Q.

1 Explain the following

a. Project Vs. Program Vs. Portfolio
b. Project work and Traditional functional work

Ans:

(a) Difference between Project, Program and Portfolio Management :

Project Management: A project has a definite start and end date with a clearly mentioned
deliverable produced and project management is the application of knowledge, skills, tools, techniques
and processes to effectively manage a team to achieve this final deliverables, which means the
management of a specific project. Project management focuses on delivering the specific objectives of
the project.

Program Management: A program is a group of related projects which are managed together to
obtain specific benefits and which cannot be obtain if the projects are managed individually. Program
management is focused on achieving the strategic objectives of the integrated project. Portfolio
Management: A portfolio is the collection of projects or programs grouped together to facilitate
effective management of effort to meet strategic business objectives and this typically includes
identifying, and prioritising projects and programs to achieve specific strategic business objectives. If
you consider projects as the bottom of a hierarchy then programs sit above them in the middle of the
hierarchy and address a related set of projects. This allows the portfolio management level to stand at
the top of this hierarchy. The primary roles of a project manager, program manager and portfolio
manager differs, however, many organisations blend these roles together and treat them as basic
project management.
(b) Differences between Project Work and Traditional Functional Work
Project work and traditional functional work differ in many ways. It is important to understand these
differences. Functional work is routine ongoing work. Each day machine operators, car salesmen,
secretaries, accountants, financial analysts and quality inspectors perform functional work that is
routine, notwithstanding some variations from day to day. The functional worker gets training from a
manager assigned to the specific function, and the manager supervises and manages the worker
according to standards of productivity and quality set for the particular function. In contrast to
functional work, project work is a temporary endeavour undertaken to create a unique, non-routine
product or service. A project manager manages a specific project with people and other resources
assigned to him only for project management support on the specific project, and not on an ongoing
basis. The project manager is responsible for the approved objectives of a project such as budget,
schedule and specifications. Project terms are typically not organised in the same hierarchical
structure as that of functional group.

Q.2 Compare Operation and project procurement. Also list and explain the project
procurement process.
Ans.
Comparision between Operation and project procurement :
Project Management Body of Knowledge (PMBoK) defines project procurement management as the
process of acquiring goods, services or results needed from outside the project team to perform the
work as well as the contract management processes. Procurement is formalised by a contract between
buyer and seller. Project procurement management is a part of the project management process. In
this process, products or services are acquired or purchased from outside of the organisation in order
to complete the task or project. The differences between the procurement carried out for the overall
operation of an organisation, and the procurement carried out for a specific project, are shown below:
Fig: Differences between Operations Procurement and Project Procurement
Project Procurement Management Process :
The project procurement method varies depending on the category of the contracted product or
service. The broad categories are:
- Materials or products
- Equipment or tools
- Labours
- Professional services
- Totally engineered systems
- Total project
Project Procurement Management generally involves the following:
- Deciding to “Make or Buy”
- Outsourcing the work for a “Buy” decision.
- Managing risk (although risk management is often addressed separately, it is noteworthy
that contracts are, at their core, risk management tools.)

All procurement requires some level of planning. The intensity and the effort required in planning
depend on the complexity of the scope of work in the procurement package.

Q.3 Describe the following quality control tools:

a. Ishikawa diagram
b. Flow chart
c. Pareto chart
d. Scatter diagram
Ans.
a. Ishikawa diagram : This is also known as fishbone diagram or Ishikawa diagram was
developed in 1960 and named after Kaoru Ishikawa, a Japanese quality control statistician. It
is one of the seven basic tools of quality management. It is named fishbone diagram because
of its fish-like appearance. It is a systematic way of analysing effects and causes that creates
or contributes to the effects. This tool is employed by a problem solving team for assembling
all inputs systematically and graphically. All the inputs given to this tool is obtained from a
brainstorming session. It enables the team to focus on why the problem occurs and not on the
symptoms or history of the problem. It also displays a real-time snapshot of the collective
inputs of the team as it is updated. The possible causes are represented at various levels of
detail in connected branches. The level of detail increases as the branch goes outwards which
means that an outer branch is a cause of the inner branch it is attached to. Therefore, the
outermost branches in a cause and effect relationship diagram usually indicate the root causes
of the problem. Below figure shows an example of cause and effect diagram.
b. Flow chart : A flowchart is a type of diagram that represents an algorithm or process,
showing the steps as boxes of various kinds, and their order by connecting these with arrows.
This diagrammatic representation can give a step-by-step solution to a given problem. Process
operations are represented in these boxes, and arrows connecting them represent flow of
 control. Data flows are not typically represented in a flowchart, in contrast with data flow
diagrams; rather, they are implied by the sequencing of operations. Flowcharts are used in
analyzing, designing, documenting or managing a process or program in various fields.
c. Pareto chart : This quality control tool is based on Pareto‟s rule. The Pareto rule states that
80 percent of the problems are often due to 20 percent of the causes. The basic assumption is
that most of the results in any situation are determined by a small number of causes and
helps to identify the vital few contributors that account for most quality problems. The Pareto
chart is a form of histogram that orders the data by frequency of occurrence. It shows how
many defects were generated, by a type of category of identified cause.
a. Scatter diagram : It is a graphical technique used to analyse the relationship between two
variables. It determines and shows whether or not there is correlation between two variables.
Correlation means the measure of the relationship between two sets of numbers or variables.
Two sets of data are plotted on a graph, where y-axis is used for the variable to be predicted
and the x-axis is used for the variable to make the prediction. A scatter diagram shows the
possible relationships. It should be noted that two variables might appear to be related but
they might not be. Hence those who know well about the variables must evaluate the
variables. Correlation does not refer a direct cause and effect relationship. If the values of
onevariable can be predicted, based on the value of the other variables, then there exists
correlation. All relationships between variables are not linear. A visible slope of line does not
provide any information about the strength of correlation since the scales of the graph can be
expanded or compressed on either axis of the scatter diagram. The direct or strong correlation
between the variables does not necessarily imply cause and effect relationship. If a correlation
is shown by scatter diagram, investigate for further confirmation. For example, volume of ice
cream sold per day is strongly correlated to the daily number of fatalities by drowning. Neither
of the variables is a result and strongly correlated to third variable which is the outside
temperature.
Q.1 Need for risk management in an organization-comment.

Ans: Risk is defined as the possibility of an outcome being different from the expected outcome. The
PMBoK defines risk as the totality effect of outcomes (i.e. states of nature) that can be described
within established confidence limits (i.e. probability distributions)

Why Project risk management?

The PMBoK defines risk management as the “formal process by which risk factors are systematically
identified, assessed and provided for.” Risk management provides support for attempts to gain better
control over a project when it comes to
Time (planning / schedules)
Money (estimates)
Quality
Information
Organization
Risk management helps to
 Promote an uninterrupted progression in the activities carried out within the project by taking
appropriate measures, as well as remove any interruptions as quickly as possible in the event
of interruptions occurring

 Instill confidence in the project team as well as project stakeholders and third parties

 Promote communication within the project

 Support the decision making process within a project

Risk management is not a one-off activity of risk identification, but a cyclical process that must be
repeated regularly during the course of the project. The manner in which risk management is applied
will depend on the nature of the project e.g. the risks identified in a 200 km. railway line laying
project will be different from those in the construction of a side-walk along roads to be implemented
by a municipal body.

In summary, risk management is a structured form of risk control that unearths possible bottlenecks
early by looking ahead, and thus ensures that a project is both better managed and controlled. The
known risks of a project can be managed. The unknown risks have to be managed by contingency
plans based on past experience. Risk management’s objective is to reduce the impact of a potentially
adverse event.

The extent of investment in risk management will not exceed the benefit that may accrue because of
the non-occurrence of the risk Organizations accept only those risks which are associated with
opportunities i.e. they take only those risks which are balanced with the reward that may be gained by
accepting the risk. This means that different organizations have differing degrees of risk tolerance –
an organization can be risk-averse, risk-prone or risk-neutral depending on how it views the risks.

Finally, it is important to note that Risk management is not a separate project activity; rather, it is an
aspect of project implementation.

Q.2 Explain the following types of contract:

a. Cost reimbursable and its variation
b. Fixed price and lump sum contract

c. Time & material contract

Ans:
Cost reimbursable and its variation
A cost-reimbursable contract is a variant of a contract that involves making a payment from the buyer
to the seller in reimbursement for the seller’s actual costs. Added to that is a fee that typically
represents the seller’s profit. When analyzing costs they are typically broken down into two categories.
Those categories are direct costs and indirect costs. Direct costs are defined as the costs that have
been incurred only for the purpose of the project. One example of this type of cost can be the salaries
of the full time staff members, or equipment purchased exclusively for use in the project. Indirect
costs represent costs that refer to more general, more broad types of costs, such as administrative
costs and general overhead costs. Cost-reimbursable contracts often contain incentive-based contracts
in which the seller will receive a bonus payment or incentive if the seller meets or exceeds a series of
pre-determined target objectives, such as meeting a particular schedule or keeping the activity below
a certain cost.

Fixed price and lump sum contract

The term firm fixed price or lump sum contract refers specifically to a type or variety of fixed price
contract where the buyer or purchaser pays the seller or provider a fixed total amount for a very well-
defined product, however there is the allowance within these for a variance in the event there are
incentives attained through project incentives achieved or targets met. There are benefits of this type
of contract to both the buyer and the seller, and these are similar to those for the fixed price incentive
fee contract. To the seller, it is beneficial because it typically allows for the seller or provider to charge
a reasonable base fee, yet also allows for exceptional performance to be rewarded further. However,
for the buyer that also provides a very tangible benefit. The buyer typically will be paying a very
reasonable base fee up front, but there is of course the chance that the price will go up in the future if
certain conditions are met.

Time & material contract

In order to facilitate the variables involved in project management, a variety of contractual

arrangements have been developed that have been designed to meet the needs of the parties
involved. The time and material (T&M) contract is one such instrument that provides an alternative to
standard, boilerplate contracts.

In a time & material (T&M) contract, both parties agree to unit rates that have been predetermined by
both parties in advance for the category of senior engineers. This is also the case in fixed-price
arrangements. In project management, this type of contractual arrangement contains aspects of both
cost-reimbursable and fixed-price contracts, and could be considered a hybrid of the two. Like a cost-
reimbursable arrangement, the time & material (T&M) contract has no definite end. The full value of
the contract is not defined at the time the contract is awarded. Therefore, similar to cost-
reimbursement contract, time and material (T&M) contract can grow in value over the period they are
in effect. The inherent flexibility of the time and material (T&M) contract makes it an attractive
alternative for those involved in project management, as well as for the individuals involved.

Q.3 Describe the factors to be considered when feasibility of a project is examined. Also explain the
various qualities that a good project management process encompasses.

Ans: Feasibility studies aim to objectively and rationally uncover the strengths and weaknesses of
the existing business or proposed venture, opportunities and threats as presented by the
environment, the resources required to carry through, and ultimately the prospects for success.
Five common factors

Technology and system feasibility

The assessment is based on an outline design of system requirements in terms of Input, Processes,
Output, Fields, Programs, and Procedures. This can be quantified in terms of volumes of data, trends,
frequency of updating, etc. in order to estimate whether the new system will perform adequately or
not. Technological feasibility is carried out to determine whether the company has the capability, in
terms of software, hardware, personnel and expertise, to handle the completion of the project

Economic feasibility

Economic analysis is the most frequently used method for evaluating the effectiveness of a new
system. More commonly known as cost/benefit analysis, the procedure is to determine the benefits
and savings that are expected from a candidate system and compare them with costs. If benefits
outweigh costs, then the decision is made to design and implement the system. An entrepreneur must
accurately weigh the cost versus benefits before taking an action.

Cost-based study: It is important to identify cost and benefit factors, which can be categorized as
follows: 1. Development costs; and 2. Operating costs. This is an analysis of the costs to be incurred
in the system and the benefits derivable out of the system.

Time-based study: This is an analysis of the time required to achieve a return on investments. The
future value of a project is also a factor.

Legal feasibility

Determines whether the proposed system conflicts with legal requirements, e.g. a data processing
system must comply with the local Data Protection Acts.

Operational feasibility

Operational feasibility is a measure of how well a proposed system solves the problems, and takes
advantage of the opportunities identified during scope definition and how it satisfies the requirements
identified in the requirements analysis phase of system development. [4]

Schedule feasibility

A project will fail if it takes too long to be completed before it is useful. Typically this means
estimating how long the system will take to develop, and if it can be completed in a given time period
using some methods like payback period. Schedule feasibility is a measure of how reasonable the
project timetable is. Given our technical expertise, are the project deadlines reasonable? Some
projects are initiated with specific deadlines. You need to determine whether the deadlines are
mandatory or desirable.

Other feasibility factors

Market and real estate feasibility

Market Feasibility Study typically involves testing geographic locations for a real estate development
project, and usually involves parcels of real estate land. Developers often conduct market studies to
determine the best location within a jurisdiction, and to test alternative land uses for given parcels.
Jurisdictions often require developers to complete feasibility studies before they will approve a permit
application for retail, commercial, industrial, manufacturing, housing, office or mixed-use project.
Market Feasibility takes into account the importance of the business in the selected area.

Resource feasibility

This involves questions such as how much time is available to build the new system, when it can be
built, whether it interferes with normal business operations, type and amount of resources required,
dependencies,
Cultural feasibility

In this stage, the project's alternatives are evaluated for their impact on the local and general culture.
For example, environmental factors need to be considered and these factors are to be well known.
Further an enterprise's own culture can clash with the results of the project.

PMBoK defines quality as ‘the degree to which a set of inherent characteristics fulfill the requirements’.
MBoK also emphasizes that product quality measures and techniques are specific to the particular type
of product, while project quality management must address both the management of the project and
he product of the project e.g. quality management of a software project entails different approaches
and measures than a highway building project. But project quality management approaches apply to
both. In the context of a project, stakeholders’ needs, wants and expectations form a critical element
of quality management.

Among popular alternative concepts of quality are the following:

· Quality is fitness for use

· Quality is doing it right the first time – and every time
· Quality is the customer’s perception
· Quality provides a product or service at a price the customer can afford
· You pay for what you get (quality is the most expensive product or service)

For a company, this is a document created by quality experts and backed by the top management. It
states the quality objectives of the company, responsibilities of the project team, and, by providing
guidelines for important quality matters; it promotes consistency of quality throughout the
organization. The quality policy should be disclosed to all stakeholders. It should be implemented for
all specific projects and top management should periodically review the performance of lower and
middle management to ensure that the activities are in line with the overall quality objective of the
firm.

A good quality policy has the following features:

– provides guidelines to improve the quality of the project

– promotes consistency across all projects of the firm
– explains to outsiders how the firm views quality
– provides for changes and updates in the policy

PMBoK of PMI, USA details the project quality management processes under the following heads:

· Quality Planning

This is a planning process.

This process identifies which quality standards are relevant to the project and determines how to
satisfy them. This process is to be performed with other project management processes e.g. cost and
schedule may need to be adjusted to satisfy the standards set. This is also implied in the P, C, T, S
relationship discussed in unit 1. ‘Value for money’ also implies the same principle.

· Quality Assurance

This is an execution process

This process is for applying the planned, systematic quality activities with the purpose of ensuring that
the project employs all processes needed to meet requirements. This process also includes
reevaluating quality standards and quality audits. Lessons learned are used for process improvement

· Quality Control
This is a monitoring and control process.
This process is for monitoring project results with respect to the set standards as well as for
identifying ways to eliminate the causes of unsatisfactory variances. Quality control focuses on
correctness of work and includes inspections.

Total Quality Management

Total Quality management (TQM) is a non-proprietary management approach that started in the
1950s in the Japanese industry after the Second World War. It aims at involving every individual in
the firm to be involved in the quality improvement in every stage of the project management process
or production process. The concept of TQM focuses on involving everyone in an organization in a
continual effort to improve quality and achieve customer satisfaction. The methods for implementing
TQM approach have been developed from the teachings of many Quality leaders as Philip B. Crosby,
W. Edwards Deming, Armand V. Fiegenbaum, Kaoru Ishikawa and Joseph M. Juran.

The essentials of TQM focus are:

1. Customer satisfaction
2. Leadership
3. Quality policy
4. Organization structure
5. Employee involvement
6. Quality costs
7. Supplier selection and development
8. Recognition and reward