Project Selection at Ewing Natural Gas

Case 6.3 Project Selection at Ewing Natural Gas By (Name) Course Professor University Date Executive Summary Ewing Natural Gas, a large energy company’s manager for project development obtained project proposals from various functional company departments that are to be undertaken. Cliff as the present senior project manager must work amidst of multiple constraints such as handling capital expenditures under a fixed budget, identify experienced senior project managers to undertake the projects as well as managing risks associated with the project implementation. Essentially, the cliff has to explore the best collection of projects for approval. The process at the end must maximise the total NPV while satisfying the project constraints of the annual capital expenditure limits. Also, at least one project based on company functional area should be approved. Besides, assigning the approved projects to the most appropriate senior project managers. The method implies that a project will not be accepted except a qualified manager is assigned. Cliff is supposed to work under a multitude of constraints that involve managing capital expenditure under a fixed budget of $ 10 Billion and $ 4 Billion to get a senior project manager with appropriate skills and experience, and managing risk. The report focused on solving the problem of looking for an effective set of projects to approve, which maximise the total NPV while sustaining the constraints of the overall and annual capital expenditure limits and that of at least one project for each functional areas. Also allocating the senior project manager with an appropriate project they can manage based on their expertise. The results found that there were overall 8 projects, which have been approved to be undertaken with 3 projects from functional area 1 and 3 with a total NPV of $1.769 Billion. The study recommended the utilisation of cash reserve to maximise the expected value of total NPV under the constraint that the risk of total CapEx over the limit is within 5% and since the total NPV is a linear function, the expected value of each project’s NPV can be used in the objective. Problem Statement Ewing Natural Gas, a large energy