Question

You are a consultant to an organization and have been asked to help evaluate some potential projects and draft the statement of work (SOW) to be given to potential solution providers. One of the projects has an expected value of $50,000 in 3 years. Another project has an expected value of $60,000 in 4 years. The discount rate is 8.2%. You will want to make sure your SOW indicates all of the following EXCEPT:

A Business need.
B Staffing plan.
C Project scope description.
D Strategic plan.

Answer 1

When drafting a Statement of Work (SOW), a strategic plan is not required as it is a broader organizational document not specific to project SOWs, which should include business need, staffing plan, and project scope description.

Step-by-step explanation:

The question pertains to the drafting of a Statement of Work (SOW) for potential projects within an organization and does not require the inclusion of strategic plan details, as that is generally an overarching company document not specific to an individual project's SOW. The SOW should encompass business need, staffing plan, and project scope description as part of its content to guide potential solution providers on what is required for the project. In terms of financial evaluation, understanding the concept of present discounted value is crucial.

If you have a future payment, to find its present value, you need to discount it using a specific interest rate. For instance, with a discount rate of 25%, a future payment of $125 would have a present value of $100. This principle applies to evaluating the present value of expected future cash flows from projects or financial instruments like bonds.