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Make-Or-Buy Analysis Assignment (100 Points)

For this assignment, you have two options: use Microsoft Project or use Microsoft Excel.  The assignments are slightly different depending on which option you select, so be sure to read the assignment descriptions carefully. Complete only one option.

If You Are Using Microsoft Project 
Continuing the theme of pharmaceutical product development that we started in Module 1, the senior management is pleased with your work, but they require more information than the project update has provided thus far.

Your deliverables for this assignment are two-fold; first use Microsoft (MS) Project to develop a make-or-buy analysis for a pharmaceutical component assuming costs and then answer the following questions in the notes feature in Microsoft Project or Excel.  

If the expected profits after the drug development were $2 billion for the first year, the growth rate for the next five years is predicted to be 15 percent, and the growth rate for the following 10 years is predicted to be 5 percent, is this a good project or not? What are the IRR, the ROI, and the payback period?

Explain your responses in 1-2 pages. Ensure your work is well written and adheres to CSU-Global APA and writing guidelines.

If You Are Using Microsoft Excel 

Continuing the theme of pharmaceutical product development that we started in Module 1, the senior management is pleased with your work, but they require more information than the project update has provided thus far.

A make-or-buy analysis is part of a larger series of processes called a Procurement Management Plan. The plan’s purpose is to determine whether or not to acquire outside support for the success of the project and how much support is needed (Project Management Institute, 2013). A make or buy analysis is a report that considers several variables related to project costs and is used to gauge at what point it makes more sense to export a product or resource than to keep it internal.

The complexity of a make-or-buy analysis is dependent on the project scope, deliverables and the values each company holds dear. When using Excel, a make-or-buy analysis ranges from a simple two column dichotomous comparison to an extensive macro spreadsheet with multiple pages and links. The design complexity (form) is dependent on the use (function) of the data.

If the expected profits after the drug development were $2 billion for the first year, the growth rate for the next five years is predicted to be 15 percent, and the growth rate for the following 10 years is predicted to be 5 percent, is this a good project or not?

For a pharmaceutical development project you will need to include the following pieces in your Excel Spreadsheet. The more detailed information the better, but at a minimum you need to include the following four requirements:

• Cost Estimates
• Schedule
• Project Requirements (variables)
• Risk (very detailed)

Additional information that could be useful depending on the level of analysis desired:

• Project Plan
• Estimate of Activity Resources
• Stakeholders
• Organizational Values (as a numerical value)

In Module 1, you were required to explain to senior management the project’s viability and answer the following questions.

• The projects ability to succeed
• Difficulties you envision in the project and why?
• The average total value of this project  
• Consider the average output rate out of the FDA review if there are 200 projects in the pipeline for basic research, how does this project fare?
• What kind of performance is required to warrant a financial investment?

Refer back to the answers to these questions that were created in Module 1 as they will help you in this Critical Thinking assignment as well.

Your deliverable for this assignment is to construct an Excel spreadsheet that demonstrates your understanding of cost estimates, schedule, project requirements, and risk.  Once you complete this spreadsheet you will determine the cut off points and make your analysis. The final piece of this assignment is to describe in detail your rationale for the spreadsheet’s numbers, determining your cut-off points (break-analysis) for the project, and to write a description of how you believe the project will trend (make-analysis).  Your rationale should be at 1-2 pages and adhere to the  APA and writing guidelines.

Below you will find a sample spreadsheet and description.  Please note that this sample is meant to give you a small taste of what the assignments entails.  To receive full credit you will need to go into significantly more detail.