This Project is all about the RVM (Reverse Vending Machine). RVM is a device which takes recyclable containers like beverage containers, cans, bottles(both plastic & glass) and returns back coupons and money (10 cents per bottle) to the customer. In this review we discussed about RVM installations about planning and locations in main centres of city (Melbourne). By using Cost Benefit Analysis we are making business calculations in this project for a period of 2017-2035. By Sensitivity and Threshold analysis we are trying to find out the risk factor in installing machines. By using Net present Value, and IRR (Internal Rate of Return) we are making decisions to accept this project or not? In this review we are calculating the cash inflows and outflows for a particular period of time. In this review we also make some calculations and assumptions to get our project NPV>0. We also discussed about the project Objectives and scope. Based on the business tools what we have, we just brief out how this project is going to be success and make environment Clean and Green.

Project background

We all know the importance of waste and recycling in our daily life. Meanwhile it is also important how to manage waste? in a uniform manner for long term sustainable and brighter lives in this planet. This project goal is to reduce the waste landfill and increase the recycling in Melbourne, because currently Melbourne produces 10.3 million tons of waste in a year. Melbourne currently recycling only 73% of its waste and around 42% of household and commercial waste is going to landfill which can be recycled. Analysts saying the Melbourne population will be 7.8 million by 2041 and the waste produced by them also increased by 63%. Taking these assumptions into consideration, we want to take a step forward in managing waste by introducing RVM’s in Melbourne. RVM is a machine which works exactly opposite to normal vending machine. Which takes recyclable items and given coupons and cash in return. So, we thought by this way we can make a change in current recycle waste. These RVM will work accordingly to a company with particular software and securities.

1.2. Project Objectives and Justification

The main objective of this project is to make Melbourne cleaner by making some amendments in Melbourne recycling waste management system by introducing some new waste management techniques and RVMs. In current Melbourne waste management system we are focusing on MSW (Municipal Solid Waste) and commercial material which includes paper/ cardboard, beverage cans, bottles & glass. In this project we also make some business economic analysis to take decisions and some alternatives. In this project we used all the business tools like EUAC, NPV, IRR, B/C and Payback Period of the RVMs based on this course. We also calculated NPVs and payback period for a period of time as it is the main objective of this course.

Decision Making Questions:

· Need to select the right position to installing the machine

· Where this waste goes and how it is going to collect and recycles?

· Taking risk in comparison of Melbourne waste with Sydney and Tasmania

· Assumptions made on future waste and incorporate with Victorian Government

· Choosing a trustworthy manufacturer with economical price comparison with other companies

· Support from Government to transportation waste produced by RVMs

· Depreciation value of the RVMs after a particular period

· Payback period for all the RVMs

· Choosing right Beverage Industry to support like Coca-Cola some others

· Security of coin machine inside RVM and make sure obeying all business laws

· Choosing the right bank for 10 cents per bottle coin machine

Objectives:

· To make Business Economic analysis of RVM’s for a particular period using Business tools

· Finding out NPV, IRR values for machines

· For better use of Melbourne waste and makes more efficient

· Awareness about the recycling waste rejection

· Giving rewards to customer like coupons and cash(10C per bottle)

· Developing a business model for implantation of RVMs

Assumptions:

We are assuming 2.3 tonnes of recycling cans in the trail period of two months

Vehicle travel time and operating cost

Container refund redemption time

Basic business operating cost

Environmental benefits

We are expecting around 70,000 rewards from customers

To create awareness about RVMs

Literature review:

In this review we examine the various areas and their waste management system analysis to compare with current Melbourne waste. We also reviewed various methodologies to implement these RVMs all over victoria. Based on the assumptions we made, we calculated the estimated payback period of RVMs.

In this review we also made three commonly used economic business analysis like

· Annual worth analysis

· Present worth analysis

· Rate of return analysis

2.1.1. Equivalent Uniform Annual Cash Flow:

For a project cash flow analysis is incredibly important as a project manager to run the project successfully. For this project we also calculating EUAC based on some assuming cash outflows and cash inflows. We determined a fixed value for a period of time. EUAC is all about the calculating the various annual costs like Operational costs, Salvage Value, owing costs, Revenues, maintenance costs, 10 cents per bottle machine costs (in our project), human resources costs and all things like that. In our case the decisions were made according to the highest EUAC what we get on comparing with all other alternatives. Generally in these type of projects (social related projects) we need to make sure of payback period based on annual cash flow.

2.1.2. Net Present Value (NPV):

While decision making in a project it is very important to calculate NPV which exactly means the difference between present cash inflows to present cash outflows. Generally investment decisions are almost taken based on NPVs. But in some cases we also need to calculate APV (adjusted present value) based on the equity plus the present benefits. While doing these type of projects we need to be aware of the inflation. Due to inflation the time value of money may varies from present to future.

2.1.3. Internal Rate of Return:

Every business will come up with an idea of making profits, before that they also need to reach their internal rate of return in general return of their investment. It is defined as total of all cash inflows to all cash outflows Baker, Samuel L. (2000). IRR is mainly used in decision making weather to accept or reject the project based on the time it takes to get their money back. In our project we calculated IRR for all RVM’s which are going to install in victoria.

2.1.4. Cost-Benefit Analysis:

It is all about the estimating and comparing of our profits or activities with other alternatives or projects. In our case we are calculating the cost overrun of the machines costs and benefits overrun of the project in any form like rewards and coupons. We are also working out on costs and benefits worksheet as well. based on worksheet we are taking particular actions in this project. In this project we are making cost benefit analysis based on Identification of all favourable and unfavourable actions and then financial valuation which means costs and benefits. Finally choose a best alternative. In our case choosing the right manufacturer, right location, right recycling management and right support.

3. Sensitivity Analysis:

For every project as a project manager one must do sensitivity analysis which tells how sensitive our project is to various costs. Sensitivity analysis all about identifying the independent variable like operational costs which we don’t know and based on that variable we are finding the changes in dependent variable like NPV( net present value). For suppose in our case transportation of recycling waste what we thought is around 200,000$, but in case it changes to 300,000$ then these uncertainty has to be calculated according to that NPV and Breakeven Point will change. So as a manager one must be very careful while doing Sensitivity analysis which may sometimes leads to failure of the project due to cost impact.

4. Methodology:

Every project has to start with planning and scheduling all the activities in a particular manner. Methodology is the one according to that we will generate outcomes and outputs. Every project has its own methodology.

In our project “installation of reverse vending machine in victoria”

· Study of the area

· Study Population and waste produced by area wise

· Data collection

· Predictions based on risk analysis

· Required approvals

· Research in waste recycling and managing

· Installing RVMs

· Calculations using some business tools

· Collaboration with other distributors and government

· Waste transportation and Operations Management

· Security of RVMs and software

We are starting this project by studying the area (victoria) which is divided into regions based on their waste production and population. Based on their previous waste quantities we are going to take some important decisions in installing RVMs in those areas. Before taking decisions all we need to do is to collect data from waste management and to predict both future population and the waste produced by them. Before installing RVMs we need to take required approval and documentation from government. We also going to do some calculation’s using business tools as we mentioned in literature review and then made sensitive and threshold analysis over the project costing’s. then installing RVMs and their security and maintained comes into matter.

Business Strategic Analysis:

Strategic analysis is all about the summarization and consolidation of both front-end and back-end results. Based on examine the whole result the decisions will be made for a current situation facing. In general strategic analysis will be on External business and Internal business. In our case it is Front end and back end analysis. Strategic analysis means setting up a pre-work structure by keeping vision and mission. This analysis covers how to prioritize the efforts on highest value initiatives to drive the goals. There are many techniques used for calculating current facing changes and performance measurement. In our project front end changes are like software problems, machine locations, security, non- recycle waste injections. Coming to back-end changes in our project are like delays in transportation of waste, regional problems, manufacturer faults, maintenance, electricity, security systems, etc.,. Before implementation of change in our actual plan we need to consider all the issues that are currently facing. In back-end analysis we can use PESTEL (political, economic, social-cultural, technological, environmental and legal) technique for making changes in strategic analysis.

SBM1203 venture/project economics and finance Reverse Vending Machine

SBM1203- Reverse Vending Machine

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References:

Baker, Samuel L. (2000). "Perils of the Internal Rate of Return". Retrieved January 12, 2007.