POM+ Project 1

POM+ Project: Squeezing the Juice Out of the Drink Market

Summer D. Leifer

MGMT505PA – Project Management Fundamentals

February 12, 2012

Dr. Joel Light

Southwestern College Professional Studies

POM+ Project 2

Abstract

Big Kola Company initiated the POM+ Project in an effort to counteract competition from

specialty juice beverages cutting into its soda sales. Based on higher profit margins, increased

market exposure, and higher antitoxin levels found in pomegranate juice, the POM+ project is

responsible for devising, testing, producing and marketing a pomegranate juice based specialty

beverage. The POM+ Project priority matrix has determined that costs are a constraining factor,

project scope should be enhanced as available, and the project timeline is flexible. Based on this

criterion, Gage Conner, the POM+ Project Manager, has determined the work breakdown

structure, depicted the critical path and leveled resource allocation. Unfortunately, with

approximately seven weeks left in the schedule, the POM+ Project is over budget and

underperforming. Mr. Connor must now consider using the principles of Earned Value

Management, getting the most bang for the buck, as he rethinks the POM+ project plan and

resource allocation.
POM+ Project 3

POM+ Project: Squeezing the Juice Out of the Drink Market

The Big Kola Company has recognized an opportunity to break into the specialty juice

beverage market. After initial research and market surveys, it has determined it will introduce a

new pomegranate beverage into the market. POM+ Project will lead the way for Big Kola

Company's efforts into the antitoxin juice market. The POM+ project team has made steady

progress; however, as of the last update on May 31, 2012 it is over budget and has not optimized

its work resource allocations.

Summary

Over the last several years, specialized fruit juices have made a big splash in the beverage

industry. Big Kola Company has decided to create its own line of specialty juice beverages in an

effort to bolster flagging profits while breaking into new markets. Grape juice beverages were

the first to create a specialty juice niche in the beverage market through heavy advertising

touting the healthy, antioxidant benefits found in grape juice. Several beverage manufacturing

companies followed suit and began marketing their own grape juice based beverages. Big Kola

has explored other options and, after months of market research surveys, has developed a list of

three potential high-margin drinks: cranberry, blueberry, and pomegranate. While all three are

high in antioxidants, Big Kola has decided to produce a pomegranate beverage based on its 71

percent relative ability to eliminate free radicals as compared to 33 percent for blueberries and 20

percent for cranberries (Larson & Gray, 2011). Additionally, pomegranate and its byproducts

are very popular in the Middle East and Asia, providing a wider appeal and potential new

markets. Ultimately, a pomegranate beverage has a more attractive market appeal and a higher

potential profit margin than other antioxidant juices. Big Kola Company has spearheaded this

initiative through the POM+ Project led by the project manager, Connor Gage.
POM+ Project 4

POM+ Project Priority Matrix

Prior to beginning the POM+ Project, Big Kola Company executives and project

management teams decided on the project's priority matrix. The priority matrix determined the

relative importance of the project criterion thus providing guidance over the life of the project in

the event the criterions were in conflict. As Nigel Slack stated in "The Importance-Performance

Matrix as a Determinant of Improvement Priority" published in the International Journal of

Operations & Production Management, the priority matrix may be used in two ways: as a

translation method between organizational market aspirations and operations strategy and as a

list of ranked competitive factors used to determine decision making (1994). The POM+ project

is constrained by costs. The budget, as initially set, should be adhered to and every effort should

be made to stay under budget. As a result of declining profits, Big Kola Company simply cannot

afford higher costs. It is also important for the project manager to take advantage of

opportunities to optimize the scope of POM+ Project. However, Big Kola Company determined

it was willing to change the timeline in an effort to mitigate costs or enhance the scope of the

project.

Time Scope Cost

Constrain X

Enhance X

Accept X

Table 1, POM+ Project Priority Matrix (Larson & Gray, 2011, p. 625)
POM+ Project 5

POM+ Project Work Breakdown Structure

Developing the Work Breakdown Structure (WBS) is a major step in the project planning

process. It intended to structure the work into measurable, manageable, independent, and

integration capable increments (Davies, 1995). The WBS provides a framework for preparing

comprehensive "plans and network schedules, develops a job cost system, and outlines job

responsibilities. From the WBS the total project can be identified, network scheduling

performed, costs and budgets established, project schedules and cost performance tracked, and

responsibilities established" (Davies, 1994). Based on the Work Breakdown Structure (WBS),

the POM+ Project will take 142 working days to complete. With a project start date of January

3, 2012 the project is estimated to be complete July 26, 2012. This timeline is based on eight-

hour workdays, Monday through Friday with allowances for federal holidays. To compensate

for over-allocation of resources and project constraints, the POM+ Project WBS includes

leveling efforts to enhance the project scope and stay within budget. The POM+ Project team

capitalized on the total slack within the project's schedule to optimize project resource

management. Total slack indicates the amount of time an activity may be delayed without

resulting in an overall delay to the project (Larson & Gray, 2011). For example, the POM+

Project initially had 50 days of total slack to select distributors. Based on the initial WBS and

critical path network diagram, Marketing, Research and Development, Engineering, and

Production resources were over allocated. Through redesigning the WBS, the select distributors’

task now has six days of total slack allowing the marketing team members to focus their attention

on other critical tasks.

POM+ Project 6

ID Task Name Start Finish Late Start Late Finish Free Slack Total Slack

1 1 POM+ Project Tue 1/3/12 Thu 7/26/12 Tue 1/3/12 Thu 7/26/12 0 days 0 days
2 1.1 R&D product development Tue 1/3/12 Mon 3/19/12 Tue 1/3/12 Thu 7/26/12 91 days 91 days
3 1.1.1 Need survey Tue 1/3/12 Fri 2/10/12 Tue 1/3/12 Thu 7/26/12 117 days 117 days
4 1.1.2 Set product specs Fri 2/3/12 Tue 2/28/12 Fri 2/3/12 Tue 2/28/12 0 days 0 days
5 1.1.3 Shelf life report Wed 2/29/12 Tue 3/13/12 Wed 2/29/12 Tue 3/13/12 0 days 0 days
6 1.1.4 Nutrition report Wed 3/14/12 Mon 3/19/12 Wed 3/14/12 Mon 3/19/12 0 days 0 days
7 1.2 Secure fruit suppliers Tue 3/20/12 Mon 4/16/12 Wed 3/21/12 Tue 4/17/12 1 day 1 day
8 1.3 Initial production W ed 2/29/12 Thu 7/5/12 W ed 2/29/12 Thu 7/5/12 0 days 0 days
9 1.3.1 Equipment rehab Wed 2/29/12 Tue 4/17/12 Wed 2/29/12 Tue 4/17/12 0 days 0 days
10 1.3.2 Production trials Wed 4/18/12 Tue 5/8/12 Wed 4/18/12 Tue 5/8/12 0 days 0 days
11 1.3.3 Quality Trials Wed 5/9/12 Wed 6/6/12 Wed 5/9/12 Wed 6/6/12 0 days 0 days
12 1.3.4 Quality metrics Thu 6/7/12 Wed 6/13/12 Thu 6/7/12 Wed 6/13/12 0 days 0 days
13 1.3.5 Quality training Thu 6/14/12 Thu 7/5/12 Thu 6/14/12 Thu 7/5/12 0 days 0 days
14 1.4 Distribution Tue 3/20/12 Tue 6/26/12 W ed 3/28/12 Thu 7/5/12 6 days 6 days
15 1.4.1 Market testing Tue 3/20/12 Mon 4/30/12 Wed 3/28/12 Tue 5/8/12 0 days 6 days
16 1.4.2 Package design Tue 5/1/12 Mon 5/21/12 Thu 6/14/12 Thu 7/5/12 31 days 31 days
17 1.4.3 Select distributors Tue 5/22/12 Tue 6/26/12 Thu 5/31/12 Thu 7/5/12 6 days 6 days
18 1.5 Legal Tue 5/1/12 Tue 5/29/12 W ed 5/9/12 W ed 6/13/12 6 days 6 days
19 1.5.1 Complete FDA registration Tue 5/1/12 Mon 5/21/12 Wed 5/9/12 Wed 5/30/12 6 days 6 days
20 1.5.2 Register trademark Tue 5/22/12 Tue 5/29/12 Thu 6/7/12 Wed 6/13/12 11 days 11 days
21 1.6 Prepare product launch Fri 7/6/12 Thu 7/26/12 Fri 7/6/12 Thu 7/26/12 0 days 0 days

Table 2, POM+ Project WBS

POM+ Project Critical Path

According to Mark Cohen, in his article published in AACE International Transactions,

"Project Risk Identification and Management", Critical Path Management offers "the most

efficient and effective mechanism for generating and monitoring the planning process throughout

the entire life cycle of a project. –As such, it is one of the most useful tools managers have at

their disposal for analyzing and mitigating risk" (2004). The tasks, as indicated in the table three

below, depict the tasks comprising the POM+ Project critical path. The critical path depicts the

essential start and stop times for key activities which in turn will impact the on-time rate for the
POM+ Project 7

POM+ Project completion. The critical path allowed the project manager to identify and track

the most crucial activities within the project plan.

Task ID Task Name Duration Start Finish Predecessor

3 Need survey 20d Tue 1/3/12 Tue 1/31/12
4 Set product 15d Wed 2/1/12 Tue 2/21/12 3
specs
5 Shelf life 10d Wed Tue 3/6/12 4
report 2/22/12
7 Secure fruit 20d Wed 3/7/12 Tue 4/3/12 5,6
suppliers
9 Equipment 30d Wed Tue 4/3/12 4
rehab 2/22/12
10 Production 15d Wed 4/4/12 Tue 4/24/12 7,9
trials
11 Quality Trials 20d Wed Tue 5/22/12 10
4/25/12
12 Quality 5d Wed Wed 11
metrics 5/23/12 5/30/12
13 Quality 15d Thu 5/31/12 Wed 12
training 6/20/12
21 Prepare 15d Thu 6/21/12 Thu 7/12/12 13,16,17,19FS+25d,20FS+15d
product
launch
Table 3, POM+ Project Critical Path Tasks
POM+ Project 8

The POM+ Project has one main critical path and several non-critical activities with

significant slack. Therefore, it has been determined to be insensitive. Figure 1, POM+ Project

Gantt Chart with Critical Path, shown below, demonstrates the POM+ Project critical activities.

in red and the non-critical activities in blue.

Figure 1, POM+ Project Gantt Chart with Critical Path

POM+ Project 9

POM+ Project Resource Allocations

Due to cost constraints, the POM+ project manager assigned resources according as

shown in table 4, POM+ Project Resource Assignments. The WBS was also extended one week

from the original timeline to allow resource allocation without going over budget.

ID Task Name Duration Start Finish Predecessors Resource Names

1 1 POM+ Project 145 days Tue 1/3/12 Thu 7/26/12

2 1.1 R&D product development 54 days Tue 1/3/12 Mon 3/19/12
3 1.1.1 Need survey 28 days Tue 1/3/12 Fri 2/10/12 MRKT[500%]
4 1.1.2 Set product specs 18 days Fri 2/3/12 Tue 2/28/12 3 R&D[400%],MRKT[200%]
5 1.1.3 Shelf life report 10 days Wed 2/29/12 Tue 3/13/12 4 R&D[300%]
6 1.1.4 Nutrition report 4 days Wed 3/14/12 Mon 3/19/12 4 R&D[300%]
7 1.2 Secure fruit suppliers 20 days Tue 3/20/12 Mon 4/16/12 5,6 PURCH
8 1.3 Initial production 90 days Wed 2/29/12 Thu 7/5/12
9 1.3.1 Equipment rehab 35 days Wed 2/29/12 Tue 4/17/12 4 ENG[1,000%],PROD[2,000%]
10 1.3.2 Production trials 15 days Wed 4/18/12 Tue 5/8/12 7,9 PROD[1,500%],PURCH,ENG[1,000%]
11 1.3.3 QualityTrials 20 days Wed 5/9/12 Wed 6/6/12 10 QUAL[300%],PROD[500%]
12 1.3.4 Qualitymetrics 5 days Thu 6/7/12 Wed 6/13/12 11 QUAL[300%],PROD
13 1.3.5 Qualitytraining 15 days Thu 6/14/12 Thu 7/5/12 12 QUAL[300%],PROD[1,500%]
14 1.4 Distribution 70 days Tue 3/20/12 Tue 6/26/12
15 1.4.1 Market testing 30 days Tue 3/20/12 Mon 4/30/12 5,6 MRKT[500%]
16 1.4.2 Package design 15 days Tue 5/1/12 Mon 5/21/12 15 DESIGN[300%],MRKT
17 1.4.3 Select distributors 25 days Tue 5/22/12 Tue 6/26/12 5,6 MRKT[500%]
18 1.5 Legal 20 days Tue 5/1/12 Tue 5/29/12
19 1.5.1 Complete FDA registration 15 days Tue 5/1/12 Mon 5/21/12 7,15 LEGAL[300%]
20 1.5.2 Register trademark 5 days Tue 5/22/12 Tue 5/29/12 7,15 LEGAL[300%]
21 1.6 Prepare product launch 15 days Fri 7/6/12 Thu 7/26/12 13,16,17,19FS+25 days,20FS+15
QUAL[300%],PURCH[200%],PROD[1,500%],MRKT[500%],ENG[500%],R&D
days

Table 4, POM+ Project Resource Allocations

POM+ Project 10

POM+ Project Earned Value Cost Indicators

According to the May 31, 2012 POM+ Project Earned Value Cost Indicator (CPI), the

project has a return on investment of 70 cents on the dollar. The forecasted cost at completion

(EAC) is projected to be $2.4 million dollars, a total more than $710,000 (VAC) dollars over the

original budget (BAC) of $1.7 million dollars. As of May 31, 2012, project estimates show the

POM+ project will need to earn $1.15 (TCPI) on the remaining work in order to achieve the

target budget.

ID Task Name Planned Value - PV Earned Value - EV CV CV% CPI BAC EAC VAC TCPI
(BCWS) (BCWP)
1 1 POM+ Project $586,400.00 $402,208.00 ($168,992.00) -42% 0.7$1,690,080.00 $2,400,185.22 ($710,105.22) 1.15
2 1.1 R&D product development $148,480.00 $135,040.00 ($31,360.00) -23% 0.81 $148,480.00 $182,961.14 ($34,481.14) -0.75
3 1.1.1 Need survey $64,000.00 $50,560.00 ($19,840.00) -39% 0.72 $64,000.00 $89,113.92 ($25,113.92) -2.1
4 1.1.2 Set product specs $57,600.00 $57,600.00 ($11,520.00) -20% 0.83 $57,600.00 $69,120.00 ($11,520.00) -0
5 1.1.3 Shelf life report $19,200.00 $19,200.00 $0.00 0% 1 $19,200.00 $19,200.00 $0.00 1
6 1.1.4 Nutrition report $7,680.00 $7,680.00 $0.00 0% 1 $7,680.00 $7,680.00 $0.00 1
7 1.2 Secure fruit suppliers $4,320.00 $0.00 $0.00 0% 0 $9,600.00 $9,600.00 $0.00 1
8 1.3 Initial production $404,800.00 $267,168.00 ($137,632.00) -52% 0.66 $998,400.00 $1,512,727.27 ($514,327.27) 1.23
9 1.3.1 Equipment rehab $404,800.00 $267,168.00 ($137,632.00) -52% 0.66 $528,000.00 $800,000.00 ($272,000.00) 2.12
10 1.3.2 Production trials $0.00 $0.00 $0.00 0% 0 $235,200.00 $235,200.00 $0.00 1
11 1.3.3 QualityTrials $0.00 $0.00 $0.00 0% 0 $86,400.00 $86,400.00 $0.00 1
12 1.3.4 Qualitymetrics $0.00 $0.00 $0.00 0% 0 $12,000.00 $12,000.00 $0.00 1
13 1.3.5 Qualitytraining $0.00 $0.00 $0.00 0% 0 $136,800.00 $136,800.00 $0.00 1
14 1.4 Distribution $28,800.00 $0.00 $0.00 0% 0 $207,200.00 $207,200.00 $0.00 1
15 1.4.1 Market testing $28,800.00 $0.00 $0.00 0% 0 $96,000.00 $96,000.00 $0.00 1
16 1.4.2 Package design $0.00 $0.00 $0.00 0% 0 $31,200.00 $31,200.00 $0.00 1
17 1.4.3 Select distributors $0.00 $0.00 $0.00 0% 0 $80,000.00 $80,000.00 $0.00 1
18 1.5 Legal $0.00 $0.00 $0.00 0% 0 $57,600.00 $57,600.00 $0.00 1
19 1.5.1 Complete FDA registration $0.00 $0.00 $0.00 0% 0 $43,200.00 $43,200.00 $0.00 1
20 1.5.2 Register trademark $0.00 $0.00 $0.00 0% 0 $14,400.00 $14,400.00 $0.00 1
21 1.6 Prepare product launch $0.00 $0.00 $0.00 0% 0 $268,800.00 $268,800.00 $0.00 1

Table 5, Earned Value Cost Indicators

POM+ Project 11

POM+ Project Earned Value Schedule Indicators

According to the May 31, 2012 POM+ Project Earned Value Schedule Indicator (SPI) as

shown in table 6 below, the project has completed 69 percent of the work leaving approximately

31 percent (SV%) or $184,000 dollars worth of work to be completed (SV). Based on the

lagging SPI and CPI numbers, it is highly recommended that the POM+ Project Manager utilize

Earned Value Management (EVM) to determine weak areas within the project and revise the

project plan to assist the project with coming in under budget. As Barbara Poletti and Richard

Marcoux wrote in their article, "Performance Indicators for Project Management", EVM offers

great assistance to project managers by providing important insight "to ensure that a project

doesn’t stray from its initial objectives. It can also be used as a forecasting or extrapolation

tool to reassess an ongoing project. In addition, its principles can be applied to projects both

large and small" (2008, p.24).

ID Task Name Planned Value - PV Earned Value - EV SV SV% SPI

(BCWS) (BCWP)
1 1 POM+ Project $586,400.00 $402,208.00 ($184,192.00) -31% 0.69
2 1.1 R&D product development $148,480.00 $135,040.00 ($13,440.00) -9% 0.91
3 1.1.1 Need survey $64,000.00 $50,560.00 ($13,440.00) -21% 0.79
4 1.1.2 Set product specs $57,600.00 $57,600.00 $0.00 0% 1
5 1.1.3 Shelf life report $19,200.00 $19,200.00 $0.00 0% 1
6 1.1.4 Nutrition report $7,680.00 $7,680.00 $0.00 0% 1
7 1.2 Secure fruit suppliers $4,320.00 $0.00 ($4,320.00) -100% 0
8 1.3 Initial production $404,800.00 $267,168.00 ($137,632.00) -34% 0.66
9 1.3.1 Equipment rehab $404,800.00 $267,168.00 ($137,632.00) -34% 0.66
10 1.3.2 Production trials $0.00 $0.00 $0.00 0% 0
11 1.3.3 Quality Trials $0.00 $0.00 $0.00 0% 0
12 1.3.4 Quality metrics $0.00 $0.00 $0.00 0% 0
13 1.3.5 Quality training $0.00 $0.00 $0.00 0% 0
14 1.4 Distribution $28,800.00 $0.00 ($28,800.00) -100% 0
15 1.4.1 Market testing $28,800.00 $0.00 ($28,800.00) -100% 0
16 1.4.2 Package design $0.00 $0.00 $0.00 0% 0
17 1.4.3 Select distributors $0.00 $0.00 $0.00 0% 0
18 1.5 Legal $0.00 $0.00 $0.00 0% 0
19 1.5.1 Complete FDA registration $0.00 $0.00 $0.00 0% 0
20 1.5.2 Register trademark $0.00 $0.00 $0.00 0% 0
21 1.6 Prepare product launch $0.00 $0.00 $0.00 0% 0

Table 6, Earned Value Schedule Indicators

POM+ Project 12

Conclusion

Big Kola Company's decision to pursue a niche in the growing specialty fruit juice

market was a business savvy decision as it allows the company to shore up profit losses,

capitalize on the growing specialty juice markets, and break into new markets in the Middle East

and Asia. Big Kola Company ultimately decided to offer a pomegranate fruit juice beverage,

POM+, based on projected high profit margins, market research, higher antitoxin levels than

blueberries and cranberries and an underdeveloped pomegranate niche within antitoxin fruit

drinks. While Big Kola Company was constrained by costs, it was able to be flexible with the

project schedule to allow optimal resource allocation without going over budget. The POM+

Project estimated completion date was extended from July 19, 2012 to July 26, 2012 to allow for

reallocation of over-allocated resources. As of the last update noted on May 31, 2012, the

project manager is over budget and has had poor work performance. In order to come in under

budget, the project manager must reassess the resource allocation and project schedule.
POM+ Project 13

References

Cohen, M. W., & Palmer, G. R. (2004). Project Risk Identification and Management. AACE

International Transactions, 1. Business Source Premier, EBSCOhost

Davies, J. R. (1995, November 6). Using work breakdown structure in project planning. Plant

Engineering, 49(14), 54+. Retrieved from

http://go.galegroup.com/ps/i.do?id=GALE%7CA17985584&v=2.1&u=klnb_southwest&

it=r&p=AONE&sw=w

Larson, E. W., & Gray, C. F. (2011). Project management, the managerial process (5th ed.).

New York, NY: McGraw Hill Irwin.

Poletti, B., & Marcoux, R. (2008). Performance indicators for project management. CMA

Management, 82(6), 24-28. Business Source Premier, EBSCOhost.

Slack, N. (1994). The importance-performance matrix as a determinant of improvement priority.

International Journal of Operations & Production Management, 14(5), 59-59. Retrieved

from

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untid=13979