Part 4mia

AcelRx Pharmaceuticals Inc Company

Project Budget

5.1 Available Resources

AccelRX Pharmaceutical provides for a 300% profit for its shareholders (Orelli, 2017). This has increased the capital investment of the company. This is the first valuable resource that will enhance the success of the project. Having a strong financial history and background guarantees that the will not cause adverse financial impacts in the introductory stage. On the other hand, this is a good business image, and it will work for the benefit of the project and the business by attracting more customers and potential partners.

Secondly, the company has had an increase in the scope of operations which have increased the customer base as well as the number of suppliers. The number of investors, long-term and short-term creditors has increased in the company. The availability of many of suppliers and partners will ensure a constant supply of drugs and equipment throughout the season. This is the best opportunity to tap in because the project will increase the level of sales, therefore, luring more suppliers and better deals shortly.

Thirdly, there is adequate workforce, skill, and experience within the company. Among skilled personnel available in the company include marketing executives, director of communication and information technology, technical engineers and IT experts, who all have a specific role to play in the project. This means that most of the initial exercises in the developing and introduction stage will be internally operated unless a critical need for outsourcing arises.

The most important resource for this project is the magnitude of the stock of products, drugs, and equipment. This is the primary task of this project; devising the quickest and most efficient possible to transfer products from our possession to the customer. The wide range of product available in the company’s stock will be presented in a catalog that will be visible to all the customers both through online and through physical purchase or transaction.

5.2 Labour Budget

Just like many other successful budgets, a lot of money will be used in the labor sector. Because the project will be IT-oriented, the preparation of the labor budget will be done effectively by considering the company’s resources, internal and external cost (Wilkes, 1983). The budget will be prepared about the project funding.

Schedule And Scope of Labour Budget

Estimation and timing of costs will be used for reporting purposes and financial budgeting and will mainly comprise of the project activity estimates and the work packages. Labour estimations will apply the Bottom-up estimating which will outline the general description of project tasks, prices of the project tasks at the top and lower levels. Primary contents in the labour budget will include system maintenance, packaging, and shipment of purchases to the prospective buyers. The storage cost is already catered by the company’s budget thus this project will focus on the new budget.

The project crew will comprise of 27 personnel. The average personnel weekly cost will be $ 100. Weekly working hours will be 56 hours which will be very crucial during the initiation stage to ensure that we have an empowered workforce.

The weekly estimate labour cost will be as follows;

Category	Description	No. personnel/ quantity	Unit Price ($)	Total Cost ($)
System maintenance	Catalogue, Inventory and Update of Stock	7	150	1050
Packaging	All activities before distribution of products	10	100	1000
Distribution	Supply	10	100	1000
Distribution	Trucks	5	200	1000

5.3 Capital Budget

The project will carry out a capital budget evaluation which will project the company’s benefits that will result from the existing and a new asset. Factors that will be used to prepare the capital budget will include; inflation, net cash flow, net income, depreciation, inflation, risk, and interest (Drake & Fabozzi, 2002).

Schedule and Scope of Capital Budget

New machinery will be one of the principal long-term investment for this project. Secondly, there will be new products which will be introduced to the company’s catalog. These factors will increase the company’s working capital and cash flow. The projected capital budget will be as follows;

Item	Year 1	Year 2	Year 3
Volume sales	70,200	72,070	73,940
Less cost service production	46,010	42,003	40,000
Gross Profit	24,190	30,067	33,940
Expenses
Advertising	1,500	1,000	800
Payments to creditors	11,680	10,512	9344
Maintenance	6,000	5,000	4000
Total expenses	19,180	16,512	14,144
Net profit before tax	5,010	13,555	19,796
Tax (34%)	1,703.4	4,608.7	6,730.64
Net cash flow	14,170	8,946.3	13,065.36

Federal corporate income tax at 34%

5.4 Risk Management Plan

A risk is an event that the project sponsor wouldn’t want to happen. There are different levels of risk that comes with online and digital shops. These would be among the many challenges that we will have to battle with before the project commences and as the project continues. Project risk assessment will be carried out to identify the type and magnitude of a risk that would affect the project such as; quality of outcomes, budget overrun, schedule overrun and omission. The project risk management plan will involve both the internal and external factors of the project meaning that in every documentation there will be a sector of risk assessment.

Because digital/online marketing is not a new thing in our field of speciality, we will borrow form case studies of practical experiences, evaluate the nature of risk, its incidence and how the respective companies, institutions and company’s managed to overcome implications of the same. Risk management will include the following sectors; budget, schedule, statement of work, acquisition plan and execution plan. The management process will include identification and analysis of risk then followed by risk mitigation. Members of the company will have the opportunity to brainstorm and to actively engage in the risk management process.

Internal Risks

Internal risks are easier to predict and control. They include all those factors that will affect the project from the internal operations such as the ability to acquire the required infrastructure for the project, finance, personnel and any other unanticipated shortcomings. The internal risk of this project is as follows;

i. Operational Risk: Risk management will take account of the production and acquisition of supplies, procurement, marketing, and distribution. All the activities in the project will be examined and tested to provide with mitigation and control measures to prevent consequences that might face the company. 80% of the project investment will be used to manage the company’s inventory, online purchases and transactions, responding to customers’ requests, a database of catalogs, purchase, sales, returns and different crucial tasks.

ii. Governance risks: Management of this risk will focus on enhancing the board and management team regarding ethics, conduct, stewardship which will be a big contributor to the company’s reputation. There will be two main overseers of the operations carried out by the project. These people will have all the security access codes which have access to the financial records and statements and stock details.

iii. Schedule and performance risk: This risk will comprise of the risk that project operations might take longer than expected and that production will be lower than the projections. Management of this risk will greatly rely on the input from the company’s personnel for they will be required to set SMART goals and objectives for the project.

External Risks

i. Market risk: The projects will carry out projections of market niche ensuring that it doesn’t fail due to competition from other companies dealing with the same product and using a similar operational approach.

ii. External hazards: Risk assessment will comprise of a quality test of the security level of the project system. The company will be protected from vandalism and sabotage that can result from external forces such as breaching of systems through system malware and viruses.

The Budget of Contingencies For Risk Identified

The risk contingency budget will contain funds that will be used by the project to mitigate negative financial impacts of a risk (Shim & Siegel, 2009).

Risk	Risk Probability	Cost Impact	Risk Contingency
Operational Risk	0.8	20,000	18,000
Marketing Risk	0.6	25,000	15,000
External Hazards	0.7	30,000	15,000
Performance Risk	0.3	10,000	3,000

References

Drake, P. & Fabozzi, F. (2002). Capital budgeting: theory and practice. New York, NY: Wiley.

Orelli, B. (2017). Why AcelRx Pharmaceuticals Inc Jumped Higher Today. The Motley Fool . Retrieved from: https://www.fool.com/investing/2017/10/02/why-acelrx-pharmaceuticals-inc-jumped-higher-today.aspx

Shim, J. & Siegel, J. (2009). Budgeting basics and beyond. Hoboken, N.J: John Wiley & Sons.

Wilkes, F. (1983). Capital budgeting techniques. Chichester Sussex New York: Wiley.

Grading Guide

Content 60 Percent	Points Available 6	Points Earned X/6	Additional Comments:
· All key elements of the assignment are covered in a substantive way. · The budget includes the following: · Resources available · Labor budget · Capital budget · The budget aligns with the project’s scope and schedule · The risk management plan is complete, while identifying internal and external risks. · Risk management plan addresses contingency plans and budget adjustments relevant to risks identified	6	5	To date, I do not believe you have an approved project topic. I would encourage you to review my earlier feedback. While you may have a clear understanding of what is required for a budget, I didn’t see it being reflected in this work. For instance, how do you distinguish between a labor and a capital budget? Further explanation is needed. I suspect you understand how to calculate labor costs, but this needs to “marry” with the many activities in the schedule (submitted last week). Each activity should have an associated cost. By looking at the costs as they relate to each activity, I believe we get a more clear and accurate picture. You would want to ensure you didn’t have the overlap over resources as time may be a constraint. People typically will only work 40 hours per week. If you have one person assigned to work on multiple activities which would require more than 40 hours per week for that one person, it could pose a problem. When looking at your risks, you may want to review the difference between a risk and a risk factor. Once you identified the risks, then, you need to determine what is the potential impact AND the likelihood of occurrence for each risk. Would anything additional or different be done in the event a risk was avoid realized? Sometimes we plan to avoid a risk, but it could occur despite our best planning. Again, we would likely want to look back at our schedule and the many activities required to get a more clear picture.
Organization / Development 20 Percent	Points Available 2	Points Earned X/2	Additional Comments:
· Paragraph transitions are present, logical, and maintain the flow throughout the paper. · The tone is appropriate to the content and assignment. · Sentences are complete, clear, and concise. · Sentences are well constructed, strong, and varied. · Sentence transitions are present and maintain the flow of thought.	2	1.75	In the future, an introductory paragraph should be used to introduce the reader to the task/scenario. The document started out without any mention of what the actual project entailed. I would encourage you to use a conclusion paragraph to summarize the information presented. After all, you wouldn’t want to leave the reader “hanging” or wondering if there might be more.
Mechanics 20 Percent	Points Available 2	Points Earned X/2	Additional Comments:
· The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements. · Intellectual property is recognized with in-text citations and a reference page. · Rules of grammar, usage, and punctuation are followed. · Spelling is correct.	2	1.5	I would encourage you to get better acquainted with APA guidelines, especially as they relate to references, headings, and spacing.
	Total Available	Total Earned
	10	8.25	I believe there is still more that can be done. With a little more attention to some of the details I have identified with my comments, I think you could make this a much better project. You can do this!

�To date, I do not believe you have an approved project topic. I would encourage you to review my earlier feedback.

�The title should mirror the title as shown on the cover page. Then, you are to proceed to an introductory paragraph. What do you intend to present in the paragraphs that follow? You would need to be clear about the specific project as well so the reader understands how the topics apply.

�Why is this 5.1? All key topics are to be identified using a level one heading. A level one heading is to be centered, use upper- and lower-case letters, and appear in bold.

�I need to be able to see who is completing each activity in your schedule (which was to be done last week).

�When using double-spacing, all paragraphs are to begin with a five-space indent.

�I read the information provided on the web page included in the reference. I did not see where this was noted in the brief part of the article.

�Double-spacing is to be used throughout. It looks like you are using additional spacing after the heading.

�Did you obtain this from elsewhere?

�Labor

�How do you distinguish between a labor and a capital budget?

�What project? There is no project approved as of yet. Did I miss something? Did you review the earlier feedback?

�I want to see the costs associated with each specific activity in your schedule for your project.

�How did you arrive at this?

�No person is working for less than $2 per hour. I want this project to be realistic. If a person is working $56 hours and the cost is $100 per week, is this likely to truly be happening? What am I not understanding.

�How many hours is each person working?

�Further explanation is needed to understand how this differs from a labor budget. How would you explain this to someone unfamiliar with the terms?

�I didn’t think you were talking about any online or digital shops so far.

�Writing in the first person is discouraged. Writing in the third person is preferred.

�You may want to revisit the wording here.

�What are some specific risks? Do you know the difference between a risk and a risk factor?

�What is the risk? What might happen?

�You would also want to evaluate the potential impact to the project when assessing risk.

�How did you arrive at these numbers?

�A conclusion paragraph should be used to summarize the information presented.

�This heading should not be in bold per APA guidelines.

�Were our assigned readings of any value? I want to see you applying what you are learning from our reading.

�Double-spacing is to be used throughout. I noticed you are using more after each return.

�The title of an article would not appear in italics.

�You are not to use the justified edges.