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Q.1 Define Project Management Information Software. Discuss the various steps of PMIS planning.

A.1: Project Management Information System (PMIS) is the system tools and techniques used in project
management to deliver information. Project managers use the techniques and tools to collect, combine, and distribute information through electronic and manual means. PMIS is used by the upper and lower management to communicate with each other. It is a Management Information System (MIS) related to a project. A PMIS consists of people, equipment, and procedure to collect, process, store, combine, and communicate the needed information to users (stakeholders) for carrying out project management functions. The success of a PMIS depends on its effective planning. The PMIS is used for many purposes by a project manager like budget estimation of costs, creating a schedule, define the scope, etc. Hence, these should Be considered while planning for PMIS. The planning of PMIS includes the following steps: 1. Identify the information needed 2. Capture data 3. Process data into information and store it 4. Communicate information to stakeholders 1. Identify the information needed Identification of the information that is needed is necessary for improving the decision making and the structure of the PMIS. Information requirements of project stakeholders include the recipients of information, the type of information that is needed, which includes format, contents, and level of details, the time the information is required and how (by what media) will it be communicated to them. (i) Who needs information? Recipients of information may include any stakeholder of a project. They are persons or groups that have claim or ownership rights or interests in a project and its activities that may have occurred in past, present, or future. Primary stakeholders are the ones who have a legal/contractual relationship to the project. Secondary stakeholders include those who influence or affect or are influenced or are affected by the project but may not be essential for the project survival. (ii) What type of information is needed ? The information need of various stakeholders differ in contents and time of need. A survey may be conducted to identify the specific information requirements of stakeholders related to the various decision areas in a project. However, most projects require information on some or all of the following: scope, time, cost, quality, resource utilisation, procurements, and risk. (iii) When information is needed? Time of need of each stakeholder may be different. Some may need it on daily, weekly, or monthly basis. Table 1 depicts the format to summarise the information need of stakeholders.
Format to Summarise Information Need
Stakeholders Information Description How often? (weekly/ fortnightly/ monthly) Content and format (summary/ details, tabular/graphical) What media? (report/ meeting/ electronic)

2. Capture data Term Capture data is used to state a process of preparing and collecting data i.e., as element of a process improvement or similar project. The function of data collection is to attain information to maintain record, to make decisions for vital issues, and to pass information on to others. Data can come from actual observation or from records. Data collected from records is known as secondary data. Data collected from direct observation is known as primary data. It should be ensured that all relevant groups are represented in the data. A formal data collection process is essential as it makes certain that the gathered data are both defined and precise and that subsequent decisions based on opinion embodied in the findings are valid. Data possibly be arranged in tabular form, data array or frequency distribution. 3. Process data into information An organisation, to achieve its aims, needs to process the data collected into meaningful information. It should be presented in its most useful formats. Data must be processed in a context to give it meaning. Data is transformed into information using mathematical, statistical, or other tools Including computer software. Information can be stored in electronic form or hard copies represented in the most useful form. 4. Communicate information to stakeholders Communication is the process by which information is exchanged between individuals through a common system of symbols, signs, or behaviour. To show the importance of communication, Cleland quotes the following statements: Peter Drucker states that the ability to communicate, heads the list of criteria for success. Harvard Business Review reports that the ability to communicate was at the top among 22 personnel attributes in promotions. A project manager uses communication more than any other force to manage the project.

Q.2 Explain procurement process . What are the key steps involved in purchase cycle? Ans: The activities involved in the selection of suppliers and the purchase of goods or services. Procurement process is the term used by businesses to describe the buying process, and can refer to the purchase of supplies or services. Purchase cycle is a standard process that corporations and individuals progress through (in order) when purchasing a product or service. It is also known as the 'buying cycle' or 'purchase process'. This cycle discusses about the decision points that the buyer or the purchasing team goes through. Usually, purchase cycle of a project consists of the following elements. Figure-2 depicts a purchase cycle.

1. Indent goods This involves identifying the needs, preparing specification of goods, and filling up indents and obtain signature of the competent authority. Based on the project network, the project engineers identify the need (description of goods, quantity, and time of need). The next task is to specify the goods. Purchase specification is called the heart of procurement. It describes a product in terms of its design characteristics which includes dimensions, weight, shape, size, surface finish, physical and chemical properties, and performance. Various types of specifications including commercial design; materials and methods of manufacturing; performance, function and fit; brand and trade name; and sample and market goods are available to specify the goods. Any of these may be used for specifying the goods. 2. Shortlist suppliers The buyer's first task is to identify a suitable source of supply. The list of potential suppliers can be prepared with the help of several sources including the supplier's catalogue, trade register, internet, trade journals, historical records of purchase sections, etc. Based on the historical records or other considerations like indigenous or imported, local or global, etc, the suppliers are shortlisted. In case of limited tender, 8-10

suppliers are listed. In case of open tenders, the number is unlimited. Besides other things, the number of suppliers short listed depends on the availability of suppliers; if the product is highly specialised, the number of suppliers available may be limited. 3. Invite, receive, and choose bid Competitive bid (bid and award) The steps involved in competitive bid are discussed below: 1. The bid or tender is invited from a required number of suppliers. 2. The bid received in prescribed condition are accepted and held in safe custody. 3. The bids are opened and made public at the stated time and place in the presence of the bidders who are present. 4. The information received from bidders is tabulated on a comparative statement which allows comparison of quoted prices, validity periods and other critical factors. Negotiated bids For new and complex products, prior manufacturing experience may not be available with the suppliers and the price quoted may not be realistic. Under the situation, the bid-and-award method may not be suitable and the buyer may prefer to go for negotiated bid. Negotiated bid also starts with bidding. Up to the comparative statement stage, this is identical to competitive bidding (bid-andaward). After this, the negotiated bid enters into a negotiation with bidders.

4.Preparation and placement of purchase order The purchase order can be divided into two parts. They are: Specific conditions to the purchased goods The specific conditions include purchase order no., name and address of the supplier, delivery address of the goods, description of the goods, product specifications, quantity, contract price, delivery date, delivery conditions (liability to transport, packaging, insurance cost, etc.), terms of payment, liquidated damage (right to recover some specified amount from supplier for delayed delivery), other features (responsibility for export licence, custom clearance at port of origin, transportation and insurance cost upto port of loading, shipping document, etc.), and an authorising signature. These items are typed on the front side of the purchase order form. General commercial condition of purchase Normally, companies standardise the commercial conditions of purchase and print them on the reverse side of the purchase order form. Generally, these conditions include: Prices: All prices are fixed for the duration of the contract and unless otherwise agreed. Quantity and description: The goods shall confirm in all respect to the specification given by the company to the seller. Indemnity: The seller at his own expense repairs or replaces all the defects attributed to faulty design or workmanship which may crop up in the goods within a period of 12 months. Loss or damage: All responsibility for any loss or damage to the goods shall lie with the seller. Rejection: The rejected goods observed during testing/inspection will have to be lifted by the supplier at his own cost within a month of receipt of rejection advice from the company. Force majeure clause: Neither the company nor the supplier shall be responsible if the execution of the contract is delayed/interrupted due to the cause absolutely beyond their control, such as acts of God, war, major civil commotion, etc. Termination: The Company reserves the right to terminate the contract either in full or in part in the event of failure/default/refusal on the part of supplier to perform as per the contract. Arbitration: All disputes related to the contract will be referred to the sole arbitrator chosen by the company. Applicable law: The law of the buyer's country will be applicable. Time of orders and deliveries Depending on the situations, the following options may be kept in view while choosing the timing of placing the order: Early ordering of long lead time Items: Items of long lead time are to be identified and procurement action for these should be initiated as soon as possible.

Just-in-time: It is a good practice to order goods on just-in-time concept as it eliminates multihandling and inventory holding cost. However, the risk of delayed arrival of material is to be kept in view. Retarded deliver: Some materials are needed at a later part of the project. Even though the order is placed earlier, their delivery should be retarded. Call off order (similar to phased delivery): If the order size is large, delivery can take place in small batches at an agreed rate over a specified period. Items are called off as they are needed for the project. Building supplies, cement, sand, bricks, etc fall under this category. Common sense timing: However there are items like screws, nuts, washer, etc which are relatively less expensive and occupy less space. Such items can be purchased in one lot. Use of lot-sizing techniques to find out how much to order and when to order There are numerous available heuristics which provide better solutions with regard to 'when to order' and 'how much' to order. Here presents the applications of four such heuristics: Purchase order: Purchase order, complete with its set of conditions, is sent to the supplier for acceptance. Letter of intent (intention of purchase): Sometimes there is a likely delay in the preparation of the purchase order. Keeping this in view, a letter of intent is sent to the supplier to minimise delay. Acceptance of purchase order: Purchase order becomes a legal contract only after it has been accepted by the vendor or any of his authorised agents. To ensure this, two copies of purchase order are sent to the supplier. One of these acts as an acknowledgement. This copy is signed and returned by the supplier. It is a good practice to include a phrase, "We acknowledge and accept the offer" in the acknowledgement copy. Amendment in purchase order: If any change in the purchase order is needed, an agreement with the supplier should be reached considering its impact on price, delivery, etc. 5. Follow-up Follow-up is a preventive measure that seeks to foresee the problem and preempt late delivery. Follow-up includes internal follow-up with departments like store, finance, inspection, and project groups and external follow-up with suppliers. Internal follow-up includes co-ordination with store for receipt of materials and dispatch of documents, finance for clearing of invoice and freight charges, and project group for requirements of material and change of specification, if any. External follow-up monitors the progress of each order and calculates the deviation between planned date and expected date of arrival of goods and takes action either to expedite or de-expedite the supply of goods. The need for expediting arises in situations when the item is due, soon going to be due, or due date is advanced for some reasons. Sometimes, the due date of item is shifted to a later date. In this case, there is a need to deexpedite the supply to avoid excessive build-up of inventory. Method of follow-up includes letter, telegram, telephone call, e-mail, and personal meeting. Some firms maintain expediters in the field who keep contacts with suppliers on important orders. At times, the expediters are responsible for a specific territory to follow-up all orders. Heavy construction items of long lead times call for field expediting. 6. Receipt, inspection, and storage of goods On receipt of shipment, the Incoming Material (IM) section receives the challan and excise document and ensures that the material is as per the seller's packing slip and against the project purchase order. Then, the material is unloaded and the general conditions of packing are checked. If satisfied, the material is unpacked. The quantity and general conditions of the material is checked. If an inspection is to be carried out, the IM section arranges for the same. After inspection, the IM section raises Goods Receipt Note (GRN) for right (O.K.) material. The contents of GRN include delivery timing, shipment damage, rejection percentage, shortages, split shipment, etc. This is used for invoice payment, closing the order, any negotiation with the supplier, and inventory updating. Information is sent to the concerned agencies like accounts, project, and others for taking necessary actions. This section arranges for shifting of the material in project stores. In a good system, the design section develops a unique identification code (also called a Unique Material Code-UMC) for each material needed for the project right from the beginning. On receipt of material from IM section, the first task of the project store is to mark each material by the correct material code.

The project materials are stored in a specific location within closed/controlled areas. The materials enter and leave the areas only with authorised documents. No one can enter in the area without permission. All receipt or withdrawals of materials are recorded in a card or register or computer. Every storage location has an address. Co-ordinates of a place or part number may serve as address of the location. Each item is assigned a specific storage space and record of it is kept in an inventory catalogue or a location index. A large number of equipments such as stackable trays, pallets, racks, trolleys, etc. are used to store the materials. Also, various types of handling equipments including forklift trucks, cranes, truck mounted with cranes, or stacker are used to handle the materials within the storage area safely. 7. Maintenance of records Records of each stage from indenting to receipt and closing of orders are maintained for the purpose of monitoring and control. Records are also helpful in identifying vendors for new items at a later date, resolving any disputes with the suppliers, bringing changes in product specification in the future, and planning similar projects in the future.

Q.3 Define project-type organisation and discuss it in detail A.3 There cannot be a single ideal structure for all organisations as different organisations have different size, environment, resources, technologies, and goals. There are many different ways in which people can be organised to work on projects. Project-type organisation is one of four concepts for organisational structure in which the employees work for different projects in a team-like structure. Examples are construction companies, where different teams work on different projects. Teams are put together for a project. Each project is headed by a project leader. Each team will have employees to suit its demands and complete the project successfully. Only employees with requisite specialised skills are considered for project teams. These members of project team will join back their parent company once the project gets finished.

Figure 1:A Typical Organizational Chart of Project-Type Organization

In project-type organisational structure, each project is handled like a small company. All the essential resources and paraphernalia needed to execute projects are procured for full-time till the project closes out. Employees having specialised knowledge and exposure to similar project environment will be appointed on contractual terms to work in a group and deliver the project expectations. Advantages of project-type structure
Clear line of authority: The project manager has complete authority over the project. All the

members of the project team are responsible only to the project manager. High level of commitment: The project team has a separate and strong identity, and all members are committed to the project and to each other strongly. Swift decision making: Because the authority is only with the project manager, the capacity to make swift decisions is increased. Simple and flexible: Project-type organisations are structurally flexible and simple, which makes them comparatively easy to implement.

Disadvantages of project-type structure

Duplication of effort: Each project team is fully staffed, which can result in a duplication of effort

in every area from clerical staff to technological support. Cost inefficient: The project organisation structure can be costinefficient because of underutilization of resources or stockpiling equipment for future use. Stretching out work during slow periods: During slack times, team members may not work at high level of productivity. Low level of knowledge transfer: There is low level of knowledge transfer between projects as employees are committed to working only on one project. So, there is no source of knowledge transfer and shared functional expertise. Job insecurity: At the completion of a project, the employees may be fired if there is no similar type of project. Examples of project-type organisation Rapid transit projects Construction projects IT projects

Q.4 Define value engineering. Discuss the scope of applying VE in project. A.4 Definition: Value engineering is the systematic application of recognised techniques that identifies the function of a product, process or services, accomplishes a monetary value of that function, brings out areas of avoidable costs and provides the essential functions consistently at the lowest overall cost. In short, it tries to improve function or reduce cost or achieve both without compensating quality, reliability and safety. Scope of applying VE in project Projects aim to produce some product, process, services, or others. A good number of these are concerned with building plants to produce goods and services to satisfy the human wants and needs. A typical life cycle of such projects includes project selection, planning, execution, and close out. VE may be applied in all the phases of project life cycle. However, the saving potential of a phase decreases as we move down the phases of a project. Figure 2 depicts the saving potential over life cycle phases of a typical project. From Figure 2, we observe that when the saving potential decreases, the cost to implement the changes to reap the benefit increases over the phases. As a result, the net saving decreases over the phases. It is why one should embark on VE as early as possible in a project.

Figure 2:Saving/Cost to Implement

Some important areas of VE application in various phases of a project include the following: I. Project Selection Phase Listing of all potential projects

Shortlist potentially good projects on technical and financial consideration o Market Analysis: Product-mix, demand and supply, existing and future competition, etc. o Technical Analysis: Plant capacity, product mix, plant location, process selection, selection of equipment including specification, requirement of auxiliary and utilities, design and engineering of fabrication and civil work, etc. o Financial Analysis: Estimation of capital and operating cost, profitability analysis and sensitivity and risk analysis. II. Planning and execution phase Procurement of material and equipment accounts for over 50% of project cost. VE can play a useful role in cutting the cost and lead time. Some VE approaches suggested by Miles to improve procurement are summarised below: Analyse the function performed by a part, particle, or specification. If any of these contributes little or nothing, designer should reconsider. Aesthetic function may be performed by various alternatives. Select the alternative performing the desired aesthetic at the least cost. Avoid extra cost needed to make the material ready to use. Analyse the different products performing the needed functions. Choose the least cost product. Compare the function provided by the buyers process with the desired function. Select the process offering close fit. Identify the parts performing the needed function and parts which support the primary parts. Cut down the cost of supporting parts.

Q.5 Define project management, resource, process, and project cycle. Why is project management important? A.5 Definitions: Project management: Project management is the art of organising, coordinating, and controlling the various tasks and resources in order to complete a project successfully. Resource: Resource refers to the manpower, machinery, money, and materials required in the project. Process: A process is a part of the project which consists of simple and routine instructions to achieve a desired result of any activity of the project. Project cycle: A collection of generally sequential project phases whose description and order of occurrence are determined by the control needs of the organisation or organisations involved in the project. Importance of Project Management The primary reason for commencing a project is to fulfil some specific goals. Project Management assists in realising those goals. To maximize returns in the current cut throat competitive environment, it is vital to manage the projects effectively. The present corporate environment requires proper and effective project management to achieve growth in business. Project management is vital for the success of a project. Without proper project management, there are chances that the teams may pursue the wrong goals, activities may prolong, actual expenditure may exceed budget, and resources may be under allocated or over allocated. Project management helps an organisation to execute a project successfully by:
Preventing Helping

failures in projects. A project needs large funds and society is affected directly or indirectly by a loss in any project. an organisation to define an project scope control the project creep.


the managers to understand the project and its purpose, as lack of understanding of the project among managers leads to failure.

and mitigating the risks from change of technology used during the course of project implementation. Helping to identify and communicate the problem areas. Project management provides a shared vision to the project team to guide their day-to-day work much more actively. The team members are expected to focus exclusively on this shared vision. Their sharp focus leads them to greater productivity. The project manager is responsible for optimising the productivity of his team. In simple terms, it is his/her responsibility to do everything possible to minimise the obstacles. The project manager has to match and combine all activities required to attain projects goals. Specifically, the project form of organisation permits the manager to be reactive to:

client and the environment, of problems at near the beginning stage and correct them, Taking well-timed decisions concerning to tradeoffs among differing project goals Guarantees that managers of separate tasks of the project do not optimize the performance of their individual tasks at the expense of the total project.

Practical experiences of several organizations prove that project management helps them to experience better control and better customer relations, and increase their project's return on investment. A significant proportion of users also reported shorter development times, lower costs, higher quality and reliability, and higher profit margins. Other reported benefits include a sharper orientation toward results, better interdepartmental coordination, and higher worker morale.

Q.6 What are the key steps included in risk management process? What are the strategies used to reduce risk? A.6 Steps included in Risk Management Process: In risk management, the following steps should be considered for effective risk management: Step 1 Recognition of assets at risk: The foremost step in the risk management technique is to carefully identify the assets which might generate risks in project operations. These assets may fall under various groups, such as tangible and intangible assets, movable and immovable assets etc. Step 2 Valuation of assets: The assets identified and grouped in the previous step are to be valued and categorised into different classes such as critical and essential. Step 3 Identifying the intimidation: Threats can be distinct as anything that contributes to the intermission or devastation of any service/product. Various compulsions can be grouped into environmental, internal, and external threats. Step 4 Risk consideration: The process of risk appraisal includes not only assessment as to the provability of occurrence but also the assessment as to the impending severity of loss, if risk materialises. This will support in determining the appropriate risk lessening strategy, the residual risk, and the investment required to alleviate the risk. Step 5 Emergent strategies for risk management: After risks identification and assessment, one must apply various risk management techniques such as risk avoidance, risk reduction, risk retention and risk transfer etc.

Strategies used to reduce risk:

To make the most of the benefits of project risk management, we must integrate the project risk management activities into well planned project management plan and work activities. Once risks have been identified and measured, the strategies to control the risk fall into one or more of these four categories:
Risk avoidance: It includes not performing an activity that could carry risk. For example, not

buying a property or business to avoid the liability attached to it or not flying an airplane to avoid the risk of a crash. Avoiding activities may seem to a very easy way of dealing with risks, but it also means losing out on the potential gain that performing the activities with risk may have allowed. For example, not entering a business to avoid the risk of loss also ends the possibility of earning profits.
Risk reduction: It involves methods that reduce the severity of loss from occurring. For example,

sprinklers are designed to put out a fire to reduce the risk of loss by fire. This method may cause a greater loss by water damage and therefore may not be suitable. Halon fire suppression systems may mitigate that risk, but the cost may be prohibitive as a strategy. Risk retention: It involves accepting the loss as when it arises. True self insurance is an example. Risk retention is a feasible strategy for small risks where the cost of insuring against the risk is likely to be higher over time than the total losses sustained. Risks which are not avoided or transferred are retained by default. This comprises risks that are so disastrous that they either cannot be insured against or the premiums would not be feasible. For example, during a war, most property was not insured against war, so the loss caused by war is retained by the insured. Also any amount of potential loss (risk) over the amount insured is retained risk. This can be accepted if there is a small chance of a very large loss or if the cost to insure for higher coverage amounts is so high it would hamper the goals of the organisation.
Risk transfer: It means causing another party to accept the risk, usually by means of contract or

by hedging. An example of a risk that uses contracts is insurance. In other cases, it may involve contract language that transfers a risk to the other party without the payment of an insurance premium. Very often, the liability among construction or other contractors is transferred this way. On the other hand, taking offsetting positions in derivatives is normally how firms use hedging to financially manage risk.