Project Introduction
The project aims at automating of ABC Ltd. accounting system through an upgrade of the current manual system. The project involves the installation of a computerized accounting system instead of the company’s IT system and accounting processes. Due to the increasing demand for transparency in processing of accounting data and proper reporting of financial information, the company found it worth installing automated accounting system. In installing the system, the company will make a valuable investment in an asset that will reduce management costs. The new system will also enable the company to reduce employee costs by lowering the number of accounting staff and improve the accuracy of the financial information.
Project Scope
The primary scope of the project is to install an automated computerized accounting system to operate the company’s accounting process. The main objective of the project is to provide an effective system to facilitate accuracy and efficiency of accounting for transactions as well as financial information. The system needs to be user friendly and supported by a centralized IT infrastructure. The system will be configured to ensure simplified posting of accounts payable and accounts receivable. The system should also eliminate the need for multiple postings in the books of accounts in order to maintain accounting records and comply with accounting principles.
This project will necessitate the company to acquire new computers with more efficient processors and reliable memory capacities. In addition, the project should include installation of secure and reliable data storage and backup system and devices. The project will also incorporate training of the company’s staff to match their skills with the demands of both the new system and the accounting principles.
Project Cost
The cost of the project depends on the selected software and the properties of the hardware installed for the new system. The investment for the project will involve the cost of disposing the current computers used by the accounting department. It will also include purchasing new computers, procuring the accounting software and the installation of the system to substitute for the existing procedures. Another cost driver is the training of the users of the new system for accounting and auditing processes. The total budget of the system is $75,000, which are broken into the five cost items.
First, the cost of disposing the current system is estimated at $7,500. Secondly, it will cost the company $30,000 to acquire new computer systems for the sales, accounting and auditing departments. Thirdly, the company will spend about $20,000 to purchase automated accounting software and applications to run the new system. Additionally, the company will incur up to $10,000 to install and configure the new system and applications to the installed computer system. Finally, the company will spend up to $7,500 to train all the employees on the new system demands as well as comply it with accounting standards. To cover these costs, the company will plough back previous year’s profit of $50,000 and take a loan on the remaining $25,000.
Net Present Value
Table 1: Net Present Value
Team Organization
The team that will be in charge of this project includes key leaders in charge of all the departments that will be affected by the new system. A project manager who will be assisted will head the team by the current head of IT department as a project assistant manager. A project management committee that will meet every week to review the progress of the project will make major decisions on the project. Overall, project team will comprise four teams responsible for specific roles. These teams are the system development, the hardware installation, the accounting, and the training teams. A supervisor who will be a member of the project management committee will head each of these teams.
Project Schedule
The project will be held in a period that will be determined by the company’s management since its implementation will disrupt the operations of the company’s accounting department. Project evaluation will be done on weekly basis but daily assessments will be carried out to review its progress. There will ensure there is no time gap between project pilot exercise and project rollout in order to avoid delays in the implementation schedule. The management will decide on the expected completion dates from three dates recommended by the project management committee.
The project of automating ABC Ltd’s accounting system and upgrading the current manual system is estimated to take two weeks. The project’s network diagram and schedule is described below.
Network Diagram
AOA Network for the project
The following are the identified project activities represented by each letter in the network above. Each activity will be implemented independently but in line with the schedule of the project.
Table 2: Activity Durations
Identification of all the paths of the project
A – D – H – K = 5 + 3 + 5 + 1 = 14
B – E – I – K = 2 + 1 + 6 + 1 = 10
C – F – I – K = 2 + 3 + 6 + 1 = 12
C – G – J – K = 5 + 4 + 2 + 1 = 11
The project’s critical path is B – E – I – K and will take ten days to complete. The shortest time it can take to complete the project is therefore ten days.
Gantt chart
This project’s project manager may find it quite useful to engage the use of a Gantt chart in managing complexity in cost and time. A Gantt chart is an intricate tool used for the management of interrelated tasks with different durations. When using a Gantt chart, the project manager assumes that the tasks are linear and their durations can be determined beforehand with a high degree of precision. However, it is advisable for management to have duration estimates with the relevant possible contingencies.
A Gantt chart has a number of benefits to the project manager. First, it diagrammatically represents the whole project. This makes it easy for the project manager to indentify the activities to complete first and clearly shows the relationships between tasks. Second, it shows the duration of a project. However, in as much as it may show the tasks clearly, it does not indicate dependencies among tasks and the project manager may not know from the Gantt chart how the delay of one task may affect another. For this purpose, the project manager will have to use the network diagrams. The figure below shows the Gantt chart for this project. It indicates the start times and durations for each activity. However, it does indicate the costs. The durations are indicated in days.
Table 3: Gantt chart Activity Durations
Communications Plan
The management of the project will adopt several methods of passing information as well as tools of sharing data among the team members and other users involved. The management will print out a Gantt chart for the project to indicate progress and use a timescale to make the Gantt chart fit to one page. The chart will then be pasted in a PowerPoint or printed on a slide for easy presentation.
The management will also print a “To-do List” information sheet for all the team members to ensure that everyone understands his or her role. In addition, the project manager will prepare a “Who Does What” information sheet that will determine all the roles and people responsible for them. This way, the team will facilitate coordination among the team players. Continuous update will be done to the communication plan as appropriate and will be reviewed during the weekly status meetings. However, the management of the company and the Project Manager will approve all the changes that should be made to the plan during the meetings.
Communications Matrix
In order to keep the work going on smoothly, it is very crucial to maintain an organized workforce. The project manager is an expert in leadership qualities. He knows how to handle such a huge workforce. He addresses them sympathetically and asks for any problems that they might have. This behavior of the project manager garners honor and respect for him. The workers come forward and express their problems and in turn, the project manager tries his level best to find solutions.
Table 4: Communications Matrix
Risk Management Plan
Risk assessment of the project will be defined in terms of the probability of occurrence of risky events. Concerning the impact of the risks, the negative cost of each one will eventuality be regarded as an impact of the risky event on the project? Risk analysis will therefore involve the increase in the impact of the speculated risk events and their probability to occur as well as their sensitivity to change. Risk response will be determined by the findings of risk analysis of every event. The response will determine appropriate actions to be taken if the speculated events occur. The response will be coordinated through a risk response table that will include a summary of a contingency plan for all the risks.
Designing an automated system will encounter a number of risks. For example, the basic probability of equipment failure to more complex issues including the threat of the wrong choice of information management strategy. The risks might lead to confusion in the data and the ultimate failure of the venture. However, an efficient risk management plan will ensure coordination. In this project, the highest risk is the technical risk. Technical risks may be occasioned by:
- Errors occasioned by design and construction
- Poor planning is the main reason for the occurrence of previous technical risk
- Quality assurance checklists are an important to curb technical risks
- Control point Identification charts are also crucial tools. A project specific Control point Identification chart is outlined below.
Control Point Identification Chart
The chart below will be useful for tracking areas that may go wrong and anticipating ways in which the project manager will solve the problems to avoid nasty surprises.
Table 5: Control Point Identification Chart
Risks Register
Table 6: Automated Accounting System Risks Register
Sensitivity Analysis
Table 7: Best/worst Case Scenario
Risk Response Plan
The risk response plan includes the following recommendations to mitigate risks
Table 8: Risk Responses
Supplier Management
The project management committee will float tenders to interested suppliers and receive their offers according to the company’s procurement procedures. After assessing the received tenders, the project management committee will recommend the best suppliers to the procurement department to select the most appropriate one among them. The selected supplier will be contracted to supply the company with the ordered software, computer hardware and system development services. In such a way, the project management team will acquire the services of the best supplier while maintaining the company’s procurement standards.
Conclusion
It would be in the interest of the company to undertake the computerized accounting system Project. This is because it arrives at a positive NPV and a high internal rate of return. The sensitivity analysis also indicates that this project is highly flexible to any change to cost of capital. This is despite the fact that the board meeting had noted that this is unlikely to happen. Hence, this project has the capacity to increase the wealth of shareholders. It also has the capacity to expand the market share of the company if the demand levels are anything to go by. The project will also have a futuristic impact to the company. It will also reduce wage bills and propel the company towards efficiency. The project is viable.