Project Management:


Sensitivity Analysis and Decision Making



Understanding of business systems can help you in making project management decisions by evaluating them based on their effect on economic value. You can use the business systems calculator for three purposes:

  1. to develop a better understanding of the interactions among the variables in business systems that work to produce economic value

  2. to discover which project variables, or factors, are most important for producing economic value and which factors cause the biggest change in that value.

  3. to analyze and evaluate the effects of various decisions made during the execution of the project.

Project Management: 2 Approaches

10 Key Project Leader Skills

Project: Business Synergies


Business Systems Calculator

Adapted from Project Manager's MBA by D.J.Cohen and R.J.Graham


  • Project duration (months)

  • Total project salaries ($)

  • Total project investment ($, including all expenses)

  • Project investment with capital charge ($)

Market Demand

  • Length of time until the market for this product/service begins (months)

  • Length of time after introduction to peak of market (months)

  • Length of time after peak of market ends (months)

  • Sales volume at market maturity (units/month)


  • Price ($/unit)

  • Price deterioration (%/year)

  • Expected market share if first to market (%)

  • Expected market share otherwise (%)


  • Costs of goods sold ($/unit)

  • Cost reduction (%/year)

  • Selling (variable), general and administration (% of revenues)

  • Selling (fixed), general and administration ($/month)

  • Depreciation ($/month)

  • Other expenses ($/month)

  • Tax rate (%)

  • Company weighted average cost of capital (WACC) (%/year)


  • Approximate time to breakeven (months)

Net Cash Flow (NCF)

  • Period of time to be considered in NCF calculation (months)

  • Net cash flow without capital charges ($)

  • Net cash flow with capital charges ($)

  • Net present value ($)