UPSC

ESE 2022
Basics of Project Management
Lecture 1
 What is Project?
 According to the PMBOK a project is “a temporary endeavor
undertaken to create a unique project service or result”

 According to the Project Management Institute (PMI), the

term Project refers to ”to any temporary endeavor with a
definite beginning and end”

• PMBOK - Project Management Body of Knowledge (book whose sixth

edition was released in 2017, Originally published in 1996)
 What is Project?
 Temporary endeavor
 Unique creations
 Group of well defined sequence of activities
 Having goal/ goals to meet organization’s needs
 Having Time Limitation
 What is Project Management?
A temporary endeavor undertaken to create a unique
product or service by Optimal utilization of resources

Both Art & Science. Why?

 Optimal Utilization of Ms
 Man
Machine
Material
Method
Money
 Project in Loss
Total Revenue = 90 Crores
Total completion cost = 95 Crores

What to do??
Project’s Major Characteristics
 Characteristics of Project
1. Introduce change
2. Temporary effort
3. Unique (not exactly repeated in past)
4. Life Cycle (initiation, planning, execution & closing phase)
5. Goal/ Goals
6. Skilled Staff
7. Coordination
8. Made to order
9. Subcontracting
10. Risk and uncertainty
 Difference between Program & Project
Programs focus on the coordination of a number of related
projects and other activities, over time, to deliver benefits to
the organization
• Program is “a portfolio of projects and activities that are
coordinated and managed as a unit such that they achieve
outcomes and realize benefits” – Disaster Relief Program

• Projects are focused on the efficient creation of outputs;

programs are focused on delivering outcomes
• Rebuild a school??
 Four Dimensions of a Project
• Inherent size (usually measured in terms of value)

• The degree of technical difficulty in creating the output

• The complexity of the relationships with the stakeholders

• The degree of uncertainty involved in the work

 Degree of Uncertainty in Project
Unclear Semi Open Open
(Making a Movie) (Lost in Fog)

What
to
Closed Semi Closed
Do
(Painting by numbers) (Going on a Quest)

Clear
Clear Unclear
How to do it
 Phases - Project Management
It includes six phases:
1. Initiation phase
2. Definition phase
3. Design phase
4. Development phase
5. Implementation phase
6. Follow-up phase
 Phase-wise Examples
Idea – Why this building/ road, how community will be benefitted, how
government will be benefitted, impact on environment, is it feasible, fund idea,
payback period etc)
What – Requirements, limitations (route/ land acquire task, fund analysis, legal
procedure to acquire, climate limitation (hill areas), management system to control/
implementation,
How - legal procedure to acquire, kind of material to be used, How much
manpower required, time to complete, end to end or partwise construction, water
Drainage system, road lights required or not and its frequency, procedure to make
road (its density, etc), Creating a management system
How to implement – Arrange manpower, arrangement of resources, instructions
hierarchy, deciding/ finalizing subcontractors, ordering material,
Implementation – Execution of plan, payments, daywise fund arrangement,
Contract Closing & Maintenance – Deciding Toll tax, Its frequency in km, repair
frequency, cleaning frequency
 Initiation Phase: Idea
Questions to be answered in the initiation phase
 Why this project?
 Is it feasible?
 Who are possible partners in this project?
 What should the results be?
 What are the boundaries of this project (what is
outside the scope of the project)?
 Definition Phase: What?
In this phase, the requirements that are associated
with a project result are specified as clearly as
possible. This involves identifying the expectations
that all of the involved parties have with regard to the
project result.
 Definition Phase: What?
It is important to identify the requirements as early in
the process as possible. Several categories of project
requirements that can serve as a memory aid:
 Preconditions
 Functional requirements
 Operational requirements
 Design limitations
 Design Phase: How?
• In the design phase, one or more designs are
developed, with which the project result can
apparently be achieved. Depending on the subject of
the project, the products of the design phase can
include diagrams, sketches, flow charts, site tree, etc.
• As in the definition phase, once the design has been
chosen, it cannot be changed in a later stage of the
project.
 Development Phase: How to Implement
During the development phase, everything that will be
needed to implement the project is arranged.
Potential suppliers or subcontractors are brought in, a
schedule is made, materials and tools are ordered,
instructions are given to the personnel and so forth.
 Implementation Phase
• This phase involves the construction of the actual
project result.
• It is during this phase that the project becomes
visible to outsiders.
• Implementation phase is the ‘doing’ phase, and it is
important to maintain the momentum.
 Follow-up Phase: Maintenance/ Monitoring/ Closing
• Although it is extremely important, the follow-up
phase is often neglected.
• During this phase, everything is arranged that is
necessary to bring the project to a successful
completion.
• It includes writing handbooks, providing instruction
and training for users, setting up a help desk,
maintaining the result, evaluating the project itself,
writing the project report, etc.
Cost vs Project Life Graph
 Project Cost Estimates - Types
Types of Rough Order Premilinary Budget Definitive Final
Estimate in of Estimate Estimate Estimate Estimate
Project Cycle Magnitude (Detailed
Estimate)
% Error -25 to 75 -15 to 50 -10 to 25 -5 to 10 0% ideally

When done Project Initiation Planning Phase

Selection Phase
Time
 How to do Estimates
• Expert Judgement

• Bottom-up Estimation

• Progressive Elaboration
 About Project Phases
• Max Uncertainty – Initiation Phase
• Lowest Risk – Execution Phase
• Maximum Risk – Initiation Phase
• Most Important – Project Execution & Monitoring Phase
• Most Demanding – Execution (Implementation) Phase
• Longest – Implementation Phase
• 90% projects end in Initiation Phase itself.
 Project Manager
A project manager is the person responsible for leading a
project from its inception to execution. This includes
planning, execution and managing the people, resources
and scope of the project. Project managers must have the
discipline to create clear and attainable objectives and to
see them through to successful completion. The project
manager has full responsibility and authority to complete the
assigned project.
 Managing the Project
Project leader/manager and project team is involved with the
following components:
1. Team
2. Goal
3. Limited resources
4. Uncertainty (Risk)
 Project Parameters for Project Manager
Although project managers must attend to many matters, they
actually direct projects along only five parameters:
• Time
• Money
• Quality
• Organization
• Information
These five parameters are often known as the ‘Control factors’
Triple & Diamond Constraints of Project
 Stakeholders
A stakeholder is a single person, group, or organization
involved in or affected by the development and completion of
a project They have a vested interest in its outcome.
Types of stakeholder:
• Internal stakeholders – Employees
• External stakeholders - Vendors, suppliers, creditors, project
customers, project testers, and a product user group

Stakeholders -Customers, Employees, Governments, Investors,

Shareholders, Local communities, Suppliers and vendors
 Positive – Negative Stakeholders
The people whose interests may be positively or negatively
affected by the project.
1. Project Manager/ leader & team
2. Sponsors
3. Customer
4. Business Partner
5. Company itself
6. Competitors (negative stakeholder)
 Project Management Approaches
1. Waterfall Model (Predictive Life cycle – Plan driven)

2. Cyclical Model (Iterative Life cycle)

Cyclic Project Management
 Types of Projects- Industrial Category
1. Research and development project

2. Deliver a prototype or ‘Proof of Concept’

3. Deliver a working product

 Types of Projects- Overall Categories
1. Personal Project
2. Business/ Organizational Project
3. National Project
4. Global Project

Projects can further be categorized on the basis of:

• Time taken
• Value (Cost)
• Speed of execution
• Ownership (Private or Public)
 Types of Projects- Overall Categories
• Based on Duration – Long (>5 years)
- Medium (3-5 years)
- Short (1-3 years)
- Special Short Duration (<1 year)

• Based on Project Value – Mega (> 1000 Crs.)

– Large (100-1000 Crs.)
– Medium (1-100 Crs.)
– Small (<1 Cr.)
Thank
You
 UPSC
ESE 2022
Basics of Project Management
Lecture 2
Cost vs Project Life Graph
 Project Cost Estimates - Types
Types of Rough Order Premilinary Budget Definitive Final
Estimate in of Estimate Estimate Estimate Estimate
Project Cycle Magnitude (Detailed
Estimate)
% Error -25 to 75 -15 to 50 -10 to 25 -5 to 10 0% ideally

When done Project Initiation Planning Phase

Selection Phase
Time
 How to do Estimates
• Expert Judgement

• Bottom-up Estimation

• Progressive Elaboration
 About Project Phases
• Max Uncertainty – Initiation Phase
• Lowest Risk – Execution Phase
• Maximum Risk – Initiation Phase
• Most Important – Project Execution & Monitoring Phase
• Most Demanding – Execution (Implementation) Phase
• Longest – Implementation Phase
• 90% projects end in Initiation Phase itself.
 Project Manager
A project manager is the person responsible for leading a
project from its inception to execution. This includes
planning, execution and managing the people, resources
and scope of the project. Project managers must have the
discipline to create clear and attainable objectives and to
see them through to successful completion. The project
manager has full responsibility and authority to complete the
assigned project.
 Powers of Project Manager
Positional Power
1. Legitimate Power
2. Reward Power
3. Coercive Power

Personal Power
1. Referent Power
2. Expert Power
 Managing the Project
Project leader/manager and project team is involved with the
following components:
1. Team
2. Goal
3. Limited resources
4. Uncertainty (Risk)
 Project Parameters for Project Manager
Although project managers must attend to many matters, they
actually direct projects along only five parameters:
• Time
• Money
• Quality
• Organization
• Information
These five parameters are often known as the ‘Control factors’
Triple & Diamond Constraints of Project
 Stakeholders
A stakeholder is a single person, group, or organization
involved in or affected by the development and completion of
a project They have a vested interest in its outcome.
Types of stakeholder:
• Internal stakeholders – Employees
• External stakeholders - Vendors, suppliers, creditors, project
customers, project testers, and a product user group

Stakeholders -Customers, Employees, Governments, Investors,

Shareholders, Local communities, Suppliers and vendors
 Positive – Negative Stakeholders
The people whose interests may be positively or negatively
affected by the project.
1. Project Manager/ leader & team
2. Sponsors
3. Customer
4. Business Partner
5. Company itself
6. Competitors (negative stakeholder)
 Project Management Approaches
1. Waterfall Model (Predictive Life cycle – Plan driven)

2. Cyclical Model (Iterative Life cycle)

Cyclic Project Management
 Scope of Project
Project scope is defined as the body of work (overall tasks,
activities and decisions) that must be completed in order to
ensure project goals and deliverables are met. Scope should
be clearly defined and limited to the work that must be done
to meet the goals at hand.
 Scope of Project
What is Scope:
a) It is the design of experiments that are used to complete the
project work
b) It is the combination of the cost and the schedule which is required
to complete the project work
c) It is the description of the required work that is necessary to
complete the project.
d) It is the description of the required work and resources that are
needed to complete the project
 Process Groups
According to PMI, Project Management is accomplished by
applications and integration of 47 processes.
These processes are classified into 5 Process Groups & 10
Knowledge Areas.
Process Groups:
1. Initiating Process Group (3)
2. Planning Process Group (24)
3. Execution Process Group (8)
4. Monitoring & Controlling Process Group (10)
5. Closing Process Group (2)
 10 Project Knowledge Areas
1. Integration Management
2. Scope Management
3. Time Management
4. Cost Management
5. Quality Management
6. HR Management
7. Communication Management
8. Risk Management
9. Procurement Management
10. Stakeholders Management
Shewhart – Deming Cycle
 Types of Projects- Industrial Category
1. Research and development project

2. Deliver a prototype or ‘Proof of Concept’

3. Deliver a working product

 Types of Projects- Overall Categories
1. Personal Project
2. Business/ Organizational Project
3. National Project
4. Global Project

Projects can further be categorized on the basis of:

• Time taken
• Value (Cost)
• Speed of execution
• Ownership (Private or Public)
 Types of Projects- Overall Categories
• Based on Duration – Long (>5 years)
- Medium (3-5 years)
- Short (1-3 years)
- Special Short Duration (<1 year)

• Based on Project Value – Mega (> 1000 Crs.)

– Large (100-1000 Crs.)
– Medium (1-100 Crs.)
– Small (<1 Cr.)
 Project Identification - Goal
The Primary goal of Project identification is to generate new
ideas about the possible project that can be undertaken or
implemented.
 Project Ideas – Sources
1. Knowledge of Potential customer requirement
2. Emerging trends in demands
3. Scope for producing alternative product
4. Success story of entrepreneur, etc
5. Ideas/ opportunities suggested by knowledgeable persons
6. Meeting government agencies
7. Knowledge about government policies
8. Visiting exhibitions , fairs, etc
 Project Identification Steps
1. Pre-feasibility Studies
2. Feasibility Studies – Market
– Financial
– Technical
– Socio Economic
– Environmental/ Ecological
3. Detailed Project Report
4. Project Appraisal/ Evaluation
5. Project Selection Decision
6. Project Charter
SWOT Analysis
Present vs Future Value of Money
 Pre-feasibility Studies
• This is also called Prima Facie analysis or Preliminary
Filtration.
• It is very crucial step as approx. 99% projects are dropped
during this phase.
What to analysis here:
1. Performance of existing projects
2. Price trend
3. Price difference between international and domestic source.
4. Government Policies
5. Location Aspects
6. Financial Position
 Market Feasibility Studies
1. Project Background and History
2. Demand & Market Survey
3. Sales Forecasting Techniques
4. Export Projections
5. Market Penetration
6. Sensitivity
 Forecasting
Forecasting is the process of making predictions based on past
and present data.
Types of Planning:
1. Long Term Planning (impact for >5 years)

2. Medium Term Planning (impact for 1 to 5 years)

3. Short Term Planning (impact for <1 year)

 Forecasting
Qualitative Methods of Forecasting:
1. Jury Opinion
2. Delphi Method
3. Nominal Group Technology
4. Surveying
 Forecasting
Quantitative Methods of Forecasting:
1. Simple Average Method
2. Moving Average Method
3. Weighted Moving Average
4. Exponential Smoothing
5. Regression (Time Series)
 Financial Feasibility Studies
1. Estimation of Project Cost
2. Estimation of Project Cash Flow (Equity, Promoters, Govt.
Contribution, Financial Institutes, Mutual Funds, Lease
financing, etc)
3. Estimation of Expected Rate of Return
 Technical Feasibility Studies
1. Location & Site
2. Suppliers availability
3. Manpower availability
4. Customer Availability
5. Technology Availability
6. Capacity vs Cost analysis
7. Government Support
8. Environment Regulations
9. Legal Rules
 Environmental/ Ecological Feasibility Studies
Social Cost & Benefit Analysis
Social Cost – Environmental damage, Ecological imbalance,
Human services used, Material used, usage of public utility,
unemployment caused, usage of foreign exchange, etc.

Social Benefits – Improve environment, products & services

provided, employment creation, taxes, indirect employment,
development of backward areas, etc.
Break Even Analysis
 Critical Path Method
Kheer (Paysome) Banao Project
Activity Predecessor Time
Activity (mins)
Milk - 30
Rice - 60
Sugar - 180
Cooking M, R, S 60
 Critical Path Method
Critical Path:
The longest path in the network diagram is called as
Critical path as it decides the project duration.

Critical path time is the minimum time to complete

the project with available resources.
Program Evaluation & Review Technique (PERT)
 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
 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

Above Techniques are Numerical Models.

 Non-Numerical Models
1. Scared Cow

2. Q – Sort Model
Thank
You
 UPSC
ESE 2022
Basics of Project Management
Lecture 3
 Forecasting
Quantitative Methods of Forecasting:
1. Simple Average Method
2. Moving Average Method
3. Weighted Moving Average
4. Exponential Smoothing
5. Regression (Time Series)
 Financial Feasibility Studies
1. Estimation of Project Cost
2. Estimation of Project Cash Flow (Equity, Promoters, Govt.
Contribution, Financial Institutes, Mutual Funds, Lease
financing, etc)
3. Estimation of Expected Rate of Return
 Technical Feasibility Studies
1. Location & Site
2. Suppliers availability
3. Manpower availability
4. Customer Availability
5. Technology Availability
6. Capacity vs Cost analysis
7. Government Support
8. Environment Regulations
9. Legal Rules
 Environmental/ Ecological Feasibility Studies
Social Cost & Benefit Analysis
Social Cost – Environmental damage, Ecological imbalance,
Human services used, Material used, usage of public utility,
unemployment caused, usage of foreign exchange, etc.

Social Benefits – Improve environment, products & services

provided, employment creation, taxes, indirect employment,
development of backward areas, etc.
Break Even Analysis
 Critical Path Method
Kheer (Paysome) Banao Project
Activity Predecessor Time
Activity (mins)
Milk - 30
Rice - 60
Sugar - 180
Cooking M, R, S 60
 Critical Path Method
Critical Path:
The longest path in the network diagram is called as
Critical path as it decides the project duration.

Critical path time is the minimum time to complete

the project with available resources.
Program Evaluation & Review Technique (PERT)
 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

Above Techniques are Numerical Models.

 Non-Numerical Models
1. Scared Cow

2. Q – Sort Model
 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
 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

Thank
You
 UPSC
ESE 2022
Basics of Project Management
Lecture 4
 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
 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
Thank
You
 UPSC
ESE 2022
Basics of Project Management
Lecture 5
 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 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
 UPSC
ESE 2022
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
 UPSC
ESE 2022
Project Closure & Review
 Contract Closing Steps
1. Ensuring Physical Completion

2. Closing Procurement and other Contracts

3. Handing Over Outputs and Obtaining Formal Acceptance

4. Documenting Project Records

 Contract Closing Steps
5. Performing Financial Closure

6. Documenting Lessons Learnt

7. Release/ Redistribution of Resources

8. Post Implementation Review

9. Archiving Project Records

 Project Audit
1. Financial Audit

2. Technical Audit

3. Schedule Audit

4. Social Audit
 Types of Project Closing [by Gray & Larson]
1. Normal Closure

2. Premature Closure

3. Perpetual Closure

4. Failed Project

5. Changed Priority
 Types of Project Closing [by Medredith & Mentel]
1. Termination by addition

2. Termination by Integration

3. Termination by Starvation

4. Termination by Extinction
 UPSC
ESE 2022
Financing of Projects
 Debt Instruments
1. Debentures – Debentures can be converted into shares

2. Bonds – Generally issued by govt., central bank or large

companies (now bond and debenture are same)
3. Mortgage – Loan against residential property
4. Treasury Bills – Short term debt instrument
 Important Terms
1. Term Loan

2. External Aid

3. Cash Credits/ Overdraft

4. IPO
 Important Terms
5. Equity Shares

Credit Rating -
 Debt Equity Ratio
It is a type of leverage ratio that is used to determine the
financial leverage that a company uses. Debt to equity ratio
takes into account the company’s liabilities and the
shareholders equity.

Debt to Equity Ratio = Total Liabilities / Shareholders Equity

Total liabilities = Short term debt + Long term debt + Payment

obligations
Shareholders equity = Financing done by shareholders of the
company
 Cost of Equity
Cost of Equity is compensation market demands in exchange
for owning the asset and bearing the risk of Ownership.
Cost of Equity
= (Dividend per share for next year/Current market value of stock)
+ Growth rate of dividend
 Cost of Debenture
1. Cost of irredeemable (perpetual) debt
= (I.P. / NPV) x 100
2. Cost of redeemable debt
= {[n(I.P.)+ F.C + d + Pr – Pi] / [n(NPI+RV)/2]}x 100
n – no. of years of issuance F.C. – Floatation cost
d – Discount Pr – Premium on redemption
Pi – Premium on issue NPI – Net proceeds from issue
I.P – Interest Payable RV – Redemption value
 Cost of Debt
Overall rate being paid by company to use different types of
debt financing.
Ques: A company has a 10 million loan at 5% interest rate and
2 million at 6% interest rate. If tax rate is 30%, calculate cost of
debt?