Table of Contents
John Jr.’s Plan 3
Cost and Profits 4
Exhibit 1: Project Scope Statement 7
Figure 2: Approach to Project 8
Figure 3: Revised Work Breakdown Structure 9
Figure 4: Required Tools Breakdown 10
Figure 5: Return of Investment (ROI) Calculations 10
Figure 6: Net Present Value (NPV) for Next 5 Years 10
Figure 7: Project Life Cycle (Effort vs. Time) 11
Figure 8: Gantt Chart for Pool Installation 11
Ringold’s Pool and Patio Supply is a small business specializing in above and below ground pools for home use. It is owned and operated by John…show more content… After that, the company can expect to pay out approximately $500 each year to replace equipment. Given 3% for inflation and averaging it out over a five year period, this puts the Net Present Worth of cost of all of the equipment at $3,719. At an average of one pool installation per week, this amounts to $45.20 for equipment per pool for that five year period.
Costs and Profits
Together with the revised cost of labor, the total cost of installing an above ground pool comes to $252.34. In order to make this investment profitable, a Return of Investment (ROI) of 50% would be acceptable. In order to do this, the company would have to charge $378.51(Figure 5). Companies that specialize in assembling pools generally charge around $350 for installation. If Ringold’s were to charge the standard $350, this would yield a ROI of 38.7% (Figure 5). At the profit of $97.66 per pool, over a period of 5 years at a rate of one pool per week this yields a NPW of $8,874.75 (Figure 6).
To maintain prices at a competitive level, installing the pools would yield a small profit. As the price of the installation goes up, customers are going to be convinced to go elsewhere for business. Since it can be estimated that most people hire installers at the same place they buy the pools, this may affect sales of above ground pools at Ringold’s. My recommendation to John Sr. is based on a couple of variables. If the pools are