Continuation of Project (attached) - for tutor Goodwriter

The project of constructing an emergency department in Arizona is a project that has to be carried out in a manner that will help in avoiding any risks that can jeopardize the project. The main risk of this project is the failure to complete the project due to poor management. This is because there are many projects that were managed poorly, and that led to the project coming to a stand-still in the process. The project manager and the project committee have to come up with an approach that will ensure that all the requirements of the project are estimated accurately, so as to prevent a stall of the project due to unavailability of resources (Meredith & Mantel Jr, 2011). This is the responsibility of the project manager to ensure that all the resources especially funds are enough before the start if the construction.

The total budget has been estimated at $4 million dollars. This is because the construction and the development of the emergency department design will cost half a million dollars and the design and documentation process will cost more than one hundred thousand. The gathering of information and analysis will require intensive research by the members of the company among specialists so that they can collect enough information about the initiation of the project and the views of the customers (Meredith & Mantel Jr, 2011). This will cost an estimate of one hundred thousand. There will be payment of the taxes for the land where the construction will be made; this will be an average of one hundred thousand. The remaining two hundred thousand will be for safety purposes for the progress of the project. This is because there should be spare funds that should be ready for usage during a project this is in case there is an upcoming issue concerning the project then it can be solved with that money.

Labor will be one of the main resources that will be required for the success of the project. This is because in almost all the stages of the project there will labor required (Gido & Clements, 2014). For example, during construction labor will be necessary to carry the construction materials and to carry out the construction. Labor is estimated to use half of the budget. This is because the contractor will have to be paid and the laborers. The researchers and construction designers will also have to be paid. The estimated budget of the labor is $2 million.

Labor Budget

The labor is estimated to consume half the budget; this means that it will consume almost $2 million. The funds will be divided as follows:

Capital Budget

Capital budgeting involves the decision making process for the investments that a company has in operations. This means planning for the eventual returns on the monies spent on investment such as machinery or real estate. In order to capital budget for this project; the best method to use is the payback period. This method simply evaluates the time that is needed for the investments to return their value. When it comes to the time value for money, the investments made will be actually more in the future since the emergency project will have increased in value. Since the total amount estimated to be spent on the project $4 million dollars, when capital budgeting there are three steps involved; these are recording the investments, projecting cash flow and factoring in inflation. Since the investment is $4 million in total, the land is the only investment that can appreciate and it is approximated that 4 percent per annum. This means that in the first year, the revenue generates 160,000 dollars in real value in the first year. The rate of inflation will be factored in after the center is operational since this is a variable.

Internal Risks

One major internal risk that is of major concern is budget shortfalls. This means the money set out for the competition of the project turns out to be less than is required. Another internal risk when it comes to the budget is the mismanagement of funds. In the case the funds are mismanaged, they will not be enough to sufficiently complete the project in the estimated time.

External Risks

There are some external risks involved with the project. For example, weather and climate conditions might interfere with the completion of the project. Political factors can also affect the competition of the project. Finally, issues such as legislations that are put in place might prove to be too costly to finish the project.

Budget for Contingencies

The budget that is set aside for any contingency is 600,000 dollars. The reason that this amount is smaller when compared to the main budget is because both the internal and external risk do not involve financial factors. The internal factors budget shortfall which will be catered for by the monies set aside. The other internal risk is the mismanagement of funds and this can also be offset by the money set aside. When it comes to the external risks, the only money that may be required is the taxes that might be required is legislation put in place by the relevant authorities.

In conclusion, creating and managing to a budget is critical with any project. Without a budget and the fortitude to manage to the budget we risk letting spending run out of control. Lack of a budget and managing to the budget can easily bankrupt a business by through overspending and raising expenses higher than what the business can afford.

References

Gido, J., & Clements, J. (2014).Successful project management.Cengage Learning.

Meredith, J. R., & Mantel Jr, S. J. (2011).Project management: a managerial approach. John Wiley & Sons.