You are on page 1of 39

PROJECT PLANNING AND MANAGEMENT

(Project Planning / Project Formulation / Project Implementation / Preparation of Project


Proposal)
Compiled by
S.Rengasamy,
Madurai Institute of Social Sciences

One Of the most important administrative developments in the developed as well as in developing countries
has been the initiation and growth of a large number
of new programs projects in every field like Since the 1950s the development agenda has been
agriculture, irrigation, industry, community characterized by projects and programs aimed at
improving the quality of life of beneficiary communities,
development and social welfare etc.. The principle
be it in physical or qualitative terms. Despite significant
aims and objectives of all these programs have been inputs of human and financial resources, many fell short
to bring about overall changes in the existing socio- of expectations. Projects failed to meet the priority
economic structure in the country providing thereby needs of communities; stated outputs were not achieved
dignified way of life to a citizen as a unit and socio- or, if achieved, not sustained; target groups did not
economic up liftment of the society. benefit in the manner intended; project costs escalated
and implementation dates slipped; and adverse
So most of the administrators are directly concerned outcomes were not anticipated.
These failures were attributed in part to poor project
with the program / project administration than other
management, such as inadequate opportunities for
activities. The capability of administrative system to potential beneficiaries to participate in project
formulate and implement, relevant and in able identification, weak financial management, inadequate
programs effectively constitutes a crucial element in monitoring during implementation, poor linkages
the process of development. Development requires between project activities and project purpose, and
planning and planning includes a lot of programs / insufficient attention to the external environment during
projects. Plan requires projects and projects require a project design. It was also recognized that projects were
lot of planning. more likely to succeed when account was taken of the
socio-economic context in which they operated.
The rationale for using sound project management is to
As in the case of all definitions, the term program / achieve sustainable development.
project has a variety of meaning. The simplest definition of a project is "it is a unique set
Definition of a project of activities with a beginning and an end, undertaken to
1. Programs / Projects are tools to achieve the meet some established goals, objectives and deliverables
plan goals. within defined constraints of scope, quality, time, cost
E.g. Plan goal – Removal of poverty. and stakeholder or customer satisfaction."
More than 2,500 years ago, the famous Chinese
Plan tool – IRDP, JRY, TRYSEM etc.
philosopher, Confucius, expressed this sentiment. "In all
2. A project is an investment of resources in a
things, success depends upon previous preparation - and
package of interrelated time found activities. without such preparation there is sure to be failure." In
Thus a project becomes a time found task. A modern parlance, this elementary observation translates
Project should have definite beginning and an into a simple two-step sequence: 'Plan before doing', or
end. the more popular exhortation 'Plan Your Work, Work
3. A project can be defined as a scientifically Your Plan!' This basic concept is the foundation of the
evolved work plan devised to achieve specific project life cycle by which projects need to be managed.
First plan, then produce.
objectives within a specific period of time.
4. An activity (or, usually, a number of related activities) carried out according to a plan in order to
achieve a definite objective within a certain time and which will cease when the objective is
achieved.
5. A collection of linked activities, carried out in an organized manner, with a clearly defined start
point and end point to achieve some specific results desired to satisfy some clearly defined
objectives.
6. A group of activities that have to be performed in a logical sequence to meet pre-set objectives
outlined by the client.
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

7. A project is a temporary endeavor involving a connected sequence of activities and a range of


resources, which is designed to achieve a specific and unique outcome and which operates within
time, cost and quality constraints and which is often used to introduce change.

Categories of projects
Based on levels Based on time Based on the purpose
Centralized Normal Experimental
Decentralized Crash Pilot
Partially decentralized Disaster Production / Service.

Characteristics of a project:
1. Each and every project should have a package of interrelated activities.
Eg. IRDP
a. Identification of the poor Projects may stand-alone or be integrated
b. Knowing their choice into a program, with several projects
c. Arranging bank assets contributing to one overall goal.
d. Follow up / advisory activities A unique, one-time operational activity or
effort
e. Evaluation
Requires the completion of a large number
2. Each activity is time found
of interrelated activities
3. Each and every project should have a set of objectives to Established to achieve specific objective
be achieved. Resources, such as time and/or money, are
E.g. IRDP-Eradication poverty by distributing income- limited
generating assets. Typically has its own management structure
E.I.P-Improving the environment in slums through Need leadership
providing basic amenities like drinking water, drainage,
street lights, toilets and community centers etc.
4. Each and every project should be operated with constraints.
E.g. Eradication of poverty within a democratic framework, within a time frame, within a limited
resource within the present bureaucratic setup.
5. Each and every project should specify the (clientele) target group.
E.g. IRDP – Rural poor, SEPUP – Urban poor.
6. Each and every project should have well defined time sequence of investments.
7. Each and every project should have an in built arrangement to evaluate the program.

Project Life Cycle Phases:


All projects have to pass through certain phases. The attention that a particular project receives is again not
uniformly distributed throughout its life span, but it varies from phase to phase. At a particular appropriate
attention has to be paid.

Following are the general phases of a project.


1. Conception phase
2. Definition phase
3. Planning and organizing people
4. Implementation phase
5. Project clean up phase
The above phases won’t follow a sequence … rather they overlap; sometimes this overlapping is done
deliberately in the interest of compressing the overall project schedule. There are others who would
encourage natural growth.

2
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Conception phase:
Phase in which the project idea germinates. This phase is also known as Identification of the problem,
identifying the performance gap. It we avoid or truncate this phase, the project will have innate defects and
may eventually become a liability for the investors.
How to implement the project is not the botheration of this phase. It we start thinking about the
implementation during this phase, it will unnecessary delays this phase.
Definition Phase:
The definition phase of the project will develop the idea generated during the conception phase and produce
a document describing the project in sufficient details covering all aspects necessary for the customer or

investors to make up their minds on the project idea.


Planning and organizing phase:
This phase can effectively start only after definition phase, Need Analysis
Why?
nut in practice it start much earlier, almost immediately
after the conception phase. This phase overlaps so much
Aims & Objectives
with the definition and also with implementation phases. What For?
That is why no formal recognition is given to this by most
organizations. Strategy or Methodology
How?
Implementation phase:
Period of hectic activity for the project. It is during this
period, something starts growing in the field and people Plan of Activities Where?
for the first time can see the project.
Project clean up phase:
Completion and handing over the project. Implementation

The curve in the above diagram shows that effort to build With what with?
Evaluation
up a project is very slow, but effort to withdraw is very
sharp. It can also be seen that time taken for the formative
and clean up stage & implementation stage. While this Follow up
pattern is true for all the projects, the percentage of effort
in different phases would not be the same for all projects.
However for the same class projects the curve may be more or less the same. A life cycle curve can thus
represent a class of projects.

3
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Project Life Cycle Phases – II


Project Planning:
Planning in the context of projects is a means of organizing the work, deciding who does what, when, how
and for whom, determining the resources required, allocating responsibility communicating among all those
involved in a project, coordinating activities and people involved, controlling progress, estimating term of
completion and handling unexpected events and changes. Planning is also a basis for the authority of a
project manager, for the budgeting and financial control of a project manager, for the self analysis and
learning, means of orienting people to look ahead of a project, and above all, a way of initiating and
maintaining a sense of urgency i.e. time consciousness.

Project Formulation:
Project formulation means developing our ideas in a good shape so as to present it to decision-makers to
take correct investment decisions. Thus, project formulation refers to a series of steps to be taken to convert
an idea or aspiration into a feasible plan of action.

Project Planning –Table


Methods Project Identification Definition
Sources: Surveys, Published documents,
Govt .agencies & policies, Credit
institutions, Priority & Felt needs

Financial Analysis The identified project should be


-Commercial profitability Project Appraisal appraised in relation to the feasibility of
-Simple rate of Return technical, commercial, financial,
-Pay back period managerial, social, environmental and
-Social cost benefit analysis other aspects of the project by raising
various questions
Implementation involves Project Implementation
allocation of tasks to groups within
the project. It means
To carryout, Accomplish, Fulfill, To
give practical effect. Initiating involves obtaining approval of
the proposed strategies, project plan,
Levels of acceptance Initiating the project relevant budget and selection of the
Total, Changes in man power, project manager and other functionaries
Changes in funding, Rejection
Work break down structure.
Scheduling techniques
Gantt Chart, Bar Chart Specifying & Scheduling the
Milestone Chart, Network Analysis work Fixing the work responsibility,
relationship within & between
Personnel implementing & supporting authority
Cost of manpower
Clarifying authority,
Type of manpower (Admn, Tech, responsibility & relationship
Clerical)
Obtaining resources Finances and consumption of finances
and its quantity in various stages
What and what not to control Direction & Controlling
Motivating the staff
Tools of monitoring Monitoring the project Definition and advantages
Normal, Non termination, Early Terminating the project
termination, Late termination
Types &Methods Evaluation of the project Definition

4
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Techniques useful for Planning.


Force Field Analysis.
Program Evaluation and Review Technique (PERT)
Delphi technique.
Nominal Group technique.

Force Field Analysis


This technique is useful in identifying the current obstacles and current resources. As we plan and proceed
towards our work, a number of contending forces operate in our arena of our action. Some of these forces
drive us towards our goal, while some drive us away from our goal. A state of tension exists, producing a
dynamic situation as forces act upon one another and maintain a relative balance. This balance represents the
current state of affairs.

Helping Forces Hindering Forces


Present Situation
DEFEAT

GOAL
Brainstorm all the forces. These forces may be tangible items such as people or meeting rooms or
intangibles like apathy or personal connections or skills. One can move towards the goal ether by increasing
the helping forces, or by weakening the hindering forces. Sometimes the more pressure comes from the
helping forces; the more resistance develops in the hindering forces. In such cases it is often best to start by
reducing the hindering forces.

Project Monitoring
Methods and Techniques of monitoring projects / Programs
Projects even with a good planning, adequate organizational machinery and sufficient flow of resources
cannot automatically achieve the desired result. There must be some warning mechanism, which can alert
the organization about its possible success and failures, off and on. Constant watching not only saves
wastage of scarce resources but also ensure speedy execution of the project. Thus monitoring enables a
continuing critique of the project implementation.

q Monitoring means keeping a track of implementation process.


q Monitoring involves watching the progress of a project against time, resources and performance
schedules during the execution of the project and identifying lagging areas requiring timely attention and
action.
q Monitoring is defined as a management function to guide in the intended direction and to check
performance against pre – determined plans.
q Monitoring means periodic checking of progress of works against the targets laid down in order to
ensure timely completion of the project.

Purpose of Monitoring:
Project monitoring helps to provide constructive suggestions like.

5
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

q Rescheduling the project (if the project run behind the schedule)
q Re budgeting the project (appropriating funds from one head to another; avoiding expenses under
unnecessary heading).
q Re – assigning the staff (shifting the staff from one area to other; recruiting temporary staff to meet the
time schedule)
Steps in Monitoring:
1. Identifying the different units involved in planning & implementation
2. Identifying items on which feedback is required.
3. Developing proforma for reporting.
4. Determining the periodicity of reporting.
5. Fixing the responsibility of reporting at different levels.
6. Processing and analyzing the reports.
7. Identifying the critical / unreliable areas in implementation.
8. Providing feedback to corrective measures.

Indicators for Monitoring:


Projects are usually monitored against
Whether the projects
Running on schedule
Running within the planned costs
Receiving adequate costs.

Methods / Techniques of monitoring.


Project reporting, project appraisal, project monitoring project evaluation are inter – related terminology’s
with minor differences in their meaning. In project evaluation monitoring is referred as interim or
concurrent evaluation. So many of the methods used for evaluation can also relevant for monitoring the
project.
First hand information.
Formal reports
Project status report
Project schedule chart
Project financial status Report
Informal Reports.
Graphic presentations.
(Methods of monitoring & evaluation are similar.See methods of evaluation)

Evaluation
Meaning, Objectives, Scope, Principles, Functions, and Methods of Project Evaluation.
Types (internal / external) of Evaluation. A guideline for evaluating Projects

Evaluation has its origin in the Latin word “Valupure” which means the value of a particular thing, idea or
action. Evaluation, Thus, helps us to understand the worth, quality, significance amount, degree or
condition of any intervention desired to tackle a social problem.

Meaning of evaluation:
q Evaluation means finding out the value of something.
q Evaluation simply refers to the procedures of fact finding
q Evaluation consists of assessments whether or not certain activities, treatment and interventions are in
conformity with generally accepted professional standards.
q Any information obtained by any means on either the conduct or the outcome of interventions, treatment
or of social change projects is considered to be evaluation.

6
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

q Evaluation is designated to provide systematic, reliable and valid information on the conduct, impact and
effectiveness of the projects.
q Evaluation is essentially the study and review of past operating experience.

Evaluation primarily perceived from three perspectives.


Evaluation as an analysis – determining the merits or deficiencies of a program, methods and process.
Evaluation as an audit – systematic and continuous enquiry to measure the efficiency of means to reach their
particular preconceived ends.

In the agency context


Evaluation of administration means appraisal or judgment of the worth and effectiveness of all the processes
(e.g. Planning, organizing, staffing etc.) designed to ensure the agency to accomplish its objectives.

Areas of evaluation:
Evaluation report may be split into various sections, so that each area of the work of the agency, or of its
particular project is evaluated. These may be,

Purpose
Programs
Staff
Financial Administration
General.

Purpose:
The review the objectives of the agency / project and how far these are being fulfilled.

Programs:
Aspects like number of beneficiaries, nature of services rendered to them, their reaction to the services,
effectiveness and adequacy of services etc. may be evaluated.

Staff:
The success of any welfare program / agency depends upon the type of the staff an agency employs. Their
attitude, qualifications, recruitment policy, pay and other benefits and organizational environment. These
are the areas which help to understand the effectiveness of the project / agency.
Financial Administration:
The flow of resources and its consumption is a crucial factor in any project / agency. Whether the project
money is rightly consumed any over spending in some headings, appropriation and misappropriation. These
are some of the indicators that reveal the reasons for the success or failures of any project.
General:
Factors like public relations strategies employed by the project / agency, the constitution of the agency board
or project advisory committee and their contribution future plans of the agency are important to understand
the success or failures of any project.

Purpose of Evaluation:
From an accountability perspective,
The purpose of evaluation is to make the best possible use of funds by the program managers who are
accountable for the worth of their programs.
-Measuring accomplishment in order to avoid weaknesses and future mistakes.
-Observing the efficiency of the techniques and skills employed
-Scope for modification and improvement.
-Verifying whether the benefits reached the people for whom the program was meant.

7
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

From a knowledge perspective:


The purpose of evaluation is to establish new knowledge about social problems and the effectiveness of
policies and programs designed to alleviate them.
Understanding people’s participation & reasons for the same.
Evaluation helps to make plans for future work.

Principles of Evaluation:
The following are some of the principles, which should be kept in view in evaluation.
1. Evaluation is a continuous of the process.
2. Evaluation should involve minimum possible costs (inexpensive)
3. Evaluation should be done without prejudice to day to day work (minimum hindrance to day to day
work).
4. Evaluation must be done on a co-operative basis in which the entire staff and the board members should
participate (total participation).
5. As far as possible, the agency should itself evaluate its program but occasionally outside evaluation
machinery should also be made use of (external evaluation).
6. Total overall examination of the agency will reveal strength and weaknesses. (Agency / program totality).
7. The result of evaluation should be shared with workers of the agency (sharing).

Stages in Evaluation.
1. Program Planning Stage.
Pre – investment evaluation or
Formative evaluation or
Ex – ante evaluation or Early / Formulation
Pre project evaluation or
Exploratory evaluation or
Need assessment.
Program Monitoring Stage :
Monitoring Evaluation or Ongoing / interim.
Concurrent evaluation
1. Program completion Stage :
Impact evaluation or
Ex- post evaluation or Summative / Terminal / Final
Final evaluation.

Steps in Evaluation:
Learning about the program
Creating on evaluation plan & Evaluation indicators
Briefing the concerned people about the evaluation plan & indicators
Revising and elaborating the evaluation plan
Initiating Evaluation
Utilizing / Sharing the Information

8
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Types of Evaluation:
Evaluation can be categorized under different headings
A) By timing (when to evaluate)

Formative Evaluation
Done during the program -Development stages
(Process Evaluation, ex-ante evaluation, project appraisals)
Summative Evaluation
Taken up when the program achieves a stable of operation or when it is terminated
(Outcome evaluation, ex post evaluation etc.)
B) By Agency. Who is evaluating?
Internal Evaluation External Evaluation
It is a progress / impact Unbiased, objective detailed
Monitoring by the management it self assessment by an outsider
(Ongoing / concurrent evaluation)

On going Terminal Ex – post


During the implementation At the end of After a time lag
of a project or immediately from completion
after the completion of a project
of a project

By Stages
Internal / External Evaluation:
Internal Evaluation: (Enterprise Self Audit)
Internal evaluation (or otherwise monitoring, concurrent evaluation) is a continuous process which is done at
various points and in respect of various aspects of the working of an agency by the agency staff itself i.e.
staff board members and beneficiaries.

External / Outside Evaluation: (This is done by outsiders /Certified Management Audit)


q Grant giving bodies in order to find out how the money given is utilized by the agency or how the
program is implemented sent experienced and qualified evaluators (inspectors) to assess the work E.g.
Central social welfare Board
q Some donors may send consultants in order to see how far the standards laid down are put into practice.
q Inter agency evaluation. In this type two agencies mutually agree to evaluate their program by the other
agency.
q Inter agency tours.

Methods of Evaluation: (Tools / techniques)


Over the years, a variety of the methodologies have been evolved by academicians, practitioners and
professionals for evaluating any program / project. Some of the commonly used practices are given below.

First hand Information :


One of the simplest and easiest methods of evaluation by getting first hand information about the progress,
performance, problem areas etc,. of project from a host of staff, line officers, field personnel, other
specialists etc who directly associated with the project. Direct observation about the performance and pit
falls further facilitate the chances of an effective evaluation.
Formal / Informal periodic Reports.
Evaluation is also carried out through formal and informal reports.
Formal reports consists of
Project Status Report

9
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Project Schedule chart


Project financial status Report.

Project Status Report:


From this one can understand the current health, performance, schedule, cost and hold ups deviations from
the original schedule.

Project schedule Chart:


This indicates the time schedule for implementation of the project. From this one can understand any delay,
the cost of delay and the ultimate loss.

1) Project Financial Status Report:


It is through financial report, one can have a look at a glance whether the project is being implemented
within the realistic budget and time.

2) Informal reports:
Informal reports such as anonymous letters, press reports, complaints by beneficiaries, petitions sometimes
reveal the true nature of the project even though these reports are disserted, biased and contains maligned
information.

3) Graphic presentations:
Graphic presentations through display of charts, Graphs, Pictures, illustrations etc. in the project office is yet
another instrument for a close evaluation.

4) Standing Evaluation Review Committees:


Some of the organizations have setup standing committees, consisting of a host of experts and specialists
who meet regularly at frequent intervals to discuss about problems and to suggest remedial measures.

5) Project Profiles :
Preparation of the project profiles by the investigating teams on the basis of standardized guidelines and
models developed for the purpose, is also another method of evaluation.

Rate of Return
In finance, rate of return (ROR), also known as return on investment (ROI), rate of profit or sometimes just
return, is the ratio of money gained or lost (realized or unrealized) on an investment relative to the amount of
money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or
net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of
the investment. ROI is usually expressed as a percentage rather than a fraction.

Measure of profitability obtained by dividing the expected future annual net income by the required
investment; also called Accounting Rate of Return or unadjusted rate of return. Sometimes the average
investment rather than the original initial investment is used as the required investment, which is called
average rate of return. For example, consider the following investment:

Initial investment Rs.6500


Estimated life 20 years
Expected annual net income Rs. 675

Then the simple rate of return is Rs.675/Rs.6500X100 = 10.4%.

10
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Cost Benefit Analysis (CBA)


Definition: Process of quantifying costs and benefits of a decision, program, or project (over a certain
period), and those of its alternatives (within the same period), in order to have a single
scale of comparison for unbiased evaluation. Unlike the present value (PV) method of
investment appraisal, CBA estimates the net present value (NPV) of the decision by
discounting the investment and returns. Though
employed mainly in financial analysis, a CBA is PVB (present value of benefits);
not limited to monetary considerations only. It PVC (present value of costs);
NPV (PVB less PVC);
often includes those environmental and social costs
NPV/k (where k is the level of funds
and benefits that can be reasonably quantified. available) and
BCR (benefit cost ratio, PVB divided
A technique designed to determine the feasibility of a project or plan by PVC).
by quantifying its costs and benefits.

A process by which business decisions are analyzed. The benefits of a given situation or business-related

The Simple Return on Investment


Return on investment is frequently derived as the “return” (incremental gain) from an action divided by the cost of that action.
That is “simple ROI”. For example, what is the ROI for a new marketing program that is expected to cost Rs.500,000 over the
next five years and deliver an additional Rs.700,000 in increased profits during the same time.

action are summed and then the costs associated with taking that action are subtracted. Some consultants or
analysts also build the model to put a dollar value on intangible items, such as the benefits and costs
associated with living in a certain town. Most analysts will also factor opportunity cost into such equations

Comparison of the cost of a solution and the economic benefits that would accrue if the solution is put into
effect. This analysis is a prerequisite to the installation of an employee benefit plan. Questions to be
answered include: (1) will the cost result in greater loyalty of employees? (2) will the cost result in greater
productivity; and (3) will the benefits encourage employees to participate in their cost?

Cost-benefit analysis sets out to do for government what the market does for business :add up the benefits of
a public policy and compare them to the costs.

11
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Model Cost Benefit Analysis of PHC in Tamilnadu


By Dr. C Kannan Community Medicine Department, V.M.K.V. Medical College, Salem, Tamilnadu

Expenditure for public health services carried out by 32 primary health centers and
267 health sub-centers for the of Kanyakumari (13.4-lakh rural population) district of
Tamil Nadu (1995-1996 (01.04.05 to 31.03.06).
Expenditure (in Rupees)
Salary and non salary expenditure for 830 public health staff 4, 48,00000
Cost of drugs for the 32 primary health centers. 25,00000
Cost of vaccines (approximate) 8,00000
Expenses for doing 7601 tubectomy operations (Rs.200 per sterilization) 15,20000
Other expenses (Approximate) 50,00000
Total 5,50,00000
Benefits
Various programs in curative, preventive and promotive sides are carried out through the primary health
centers. For easy compilation, the following benefits were considered. The number of mothers who got
antenatal care including tetanus toxic administration, natal care (only a few mothers, as most of them
delivered in hospitals or nursing homes)
Benefi
Benefits (Rupees)
ciaries
1. Benefit under family welfare program 7601 116,00,00000
a. Sterilizations done 4428
b. Copper T insertions (equivalent to sterilizations) 9077
It was presumed that by each equivalent sterilization, two children were avoided in the
lifetime of each woman, who benefited from the family welfare program. A child should
be given food, shelter, clothes, education and health care by their parents at least up to
the age of 15 years. On an average, the monthly expense per child was put at Rs. 300
and yearly at Rs. 3600 and for
15 years at Rs. 54,000. By acceptance of sterilization and copper T. The savings to
every eligible couple was put at Rs. 108,000. The benefit to 9077 eligible couples was
put at Rs. 98 crore. The savings to the nation by preventing 18,154 births was put at
Rs. 20 crore, approximately
Rs. 10,000 per child. Therefore, the total benefit under the family welfare program was
put at Rs. 116 crore
2. Benefit for maternity and child health program 59,00000
The benefit for the above services for each mother was put at Rs. 100 and thus the
total benefit was put at Rs. 30 lakh. A total of 29,000 children got full immunization.
The benefit for each child was put at Rs. 100 and thus the total benefit was put at Rs.
29 lakh consequently benefit under maternity and child health program was put at Rs.
59 lakh.
3. Benefit on curative side Beneficiaries

a. New cases 444,869


561,332
b. Old cases
2208
c. Inpatients
For every new case, the benefit was put at Rs. 10 and for every old case, the benefit
was put at Rs. 5. The benefit for the inpatients treated was excluded being small in 72,00000
number. Hence, the total benefit under curative side was put at Rs. 72 lakh.
Total benefits from above three programs 117,31,00000
Benefit-Cost Ratio
Benefit-cost ratio =Total benefit 117.31 crore/ Total cost 5.46 crore = 21.48
For every rupee spent by the Government of Tamil Nadu, the benefit was Rs. 21 to the people of
that district. Thus, Tamil Nadu health program seems to be cost beneficial at the assumptions
made in this study. The benefit will increase further when other preventive, promotive and
curative services will be taken into consideration as expenditures on salary will remain the same.

12
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Ratio Analysis
Ratios are used to analyze financial statements and to explain relationships between individual amounts in
the financial statements (i.e., revenues and expenses; assets and liabilities; revenue to assets; and expenses to
liabilities). A ratio in isolation is typically of little value. Ratios become more meaningful when they are
compared to:
· Organization’s past performance.
· Organizations of similar size.
· Standards by charitable watchdog organizations (i.e., National Charities Information Bureau,
Better Business Bureau).
We have grouped ratios for discussion by their application in measuring liquidity, efficiency,
leverage and profitability.

What is meant by accounting ratios? How are they useful?


Answer: A relationship between various accounting figures, which are connected with each other, expressed
in mathematical terms, is called accounting ratios.
According to Kennedy and Macmillan, "The relationship of one item to another expressed in simple
mathematical form is known as ratio."
Robert Anthony defines a ratio as – "simply one number expressed in terms of another."
Accounting ratios are very useful as they briefly summarize the result of detailed and complicated
computations. Absolute figures are useful but they do not convey much meaning. In terms of accounting
ratios, comparison of these related figures makes them meaningful. For example, profit shown by two-
business concern is Rs. 50,000 and Rs. 1,00,000. It is difficult to say which business concern is more efficient
unless figures of capital investment or sales are also available.
Analysis and interpretation of various accounting ratio gives a better understanding of the financial condition
and performance of a business concern.
What do you mean by ratio analysis? What are the advantages of such analysis? Also point out the
limitations of ratio analysis.
Answer: Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and
performance of a business concern. Simply, ratio means the comparison of one figure to other relevant figure
or figures.
According to Myers, " Ratio analysis of financial statements is a study of relationship among various financial
factors in a business as disclosed by a single set of statements and a study of trend of these factors as shown
in a series of statements."
Advantages and Uses of Ratio Analysis
There are various groups of people who are interested in analysis of financial position of a company. They use
the ratio analysis to work out a particular financial characteristic of the company in which they are interested.
Ratio analysis helps the various groups in the following manner: -
To workout the profitability: To workout the solvency: Helpful in analysis of financial statement: Helpful in
comparative analysis of the performance: To simplify the accounting information: To workout the
operating efficiency: To workout short-term financial position: Helpful for forecasting purposes: future line
of action.

I. Liquidity Ratios
Liquidity ratios, also referred to as solvency ratios, show the ability of a CDC to meet financial obligations
over the short-term.
These ratios help you assess the organization’s ability to meet such near-term obligations as accounts payable,
or to maintain regular operations, with current assets that will become available in the near future (typically
within one year). These ratios give information on the adequacy of unrestricted cash for seeding new
community development projects, bridging cash shortfalls, and providing collateral for loans.

13
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Current Ratio
This ratio compares assets expected to be available as cash within the next year (i.e., cash, investments,
accounts receivable, etc.) with current liabilities, or those liabilities that will become due within the same 12
month period (i.e., accounts payable, current portion of debt, etc.). The current ratio is calculated as follows:
Current Ratio = Current Assets 120
Current Liabilities 100
As a general guide, the current ratio should be 1.2:1 or higher. In the for-profit and government sectors, a
current ratio of 2:1 is considered an indicator of reasonable financial strength. A ratio of less than 1.0 indicate
that the organization does not have sufficient current assets to meet current payment obligations. Charting the
current ratio over time provides useful information concerning trends in the CDC’s financial status.

An analysis of the CDC’s current ratio requires some judgement. If the CDC has carried a receivable from an
affiliated entity on its books (for example, a housing development limited partnership) for several years, in the
same amount, this is most likely not collectible within a one year period. A more conservative approach in
determining the current ratio would require deducting the amount of questionable receivables from total
receivables reported.

Cash Ratio
This is a more conservative estimate than the current ratio since assets other than cash and cash equivalents are
excluded from this ratio. The cash ratio relates current liabilities to an organization’s most liquid current assets.

In essence, some assets are quickly convertible into cash. A CDC’s most liquid current assets exclude accounts
receivable from this calculation, as these are
frequently not immediately collectable. This Cash Ratio = Cash + Cash Equivalents ratio is an
important measure of the organization’s Current Liabilities liquidity.
This ratio should be at least .5 to .75, and clearly, the higher the better.

Days’ Cash
This is the number of days that the organization can pay its obligations without any cash inflows. This can be a
very enlightening number and in some cases
Days’ Cash = (Cash + Cash Equivalents) X 365 shocking. Days’ Cash is expressed in number of
Operating Expenses - Depreciation days, and is calculated as given in the box:
As a general guide, an organization should
have at least 90 days (three months) of cash at its disposal.

Working Capital Working Capital = Current Assets - Current Liabilities


This is the difference between current
assets and current liabilities. It represents the pool of resources available to management to conduct daily
operations, and is a significant indicator of the resources available to your CDC for equity investments in
development projects. Working Capital is expressed as a dollar amount (not as a ratio) and is calculated as
follows:

II. Efficiency Ratios


Efficiency ratios measure how successful the organization is in using the assets and capital at its disposal
in order to maximize cash flow.

Receivable turnover = Annual Revenue/Support* Receivable Turnover - The receivable


Average Receivables** turnover ratio and the average receivable
collection period provide information on the
ability to collect receivables by examining how often they turn over (or are collected) per year and the
number of days (on average) it takes to collect accounts receivable. The intent is to determine the liquidity

14
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

of accounts receivable.
The organization’s receivable turnover rate, stated in times per year, is computed as follows:
*Revenue and support amounts are located in the Statement of Activities.
**The Average Receivables is calculated by adding the prior year’s accounts receivable and the current year accounts receivable from the
Statement of Financial Position and dividing the total by two.

Once the receivable turnover rate is determined, the average collection period (in days) is calculated as
follows:
Because many CDCs have a number of Average Collection Period = 365
revenue and support sources (i.e., government Receivable Turnover
grants, private grants, rental/developer
revenue, etc.) it is appropriate to separately calculate the receivable turnover ratios and the average
collection period for the major different sources of revenue/support.

For example, you might want to look at the average collection period for government grants, if these grants
are a major element of your CDC’s revenue. You would calculate your Grants Receivable Turnover (annual
grants receivable/average grants receivable), and then divide 365 by that amount. If it’s taking the
organization an extended period of time, let’s say more than 3 months, to collect the major source of
revenue, perhaps the organization needs to explore diversifying its sources.

Receivable turnover and the average collection period are meaningful statistics since they show how long it
takes for an organization to convert its accounts receivable to cash. Comparing these to ratios to the Days’
Cash provides a powerful snapshot of a CDC’s efficiency and liquidity. A CDC with only 30 Days’ Cash,
and a 90 day Average Collection Period, could be facing short-term problems.

A reasonable time period to collect is 30 days for accounts receivable and 90 days for grants. A longer time
period is indicative of billing or collection problems.

Management & General Expenses as % of Total Expenses - This ratio measures what percentage of
total expenses the organization is spending on management and general expenses (sometimes referred to as
administration and overhead). This ratio is generally of great interest to the funders, as it is a reflection of
the CDC’s proficiency in the use of funds for programmatic purposes. Charitable watchdog organizations
set a standard for this ratio in the range of 20% - 25% of total expenses. This ratio is calculated as follows:

Management & General Expenses


Program Expenses
Total Expenses
Total Expenses
Program Expenses As % Of Total Expenses - This ratio indicates what
percentage of total expenses are devoted to program activities. Charitable watchdog organizations look
for this ratio to be 60% or greater. This ratio is calculated as follows:

Program Expenses
Total Expenses
III. Leverage Ratios
Leverage ratios measure the difference between funds generated by the CDC’s activities (i.e., fees,
developer’s profit, and unrestricted grants) as compared to funds supplied by outside lenders in the form of
debt. Outside lenders are interested in seeing a high proportion of organizational equity to debt, to insure the
CDC’s ability to fulfill payment obligations, as well as its ability to weather unexpected financial reverses.

Debt To Net Assets Ratio - This ratio measures to what extent the organization’s operations are funded by
debt. The principal amount of the CDC’s long term debt is the amount included in the computation.
Commercial lenders frequently look at this ratio to determine their risk when they are considering lending to
a new borrower. An excessive debt to net asset ratio may suggest that the CDC is over-leveraged. In the

15
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

community development industry, a ratio above 5-to-1 is cause for concern. Younger CDCs, in particular,
need to be very conservative in acquiring debt, until they have established stable and adequate revenue
streams.

In calculating this ratio it is important to consider:


• Whether the organization has an explicit policy on what ratio is acceptable and where you stand in
relation to this ratio.
• The quality of the net assets, with an analysis of its composition (i.e., what portions of the net assets
are unrestricted or questionable receivables.
• The ability to service debt, or the net cash flow during the year.
• The reliability and consistency of the sources of support and revenue.
• How the CDC uses debt. Long-term debt to finance real estate investments is an acceptable use while
long-term debt to finance organizational operations is cause for concern.
This ratio is calculated as follows:
Debt-to-Net Assets Ratio = Long-term Debt
Net Assets

IV. Profitability Ratios


Ratios concerned with profitability may, at first consideration, not be relevant to the CDC industry. CDCs
are nonprofit organizations with a charitable purpose; profit would seem to be antithetical to our work and
purpose. At the same time, a CDC cannot afford to remain static, or stagnant, nor can it afford a long-term
decline.

An organization, which chronically runs deficits, is a poor candidate for outside investment or program
expansion. For better or worse, a funder’s confidence in the effectiveness of the organization’s management
will be determined and influenced by the results of these ratio calculations.

Operating Ratio - This ratio can be used as an index of efficiency as well as profitability. It is frequently
calculated as part of the underwriting of real estate projects, but also can be used as a measurement of how
well the CDC can control operating costs. A CDC with a low operating ratio (and therefore a high level of
revenues) is generally considered stable, and well managed.

Trending this ratio is a useful analytic exercise. If the ratio is increasing over time, it may, for example,
indicate that the organization’s net revenues
are shrinking through the loss of an Operating Ratio = Total Operating Expenses
important source of funding. Revenues + Support

Return On Net Assets - This ratio is frequently referred to in the field of financial analysis, and is also
known as Return on Equity. In nonprofit terms it compares the amount of change in net assets (or net
revenue) to the net assets (or equity) of the CDC.
Return on Net Assets = Change in Net Assets
The composition of the CDC’s net assets is an Net Assets
important consideration when analyzing this ratio.
The net assets of many CDCs consist of real estate, which is fixed in value. Real property which has been
designated for a particular use, or a restricted income group, will not necessarily generate a profit or return.
On the other hand, a CDC whose net assets are substantially liquid may generate a high rate of return on its
funds. Watching the trend of this ratio provides useful information to a CDC’s financial managers.

16
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

PROGRAMME EVALUTION AND REVIEW TECHNIQUE (PERT)


CRITICAL PATH ANALYSIS (CPM).

Nature of present day projects


There is no denial of the fact that the present day projects are very complex in nature, involving huge
investments over a period of time and come across multitude of problems. In order to accomplish the
intended objectives as also to optimize use of scare physical and financial resources, it has been felt that the
need to apply professional management techniques to plan, finance and schedule the projects on a scientific
basis. One such widely used professional management technique is PERT

Origin of PERT & CPM Net work is a managerial device


The network techniques (PERT and CPM) have their origin in the late advantageous over the earlier
fifties in U.S.A. Since older scheduling techniques have never enjoyed scheduling techniques
History
much success in connection with the development projects,
Critical Path Method (CPM)
networking is considered an important advance in project E I Du Pont de Nemours & Co.
management. These (PERT and CPM) techniques were developed to (1957) for construction of new
facilitate planning, scheduling and controlling the projects in an chemical plant and maintenance
integrated manner so that these could be completed within the shut-down
constraints of desire time, cost and performance. Deterministic task times
Activity-on-node network
construction
The technique of critical path method was evolved in 1957 by the DU
Repetitive nature of jobs
Pont Company to solve scheduling problems in the construction of Project Evaluation and Review
projects. Similarly, Program Evaluation Review Technique was Technique (PERT)
developed in 1958 by the U.S. Navy Department to coordinate the U S Navy (1958) for the POLARIS
efforts of a host of agencies involved in the implementation of the missile program
project and thereby diminishing the chances of all uncertainties. Multiple task time estimates
(probabilistic nature)
Activity-on-arrow network
Though both these techniques have developed independently, they
construction
have a common base, i.e., optimum utilization of resources for the Non-repetitive jobs (R & D work)
implementation of projects as per the predetermined time cost and
performance. Some of the potential benefits of these techniques are given below:
Net work techniques in India

Potential Benefits of PERT & CPM


a) Provides a logical thinking device for preparation of the project schedule and gives a working logical model:
b) Helps to identify critical jobs to the completion of the project;
c) Provides a method for scientific allocation of resources;
d) Facilitate coordination of various efforts and improves communication at all levels;
e) Understand the status of the project at any given time;
f) Helps us to diagnose / detect problem areas for improvement.
g) Helps in predicting schedule slippage and cost overrun ;
h) Gives management a tool for supervision and control.

It is due to the inherent advantages of network techniques that of late, the developing countries like ours,
have also started relying on their application in almost all important sector of economy such as irrigation,
power, steel, fertilizers etc., both in private and government sectors. The various studies amply show that the
results have also been quite spectacular, even the Administrative Reforms Commission way back in 1965
recognizing the potentiality of these techniques, stresses the need that once a project is approved, its
systematic planning must invariably be undertaken by applying the network techniques. It may, however, be

17
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

cautioned that network techniques are not a panacea in themselves. These are one of the most powerful tools
for management to ensure effectiveness, efficiency and efficacy of our projects.

Critical Path Method


A network analysis technique used to predict project duration by analyzing which sequence of
activities (path) has the least amount of schedule flexibility (float)
Float: Slack
Amount of time that an activity may be delayed from its early start without delaying the project
finish date
Critical Path Analysis (CPA)
Effective and powerful method of assessing:
Identify what tasks must be carried out
Identify where parallel activity can be performed
The shortest time in which you can complete a project
Resources needed to execute a project
The sequence of activities, scheduling and timings involved
Task priorities
The most efficient way of shortening time on urgent projects
PERT Charts – Definition
Program Evaluation and Review Technique:
An event-oriented network analysis technique used to estimate project duration when there is a high
degree of uncertainly with the individual duration estimates
Variant of Critical Path Analysis that takes a more skeptical view of the time needed to complete
each project stage

Some of the salient features of the various components of the network are given below
1. An activity has a preceding as well as a succeeding event;
2. An activity cannot occur until its preceding events have been completed.
3. An activity has to culminate in the end as an event;
4. An activity consumes resources especially time. However, it may or may not consume other resources such as materials,
money etc.
5. Each event / activity carries a distinct number’
6. The same activity cannot be depicted by two arrows;
7. The arrows indicating the activities move in the direction from left to right and not vice versa;
8. The length of an arrow has no significance in terms of an activity.
9. An event having completed once cannot occur again.
10. An event does not consume any resource including time.
11. An event invariably indicates the program in the implementation process.
12. The dummy activities do not consume any resources;
13. A network may represent more than one critical path. It is this path which determent the shortest time required for the
completion of the project. More so, any delay in an activity on critical path correspondingly affects delay in project
completion.

18
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

A MODEL PROJECT EXECUTION PLANNING USING NETWORK


ANANYSIS.

Name of the Project: Establish a milk chilling plant.


Assumptions
1. Feasibility and viability of a milk chilling plant with capacity of 5000 lits/ per day worked out,
this feasibility analysis is final.
2. Based on that an execution plan for the project is ready. I t has to be approved by the dairy development
corporation.
3. A building is available we can use it directly.
4. Staff need to be recruited they will be trained in another plant of similar size.
5. Machineries for the project have to be purchased.
6. Power line has to be obtained.
7. Electrical writing work has to be undertaken .
8. Running the plant for 4 weeks before handing it over to the manager

STEPS IN THE NETWORK PREPARISSION:


1. List all the activities to be executed and assigning code numbers to activities.
2. Specify a logical sequence of activities.
a) Which activity / activities in the package should proceed?
b) Which activity has to succeed?
c) Which activity can be taken up concurrently / simultaneously?
3. Estimate / specify the time duration for each activity.
4. Assemble the activities in the form of a flow diagram.
5. Analyze the flow diagram.

STEP -1. LIST ALL THE ACTIVITIES TO THE EXECUTED AND ASSIHNING CODE
NUMBERS.

Code Activity description


1 A Project plan approval (from Dairy. Development Corporation)
2 B Recruit staff
3 C Purchase machinery
4 D Obtain power supply line
5 E Training of staff
6 F Installing the machineries
7 G Electrical writing
8 H Pilot run.

19
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

STEP-2. SPECIFY A LOGICAL AEQUENCE.


For this indicate against each activity which activity / activities in the package should precede the given
activity.
Activity Code Activity description Immediate predecessor
A Project plan approval None
B Recruit staff A
C Purchase machinery A
D Obtain power supply line A
E Train staff B
F Install machinery C
G Electrical wiring D
H Pilot run E,F,G

STEP-3, ESTIMATE SPECFIY ACTIVITY DURATION:


Estimate if you do the project for the first time using other project manager’s experience, who have done
similar projects in the past under more or less identical conditions. Collect data on each activities time from
more than 30 such project managers. (more than 30 samples will constitute a large sample according to
statistics) any estimate based on large sample will be a reliable estimate.
Example: Project Plan Approval – Sample Data (in weeks).
14 22 9 6 5 11 18 6 17 8 19 6 12 2 6 14
6 2 5 6 6 15 6 7 20 8 22 6 10 16 6 6
Maximum duration in the sample - 22 weeks – Pessimistic Time (tpe) Majority in the sample -6 weeks
– Most Likely Time (tml) Minimum in the
sample – 2 weeks – Optimistic Time (top) Time Estimate: te = top + 4tml + tpe
Similarly for other activities arrive at the time ______________
estimates. 6
Using the methodology described above the In our example: te = 2+4*6 + 22 = 48
activities duration can be worked out as shown in __________ ____ = 8 weeks
the box 6 6
(A note on the activity duration.The unit of measuring time
should be the same for all the activities. It may in terms of months (for project having time span of 5 or 7 years) week (running
nd
to two years) days (short duration projects) or even minutes and 2 (as in the case of surgical operations.)

Acti- Code Activity description Immediate prede- Activity Duration


vity cessor activity (in months )
1 A Project plan approval None 2
2 B Recruit staff A 3
3 C Purchase machinery A 5
4 D Obtain power supply line A 2
5 E Train staff B 2
6 F Install machinery C 4
7 G Electrical wiring D 2
8 H Pilot run E,F,G 1

20
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

STEP -4 ASSEMBLE THE ACTIVITIES IN THE FORM OF A FLOW DIAGRAM.

Train Staff

E
2 5
Recruit Staff 2
B
Project Plan Approval 3 Pilot Run
Purchase Install
A Machinery Machinery H
0 1 3 8
2 1
0 D

Obtain Power
2 G

4 7
2

Electric Wiring

• Activities connected by critical events are called critical activities.


• The path connecting the activities is the critical path.
• Critical path is the longest path.
• There can be more than one critical path in a project; both paths will be of the same length.
• Critical path analysis tells us which events / activities need to be controlled.
• Knowledge of non-critical events and activities tells us the duration of time available to them
as slack.

See the use of dummy activities in the above flow diagram.

STEP-5. ANALYSE THE FLOW DIAGRAM.


Assume that the project is started at time. That is the earliest occurrence time of the initial event, in this case
`O`. Go forward to compute the Earliest Occurrence Time (EOT) of other events. EOT of the events are
furnished in the flow diagram below the events. Let the EOT of the final / last event be the Latest
Occurrence Time (LOT) of that event. To compute the LOT of other events go backward on the top of the
events.

Look at some of the events having the same LOT and EOT. They are 0-1-3-7-8. Such events are called
critical events. The different between LOT and EOT is the surplus time available for the event to occur. This
cushion is known as slack.

21
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Train Staff

E
2 5
Recruit Staff 2
B
Project Plan Approval 3 Pilot Run
Purchase Install
A Machinery Machinery H
0 1 3 8
2 1
0 D

Obtain Power
2 G

4 7
2

Electric Wiring

Slack = LOT- EOT.On critical events Slack = 0. Other events are called non-critical events. eg event no 3
and 7.

Use of nodes and arrows


Arrows An arrow leads from tail to head directionally
Indicate ACTIVITY, a time consuming effort that is required to perform a part of the
work.
Nodes n A node is represented by a circle
Indicate EVENT, a point in time where one or more activities start and/or finish.
Activity
A task or a certain amount of work required in the project
Requires time to complete
Represented by an arrow
Dummy Activity
Indicates only precedence relationships
Does not require any time of effort

22
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Gantt Charts
Planning and scheduling more complex projects
How to use the tool:
Gantt Charts are useful tools for analyzing and planning more complex projects. They:
q Help you to plan out the tasks that need to be completed
q Give you a basis for scheduling when these tasks will be carried out
q Allow you to plan the allocation of resources needed to complete the project, and
q Help you to work out the critical path for a project where you must complete it by a particular date.

When a project is under way, Gantt charts help you to monitor whether the project is on schedule. If it is not,
it allows you to pinpoint the remedial action necessary to put it back on schedule.
Sequential and parallel activities:
An essential concept behind project planning (and Critical Path Analysis) is that some activities are
dependent on other activities being completed first. As a shallow example, it is not a good idea to start
building a bridge before you have designed it!

These dependent activities need to be completed in a sequence, with each stage being more-or-less
completed before the next activity can begin. We can call dependent activities 'sequential'.

Other activities are not dependent on completion of any other tasks. These may be done at any time before
or after a particular stage is reached. These are nondependent or 'parallel' tasks.

Drawing a Gantt Chart


To draw up a Gantt Chart, follow these steps:

1. List all activities in the plan


2. Head up graph paper with the days or weeks through to task completion
3. Plot the tasks onto the graph paper
4. Schedule Activities
5. Presenting the Analysis

Key points:
Gantt charts are useful tools for planning and scheduling projects. They allow you to assess how long a
project should take, determine the resources needed, and lay out the order in which tasks need to be carried
out. They are useful in managing the dependencies between tasks.

When a project is under way, Gantt charts are useful for monitoring its progress. You can immediately see
what should have been achieved at a point in time, and can therefore take remedial action to bring the
project back on course. This can be essential for the successful and profitable implementation of the project.

23
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

SWOT Analysis
SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities,
and Threats involved in a project or in a business venture. It involves specifying the objective of the
business venture or project and identifying the internal and
external factors that are favorable and unfavorable to achieving
that objective. The technique is credited to Albert Humphrey,
who led a research project at Stanford University in the 1960s
and 1970s using data from Fortune 500 companies

Strengths: attributes of the organization that are helpful to


achieving the objective.
Weaknesses: attributes of the organization that are harmful to
achieving the objective.
Opportunities: external conditions that are helpful to
achieving the objective.
Threats: external conditions which could do damage to the
business's performance.

MODEL SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY


Strengths:
* Demand profile: Absolutely optimistic.
* Margins: Quite reasonable, even on packed liquid milk.
* Flexibility of product mix: Tremendous. With balancing equipment, you can keep on adding to your
product line.
* Availability of raw material: Abundant. Presently, more than 80 per cent of milk produced is flowing
into the unorganized sector, which requires proper channelization.
* Technical manpower: Professionally-trained, technical human resource pool, built over last 30 years.
Weaknesses:
* Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long life. Surely,
many new processes will follow to improve milk quality and extend its shelf life.
* Lack of control over yield: Theoretically, there is little control over milk yield. However, increased
awareness of developments like embryo transplant, artificial insemination and properly managed animal
husbandry practices, coupled with higher income to rural milk producers should automatically lead to
improvement in milk yields.
* Logistics of procurement: Woes of bad roads and inadequate transportation facility make milk
procurement problematic. But with the overall economic improvement in India, these problems would also
get solved.
* Problematic distribution: Yes, all is not well with distribution. But then if ice creams can be sold
virtually at every nook and corner, why can’t we sell other dairy products too? Moreover, it is only a matter
of time before we see the emergence of a cold chain linking the producer to the refrigerator at the
consumer’s home!
* Competition: With so many newcomers entering this industry, competition is becoming tougher day by
day. But then competition has to be faced as a ground reality. The market is large enough for many to carve
out their niche.
Opportunities:
"Failure is never final, and success never ending”. Dr Kurien bears out this statement perfectly. He entered
the industry when there were only threats. He met failure head-on, and now he clearly is an example of
‘never ending successes! If dairy entrepreneurs are looking for opportunities in India, the following areas
must be tapped:

24
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

* Value addition: There is a phenomenal scope for innovations in product development, packaging and
presentation. Given below are potential areas of value addition:
Steps should be taken to introduce value-added products like shrikhand, ice creams, paneer, khoa,
flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility in the market place along
with opportunities in the field of brand building.
Addition of cultured products like yoghurt and cheese lend further strength - both in terms of
utilization of resources and presence in the market place.
A lateral view opens up opportunities in milk proteins through casein, caseinates and other dietary
proteins, further opening up export opportunities.
Yet another aspect can be the addition of infant foods, geriatric foods and nutritionals.
* Export potential: Efforts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri
Lanka, Nigeria, and the Middle East. Following the new GATT treaty, opportunities will increase
tremendously for the export of agri-products in general and dairy products in particular.

Threats:
Milk vendors, the un-organized sector: Today milk vendors are occupying the pride of place in the industry.
Organized dissemination of information about the harm that they are doing to producers and consumers
should see a steady decline in their importance.

The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far outweigh ‘weaknesses’
and ‘threats’. Strengths and opportunities are fundamental and weaknesses and threats are transitory. Any
investment idea can do well only when you have three essential ingredients: entrepreneurship (the ability to
take risks), innovative approach (in product lines and marketing) and values (of quality/ethics).

The Indian dairy industry, following its delicensing, has been attracting a large number of entrepreneurs.
Their success in dairying depends on factors such as an efficient yet economical procurement network,
hygienic and cost-effective processing facilities and innovativeness in the market place. All that needs to be
done is: to innovate, convert products into commercially exploitable ideas. All the time keep reminding
yourself: Benjamin Franklin discovered electricity, but it was the man who invented the meter that really
made the money!

MODEL SWOT ANALYSIS OF INDIAN TEXTILE INDUSTRY

Strengths:
Indian Textile Industry is an Independent & Self-Reliant industry.
• Abundant Raw Material availability that helps industry to control costs and reduces the lead-time across
the operation.
• Availability of Low Cost and Skilled Manpower provides competitive advantage to industry.
• Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry.
• India has great advantage in Spinning Sector and has a presence in all process of operation and value
chain.
• India is one of the largest exporters of Yarn in international market and contributes around 25% share of
the global trade in Cotton Yarn.
The Apparel Industry is one of largest foreign revenue contributor and holds 12% of the country’s total
export.

• Industry has large and diversified segments that provide wide variety of products.
• Growing Economy and Potential Domestic and International Market.
• Industry has Manufacturing Flexibility that helps to increase the productivity.

25
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Weaknesses:
• Indian Textile Industry is highly Fragmented Industry.
• Industry is highly dependent on Cotton.
• Lower Productivity in various segments.
• There is Declining in Mill Segment.
• Lack of Technological Development that affect the productivity and other activities in whole value chain.
• Infrastructural Bottlenecks and Efficiency such as, Transaction Time at Ports and transportation Time.
• Unfavorable labor Laws.
• Lack of Trade Membership, which restrict to tap other potential market.
• Lacking to generate Economies of Scale.
• Higher Indirect Taxes, Power and Interest Rates.

Opportunities:
• Growth rate of Domestic Textile Industry is 6-8% per annum.
• Large, Potential Domestic and International Market.
• Product development and Diversification to cater global needs.
• Elimination of Quota Restriction leads to greater Market Development.
• Market is gradually shifting towards Branded Readymade Garment.
• Increased Disposable Income and Purchasing Power of Indian Customer opens New Market
Development.
• Emerging Retail Industry and Malls provide huge opportunities for the Apparel, Handicraft and other
segments of the industry.
• Greater Investment and FDI opportunities are available.

Threats:
• Competition from other developing countries, especially China.
• Continuous Quality Improvement is need of the hour as there are different demand patterns all over the
world.
• Elimination of Quota system will lead to fluctuations in Export Demand.
• Threat for Traditional Market for Power loom and Handloom Products and forcing them for product
diversification.
• Geographical Disadvantages.
• International labor and Environmental
Laws.
• To balance the demand and supply.
• To make balance between price and quality.

26
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

SWOT analysis of extension service providers


A SWOT analysis makes it possible to assess the various strengths, weaknesses, opportunities and threats
(SWOTs) within an organization, or within the agricultural extension system as a whole. In this study, a
SWOT analysis was carried out at the category level, and focused on the categories of extension service
providers. The following table outlines the findings of that analysis.

Catego Strengths Weaknesses Opportunities Threats


ry
- Highly qualified, - Limited financial resources: - Improved - Inadequate
competent and more than 75 percent of collaboration and budgets are
experienced budget goes on salaries; very efficiency through declining in real
personnel. little left for operational costs. department mergers. terms (inflation).
providers and public research organizations

- Good in-house - Poor logistical support: no - Collaboration - Prevailing


training programs transport and equipment. opportunities among economic
Public agricultural extension service

have produced - Lagging technical knowledge line ministries, situation: unlikely


credible staff. in new enterprises (e.g. departments and that government
- Extensive grassroots ostrich/crocodile farming). other system actors. will increase
coverage with district - Bureaucracy and long - Potential for budgetary
and/or village-level channels of communication. improved allocations.
representation. - Conflicts between line effectiveness and - Unstable
- Amalgamation of ministries and departments at efficiency through macroeconomic
DR&SS and AGRITEX the expense of rural transformations (e.g. and political
ensures collaboration development programs and commercialization and environment.
between technology intended beneficiaries. cost recovery - Donors are
generators and - Lack of self-discipline: few can programs). withdrawing or
disseminators. work without supervision. scaling down.
- Public research - High staff turnover leaves - Retrenchments
system has a broad some projects/programs usually start at the
spectrum of unfinished. bottom with the
researchers. - Politically aligned line community service
ministries (e.g. Ministry of providers.
Youth Development, Gender
and Employment Creation) are
viewed suspiciously.
- Counterproductive policies
(e.g. technical papers used for
career promotion, no
consideration of the ground-
level impact).

27
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

- Grassroots - Inadequate budgets - Better services and - Most are likely to


representation. (despite donor support). more tangible benefits be affected by
associations - More grassroots - Technical weaknesses. for members would donor fatigue and
contact: more aware of improve the investment
Farmers'

farmers' needs. membership base. withdrawal (but


- Member-based - Could be self-funding not the
(district- and village- if membership base is Commercial
level), so effective two- improved. Farmers' Union).
way communication.
- Specific interest groups
provide specific, relevant
information to clients.
- Abundant financial - Thin on the ground, so - Potential for effective - Unstable
resources. very limited coverage. program sociopolitical
- Better logistical support - Lack integrated implementation: environment not
(transport and approach (despite the cooperative NGOs conducive to
equipment). rhetoric). involve everyone. normal
- Use multidisciplinary - Lack information and - Donors will fund well- operations.
teams and more holistic technical expertise. designed programs - Donor fatigue
approaches. - Lagging technical with demonstrated and investment
NGOs and donor-supported rural

- Good networking skills. knowledge in new impact. withdrawal.


- Use of participatory enterprises (e.g. - Political pressure
and bottom-up ostrich/crocodile to extend
development programs

approaches ensures farming). programs or


effective grassroots and - Exist for financial projects beyond
community benefits: are dollar- the available
participation. driven. resources.
- Provide training, - Funds abused or not - Programs may be
extension and finance passed to the rightful overwhelmed as
from one source. beneficiaries. economic decline
- Greatly improved - Work is too localized. and retrenchment
understanding of - Programmes that are lead more and
community needs too short to have much more beneficiaries
(through accountability impact. to seek
and demonstration of - Programmes that are involvement.
impact to donors). too narrow (sector- - Political pressure
- Small independent focused) to have much may force closures
decision-making units impact. (e.g. NGOs
facilitate quick decision- - Ineffective umbrella accused of
making and greater body: the National supporting
flexibility in project and Association of NGOs opposition and
programme (NANGO). banned from
implementation. - Overdependence on holding meetings
external financial in some areas).
resources and expatriate
technical assistance.

28
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

29
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Environmental Impact Analysis

What is EIA?
History of EIA in India
The EIA process
Forms of impact assessment
Comparative review of EIA procedures and practices

What is EIA?
Environment Impact Assessment or EIA can be defined as the study to predict the effect of a proposed
activity/project on the environment. A decision making tool, EIA compares various alternatives for a project
and seeks to identify the one which represents the best combination of economic and environmental costs
and benefits.

EIA systematically examines both beneficial and adverse consequences of the project and ensures that these
effects are taken into account during project design. It helps to identify possible environmental effects of the
proposed project, proposes measures to mitigate adverse effects and predicts whether there will be
significant adverse environmental effects, even after the mitigation is implemented. By considering the
environmental effects of the project and their mitigation early in the project planning cycle, environmental
assessment has many benefits, such as protection of environment, optimum utilization of resources and
saving of time and cost of the project. Properly conducted EIA also lessens conflicts by promoting
community participation, informing decision makers, and helping lay the base for environmentally sound
projects. Benefits of integrating EIA have been observed in all stages of a project, from exploration and
planning, through construction, operations, decommissioning, and beyond site closure.
Evolution of EIA

EIA - Three core values EIA is one of the successful policy innovations of the 20th
• Integrity: The EIA process should be Century for environmental conservation. Thirty-seven years
fair, objective, unbiased and balanced ago, there was no EIA but today, it is a formal process in
• Utility: The EIA process should many countries and is currently practiced in more than 100
provide balanced, credible information
countries. EIA as a mandatory regulatory procedure
for decision-making
• Sustainability: The EIA process originated in the early 1970s, with the implementation of the
should result in environmental National Environment Policy Act (NEPA) 1969 in the US. A
safeguards large part of the initial development took place in a few high-
income countries, like Canada, Australia, and New Zealand
(1973-74). However, there were some developing countries as well, which introduced EIA relatively early -
Columbia (1974), Philippines (1978).

The EIA process really took off after the mid-1980s. In 1989, the World Bank adopted EIA for major
development projects, in which a borrower country had to undertake an EIA under the Bank's supervision
(see table 1: Evaluation and history of EIA).
History of EIA in India

The Indian experience with Environmental Impact Assessment began over 20 years back. It started in 1976-
77 when the Planning Commission asked the Department of Science and Technology to examine the river-
valley projects from an environmental angle. This was subsequently extended to cover those projects, which
required the approval of the Public Investment Board. Till 1994, environmental clearance from the Central
Government was an administrative decision and lacked legislative support.

On 27 January 1994, the Union Ministry of Environment and Forests (MEF), Government of India, under
the Environmental (Protection) Act 1986, promulgated an EIA notification making Environmental Clearance

30
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

(EC) mandatory for expansion or modernization of any activity or for setting up new projects listed in
Schedule 1 of the notification. Since then there have been 12 amendments made in the EIA notification of
1994.

The MEF recently notified new EIA legislation in September 2006. The notification makes it mandatory for
various projects such as mining, thermal power plants, river valley, infrastructure (road, highway, ports,
harbors and airports) and industries including very small electroplating or foundry units to get environment
clearance. However, unlike the EIA Notification of 1994, the new legislation has put the onus of clearing
projects on the state government depending on the size/capacity of the project.

Certain activities permissible under the Coastal Regulation Zone Act, 1991 also require similar clearance.
Additionally, donor agencies operating in India like the World Bank and the ADB have a different set of
requirements for giving environmental clearance to projects that are funded by them.
The EIA process
The eight steps of the EIA process
Screening: First stage of EIA, which determines whether the proposed project, requires an EIA and
if it does, then the level of assessment required.
Scoping: This stage identifies the key issues and impacts that should be further investigated. This
stage also defines the boundary and time limit of the study.
Impact analysis: This stage of EIA identifies and predicts the likely environmental and social
impact of the proposed project and evaluates the significance.
Mitigation: This step in EIA recommends the actions to reduce and avoid the potential adverse
environmental consequences of development activities.
Reporting: This stage presents the result of EIA in a form of a report to the decision-making body
and other interested parties.
Review of EIA: It examines the adequacy and effectiveness of the EIA report and provides the
information necessary for decision-making.
Decision-making: It decides whether the project is rejected, approved or needs further change.
Post monitoring: This stage comes into play once the project is commissioned. It checks to
ensure that the impacts of the project do not exceed the legal standards and implementation of the
mitigation measures are in the manner as described in the EIA report.

The stages of an EIA process will depend upon the requirements of the country or donor. However, most
EIA processes have a common structure and the application of the main stages is a basic standard of good
practice.
The environment impact assessment consists of eight steps with each step equally important in determining
the overall performance of the project. Typically, the EIA process begins with screening to ensure time and
resources are directed at the proposals that matter environmentally and ends with some form of follow up on
the implementation of the decisions and actions taken as a result of an EIA report.

31
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

The overview of the EIA process is represented in the figure.


Generalised process flow sheet of the EIA process

Different names for the same report


An EIA report may be known by several other names such as:
• Environmental impact assessment (EIA)
• Environment impact statement (EIS)
• Environmental statement (ES)
• Environmental assessment report (EA report)
• Environmental effects statement (EES)

Forms of impact assessment

There are various forms of impact assessment such as Health Impact Assessment (HIA) and Social Impact
Assessment (SIA) that are used to assess the health and social consequences of development so that they are

32
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

taken into consideration along with the environmental assessment. One of the forms of impact assessment is
strategic environment assessment, which is briefly discussed below

i. Strategic environment assessment

Strategic Environment Assessment (SEA) refers to systematic analysis of the environmental effects of
development policies, plans, programs and other proposed strategic actions. This process extends the aims
and principles of EIA upstream in the decision-making process, beyond the project level and when major
alternatives are still open. SEA represents a proactive approach to integrating environmental considerations
into the higher levels of decision-making.

Despite its wide use and acceptance, EIA has certain shortcomings as a tool for minimizing environmental
effects of development proposals. It takes place relatively late at the downstream end of the decision making
process, after major alternatives and directions have been chosen (see table 3: Difference in EIA and SEA).

Table 3: Difference in EIA and SEA

Environment impact assessment Strategic environment assessment


Takes place at end of decision-making Takes place at earlier stages of decision making
cycle cycle
Reactive approach to development proposal Pro-active approach to development proposals
Identifies specific impacts on the Also identifies environmental implications,
environment issues of sustainable development
Considers limited number of feasible Considers broad range of potential alternatives
alternatives Early warning of cumulative effects
Limited review of cumulative effects Emphasis on meeting environmental objectives,
Emphasis on mitigating and minimizing maintaining natural systems
impacts Broad perspective, lower level of detail to
Narrow perspective, high level of detail provide a vision and overall framework
Well-defined process, clear beginning and Multi-stage process, overlapping components,
end policy level is continuing, iterative
Focuses on standard agenda, treats Focuses on sustainability agenda, gets at sources
symptoms of environmental deterioration of environmental deterioration

SEA had limited development and implementation till 1990. However, after 1990, a number of countries in
developed economies adopted SEA. Some countries such as Canada and Denmark have made provision for
SEA of policy, plans and programs separately from EIA legislation and procedure. Other countries such as
Czech Republic, Slovakia, etc have introduced SEA requirements through reforms in EIA legislation and in
case of United Kingdom through environmental appraisal. While in New Zealand and Australia, it is a part
of resource management or biodiversity conservation regimes. The adoption of SEA is likely to grow
significantly in the coming years especially with directives by European Union and Protocol to the UNECE
Convention on Transboundary EIA by signatory countries (with a provisional date of May 2003 for
completion).

33
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Comparative review of EIA procedures and practices

Developed countries EIA in developing countries EIA in India


Well-framed EIA legislation in place. For Lack of formal EIA legislation Formal legislation for EIA. It
instance, in Canada, Canadian in many developing countries. has been enacted by making an
Environmental Assessment Act regulates For instance, EIA is not amendment in the Environment
EIA while EU countries are guided by mandatory in many African Protection Act 1986.
Directive on EIA (1985). countries
In developed countries, active involvement Limited involvement of public Limited involvement of public
of all participants including competent and government agencies in the and government agencies in the
authority, government agencies and initial phases. This often results initial phases.
affected people at early stages of the EIA. in poor representation of the
This makes the process more robust and issues and impacts in the report,
gives a fair idea of issues, which need to be adversely affecting the quality of
addressed in the initial phase of EIA. the report.
Integrated approach to EIA followed. All Mainly environmental aspects No provision in place to cover
aspects including social and health taken considered. Poor on social or landscape and visual impacts in
into account. health aspects. the Indian EIA regulations
Proper consideration of alternatives in EIA The consideration of alternatives Same as developing countries
in developing countries is more
or less absent.
The process of screening is well defined. In developing countries, Screening done on the basis of a
For instance, in EU countries competent screening practice in EIA is defined list. Threshold values on
authorities decide whether EIA is required weak. In most cases, there is a the size of the project has been
after seeking advice from developer, NGO list of activities that require EIA used to decide whether the
and statutory consultees. In Japan, but without any threshold values. project will be cleared by the
screening decision is made by the state government or the central
authorizing agency with respect to certain government.
criteria. In Canada, federal authority
determines whether an environmental
assessment is required or not.
Scoping process is comprehensive and Scoping process in most Earlier scoping was done by
involves consultation with all the developing countries is very consultant or proponent with an
stakeholders. In many countries like US, poorly defined. In countries inclination towards meeting
Netherlands, Canada and Europe, the where it is undertaken, there is pollution control requirements,
involvement of the public and their no public consultation during rather than addressing the full
concern are addressed in the scoping scoping. Moreover, in most range of potential environmental
exercise. Besides this, funding developing countries, scoping is impacts from a proposed
organisations such as World Bank, ADB often directed towards meeting development.
and ERDB have provision for consultation pollution control requirements,
with the affected people and NGOs during rather than addressing the full However, the new notification
identification of issues in scoping exercise. range of potential environmental has put the onus of scoping on
impacts from a proposed the expert committee based on
development. the information provided by the
proponent. Consultation with
public is optional and depends
on the discretion of the expert
committee.
Most reports in local language Most reports in English and not Most reports in English and not
in the local language. in the local language. In some
case, executive summary is
translated into local language.
A multi-disciplinary approach. Lack of trained EIA Same in India. Preparation of
Involvement of expert with expertise in professionals often leads to the EIA is done by consultants.
different areas. preparation of inadequate and Therefore, the selection criterion
irrelevant EIA reports in for the organisation is fees/cost
developing countries rather than the expertise of EIA
team.

34
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Two tier of EIA review, One conducted Poor review or monitoring. In India too, EIA review is not
after the completion of EIA to check the upto the marks. The review
adequacy and effectiveness of EIA and the agency called Impact
second done before decision-making. Assessment Agency (IAA) lacks
inter-disciplinary capacity. No
representation of NGO in IAA,
which is a violation of the EIA
notification.
Expertise in EIA: The International The expertise in EIA is slowly Expertise in this area is
Association for Impact Assessment (AIA) developing. In most cases, developing.
and other organisations demonstrate that students from the developing
there are a large number of individuals countries go to the developed
with the capability to design, conduct, countries to gain knowledge of
review and evaluate EIAs from countries the subject.
of the North. The major portion of teaching
about environmental assessment also takes
place in industrial countries.

35
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

MANAGEMENT INFORMATION SYSTEM (MIS)


MANAGEMENT INFORMATION SYSTEM:
An organization in grouping and interaction of men, materials machines and money, to achieve a set of aims
and objectives of the organization. This is a common feature with any organization, be it small or a big
social welfare organization or a private sector organization. As an organization grows in size and
complexity, certain problems arise and communication and co-ordination become more important and more
complex; with this the need for establishing an effective information system also arises.

MANAGEMENT: The act of getting things done,


INFORMATION: Giving intelligence, knowledge and direction.
SYSTEM: Organized way of performing ---Collection or assemblage of elements which operate in total
harmony and unison.
MIS: Means organized way of providing intelligence / knowledge /direction to get the things done.
MIS: Intends to provide the needed information to the user in the form acceptable to him within the
reasonable accuracy and reasonable time.
MIS: Includes / relate to the whole gamut of data capture, verification, storage, processing, generation and
retrieval of information.

WHY MANAGEMENT INFORMATION SYSTEM?


A majority of workers today are knowledge workers – they spend time creating, distributing, or
using information. Example: bankers, coordinators, caseworkers, counselors, community
organizers, programmers, etc
§ About 80% of an executive’s time is devoted to information receiving, communicating, and
using it.
§ Information is the basis for virtually all activities performed in an organization
§ Best use of two key ingredients in organizations – people and information
§ Effective utilization of information systems in management. Productive use of information
§ Information is a resource to increase efficiency, effectiveness and competitiveness of an
enterprise
Some Examples of MIS
o Airline reservations (seat, booking, payment, schedules, boarding list, special needs, etc.)
o Train reservation · Bank operations (deposit, transfer, withdrawal)

Any organization which is goal oriented requires a system which provides information to support the
process of management and decision making at all levels. This system is commonly called as management
information system.

Quality of decision making depends upon the type of information available. Information is the most crucial
resource –some call it as a material resource – of the decision making process.

MIS is a system which provides the required information to each level of management at Hierarchy
the right time, in the right form to form the basis of decision making and control. Data
Information
Intelligence
MIS is a system of obtaining, abstracting, storing and analysis data in order to present
organized information to aid a manager in carrying out his function of planning, decision making etc.,
There is a distinction between data, information and intelligence.
DATA: Facts and figures lying on files, records and reports but not currently put to use for decision
making- are usually termed as data.

36
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

INFORMATION: Scientifically gathered data when statistically manipulated from their original state of facts
and figures into a more meaning full state of knowledge
WHAT IS INFORMATION? assume the form of information, In other wards information
Information is data presented in a form consists of classified and interpreted data that could directly he
that is meaningful to the recipient. It adds
to knowledge and is relevant for the
used for decision making.
situation. Two types of information are
accounting information and management INTELLIGENCE: A sophisticated form of information is called
information. intelligence which is the inherent characteristic of the system
Data becomes information when they are to seize essential factors from complex information about
transformed to communicate meaning or complex problems.
knowledge, ideas or conclusions. By itself Having classified some of the terminology, let us understand
data is meaningless. MIS from different angles.
The attributes of an item of information
are: accuracy, form, frequency, breadth
(scope), origin, time, horizon. Attributes of MIS: A group of people, a set of manuals and data processing
a set of information are relevance, equipments (set of elements) select, store, process and retrieve
completeness and timeliness. data (operating on data and matter) to reduce the uncertainty
in decision making (seeking a common goal) by yielding

Good Management Information System is no cure for bad management. Bad


information always leads to bad management, but good information does not itself
ensure good management. Information is only a tool for management. The ability to put
information to work is what determines a successful manager.

information for administrators at the time they can most efficiently use it (yield information in a time frame).
Steps in information system
Input data Qualities of a good information system
Information storage
Analysis of data 1. It should be relevant
Output in the form of 2. It should available in time
a. Reports 3. It should be accurate
b. Tables 4. It should be selective
c. Graphs 5. It should be economical
d. Charts 6. It should be flexible
Then the system displays 7. It should flow within various parts of the
a. Trends organization
b. Relationship 8. It should take the stresses and strains of
c. Problems the organization
d. Lacunae
e. Variances for decision making etc

MIS. Provides information on the past, present and projected future and on relevant events inside and outside
the organizations.

MIS. It means a system that collects, stores and process data and provides information to managers for
planning, controlling and decision making. Robert G Murdick

37
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

Information requirement by decision category

Characteristics of Operational level Management control Strategic Planning


information (First line) (Top & Middle) (Top level)
Source Largely internal Both Largely external
Scope Well defined, narrow Both Very wide
Level of aggregation Detailed Both Aggregate
Time horizon Historical Both Future
Currency Highly current Both Less current
Required accuracy High Both Low
Frequency of use Very frequent Both Less frequent

TYPES OF INFORMATION SYSTEM


Information system aims at processing data:
to capture details of transactions, to enable
WHY ARE WE FOCUSING ATTENTION ON people to make decisions, and/or to
DEVELOPING MIS? communicate between people and locations.
• The information explosion – growing base of 1. Transaction processing system
knowledge workers Reasons for TP are recording, classification,
• The rapid pace of change (globalization, sorting, calculation, summarization, storage
rapid social changes, legislative changes, and display of results
downloading, funding cuts, job losses, tax 2. Management Information System
reforms and so on) (Management reporting system) Provide
• The increasing complexity of Management information for decision support where
(demands on quality, competitiveness, timely information requirements that can be
delivery, etc.) identified in advance. Decisions supported by
• The interdependence of organization units this frequently occur.
(finance, family welfare, fund-raising, 3. Decision Support System
personnel, etc.) Assist with unique and non-recurring
• The improvement of productivity (better decisions, which are relatively unstructured.
outreach, more clients, more programs, Mainly what factors to consider and what
better accuracy, etc.) information are needed.
• The availability of computers for End-users 4. Office Information system
(easy access, hand-on service, wide literacy Combines word processing,
and interest) telecommunications and data processing to
• The recognition of information as a resource automate office information. Draws on
stored data as a result of data processing.
Includes handling of correspondence, reports
and documents.

38
S.Rengasamy - PROJECT PLANNING AND MANAGEMENT

TYPES OF MANAGEMENT INFORMATION


Seven types of information are necessary for top-level managers.
1. Comfort information: informs about current situation or achievement levels that are tuned
to expectations. (Clients served, target achieved, patients treated, operations conducted, etc.)
2. Status information or progress information: keeps abreast of current problem and
crises and changes.(progress on office construction, status of research study, labor negotiation,
grant application)
3. Warning information: signals that change for good or worse are occurring (stock price,
turn over, client complaints, etc.)
4. Planning information: descriptions of projects/programs due in future, knowledge of
anticipated developments (future of funding, future of federal/provincial support )
5. Internal operations information: indicators on how organization/program is performing.
6. External intelligence: information, gossip, and opinions about activities in the
environment of the agency. Competition, funding policies, political changes, emerging social
policies, etc.
7. Externally distributed information: annual report before release, quarterly progress
report for donors, press releases about the agency, publicity material before printing, etc.
Among these, the first five are internal to the organization. Two are external to the organization

WHAT COULD BE THE ROLE OF MIS COORDINATOR IN DEVELOPING A MIS?


IInteract with user groups
IIdentify the needs of users of MIS
IDesigning of reporting formats
IIdentify systems of information flow
IEnsure smooth flow of information within and outside the organization
ITime management – tracking inputs/reports
IAct as interface among sections and management tiers
IIdentify training needs of staff in MIS jointly with application developer
IOrganize monthly/periodic meetings to assess performance, maintain minutes and follow-up
on the decisions
IInterface with the various divisions/units in the organization for information sharing

39