Payback Period Analysis
A project manager's primary responsibility is to decide if a project is worth investing
in and to assure its success from start to finish. The Payback Period is a Project
Management tool used to determine how long it will take to recover an investment in
a project. The phrase describes the length of time needed to recoup an investment's
cost. Simply described, it is the period of time it takes for an investment to break
even.
Shorter paybacks mean more attractive investments, while longer payback periods are less
desirable. Based on a Payback Period Analysis by me, I would recommend the Project C,
Develop online training and development modules. I would now like to explain with the
following example.
The above formula explains that the Initial Investment describes the original
expenditure for the project, which for Project C is $50,000. Periodic Cash Flow
depicts the total revenue the project makes during the period of 1 year i.e. $20,000.
According to the Payback Period Analysis, the payback period for Project C is 2 years
and 5 months. Though it is much more than the other projects, but according to our
top priorities, by developing online training and development modules would
decrease the operating costs as the employees would work more efficiently. Moreover,
as the employees would be on their potential, it would retain their talents to the
fullest and enhance their productive skills.
Weighted Factor Model
A Weighted Factor Model is a project management strategy for weighing particular
decisions, such as prioritizing project tasks, prioritizing product feature development,
purchasing new software, and so on.
Goals
Reducing operating
costs through gained
efficiencies
Attract & retain top
employee talent
Develop & enhance
employee skills
Total
Importance
Plan A
Plan B
Plan C
Plan D
0
0
1
(0.5x1)= 0.5
2
(0.5x2)= 1
0
100% (1)
0.6
0
1
(0.3x1)= 1
2
(0.2x2)= 0.4
1.2
0
20% (0.2)
2
(0.3x2)= 0.6
0
50% (0.5)
30% (0.3)
0
0
1