Monday, 27 February 2012

Rate of Return

The Rate at which we get our money back. It is % of  money we gain or loss in specific time period. An investment with business motive will only get return, we should not and cannot expect ROR for money invested in charity.But most people invest in charity with some hidden motive. Mostly the hidden motive is to get cheap popularity(I likes to quote a thirukural here)
ஈகை - Charity
221 – வறியாருக்கொன் றிவதே ஈகைமற் ரெல்லாங்
குறியெதிர்பை நீரது உடைத்து
To give the poor is charity
the rest is loan and vanity
A simple rate of return Formula ROR = Revenue or profit - (Operating expense + Depreciation) / Intial Investment
Different type of investment will have different formulas to work out, investment on new motor cars for personal use will always have a negative returns. Investment on gold and land mostly will have positive return.
I assume a case here, I got a car worth 8 lacks INR and i am using it only for personal use.  ROR will be -ve here.  Assuming in a year i spend 20,000 for expense and it depreciated a lack rupee, the figure here is
= 0-(20,000 + 1,00,000) / 8,00,000 = -15%
If i use my car as call taxi the figure will be different, I am the driver and getting a revenue of 3,00,000 with little more expense. the figure here is
=3,00,000 - 1,40,000 / 8,50,000 = 18.8%
Another interesting fact about car is new car never appreciate but we can buy old car and sell it to a higher rate.

Work Break Down Structure - 2

Continuing the previous post on WBS, I likes to talk about few more aspects of WBS.
WBS depends on project management methodology ?
I believe in spite of project management methodology the approach towards WBS remains the same. In case of waterfall we will break down the phases, in case of agile we will break down each sprint. Probably different people uses different terminology for decomposition.
WBS is industry specific?
I believe it is also not industry specific , every industry before beginning any work they decompose into manageable deliverable,even our foremost farming industry break down the work along with phases.Following is what a farmer do in a single cycle. Plough,manure,Weed,Irrigate.
Farmers break down each phases into work packages which is suitable for the day and climate but obviously they break down the work in there mind; This capability of breaking down comes from experience or with expert power with us.
I likes to say about a thirukural which say which phase should be done better:
ஏரினும் நன்றால் எருவிடுதல் கட்டபின்
நீருனும் நன்றதன் காப்பு.
Better manure than plough; then weed;
then irrigating, better guard;

Work Breakdown structure - 1

Work Break Down Structure - The most easy and tough job in planning that's what i say about WBS.
Here are common questions that comes when we start writing WBS.
  • When we can begin WBS ?
  • How to break down?
  • How far i can decompose ?
  • Who should be involved in decomposing ?
I am not going to answer to these questions, but i am going to talk about these
And Ideal time to begin WBS is when we have defined scope, we should know what we are going to do then we can begin decomposing.
  • I want to go for a vacation.
  • Need to develop a software product.
  • Need to build a garden for home.
  • I Want to eat an apple. :-)
Now I got what to do ? Before scheduling we need to decompose. There is no such standard methodology that says how to breakdown. We can breakdown by our experience or get expert suggestion when breaking down.
We should be decomposing until we have manageable component and expertise in that domain will make our decomposing simple and easy.
Now let us come to our last scope  I want to eat an apple...
  • When we can begin WBS ?  When the apple is ready in our hand...
  • How to break down? Cut into pieces...
  • How far i can decompose ? As small you can eat...
  • Who should be involved in decomposing ? Who knows to cut......:-)
Work Break Down Structure
Coming to business, This can be a sample high level WBS of a software product, which can be further decomposed.