding the budget may lead to immature project termination, hence non-fulfillment of the project objectives. Secondly, MarketWorld Ltd will ensure that the information that will be collected for analysis will be accurate, relevant and useful for Dell Corporation and other stakeholders. Good performance will indicate quality market research work. The third key milestone of the project is time. MarketWorld Ltd will ensure that the research project will be carried out within the schedule time to prevent unnecessary delays that may lead to late achievement of company objectives as well as increasing project costs. 1.2.4 Role and responsibilities Table 1.1 Roles and Responsibilities of the Market Research Team Management Board Approves the market research projects Market Research Director Negotiate and agree market research projects Liaise with clients Preparing briefs and commissioning research Presenting reports Market Research Manager Formulating market research plan or proposal Managing survey staff Briefing interviewers and researchers Report writing Managing research budgets Monitor and evaluate data collection and recording Market research assistants Facilitating focus groups, ethnographic observation Telephoning and mailing respondents Conducting surveys Data Analysis Developing questionnaires Analyzing and recording data Interpreting data 1.2.5 Task Responsibility Matrix Table 1.2 Task Responsibility Matrix Activity Responsible Estimated duration 1 Market problem definition Williamson 15 2 Preparing a market research plan Williamson 20 3 Developing draft questionnaire Williamson and Victoria 15 4 Pilot test the questionnaire Charlen, Ray, Peter, Faith, Jeffrey and Victoria 15 5 Finalize the questionnaire Williamson and Victoria 5 6 Facilitating focus groups Beatrice and Coleman 10 7 Ethnographic observation Faith and Peter 15 8 E- mailing and telephoning respondents Joy and Charles 14 9 Personal interviews Charlen, Ray, Jeffrey and Victoria 10 10 Assigning numerical to the data Coleman and Victoria 5 11 checking consistencies Charles and Faith 9 12 Computing inferential statistic Peter, Joy, Jeffrey and Ray 8 13 Interpreting data Williamson 6 14 Report writing Williamson 10 15 Report presentation Joe 1 1.3 Document of Circulation Document for circulation amongst senior in-house staff on some of the key issues that need to be addresses in the development of a PMP/SPP/PEP for the scheme MarketWorld Ltd Document of Circulation dated October 24, 2010 The key issues that MarketWorld Ltd senior in-house staff will have to consider when developing the PMP/SPP/PEP include project objectives, resources, performance, roles and responsibilities, stakeholder management and cost management. First, project objectives and activities are the pillars of the market research project. All the senior staff must be aware that Dell Corporation will wish to determine demographic breakdown of the number and kind of people to purchase upcoming new model of Dell’s personal computers. In addition, the company will wish identify and assess elements of personal computers that will influence purchasing behavior of twenty-five to forty-five year old business executives. This will enable them to sustain focus to the course of the market research project before them as they plan. Secondly, the in-house staff must be aware of the quantity and quality of resources needed to do quality market research. The resources include the skills, labour, means of transport, time and other materials. In this regard, the research project requires that, a research director must have solid background in sales and marketing with over five years experience in active market research; the project will need a research manager who must have a solid background in information communication technology as well as solid background in data analysis and interpretation. The company will engage ten market research assistants to collect data from the three thousand five hundred business executives. MarketWorld Ltd will provide three cars. The cars will be used as follows; one for the research director, second for the research manager and the third for contingency purpose. All research assistants will be reimbursed transport expenses or mileage. The time that have been provided for the market research project by the sponsor is sixty days commencing January 1, 2011. Therefore, MarketWorld Ltd must realize that it has only fifty days to collect data and present it on March 2, 2011. All the staff that will be involved in conducting the market research project must ensure that all the data collected must be accurate, relevant and acceptable to both MarketWorld Ltd and Dell Corporation. The roles and responsibilities of all the people involved in the market research project has been well defined to ensure that everybody plays own role appropriately. MarketWorld Ltd senior in-house staff understands the importance of keeping all the stakeholders aware of the progress that will be made in the field. Consequently, there is need to develop acceptable reporting procedures that all the staff who will get involved will adhere to it strictly. For example, the marketing director shall provide weekly reports to the management board of Dell Corporation. The final vital issue that must be addressed adequately is cost management. Dell Corporation provided a budget of one hundred thousand pounds to undertake the research. Therefore, all the senior staff must budget for the money appropriately to ensure that the budget will not go overboard. Developing market research project plan aligned to the above issues will deliver high chances of project success. Finally, MarketWorld Ltd is currently selecting the project team and wishes to ask all qualified members of staff to express their interest, though the final decision rests on the MarketWorld Ltd management board. Question 2 2.0 Cost Management Cost is one of the most important pillars that determine the achievement of the market research project that will be sponsored by Dell Corporation. Therefore, MarketWorld Ltd will ensure that the budget that the sponsor will provide will not be exceeded no matter changes or circumstances that may occur in the process. The market research project will be immaturely terminated and the project’s objectives will not be achieved if the budget will be exceeded. This is because Dell Corporation will run out of money or they will not be willing to add more money into the project. It will be extremely important for the research director together with his/ her team to ensure that the project does not exceed the budget. Resource planning, cost estimation, budgeting and cost control are the four main components of cost management (Budd and Budd 2010). The first main component of cost management is resource planning. It is extremely important to identify and assess all the resources that will be needed to carry out the market research for Dell Corporation. Cost is directly related to the amount of resources that will be used. The more the resources used, the more the expenses to be incurred. Therefore, costing is far beyond the concept and idea of money and numbers. It is important for the research company to identify all the tasks to be performed to achieve the desired objectives of the project. Tasks set the stage for determining the quality and amount of resources needed to execute market research project conclusively and deliver desired results to its sponsor. MarketWorld Ltd will gather adequate historical data on similar past projects to identify the number and quality of the project team, necessary materials, equipments, formal requirements, facilities and transportation needs. Once the needed resources are identified, the next step is to consider available resources and duration of the project to draw up a final list of required resources. This task will be carried out in consultation with experts to solicit their judgment to be able to reduce the number of errors in the process. MarketWorld Ltd in conjunction with Dell Corporation will complete resource-planning process and develop resource needs estimates before the project start date. Secondly, cost estimation is another component of cost management. As much as Dell Corporation has come up with its own budget for the market research project, it is important for MarketWorld Ltd to estimate their own costs to ensure that they do not run at a loss once the project is completed. Bottom up and top down approaches are two approaches that the research company will use to estimate the cost of the project. At this stage, historical data of similar projects as well as adequate estimating methods are important to ensure that cost estimation accuracy is achieved in the end. Estimation process is not an easy task because both external pressures and personal biases affect it. However, facts should be depended upon at all times. Cost estimators must identify and utilize current pay rates for various resources to ensure that they are not out of touch with the reality. In addition, they must estimate the number of resources and materials needed for the project after considering the duration of the project. At the end of the estimation process, MarketWorld Ltd project team should be in a position to pinpoint with certainty the cost of the project and details on how those cost were arrived. Resources requirement analysis and cost estimation forms the foundation of project budgeting. Third, budgeting is also an important component in cost management. Once the project team of MarketWorld Ltd has estimated the project cost, budget for the project must be constructed. The budget will state in details how, when and how much money will be spent during the entire market research project execution. According to Venkataraman and Pinto (2008), cost estimates, availability of resources, expected funding as well as work based structure tasks must be integrated and align with the project schedule plan. This will enable the company to allocate the funds to both the resources and all tasks to be performed. Budget act as a ceiling to ensure that spending does not go beyond as planned. It also ensures that all the tasks are funded as scheduled and completed in time. According to Heldman (2009), budget is a direct measure of project’s performance and health. Any deviation from the budget is a sign of bad spending and the project management team must act fast to ensure that the project spending is brought back on track. Fourth and final component of cost management is cost control process. Cost control is vital for project success and it is comprised of conscious efforts to track expenditures to ensure that they are in line with the budget. The project director and project team of MarketWorld Ltd must monitor spending of the project and ensure that it does not exceed the budget provided by Dell Corporation. The project team must always remember that discrepancies in spending may not be because of bad spending but it may result from incorrect assumptions and estimations that were made when costs were being estimated (Gido and Clements 2008). Cost control process may involve one or all of the below activities during project execution: Change project execution to bring spending back on track; prevent implementation of unapproved changes to the project; inform key stakeholder on the changes; and record authorized changes accurately. 3.0 Critical Path Analysis Table 1.3: Activity data for the project Activity Preceding Activities Normal Cost (£) Crash Cost Normal Duration (Weeks) Crash Duration (Weeks) CC-NC ND-CD A None 4,000 5,000 3 2 1,000 1 1000 B A 6,000 10,000 5 3 4,000 2 2000 C A 6,000 6,500 3 2 500 1 500 D C 5,000 5,000 1 1 0 0 0 E B 10,000 12,000 3 2 2,000 1 2000 F B, D 8,000 11,000 4 3 3,000 1 3000 G C 6,000 6,000 2 2 0 0 0 H G, F 3,000 7,000 3 1 4,000 2 2000 I E, H 2,000 2,000 1 1 0 0 0 Table 1.4 : The earliest and latest time, floats and crash cost slopes A B C D E F G H I Earliest time 0 3 3 6 8 8 6 12 15 Latest time 0 3 4 7 12 8 10 12 15 Floats 0 0 1 1 4 0 4 0 0 Crash Cost Slope 1000 2000 500 0 2000 3000 0 2000 0 Diagram 1.1- Network Precedence Diagram (b) Earliest and latest times for all activities and calculate activity floats Diagram 1.2: Network precedence diagram with the durations, early and late times as well as critical path indicated by red dotted line Table 1.5: The earliest and latest time and floats A B C D E F G H I Earliest time 0 3 3 6 8 8 6 12 15 Latest time 0 3 4 7 12 8 10 12 15 Floats 0 0 1 1 4 0 4 0 0 Activity Floats = Late times less Earliest time There were activity floats for activity C, D, E and G of 1, 1, 4 and 4 respectively. The total activity floats = 1 + 1+ 4 + 4 =10 (c). The critical path on the network diagram The critical path is shown by the red dotted line (A, B, F, H, and I) and it is 16 weeks. Table 1.6 : Activity data for the crashed project Activity Preceding Activities Normal Cost (£) Crash Cost (£) Normal Duration (Weeks) Crash Duration (Weeks) CC-NC ND-CD Cost per unit crash Total cost A None 4,000 5,000 3 2 1,000 1 1000 5000 B A 6,000 8,000 5 4 4,000 2 2000 13,000 C A 6,000 6,000 3 3 500 1 500 19,000 D C 5,000 5,000 1 1 0 0 0 24,000 E B 10,000 10,000 3 3 2,000 1 2000 34,000 F B, D 8,000 8,000 4 4 3,000 1 3000 42,000 G C 6,000 6,000 2 2 0 0 0 48,000 H G, F 3,000 5,000 3 2 4,000 2 2000 53,000 I E, H 2,000 2,000 1 1 0 0 0 55,000 Diagram 1.3: Network precedence diagram with the durations, early and late times as well as critical path indicated by red dotted line for the crashed project Table 1.7: The earliest and latest time and floats A B C D E F G H I Earliest time 0 2 2 5 6 6 5 10 13 Latest time 0 2 2 5 8 6 10 10 13 Floats 0 0 0 0 2 0 5 0 0 Activity Floats = Late times less Earliest time There were activity floats for activity E and G of 2 and 5 respectively. The total activity floats = 2 + 5 =7 Cost time graph Above graph shows the result of the crash project. Weeks reduced from 16 days to 13 days and the costs increased from 50000 to 55000 when the project was crushed. 4.0 Earned Value Analysis Table 1.8: Project data for earned value analysis Number of Units Completed Budgeted value (£) Budgeted Amount (£) Actual Cost (£) 1 A 25 2000 50000 50000 B 23 2000 46000 52000 2 A 50 2000 100000 102000 B 44 2000 88000 114000 3 A 77 2000 154000 140000 B 68 2000 136000 160000 4 A 120 2000 240000 196000 B 80 2000 160000 240000 Total 487 974000 1054000 (i) Overall performance of this Work package Planners assumed that workers would produce 25 units per week at an agreed price of £2000 over five-week project period. Looking at the number of units completed and the corresponding cost, it is evident that: The workers exceeded their productivity. All the workers managed to produce 487 units of completed work in a period of four weeks, which was above the 200 units of completed work planned. The earned values (Earned Value (EV) = Total Units of Work (TV)/ Total period (budget per period)* actual period = 250/5*4= 200) in the fourth week is supposed to be 200 units of completed work. (Assumption: 50 units of completed work were expected weekly from the two teams). The project cost exceeded the planned values. This can be illustrated in the following ways. Given that each work unit cost £2000, the total number of units completed was 487. According to the project plan, 487 units of work could have cost £974000. However, the total actual cost (£1054000) was exceeded by £80,000. In general, the project work package was exceeded beyond the plan values and project managers and team should reexamine the work package and align it according to situation. (ii) Commenting on the performance of each team and drawing attention to areas that require immediate attention Team A Table 1.9: Team A performance   Number of Units Completed Budgeted value (£) Budgeted Amount (£) Actual Cost (£) 1 25 2000 50000 50000 2 50 2000 100000 102000 3 77 2000 154000 140000 4 120 2000 240000 196000 272 544000 488000 -56000 Team A was the more productive and cost efficient as compared to team B. because team A was able to produce the highest number of completed units under smaller budget. The team was able to save £ 56000, by using £488000 instead of the budgeted £544000. Team B Table 1.10: Team B performance   Number of Units Completed Budgeted value (£) Budgeted Amount (£) Actual Cost (£) 1 23 2000 46000 52000 2 44 2000 88000 114000 3 68 2000 136000 160000 4 80 2000 160000 240000 215 430000 566000 136000 Team B was the less productive and more expensive as compared to team A. because team B produced less number of completed units under larger budget as compared to Team A. team B exceeded the budget by £136000 when it spent £566000 against the budgeted £430000. (iii) Providing an Estimate at Completion (EAC) values for weeks 1, 2, 3 and 4 and comment on the figures Estimate At completion (EAC) = Cumulative Actual Cost of Worked Performed (ACWP) + (Budgeted Cost of Work Remaining (BCWR)/ Cost Performance Index (CPI)) Table 1.11: Estimate at Completion     Number of Units Completed Budgeted value (£) BCWP (£) ACWP (£) BCWR CPI= BCWP/ACWP BCWR/CPI EAC= ACWP +(BCWR/CPI) (£) 1 A 25 2000 50000 50000 0 1 0 50000 B 23 2000 46000 52000 -6000 0.88 -6818.18 46000  Total Estimate At Completion             96000 2 A 50 2000 100000 102000 -2000 0.98 -2040.82 100000 B 44 2000 88000 114000 -26000 0.77 -33766.2 88000   Total Estimate At Completion         0   188000 3 A 77 2000 154000 140000 14000 1.1 12727.27 154000 B 68 2000 136000 160000 -24000 0.85 -28235.3 136000   Total Estimate At Completion         0   290000 4 A 120 2000 240000 196000 44000 1.22 36065.57 240000 B 80 2000 160000 240000 -80000 0.67 -119403 160000 Total Estimate At Completion 400000 Total Estimate At Completion week 1= Team A Estimate At Completion + Team B Estimate At Completion = £ 50000 + £ 46000 = £ 96000 Total Estimate At Completion week 2= Team A Estimate At Completion + Team B Estimate At Completion = £ 100000 + £ 88000 = £ 188000 Total Estimate At Completion week 3= Team A Estimate At Completion + Team B Estimate At Completion = £ 154000 + £ 136000 = £ 290000 Total Estimate At Completion week 4= Team A Estimate At Completion + Team B Estimate At Completion = £ 240000 + £ 160000 = £ 400000 5.0 References Budd, IC & Budd, S. C. 2010, A Practical Guide to Earned Value Project Management, 2nd edn, Management Concepts. Vienna. Gido, J & Clements, P. J 2008, Successful Project Management, 4th edn. Cengage Learning, New York. Heldman, K 2009, PMP Project Management Professional Exam Study Guide, 5th edn. John Wiley and Sons, New York. Rad, FP 2002, Project estimating and cost management, Management Concepts Venkataraman, RR & Pinto, K. J. 2008, Cost and value management in projects, John Wiley and Sons, New York. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Dell Corporation - Project Estimating and Cost Management Research Paper, n.d.)
Dell Corporation - Project Estimating and Cost Management Research Paper. Retrieved from https://studentshare.org/management/1571219-project-managment
(Dell Corporation - Project Estimating and Cost Management Research Paper)
Dell Corporation - Project Estimating and Cost Management Research Paper. https://studentshare.org/management/1571219-project-managment.
“Dell Corporation - Project Estimating and Cost Management Research Paper”, n.d. https://studentshare.org/management/1571219-project-managment.
  • Cited: 0 times

CHECK THESE SAMPLES OF Dell Corporation - Project Estimating and Cost Management

Project management assessment

The Business School Assessment 1 (2011-2012) Module Code: 44278 Module Title: Project management Level: 6 Element: 1 Weighting: 40% Module Leader: Kevin Ord Part A This section discusses the reasons why a large number of projects fail to convene their performance intentions in a variety of aspects.... In addition, it should be kept in mind that project management literature is paying more and more attention on significance of different methodologies that could help project managers achieve desired competence and success (Kerzner, 2003; Hughes & Cotterell, 2002; Schwalbe, 2005; DevTechnologies, 2010)....
8 Pages (2000 words) Essay

Some of the important aspects of the software project management

for software project management.... … This report will present a detailed analysis of some of the important aspects of the software project management.... Software project management is a kind of plan administration that pays attention especially on developing and organizing software projects.... Nowadays, software development firms complete software development processes in the form of projects, which are effectively controlled and managed through an appropriate method acknowledged as software project management....
15 Pages (3750 words) Essay

Project Time Management

This paper “Project Time management” is concerned with critical success factor of time, which has emerged as an even more important factor in the past few years.... This paper is an attempt to briefly explore and understand project time management, its process, background, and importance.... hellip; The author also analyzes the critical path method, Gantt chart and project time management processes.... or organizations are undertaking project management, they are feeling the pressure from the governments, policymakers, and public to finalize the project as soon as possible....
7 Pages (1750 words) Research Paper

Effective Management of Suppliers

Effective management of Suppliers First Name / Last Name School Affiliation Executive Summary This paper is interested in discussing some of the problems faced during the tendering process in an organisation that are also faced or common in tendering processes in other organisations.... Introduction and Articulation of the problem A tender is handled as an offer to perform some work for a certain sum of money (firm price), or a certain quantity of benefit (cost plus or cost reimbursement)....
13 Pages (3250 words) Assignment

Multinational Financial Management Factors Affecting Their Drives

The dissertation describes the perceptions & opinions of Multinational Financial management factors affecting their drives & examination.... The analysis deals with inflows and outflows of funds and their effect on managerial objectives and Multinational Financial management focuses on decision-making.... nbsp;… Global sourcing strategy has been one of the most hotly debated management trends in the last 20 years.... nbsp; Global sourcing strategy has been one of the most hotly debated management trends in the last 20 years....
26 Pages (6500 words) Dissertation

Reducing Cycle Time in Corporations

In case of new technology establishment at the business enterprise there is need to assess a lot of factors and issues regarding the corporate management and technology implementation.... In these circumstances we will provide a platform for the new system problem, views, and suggestions to effectively develop the… Since the qualitative risk analysis is most commonly used technique, also it does not engage predictions of loss or numerical probabilities....
17 Pages (4250 words) Essay

Review of Multinational Cost of Capital

In the last 50 years, the application of financial management has changed to a great extent.... Moreover, the debt indicates towards the funds that are usually borrowed by the company to… The cost of retained earnings of a multinational company actually depicts the opportunity cost, the amount which the existing stakeholders would earn when they receive the earnings in form of dividends and also invest the funds The common equity highlights the opportunity cost that is obtained from the funds and invest the amounts in other stocks....
8 Pages (2000 words) Essay

Teradyne Corporation: the Jaguar Project

This research will begin with the statement that in the early 1990s, the CEO of Teradyne Corporation, Alex D'Arbeloff changed the way the company was conducting its operations through the introduction of a total quality management (TQM) program.... hellip; The paper operates mainly based on research questions which can be stated as follows: What impact did the project management tools have on the Jaguar project?... What were the unintended consequences of using the project management tools?...
10 Pages (2500 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us