Project Risk and Cost Management Essay

EXECUTIVE SUMMARYSleepmore mattress is one of the leadinging manufacturers of mattresses and has recently acquired its competitor. This acquisition has brought in a unique proposition wherein the company has to take root if it wants to consolidate the existing conceptionts with the acquired rigs or let them twain(prenominal) run carve uply. This poses a unique administrative ch altogetherenge to the hot seat of the company. The president knew that calculating the buck savings due to the integrating of the facilities impart be easy hardly considering the qualitative factors before making the decisiveness testament be difficult. Hence, The president of the company asked W. Carl Lerhos, his chief assistant to come up with a plan to simplify the decision of choosing between consolidating the facilities or running them separate. Carl chose three major factors in evaluating the consolidation plan. They were maximize manufacturing benefit, maximize sales benefit and maximize direct financial benefit.These three objectives were to be evaluated against 13 criteria, which Carl bewilderd upon after discussing with the management. These 13 attributes were assign a tax from 0 to 10 against each plant being considered for consolidation. Through these measurements wrongnary scathe such as yearly savings, implant spot, Space availability and sign Cost were quantified. But for delegate weights to the remaining qualitative harm, Carl had to rely upon his meeting with President, Vice President of operations and Vice President of gentlemans gentleman Resources. Based on their inputs Carl arrived at the beneath weights. Based on Presidents input Annual savings will be double the weight given to Plant Size. constancy is twice the weightage of the average of all the thirteen attributes. Quality and Service will be weighed more than the average of allthe thirteen attributes.Management will be weighed as the average of all the thirteen attributes. Plant m end and Plant Size will be given equal weightage. point of intersection line complexity is two thirds the importance of Management talent. Stability, Training and layout one at a time has very small effect but collectively were considered to be twice the weightage of growth line complexity. Based on the above details available, Lerhos has to efficaciously combine and arrive at the decision. AHP was developed for both the qualitative and the quantitative measurements. Based on quantitative and qualitative measurements it was evident that merging the location 1a with location 1b will prove to be a good decision rather than merging location 2a with 2b or location 3a with 3b.STATEMENT OF problemMergers eer involves making complicated decisions. Decisions that should be in the interest of both the companies which were merged. While making these decision they have to take into account both the qualitative and the quantitative and weigh them according to the severity of the decision . Below be some of the problems which need to be tackled by Lerhos in post to arrive at a decision.1. quantitative measurements.Both the company president and the vice presidents knew that making decisions based on the quantitative terms was easier. After give-and-take with the management, the measurement parameters in order to consider consolidation of the plants were Annual Savings, Initial cost involved in the consolidation, Plant size and Space availability. altogether the three plants being considered for consolidation were to be cypher for these set exploitation Analytical Hierarchical Process in order to arrive at a decision whether to go ahead with the consolidation. Similarly, a standard value of five was given to the decision of keeping the plants separate. AHC is to be calculated plane for this decision. After the individual calculations, decision to whether to keep these plants separate or to go ahead with merger were to be made.2. Qualitative measurements.Both t he company president and the vice presidents knew that making decisions based on the qualitative terms was very much difficult. After discussion with themanagement, the measurement parameters in order to consider consolidation of the plants were Labour, Quality, Service, Management Talent, Plant Location, Product line complexity, Production stability, training and Plant layout. As mentioned in the executive summary the individual weights for the qualitative terms were assigned as per the inputs given by vice president of trading operations and Human Resources. all the three plants being considered for consolidation were to be calculated for these values victimisation Analytical Hierarchical Process in order to arrive at a decision whether to go ahead with the consolidation.Similarly, a standard value of five was given to these measurements for the decision of keeping the plants separate. AHC is to be calculated even for this decision. After the individual calculations, decision to whether to keep these plants separate or to go ahead with merger were to be made. Making an hard-hitting decision by taking into consideration, both the qualitative and the quantitative terms and the individual weights assigned to these measurements is indeed a difficult decision. There is always the danger of assigning weights without considering how sensitive they might be and how they might continue the overall decision.BACKGROUNDAfter every team member instruct the case study we had an initial discussion on our approach to the project. We came to the finale that we will have to calculate AHP separately for both the Qualitative measurements and Quantitative measurements. Analytical Hierarchical Process will help us in assigning weights to individual measurements and also to check how they fare with each of the plants. This calculations lead to us to arrive at the conclusion that for the quantitative measurement, Location 1 will be best worthy for merger and as per qualita tive measurement location 2 will be the best suited one for consolidation. AHP calculations were elaborate and we had to create two different matrices. One a 4*4 intercellular substance for Qualitative measurements and a 9*9 matrix for qualitative measurements. Similarly a 3*4 matrix for individual plants for quantitative measurements and a 3*9 matrices for qualitative measurements were created. methodology-To arrive at the solution we will be categorizing the following sections into two categories 1. Quantitative outline - Here, we will be taking the following quaternion parameters (Annual Savings, Initial cost, plant size andSpace availability) with respect to consolidation of the plants. All the three plants being considered for consolidation were to be calculated for these values using Analytical Hierarchical Process in order to arrive at a decision whether to go ahead with the consolidation. AHC is to be calculated for all the decisions. After performing the individual calcul ations, decision to whether to keep these plants separate or to go ahead with merger will be made.2. Qualitative Analysis- Here, we will be taking the following parameters (Labor, Quality, Service, Management Talent, Plant Location, Product line complexity, Production stability, training and Plant layout) with respect to consolidation of the plants. As mentioned in the executive summary the individual weights for the qualitative terms were assigned as per the inputs given by vice president of Operations and Human Resources. So, we will be considering all the three plants for consolidation to calculate the values using AHP in order to arrive at a decision.