1.

Project Identification is the first and most important step in the entire project
process. Comment.

According to World Bank, project cycle involves five stages; namely, project identification,
project preparation, project appraisal, project implementation, and project evaluation.

Project identification

This stage is also called pre-feasibility studies. In this stage, projects that can contribute towards
achieving the specified objectives are identified (listed). Project ideas may come from:

 New experiments from previous project failures

 New experiments from expansion

 Replication of successful project tested elsewhere

 New experiments from shortages or excess of resources

 External threats

 Opportunities

 Internal strengths and/or weaknesses

 Other sources

Project identification is also concerned with elimination of inferior alternatives (projects) from
the identified ones. The output of this stage is project that is prima-facie (at first sight or based
on first impression) promising and further work is justified. Chapter three will present pre-
feasibility study in more detail.

2. What is the goal of project management?

Project management is planning, scheduling, controlling and monitoring the complex non-
routine activities that must be completed to reach the predetermined objectives of the project. It
involves the coordination of a group activity, wherein the manager plans, organizes staffs,
directs, and controls to achieve an objective, with specified time, cost and performance of the
end product.

3. If someone tells you there is too little time to plan a project, how would you defend
your conviction that planning is necessary? and what components that you will
address while you are undertaking the planning exercise

Project Planning is foreseeing with blue print towards some predicated goals or ends. Project
plan is a skeleton which consists of bundle of activities with its future prospects; it is a guided
activity. It is a plan for which resources are allocated and efforts are being made to commence
the project with great amount of preplanning, project is a way of defining what we are hoping to
do about certain issue. The project alone is not responsible for what happens during the course of
a planning. Project is a final form of written documents that guides us as to what steps need to be
taken next.

One of the objectives of project planning is to completely define all work requested so that it will
be readily identifiable to each project participant. Besides that there are four basic reasons for
project planning: To eliminate or reduce uncertainty, to improve efficiency of the operation, to
obtain a better understanding of the objectives, to provide a basis for monitoring and controlling
work.

Components that will addressed while undertaking the planning will be

Defining the scope: The first thing to do is to develop a clear scope statement as the project’s
foundation.

Resource planning: This includes the determination of resources (people, equipment, materials,
etc.) and the quantities necessary to carry out the project activities.

4. If you are project manager at Addis Construction firm, how you will manage it
effectively. And what are the issues that you will manage critically while managing
your project.

Project management provides people with a powerful set of tools that improves their ability to
plan, implement, and manage activities to accomplish specific organizational objectives. But,
project management is more than just a set of tools; it is a results-oriented management style that
places a premium on building collaborative relationships among a diverse cast of characters.

Construction industry is one of the key areas that give focus as one of the cornerstones of
development. Significant amount of money budgeted by investors for this sector which enables
to involve itself as well as to facilitate the involvement of project manager.

Issues that will critically managed in project management will be

 Developing project management plan

 Directing and managing project work

 Quality management

 Monitoring and controlling project work

 Performing integrated change control

5. What is the purpose of technical feasibility study?

Analysis of technical feasibility and engineering aspects is done continually when a project is
being examined and formulated. Other types of analysis are closely intertwined with technical
feasibility analysis. The broad purpose of technical feasibility analysis/ study is

 To ensure that the project is technically feasible in the sense that all the inputs required to
set up the project are available, and

 To facilitate the most optimal formulation of the project in terms of technology, size,
location, and so on.

6. Evaluate the merits and demerits of non-discounted and discounting methods of

financial evaluations of projects.

Merits of Non discounting methods

 Non discounted techniques of project appraisal are really simple to understand.

 These techniques involve least calculations and are easy to apply in practice.
Demerits of Non-discounting methods

 By the term non-discounted, it is meant that the time value of money has not been
considered i. e. the present value and the future value of money is being treated as same.

 The cash inflows or even the future cash outflows are not being brought at par with their
present value.

Merits of discounting methods

 Helps to estimate the money an investor would receive from an investment, adjusted for
the time value of money.

 It is appropriate in any situation where a person is paying money in the present with
expectations of receiving more money in the future.

Demerits of discounting methods

 It requires making many assumptions

 The future cash flows would rely on a variety of factors, such as market demand, the
status of the economy, unforeseen obstacles, and more.

PART II: CASE STUDY

Project A Project B

Payback period in years 4 years 7 years

NPV 43500 899343

PI 1.05 1.45

IRR 23.67% 8.76%

The projects have different value because of their different rate of return/annual cash flow

In case of payback period accepting the lowest year

If the projects are independent, accept both. If the projects are mutually exclusive, accept Project
S since NPVS > NPVL.

Accept project if PI > 1. Reject if PI < 1.0