Q.1 a. Discuss the resources required to implement a project.

Project Constraints The primary purpose of a project is to deliver a product and/or service to a customer within a specified time, cost, detailed scope and performance requirements, as contracted with the customer. The below table represents the constraints that characterise a project. Project Constraints Characteristics Characteristics Constraints S(Scope) P(Performance) Magnitude or size of the project. Functional requirement and Technical requirements (Quality requirements are included). Total cost incurred for the project. Time specified to complete the project. Total resource available for the project.

C(Cost) T(Time) Resource

The relationship between these four constraints is given by: C = f (P,T,S, R) This implies that Cost is a function of Performance, Time and Scope. An overview of Cost, Performance, Time and Scope, are given below:  Cost: The total project cost is the sum of total costs of all the resources required to complete the activities of the project.  Performance: The process of defining performance requirements of a project is a major part of project definition.  Time: The time of completion for a project is generally specified by the client. The cost of a project is inversely related to the specified time.  Scope: Scope refers to the end product or the deliverables required from the project Resources The most important step in arriving at the relationship between the four constraints is to make an accurate assessment of the resources required, and the project costs. Resources required can be classified under four categories:  Manpower  Material  Tools and Plants  Infrastructure Work Work is the total of all the tasks that needs to be performed to deliver the project on time. It is correlated to the size of the scope of the deliverable products. Every resource has a cost associated with it and the sum of these costs forms a part of the total project cost. Q.1.b Illustrate the functions of a project manager Project Manager A project manager is a person who facilitates smooth workflow of the project that is delivered to the clients timely. They are responsible for planning, execution and closure of a project. A project manager possesses a combination of skills as well as the ability to make assumptions and resolve any personnel conflicts.

2.The project manager ensures that necessary resources are available for the progress of the project work. . Time management skills 11. A project expeditor acts only as a communication coordinator and does not possess the rights to enforce any decisions. However.  Project Coordinator: The role is similar to that of a project expeditor. A project leader can report either to a project manager or to a programme manager or to both. where deploying manpower could be a problem. this role has no authority. Key Qualities and Skills of a Project Manager 1. The planning process group and its constituent processes and interactions are used to plan and manage a successful project for the organisation.  Project Leader: Responsible for managing the different stages of the project. Ability to steer team growth 3. it is important that the issues are reported systematically and in order. Assigning roles and responsibilities Q. The programme manager ensures that the delivery of projects benefits the business of the organisation. suggestions.  Project Manager: Manages individual projects assigned. Ability to manage the finances of the project 5. one person could execute more than one of the roles mentioned below:  Project Expeditor: Responsible for monitoring and reporting the status of the project to the senior management. However. in some projects.  Programme Manager: The programme manager is also called as the change manager. Hence planning contains more processes than other process groups. However. Agency responsibilities 12. Understanding the nature of the project 13. The following steps illustrates the role of various members associated with the team Also. Planning Process Group Planning is a major process group as it involves the process of doing something that has not been done before and forms the basis for carrying out the subsequent processes. Thus. Ability to take decisions 4. Excellent communication skills 7. or any other factors. Technical Skills 9. Problem solving skills 10. a project manager is a critical resource in the project team and is responsible for taking timely decisions so that project risks are managed well and uncertainties are reduced Functions of a Project manager are as follows:  It is important that a hierarchy is maintained in the organisation to report any project related issues to the top management such as status of the work. The programme manager has command of all the managers and leaders responsible for monitoring the project.List the project management processes involved in the planning process group . The project manager has project leaders as reporting employees. Setting goals 16. the project coordinator has some limited authority to make decisions. Good interpersonal skills (Individual Skills) 8. Leadership ability 2. Commitment 6. Defining and setting the project scope 15. Conforming project feasibility 14.

Creating the Work Breakdown Structure (WBS)3 improves the accuracy of cost. 5. Get the overall project rating index by adding all the factors. two different teams can generate very different plans for the same project. time and resource estimations. . rating with the factor weight to get the factor score. Describe the approaches that are used to screen projects Screening of Projects When an organization evaluates a large number of projects regularly.The above figure shows the effort spent in planning through the project life cycle. Assign weights to these factors depending on their perceived relative importance. The project management processes involved in the planning process group are: Scope planning: This process creates a project scope management plan that documents how the project scope will be defined. Project rating index involves the following steps: 1. to evaluate the project. verified and controlled. Moreover. Create Work Breakdown Structure (WBS): This process divides the major project deliverables and project work into smaller. 2. preliminary screening is performed using a project rating index. Multiply each factor. For example. Planning is not specific. form part of the planning process group. the planning processes may be repeated before the completion of planning. by the use of a suitable rating scale (5-pont scale. based on which the WBS is generated. Identify factors relevant for project rating. All the planning processes involved in a project. more manageable components. Scope definition: This process develops a detailed project scope statement for future project decisions. Table 1 shows a sample project rating index which is filled in. Rate the project proposal on various factors. The scope statement is the input to this process. 4.  Activity definition  Activity sequencing  Activity resource estimating  Activity duration estimatingSchedule development  Cost estimating  Cost budgeting  Quality planning  Human resource planning  Communications planning Q3. cost or even scope may be redefined in order to reach an acceptable completion date. The success or failure of a project is largely determined by the degree of clarity in the scope statement. or 9 point scale). if the initial completion date of the project is not acceptable. project resources. that is. 7 point scale. 3.

6. the project passes the initial screening. The same is done by pairing various projects. D is depicted in table 2 Table 2: Example of a Priority Matrix Project A B C A x 1 0 B 0 x 1 C 1 0 X D 0 0 1 D 1 1 0 X Total 2 2 1 1 Rank 1 2 4 3 Using the rating in the matrix shown in table 6.15 3 0. high quality products.  Economies of scale: In manufacturing.2 0. superior to Project D. Some factors that companies use to enhance NPV are:  Government policy. This happens when there is a number of variables involved that affect the measure of each factor that a project or strategy would yield. the final matrix for projects A. For example. For example.45 Total weight = 1.0 Project score = 4 The maximum possible score for a project is 5.35 0. the priority matrix is worked out by comparing whether project A is better than project B (designated by 1 for project „A‟ and 0 for project „B‟ – it is called a binary digit approach or a paired comparison).  Project B is superior to Project C.6. project choice is based on the rank. Sometimes it may be difficult to give weights and ratings to the factors.2 0.3 Rating (on a 5 scale) 5 3 4 Factor Score 1. and if the hurdle value is set as 3. and mining. steel production. inferior to Project C. customised service and so on.  Product differentiation: This is achieved by innovative product features. The row with the highest total is the first choice and the row with the lowest total is the last choice. petroleum refining. As an example. the following is concluded:  Project A is superior to Project B. Net Present Value (NPV) as Project Selection Criterion NPV is the present value of the future revenues after deducting future costs. and superior to Project D. B. . C. special tax benefits and exemptions for an industry or a location. If two rows show the same total. Compare the project rating index with a predetermined hurdle value to judge whether the project is prima-facie feasible or not Table1 : PROJECT RATING INDEX Factor Factor Weight Reasonableness of Cost Technical Knowhow Dependence on Company’s strength Change in Consumers’ preferences 0.6 1.  Project C is inferior to Project D. unit cost is substantially reduced by adopting high production volume.75 0. This is a very popular and valid method for selecting a project from the financial viewpoint. In such a case.

leadership skills. The project is said to be well programmed if it allows ability to meet the needs of the customers.  Result orientation performance. the organisation should be structured in such a way that the members of the team are motivated to perform their work.  Organising: Organising is an essential responsibility of the project manager. However. This helps the team members to plan various methods and procedures to follow on their own. Delegation facilitates the team to achieve the objectives of the project. What are the various factors to be considered while acquiring a project team Characteristics of Project Team Members A project manager is responsible for managing the various tasks and processes to meet the project delivery in the defined time. schedule. project planning skills. it requires that the members participating in the team also play an effective role in meeting the success of the project delivery. successfully. The accountability of delivering the product with the expected quality relies on all the members of the team with the following constraints described in the table below are taken into consideration: Table :Quality Constrains The successful completion of the project is not the sole responsibility of the project manager alone. The members of the team should have enough workspace to make small decisions on their own.  Self understanding of the roles and responsibilities of the project. Technology superiority: DRL outperformed its competitors in the drug-manufacturing industry because of their technology based on research and development. However. It ensures that the resources that are required to for smooth working of the project are well secured and organised. It ensures that the progress. to take ownership of their work that motivates self progress in meeting the deadlines of the project. procedures and cost of the project are well monitor. . The project manager then communicates with the other members of the team regarding the objectives set and the tasks that has to be accomplished. The most important aspect in the process of managing the project includes delegation.  Exhibit high degree of co-operation and trust. The various characteristics of the team members of the project include :  Clear understanding of the objectives of the project. the success of the project requires good monitoring skills. It ensures that the members of the project achieve the outcome that is expected to carry out with the tasks that have been allocated. Q4. The success of the project is based on the efficiency of the team. The various responsibilities of a project manger include  Planning: The project manager is responsible for defining the goals and objectives of the organisation.  Controlling: The project manager should be able to monitor and control the process to keep track of the status of the work. Thus.

The project manager is held responsible for the success of the project. skill of personnel. Describe the strategy planning tool of Ansoff matrix. Ansoff Matrix The Ansoff matrix (originator Igor Ansoff in 1957) presents the product and market choices available to an organisation. Reasonably establishing. The project manager should have the team building skills so that people can work well together and feel motivated to work hard for the sake of the project and their team members. A project manager should possess good people management skills which include having the discipline and the general management skills to make sure that people adhere to the standard processes and procedures. challenging and expecting from people. Diversification Markets Requires production of new products for new markets (Unrelated diversification). The fourth strategy provides high growth potentials but requires . products. and holding them responsible for meeting the expectations involves providing good performance feedback to the team members. Based on management of time availability. The below table shows the four corporate strategies using an ANSOFF Matrix.  Experience of the company with the intended market.Q5. The Ansoff matrix is used to aid decision-making concerned with market expansion and diversification. Leadership is all about conveying a vision and getting the team to accept it and strive to get there with the project manager. The bigger the team and longer the project. Q. Leadership skills should be established to get the team to follow the project manager’s direction. Explain the steps that the project manager has to take to manage people. Product Expansion customers Requires development of new products for existing customers (Related diversification). ANSOFF Matrix (Source: Corporate Strategy by Igor Ansoff) OLD Product NEW Product OLD Market-Market Penetration Related Diversification-OLD Market (Product Development) OLD Product NEW Product NEW Market-Expansion Unrelated Diversification-NEW Market (Market Development) The explanations for the four strategies mentioned in the quadrants of Table are in the below table. Markets may be defined as customers. It considers two factors:  Newness of the product to the company. A proactive verbal and written communication skill includes good and active listening skills. Market Expansion Requires identification of new customer for existing products.5b. or items sold to the customers. Strategy Explanation Market Penetration Requires an increase of existing market share in existing markets. He will have to try and resolve team’s poor morale and also find ways to overcome the missing deadlines. The project managers will be held responsible if the team members do not understand what they have to do. the more vital it is to have a good team-building skills. and fund mobilisation capacity the company decides to adopt one or more of the four strategies. a.

The discounting rate to be used for this computation is popularly accepted as the „cost of capital‟ i n percentage (k). The number of years for which this total becomes equal to the initial investment is considered as the payback period. In case the reinvestment rate is „r‟. The limitation of Ansoff matrix is that the matrix tells us one part of the strategy story. . if the Terminal Value (TV) of the cash inflows of the project has to be computed. Benefit-Cost Ratio (BCR) BCR is also known as Profitability Index (PI).careful planning and analysis prior to taking any decision. marginal productivity of capital etc. This can include a fraction of the year. the future annual cash flows are algebraically added without considering the time-value of money. It is advantageous when capital rationing is used. then. then the modified IRR i. If the annual cash inflows are equal. Discounted Payback Period In this method. Point of indifference if NPV = 0 Modified NPV (NPVn) The assumption in the NPV method above is that the cash flows are reinvested at a rate of return equal to k i.e. some of its businesses could end up being badly managed.. the project is accepted and if it is more than the standard. but it is imperative to look at other strategic models like Strength Weakness Opportunity and Threat (SWOT) analysis in order to view how the strategy changes in the future. rejected if NBCR is negative and at point of indifference if NBCR = 0.e. whereas the BCR method calculates the ratio of future cash benefits to the initial cash flow. marginal efficiency of capital. If the reinvestment rate (r) is different. The present value of future cash benefits is computed using the same as the time-value of money technique used in the NPV method. Internal Rate of Return (IRR) The IRR is the discount rate (k) at which NPV=0.e. then TV has to be reduced to its present value and the NPV will be equal to the present value of TV minus the present investment (assuming the entire investment is made in year 0). If the discounted payback period is less than the standard. cost of capital. Write notes on the various discounting and non-discounting techniques applied in financial analysis of projects We can broadly divide the financial viability criteria in two categories as under:  Discounting criteria: These criteria consider the time value of money. Non-discounting Criteria Payback Period Here. is the future years‟ cash flows are considered on the same footing as the investment or cash flows in the initial year or years. IRR is also known as „yield on investment‟. IRRn is to be computed after calculating TV as explained in the NPVn method above. The NPV method computes the difference between the Present Value (PV) of the future cash benefits and the initial investment. Discounting Criteria Net Present Value (NPV) NPV is the present algebraic value of all future cash flows discounted at “k”. the present values of future cash flows are calculated and added.  Non-discounting criteria: These criteria do not consider the time value of money i. Modified IRR (IRRn) The IRR method shown above is based on the assumption that the cash inflows of the project are reinvested at the same IRR rate. The project is accepted if NBCR is positive. This is the ratio of the present value of future cash benefits to the initial investment. If the firm decides to expand in all four areas. Net benefit cost ratio (NBCR) The formula for NBCR is : NBCR=BCR-1 It measures the ratio of the net benefit of the project rather than the gross benefit. The formula for NPV is: The project is accepted if NPV is positive and rejected if NPV is negative. Q6. the project is rejected.

. Average Rate of Return (ARR) ARR is also called Accounting Rate of Return. It is given by the formula: ARR(as%) = (Average Annual Profit/Initial Investment)* 100 A project with a higher rate of ARR is preferred.PaybackPeriod(Years)= Cost of Project/ Annual cash inflow from project Criteria for project selection are the same as that mentioned under discounted payback period.

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