PEEM - PT 1

17 February 2022 09:52

1. Define project management and types of project with examples

A project is a temporary endeavor undertaken to produce a unique product or service
Project Management is the application of skills, knowledge, tools and techniques to meet the needs and
expectations of stakeholders for a project.
The purpose of project management is prediction and prevention, NOT recognition and reaction

Types of Project Management:

• Scope Management - Ensuring all the appropriate work within the project scope is completed and only the work
within scope is being conducted…

This component is used to communicate

How the scope was defined
How the project scope will be managed
Who will manage the scope (e.g., PM, QA)
Change Control

• Issue Management - Issues are restraints to accomplishing the deliverables of the project. Typically identified
throughout the project and logged and tracked through resolution.
Issues are typically identified throughout the project and logged and tracked through resolution.

In this section of the plan the following processes are depicted:

Where issues will be maintained and tracked
The process for updating issues regularly
The escalation process
The vehicle by which team members can access documented issues

• Cost Management - How costs are controlled and incurred costs are paid
Resource Planning - Full Time Employees, Professional Services, Cost, and Contingency
Resource Planning - The physical resources required (people, equipment, materials) and what quantities are
necessary for the project
Budget
Budget estimates
Baseline estimates
Project Actuals

• Quality Management - the totality of characteristics of an entity that bear on its ability to satisfy stated and
implied need
• Quality Assurance Plan – How quality control is measured and satisfied….
Customer-Based -> Fitness for use, meeting customer expectations.
Manufacturing-Based -> Conforming to design, specifications, or requirements. Having no defects.
Product-Based -> The product has something that other similar products do not that adds value.
 Value-Based -> The product is the best combination of price and features. 5. Transcendent It is not clear what it
is, but it is something good...
via:
Quality Planning, Quality Assurance, and Quality Control
Clearly Defined Quality Performance Standards
How those Quality and Performance Standards are measured and satisfied
How Testing and Quality Assurance Processes will ensure standards are satisfied
Continuous ongoing quality control

• Communications Management - How project communications will be handled to ensure all project
stakeholders are informed… This process is necessary to ensure timely and appropriate generation, collection,
dissemination, and storage of project information eg. Information Distribution, Performance Reporting, defining
the schedule for the Project Meetings

• Risk Management - Risk Management plan to have all project stakeholders in agreement on how project risks
will be handled (aversion, mitigation or assumption)

• Change Control Management - Define how changes to the project scope will be executed…Formal change
control is required for all of the following
1. Scope Change
2. Schedule changes
3. Technical Specification Changes
4. Training Changes

2. Write in detail about phases of project life cycle.

Initiation Phase -
• Define the need
• Return on Investment Analysis
• Make or Buy Decision
• Budget Development

Definition Phase -
• Determine goals, scope and project constraints
• Identify members and their roles
• Define communication channels, methods, frequency and content
• Risk management planning
Planning Phase -
• Resource Planning
• Work Breakdown Structure
• Project Schedule Development
• Quality Assurance Plan

Implementation Phase -
• Execute project plan and accomplish project goals
• Training Plan
• System Build
• Quality Assurance

Deployment phase -
• User Training
• Production Review
• Start Using

Closing Phase -
• Contractual Closeout
• Post Production Transition
• Lessons Learned

3. Explain in detail about the difference Between Project management and formal Management

4. Write in detail about the roles and responsibilities of a Project Manager

(Key points)
Process Responsibilities
The project manager normally is responsible for defining and planning the project. This results in the completion of a
 Project Definition and a project workplan. Once the project starts, the project manager must successfully manage and
control the work, including:
Identifying, tracking managing and resolving project issues
Proactively disseminating project information to all stakeholders
Identifying, managing and mitigating project risk
Ensuring that the solution is of acceptable quality
Proactively managing scope to ensure that only what was agreed to is delivered, unless changes are approved through
scope management
Defining and collecting metrics to give a sense for how the project is progressing and whether the deliverables
produced are acceptable
Managing the overall workplan to ensure work is assigned and completed on time and within budget
To manage the project management processes, a person should be well organized, have great follow-up skills, be
process oriented, be able to multi-task, have a logical thought process, be able to determine root causes, have good
analytical ability, be a good estimator and budget manager, and have good self-discipline.
People Responsibilities
In addition to process skills, a project manager must have good people management skills. This includes:
Having the discipline and general management skills to make sure that people follow the standard processes and
procedures
Establishing leadership skills to get the team to willingly follow your direction. Leadership is about communicating a
vision and getting the team to accept it and strive to get there with you.
Setting reasonable, challenging and clear expectations for people, and holding them accountable for meeting the
expectations. This includes providing good performance feedback to team members
Team building skills so that the people work together well, and feel motivated to work hard for the sake of the project
and their other team members. The larger your team and the longer the project, the more important it is to have good
team-building skills.
Proactive verbal and written communicator skills, including good, active listening skills.
Multiple Roles
Depending on the size and complexity of the project, the project manager may take on other responsibilities in
addition to managing the work. For instance, the project manager may assist with gathering business requirements. Or
they may help design a database management system or they may write some of the project documentation. Project
management is a particular role that a person fills, even if the person who is the project manager is working in other
roles as well.

5. Write short note on Project Overruns

Project cost overrun, is a situation that occurs when the project's actual cost exceeds the initial budget. This
causes a deficit in the project's financial needs and can slow or halt a project entirely.
Project Overrun (also called a cost increase or budget overrun) means a budget deficit that occurs in a result of
unexpected costs – sometimes an organization may incur some additional expenses that weren’t allowed for the
budget on the planning stage, hence budgeted limits appear violated and this project begins to lose its yield.
Project overrun may occur due to:
• Underestimation of project costs, which may happen because of adherence to only an optimistic scenario when
planning, while not paying due attention to pessimistic factors;
• Overlooking project risks (their occurrence) or understating their severity, which can decrease project viability
and profitability, or even can collapse its schedule
Cost overrun is an unexpected change in the project budget that ends up increasing the total project cost.
Teams need to make sure that they have a clear view of project progress to catch any signs of cost overrun. Here are a few
ways to spot possible budget overruns quickly:

Lack of a detailed project budget outline

No contingency plan in effect, leading to unexpected costs spiraling out of control
Not using any tools to track project spending
Incomplete resource utilization plan
Not tying costs to specific tasks or making a work breakdown structure
Failure to review similar past projects and historical data
Not documenting project deliverables, leading to unexplained scope creep
 6. Write short note on Cost Benefit analysis technique (Incomplete)

A cost-benefit analysis (CBA) is a tool to evaluate the costs vs. benefits in an important business proposal. A formal CBA lists all
project expenses and tangible benefits, then calculates the return on investment (ROI), internal rate of return (IRR), net present
value (NPV), and payback period. Then, the difference between the costs and the benefits from taking action is calculated. A
general rule of thumb is the costs should be less than 50% of the benefits, and the payback period shouldn't exceed a year. Some
people also refer to cost-benefit analysis as benefit-cost analysis (BCA).

cost-benefit analysis (CBA) is a business process that adds up all the benefits of an
initiative (i.e. a project) and then subtracts the associated costs.

The purpose of the cost-benefit analysis is to simplify and gain an easy insight into the successful
execution of a proposed project.

This analysis outlines the strengths and weaknesses of a project. Conducting a cost-benefit

analysis provides the most accurate estimate of what the project development cost will be. Check
the cost versus the benefits aspect of the proposed project. Examine the best approach to achieve
your goal while maximizing benefits. Filter out undesirable metrics. Weigh your decisions as
objectively as possible. This evaluation is key to the decision-making process of the potential project.

Process of cost-benefit analysis-

Step 1: Define Project Goals & Objectives

Step 2: List Down Alternative Scenarios

Step 3: Identify & Schedule Benefits & Costs

Step 4: Identify Project Stakeholders

Step 5: Track Measurement Metrics

Step 6: Convert to Common Currency

Step 7: Measure Net Present Value (NPV)

Step 8: Perform Sensitivity Analysis

Check the cost versus the benefits aspect of the proposed project. Examine the best approach to
achieve your goal while maximizing benefits. Filter out undesirable metrics. Weigh your decisions as
objectively as possible. This evaluation is key to the decision-making process of the potential project.
 7. Explain Feasibility reports and its Importance

We have looked at the six broad phases of capital budgeting and examined the key facets
of project analysis. The feasibility study is concerned with the first four phases of capital
budgeting, viz., planning, analysis, selection (evaluation), and financing, and involves
market, technical, financial, economic, and ecological analysis.

OBJECTIVES OF CAPITAL BUDGETING

Financial theory, in general, rests on the premise that the goal of financial management
(which subsumes investment decision making) should be to maximise the present wealth
of the firm's equity shareholders. For a firm whose equity shares are actively traded on
the stock market, the wealth of the equity shareholders is reflected in the market value of
maximise the market value of equity shares.
The pursuit of the welfare of equity shareholders is justified on the grounds that it
contributes to an efficient allocation of capital in the economy. The bases for allocation of
savings in the economy are expected return and risk. Since equity share prices are based on
expected return and risk, efforts to maximise equity share prices would result in an efti-
dent allocation of resources. Another justification may be provided for the goal of share-
holder wealth maximisation. Equity shareholders provide the venture (risk) capital re-
quired to start a business firm and appoint the management of the firm indirectly through
the board of directors. Hence, it behooves on corporate managements to promote the
welfare of equity shareholders.

8. Explain in detail types of organizational Structure in Project management

The three main types of organizational structure used in project management are:

1. Matrix-Type Organization
• A mix of functional and project organization structures.
• Used in companies that work on multiple projects at a time.
• Provides project and customer focus.
• Retains functional expertise.
• Individuals can be assigned to various types of projects.
2. Functional Organization:
3. Pure Project organization
4.1.1 Task Force Organization:
Chief
Executive

Project Engineering Procurement Construction

Task force Task force

Engg construction
Central Central
Procurement Construction

Task force Central Engineering

procurement

Advantages:
Project management dominating which receive attention over time and cost constraints.
Project moves very fast.
Disadvantages and limitations:
One cannot be too sure about the quality objective.
For complex technology and for large project this may become ineffective.
Due to shortage of specialists sometimes creation of task force is difficult.

9. How the profi tability of project is calculated .write the steps

The economic viability of project can be assessed by the following methods.

1. Pay back Period (PBP)
It is the time required to recover the original investment through incomes from the project.
PBP = (Original investment/Annual income ).No. of years
 Annual income = Gross income – Total operating cost excluding depreciation.
If annual income is not uniform then pay back period will be counted as the number of years, over which,
the income accumulated together will equal the original money invested.

2. Return on investment (ROI)

Return on investment (ROI) is a measure that investigates the amount of additional profits produced due to a
certain investment.
Businesses use this calculation to compare different scenarios for investments to see which would produce
the greatest profit and benefit for the company.
However, this calculation can also be used to analyse the best scenario for other forms of investment, such as
if someone wishes to purchase a car, buy a computer, pay for college, etc.

3. Net Present Value (NPV)

Net present value (NPV) is a method used to determine the current value of all future cash flows generated by
a project, including the initial capital investment. It is widely used in capital budgeting to establish which
projects are likely to turn the greatest profit.

 Net present value (NPV) is used to calculate today’s value of a future stream of payments.
 If the NPV of a project or investment is positive, it means that the discounted present value of all future
cash flows related to that project or investment will be positive, and therefore attractive.
 To calculate NPV, you need to estimate future cash flows for each period and determine the correct
discount rate.

4. Internal Rate of Return (IRR)

The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential
investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a
discounted cash flow analysis.

Generally speaking, the higher an internal rate of return, the more desirable an investment is to undertake.
IRR is uniform for investments of varying types and, as such, can be used to rank multiple prospective
investments or projects on a relatively even basis. In general, when comparing investment options with other
similar characteristics, the investment with the highest IRR probably would be considered the best.

5. Benefit Cost Ratio (BCR)

A benefit-cost ratio (BCR) is a ratio used in a cost-benefit analysis to summarize the overall relationship
between the relative costs and benefits of a proposed project. BCR can be expressed in monetary or qualitative
terms. If a project has a BCR greater than 1.0, the project is expected to deliver a positive net present value to a
firm and its investors.
A benefit-cost ratio (BCR) is an indicator showing the relationship between the relative costs and benefits of a
proposed project, expressed in monetary or qualitative terms.
If a project has a BCR greater than 1.0, the project is expected to deliver a positive net present value to a firm
and its investors.
If a project's BCR is less than 1.0, the project's costs outweigh the benefits, and it should not be considered.

10. List out various types of clearances

An entrepreneur has to obtain several clearances or permission depending upon the nature of his unit and
products manufactured
Regulatory Or Taxation Clearances
Registration under Sales Tax Act - Commercial Tax officer of area concerned
Registration under Central Excise Act - Collector of Central Excise or his nominee for area
Payment of Income Tax - ITO of the area concerned
Registration of Partnership deed - Inspector General of area concerned
Calibration of weights & measures - Weights and Measures Inspector of State
Power Connection - Designated Officer of State Electricity Board
Employee strength exceeding 10 with power connection or 20 without power - Chief Inspector of Factories
Environment And Pollution Related Clearances

Pollution Control - State Pollution Control Board. A No Objection Certificate (NOC) should be obtained from
the State Pollution Control Board before commencement of construction activity. In case the industry is of the
highly polluting category, a full-fledged or rapid Environmental Impact Assessment(EIA) study has to be carried
out and submitted to the State Pollution Control Board for approval, after which the construction can
commence.
Industries Requiring Water and Affecting Effluent Disposal - State Pollution Control Board No Objection
Certificate (NOC) should be obtained from the State Pollution Control Board before commencement of
construction activity.
For units functioning outside Industrial Area - Permission from Municipal Corporation/ Municipality/ Panchyat.
In case private agricultural land is purchased for the project, the land would have to be rezoned as industrial
zone. Permission to convert such agricultural land to industrial area would have to be obtained before the actual
start of the construction from the local office of the Directorate of Town & Country Planning.
Registration and Licensing of a Boiler - Chief Inspector of Boiler. The safety clearance of the Chief Electrical
Inspector and the Chief Inspector of Boilers are required before commencing operations with electrical and
pressure vessels(boilers) respectively.
For registration as a 100% export oriented unit (EOU) which can enjoy many additional concessions, the
clearance of the Development Commissioner of the Export Processing Zone (EPZ) would be required. If the
company wishes to offer equity shares to the public, the clearance of the Stock Exchange Board of India (SEBI)
has to be taken.

Product Specific Clearances

 Establishing a Printing Press - District Magistrate

 License for Cold Storage Construction - Designated Official in State
 Pesticides - Central/State Agricultural Department - Ministry of Agriculture
 Drugs and Pharmaceuticals - Drug license from State Drug Controller
 Safety Matches/ Fireworks - License under Explosives Act from Directorate of Explosives, Nagpur
 Household Electrical Appliances - License from Bureau of Indian Standards
 Wood Working Industry within 8 km from forest - District Forest Officer
 Milk Processing & Milk products manufacturing units - Approval under Milk and Milk Products Order from
State Agricultural/ Food Processing Industries Department above a designated capacity.