Running Head: FOREVER INNOVATION TECHNOLOGIES Forever Innovation Technologies OOO 1 Running Head: FOREVER INNOVATION TECHNOLOGIES 1 Introduction Forever Innovation Technologies (FIT) is a 35 employee manufacturing company of specialty items for the consumer leisure industry. The owner, Omar Goller, has continually developed various types of gadgets and tools that have specific, but limited applications. Omar is always 'inventing' and spends very little effort improving on many of his designs but in case of a new wagon it needs large investments. This report is searching for the business case of FIT and how should a project plan be developed. In addition, it is needed to know there are tradeoffs for FIT if they decide to begin mass production of wagons or not. The business case for FIT FIT is a kind of small company that owner has a good relationship with employees. Employees like working for him, and many have been with him for five-years or more. The owner Omar is the conservative and always invents and spends very little effort about the designs. The utility wagon which FIT is developing gives opportunity to enter construction industry and produce the large scale production. A Project Initiation Document takes as its starting point a Project Charter or a Business Case, if one exists, and builds upon it using information collected or produced during the Initiation phase. Development of a Project Initiation Document is critical to define the project and it will serve as the foundation of the work. Successful projects begin with a detailed project definition that is understood and accepted by all relevant stakeholders and the project team. The aim for the project will be determined during the Discover stage. The Project Initiation Document provides a common understanding of the project to help manage expectations, identifies resources required to complete the project, and identifies any potential risks or issues so they can be addressed as early as possible. (The Knowledge Network, Project Initiation Document) Running Head: A PROJECT INITIATION DOCUMENT 3 The Purpose of Project Initiation Document Unfortunately many project managers don't take the time to write a proper PID. They write a document which is far too generic and therefore doesn't bear any real meaning. The purpose of writing a PID is not to tick a box so that you can say you have done it, but to ensure that everybody understands the premise of the project. A good PID should answer the following questions: 1) Why are we undertaking the project? It's important to understand the background of the project, the motivation for undertaking it and it's objectives. A good project manager is not only interested in delivering an output or a capability to their customer, but interested in the wider context and the benefits that this capability will ultimately bring about. 2) What are we delivering? A good PID is as specific as possible about what is in scope and what is out of scope of the project, and it makes use of flow diagrams and Product Breakdown Structures to visually illustrate the boundaries. It also clarifies the project's success criteria, i.e. everything that must be fulfilled in order for the project to be considered a success. 3) Who is responsible? It's important to clarify who plays which roles on the project so that nothing falls through the cracks. Specify who takes the role of project manager, team leader, sponsor, supplier and user representative. You should also document who the main stakeholders are and who the steering committee comprises of. Running Head: A PROJECT INITIATION DOCUMENT 4 4) How will the project be delivered? When you kick off a project you have to determine which approach you will use. Will you use a waterfall or an agile methodology? How will you communicate with the stakeholders? How will you test the quality of the products or services you are delivering and how will you keep on top of risks, issues and changes to scope? 5) When will the project be delivered? Unless you use a very structured waterfall methodology, you are unlikely to have an in depth schedule of what will happen when. For the PID it will suffice to include a milestone plan which highlights the main phases and activities of the project. As most people are visually minded it is a benefit if you also include a visual roadmap. The more graphical you can make the PID the better. 6) What are the risks, issues and constraints? Projects often derail because of unforeseen risks, so make sure you get them out in the open as early as possible. Include a snapshot of the project's top 10 risks and issues and assign owners and mitigating actions. Also remember that constraints and dependencies often turn out to be risks. 7) How much is it likely to cost? It is good practice to include a cost estimate in the PID along with any budgetary constraints. Provide the assumptions your team used when they came up with the estimate as well as details about how often you will review the estimates. (Aamer Inam, 4/10/2014) Running Head: A PROJECT INITIATION DOCUMENT 5 The Definition of the bargaining power of suppliers The presence of powerful suppliers reduces the profit potential in an industry. Suppliers increase competition within an industry by threatening to raise prices or reduce the quality of goods and services. As a result, they reduce profitability in an industry where companies cannot recover cost increases in their own prices. The following conditions indicate that a supplier group is powerful: 1) It is dominated by a small number of companies and is more concentrated than the industry to which it sells 2) It is not required to contend with substitute products for sale in the industry 3) The industry is not one of the supplier's important customers 4) Its products are an important part of the buyer's business 5) Its products are differentiated or there are built-up switching costs 6) It poses a definite threat of forward integration How can a supplier exercise bargaining power over a firm There are several characteristics that indicate the extent of a supplier's power and one is that they are able to increase their prices without this having a detrimental effect on the volume of sales. Another is the ability to create informal or even formal agreements that control pricing Running Head: A PROJECT INITIATION DOCUMENT 6 and supply. Most developed countries have extensive anti-trust laws and regulations in place to deter and penalize suppliers caught in this type of activity, but recent anti-trust court cases involving software, finance, healthcare, utility, and oil companies suggest that supplier collusion is still widespread. Rather than raise prices, suppliers in a strong bargaining position can choose to reduce the quantity of the product available, something that is most effective if there are few substitutes buyers can switch to. Suppliers are also in a strong position if the product or service they supply is an essential component of the end product. Other ways in which suppliers can dominate include imposing costs or penalties on their customers if they decide to change to another supplier. In addition, a supplier may decide that their best strategy for growth and profitability is to purchase or create agreements with other organizations further down the supply chain in order to increase control of distribution channels. (free-management-ebooks, Bargaining Power of Suppliers) An example of a supplier that would have bargaining power over a firm Suppliers play a key role in the value chain of the fast food industry. Chain restaurants rely on suppliers for food items, packaging, napkins, as well as items like plates and spoons. The same suppliers may be serving competing chains in an industry. This means that the power of these suppliers needs to be assessed by any company looking to enter the industry. A strong supplier may be able to effect profitability, quality of products and force companies to raise Running Head: A PROJECT INITIATION DOCUMENT 7 prices. The following factors may raise the bargaining power of suppliers: If the suppliers have a larger base of customers, then they will be able to exert more control over the buyer. When the bulk of sales in not made up of one company's business, the supplier can afford to drop a buyer who resists its efforts to exert control. If there are only a few suppliers in the market then they will manage to have more control. Fast Food chains can simply pick other suppliers in industries where suppliers are manifold. In this case the supplier will have to meet the buyer's demands or sell a highly differentiated product. Suppliers with strong brand names of their own will be able to exert more control. Generic products on the other hand will have significantly less bargaining room. For example, condiment makers who supply to chain stores may be able to leverage consumer preferences for their product over a generic one of the same type. Also, beverage choices such as a preference for Coca Cola over Pepsi may drive people from one chain to the other Any fast food chain needs to consider what power suppliers in its regional market exert before making the decision to move into that market or expand operations. (Martin, 21/08/2014) Conclusion Best practice project management reminds us that if we successfully initiate, plan, execute and close out our projects - our metrics will illustrate greater results. The Project Initiation Document is one of the most important artifacts in project management because it Running Head: A PROJECT INITIATION DOCUMENT 8 provides a foundation for the project. And an important force within the Five Forces model is the bargaining power of suppliers. All industries need raw materials as inputs to their process. This includes labor for some, and parts and components for others. This is an essential function that requires strong buyer and seller relationships. If there are fewer suppliers or if they have certain strengths and knowledge, then they may wield significant power over the industry. If the project progresses as planned with carefully analyzed the external environment, the project must be carried out successfully. Reference The Knowledge Network, Project Initiation Document, Retrieved from http://www.qihub.scot.nhs.uk/knowledge-centre/quality-improvement-tools/projectinitiation-document.aspx Author Aamer Inam, 4/10/2014, What makes a perfect Project Initiation Document (PID)?, Retrieved from http://www.susannemadsen.co.uk/blog/what-makes-a-perfect-projectinitiation-document-pid Free-management-ebooks, Bargaining Power of Suppliers, Retrieved from http://www.freemanagement-ebooks.com/faqst/porter-05.htm Author Martin, 21/08/2014, Bargaining Power Of Suppliers | Porter's Five Forces Model, Retrieved from http://www.entrepreneurial-insights.com/bargaining-power-ofsuppliers-porters-five-forces