Please complete the Case Study 3.2, ?Project Selection at Nova Western, Inc?. on pages 103-104 of the textbook and respond to the questions for discussion. Please make sure that each question is answered thoroughly using a minimum of 200 words for each case study question. (15 points) Q1. Phyllis has called you into her office to help her make sense of the contradictions in project evaluation. How would you explain the reasons for this divergence of opinion from one technique to the next? What are the strengths and weaknesses of each screening method? Notes: The chapter notes several strengths and weaknesses of each project screening method and these should be considered in this case. It is not uncommon for financial and non-financial screening methods to yield competing information; thus, an argument could be made that using only these two methods is insufficient and in fact, an enhanced screening model should be developed for Nova that considers these factors are part of an overall, larger model of choice. A1. Q2. Choose the project that you feel, based on the above analysis, Nova Western should select. Defend your choice. A2. Q3. What does the above case suggest to you about the use of project selection methods in organizations? How would you resolve the contradictions found in this example? Notes: A successful screening model is often a comprehensive one. Simplistic models typically yield simplistic answers and their consistency from method to method is questionable. As the chapter demonstrates, most effective screening techniques used in organizations today are complex, multi-faceted and comprehensive in nature. One simple solution to this case might be to use the results of the discounted cash flow analysis as an additional factor in the weighted scoring model, whereby net present value becomes an additional selection criterion to consider along with the other factors already listed. Likewise, students should be asked to consider if any of the criteria in the scoring model represent ?must? items that cannot be compromised, such as safety. Finally, student may point out that the factor, ?Potential Profit? ranks both projects identical. However, the DCF model shows that Project Janus might reasonably be ranked higher. Ask students how this reevaluation might change final results.
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