Activity 04
Software Project Management
2025-2026
In-Class Activity: Project selection, financial models
Students will evaluate three distinct project proposals using financial selection models and recommend the most viable investment.
A- Scenario: about the organization
AlManar Group is a mid-sized Saudi enterprise operating across retail, logistics, and digital services. With a growing footprint in the GCC region, the company is undergoing a strategic transformation to enhance operational efficiency, embrace sustainability, and invest in digital innovation.
Strategic Goals for 2025–2030:
- Sustainability Leadership: Reduce carbon footprint and align with Vision 2030 environmental targets.
- Digital Transformation: Improve customer experience and internal processes through AI and automation.
- Operational Excellence: Streamline workflows and integrate systems to support scalable growth.
B- Investment Decision Simulation
You are part of AlManar Group’s Strategic Investment Committee, tasked with evaluating three proposed projects. Each project aligns with a different strategic pillar:
- Project X – AI Chatbot for Customer Service
Strategic Focus: Digital transformation and customer engagement
Goal: Reduce response time, improve satisfaction, and cut support costs - Project Y – Solar Panel Installation
Strategic Focus: Sustainability and long-term cost savings
Goal: Lower energy costs, reduce emissions, and enhance brand reputation - Project Z – ERP System Upgrade
Strategic Focus: Operational efficiency and data integration
Goal: Improve decision-making, reduce manual errors, and support growth
Project Scenarios and financial projections
| Year | Project X: AI Chatbot for Customer Service | Project Y: Solar Panel Installation | Project Z: ERP System Upgrade |
|---|---|---|---|
| 0 | -400,000 SAR | -600,000 SAR | -500,000 SAR |
| 1 | 80,000 SAR | 100,000 SAR | 120,000 SAR |
| 2 | 120,000 SAR | 150,000 SAR | 180,000 SAR |
| 3 | 200,000 SAR | 200,000 SAR | 250,000 SAR |
| 4 | 250,000 SAR | 250,000 SAR | 300,000 SAR |
| 5 | 300,000 SAR | 300,000 SAR | 350,000 SAR |
Assumptions:
- Required rate of return: 8%
- Inflation rate: 3%
C- Tasks
- Payback Period
- Calculate the number of years needed to recover the initial investment for each project using the payback period then using the discounted payback period.
- Rank the projects by speed of recovery.
- Net Present Value (NPV)
- Calculate NPV for each project at the end of the fifth year.
- Discuss which project adds the most value.
- Strategic Reflection
- Which project aligns best with long-term strategic goals?