You are the project manager for an offering manufactured by Beta Technologies. This new offering will allow customer to use credit cards for off-track betting through the use of ATM kiosks. The project has an expense estimate of $2.5M and must be completed within the next 6 months in order to go-to-market before any competitors. If completion takes longer than 6 months (30 percent probability), Beta Technologies stands to lose $10M in market share. If completed within 6 months (70 percent probability), Beta Technologies has the opportunity to earn an additional $25M in revenue. Getting the offering to market in 6 months virtually ensures Beta Technologies receives revenue of $20M for confirmed orders already in hand.
Based on your risk assessment, there is a 30% chance of significant changes in the project requirements. If the requirements do change, an additional development expense of $2.5M will be incurred.
Develop a Decision Tree Model to answer the following. Please show your work.
1. What is the expected value of the project if no risk events occur?
2. What is the expected value of the project?
3. What is the expected value of the project if all risk events occur in a best-case scenario?
4. What is the expected value of the project if all risk events occur in a worst-case scenario?
Journals are private between the student and the instructor. Approach these activities as (a) an opportunity to reflect upon and apply what you learn each week based on the assigned readings, discussions, and activities, and (b) an opportunity to share your knowledge and expertise based on your educational and professional experiences in the past. As a successful professional, you will need good reflective and writing skills.
Journal activities offer you the opportunity to further develop these skills. For more information about Blackboard blogs and journals, review these tutorials.