PPM Combined

Presentation Topic
Open Elective-II
Project Planning and Management (IOEUA40183A)
Mr. Ashish Deokar
ashish.deokar@viit.ac.in
Department of Civil Engineering
BRACT’S, Vishwakarma Institute of Information Technology, Pune-48

(An Autonomous Institute affiliated to Savitribai Phule Pune University)
(NBA and NAAC accredited, ISO 9001:2015 certified)
OBJECTIVES OF COURSE
• To impart knowledge of project life cycle.
• To introduce students to Project Identification Process, Project Initiation, Pre-Feasibility Study and Project
feasibility Studies.
• To construct CPM, PERT network for a project.
• To introduce students to Steps in Risk Management, Risk Identification, Risk Analysis and Reducing Risks.
• To introduce students to process of project Performance Measurement, Evaluation and closeout.
Learning Outcome/Course Outcome
• Understand what a Project is, Essential of Project Management.
• Understand the Project Identification Process, Project Initiation, Pre-Feasibility Study and Project feasibility
Studies.
• Learn and Apply project planning and controlling techniques.
• Identify risks in a project and strategies for managing the project risks.
• Understand project risk Management and Quality control in a project.
• Understand the process of project Performance Measurement, Evaluation and closeout.
Faculty Name: Mr. Ashish Deokar, Department of Civil Engineering, VIIT, Pune-48
Last Sessions Recap
1. Overview of PPM_1
2. Introduction of Project management_2
3. Purpose of Project Management_2
4. Objectives of Management_2
5. Functions of Management_2
6. Principles of Management _3
7. Categories of project_4
8. Project life cycle_4
CONTENTS
1. Overview of PPM_1
2. Introduction of Project management_2
3. Purpose of Project Management_2
4. Objectives of Management_2
5. Functions of Management_2
6. Principles of Management _3
7. Categories of project_4
8. Project life cycle_4
9. Organization Structure
INTRODUCTION
Project:
• Project is a set of activities with defined starting and finishing points or time,
undertaken to active individual or organizational objectives with defined schedule, cost
& performance parameter.
• “A project is a temporary venture undertaken to create a unique product or service”.
• Projects can be large or small and take a short or long time to complete.
• A project consumes resources.
INTRODUCTION
Management:
“Management is knowledge about exactly what is to be done &
seeing how it is to be done in the best and the cheapest way”.
➢Art of getting work done through people with satisfaction of

employer, employees and public.
➢Management – Art as well as science
Scientific basis – Work done can be measured
Art – getting work done through others.
PURPOSE OF PROJECT MANAGEMENT
Importance of Management
➢No enterprise can survive without management – huge money, excellent
m/c, expert manpower lead to confusion.
➢Guide and control activities.
➢Coordinates different activities of departments.
➢Provide new ideas and vision.
➢Tackles business problems.
➢Meet challenge of change.
➢Provides stability to the enterprise.
➢Helps personality development.
➢Increase efficiency of business
➢Improves research and development
Objectives of Management
To complete the project within

schedule time.
To complete the project in allotted
funds.
To complete the project with proper safety.
To ensure that the project is completed to the

satisfaction of the end users.
To execute the project in such way that the project meets
the quality standards
Functions of Management
1. Forecasting
2. Planning
3. Organizing
4. Staffing
5. Directing- – leadership, communication, motivation, supervision
6. Coordinating
7. Controlling
8. Decision making
• Estimates future work – sales or production

• Relates to cost, finance, purchase, profit or loss
Forecasting
• Manager anticipates future and discovers alternatives

• Systematic way of making decisions
Planning • Essential for utilizing available facilities
• Organizing people, materials, jobs, time, etc.
Organizin • Determining activities
g—
• Manager select, train, promote and retire their subordinates.

Staffing • Developing and placing of qualified people
• Motivating, guiding and supervising subordinates

Directing
• Achieving harmony of individual effect towards the
accomplishment of company objectives
Coordinat
ing • Making plan to coordinate activities of subordinate.
• Measures current performance

Controllin • Controlling set standards, measure job perfection, take correct
g action
• Selecting course of action for getting desired results.

Decision
making
Various Definitions of Management
• Donald J. Cough defines, "Management is the art and science
of decision making and leadership.”
• Henry Fayol defines,“ Management as to manage is to forecast

and to plan, to organize, to command, to coordinate and to
control.”
• Peter F Drucker defines, “Management is a "multipurpose

organ that manages a business and manages managers, and
manages worker and work.”
Principles of Management
• Division of Work
• Authority
• Discipline
• Unity of Command
• Unity of Direction
• Subordination of Individual Interests To The General Interests
• Remuneration
• Centralization
• Scalar Chain
• Order
• Equity
• Stability of Tenure of Personnel
• Initiative
• Espirit De Corps
Division of Work
• Work should be divided

among individuals and
groups to ensure that effort
and attention are focused on
special portions of the task.
• Fayol presented work

specialization as the best way
to use the human resources
of the organization
Authority
• Authority was defined by
Fayol as the right to give
orders and the power to exact
obedience.
• Responsibility involves
being accountable, and is
therefore naturally associated
with authority.
Discipline
• A successful organization
requires the common effort
of workers.
• Penalties should be applied

judiciously to encourage this
common effort
Unity of Command
• Workers/employee should
receive orders from only one
manager.
• He should not receive

instructions from more than
one person .
Unity of Direction
• The entire organization
should be moving towards a
common objective in a
common direction.
• Without unity of direction,

unity of action cannot be
achieved
Subordination of Interests To The General Interests
Individual
• The interests of one person
should not take priority over
the interests of the
organization as a whole.
Remuneration
• Remuneration to be paid to
the workers/employees
should be fair, reasonable,
satisfactory & rewarding of
the efforts. It should accord
satisfaction to both employer
and the employees.
Centralization
• Centralization means
concentration of authority at
the top level.
• In other words, centralization
is a situation in which top
management retains most of
the decision making
authority.
Scalar Chain
• It is chain of superiors
ranging from the ultimate
authority to the lowest.
• Every orders, instructions

etc. has to pass through
Scalar chain
Order
• For the sake of efficiency
and coordination, all
materials and people related
to a specific kind of work
should be treated as equally
as possible.
Equity
• All employees should be
treated as equally as
possible.
Stability of Tenure of Personnel
• Retaining productive employees should always be a high
priority of management.
• Recruitment and Selection Costs, as well as increased

product-reject rates are usually associated with hiring
new workers
Initiative
• Initiative means eagerness to
initiate actions without being
asked to do so.
• Management should provide
opportunity to its employees
to suggest ideas, experiences
& new method of work..
Espirit De Corps
• It refers to team spirit i.e.
harmony in the work groups
and mutual understanding
among the members.
• Management should
encourage harmony and
general good feelings among
employees.
The 14 principles of management can be used to manage
organizations and are useful tools for forecasting, planning,
process management, organization management, decision
making, coordination and control.
Categories of Project
1. Depending upon Location
2. Depending upon size
3. Type of ownership
4. Type of application
5. Based on risk involve
1. Depending
upon location
2.Depending 3.Type of 4.Type of 5.Based on

upon size ownership application risk involve
• Minor • Government • Commercial • High risk
Projets • Public • Residential • Medium
• Mediun • Public • Industrial risk
Projects Private • Infrastructur • Low risk
• Major Partnership e
Projects
Project Failure
Owner Contractor
Inexperience or unequal
Decision making problems project team
Poor estimating Poor estimating
Insufficient tool and project Unfavourable contract
management infrastructure
Lack of senior management
Goal and vision support
Incomplete and fluid design Design issue
Lack of integral budget and Overly aggressive schedule
planning
Lack of proactive risk Lack of Risk management
management
Unrealistic schedule Lack of Project co-ordination
Project Life Cycle
A project life cycle is a collection of project phases that defines:
• What work will be performed in each phase
• What deliverables will be produced
• Who is involved in each phase
• How management will control and approve work produced in each
phase
Project Life Cycle
• Project • Project
Initiation Planning
Definiti
Detailed
on of
Planning
project
Monitori
Review ng &
Control
• Project • Project
Closure Execution
Project Life Cycle…
Selection of the best project in given resource
limits
Recognizing the benefits of the project

Project
Initiation Preparation of the documents to sanction the
project
Assigning of the project manager
Definition of the work requirement
Definition of the quality & quantity of work
Project Definition of the resources needed

Planning
Scheduling the activity
Evaluation of the various risks
Negotiating for the project team

members
Project Directing & managing the

Execution work
Working with the team members

to help them improve
Project Life Cycle
Tracking progress
Comparing actual outcome to predicted outcome

Project
monitoring
Analysing variances & impacts
& Control
Making adjustments
Project Life Cycle
Verifying that all of the work has been
accomplished
Contractual closure of the contract

Project
Closure
Financial closure of the charge number
Administrative closure of the paper work
Cost Components
Organization
• Organization is a group of person working together to achieve a
predefined/establishment goal.
• Defining and delegating responsibility and authority
• According to Chester Barnard, “Organizing is a function by which
the concern is able to define the role positions, the jobs related and
the co-ordination between authority and responsibility”.
Organization Importance of Organization
Specialization
Well defined jobs
Clarifies authority
Co-ordination
Effective
administration
Growth and
diversification
Sense of security
Scope for new changes

Specialization
• Organizational structure is a network of
relationships in which the work is
divided into units and departments.
• This division of work is helping in

bringing specialization in various
activities of concern.
Well defined jobs
• Organizational structure
helps in putting right men on
right job which can be done
by selecting people for
various departments
according to their
qualifications, skill and
experience.
• This is helping in defining
the jobs properly which
clarifies the role of every
person
Clarifies authority
• Organizational structure helps in clarifying the role positions to every
manager .
• This can be done by clarifying the powers to every manager and the
way he has to exercise those powers should be clarified so that misuse
of powers do not take place.
• Well defined jobs and responsibilities attached helps in bringing
efficiency into managers working.
• This helps in increasing productivity.
Co-ordination
• Organization is a means of creating co-
ordination among different departments of
the enterprise.
• It creates clear cut relationships among
positions and ensure mutual co-operation
among individuals.
• Harmony of work is brought by higher level
managers exercising their authority over
interconnected activities of lower level
manager
Effective administration
• The organization structure is helpful in defining the jobs positions.
• The roles to be performed by different managers are clarified.
• Specialization is achieved through division of work.
• This all leads to efficient and effective administration.
Growth and diversification
• A company’s growth is totally dependent on how
efficiently and smoothly a concern works.
• Efficiency can be brought about by clarifying the role
positions to the managers, co-ordination between authority
and responsibility and concentrating on specialization.
• In addition to this, a company can diversify if its potential
grow.
• This is possible only when the organization structure is
well- defined.
• This is possible through a set of formal structure
Sense of security
• Organizational structure clarifies the job
positions.
• The roles assigned to every manager is
clear.
• Therefore, clarity of powers helps
automatically in increasing mental
satisfaction and thereby a sense of
security in a concern.
• This is very important for job satisfaction.
Scope for new changes
• Where the roles and activities to be performed are clear and every
person gets independence in his working, this provides enough space to
a manager to develop his talents and flourish his knowledge.
• A manager gets ready for taking independent decisions which can be a
road or path to adoption of new techniques of production.
• This scope for bringing new changes into the running of an enterprise is
possible only through a set of organizational structure.
Principles of Organization
• Consideration of objectives
• Relationship of basic components of the organization
• Responsibility and authority
• Span of control
• Dividing and grouping work
• Effective delegation
• Communication
• Line and staff relationship
• Balance, stability and flexibility
Types of organization
The structure of one industrial organizational differs from that of another
organization and it depends upon following.
oSize of the organization
oNature of the product being manufactured,
oComplexity of the problem being faced.
Common Types of Organization

❑Line, military or scalar organization
❑Functional organization
❑Line and staff organization
Line, military or scalar organization
• Resembled to old military organization
• Simple form of organization
• Based upon authority and responsibility
• Followed : Govt. Dept. and autonomous engineering college
Application : all type of small firms , industries like sugar factories,

paper mills etc.
Features: Have only direct vertical relationships between different
levels in the firm.
~If VI
.
-"':~~ Line,
..1111 military
111ilitary or
or scalar
calar organization
orga11izat·o1
' --
Exhibit 10.3 : Line Organisational! Structure

-- - -- - - --
CEO
I
II I
Manager Manager
(ProducUon) (Marketing)
I I
I I I I
Foremen Fcreman Sales Olk-er Sales Officer '
(Fabtk:atloo) (Assembly) {A) (B)
I I I I
Workers Workers !
Salespersons Salespersons
Line, military or scalar organization
Advantages
• Simple, easy to understand and flexible
• Makes clear division of authority
• Strong in discipline
Disadvantages
• Neglects specialist
• Overload few key executives
• Small concern
Functional organization
F W Taylor suggested this organization,
A functional organization is a common type of organizational structure in
which the organization is divided into smaller groups based on
specialized functional areas, such as IT, finance, marketing, etc.
Application : Not is used in construction industry but modified forms is
used in most modern and advanced concerns.
Features:
• Line and staff have direct vertical relationship between different levels.
• Staff specialists are responsible for advising and assisting line
managers/officers in specialized areas.
• These types of specialized staff are (a) Advisory, (b) Service, (c)
Control.
-~ Functional
•unc ional organization
VI
or anizatio 1
Exhibit 1 0.5 : Line and Staff Organisational Structure
r----o.A--i
L - ( ~ A) ~ J [
OIA
COC.)
r- D•A 1
l_!MKTG.!.._I
rL_!_PAODNl
- DIA
[ DIA
CA&D>
DIA
(FI N)
•
G .M (Personnel)
Staff ,.espons b U1ty
i
. - - -G -....
Llne Authori ty
----.
~ (MFG)
Manager (Personnel)
Pe,.sonnel oHM:ers
r -F.M/
L _:>~oervisor
Pe05onnel Assistants Wort<era
Legend: DIA - Director

HR - Human Resources QC - Ouahty Control
MKTG - M arke t ing PAODN - Production
R & D - Research and Development FIN - Finance
MFG - Manufacturing GM - General Manager
MGR - M anager FM - Foreman
.~ Functional
~~nctional organization
organ.-i_z_at_io_1_1_ _ ___ i DSM • Depoirune,r.ta~ ~nior M~~. 8~h
~l*ifie; settm ~h;o tM d'e~nll!!flt
rnanagl!'t oversee-!....._
1
FedEnFeederC<:'.'f'l!)a.nies inelude: FedE.x c.irOllil!d, Fed~Ju1
CEO and Board of D'irectors ~,~1;,, ~Wlx ~ Oltieil H:db TQdi Ni~ f~b;
El:prei!i
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· r oft3(hofr.eqEocsm;,llptoli'letr'I·
----~~='~~~:::::;::; solvirli ll!'il~
VP' mobal Communications

and Investor VP Corporate Marketing VP lntemational Manketing VPs
Relaticns
DSM DSM DSM DSM DSM
l earn Leaders• Team Leaders Team Leaders Team Leaders Team Leaders Task Supervisors
T.ask-Specific
Team Members Team Members Team Members · eann Members ream Members WorkQrs
Functional organization
Advantages
1. Since one foreman is responsible for one function, he can
perform his duties in a better manner
2. Reduces no of accidents, wastage
3. Quality of work improved
Disadvantages
1. Difficult to maintain discipline
2. Worker remain confused about authority
3. Difficult to fix up responsibility
Line and Staff organization
• Line executives marked vertically, and staff executives are placed
horizontally.
• For growing industry, it is required.
Applications: Used in medium and larger enterprises.
Feature: Superimposes a horizontal set of divisions and reporting

relationships onto a hierarchical functional structure.
-~
INSTITUTES VI
Line •
. '111 and
a11 Staff
taff organization
orga11izatio11
Secretary - - - BOD - - - - Legal advisor
t
Acct Off / GM ----------- Sales manager
personal man t purchase engg
design engg WM ----------- industrial engg
stores officer
v v
suptd A suptd B
I I
FM FM FM
WORKERS
BOD - Board of Directors GM - Genera l Manager
WM - Works Manager Suptd - Superitendant
FM - Foreman
Line
Ji11e and
at1d Staff
Staff organization
orga11izatio11
Line and Staf·f Organ-zat~on
Sa~es Manager
lrl ark et
._._ _llliiiilll rorac a'!:l!t o
T r.aininR Re~i on A Regi on A

DJ recl!:or Sales Sales
Matrix Organizational Structure:
It is a permanent organization designed to achieve specific results by
using teams of specialists from different functional areas in the
organization.
Use: Industrial like electronics, advertising, banking etc.
Feature: Superimposes a horizontal set of divisions and reporting

relationships onto a hierarchical functional structure
Matrix
atr ·x Organizational
Orga11izatio11al Structure:
General Manager
I
Production Finance Marketing R& D

Manger Manger Manager Manager
Project A Production Finance Marketing Personal I
Manager Group Group Group Group I

I
Project B Production Finance Marketing Personal

Manager Group Group Group Group
ProjectC Production Finance Marketing Personal

Manager Group Group Group Group
Matrix Organizational Structure:
Advantages Disadvantages
• Decentralized decision making. • High administration cost.
• Strong product/project co- • Potential confusion over authority
ordination. and responsibility.
• Improved environmental • High prospects of conflict.
monitoring. • Overemphasis on group decision
making.
• Fast response to change.
• Excessive focus on internal
• Flexible use of resources. relations.
• Efficient use of support systems.
Modified Matrix organizational Structure:
• When organization grown
• To avoid the difficulty
• Appointed as project director
• PD = controls all PM and reports to GM directly
INTRODUCTION
Example
Construction of house is a Project:
Activities
1.Digging of foundation
2.Construction of foundation
3.Plinth
4.Construction of wall
5.Construction of roof
6.Fixing of doors and windows
7.Fixing sanitary fittings and wiring…etc
REVIEW
VIEW OF SESSION
SESSION
Thank You
Project Planning and Management
Mr. Ashish Deokar


Review of previous session
• Discussion on Project and Knowledge areas
Mr. Ashish Deokar, Department of Civil Engineering, VIIT , Pune-48

Objective/s of this session
1. Introduction to Identification of a Projects and screening
1. Understand Identification of a Projects and screening

Project Life cycle
4
Project constraints
• Time
• Cost
• Scope
• Resources (People)
• Quality
• Risk (Real world)
• (Facilities and equipment, Computer
Infrastructure, Physical Location etc.)
5
Project identification
• Project Identification is a continuous and repetitive process

involving screening, documentation, validation, ranking and approval
of viable project Ideas for an organization.
“The systematic effort of screening the ideas generated through

various sources and bringing out most viable and feasible
alternative project ideas is the domain of Project Identification”.
6
Project identification process/steps in project identification
• Project ideas are like other ideas don’t take concrete shape
immediately.
An idea is first born, it is under incubation for some time, and
consequently, it begins to take some definite shape.
7
• Conceptual stage:
• A number of project ideas are generated through interaction
amongst various groups of intellectually and entrepreneurially
inclined people in the organization having good knowledge and
concern about the field where contributions are sought.
• Screening stage:
• the second stage, the project ideas generated above are screened
and a preliminary exercise is conducted to weed out the bad or
unviable ideas.
• Therefore, it is understandable that all the given project ideas
would not pass the screening test and only few get short listed for
further examination.
• Such short listed ideas will be considered while promoting pre-
feasibility studies.
8
• The third & fourth stages can be termed as ‘investment opportunity
study’:
• It is a preliminary level investigation, yet extensively conducted to
analyze fundamental strengths of the project idea, and to explore
various opportunities of the project.
• It has a limited objective of providing planners with a choice of
project alternatives from which they can make a selection.
• Pre-feasibility study:
• Focuses on answering the essential questions such as; should we
proceed with the proposed project idea?
• What are the benefits and drawbacks of proposed project idea?
• How much time will it take to conduct the preliminary study i.e. pre-
feasibility study on the financial and other related economic
aspects of the project viability.
9
Importance of Project identification
• Project identification helps solve major problems in the planning stage

and addresses to meet diverse needs, while setting clear objectives of
proposed project.
• Identifies and analyses the purpose and scope of a project in the
given situation of an organization or an economy
• Encourages value addition to the existing wealth and capital of an
organization or economy as the case may be through raising more
funds for project execution
• Improves and develops the specific and general infrastructure of an
organization and the economy
10
Importance of Project identification
• Determines basic benchmarks for deciding on various types and forms of

project ideas to materialize
• Helps to identify size of investment and indicates on the complexity of
the project
• Helps define the location and find appropriate technology to be used
while executing the project
• Helps to formulate better marketing strategies to enhance profitability
• Identifies different constraints in project environment and formulation
• Evaluates the potential resources to convert an idea into reality
• Analyze the policies of government and various legal restrictions
11
Sources of new Project ideas
• Performance of Existing Industries
• The present trends and past experiences of industries provide a good
indication about the health of a particular industry.
• Changing profitability structure and break-even analysis of industries
offer adequate information about the financial health of various
industrial sectors.
• Availability of raw materials

• Availability of suitable resources is a must for any project to take off.
• Easy availability of good quality raw materials at cheaper prices is a
boon for any project.
• Identifying appropriate technology and resource base will help design
a good project idea and also make use of those untapped resources for
the betterment of the organization as well as economic health.
12
• Availability of skilled labour
• For instance, cement manufacturing unit, automobile manufacturing
unit, textile units, pharmaceutical units, sugar factories, power plants
etc.
• All these projects need not only required good infrastructure base but
also to be supported by appropriate technology and availability of
suitable manpower.
• Import/export statistics
• A clear understanding on the routine and specific international
transactions between various segments of society will make project
ideas clearer and help reveal potential areas.
• Price trend
• Data from various sources
13
• Research Laboratories:
• Identification of new products
• Consumption statists
• Identify unfulfilled physiological needs of consumers
• Government policies and outlays
• Analysis of growing and social trends
• Possibility of reviewing sick units
14
Project Initiation Phase
• The Project Initiation Phase is the 1st or beginning phase in Project
Management Life Cycle, since it includes starting up a new project.
• For starting a new project you have to define its objectives, scope,
purpose and deliverables.
• Appoint a project team, setup the project office and evaluate the
project, for gaining sanction to begin the next phase.
• The function of project initiation is to describe all the parameters of a
project and establish the suitable project management and excellence
environment necessary to complete the project.
• The project charter development is a crucial initial point for the project,
establishing the project definition which acts as the base for all future
efforts..
15
Project Initiation Phase
• A project manager is assigned at the commencement of project Initiation.

• The project manager and project sponsor work together to identify the
essential resources and required team members for further development
of key project parameters which are Cost, Scope, Schedule, and Quality
(CSSQ).
• The project team documents its charge in the form of a project charter,
which is based on the project proposal and business case.
• Approval of the project charter by the project sponsor authorizes the
designated team to begin project planning.
• A project is initiated and submitted to the competent authority for
approval.
• On approval, the project is taken up for further processing.
16
Process Phase
17
Formulate Case Study
• Evaluate all proposed projects that has been provided by the client
organization or that has been gathered by technical analyst.
• Formulate a case study and assign a new project code to the nominated
project. The business case will be examined by a screening committee with
help of management to decide whether to accept or reject a nominated
project.
• When a business case is accepted, the proposed project is forwarded for
ranking and selection.
• When additional information is received on such proposed project, the
case study may be revised based on the data and appropriate decision
would be taken on the final selection.
18
• Approval and Selection of Proposed Project:
• Based on the priority and rankings revealed by the expert committee, the
management may then authenticate the final selection of project
• However, despite its selection, it may not deem to be ‘active’ project until
resources are approved and deployed for initiating.
• Rank Candidate Projects:
• All databank nominated projects must be impartially ranked in order of
importance.
• The ranking criteria must include:
• Target due dates
• Impact on the total business
• Impact on the technology architecture
• Impact on other applications
• Project size, cost and duration
• Project risk
• Forecasted ROI
19
• Evaluate Resources
• An updated skills inventory must be maintained which is accessible for
project assignment.
• Moreover, an inventory of available contract resources must be
captured too. These skills inventory helps to understand the accurate
capabilities and capacities of these resources.
• Determine resource needs
• Through evaluation of skills inventory and the candidate project
repository, this process will recognize the expected needs for
quantities and capabilities of future resources.
• This information will provide:
• The identification of critical training needs
• A basis for employment opportunities
• Criteria for contract personnel
20
Project Formulation
• Project that prima –facie appears to be worthwhile is promoted has to be
further analyzed for attractive returns.
• The stages for the same are:
• Prefeasibility studies
• Functional studies
• Feasibility study
• Detailed project analysis
21
Wrap Up
• Project identification
• Method of identification
• Appointment of project Manager

Next Session
• Pre- Feasibility and Feasibility Study of Project

Mr. Ashish Deokar


• Project Identification

1. Introduction to feasibility and prefeasibility studies
1. Understand feasibility and prefeasibility studies of a project

Prefeasibility Studies
• Pre-feasibility study is a preliminary study undertaken to determine,

analyze, and select the best business scenarios.
• In this study, we assume we have more than one business scenarios, then
we want to know which one is the best, both technically and financially.
• In pre-feasibility we select the best idea among several ideas.
• Prima –facie appears to be worthwhile is promoted has to be further
analyzed for
4
Prefeasibility Studies
• The chief objectives of conducting a pre-feasibility study are to determine
whether the project is promising or not and also whether an investment
decision can be taken on the basis of the information furnished at the pre-
feasibility stage.
• Moreover, it analyses whether the information is adequate to decide that
the project idea is lucrative.
• Many project ideas gain life after such a pre-feasibility analysis.
5
Elements of Prefeasibility Studies
• Project description:
• The nature of the project output must be clearly described stating all
relevant advantages and disadvantages in comparison with all the
competitive projects in the pipeline.
• Description of market:
• The present and potential market, with its competitive nature, should be
delineated.
• The description of the market should include the following:
• Outline of technological variants
• Availability of main production factors
6
• Cost estimates:
• Realistic estimates should be made of all cost factors so as to reflect
on all relevant investments and operational costs of the project
including contingencies.
• Profitability estimation
• The collected information should enable comparison between all
competing projects that are in the pipeline.
• Miscellaneous
• In addition to the above, some more factors may be considered
especially for new projects.
• General opinion and support of society towards the project or the
type of proposal.
• Educational, recreational, and civic-amenities available in the
region.
• Availability of any other alternative sites in the region.
7
Focus of Prefeasibility Studies
Focus • Consumer-oriented Projects • Society/economic- oriented
(industrial) (defense, infrastructure and
others)
Object • Competition and survival • Economic growth and
• Demands and preferences quality development
• New inventions or innovation• Standard of living of the society
quality • Economic sufficiency Regional
disparities Global competition
Scope of • Existing demand vs. existing• Existing facilities vs. required
Marketability supply facilities
• Gap analysis • Present growth rate vs.
• Consumer behavior towards determined growth rate
innovations • Social behavior (taboos,
customs) vs. the proposed
project
8
Feasibility Studies
• A feasibility study focuses on the practicality of an idea by

identifying possible problems and gives the answer of one main
question:
• The purpose of the analysis is to examine the desirability of investing
in pre- investment studies. For this purpose, it is essential to examine
the project idea in the light of the available internal (inputs,
resources, and outputs) and external constraints (environment).
9
Nature of Feasibility Studies
• In the broadest sense, every rational decision to make a new investment is

preceded by an investigation of the feasibility of the project, whether or not
it is carried out in a formal manner.
• The larger the project, the greater will be the investment, and the more
formalized the investigation.
• Assurance is needed in the following matters:
• Whether the market exists or can be developed
• Whether raw materials can be obtained
• Whether sufficient labour supply is available
• Whether the local services vital/essential to the project are at hand
• Whether the overall costs for plant equipment, labour, and raw material
input will be of a certain order.
10
Need of Feasibility Studies
• In modern times, business operations are complex, requiring carefully

prepared plans.
• The shareholders, creditors, term leaders, etc insist on completing the
analysis of the scheme. Without their co-operation, it would not be possible
to translate the idea into action.
• This feasibility study helps the promoter to make the investment decisions
correctly and to obtain funds without many difficulties.
11
Complements of Feasibility Studies
• Project feasibility study comprises of market analysis, technical analysis,
financial analysis, and social profitability analysis.
• The analysis is mainly interested only in the commercial profitability and
thus, examining only the market, technical, and financial aspects of the
project.
• But generally, the scope of feasibility of a project covers the following areas:
• Commercial and economic feasibility
• Technical feasibility
• Financial feasibility
• Managerial feasibility
• Social feasibility or acceptability
12
• The economic feasibility aspect of a project relates to the earning
capacity of the project.
• Important indicators are taken into consideration are:
• Present demand of the goods produced through the project
• Future demand of the goods
• Determining the extent of supply to meet the expected demand and
arriving at the gap.
• Deciding in what way the project under consideration will have
a reasonable chance to share the market.
• Anticipated rate of return on investment.
13
• The commercial feasibility of a project involves a study of the proposed
arrangements for the purchase of raw materials and sale of finished
products, etc.
• This study comprises the following two aspects:
• Arriving at the physical requirement of production inputs such as raw
materials, power, labour, etc at various levels of output and converting
them into cost.
• In other words, deciding costing pattern.
• Matching costs with revenues with a view to estimating the profitability
of the project and the break-even point. The possibility ultimately
decides whether the project will be a feasible proposition or not.
14
• Technical feasibility:
• Feasibility report should give a description of the project in terms of the
technology to be used and the requirement of equipment, labour, and other
inputs.
• Location of the project should be given special attention in relevance to technical
feasibility.
• Another important feature of technical feasibility relates to the types of
technology to be adopted for the project.
• The technical feasibility analysis is an attempt to study the project basically from a
technician’s angle.
• The main aspects to be considered under this study are technology of the project,
size of the plant, location of the project, pollution caused by the project,
production capacity of the project, strength of the project, emergency or stand-
by facilities required by the project sophistication such as automation,
mechanical handling, required collaboration agreements, production inputs, and
implementation of the project.
15
• Financial feasibility
• The main objectives of this feasibility study are to assess the financial
viability of the project.
• Here, the main emphasis is on the preparation of the financial statement,
so that the project can be evaluated in terms of various measures of
commercial profitability and the magnitude of financing required can be
determined.
• Financial projections for future time periods, including income
statements, cash flows and balance sheets.
• Financial analysis showing return on investment, return on equity,
break- even volume, and price analysis.
• If necessary, sensibility analysis to identify items that have a large
impact on profitability or possibly a risk analysis.
16
• Managerial feasibility
• The success or failure of a project largely depends upon the ability
of the project holder to manage the project.
• A project is a bundle of activities and each activity has its own role.
Ways to measure the managerial efficiency.
• Skill acquired through training
• Skill acquired through the course of work
• Social Feasibility
• The interests of the general public, projects which offer large
employment potential, which channelize the income from less
developed areas, will stimulate the small industries.
17
Tools for conducting feasibility study
• Although each project can have unique goals and needs, below are some
best practices for conducting a feasibility study:
• Conduct a preliminary analysis, which involves getting feedback about the
new concept from the appropriate stakeholders; consider other business
scenarios and ideas
• Analyze and ask questions about the data obtained in the early phase of
the study to make sure that it's solid
• Conduct a market survey or market research to identify the market
demand and opportunity for pursuing the project or business
• Write an organizational, operational, or business plan, including identifying
the amount of labor needed, at what cost, and for how long
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Tools for conducting feasibility study
• Prepare a projected income statement, which includes revenue, operating
costs, and profit
• Prepare an opening day balance sheet
• Identify obstacles and any potential vulnerabilities, as well as how to deal
with them
• Make an initial "go" or "no-go" decision about moving ahead with the plan
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Project Break Even Point
• Break-even is a financial term to describe a business or project where the
sales revenue is easy to calculate.
• Break-even analysis provides information regarding whether revenue
from a product or service has the ability to cover the relevant costs of
production.
• Managers can use this information in making a wide range of business
decisions, including setting prices, preparing competitive bids, and
applying for loans.
• Break-even analysis specifies the minimum quantity of sales that will
cover both variable and fixed costs.
20
Wrap Up
• Pre-feasibility and feasibility studies

Next Session
• Break even point and break even analysis

Thank You

Mr. Ashish Deokar


• Discussion on Pre feasibility and feasibility studies

1. Introduction to break even point and break even analysis
1. Understand the break even point and break even analysis

Project Break Even Point
• Break-even is a financial term to describe a business or project where the
sales revenue is easy to calculate.
• Break-even analysis provides information regarding whether revenue
from a product or service has the ability to cover the relevant costs of
production.
• Managers can use this information in making a wide range of business
decisions, including setting prices, preparing competitive bids, and
applying for loans.
• Break-even analysis specifies the minimum quantity of sales that will
cover both variable and fixed costs.
4
Break even Analysis
• A breakeven analysis is used to determine how much sales volume your
business needs to start making a profit.
• The breakeven analysis is especially useful when you're developing a

pricing strategy, either as part of a marketing plan or a business plan.
• It helps to know the operating condition that exists when a company

‘breaks-even’, that is when sales reach a point equal to all expenses
incurred in attaining that level of sales.
• This concept has been proved highly useful to the company executives in
profit forecasting and planning and also in examining the effect of
alternative business management decisions.

Break even Analysis
Break Even Analysis

Sales($)
Total Revenue
40
Break~ven Point
20
i Variable Costs
- - - - - - - - - - - - - - - - -Fixed Costs
3 6

• Fixed Cost:
• The sum of all costs required to produce the first unit of a product.
• This amount does not vary as production increases or decreases, until
new capital expenditures are needed.
• Variable Unit Cost:

• Costs that vary directly with the production of one additional unit.
• Expected Unit Sales:

• Number of units of the product projected to be sold over a specific
period of time.
• Unit Price:
• The amount of money charged to the customer for each unit of a
product or service.

• Total Variable Cost:
• The product of expected unit sales and variable unit cost.
(Expected Unit Sales * Variable Unit Cost )
• Total Cost:
• The sum of the fixed cost and total variable cost for any given level of
production.
(Fixed Cost + Total Variable Cost )
• Total Revenue:
• The product of expected unit sales and unit price.
(Expected Unit Sales * Unit Price )
• Profit (or Loss):
• The monetary gain (or loss) resulting from revenues after subtracting all
associated costs.
(Total Revenue - Total Costs)
• Profit-Volume ratio or contribution margin ratio:
The P/V ratio is the measure of the contribution per every rupee sold to
cover fixed cost and to generate profit.
𝑃 (𝑆𝑎𝑙𝑒𝑠 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡)
𝑅𝑎𝑡𝑖𝑜 = ∗ 100
𝑉 𝑆𝑎𝑙𝑒𝑠
Or
𝑃 (𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 − 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑐𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡)
𝑅𝑎𝑡𝑖𝑜 = ∗ 100
𝑉 𝑠𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
• Margin of safety: It is the difference between actual sales and break even
sales of a business.
Margin of safety=Actual sales-Sales at break even point (BEP)
Or
Margin of safety=Profit/PV ratio

Contribution Margin
• The contribution margin is the sales price of a unit, minus the variable
costs involved in the unit's production.
• It is used to find an optimal price point for a product.
• The contribution margin is the amount of money a business has to cover
its fixed costs and contribute to net profit or loss after paying variable
costs.
• It also measures whether a product is generating enough revenue to pay
for fixed costs and determines the profit it is generating.
• The contribution margin can be calculated in rupees, units, or as a
percentage.

Break even point
• BREAK EVEN POINT:
Number of units that must be sold in order to produce a profit of
zero (but will recover all associated costs).
Break Even Point (IN UNIT)= Fixed Cost /S. Price- Variable Unit Cost
Break Even Point (in Rs)=Fixed Cost/ S. Price-Variable unit

Cost*Units

Example
• For example, suppose that your fixed costs for producing 100,000 product
were ₹ 30,000 a year.
• Your variable costs are ₹ 2.20 materials, ₹ 4.00 labour, and ₹ 0.80 overhead,
for a total of ₹ 7.00 per unit.
• If you choose a selling price of ₹ 12.00 rs for each product, then:
30,000/(12.00 - 7.00) = 6000 units.
• This is the number of products that have to be sold at a selling price of
₹12.00 before your business will start to make a profit.

Break even analysis
The As
Break-even
output is point
Costs/Revenue Total
The revenue
lower
Thewhere
occurs is
the
totaltotal
costs
TR TR TC generated, the
Initially a firm
determined
therefore by the
VC price,
revenue
firm
will
theincur
equals
will
incur
less
total
fixed
price
costs charged
– the
(assumingfirm, inand
steep the
variable total
costs –
would –
thecosts, these
quantity do
sold
this accurate
example
these vary
revenue
have
not depend
again curve.
thisQ1
to sell willon
to be
directly with
forecasts!)
output orby isthethe
sales.
determined
generate
sum sufficient
amount
expected
produced
offorecast
FC+VC
revenue to cover its
sales
costs. initially.
FC
Q1 Output/Sales

Break even analysis
If the firm chose to set

proceed higher than ₹2(say
Costs/Revenue TR (p = ₹ 3) TR (p = ₹ 2) TC ₹3 the TR curve would be
VC steeper-they would not
have to sell as many units
to break even.
FC
Q2 Q1 Output/Sales

Break even analysis
TR (p = ₹ 1)
Costs/Revenue
TR (p = ₹ 2)
TC VC
If the firm
chose to set
prices lower
(say ₹ 1) it
would need
to sell more
units before
covering its
costs FC
Q1 Q3 Output/Sales

Break even analysis
TR (p = ₹ 2)
Costs/Revenue TC
Profit VC
Loss
FC
Q1 Output/Sales

Break even analysis
TR (p = ₹3) TR (p = ₹2) TC
Costs/Revenue
Margin of VC
safety shows how far
sales can • A higher price would
fall before losses made.
If Q1 = 1000 and break even point and
Q2 = 1800, the margin of safety
sales could fall by 800 would widen
units before a loss
would be made
Q3 Q1 Q2 Output/Sales

Break even analysis
• Helpful in deciding the minimum quantity of sales
• Helpful in the determination of tender price
• Helpful in examining effects upon organization’s
profitability
• Helpful in deciding about the substitution of new plants
• Helpful in sales price and quantity
• Helpful in determining marginal cost

Limitation
• Break-even analysis is only a supply side (costs only) analysis, as it tells
you nothing about what sales are actually likely to be for the product
at these various prices.
• It assumes that fixed costs (FC) are constant
• It assumes average variable costs are constant per unit of output, at
least in the range of likely quantities of sales.
• It assumes that the quantity of goods produced is equal to the quantity
of goods sold. (i.e., there is no change in the quantity of goods held in
inventory at the beginning of the period and the quantity of goods held
in inventory at the end of the period)
• In multi-product companies, it assumes that the relative proportions
of each product sold and produced are constant.

Problem: Let us assume a company ABC Ltd which is in the business of
manufacturing of widgets. The fixed costs add up to ₹80,000, which
consists of asset depreciation, executive salaries, lease, and property
taxes. On the other hand, the variable cost associated with the
manufacturing of widgets has been calculated to be ₹0.70 per unit, which
consists of raw material cost, labor expense, and sales commission. The
selling price of a widget is ₹1.50 each. How much widgets should be
manufactured in order to cover its total expense
Contribution margin per unit = ₹1.50 – ₹0.70 =₹0.80

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 80000
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑝𝑜𝑖𝑛𝑡 = =
𝑐𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛 0.80
Break even point in units=100,000

https://www.wallstreetmojo.com/break-even-formula/
Problem: Let us consider a restaurant PQR Ltd selling pizza. The selling price
is ₹15 per pizza, and the monthly sales are 1,500 pizzas. Additionally, the
following information for a month is available. Is the restaurant making
profit or is in loss?
Particulars Amount (₹) Variable cost= Raw material+ Packaging
Salaried labor 4000 =8000+1000 =₹9000
Rent 3000
Variable cost per unit=9000/1500=₹6
Utilities 1300
Advertising 700
Fixed cost=4000+3000+1300+700=₹9000
Raw materials 8000
Packaging expense 1000
Contribution Margin Per Unit =15-6=₹9
Selling price per pizza 15

Break even analysis
Break Even point= 9000/9 =1000 units
So for profit the restraint must sell 1000 unit. However the restaurant is
already selling 1500 units of pizza and thus the restaurant is in profits.

Wrap Up
• Break even point and break even analysis

Next Session
• Unit III

Thank You

Unit 3: Project Planning and Controlling
Mr. Ashish Deokar

Ashish.deokar@viit.ac.in

• Discussion on feasibility studies and break even analysis

1. Introduction to Planning of a Project and Work break down

structure
1. Understand Planning of a Project and Work break down

structure

Planning of a Project
• Planning is nothing but deciding in advance the future course of actions.
• Planning is primary function of Management
• Dimensions of management
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Planning of a Project
• Triple constraint of any project: Time, Quality, cost and scope.
• The process of project planning involves the following:
• Defining objectives of the project
• Making forecasts for achieving the goals
• Identifying the alternate course of action for achieving the goals
• Evaluating the available alternate course of actions and selecting the
course of action which is most suitable.
• During process of planning, the various operations involved in the project, their
sequences and their logical inter relation are established.
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Scheduling of a Project
• Project scheduling refers to the process of laying out all the actual activities of the
project in the time order in which they are performed, keeping in view the logical
sequence of the activities.
• The logical sequence of activities can be:
• Company registration
• Transport of Machinery to project
• Obtaining license
• Erection of machinery
• Appointment of consultant
• Commissioning of plant and trial run
• Resource mobilization
• Commencing regular production
• Land acquisition and site development
• Preparing civil work designs, plans and
estimates and contractors
• Preparing design and placing order for
plant and machinery
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Scheduling Techniques
• Bar Chart
• Network Analysis : Critical Path Method and PERT
• Most important is identification of Activities.
• Activities is ongoing work which consumes time and resource
• Task is showing the start and end of a project.

Work Break down structure(WBS)
• Dividing complex projects to simpler and manageable tasks is the process
identified as Work Breakdown Structure (WBS).
• Usually, the project managers use this method for simplifying the project
execution.
• In WBS, much larger tasks are broken-down to manageable chunks of work.
• These chunks can be easily supervised and estimated.
• A work breakdown structure element may be a product, data, a service, or
any combination.
• A WBS also provides the necessary framework for detailed cost estimating
and control along with providing guidance for schedule development and
control

t•
:>

~
-~.. v•
p.
roJect
~ Phase
Activityffask
._. Milestone-Deliverable completion
._. Mile tone-Phase completion

Process of Work Break down structure(WBS)
• There are three reasons to use a WBS in your projects:
• First is that is helps more accurately and specifically define and organize
the scope of the total project.
• The second reason for using a WBS in your projects is to help with
assigning responsibilities, resource allocation, monitoring the project,
and controlling the project
• Finally, it allows you double check all the deliverables' specifics with the
stakeholders and make sure there is nothing missing or overlapping.

Process of Work Break down structure(WBS)
• There are several inputs you will need to get you off on the right foot:
• The Project Scope Statement
• The Project Scope Management Plan
• Organizational Process Assets
• Approved Change Requests - (PMBOK Guide)
• Finally, using these inputs and tools you will create the following
outputs:
• Work Breakdown Structure
• WBS Dictionary
• Scope Baseline
• Project Scope Statement (updates)
• Project Scope Management Plan (updates)
• Requested Changes - (PMBOK Guide)
Process of Work Break down structure(WBS)- Rules
• Generally few rules are followed in constructing a WBS:
1. Two Weeks Rule: Any broken down level of the above structure
cannot be smaller than two weeks of work.
2. 8/80 Rule: Any level of work should not be less than 8hrs of work or
more than 80hrs of work.
• There are many ways to represent a WBS, such as Tree, Table, or List.
• The tree type structure is mostly used and an efficient way of
representation.

How to build a Work Break down structure(WBS)
• Begin with the Charter, focusing on Objectives and
Deliverables
• Break the main product(s) down into subproducts
• Set the structure to match how you’ll manage the project
• Lowest level not too detailed, not too large
• Is there a need for Integration?
• Identify support activities
• Check for completeness - is all the effort included?
• Develop a coding structure if needed
• Assign work package managers

' ·
VISH~~
INSTITUTE S ,
VI
holiday
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travel ,___
1. -
documents booking hou ehold
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passport tickets choose confirm
I _I reso11 cat!
-
'
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insurance I
brochures
-

-0.0 EC Bank Project
+1.0 Conceptualize & initialize project Project
+2.0 Develop charter & plan
+3.0 Analysis
+4.0 Design
+5.0 Construction
4 Pnaie
--6.0 Testing
+6. 1 Test plan Deliveraole
--6.2 Test results report
6.2. I Review test plan with client
6.2.2 Carry out te t plan
6.2.3 Analyze results
6.2.4 Prepare te t re ults report and presentation
6.2.5 Present te t re ults to client
6.2.6 Address any software issues or problems
Mile~tone-Deliverable comrletion
6.2.7 Milestone: client signs off on test results
+6.3 Milestone: testing completed
~------------------------------------
+7.0 Implementation Mile~tone-Pna~e completion
+8 0 Close om je.ct

Construction of a House
Control Accounts .. 1. Internal 2. Foundation 3. External
1.1 Electrical 2.1 Excavate 3.1 Masonry Work
1.1. 1 Rough-in electrical 2.1 .1 Pour Concrete 3.1.1 Lay Masonry
1.12 lnstaU the terminal 2.12 Cure & strip forms 3.1.2 Install roof drains
1.1.3 HVAC Equipmern 3.1.3 Install tile

2.2 Steel Erection
Planning Packages .. 1.2 Plumbing
2.2.1 Steel Columns
3.1.4 Roofing
12.1 Rough-in plumbing 3.2 Building Finishes

2.2.2 Beams
1.2.2 Set plumbing fixtures
2.2.3 Joist 3.2.1 Paint Walls
Work Packages . 1.2.3 Test and clean 3.2..2 Ceiling tile
3.2.3 Hang wallpaper
3.2.4 Carpet

• Redecorated Room
• Removed old wallpaper
• Clean room
• Cover for furniture
• Cover for electrical switches
• Newspapers to cover floor.
• Paint
• Paint on wall
• Leftover paint
• Management products
• Ladder
• Brushes and rollers

s·n1aJ'I O:na \ \':lrth ou se
& POS Systt n>
I I I I I I
2.0 3.0 4.0 5.0 6.0
1.0
Requlrtrntnl An a l)'$!$ & ~ Sofl\\-are Prodltd Tt$t ing Ootumen1 f>tploymen1
Initiation
DOCUIDC'Dl i)o(umtnl & Stn·itt
- I.I A.lisign K<'y

l!e-non
----<
'2.1 Catbtr
Requlreroe1;11 - 3. 1 Anal)7,C
SRS& flO"' - .a.I An.alyzc
De$ign D<K. H $.1 Crtatt Tti:I
Scr-aario - 6. 1 Prepare
Systtm ~\fanual
- 1.2. Pl"tpare
Projttl Plan
---;
2.2 Analyie
Rt'quirtn1tnt 1
,_
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J .2 Or:aft
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--1
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4.2Coding. ,_ 5.2 Pttr kt\·iew
Sct'nario l H 6.2 Prepare-
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6.3 0s<'r
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,_ J.4 Approve
- 1.4 Prtp:art C)1

Plan - 2.4 Pttr H;e\'iew
Sk.S& f low 1
Dt-lign Doc.
- 4.4 Peer .Re\·it"'
Sort-'Urt & 1\'SI H 5.4 lntt~ratt Ttst
- 6.4 Otth·tr)'
---j:
- 3.S Draft
Prograro SJ)tt.
- l I
---1 1.S Pnpart QA
Plan
2.S ApprO\'C
SRS& Flow l- 3.6 Pc-tr Rtvlt n•
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5.S ApprO\'('; fi11al
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6.4.1
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Z.6 P"rei>at e
--I
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- J.7 Appro,·e
S~cltlcatlon Doc

Wrap Up
• Planning of a project:- Need and the tools
• Work Breakdown structure

Next Session
• Network Analysis

Unit 3: Project Planning
Mr. Ashish Deokar


• Discussion on Planning of a Project and Work break down structure

1. Introduction to Methods of planning

2. Introduction to Bar chart
1. Knowledge of different methods of planning

2. Apply a Bar chart and Mile stone chart

Methods of Project Planning
• Project Planning is required for efficient completion of the Project.
• Methods of Project Planning
• Bar charts and Mile stone charts
• Network Analysis
• Critical Path Method(CPM)
• Programme Evaluation Review Technique(PERT)
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Basic elements
• ACTIVITIES- Unit tasks and consume resources and time.
• EVENT - Each activity must have a COMMENCEMENT and ENDING time.
• Event does not consume time but is definite accomplishment in the project.
• SEQUENCE – For completion of the project each activity should be
performed in sequence decided by logic.

Bar Chart(Gantt Chart)
• Scientific Management technique was developed by A. Gantt around
1900 during World War I.
• A project can be divided into number of well defined manageable jobs or
units called ACTIVITIES.
• These activities have to performed in definite SEQUENCE for SUCCESSFUL
completion of project.
• These activities consume resources and take TIME for completion.
• Y-Axis- Different activities
• X-Axis – Duration
• Each bar specifies a unit job or activity with beginning and end.

Silent Features of Bar Chart
• Simple and easy method of scheduling
• Each activity is shown separately and thus comparison of actual and
estimated can be done.
• Interdependence of activities can be shown.
• It can represent possible delays.
• Limitations of Bar Chart
• Interdependence of activities cannot be shown absolute clearly and
sequence of activities is not clear.
• It does not give optimum duration of project.
• Different alternatives cannot be evaluated from the chart.
• Not possible to evaluate critical activities.

Mile Stone chart
• A project is divided into different activities and further the activities are divided into
key events of that activity.
• The key events are specific achievements in the activity and are marked on the bar.
• A particular activity represented in the bar chart may consists of combination of
many small activities.
• Each bar representing these compound activities is divided in such a way that each
specific point on bar represents completion of sub activity.
• Different milestones can be connected together which can look like a network.
1 2 3
4 5
6 7
2 4 6 8
Time in Weeks
Network planning and scheduling
• Objectives:
• There should be a detailed integrated planning of the different unit jobs or
activities involved.
• Realistic schedules should be developed.
• There should be periodic checking and evaluation of progress of the work
in comparison to the planned.
• The effect of current progress of work on the time of completion of
project.
• There should be optimum utilization of scarce resources, time and money.

Introduction
 Any project involves planning, scheduling and controlling a number of
interrelated activities with use of limited resources, namely, men, machines,
materials, money and time.
 The projects may be extremely large and complex such as

construction of a housing , a highway, a shopping complex etc.
 introduction of new products and research and development
projects.
 It is required that managers must have a dynamic planning and scheduling

system to produce the best possible results and also to react immediately to
the changing conditions and make necessary changes in the plan and
schedule.
Project management phases.
• Planning:
• Planning involves setting the objectives of the project. Identifying various
activities to be performed and determining the requirement of resources
such as men, materials, machines, etc.
• The cost and time for all the activities are estimated, and a network
diagram is developed showing sequential interrelationships (predecessor
and successor) between various activities during the planning stage.
• Scheduling:
• Based on the time estimates, the start and finish times for each activity are
worked out by applying forward and backward pass techniques, critical
path is identified, along with the slack and float for the non-critical paths.

Project management phases.
• Controlling:
• Controlling refers to analyzing and evaluating the actual progress against
the plan. Reallocation of resources, crashing and review of projects with
periodical reports are carried out.

COMPONENTS of PERT/CPM NETWORK
• PERT / CPM networks contain two major components
i. Activities, and
ii. Events
• Activity: An activity represents an action and consumption of resources
(time, money, energy) required to complete a portion of a project. Activity
is represented by an arrow, .
• Event: An event (or node) will always occur at the beginning and end of an
activity. The event has no resources and is represented by a circle. The ith
event and jth event are the tail event and head event respectively.

• Merge and Burst Events
• One or more activities can start and end simultaneously at an
event .
• Preceding and Succeeding Activities

• Activities performed before given events are known as
preceding activities, and activities performed after a
given event are known as succeeding activities.
Activities A and B precede activities C and D respectively.

• Dummy Activity
• An imaginary activity which does not consume any resource and time is
called a dummy activity. Dummy activities are simply used to represent a
connection between events in order to maintain a logic in the network.
• It is represented by a dotted line in a network.

ERRORS TO BE AVOIDED IN CONSTRUCTING A NETWORK
• Two activities starting from a tail event must not
have a same end event. To ensure this, it is
absolutely necessary to introduce a dummy activity,
as shown in Figure .
• Looping error should not be formed in a network, as
it represents performance of activities repeatedly in
a cyclic manner, as shown below in Figure .
• In a network, there should be only one start event

and one ending event as shown below, in Figure .
• The direction of arrows should flow from left

to right avoiding mixing of direction as shown
in Figure .
RULES IN CONSTRUCTING A NETWORK
• No single activity can be represented more than once in a network. The
length of an arrow has no significance.
• The event numbered 1 is the start event and an event with highest number
is the end event.
• Before an activity can be undertaken, all activities preceding it must be
completed. That is, the activities must follow a logical sequence (or –
interrelationship) between activities.
• In assigning numbers to events, there should not be any duplication of event
numbers in a network.
• Dummy activities must be used only if it is necessary to reduce the
complexity of a network.
• A network should have only one start event and one end event.

(a) Activity B can be perfonned
only after completing activity A,
and activity C can be perfom1ed
only after completing activity B.
(b) Activities B and C can start

A s imultaneously only a fter
completing A.
(c) Activities A and B must be.

completed before start of
activity C.
c ..
A ...
(d) Activity C must start only after
•~
I
I
I
I
completing acti\'ities A and B.
But activity D can stan after
completion ofactivity B.
B
... /o'
FULKERSON'S RULE
• Step1: Number the start or initial event as 1.
• Step2: From event 1, strike off all outgoing activities. This would have
made one or more events as initial events (event which do not have
incoming activities). Number that event as 2.
• Step3: Repeat step 2 for event 2, event 3 and till the end event. The
end
• event must have the highest number

Network - Types
• One type is the activity-on-arc (AOA) project network, where each activity is
represented by an arc.
• A node is used to separate an activity (an outgoing arc) from each of its
immediate predecessors (an incoming arc).
• The sequencing of the arcs thereby shows the precedence relationships
between the activities.
• The second type is the activity-on-node (AON) project network, where each
activity is represented by a node.
• The arcs then are used just to show the precedence relationships between
the activities.
• In particular, the node for each activity with immediate predecessors has an
arc coming in from each of these predecessors

-~
Network - Types
INISTITU'JES
VI
... and activities on node.

Table 8.1 : Sequenc.e of .'\ctivities for H ouse Con.struc.tion Projec.t
Name of Starting and Description of activity Predecessor Time duration

ihe acihiiy finishing event {days)
A (1 ,2) Prepare the house plan -- 4
B (2,3) Constntct the house A 58
c (3,4) Fi'> the door I \\iiudo\vs B 2
D (3,5) \Viriug the. house B 2
E (4,6) Paint the house c I
F (5,6) Polish the doors I \Vlndo\vs D I
.So/utioJ1:
fa the door.; (2 days1

Pr..11~.,. 11 .... c 'If , ''
(;cnstruc: the· '-/ .
h·:>use plan
,.. house
·' /
./
I ''
/
.......' 2 ·' '.
3
/
/'~ ,
6
./
1\ B
(58 clave;) )
' / 'F
Po ish :he doors 11 daY,
\\'iring the
ho N> :? d..ry..,,

Example 2: Consider the project given in Table 8.2 and construct a
network diagram. Table : Sequence of Activities for Building Construction
Project

Example 3: Construct a network for a project whose activities and
their predecessor relationship are given in Table .
·1·able ~ .3 : .'\cti,ity Sequtnce for a Projec.t
I Ptederusa
~vily I A B c D
A
E
B
F
B
c
c
H
D
I
E H, I
K
F, C

Example 4: Draw a network diagram for a project given in Table .
Acit.~il:y A B c D .E F G H I j K L
J'lllJ:U:lit ~;;, - A i3 .!l D C', :E D D H H F, F. G, J
!?.NiilJ:TiiU ar.

CRITICAL PATH ANALYSIS
• The critical path for any network is the longest path through the entire
network.
• Since all activities must be completed to complete the entire project, the
length of the critical path is also the shortest time allowable for
completion of the project.
• Thus if the project is to be completed in that shortest time, all activities
on the critical path must be started as soon as possible.
• These activities are called critical activities.
• If the project has to be completed ahead of the schedule, then the time
required for at least one of the critical activity must be reduced.
• Further, any delay in completing the critical activities will increase the
project duration.

• The activity, which does not lie on the critical path, is called non-critical
activity.
• These non-critical activities may have some slack time.
• The slack is the amount of time by which the start of an activity may be
delayed without affecting the overall completion time of the project.
• But a critical activity has no slack.
• To reduce the overall project time, it would require more resources (at
• extra cost) to reduce the time taken by the critical activities to complete.

Scheduling of Activities: Earliest Time (TE) and Latest Time(TL)
• it is necessary to find the earliest and latest time of each event to know the
earliest expected time (TE) at which the activities originating from the event
can be started and to know the latest allowable time (TL) at which activities
terminating at the event can be completed.
• Forward Pass Computations (to calculate Earliest, Time TE)
• Step 1: Begin from the start event and move towards the end event.
• Step 2: Put TE = 0 for the start event.
• Step 3: Go to the next event (i.e node 2) if there is an incoming activity for
event 2, add calculate TE of previous event (i.e event 1) and activity time.
• Note: If there are more than one incoming activities, calculate TE for all
incoming activities and take the maximum value.
• This value is the TE for event 2.
• Step 4: Repeat the same procedure from step 3 till the end event.
Backward Pass Computations (to calculate Latest Time TL)
• Procedure :
• Step 1: Begin from end event and move towards the start event. Assume
that the direction of arrows is reversed.
• Step 2: Latest Time TL for the last event is the earliest time. TE of the last
event.
• Step 3: Go to the next event, if there is an incoming activity, subtract the
value of TL of previous event from the activity duration time. The arrived
value is TL for that event. If there are more than one incoming activities,
take the minimum TE value.
• Step 4: Repeat the same procedure from step 2 till the start event.

DETERMINATION OF FLOAT AND SLACK TIMES
• The non – critical activities have some slack or float.
• The float of an activity is the amount of time available by which it is possible
to delay its completion time without extending the overall project completion
time.
• tij = duration of activity
• TE = earliest expected time
• TL = latest allowable time
• ESij = earliest start time of the activity (EST)
• EFij = earliest finish time of the activity (EFT)
• LSij = latest start time of the activity (LST)
• LFij = latest finish time of the activity (LFT)

DETERMINATION OF FLOAT AND SLACK TIMES
• tij = duration of activity
• TE = earliest expected time
• TL = latest allowable time
• ESij = earliest start time of the activity (EST)
• EFij = earliest finish time of the activity (EFT)
• LSij = latest start time of the activity (LST)
• LFij = latest finish time of the activity (LFT)
• Total Float TFij: The total float of an activity is the difference between the
latest start time and the earliest start time of that activity.
• TFij = LS ij – ESij ....................(1)

• or
• TFij = (TL – TE) – tij …………..(ii)X
• Free Float FFij: The time by which the completion of an activity can be
delayed from its earliest finish time without affecting the earliest start
time of the succeeding activity is called free float.
• FF ij = (Ej – Ei) – tij ....................(3)
• FFij = Total float – Head event slack
• Independent Float IFij: The amount of time by which the start of an activity
can be delayed without affecting the earliest start time of any immediately
following activities, assuming that the preceding activity has finished at its
latest finish time.
IF ij = (Ej – Li) – tij ....................(4) Where tail event slack = Li – Ei

IFij = Free float – Tail event slack
• The negative value of independent float is considered to be zero.

• Critical Path: After determining the earliest and the latest scheduled times
for various activities, the minimum time required to complete the project is
calculated. In a network, among various paths, the longest path which
determines the total time duration of the project is called the critical path.
• The following conditions must be satisfied in locating the critical path of a
network.
• An activity is said to be critical only if both the conditions are satisfied.
• TL – TE = 0
• TLj – tij – TEj = 0
• Construct PERT network.

• Compute TE and TL for each activity.
• Find the critical path.

• Example : A project schedule has the following characteristics as
shown in Table
(i) From the data given in the problem, the activity network is constructed as
shown in Figure given below

~
I GTffUlCI VI
Activ ity Acti,ity
Nrune
T a ble 8 .6: Various A c tivities and their Floa t s
:'.'ormal
Time
Earliest Time ( T E) Latf'st Ti.ID(' ( TL) T otal Float
(tij) S tat"h:s) Finisk , S tar!., "' Finish

{IS1
1-2 A 4 0 4 5 9 5
1-3 B 1 0 I 0 I 0
2-4 c 1 4 5 9 10 5
3-1 D I l 2 9 10 8
3-S E 6 l 7 l 7 0
4-9 F 5 5 10 10 IS s
S-6 G 4 7 11 12 16 s
S-7 H 8 7 15 7 IS 0
6-8 I l 11 12 16 17 s
7-8 1 2 15 17 15 17 0
8- 10 K 5 17 22 17 22 0
9-10 L 7 10 17 15 22 5

4
7 2
Figure 8.17: Crilkal Path of the Project

Problem: A building project consists of the following network find the
critical path and the floats
TE=7 TE=11
D
3 6
4
TL =12
TL =8 E H
B 4 8
TE=20
TE=0 TE=5 2
TE=13
I
A
5 8
1 2
7
5
TL =13 TL =20
TL =0 5 C F J
2
6 TE=11 TE=14 2
G
4 7
3
TL =18
TL =11

Activity Duration Earliest Latest Total Float
D LST-EST
Finish Time Start Time
Start Time Finish Time
(EFT) (LST)
(EST) (LFT) TL
EST+D LFT-D
1-2 5 0 5 0 5 0
2-3 2 5 7 6 8 1
2-4 6 5 11 5 11 0
3-5 4 7 11 9 13 2
3-6 4 7 11 8 12 1
4-5 2 11 13 11 13 0
4-7 3 11 14 15 18 4
5-8 7 13 20 13 20 0
6-8 8 11 19 12 20 1
7-8 2 14 16 18 20 4

Problem : Following is the network give, Find out the critical path and the
critical activities and find the floats.
12
8
10
1 4 5 8
7
8 10 12
12 6 8
6
3 6

10
18
12
8
0 10 18 26 40 52
1 4 5 8
7
18 8 10 12
0 26 40 52
12 6 8
6
12 34
3 6
5
12 34

Activity Duration Earliest Latest Total Float Free float Independent Float Interfering
Floa
t
j i j i
D EST EFT LST LFT FT=LST-EST FF=(T E-T E)-D FID=(T E-T L)-D FT-FF
(EST+D) (LFT-D) T
1-2 10 0 10 8 18 8 10-0-10=0 10-0-10=0 8-0=8
1-3 12 0 12 0 12 0 12-0-12=0 12-0-12=0 0-0=0
2-5 8 10 18 18 26 8 26-10-8=8 26-18-8=0 8-8=0
2-7 12 10 22 28 40 18 40-10-12=18 40-18-12=10 18-18=0
3-4 6 12 18 12 18 0 18-12-6=0 18-12-6=0 0-0=0
3-6 5 12 17 29 34 17 34-12-5=17 34-12-5=17 0-0=0
4-5 8 18 26 18 26 0 26-18-8=0 26-18-8=0 0
5-6 8 26 34 26 34 0 34-26-8=0 34-26-8=0 0
5-7 10 26 36 30 40 4 40-26-10=4 40-26-10=4 0
6-7 6 34 40 34 40 0 40-34-6=0 40-34-6=0 0
7-8 12 40 52 40 52 0 52-40-12=0 52-40-12=0 0

PROJECT EVALUATION REVIEW TECHNIQUE, (PERT)
• In the critical path method, the time estimates are assumed to be
known with certainty. In certain projects like research and
development, new product introductions, it is difficult to estimate the
time of various activities.
• Hence PERT is used in such projects with a probabilistic method using three
time estimates for an activity, rather than a single estimate.
• Optimistic time tO:
• It is the shortest time taken to complete the
activity. It means that if everything goes well
then there is more chance of completing the
activity within this time.
• Most likely time tm:
• It is the normal time taken to complete an
activity, if the activity were frequently
repeated
Mr. Ashish Deokar, Department under
of Civil the VIIT
Engineering, same conditions.
, Pune-48
PROJECT EVALUATION REVIEW TECHNIQUE, (PERT)
• Optimistic time tO:
• It is the shortest time taken to complete
the activity. It means that if everything
goes well then there is more chance of
completing the activity within this time.
• Most likely time tm:
• It is the normal time taken to complete an
activity, if the activity were frequently
repeated under the same conditions.
• Pessimistic time tp:
• It is the longest time that an activity would
take to complete. It is the worst time
estimate that an activity would take if
unexpected problems are faced.
• Taking all these time estimates into consideration, the expected time
of an activity is arrived at.
• The average or mean (ta) value of the activity

duration is given by,
• The variance of the activity time is calculated
using the formula,
• Probability for Project Duration
• The probability of completing the project within the
scheduled time (Ts) or contracted time may be
obtained by using the standard normal deviate where
Te is the expected time of project completion.
• Probability of completing the project within the
scheduled time is,
• Example: An R & D project has a list of tasks to be performed whose time
estimates are given in the Table , as follows.
• Draw the project network.

• Find the critical path.
• Find the probability that the project is completed in 19 days. If the
probability is less than 20%, find the probability of completing it in 24
days.
• Time expected for each activity is calculated using the formula and
calculate for all activities
• The variance of activity time is calculated using the formula

• Variances of all the activities are calculated.

• Construct a network diagram:
Calculate the time earliest (TE) and time Latest
(TL) for all the activities.
• The critical path is identified as 1-4, 4-6, 6-7,

with a project duration of 22 days.

• The probability of completing the project within 19 days is given by, P (Z< Z0)
To find Z0 ,
• we know, P (Z <Z Network Model 0) = 0.5 – z (1.3416) (from normal

tables, z (1.3416) = 0.4099)
• = 0.5 – 0.4099 = 0.0901 = 9.01% • Thus, the probability of completing the
R & D project in 19 days is 9.01%.
• Since the probability of completing the project in 19 days is less than 20% As in
question, we find the probability of completing it in 24 days.

~
!l"'IJ '!'ITU tC!J VI • . For the PERT problem find the critical path and project duration . \Vhat is the
probability that the project will be completed in 25 days?
Ar thity Predecess or Time

Optimistic Mos t lik ely Pess imistic
A - 2 5 14
B - 1 10 12
c A 0 0 6
D A 1 4 7
E c 3 10 15
F D 3 5 7
G B 1 2 3
H E,F 5 10 15
I G 3 6 9

www.ustudy.in
a.Draw the project network diagram.
b.Calculate the length and variance of the critical path.
c.What is the probability that the jobs on the critical path can be completed in 41
days?

www.ustudy.in
www.ustudy.in
www.ustudy.in
Wrap Up
• Planning of a project:- Critical Path Method and PERT

Next Session
• Cost Analysis

Mr. Ashish Deokar


• Discussion on Cost analysis of network

1. Introduction to Resource Levelling and Updating of Network
1. Knowledge and apply Resource Levelling and Updating of

Network

Introduction
• For completion of activities resources required are men, materials,

machines, space ,money etc.
• But all resources may not be available in unlimited quantities.
• Availability of man power may be restricted.
• Availability of funds, space, skilled unskilled labor, equipment's may be
restricted.
• Thus the various activities in a project should be so scheduled that the
resources is more or less uniform all along the project.
• Large fluctuations in their demand may cause problems in the project
execution.

Objective of Resource Planning
• At the time of preparing the network of any project, usually it is
assumed that all resources needed for its execution are available in
plenty and no consideration of resource constraints is taken into
account.
• In such situations the duration of the project may increase escalating the
cost of the project.
• The planning of resources should be done in such a manner that no
increase or decrease in resource demand may occur.
• As the engagement of skilled labor all a sudden is difficult, similarly the
lay off of the labor suddenly is more difficult than their employment.
• Thus for a good resource plan, it is essential that the project may be
completed during the stipulated period.
Prof. Ashish Makwana 5

• The planning of resources should be done in such a manner that no increase
or decrease in resource demand may occur and complete in given time.
• To achieve this objective some times it becomes essential to make changes
in the earliest start time of some critical activities or the execution of some
activities may be postponed for the time being.
• While taking decision for postposing the execution of any activity or effective
changes in the earliest time of critical activities following points should be
kept in mind.
• Such activities should be started first, whose completion duration is
minimum.
• The activity having maximum time of completion should be
postponed.
• The activity havingmaximum float time should be chosen for
postponement first.
METHODS OF RESOURCE PLANNING
• Depending upon the situation, the resource allocation can be done by the
following two methods.
• Resource smoothing
• Resource levelling

RESOURCE SMOOTHING
• Resource smoothing is done when there is restriction on the duration of
project completion time.
• The resource smoothing is applied in such a way that the total project
duration remains the same. i.e. there is no change in the total duration of
the project.
• First the periods of minimum demand, resources are determined and the
activities are shifted according to the availability of float and requirement
of resources.
• Thus the intelligent use of floats can smoothen the demand to the
maximum possible extent. This type of resource allocation is known as
resource smoothing.

STEPS IN RESOURCE SMOOTHING
1. The list of resources required for the execution of different activities is prepared
and the important activities are identified.
2. The resource profiles are prepared by resource aggregation and cumulative
resource requirements for each unit are plotted in the form of histogram.
3. The time periods of peak and low demand are identified and the peaks are
lowered and the troughs are filled up.
4. If there is no restraint on the availability of resources, the demand of resources
should be made as uniform as possible. This can be done by changing the time of
start and finish of non-critical activities in the first instance.
5. These activities have some float. Hence the available float can be used for doing
adjustment in the start or finish of the concerned activities. Thus the peak demand
may be lowered by staggering the resource requirements without delaying the
project duration

RESOURCE LEVELLING
• In a project, there are many activities which need varying resources.
• The demand on specific resource should not increase beyond the
prescribed limit.
• If the demand of a resource increases more than its availability, then the
only alternative is to delay the activity having maximum float. This
process is called resource levelling.
• If there are more than one activities requiring the same amount of
resources, in that case activity having minimum duration is chosen for
resource reallocation.
• Resource levelling if adopted in case, there is restriction on the availability
of resources.

STEPS IN RESOURCE LEVELLING
1. The peak requirement of the resources is lowered by staggering the resource
input on non-critical activities.
2. If needed sub-critical and critical activities may also be rescheduled to bring
down demand than specified limits. Thus the completion of project work
may be delayed due to resource constraints.
3. Either some of the concurrent activities may be placed in series or the
duration of critical activities may be increased to reduce the peak demands
below the specified limits. This will increase the duration of the project.
4. Rearrange the activities having larger magnitude of positive float as resources
can be diverted conveniently from the activities having large amount of float.

• Following procedures may be adopted –
• First the high peak of resource demand should be lowered
utilizing the free floats of the activities.
• Non-critical activities may be rescheduled to the required
extent utilizing the floats, starting with the activity having
larger float. If necessary critical activities may also be tackled.

Histograms
• In a given network the requirement of various resources are determined,
using the early start schedule of each activity.
• The requirement of a particular type of resource may not be uniform during
the project duration. This can be best known by plotting the resources usage
profiles or histograms.

Problem No:1
Activity Duration Masons(M) Laborers(L)
1-2 2 1 2
2-3 3 2 2
2-4 4 3 2
2-5 2 1 3
3-10 4 2 2
4-6 2 3 2
4-7 4 3 3
5-9 4 5 3
6-8 2 1 2
7-9 5 1 3
8-9 3 - 4
9-11 2 1 1
10-11 3 1 2
11-12 2 1 2
1
3 0
4
3 6 8 3
2
1 2 4 2
2 4 1 12
3 1
2
4
2
7
5
9 2
5

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Wrap Up
• Resource Levelling
• Resource Smoothing

Next Session
• Updating of networking

Mr. Ashish Deokar




Network

Controlling
• Once a project is scheduled and execution is commenced,
control over progress of the work is important to complete the
work in stipulated time.
• Control is comparing at regular intervals, the actual

achievement with the original plans and then taking any
necessary actions to bring back in schedule.
• Controlling requires an upwards flow of information through

suitably designed reporting system.

Updating: Process
• During process of implementation of a plan we may come across one or
more of the following possibilities:
• That some or all activities are progressing according to schedule.
• That some or all activities are ahead of schedule.
• That some or all activities are behind schedule.
• Based on the progress of the work and the revised durations of unfinished
activities due to delays, the network diagram has to be redrawn and this
process is known as updating.
• The process of re planning and rescheduling based on the results which serve
a guideline for decision by performing calculations made by taking into
consideration the new knowledge and latest information at an intermediate
stage of the project thus modifying the original network, is known as the
process of updating.
Data required
• Original network
• Original network calculation chart
• Stage at which updating is being done i.e point in time of updating.
• Execution position of the project at that stage
• New information and knowledge which will affect the duration time of
the activities to be performed.

Example:
Network shown below indicates time in weeks required for completion
of each activity.
Fig. 29.13.
The network was reviewed after 8 weeks and found that

activities have progressed as under:
Actiuity Time rtquirtd for balance work /Utnilrks

1·2 0 Completed
2-3 0 Completed
2-4 0 Completed
J -7 J Partially done
4.5 2 Not Started
4-7 2 Not Started
5 -6 3 Not Started
6-7 2 Not Started

Solution:
To know the exact progress of the activities, a revised network is drawn,
indicating remaining required time as on the date of review, i.e., after 8
weeks.
The network was reviewed after 8 weeks and found that

activities have progressed as under:
A cliuity T inle required for balance work Renuirks

1 -2 0 Compleud
2.3 0 Completed
2-4 0 Completed
3 -7 3 Parti.ally do1<e
4 -5 2 Not Started
4 -7 2 Not Started
5 -6 :J Not Starud
6 -7 2 Not Started

Example 2:Construct the network diagram for a project consisting of the following
activities. Define the critical path and Project Duration of the project. Project is
updated on 14th day.
1. Activities 1-2 and 1-3 are completed as originally planned

2. Activities 3-4 is in process and will need 16 more days for completion
3. Activity 4-5 appears to be present some problem and now will take 10 days to
complete
4. Activity 4-6 can be completed in 5 days instead of the originally planned 7 days.
Update the network

-1
.~ .
1
.. . -
..
---
INSTr"\JTrn VI
] .. _ _.. ... 0
1- 10
...
--
1...

1. Activities 1-2 and 1-3 are completed as originally planned
2. Activities 3-4 is in process and will need 16 more days for completion
3. Activity 4-5 appears to be present some problem and now will take 10 ays to
complete
4. Activity 4-6 can be completed in 5 days instead of the originally planned 7 days.
Activities Original Completed Time after Remarks

duration updating
YES NO
1-2 6
1-3 10
3-2 5
3-4 12
2-5 20
4-5 7
4-6 7
5-6 6

Activities Original Completed Time after Remarks
duration YES NO updating
1-2 6
1-3 10
3-2 5
3-4 12
2-5 20
4-5 7
4-6 7
5-6 6

Wrap Up
• Updating of networking

Next Session
• Line of Balance

Mr. Ashish Deokar




Network

• Many types of projects contain repeated blocks of activities. E.g road and
high-rise construction.
• There is a set of tasks repeated across many work areas.
• Arrow and Precedence Diagramming are both able to model these types
of schedules effectively.
• The Line-of-Balance (also known as the Vertical Production Method) is a
graphical technique that can be used in conjunction with Arrow or
Precedence Diagrams.

• In the Line-of-Balance diagram, the x-axis represents (as in the bar chart)
the timeline of the project.
• The y-axis identifies the work areas that define the project.
• The blank chart below is the starting point for the Line-of-Balance schedule.

• Activity A has a total duration of 10 weeks.
• Spread across each of the work areas the productivity of Activity A can be
shown to be 2 weeks per floor.
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• Activity B that has a productivity of one week per floor.
• If we try to start Activity B as soon as possible, then the start of activity B on
the first floor can occur at the end of week 2.

• As we continue to add Activity B throughout the remaining work areas we can
see that Activity B starts on the second floor, at the end of week 4; on the third
floor, at the end of week 6 and so on.
• Breaks in the Activity B line (red dashed lines) are significant.

• This gap means that the crew is waiting around for Activity A to clear out
before it can start.
• In the case of the project above, starting work as soon as you can will result in
a lost productivity of 4 crew weeks.
• Delay starting Activity B for four weeks.
• So that the crew remains productive for their entire stay on your project.
• Extra time can also be added if needed for backup.

PRINCIPLES
A B C
LOGIC DIAGRAM

LOB DIAGRAM
WITH A NON-PARALLEL WORKING

Buffer
A B C
Overall duration
Number of
units
Activity B slower than A
Activity C slower than B
Duration
Minimum Buffers

WITH A PARALLEL WORKING / IDEAL RELATIONSHIP
A B C
Overall duration
Number of
units
Same rate of construction
Duration
Minimum Buffer

PRINCIPLES
A D
C
LOGIC DIAGRAM FOR SEQUENCE

OPERATION B AND C BEGINNING TOGETHER
A B C D
Overall duration
Number of
units
Duration

OPERATIONS B AND C ENDING TOGETHER
A B. D
C
Overall duration
Number of
units
Duration

EXAMPLE – Access Deck Project
• Operation 1 : Install piles – 2 days (gang of 3 labours)

• Operation 2 : In situ beams– 4 days (gang of 4 carpenters)
• Operation 3 : Precast concrete deck – 1 day (gang of 2 labours)

Install piles In situ beams Precast deck
1 2 days
2 4 days
3 1 day
4
LOGIC DIAGRAM

Buffer
10 12 In situ 23 27 28 29
6 Piling beams Precast
deck
5
Completion day
29
4
Bay number
1
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
Duration (days)
Buffer
LABOUR RESOURCES
7
5 Pile caps/beams Deck
Labour 4
2 Pile caps/beams
Piling
Deck
1
0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
Duration (days)
In situ
beams Buffer
10 12 13 17 18 19
6
Piling
Precast
deck
5
Completion day
19
4
Bay number
1
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
Duration (days)
Buffer
REVISED LABOUR RESOURCES
12
11
10
9 Deck
Caps and beams
Labour 8 Gang 2
7
6
Caps and beams Gang
5 1
4
3
2
Piling
1 Deck
0
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36
Duration (days)
Wrap Up
• Line of Balance

Next Session
• Unit No. 4

Mr. Ashish Deokar


• Crashing of network
• Optimum Duration and Optimum Cost of network/project
2
Project costs
• Direct Costs: Cost of materials, labors(salaries, wages,

overtime costs, hiring or firing costs etc.) and machines and
equipments.
• Indirect Costs: cost of supervision, salaries to project

manager/supervisor etc. costs due to delays in projects.
• A project having longer duration will have a higher cost due

to supervision required for longer duration)

Crashing of a project
• Crashing of a project means intentionally reducing the duration of project by
allocating more resources to it.
• A project can be crashed by crashing the critical activities as duration of a
project depends upon critical activities.
• An activity can be crashed by adding resources only up to definite limit.
Beyond this the duration of activity reduces but the cost increases.
• The normal time is the duration of an activity when minimum possible
resources required for its performance are deployed.
• The duration is NORMAL DURATION and cost is NORMAL COST.
• A limit beyond which duration of the activity does not decrease by adding
amount of resources is called CRASH TIME and the cost as CRASH COST.
• The incremental cost of crashing = crash cost-normal cost
normal time-crash time
~1- -1- -1- -1- -1- -1
otal project costs 1 1
-1- -1- -1- -1
- -I -
-1

Crashing of network
• Construct network from given activities
• Find out duration and normal critical path along with critical activities
• Calculate cost slope for different activities
• Choose critical activities for crashing
• Select the activity of having least cost slope for crashing and crash by ∆t days max.
• As critical path duration is reduced then other critical paths can also become, such activities
can also be considered for crashing for further stages.
• Calculate new direct/normal, Indirect and total cost
• Select the optimum duration and cost of project
6
Practice Numerical 1
Numerical-
The following table shows the data on normal duration, crashed duration, normal cost, crashed
cost for a project. The indirect cost per day is Rs. 50. Draw a network diagram, Find the critical
path. Determine optimum time and corresponding optimum cost.
Normal Duration Normal Cost Crash Duration Crash Cost

Activity
(Days) (Rs.) (Days) (Rs)
1-2 6 60 4 100
1-3 4 60 2 200
2-4 5 50 3 150
2-5 3 45 1 65
3-4 6 90 4 200
4-6 8 80 4 300
5-6 4 40 2 100
6-7 3 45 2 80
Mr. Ashish Deokar, Department of Civil Engineering, VIIT , Pune-48 7

6 6 9 15
2 5
3 (1)
6 (4) 5 (3) 4 (2) 19 19 22 22
0 0 1 4 6 7
8 (4) 3(2)
11 11
4 (2) 6 (4)
3
4 5
8
Normal Duration and Normal Cost
• There are 3 paths-
• A. 1-2-5-6-7 Duration = 16 days
• B. 1-2-4-6-7 Duration = 22 days •Normal/ Direct Cost: Rs. 470/-
• C. 1-3-4-6-7 Duration = 21 days •Indirect Cost: 22*50=Rs.1100/-
•Total Cost: Rs.1570/-
• Project Duration – 22 days
• Critical Path – 1-2-4-6-7
Duration 22 Days
Normal/
Rs. 470/-
Direct Cost
Indirect Cost Rs. 1100/-
Total Cost Rs. 1570/-

• Cost Slope = (Crash Cost – Normal Cost) / (Normal Duration – Crash
Duration)
10
Normal Crash Cost
Normal Crash Cost
Activity Duration Duration ∆c ∆t Slope
Cost (Rs.) (Rs)
(Days) (Days) (∆c/∆t)
1-2 6 60 4 100 40 2 20
1-3 4 60 2 200 140 2 70
2-4 5 50 3 150 100 2 50
2-5 3 45 1 65 20 2 10
3-4 6 90 4 200 110 2 55
4-6 8 80 4 300 220 4 55
5-6 4 40 2 100 60 2 30
6-7 3 45 2 80 35 1 35
Normal
Cost
=470
Stage 1 Crashing
• Lowest cost slope of critical activity 1-2 is Rs. 20.
• So crash activity 1-2 by 1 day.
12
6 6 9 15
2 5 Step: Crash activity 1-2 by 1 day

3 (1)
6 (4) 5 (3) 4 (2) 19 19 22 22
0 0 1 4 6 7
8 (4) 3(2)
11 11
4 (2) 6 (4)
3
4 5
13
5 5 8 14
2 5
3 (1)
5 (4) 5 (3) 4 (2) 18 18 21 21
0 0 1 4 6 7
8 (4) 3(2)
10 10
4 (2) 6 (4)
3
4 4
14
5 5 8 14
2 5
3 (1)
5 (4) 5 (3) 4 (2) 18 18 21 21
0 0 1 4 6 7
8 (4) 3(2)
10 10
4 (2) 6 (4)
3
4 4
15
• A. 1-2-5-6-7 Duration = 15 days •Normal/ Direct Cost: 470+20=Rs. 490/-
• B. 1-2-4-6-7 Duration = 21 days •Indirect Cost: 21*50=Rs.1050/-
• C. 1-3-4-6-7 Duration = 21 days •Total Cost: Rs.1540/-
Critical Path: 1-2-4-6-7 and 1-3-4-6-7
Duration 22 Days 21 Days
Normal/
Rs. 470/- Rs. 490/-
Direct Cost
Indirect Cost Rs. 1100/- Rs. 1050/-
Total Cost Rs. 1570/- Rs. 1540/-

New Critical Activities Cost Slope
Normal Normal Cost Crash Duration Crash Cost
Activity Cost Slope
Duration (Days) (Rs.) (Days) (Rs)
1-2 6 60 4 100 20
1-3 4 60 2 200 70
2-4 5 50 3 150 50
2-5 3 45 1 65 10
3-4 6 90 4 200 55
4-6 8 80 4 300 55
5-6 4 40 2 100 30
6-7 3 45 2 80 35
Normal Cost
=470
Stage 2 Crashing
• For further crashing, we have to consider both the critical paths together.
• We can crash activity 4-6 or 6-7 individually.
• But we can not crash activities 1-2, 2-4, 1-3, 3-4 individually. For crashing
these activities we have to consider combination of activities.
• Combinations as follows-
(1-2,1-3) , (1-2,3-4), (2-4,1-3) (2-4, 3-4)
• Cost of crashing-
• (1-2, 1-3) = 20 +70 = Rs.90
• (1-2, 3-4) = 20 +55 = Rs. 75
• (2-4, 1-3) = 50 +70 = Rs. 120
• (2-4, 3-4) = 50 +55 = Rs 105
• 4-6 = Rs. 55
• 6-7 = Rs. 35 (Least Cost Slope)
• So crash activity 6-7 by ∆t= 1 day
18
5 5 8 14
2 5 Step: Crash activity 6-7 by 1 day

3 (1)
5 (4) 5 (3) 4 (2) 18 18 21 21
0 0 1 4 6 7
8 (4) 3(2)
10 10
4 (2) 6 (4)
3
4 4
19
5 5 8 14
2 5
3 (1)
5 (4) 5 (3) 4 (2) 18 18 20 20
0 0 1 4 6 7
8 (4) 2(2)
10 10
4 (2) 6 (4)
3
4 4
20
• A. 1-2-5-6-7 Duration = 14 days
• B. 1-2-4-6-7 Duration = 20 days •Normal/ Direct Cost: 490+35=Rs. 525/-
• C. 1-3-4-6-7Duration = 20 days •Indirect Cost: 20*50=Rs.1000/-
Critical Path- 1-2-4-6-7 and 1-3-4-6-7
Duration 22 Days 21 Days 20 Days
Normal/
Rs. 470/- Rs. 490/- Rs. 525/-
Direct Cost
Indirect Cost Rs. 1100/- Rs. 1050/- Rs. 1000/-
Total Cost Rs. 1570/- Rs. 1540/- Rs. 1525/-

Stage 3 Crashing
• For further crashing, we have to consider both the critical paths together.
• We can crash activity 4-6 individually.
• Or we have to consider combination of activities.
• Combinations as follows-
(1-2, 1-3) , (1-2, 3-4), (2-4, 1-3) (2-4, 3-4)
• Cost of crashing-
• (1-2, 1-3) = 20 +70 = Rs.90
• (1-2, 3-4) = 20 +55 = Rs. 75
• (2-4, 1-3) = 50 +70 = Rs. 120
• (2-4, 3-4) = 50 +55 = Rs 105
• 4-6 = Rs. 55 (Least Cost Slope)
• So crash activity 4-6 by ∆t= 4 days (It will add cost 4 x55 = 220)
22
5 5 8 14
2 5 Step: Crash activity 4-6 by 4 days

3 (1)
5 (4) 5 (3) 4 (2) 18 18 20 20
0 0 1 4 6 7
8 (4) 2(2)
10 10
4 (2) 6 (4)
3
4 4
23
5 5 8 10
2 5
3 (1)
5 (4) 5 (3) 4 (2) 14 14 16 16
0 0 1 4 6 7
4 (4) 2(2)
10 10
4 (2) 6 (4)
3
4 4
24
• A. 1-2-5-6-7 Duration = 14 days
• B. 1-2-4-6-7 Duration = 16 days •Normal/ Direct Cost: 525+(4*55)=Rs. 745/-
• C. 1-3-4-6-7 Duration = 16 days •Indirect Cost: 16*50=Rs.800/-
Critical Path – 1-2-4-6-7 and 1-3-4-6-7
Duration 22 Days 21 Days 20 Days 16 Days
Normal/
Rs. 470/- Rs. 490/- Rs. 525/- Rs. 745/-
Direct Cost
Indirect Cost Rs. 1100/- Rs. 1050/- Rs. 1000/- Rs. 800/-
Total Cost Rs. 1570/- Rs. 1540/- Rs. 1525/- Rs. 1545/-

Optimum Duration
Duration 22 Days 21 Days 20 Days 16 Days
Normal/
Rs. 470/- Rs. 490/- Rs. 525/- Rs. 745/-
Direct Cost
Indirect Cost Rs. 1100/- Rs. 1050/- Rs. 1000/- Rs. 800/-
Total Cost Rs. 1570/- Rs. 1540/- Rs. 1525/- Rs. 1545/-
Optimum Cost

• Optimum Duration: 20 Days
• Optimum Cost of Project is: Rs. 1525/-
27
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Presentation Topic

BRACT’S, Vishwakarma Institute of Information Technology, Pune-48

• “A project is a temporary venture undertaken to create a unique product or service”.

• A project consumes resources.

➢Art of getting work done through people with satisfaction of

To complete the project within

To complete the project with proper safety.

To ensure that the project is completed to the

• Estimates future work – sales or production

• Manager anticipates future and discovers alternatives

• Manager select, train, promote and retire their subordinates.

• Motivating, guiding and supervising subordinates

• Measures current performance

• Selecting course of action for getting desired results.

• Henry Fayol defines,“ Management as to manage is to forecast

• Peter F Drucker defines, “Management is a "multipurpose

• Work should be divided

• Fayol presented work

• Penalties should be applied

• He should not receive

• Without unity of direction,

• Every orders, instructions

• Recruitment and Selection Costs, as well as increased

2.Depending 3.Type of 4.Type of 5.Based on

Recognizing the benefits of the project

Assigning of the project manager

Definition of the quality & quantity of work

Project Definition of the resources needed

Evaluation of the various risks

Negotiating for the project team

Project Directing & managing the

Working with the team members

Comparing actual outcome to predicted outcome

Contractual closure of the contract

Administrative closure of the paper work

Well defined jobs

Scope for new changes

• This division of work is helping in

Common Types of Organization

Application : all type of small firms , industries like sugar factories,

Exhibit 10.3 : Line Organisational! Structure

Legend: DIA - Director

VP' mobal Communications

DSM DSM DSM DSM DSM

Applications: Used in medium and larger enterprises.

Feature: Superimposes a horizontal set of divisions and reporting

Line and Staf·f Organ-zat~on

T r.aininR Re~i on A Regi on A

Use: Industrial like electronics, advertising, banking etc.

Feature: Superimposes a horizontal set of divisions and reporting

Production Finance Marketing R& D

Project A Production Finance Marketing Personal I

Manager Group Group Group Group I

Project B Production Finance Marketing Personal

ProjectC Production Finance Marketing Personal

Mr. Ashish Deokar

BRACT’S, Vishwakarma Institute of Information Technology, Pune-48

Mr. Ashish Deokar, Department of Civil Engineering, VIIT , Pune-48

1. Introduction to Identification of a Projects and screening

Learning Outcome/Course Outcome

1. Understand Identification of a Projects and screening

Mr. Ashish Deokar, Department of Civil Engineering, VIIT , Pune-48

• Project Identification is a continuous and repetitive process

“The systematic effort of screening the ideas generated through