Financial Analysis of a new Indoor Theme Park Project

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Table of Contents

Executive Summary
Schedule 1
Performance Analysis
Estimate Completion
Control Plan
Revised Estimate at Completion
Schedule 2
Appendix

Executive Summary

Project Management is an activity that needs careful planning and execution as a precursor of meeting set out goals. This essay looks into a project whereby a theme park is being developed under the supervision of a project manager. The project has experienced some problems is now behind schedule since the project is at 40% level.

The project manager has decided to review the status of the project and report to all stakeholders before continuation of the project. The CP-2 project report shows the progress of the project as at the date of 1^st October, 2008. At this date the project is supposed to be 50% complete and this is not so since the project is only 40% complete.

In the process of project implementation, cost and schedule are very important factors that need to be monitored closely. The CP-2 project was supposed to be completed within a period of 180 days but the project might take a little longer if the project schedule is not adhered to strictly. The project was initially budgeted to cost an estimate of $ 4,449,920.

The actual work done on the project during the reporting date amounted to the project being 40% complete. This was against the desired 50% where the project was supposed to be at this reporting time. The CP-2 project report indicates that the project encountered a few problems hence leading to the project not completing on time.

If the project is to continue at this rate then the project could end up taking 184 days to complete at a cost of $ 4,644,920. At the current status of being 40% complete the actual cost of the project amounted to $1,154,945.51, this is against the anticipated 50% completion status cost of $1,756,051.42.

As a result, whilst the delays will cost more in the implementation of the project, these delays will not cause problems to the stakeholders. The task of project factors in risks in the implementation of various projects and these risks are anticipated by all stakeholders. Risk planning factors in +/- 10% of additional costs or time and this information is usually communicated to all stakeholders before project implementation.

Major stakeholders in this project should be assured that the project will complete on time as scheduled. Since all risks will be mitigated since the extra costs and resources deployed will ensure the project runs on schedule.

Schedule 1

Data obtained from the project as per the set baseline represents a lot of information and data. At the 50% completion level several tasks had already been completed with several other tasks remaining incomplete or un-started. During the project reporting stage the project was at 40% level and some of the issues that had arisen include the increase in costs due to overspending on raw materials.

The adjustment on the costs of different tasks led to the increase in the overall implementation of the project. As a result, the overall project costs will increase by $ 195, 000 with the actual costs amounting to $ 1,901,051.42 at the 50% completion level. The project’s costs during the preparation of the CP-2 report were $ 1,299,945.31 while the project was 40% complete.

Delays in the project implementation will push the project 50% completion date to be on the 7^th of October, 2008 as opposed to the initially planned date of 1^st October, 2008. When the project is rescheduled and costs of implementing the project are adjusted, the project is set to complete after 184 days. This would lead to a 4 day delay in the implementation of the project.

The baseline of this project was set during the preparation of the first analysis report at the project status reporting date of 1^st October, 2008. The project would take a longer period of time due to the fact that there has been an increase in costs.

The increase in costs is as a result of lack of proper planning resulting in more time being spent in implementing some tasks. The review in the costs in implementing the project will push the project 50% completion level to 15^th of October, 2008.

Performance Analysis

Performance analysis evaluates the cost of implementing a given project through examination of costs and time spent on the project. The performance of this project is currently out of scope and budget as it was earlier set during the initiation of the project. The earned value of a project represents the worth of undertaking the project and it is through this analysis that we are able to determine if the project satisfies the customer.

The earned value of the project at the 50% completion rate stands at $1,155,531.92 against the planned value of $1,381,866.67. The earned value represents the cost put into good use in the implementation of the project. On the other hand, the actual cost of project stands at $1,359,969.28 and this was against the $1,381,181.52 that was planned to be spent if the project would have stayed on course.

The rise in cost can be attributed to several tasks which went out course leading to increase in the completion of these tasks. The summary below shows the set of activities that run out of course leading to increase in costs.

Activity	Planned Earned Value	Current Earned Value
1.6Slab on Grade	$ 268,200	$312, 200
1.2 Footings and Foundation	$ 58,600	$ 128,600
1.81 Stacks and Vents	$ 55,000	$ 80,000

The earned value report shows that the project was not working well since the earned value did not correlate to the actual value of undertaking the project. For instance, the project was supposed to be at the 50% level but delays meant the project could only achieve 40% success rate.

Estimate Completion

Several factors are considered in estimating the successful completion of a project and some of these tasks include the allocation of resources. The estimation of this project will look into the adjustment of the schedule to ensure the project completes within the initial planned time. Using the current schedule and planning procedure we find out that the project will cost an estimated $4,644,920.00.

The estimated actual cost did rise from the initial cost as a result of delays which led to many resources being reallocated for use in other projects. Using the current schedule it is important to understand that the project will take 184 days to complete successfully. When the project was brought back due to implementation issues, resources had to be re-assigned to various tasks leading to the project slacking a bit.

The process of estimation of the looks into the beginning of the project and the costs associated with running the project. The budgeted cost at the beginning of the project was $4,449,920.00 but the current actual cost of implementing the project stands at $4,644,920.00. Scope management within the project will look into resources and the tasks or activities to be undertaken.

In our project, we take a look at the time taken to complete a certain tasks against the assigned time to finish that specific task. In addition, we look at whether the budgeted costs were enough to complete the project within the set period and time.

Scope management is important due to the fact that if resources are underutilized then the overall effect of the project is delivery of a substandard project. On the other hand, employees involved in the project are important in setting up the technical aspects of the project. The output of the employees and the customer are important in ensuring good quality is met during project implementation.

Control Plan

A control plan is a schedule and plan meant to change the project’s working days and ensure that the project runs normally for the project to achieve its objectives. In this project, the customer and project stakeholders want the project to complete on schedule. As a result, several tasks will have to be adjusted so as to fit the project schedule.

The CP-2 project will have to make with a few changes here and there and these changes will affect the project schedule. The changes will be geared towards changing the tasks that are yet to be started to adopt a different schedule which will have the overall effect of reducing the time needed in implementing the project.

The best plan to implement in ensuring that the project runs on schedule is to make changes and ensure that the project is implemented over the agreed period of 180 days. The control plan that will be used in this project will look into the tasks that that were rescheduled and whether these tasks have already begun or not.

The re-scheduled tasks that have not begun will be assigned shorter days and more resources assigned to their completion. For instance, task 1.17 Plumbing was scheduled to take 85 days but the task will now take 93.58 days as a result we need to reduce the un-started task under this main task. The technique that is deployed is through the re-assignment of resources by reducing the cost of certain resources.

The re-adjustment of these costs will lead to faster completion of these un-started sections which contribute immensely to the completion of the project. Some of the tasks that will be re-allocated resources include painting, finish carpentry, furniture installation and other tasks. The pay rate of the workers working on these tasks will also be increased to ensure these tasks take little time in marking their completion.

Revised Estimate at Completion

The revised estimates reflect the actual costs of implementing the project when the costs of undertaking the project are adjusted. The revised estimates look into the adjusted days with the aim of working out a plan to complete the project. Cost adjustments had to be considered as a result of re-scheduling the project. However, the rescheduling process will mainly affect time and most tasks will have little changes in cost.

This is because some tasks will be left untouched during the project schedule and these tasks will only resume when the project restarts again. Many costs associated with the implementation of the project will need adjustments leading to increase in costs. For instance, task 1.6 Slab on grade was budgeted at a cost of $ 300,000 but will end up costing $ 318, 200.

Another task such as 1.3 Masonry was budgeted at a cost of $ 150,000 but the actual cost of implementing this task will cost of $ 181,200. The total cost of implementing the theme park project will cost $4,670,400.00 and the breakdown of all costs will be shown in fig. 3 in the appendix. Several other tasks will cost more and thus the project will end up being implemented at a higher cost.

The corrective actions that were done in this project was the reallocation of more resources to various task such as the installation of the Ferris wheel, furniture installation, system and security and the final walkthrough. Moreover, it was not only the resources that were allocated more funds but the employees working of the various tasks had to be deployed to complete the work on time.

The overall effect of making these changes led to the reduction of time on the project leading to the project completing on time. Another important corrective action that was conducted was the reduction in time taken by employees in undertaking some activities. Moreover, these employees were allocated higher pay rate to complete these tasks within the re-allocated periods.

Schedule 2

The impact of the corrections conducted on the CP-2 project led to increase in project implementation costs and in overall the project was brought back on schedule. The rescheduling of the project will affect the scope of the project in that several sections will take time to complete. As a result, the scope of the project has to be adhered to strictly for the project to complete effectively.

The impact of the corrective tasks undertaken in the project show that the project will end up costing more than it was initially planned and these costs will affect the implementation of the project. The total impact of the project is the fact that the project ended up taking up lots of money in terms of completing the tasks that were left unfinished.

The overall impact of increasing resources to the project is the fact that these increases will lead to the project running on schedule and ensuring that all the project areas are covered. However, the cost of implementing the project will increase slightly as a result of allocating more resources to the completion of this project.

In terms of cost the overall impact of the project correction was the fact that the project completion costs shot up by around 5% of the initial project cost. This figure represents $240,000 while at the same time the pay rate of some of the workers were reduced to a level that was manageable as shown in Fig 3 in the appendix.

The time taken to complete the project was amended and the projects leading to change in completion period leading to an improvement of project time by 4 days. Moreover, the project status report was useful and necessary in amending the time and resources to be used in the implementation of the project. This project show as a perfect example in amending and handling delays related to project implementation.

Appendix

Schedule 1 Diagrams

Schedule 1: diagram of the project duration & tasks

Fig 1., Performance Analysis using Earned Value

Fig 2. Actual costs of implementing the Theme Park project

Schedule 2 Diagrams

Fig 3: Diagram showing Total cost after corrections

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