First Cars Ltd Essay

Critical path analysis is a method that is used to plan out the many activities involved in a project to be able to find the most efficient way of complete it and how to complete it on time. From a research and development point of view, the decision to go ahead with this project relies solely on the critical path analysis provided by Amy Jones. In light of this, the operations director is rightly concerned about how valuable the data provided by the critical path analysis is. The arguments for and against seem to be balanced. Therefore, I present the most significant argument of how valuable a critical path analysis – which is how Amy’s data allows the business to be have a clear outline of when and where money is spent in the project. This means that the critical path analysis will help First Cars plc with their cash flow which would allow them subsequently to be able to plan out careful spending to ensure they are able to fund the project. This would allow them to under go an investment appraisal before starting the project as they also have specific dates in which each part of the development would be ready. This is vital because of First Cars plc’s limited financial reserves it would mean they would be able workout the payback period and the average rate of return which could mean they are able to work out expected profits for the coming year from the which would mean shareholders would feel happier with the business as they are able to see a clear direction in which the business is improving, but most importantly it will show if the project is viable as they will be able to know how quickly it will allow the business to generate cash quickly to ensure they do not face a poor cash flow situation which could see the business dipping into liquidation. Another potential benefit of using critical path analysis is that it allows such an important project to be planned thoroughly in order to make sure everything is completed properly and on time. This is important because the business has a very clear deadline to make (August 2010) any issues which could mean they are not reached on time would result in the business failing to reach this deadline. Amy makes it clear that it is important to enter this market early to ensure a strong competitive market position because this is so vital it allows the critical path analysis to be used constructively to ensure everyone keeps to the same deadlines, this is because the tasks on the critical path analysis are completed by various other departments meaning the business has a Matrix structure so therefore it is important to highlight how important it is to reach deadlines and a clear outline on what deadlines should be met and how long the project teams have to reach them because there could be confusion due to the overlapping authority which is held in a Matrix structure. On the other hand, there is evidence that makes the credibility of the critical path analysis doubted. The most important argument supporting this would be the accuracy of the information provided in the diagram. In the case study it says ‘information provided by Amy Jones’ because of this it is hard to determine if the numbers are correct. Whilst it is important to remember that this is a completely new venture and there are hardly any competitors there is relatively no previous data to be obtained from competitors, because of this Amy has no where to be able to validate her own data with which could be worrying to the Operations Director because these numbers could have been come up with in thin air with no chance in reality to be reached on time. This concern could stem from the fact that all the data comes from Amy, who is pushing this project extremely hard to get through in to production. As the business is relying on this proposal to put the business ‘back o n to the road of success’ having only a critical path analysis could be of none value at all to First Cars plc. Another argument doubting the value of critical path analysis in this proposal is that most of the activities to take place are not in Amy’s marketing division which could mean she could underestimate the time needed to complete other tasks resulting in the time needed to complete the project being set back by many weeks. Which could mean they do not reach their important deadline of August 2010 – which could possibly mean that they have thrown the whole project down the drain; this is because it is extremely important for the business that they reach the deadline if they want to become a strong competitor in the given market. Not only could the project be in jeopardy but the whole of the business if any of the deadlines aren’t met because it would put them in a poor state regarding their cash flow. All in all, even though the argument seems to be relevantly balanced I believe there is a lot to loss on this project, a considerably amount more than what is at stake to be gained. The project is so unsafe for a business which is already struggling to survive. I think that First Car plc needs to hold fire and invest in a project which will guarantee to bring in profits and cash quickly rather than one that is extremely risky with no previous data to compare it on and one that entails extremely high costs – cars could be sitting around for days or even weeks in expensive city centres with staff having nothing to do, I suspect it could be a seasonal business in regards to when someone might want a car and what for. Due to the reasons above I believe that in this case the value of the critical path analysis is extremely poor and that other factors need to be taken in to consideration, I would have liked to have seen more supporting evidence of the payback figures.