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1. We bid for resources due to following reasons -
a. Resources are scarce. Usually there is more demand of the resources than supply. Hence only a few (who give better price) can have it
b. Price discovery - More often than not, scarce resource are available on their relative value and not at their absolute (intrinsic) value. That is to say, people are not very sure about the price to put on project resources, hence bidding is done.
2. Net present value - Any project will have different cash outflows (costs) and cash inflows (revenues) over the period of its course. Net present value is the algebraic sum of the present value (that is, how much the amount values today) all these cash flows taking inflows as positive and outflows as negative .
3. NPV and project management - NPV is used to evaluate the financial profitability of any project. At the time of choosing which project to start from a list of several possible projects, NPV of all the projects are estimated and the project with high npv is given the preference.
4. Stakeholders are concerned about profitability and sustainability of a project. Any delay in execution or inferior quality execution will result in increased costs. As the project evolves, there are always new insights which require new changes. Project management team must adapt to these changes and design new strategies without must waste of resources like time, money, infrastructure and human resource. All these elements of project management impacts stakeholders' satisfaction.
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Oct 14th, 2015
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