Decisions Taken in Respect of Project Management

Questions: 1. What types of decisions are taken in respect of your chosen area? 2. What are the financial decision making implications of these decisions? 3. To what extent are decisions taken using decision management software programs? 4. How effective are these decisions? 5. Would you recommend any improvements to the financial decision making process relevant to your chosen area? Answers: Introduction Project management is the process of using certain steps to make use of the available resources efficiently and effectively to achieve the desired goals. The goals are set to achieve certain objectives for a desired project. A project can be an endeavor made to achieve certain outcome which could be a building, a service or something else. It has emerged as an important tool in decision making. The decision making process is largely dependent on an effective project management. Effective project management helps in successful completion of the project with optimizing the available resources providing a good quality end product to the consumer (Baguley, 2008). 1. Decisions Taken In Respect Of Project Management Decision making in project management is depended on several important factors which are cost, time, scope, risk involved and resources used. The project manager measure the time and cost required to understand the basic function of the project. But the important factors like the scope, resource and risk management help the project manager understand the condition of the project more accurately and make decisions based on the analysis (Doumpos, Zopounidis and Pardalos, 2012). The scope is an important factor which gives the project manager to make any change, the risk factor should be identified and controlled and the resource factor helps in effective utlization of sources available for better project management system (Ferguson, 2008). It is important to take a right decision to achieve the pre set goals. The implications for a right financial decision are as follows- 1. Financial facts- For an effective decision making it are important to gather correct financial information. The desired goals can be achieved with the use of the information gathered. 2. Financial values- A value of a particular situation help decide the action to that situation. Thus, decision is made on the basis of the situation. 3. Financial means- The means to get the required financial objective is decided based on the actions taken. 4. Financial results- The end result of the financial structure is achieved with the combination of the actions and means taken to reach to the final objective. Thus, the process of decision making in project management is to identify the objective and gather information on it, then check the limits of various situations, then analyze all the options, select the most appropriate option and then exercise control on it (Huizinga and Kolawa, 2007). The four stages of project process are- 1. Initiation process of the project- It is the first phase of project management which involves the beginning of a project. In this phase, the situation is reviewed and an objective is set and to achieve that objective a skillful team is recruited and selected and a project location is set. 2. Planning process of the project- It is the second phase of project management which involves formulating of a plan to achieve the desired objectives with the resources and the selected team available. It identifies the objectives which are to be achieved, create plans to achieve that plan and monitor how that plan is implemented to deliver the project. It helps the team carry out the project plan. 3. Execution process of the project- It is the function of organizing the plan taken to achieve the desired goals. In this step the product is created and the customer is presented with it to get ensure customer acceptance. While the product is manufactured several factors like the cost, time, quality, suppliers and customers are considered. Once the customer like the product and all the factors are duly measured the last stage, i.e. project closure comes. 4. Closure process of the project- It involves the release of the final product to the consumer, giving the project document to the business, communicating the project closure to all the shareholders and terminating the contract of the suppliers. After all this a review on the entire project management system is made to understand the success of the project and the learning from the project (Kimmel, Weygandt and Kieso, 2007). 2. Financial Decision Making Financial decision making is the process of collecting the financial data, determining the cost of the project and determining the payback period of the investment. The cost of capital of the investment is determined using the net present value or NPV and the internal rate of return or IRR. In the net present value method a certain rate of interest is given and the net cash flows are discounted using the rate of interest. The discounting rate is taken equal to the firms cost of capital. The present value of thecost of the project is then subtracted from the sum of the present values of varius net cash flows. The surplus obtained is the net present value of the investment and compairing all the project the project with the best NPV is selected hile the projects with negative NPV are discarded (Gollier, 2009). Another important method is the internal rate of return or IRR method. The internal rate of return of an investment is the discount rate that equates the present value of the ini tial outlay with the present value of the expexted net cash flows. The internal rate of return is then compared with the cut off rate which is taken to be the cost of capital of the firm. The IRR of all the alternatives are compared, the project with most positive IRR is selected and the negative ones are rejected (Harrison, 2009). 3. Decisions Taken Using Decision Management Software Programs Decision management is used in improving the process of decision making with the use of the information available to have more precise, agile and consistent decisions and taking the time constraints and risk in mind to make better choices. The decision management system use technology in the form of decision management software programs for better decision making process (Lee, 2014). The decision management uses tools like business intelligence or BI, artificial intelligence or AI, business rules and analyzing tools. The decision taken using the tools are selected from several alternatives available. But when the number of decisions increases, the management uses the decision making software. Generally, financial organizations like insurance and banking institutions are using decision making system in their business process and customer dealing. These software programs help in enabling more effective , consistent and fast operations in project management (Lucarelli and Brighetti, 201 1). 4. Effectiveness Of Using These Softwares The decision management software programs in project management helps in planning, organizing and managing the available resources and make a estimate of the usage of various factors. Some of the features of decision making software in project management are- 1. Assigning the resources- It makes a connection between the task and the resources needed for that task. The resources are mainly the manpower and the materials required to achieve that task. With Microsoft Project the task and the resources needed for it are recorded. 2. Managing the quality- The quality standard is set on all the activities at the beginning of the project which helps maintaining a better quality on the product produced in the process (Verma, 2013). 3. Scheduling the project- It is the most important feature of project management decision making system. A project is scheduled in the Microsoft Project starting from the use of raw materials in the beginning, the tasks used to achieve the project and the resources required for completion of all the tasks. All the details related to tasks and resources are recorded in the MS Project and updates are made to that record if necessary later (Mehta, 2007). 4. Tracking the progress- A path is followed to complete the tasks and thus to finish the project in time. This path is known as the critical path which can be defined with the study of all the tasks required to be finished in this project. The MS Project helps in recording and tracking the tasks, determining the time period required in completing the task and also the resources assigned to these tasks. This gives the project management the idea about the completion of the project in time. 5. Generating the report- Reports on the details on the resources used, work completed, total cost incurred and the task achieved gives a complete details on all the factors of the project management. It helps the shareholders, investors and other concerned members to understand the progress of the project better. Using these project reports the stakeholders take decisions to decrease the risk and increase better decision making in project management (Miller, 2007). 5. Improvements For Better Decision Making These decisions are highly effective in project management. It helps in proper analysis of all the factors including the resources available, the tasks to be taken and the objectives to be achieved. A project manager through proper analysis and study takes a right decision to ensure that the desired outcomes are achieved in the stipulated time set. An effective decision is made comparing all the criteria and status of the project (Paramasivan and Subramanian, 2009). With the use of the decision management software programs in project management, the decision making process has become quick and correct. Decision making in project management helps in better project execution with better use of resources available. The organizations success or failure is dependent on financial decision making in project management. Effectiveness in project management helps in solving the problems of delay in project completion, wastage of resources and wastage of time and costs (Patel, 2008). Improvements like educating the human resource in using the decision management software system better helps in delivery of the projects in time, helps in controlling the budget and achieving the set goals in time. The value of the project is evaluated by measuring the quality of the project. The quality of the project is measured on cost and time needed to complete the project. Conclusion The project starts from setting of goals to be achieved, the process followed to complete those goals and finally presenting the final deliverables to the customer (Skinns, Scott and Cox, 2011). The project objectives are first initiated, then a plan is made to achieve those objectives, steps are taken to execute the plan with proper use of resources which includes manpower, machine and materials and once the product is delivered to the consumer, the project is closed. For effective project management, decision making plays a vital role in timely and successful project completion. But with the increase in size of the number of decision making and time constraints it is important to take those decisions electronically through a decision management software system. This helps the management in recording the daily updates of the project which helps in reaching satisfying results with better problem solving process and averting any issues related to project failure. Thus, an effective pr oject management should have clear objectives set which can be attained with the challenge to control the cost and time and improving the quality (Tiffin, 2007). References Baguley, P. 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