Managing projects

Managing projects

Initial Public Offerings (IPO’s) are the first sale of stock to the public by a company. The main purpose of having IPO’s is to raise capital for expansion as well as becoming more open to being owned by a variety of public shareholders. Most IPO’s are usually managed by an investment-banking firm that oversees all the amendments, corrections and negotiations that would help a private company get the best share price. The benefits of going public include accessing more capital, attracting better management through liquid equity participation as well as creating other various financing opportunities for example convertible debts.

InterCat will require the full contribution of their employees in order to achieve the deadline set for 28 weeks. On the recommendation of the head of the finance department, they adopt the PERT/ CPM method of analyzing their IPO project I order to prioritize. The Project Evaluation and Review Technique (PERT) is a statistical tool that is used to analyze and represent the tasks involved in a project. The Critical Path Method (CPM) however is an algorithm for scheduling a set of project activities. Using these two techniques, one can analyze, categorize and present all the activities of a project in a systematic manner in order to reduce costs and time taken to complete the project. Planning, scheduling and control are the basic functions within CPM. Focus is placed on the duration each activity takes with emphasis being placed on reducing the time taken to finish an activity. PERT / CPM techniques have the following advantages: they explicitly define and display all the elements and their relationships within the network. Two, the PERT/ CPM techniques facilitates identification of the shortest time needed to complete a certain task and the project as a whole. Third, PERT technique provides for the starting and finishing deadlines that may help a manager approximate his schedule. There are six steps common to PERT and CPM techniques, going in the following order. Defining the project including stating the activities as well as the tasks involved. Next, developing the relationships among the activities, placing them in the order in which they are to be executed. After that, the various network links are drawn in order to connect all the activities. Then, time and cost estimates are awarded to each activity. Lastly, the project manager uses the network to help plan, schedule, and monitor the project.

 

Project network diagrams are essentially flow charts showing the relationship between project elements. It is easy to read as it shows the sequence of activities as well as the links between each activity. Some of the methods most commonly used in CPM include crashing the critical path. This refers to the shortening of the duration of crucial paths by adding other resources. Therefore, the crash duration refers to the shortest possible time for which an activity can be scheduled. Fast tracking on the other hand, refers to the performing of more activities simultaneously. This will ensure faster completion of each task as well as greater levels of monitoring. Within the network diagram, some processes for instance appointment of the registrar  and the transfer agent have been subjected to the fast tracking principle that will see the simultaneous sourcing of theses two bodies.

The above network diagram shows the overall process of completing the IPO for InterCat Company. The estimated time for ensuring this project will be completed will be 51 weeks and 3 days. Before looking at the most important steps in this PERT chart, the most critical steps in the process of ensuring this IPO successfully pulls through are the following. One, the selection of syndicate underwriters is a vital step. The competence and experience of these underwriters will help InterCat get the best share price. Two, calculating the share price is also very important. A share price is the price of a single share of a stock floated by a company. Share prices are affected by future expectations. Therefore, existing information affects the price and changes it only at the disclosure of new information. Share prices are calculated by dividing the total value of fund’s holdings by the total number of shares outstanding. This is only for determining a share price for the day.

If the negotiation time for each of the syndicate members are increased from to three weeks, this would first, increase the duration taken to complete the project to 56 weeks and 3 days. This already disrupts the intended deadline. The most damaging consequences that this extension of negotiation has is the possibility that InterCat will miss out on the best share price that we set out to be timed approximately when the project is achieved. Increasing the negotiation time by a week will mean the possibility of acquiring a lower share price for InterCat.

Reduction of the time taken by the underwriters by a week is an advantage to InterCat as they can have more time to analyze the markets to properly identify the missing parts of their project and come up with a successful IPO. The efficiency of the underwriters means as InterCat, they have more time to re-evaluate their whole schedule and can revise any poorly scheduled activities. The SEC makes the regulations for trading in the stock exchanges. Therefore, it will dictate the rules, which InterCat must comply. The amendments by SEC having been increased by 2 and a half weeks means that the project manager must make haste in finishing and resubmitting the final version as it will require a couple more days for the agencies’ bureaucracy to process the application. This process must be awarded more time as it displays a poor formulation of the registration statement on the part of the team members.

The compliance with various laws is also quite similar to the SEC situation in that they are external influences to a company’s marketing resolutions. States’ requirements must be met and therefore, amendments cannot be hurried owing to their high priority and have to go the full length of four weeks, which is required for satisfactory changes to be made to the compliance laws. However, with proper interpretation of the laws, this duration can be reduced to two and a half weeks. Coupled with the accruing time lag in other succeeding activities, this change in duration will most certainly affect the timeline in a significant way. Working with worst-case scenarios is never the best as will be witnessed in the pressure that come with it.

The owners’ decision to reduce the duration taken to process the issuing of new stock down to twenty-two weeks is mainly due to the emerging of SoftSales that threatened to clinch a bigger part of their market share by planning to float their shares as well. This competition by a rival firm is the main reason for the increased resources. Meeting these new deadlines will require certain changes in the working schedule as well as the contribution by the project members. First, the working hours have to be increased. Typically, this may be done by introducing night shifts for the newly employed workers. In this way, the duration taken for finishing a particular activity can be reduced by up to half. The deadline that was previously set at 52 weeks can now be reduced to around 25 weeks in order to have a closer reach at the new deadline set at 22 weeks.

Termed as maneuvering the crash duration, this will be achieved by shifting more resources towards the completion of that activity. Crash duration will be significantly increased by this new change in deadlines. The increased resources that were previously availed to InterCat employees will be essential in fast tracking the IPO process too. The increased funding to the project by the clients, Janet and Gilbert can be used in the following ways in order to shorten each activity and achieve the proposed deadline. First, the new funds can be used to recruit new employees. High salaries are a potential source of motivation for employees and this is what will be required in order to beat the deadlines. Proper rewarding of team members will eliminate any potential distractions that crop up. The money can also be used to increase personnel that would be responsible for confirming the compliance with state laws. This influx of money and workers will definitely have the overall impact of fast forwarding the whole IPO process which will enable InterCat compete with SoftSales and come out on top. The project manager can also establish a clean, neat and organized working environment. This can significantly promote focus and increase productivity among the team members that will translate into more efficiency at completing tasks on time.

The hiccup on the part of SoftSales in organizing their documents gives InterCat an advantage in that they can afford to be more lenient in allocation the time duration for completing the project. This added time will be useful in the following processes, which need the most attention. The evaluation time for each syndicate can be increased to two full weeks. This is because the selection of an underwriter was previously three weeks but was reduced to one and a half weeks. This process will eventually determine the expertise with which the InterCat case is handled. Some investment banking firms are unscrupulous and may shortchange the client for example the one in InterCat’s case that also represented their competition, SoftSales.

Increased time on the schedule will allow the project team to engage in studying the effect that the preliminary prospectus had on the relevant buyers. The response gathered from issuing these prospectuses will have an influence on the calculation of the issue price and the drafting of the final prospectus. The increased time will also allow for an in-depth investigation into the most competent registrar as well as transfer agents that InterCat can afford. Between the times when institutional investors are exposed to the information that InterCat is going public up to the time the final prospectus is issued, quite a lot of information is disseminated. The project manager will need to factor in this new information to help in decision making at the later stages.

In conclusion, the whole process of making an initial public offering for InterCat has been optimized by the following key inclusions. One, the adoption of the PERT/ CPM method will ensure proper prioritization of activities as well as detailed breakdown of tasks into manageable proportions. The real-time handling of all the contingencies that popped up during the process for example increased resources and reduced deadlines have contributed to the project’s success.

Last Completed Projects

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