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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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Working Capital Management

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This chapter discussed the management of current assets, including cash, marketable securities, inventory, and receivables. Current assets are essential, but there are costs associated with holding them. So if a company can reduce its current assets without hurting sales, this will increase its profitability. The investment in current assets must be financed; and this financing can be in the form of long-term debt, common equity, and/or short-term credit. Firms typically use trade credit and accruals; they also may use bank debt or commercial paper.
Although current assets and procedures for financing them can be analyzed as we did in this chapter, decisions are normally made within the context of the firm’s overall financial plan. We take up financial planning in the next chapter; hence, we continue our discussion of working capital there.

 

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