UPSC

ESE 2022
Basics of Project Management
Lecture 3
 Program Evaluation & Review Technique (PERT)
Time (Days)
Preceding
Activity Optimistic Most Pessimis Expected Variance
Activity
Likely tic Time
A – 2 5 8
B – 2 5 14
C A 4 6 14
D A 5 7 15
E B, C 2 3 10
F D 3 3 3
G E 1 2 3
Gantt Chart
Gantt Chart vs CPM/ PERT
Crashing
 Important Terms
1. Payback Period = Initial Investment/ Annual Cash flow

2. Average Rate of Return (ARR)

= Average Profit/ Average investment

3. Net Present Value = PV of Cash Inflow – PV of Cash Outflow

4. Profitability Index
= (PV of future cash inflows/PV of Future cost) *100
 Important Terms
5. Internal Rate of Return = Rate at which the net PV of an
investment becomes zero.

6. Scoring Model - A scoring model is a tool you use to assign a

comparative value to one or more projects or tasks. Scoring
models allow governance teams to rank potential projects based
on criteria such as risk level, cost, and potential financial returns.

Above Techniques are Numerical Models.

 Non-Numerical Models
1. Sacred Cow - The project is created as an immediate result
of this bland approach for investigating whatever the boss
has proposed. The sacredness of the project reflects the fact
that it will be continued until ended or until the boss himself
announces the failure of the idea & ends it.
 Non-Numerical Models
2. Q – Sort Model – It is one of the most straightforward
techniques for ordering projects. According to their relative
merits, the projects are first divided into three groups which are
Good, Fair and Poor. The main group is further subdivided into
the two types of fair-minus and fair-plus if any group has more
than eight members.
3. The Operating Necessity
4. The Competitive Necessity
5. The Product Line Extension
 Question 1
A project has a 60% chance of a $100,000 profit and a 40
percent of a US $100,000 loss. The Expected Monetary Value
for the project is:
a) $100,000 profit
b) $60,000 loss
c) $ 20,000 profit
d) $40,000 loss
 Question 2
Assuming that the ends of a range of estimates are +/- 3
sigma from the mean, which of the following range estimates
involves the LEAST risk?
a) 30 days, plus or minus 5 days
b) 22 – 30 days
c) Optimistic = 26 days, most likely = 30 days, pessimistic =
33 days
d) Mean of 28 days
 Question 3
If a risk has a 20 percent chance of happening in a given
month, and the project is expected to last five months, what
is the probability that the risk event will occur during the
fourth month of the project?
a) Less than 1 percent
b) 20 percent
c) 60 percent
d) 80 percent
 Question 4
An accepted deadline for project approaches. However, the
project manager realizes only 75% percent of the work has
been completed. The project manager then issues a change
request. What should the change request authorize?
a) Additional resources using the contingency fund
b) Escalation approval to use contingency funding
c) Team overtime to meet schedule
d) Corrective action based on causes.
 Question 5
The best project organization structure for a small but highly
technical project will be:
a) Matrix Organization
b) Functional Organization
c) Mixed Organization
d) Projectized Organization
 Question 6
When estimating time for activities, a Project Manager
should:
a)Use the best guess and estimate all activities since there
will be changes as the project progresses and more
information becomes available
b)Involve people who will be doing the work to get estimates
c)Estimate for what the cost will allow and include buffers
d)None of the above
 Question 7
Being assigned as a project manager, you noticed during project
execution that conflicts arise in the team on both technical and
interpersonal levels. What is an appropriate way of handling
conflicts?
a)Conflicts distract the team and disrupt the work rhythm. You
should always smooth them when they surface.
b)A conflict should be handled in a meeting so that the entire
team can participate in finding a solution.
c)Conflicts should be addressed early and usually in private, using
a direct, collaborative approach.
d)You should use your coercive power to quickly resolve conflicts
and then focus on goal achievement.
 Question 8
The person or group providing the resources and support for
the project, program or portfolio and is also responsible for
enabling success is called the:
a)Project Manager
b)Senior Management
c)Sponsor
d)Client
 UPSC
ESE 2022
Project Planning Management
 Planning About??
1. What is to be done?
2. How should it be done?
3. When must it be done?
4. Who will do it?
5. How much will it cost?
6. How good will it be?
Project Planning is to identify work to be done and estimate
time, cost and resources requirements and getting approval
to do the project.
 Project Planning Steps
1. Kick-off meeting

2. Defining Scope of work

3. Prepare WBS

4. Role assignment
 Project Planning Steps
5. Project Scheduling

6. Defining Activities

7. Sequencing of activities

8. Estimate resources
 Project Planning Steps
9. Estimate Activity duration

10. Develop Schedule

11. Estimate Project Cost

12. Determine Budget

 Project Planning Steps
13. Finalise Quality Plan

14. Make Risk Management Plan

15. Procurement Plan

16. Communication Plan

 Project Planning Steps
17. Make Human Resource Plan

18. Stakeholder Management Plan

 UPSC
ESE 2022
Project Risk Management
 What is Risk?
When you start the planning process for a project, one of the
first things you need to think about is: what can go wrong?
Or
Risk is an uncertain event or condition
It is made up of two components:
• Likelihood (Probability)
• Impact (Consequences)
Risk = Probability x Impact
 Types of Risk
1. Positive Risk:

2. Negative Risk:
Risk Tolerance/ Threshold
 Sources of Risk
1. Operational Risk

2. Market Risk

3. Economic Risk

4. Financial Risk
 Sources of Risk
5. Technological Risk

6. Quality Risk

7. Commercial Risk

8. Legal & Regulatory Risk

 Sources of Risk
9. International Risk
 Risk Management - Steps
1. Risk Identification

2. Risk Analysis

3. Risk Response Planning

4. Risk Monitoring & Control

 Risk Identification - Techniques
1. Brainstorming
2. Delphi Method
3. Interviewing
4. SWOT Analysis

Risk Register: Output of risk identification process is Risk

Register, where risks are given ranks.
 Risk Analysis - Techniques
Qualitative Risk Analysis:
1. Probability Impact Matrix
 Risk Analysis - Techniques
Quantitative Risk Analysis:
1. Sensitivity Analysis
2. Expected Monetary Value Analysis
EMV = ∑ (Probability x Impact)
3. Modeling & Simulation
4. Decision Tree Analysis
5. Forecasting
 Risk Response Planning
Response to Negative Risk:
1. Avoid
2. Transfer
3. Mitigate
Response to Positive Risk:
1. Exploit
2. Enhance
3. Share
 UPSC
ESE 2022
Project Execution Management
 Project Execution
Which Phase of Project Life Cycle –
Usually __________________ phase.
Most __________________ phase.

• Your focus, as a Project Manager changes to performing

and supervising all activities to create deliverables as
outlined in the project plan.
• You need to step back a bit and let your team carry out
the Project Plan.
 Project Execution
Objectives:
1. Conversion of planning into action
2. Achieving tangible changes & improvements

The project manager has three main objectives during the

execution phase:
1.Managing people
2.Managing processes
3.Managing communication
 Benefits of Project Execution
1. The project can be completed on time and budget
2. Team morale can be maintained
3. Stakeholders are satisfied with overall project progress
 What happens during the execution phase?
1. Execute the project scope
2. Manage the team’s work
3. Recommend changes and corrective actions
4. Manage project communication with stakeholders
5. Conduct team-building exercises
6. Celebrate project milestones and motivate team members
7. Hold status review meetings to make sure everything is on
schedule
8. Document all changes to the project plan
 Challenges in Project Execution
1. A lack of common understanding
2. Uninvolved sponsors
3. Misalignment with strategic project objectives and goals
4. Poor change management processes
5. Ineffective corporate governance
6. Poor leadership
 What Produces during Project Execution
1. Project deliverables
2. Change requests
3. Performance data
4. Issue log
5. Documentation updates
 Numerical
We are given a task of deciding between vendor A and B.
Vendor A has success probability of 70% with impact amount
of Rs. 60000 and failure impact of Rs. -10000. Vendor B has
success probability of 60% with impact Rs. 75000 and failure
impact Rs. -16000. Based on above information select the
better vendor.
 UPSC
ESE 2021
Project Monitoring & Control
 Introduction
Monitoring:-
1. Collecting data
2. Recording
3. Reporting

Controlling:-
Use report to bring actual performance to planned
performance.
 Difference between Manage & Monitor
• Class Teacher vs Class Monitor
 Difference between Manage & Monitor
Monitoring refers to the process of watching, keeping track of
and gathering data about performance.

Controlling on the other hand refers to the process of actively

exercising power over, guiding and supervising behaviour,
tasks and activities in a business or organisation.
 Monitoring Techniques/ Tools
A. Earned Value Analysis
EVA is an industry standard method of measuring a project's
progress at any given point in time, forecasting its completion
date and final cost, and analyzing variances in the schedule
and budget as the project proceeds.

The earned value analysis is a project controlling procedure

that, along with the planned and actual costs, includes the
earned value. Through this the project’s cost efficiency and
time efficiency can be calculated.
 Terminology Used
AC: Actual Cost
CPI: Cost Performance Index
EAC: Estimate At Completion
EC: Estimated Completion
EV: Earned Value
PC: Percent Complete
PV: Planned Value
SPI: Schedule Performance Index
CV: Cost Variance
SV: Schedule Variance
 Earned Value Analysis
Earned value (EV) = Planned Value (PV) * Percent Complete (PC)
 Earned Value Analysis
1. CPI (Cost Performance Index) : EV / AC
2. SPI (Schedule Performance Index) : EV / PV
3. Critical Ratio : CPI X SPI
Observations:
• CPI > 1 (within budget)
• SPI > 1 (within plan)
• CR > 1 (good project performance)
 Earned Value Analysis
1. Cost Variance (CV) = Earned Value – Actual Cost
2. Schedule Variance (SV) = EV - PV
3. Estimate at Completion (EAC) = PV / CPI
4. Estimated Completion (EC) = Duration / SPI
Observations:
• CV + means under budget
• SV + means we are ahead of schedule
 Monitoring Techniques/ Tools
B. S Curve Analysis
This curve helps in determining project:
• Growth
• Slippage
• Progress
S Curve – Determining Growth
S Curve – Determining Slippage
S Curve – Determining Progress
Thank
You