Dhahran Roads A Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Dhahran Roads A Case Study Help

Qualitative analysis

Alternative 01: accept the project

There benefits of accepting the project that involves the reconstruction and upgrading of the highway network, which are as follows:

Pros

The substantial advantages of accepting the project, ranges from competitive advantage to the efficiency gains, strong financial outcomes and an improved market reputation.
It would allow the company to strengthen its international image to be the leading construction contractor.
The contractor would be granted advance, which would be 15 percent of the total project’s cost.
The project did not present any unusual challenges and it was similar to the several SADE projects in other international arenas that were now nearly complete and had moved ahead without the occurrence of any challenges and difficulties.
SADE would be in position of the competitive edge as the acceptance of the project would lead the company towards having operational excellence and financial benefits.
It also helps in achieving more efficient services with grater quality, often.
The Bahraini and Saudi Arabia tax laws would not require the company to make payment of taxes on the profits of the contract.

Cons

In case of not meeting the deliverables of the project; the reputation as well as the image of the company would be at risk.
It would require a considerable amount of time and money for the project’s execution.

Alternative 02: reject the project

If the project involving the reconstruction and upgrading of the highway network is rejected; there would be a number of benefits, which are as follows:

Pros

The economic downturn would severely affect the internal rate of return.
The acceptance of the project might lead towards diversified focus which in turn might reduce the company’s operational efficiency. The employees would have the pressure of working on multiple projects, eventually making them stressed and faced with the burnoutexperience.
The rate of return of 15 percent is lower than the 18 percent hurdle rate required by the company, for the project of its nature.

Cons

Missing the opportunity of project would lead the company towards the loss of financial gains.
The company would miss the opportunity of improving its reputation and image in the market.
It would place the company at the risk of losing its customers to the market competitors.

Conclusions and Recommendation

On the basis of the quantitative as well as the qualitative analysis; the company is advised to accept the project on account of the positive net present value, the higher internal rate of return than the hurdle rate and the payback period of 3 years. The sensitivity analysis also provides strong foundation of accepting the project as the NPV at 7% and 12% discount rate amounted SR 14.53 million and SR10.68 million, respectively. Similarly, the project’s internal rate of return in case of the 7 percent and 12 percent discount rate are: 41 percent and 47 percent, respectively which means that the possibilities of the unexpected or negative scenarios would not last negative impact on the profitability of the project to a greater extent. To sum up, it is to notify that the investment would be feasible and the idea is a viable, since the Net Present Value is positive, IRR is high and length of time required for recouping the funds that would be invested, is short. All in all, the project is a good idea to be pursued.

Furthermore, it would allow the company to be distinguished from the market rivals and would lead it towards having great productivity, operational excellence, an improved market reputation and strong financial returns. Because of the absence or less expectancy ofthe unusual challenges related to the project; the company would not find it challenging and difficult to deliver the desired outcomes within a scheduled timeframe. Also, the Bahraini and Saudi Arabia tax laws would not require the company to make payment of taxes on the profits of the contract and the foreign exchange exposure would be minimal as well, since the currency of Bahrain was pegged to the Saudi Arabian currency. Additionally, the project would be managed by experienced and competent project manager of SADE, who is known for tight fiscalcontrol and strong engineering skills, which in turn increases the chances of the project’s success.................................

This is just a sample partical work. Please place the order on the website to get your own originally done case solution.