Question:
Describe about the Aims of the project, Description of the Organization and Critical evaluation of the practice and measurement of the influence of “Jivan” organization?
Bahrain, an archipelago of 36 land located in the Persian Gulf is an oil producing country. A country, which only focuses on oil production so desalinated water, is not available. Ground water is used for industrial purposes. Therefore, there is an idea of opening an organization of packaged drinking water that will be helpful for the residents of the country to consume clean and germ free water.
The organization is a start up in the country so few things have to be kept in mind like the man- power, machinery , production and the packaging of the product. As the organization is a new comer in the country so they are opening it with very few people but in the coming year both the number of workers and their production will also increase. But in the first one year certain things will have to be kept in mind like the sanction of their finance, their registration, no objection letter from the government. In the cost part the organization have to certain things in their mind i.e. capital expenditure, operating expenditure, capital maintenance, additional cost and external cost.
At the end it will be seen how the organization is maintaining their man-power and estimating their costs.
In the recommendation part it would be described as-
An archipelago of 36 lands, Bahrain is located in the Persian Gulf with a dense population. Bahrain has been experiencing high rates in the growth of population; Damman aquifer provides groundwater by lateral under-flow to Bahrain. There is no system of dams. Treatment of water is very less and if any than water treated through tertiary treatment is only used for agricultural purposes while the rest id released in the sea. Groundwater is used for industrial and domestic purposes and rest is desalinated water which is very less left for consumption. For many years the government has been taking actions to solve the crisis of water but no such results have been seen (Blažek and Macešková, 2010). The project is based on setting up a packaged drinking unit in Bahrain so fresh water is available for the residents of the country for consumption. This gives the idea about the aims and objectives that is to be taken care, the elaborate description of the organization and the finance required to set up a project. Finally suggestions are given to upgrade the project (Sawicki, 2011).
1. To lessen the water crisis faced by the population by bringing a unit of packaged drinking water plant.
2. To analyze the technique and procedure used in building up the plant with respect to the costs, effectiveness and environmental impact.
3. To build up a plant which must be accepted environmentally and be cost-effective.
4. To provide fresh drinking water to the residents at a price affordable by the population.
5. To build up a packaged drinking water plant within the country with the help of newer technology and store water for the residents of the country.
The scope of the project can be summarized in the following way:
1. To identify the place where the plant is to be set up and the raw materials needed.
2. To find the out- What is the condition of the water system of the country? What treatment should be done to the water available?
3. To find out -What should be the manpower strength required for the plant?
4. To find out- What are the legal procedures that should be undertaken for this kind of project?
5. To find and evaluate the costs to be incurred in the project- What should be the capital needed? What should be the operational cost of the entire project? What should be the cost for hiring people for the project?
6. To find out the stipulated time needed to complete the project and also to find the crash time if the project time exceeds.
Bahrain is an oil producing country. As it is producing oil it is polluting the environment very badly. Drinking water is getting polluted and when common people are drinking that water then they are falling sick and it is affecting their health very badly. So, the company ‘JIVAN’ is coming up with new plan of packaged drinking water which will be highly filtered so that not a single piece of chemical molecule is found. As the organization is a start up organization in this country so the man-power of this company is very small but the company will be having updated technologies which will help in filtering the water precisely. In the beginning the total number of workers will be working in this organization will be around 10. In the organization, there will be person who will handle the accounts and he will be the cashier also. There will around 6 people who will be falling under grade D. There will be a sweeper, unskilled workers, mechanic driver and a guard. Almost all of them will be permanent staff except the sweeper. In the organization there will be a production manager who will also be the chief under whom the whole work of filtering the water and packaging will be done. He will be supervising the whole matter. A lab assistant will also be there who will also a skilled electrician (Boucekkine, Martinez and Saglam, 2010).
The main aim of the project is to give the common people safe, clean and portable drinking water for their consumption. As it is known that now many organizations are coming up with plant of packaged drinking water so the company’s aim will be to reach the common people as fast as possible and fulfill their needs. There is always a demand for drinking water as there are large numbers of hotels because Bahrain is a tourist spot and people are coming from different parts of the world to visit the place (Sullivan and Amacher, 2009). So it is the company’s responsibility to give the tourist’s germ free clean packaged drinking water. To keep the market of packaged drinking water they have to keep their supply high from their competitors and for that the productions of the organization have to be more.
The organization will have their own building which would be open for 300days and there will be only one shift. As it is a start up organization so their main focus will be using their full capacity in their second year. The workers will be paid according to the present rate of the market of the industry. The interest of the firm will be calculated @12% per year.
Within 8 months period from the installation of the organization they have to complete certain activities like
The plant will be located in such a place where there will be easy availability of clean water, electricity and PET bottles and the market is also easily accessible.
Manufacturing Process-
The flowchart of the manufacturing Process-
(Dougherty, Edward and Ragan, 2014)
They are starting up this organization due to pollution in drinking water so they have to keep in mind that they are not polluting the environment. As disposal these types of organizations have only waste water which should be treated and effectively used. Measures on conservation of electricity will also be kept in mind.
This section of the study dealt with various cost objectives of the project as well as the procedure to manage the cost objectives. It is noted that the cost objectives are broadly classified under four heads, such as capital expenditure, operation expenses, capital maintenance and external cost. Below are the details of each of the cost objectives:
Capital expenditure:
Capital expenditure helps us to understand the water quality improvement schemes that incurred to acquired or upgrade physical assets. If the capital costs are involved and it applies to the end user’s then the costs for that item will be concerned (Blažek and Macešková, 2010).
A] Plant and machinery:
Operating expenditure:
Operating cost includes additional monitoring costs, energy costs, chemical costs, labour/manpower costs, etc. Additional annual operating costs – depends on particular intervention gives us the operating cost (GCPL consolidated net up 2% on higher tax, operating expenditure, 2013).
Raw material:
Capital maintenance:
Capital costs incurred on an improvement system to maintain the existing standard. It says that profit should not be recognized unless a business has at least maintained the amount of its net assets during the period of accounting (Boucekkine, Martinez and Saglam, 2010).
Additional costs:
Additional costs includes replacement costs, overhead costs etc (Sawicki, 2011).
External costs – social and environmental costs:
External – social and environment costs include items like traffic congestion costs, delay to pedestrians due to repair works, noise pollution, carbon impacts of intervention etc. External costs depend on identifying the particular operational improvement in the particular location of implementation (Dougherty, Edward and Ragan, 2014). As per general rule, externalities should be included if they are quantified and although care must be taken to ensure any unquantifiable external impacts that are not completely disregarded (Sullivan and Amacher, 2009).
In order to fulfill all the cost objectives, the organization, JIVAN aims to access government funding support for Small and medium size enterprises. The above details explores that the project requires USD $2, 87,806.23. Here, the organization aims to take a loan of USD $ 2, 00,000 from government and rest of the amount will be personal investment.
Figure: Procedure to manage cost objectives
1.7.1 Explannation of cost determination for the project
In order to determine the cost and schedule for this capital project following stages are followed –
Conceptualization of project cost and timeline: Before developing the plant for package drinking water bottle, financial and physical feasibility of the capital project are ascertained. Apart from that, in orde to complete the anaylsis, management of the project assigned the staff for producing several options for the site.
Estimate proliminary budget and Schedule: The manager of the project designed the details of building costs of the taken project plan and caculate the costs of componenets along with the project budget. For this particular project, manager of this project signed the Capital Imporvement Budget by the campus architect.
Project approval Budget and Schedule: Aftercompleting the deisgn phase of the packagedrinking water bottle project, respected manager of this project developed the secobd budget and scheduled properly. However, the alignment of the scope and budget was not approved. Therefore, project manager involve the Value Enginerring session for reconcil without additional funding.
Bid Proposal: After completed the drawing of working project, project managers seek the bid proposal from contractor in order to build the project successfully.
In order to make the project of Package Drinking Water Bottle, cost based pricing strategy was determined. This cost determination strategy allowed in involving the setting of price in a fixed amount for the making or project. Following diagram is the result of cost determination strategy of this particular project
Figure: Typical Activity level of the phase of the project life
To minimize the cost objectives the company is using Cost Benefit Analysis (CBA) technique. CBA is a systematic process or technique through which any company can analyze all the business decision on the basis of the estimation of the strengths and the weakness. It considers both the quantitative and the qualitative factors of the all the investment and the cost company have done. It is also known as Benefit – Cost Analysis (BCA) (Cost-Benefit Analysis, 2012). So to evaluate the cost of the company they take some of the costs into account. These are as follows –
Capital Expenditure:
Every organization uses some of the bulk amount of their investment as capital cost expenditure or as fixed asset. Capital cost is the main cost which is incurred to set up or upgrade the techniques or assets which is used to start some of the schemes which helps to improve the quality of the packaged water. This also includes the purchasing cost of the raw materials, equipments etc which the company are using to accomplish their purpose. Some of them include cleaning apparatus which are used, washouts, vehicles etc. In capital expenditure all the preparatory cost including the installation cost of the washouts etc.
Operating Expenditure:
It is also one of the important expenditure of any organization which is includes all the operations which are required to do all the intervention for packaged drinking water. In Operating Expenditure (OPEX) of the company all the labor cost, work cost, transportation cost includes. It also includes that cost, which is lost, or misuse at the time of the cleaning process.
Capital Maintenance:
In it the costs includes all the maintenance cost, replacing cost of the equipments, the cost which is used to maintain in the expenditure of the quality of the packaged drinking water. Capital costs are also includes the cost which is used to maintain the existing standard. Under capital maintenance, there are two parts – financial capital maintenance and physical capital maintenance. The financial maintenance for this project is all the monetary costs, profits and all the financial expenditure.
Additional Costs:
Under additional cost all the replacement cost, overhead cost, etc that indirectly affects the costs of the company. Additional costs also come under the extra costs of the company. If the additional cost do not come under the capital cost than it will be effect directly into the cost of products.
External costs:
External costs include all the environmental costs of the company. In external cost, the intervention cost that incurred due to repairing, cost of congestion also includes. External costs also not directly included to the company’s cost it is indirectly connected to the company. Some of the cases, external costs may leads to the market failure. This cost actually comes when producing any good or services which also imposes the third party cost. External costs always depend on the operational improvement of the implementation of the new plan (Cost-Benefit Analysis, 2012).
The above analysis explores that in order to attain success the organization, Jivan need to follow the below mentioned strategy:
Be Agile: Appropriate estimation of the project cost. In order to do this, first it requires proper planning of the project with considering all the factors of the project;
Do not Micromanage: the organization also requires appropriate estimation of the cost by developing the budget plan so that they have the rough idea where and how can they estimate the incurred costs;
Improvement of project management practice: The organization also have to look after all the necessary resources which includes all the indirect cost so that they can estimate the project in a accurate manner so that they can earn profit;
Ongoing Planning: JIVAN can also prepare an analysis report of the detailed task so that the work can be performed in a respective manner;
Communicate and Visualize all the activities and deliverables of the project: The organization can choose the simplest form to perform the work rather than using complex method so that they can avoid the error in the report analysis.
Complete deliverables step-by-step: Project manager has to take the total responsibility of completing the project deliverables according to needs and requirements of the project.
Healthy Risk management: This is the most important and effective step of excute a succesfull project. The assign officer with the respected project has to be more responsible in terms of detecting the potentiality of the project as well as issues.
6.1 Conclusion:
By concluding this, it describes the main aim of the project that how to estimate the project in such a way that it can incurred the profit by utilizing all the factors. The main points, which it includes, are how they estimate all the costs such as Capital Expenditure, Operating Expenditure, Capital Maintenance, Additional Costs and the External costs in a proper way which can cause them profit. In capital expenditure, it includes all the expenditure of the fixed assets such as costs of the equipments and fittings, vehicles and the costs of the installation of all the washouts. In operating expenditure, it describes all the work cost, labor cost, transportation costs etc. In capital maintenance costs, it defines all the costs of the maintenance, replacing of the equipment, which they use to improve the packaged mineral water. Therefore, they have to look after all the comments and the recommendation that is mentioned in the above points of the study. By referencing and following the above recommendation of the study, they can improve their business plan in such a way that they incur only the profit.
References
Blažek, J. and Macešková, M. (2010). Regional Analysis of Public Capital Expenditure: To Which Regions Is Public Capital Expenditure Channelled – to ‘Rich’ or to ‘Poor’ Ones?. Regional Studies, 44(6), pp.679-696.
Boucekkine, R., Martinez, B. and Saglam, C. (2010). CAPITAL MAINTENANCE AS A KEY DEVELOPMENT TOOL. Scottish Journal of Political Economy, 57(5), pp.547-567.
Dougherty, K., Edward, J. and Ragan, R. (2014). The value of formalism: re-examining external costs and decision costs with multiple groups. Public Choice.
GCPL consolidated net up 2% on higher tax, operating expenditure. (2013). Focus on Surfactants, 2013(12), p.7.
Sawicki, P. (2011). Commentary: Does additional benefit justify additional costs of insulin analogues?.BMJ, 343(sep14 1), pp.d5858-d5858.
Sullivan, J. and Amacher, G. (2009). Private and Social Costs of Surface Mine Reforestation Performance Criteria. Environmental Management, 45(2), pp.311-319.
Cost-Benefit Analysis. (2012). Science, 335(6076), pp.1543-1543.
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