Devry PROJ587 Case Study Latest 2019 September

PROJ587 Advanced Program Management

Case Study

Introduction

The Case
Study for PROJ587 will place the student in the role of a senior manager in
charge of one of your company’s Strategic Business Units (SBU). Your first task
in this new position is to develop a project portfolio management process and
then use this process to select projects for your SBUs portfolio. The Case
Study will involve the application of the tools and techniques of multiproject
and program management and will deal with the analysis and establishment of
project management systems based on the structure of the project.

The
expected outputs from this Case Study will be in the form of a two-part written
report due Week 5.

Background

The senior
management of your company has already made the strategic decisions to allocate
annual funding to each of the Strategic Business Units (SBU) within the
company. You have been hired to manage one of the companies SBUs.

Your new
company is a mid-cap company with revenues of approximately $350 million
dollars a year. This company, like many others, is struggling in today’s
economy. It realizes in order to survive it needs to both expand and control
costs at the same time. You are new to this industry. This company’s vision is
to become the “go to” support or the “provider of choice” for the cruise ship
industry throughout the world.

This
company currently is in the travel and hotel support industry. As such, you
supply support services to the travel and hotel industry such as linen services
to cruise ships and major hotel chains in the southeastern United States. Most
of your new company’s revenues are derived for the cruise ship industry versus
the hotel industry. This company is home based in Tampa, Florida, as most of
your business is in that geographic area.

You are in
charge of the Operations SBU and responsible for the management of a product
portfolio in this strategic business unit. The Operations SBU is the SBU that
provides all the company’s services to its clients. There are a number of
projects already in progress, but there has not been a good portfolio
management process in place.

The parent
company has set the following strategic goals for the entire company.

Expansion
goals are to grow the company 10% per year, specifically to include the
following.

Expand into
new markets in Alaska and Europe

Expand
services provided to current customers

Increase
revenues by 10%

Increase
customer satisfaction by 15%

Cost
control goals include the following.

Reduce
operating costs by 10%

Reduce
overhead and warehousing costs by 5%

Assignment

This is a
two-part assignment.

Part 1

First,
develop project selection criteria and a high-level process for applying the
criteria and managing the portfolio. The criteria should be consistent with the
business environment for the industry, consistent with your company’s overall mission/strategies,
and consistent with the mission and strategies of your strategic business unit.
You are proposing a process, not individual projects.

The
deliverable for Part 1 is a written proposal for the project selection criteria
and a high-level description of a proposed portfolio management process. You
may also be expected to make an informal presentation of the report in class.

The
proposal should be in the form of a memorandum to your vice president (your
instructor) outlining your proposal. The memorandum should be no more than 10
pages, including any figures and tables. It should be double-spaced, 10- or
12-point font with 1-in. margins. This is a summary for an executive, so be
concise, to the point, and leave out the fluff. If you don’t need 10 pages to
document your proposal fully, I am sure that your vice president will be happy
with less as long as it is complete. Using appropriate grammar, spelling,
punctuation, and sentence structure will be part of your grade.

The actual
proposal should include the following.

A
description of the proposed portfolio process. You are explaining it to the
executives.

The reasons
it was selected (tie to strategies as appropriate.)

A
description of the proposed selection criteria. How will the process be applied
in your SBU?

The method
for applying the selection criteria, and the justification for both. How are
you going to score the projects and evaluate the scores?

Hints for a
Successful Part 1:

This is not
a complete project proposal or even a complete status report. You are making a
specific proposal to management called a Project Portfolio Evaluation and
Selection Process.

All reports
and memos to executives should include an executive summary at the beginning.
This one is no exception.

The
discussion of the organization should be limited to how the SBU organization
supports projects and the PPM process. It is not necessary to discuss the total
company.

Pay
attention to the specifics requested in the deliverables. Do NOT make your memo
a list of questions and answers. That is not the way a business memo is
written. It is easy to select a process that is presented in a reference but
you must propose one that works for your SBU.

When you
think you are finished, put yourself in the role of someone who was not working
on the solution and read your presentation. You can assume you know the basics
of PPM.

Does your
presentation provide a good description of the process and how it will be
applied?

Are there
obvious questions that it raises that are not answered?

This is not
a classroom assignment, it is a business memo. Also, it is not a research
report and you are not trying to demonstrate your academic expertise and how
well you are read.

Part 2

In Part 1
of the project, the new vice president (your instructor) of your Strategic
Business Unit had asked you to create a portfolio management process and
project selection criteria for use by the SBU. It is now time to apply this
process in selecting this year’s projects for your portfolio.

In the
annual budget cycle, your SBU was allocated $24 million dollars of funding
uniformly spread over the next year for your portfolio. This means you have $6
million dollars to spend any given quarter. You may select any of the below
projects to be included in your portfolio, but you cannot spend more than the
allotted dollars allocated to your SBU. Your task is to select those projects
using your selection criteria that most benefit the overall company without
exceeding your quarterly budget of $6 million. You must also lay out a plan for
what quarter your selected projects will start in.

Below are
your possible projects.

Project
Call Center

Currently
you have no call center to address customer complaints or accept orders.
Customers must use the Internet to fill out an online form to address their
complaints or service needs. These forms are processed by employees in your
department. Currently, the turnaround time on any given form is between 4 to 8
hours. This creates a number of other customer complaints. The Project Call
Center is designed to reduce this turnaround time by 75% by creating and
staffing a call center in Tampa. Building acquisition, building renovations,
building fit out, IT system upgrades, and hiring and training of staff are
estimated to cost $8.5 million. This $8.5 million can be paid evenly in any two
quarters in the next year. In addition, seven new employees will need to be
hired at $40,000 burdened labor costs per year to staff the call center.
Management of this project could easily be done with the current in-house
staff. Most of the work of this project would be outsourced and will have minimal
impact on day-to-operations.

Project
Ordering Upgrade

Currently,
ordering processing is done online. The software and hardware used in this
system are about 10 years old. As such, order processing is a long, arduous
process for the 15-person staff. Upgrading this process to a state-of-the-art
system would cost approximately $2.5 million, and it is a onetime pay in full
internal charge to your SBU. It would also result in a reduction in the
15-person staff by seven individuals and reduce order processing time by 50%.
Each individual in this department is paid $35,000 burdened labor costs a year.
Most of the work of this project could be done internally with existing staff.
One weekend of operations will be impacted by the project in its entirety.

Project
Rocky

The Alaskan
cruise ship industry is booming. For some reason, people like to look at
icebergs. Unfortunately, our company is servicing no cruise ships in Alaska.
Project Rocky is to expand into the Alaskan market. This project will require
the acquisition of property in Alaska, renovation of that property, and
staffing of the facility. This project is seen as a major moneymaker for the company
and has an NPV of $19 million over 5 years. Its costs would be $13 million to
initially set up the project and $400,000 a year to operate the facility. This
initial cost can be spread evenly over each of four quarters of the entire
year. These initial costs should be recovered within the first 2 or 3 years of
operation. Most of the work of this project would be outsourced and management
of the project would likely be difficult.

Project
Europa

The
Mediterranean cruise ship industry is booming. Unfortunately, our company is
servicing no cruise ships in the entire European area. Project Europa is to
expand into the Mediterranean market. This project will require the acquisition
of property in Italy, renovation of that property, and staffing of the facility.
The current governmental overspending and austerity issues may impact this
project. However, this project is seen as a major moneymaker for the company
and has an NPV of $15 million over 7 years. Its costs would be $11 million to
initially set up the project and $500,000 a year to operate the facility. This
initial cost can be spread evenly over each of the four quarters of the entire
year. These initial costs should be recovered within the first 3 years of
operation. Most of the work of this project would be outsourced and management
of the project would be extremely difficult.

Project
Robot

Our key
distribution center is in St. Petersburg, Florida. It has a staff of 100
individuals to process the linens for the Florida cruise industry. Automation
would allow us to reduce staff by 35 individuals. The average burdened labor
costs of each of these individuals is $45,000 dollars a year. The cost of such
automation would be in the neighborhood of $17 million. This initial cost can
be spread evenly over the entire year. This project would also likely disrupt
the facility for about 3 months while the work is being done. Upon completion,
the newly remodeled facility will be one-third smaller allowing our need for
warehousing space to be reduced by one third. This would allow us to sublet
this space for an estimated $2 million a year in revenue. Most of the work of
this project would be outsourced.

Project
Tableware

In order to
become the provider of choice for the cruise industry, our company needs to
expand to more than just linens. A suggestion was made to expand into supplying
tableware to the cruise industry, as much tableware is lost to breakage on
every cruise. Currently, this need is supplied by a number of smaller companies
that we could easily compete with. This project would involve creating a
just-in-time process to receive and supply the cruise ships. It would also
involve the need for a minimal warehouse facility. This project is likely to
cost $5.5 million and have an NPV of $1 million over 5 years. All initial costs
can be spread over any two quarters of the upcoming year. It would likely take
4 years to recover the initial costs of this project. It would further cost
approximately $300,000 a year to operate this facility. All of the work of this
project would be outsourced.

Your
Assignment

Your task
is to use your portfolio process to determine which of the above projects best
fit into your portfolio and create a time-based plan by quarters as to when
each project selected should begin and be paid for. Once this is accomplished,
you need to write an internal memo to your vice president denoting the projects
selected, the time-based plan in quarters, and why you chose as you did.

The
document should be double-spaced and 10- or 12-point font with 1-in. margins.
This is a Recommendation Memo for an executive, so be concise and to the point.
If you don’t need more than eight pages to document your plan adequately, I am
sure that your manager will be happy with it as long as it is complete. The use
of appropriate grammar, spelling, punctuation, and sentence structure is part
of your grade.