Assume that you are buying a car and you are deciding between three cars: one ne
ID: 387463 • Letter: A
Question
Assume that you are buying a car and you are deciding between three cars: one new car using a lease, another that is a financed purchase, and finally, a pre-owned vehicle. Describe how you would approach choosing between the different vehicles and consider how your process would be similar or different from the project selection process. Include in your post answers to the following questions:
- Could the process used for choosing between cars be applied to selecting between projects to fund within a company? What would be the same, and what would be different? Why?
- Critique the process you used for selecting between vehicle acquisition alternatives. What are some changes you might make to the process so that it is useful in the context of project selection?
Explanation / Answer
The choice of method of purchase will depend on the need and resource availability. For example, an expat ( company / individual ) who needs a car for the duration of his stay of three years at a foreign country would go for a lease, whereas someone who has lived for say fifteen years at a city and expects to live for ten more years may go for a finance option. Another young person who is graduating from a two wheeler to a car, may look for a cheap, reliable and affordable pre owned car. Overall, the decision depends on the type of need and resources available for purchase.
For funding a project within the company, the factor of budget and resource allocation will remain the same,as the project that fits within the budget and meets the needs will be the right choice. However, a project may have a number of different stakeholders ( different for every project) unlike the cars, which need to be considered while choosing the right way of choosing project. Another factor is that the choices of selecting the project may be limited unlike cars, and a project may have to be selected in a particular way only.( i.e. it may not be possible to have it for desired time). Another factor is the risk associated with the project which is almost negligible in car purchase ( except in pre owned car which may turn out to be defective), whereas in a project selection, risk analysis also needs to be done, in addition to keeping allowance for uncertainties of cost, time and efforts, and other changes which creep in with time.
2. The process of selecting the cars can be modified in some ways to suit it for project selection.
(a) Inclusion of stakeholder analysis.
(b) Doing risk analysis and devising mitigation strategy
(c) Provision of allowances for uncertainties of cost, effort and time
(d) Strategies to keep up with the changes that may creep in owing to circumstances.