Management and

Entrepreneurship
(15ES51)
MODULE- 5
Project Management
By
Prof. JIJESH J.J
Department of E&CE
SVCE, Bangalore
Project
 An entrepreneur takes numerous decisions to convert his
business idea into a running concern. His/ Her decision
making process starts with project/product selection. The
project selection is the first corner stone to be laid down in
setting up an enterprise.
 The success or failure of an enterprise largely depends upon
the project.
 A project has typically has a distinct mission that it is
designed to achieve and clear termination point, the
achievement of the mission.
 As a whole complex of activities involved in using resources
to gain benefits.
 Project can differ in their size, nature of objectives, time
duration and complexity.
A Project: Search for a Business idea
Introduction
 Industrialization is widely recognized not only as
one of the important means to users in socio-
economic transformation and achieving self-
sufficiency but also for the accelerated
development of agriculture, transport, trade,
service and other potential sectors through
forward and backward linkages.
 It is a process which accelerates economic
growth.
 Real progress must ultimately depend on
industrialization.
 Choosing an Idea
 Establishing as a successful entrepreneur depends, in part, upon
choosing a good idea.
 Idea must not only be good for the market, but good for the project and
good for the entrepreneurs.
 It should be manageable by you without much dependence on others.
 The idea should give satisfaction results.
 As an entrepreneur develop more idea in parallel until one emerges so
appropriate that it begins to dominate.
 To adopt one idea at a time had some disadvantage because constantly
receiving random information from what we read and from people talk
to. Also if pursuing a single idea by commitment then we may put our
self in tight corner.
 Choosing an idea is difficult and the entrepreneur has to weigh
objectively his intrinsic capabilities in finalizing an idea.
 In the idea stage, suggestions for new products are obtained from all
possible sources: customers, competitors, R&D, distributors and
company employees.
 Established objectives and defined areas provide a base for
development.
 Selection of product
 At this stage, the entrepreneur is concerned with identifying a particular
product that hopes to market successfully at a reasonable profit.
 The selection of the right product is very essential for being successful in
the business.
 The product should be marketed at a reasonable profit for the business
growth.
 Various factors influence the entrepreneur in selecting the right product are:
◦ Whether import restrictions or the items selected are banned items would
considerably weigh favorably or otherwise in the selection of the products.
◦ If the entrepreneur himself or his partners have gathered, substantial amount
of experience in the manufacture and marketing of certain products , then
selection of such product is advantage.
◦ The selection of product will also be based upon the degree of profitability
that generally rules in the market.
◦ Many concessions are available from the government for producing a
product which serves as an import substitute or even essential item.
◦ May products belongs to the priority industries or small-scale sector.
◦ The market for the product also plays a significant role in the selection of
the product.
◦ Certain products are permitted for production only if the license is obtained
from the appropriate authority while others belongs to the de-license
category.
◦ Many products enjoy specific advantages in regard to the scale of
manufacture or carry location advantage.
◦ If a product belongs to an ancillary unit and serves as a major component for
the parent industry, it provides a ready demand.

Product-Planning and Development Process

 The Adoption process
 An adoption process is a process bringing about a change in a buyer’s
attitude and perception.
 Customer adoption process covers the steps that a consumer usually
goes through in determining the feasibility of buying new products:
◦ Awareness: A person learns about a new idea, product or practice. He has general
information about it. He has however, limited knowledge about special qualities,
usefulness, performance, etc.
◦ Interest: He now develops an interest in the innovation. He demands more detailed
information about the new product, its utility, its performance, and so on. He listens to
radio, TV ads, reads press ads, and learns more about it from others.
◦ Evaluation: The accumulated information and evidences are weighed by the person in
order to assess the basic soundness or worth of the innovation. He tries to weight the
value of the new product and the extent to which it is good for him.
◦ Trial: The person now is ready to put the idea into practice. Competent personal
assistance is necessary to put the innovation to use.
◦ Adoption: It is the final stage in which he makes a decision to buy. The person now
decides to adopt the new idea, product or practice for continued use. If post purchase
experience is good, he becomes a repeat buyer and a talking advertisement of the
innovation.
 Product Innovation
 Business enterprise must have two basic
functions: marketing and innovation
 Innovation alone assures growth and survival
while customers orientation assures survival.
The evolution of new products is a practical
business function and it is described as a process
product management.
 The process of product planning and
development is always adopted for product
innovation.

 Fig 16.2
 Product Planning and Development
Strategy
 Marketing have four alternative ways of bringing about an increase in
sales and profit:
 Market penetration: It involves the expansion of sales of the existing
products in the existing markets by selling more to present customers or
gaining new customers in the existing markets. The firm can market its
present products to existing markets. May have a temporary price cut to
raise the volume of sales and penetrate the market in a big way.
Penetrating the current market for higher usage rate is a conservative
choice.
 Market development: In market development, a present product
is introduced to a new market or segment. Market development
is the creation of a new market by discovering new applications
for existing goods. This is another alternative to expand market
opportunity, prolong product life cycles, profitability and
survival.

 Product development: Product development occurs when a firm

introduces new products into market in which it is well
established. Product development is the introduction of new
products in the present market. The firms by offering new or
improved products to present markets can satisfy the present
customers better and stand assured of their loyalty.

 Product diversification: Diversification occurs when a firm

seeks to enter a new market with a completely new product.
Such a firm has neither market enterprise nor product
knowledge. The firm may adopt a daring strategy by creating
new products for entirely new markets. The innovations are
introduced for the first time in the new market.
 Product Planning and Development
Process
 There are seven steps in planning and development of a new product.
 New Product Ideas: We visualize the detailed features of a model
product. Ideas may be contributed by scientists, professional designers,
rivals, customers. Sales force, top management, dealers, etc. We may
need many ideas to get one commercially viable product.
 Idea Screening: We have to evaluate all ideas and inventions. Poor or
bad ideas are dropped and through the process of elimination, only the
most promising and profitable ideas are picked up for further detailed
investigation and research.
 Concept Development and Testing: All ideas that survive the process of
screening will be studied in detail. They will be developed into mature
product concepts. We will have a precise description of the ideas and
features of the proposed product. We can incorporate customer
preference also.
 Business Analysis: Once the best product concept is picked up, it will
be subjected to rigorous scrutiny to evaluate its market potential, capital
investment, rate of return on capital, etc. Business analysis is a
combination of marketing research, cost benefit analysis and
assessment of competition. It eill prove the economic prospects of the
new product concept.
 Product Development Programme: We have three steps in
this stage when a paper idea is duly converted into a
physical product.
◦ Prototype development, giving a visual image of the
product
◦ Consumer testing of the model or prototype
◦ Branding, packaging and labeling.
 Test Marketing: The entire product marketing programme
is tried out for the first time in a small number of well-
selected test markets. Test marketing is necessary to find
out the viability of a full marketing programme for
national distribution. Customer reactions can be tested
under normal market conditions.
 Commercialization: Once the test marketing gives the
green signal for the product with or without expected
modifications, the company can proceed to finalize all
features of the product. Mass production will start and all
distribution channels will be duly organized. The product
is now born and will start the life cycle.
Concepts of Projects and Classification
 Introduction :
 The project is an important groundwork of an enterprise and
is also very crucial to the entrepreneur. Project is speculative
imagination; a scheme of something to be done; a proposal
for an undertaking. Two important aspects have to be borne
in mind ie. A scheme and speculative imagination.
 Meaning of Projects:
 The smallest unit of investment activity to be considered in
the case of programming.
 It may be any item of investment activity which can
separately be evaluated.
 The whole complex of activities involved in using resources
to gain benefits.
 A project may be defined as a scientifically evolved work
plan devised to achieve a specific objective with a specified
period of time. The three basic attributes are a course of
action, specific objective and defined time perspective.
 A project is a productive activity, which can be analyzed appraised and
monitored independently.
 A project has specific objective in terms of a geographic location,
specific starting and end point
 Serve the target population by achieving good returns on investment.
 Has an organization to implement it.

Basic Components of a project

Characteristics of a Project
 The four basic characteristics are:
◦ Investment pattern
◦ Benefits or gains
◦ Time limit
◦ Location
 The project is an economic activity with well-defined
objectives and having a specific beginning and end.
 A well planned project includes a correct consideration
of alternatives, identification of key issues, broad
participation, compactness and enforceability. It should
be neat, clear cut and specific.
 A project will involve allocation and consumption of
resources, on the one hand and generation of resources,
goods, or services, on the other.
Project Levels
 The three levels are:
 At the national level, where national investment plans
are formulated, priorities among sectors are
established, and the macroeconomic framework of
policies for economic growth is put in place.
 At the sector level, where priorities for investment
within each sector are determined and the issues and
problems affecting the development of the sector are
addressed.
 At the project level, where individual projects are
identified, prepared and implemented and attention is
given to their technical, economical, financial, social,
institutional and other dimensions.
 Features and Phases of Project management
 Project Features
◦ Simplicity and clarity
◦ Availability of attractive technology to promote the project.
◦ Integration of basic production services, especially those of input supply,
credit, marketing and extension.
◦ Compatibility of the project within the existing administrative mix.
 Phases of Project management
◦ An entrepreneur has to consider carefully various factors from the start to
the finish in converting profitable opportunities into realities.
◦ The process of project management may be divided into six broad phases –
identification, formulation, appraisal, selection, implementation and
management of projects.
 PHASES OF A PROJECT
S.no. PHASE REQUIREMENTS
Selection of a project after a careful scanning of the
environment of investment opportunity and its likely
1 Identification return
Translation of the idea into a concrete project with
scrutiny of its important preliminary aspects.
2 Formulation Preparation of feasibility reports.
Searching scrutiny, analysis and evaluation of market
technical, financial and economic variables. Assessing
the profitability, return investment and break even
3 Appraisal points.
Rational choice of a project in the light of objectives
4 Selection and inherent constraints.
5 Implementation Expeditious completion within the allocated resources
Judicious operation of a project / enterprise with
objectives like maximisation of net present value,
maximisation of return and increase and increase in
6 Management the rate of return of low risk.
Project Management Processes
◦ Operational Management Process
 Planning
 Executing
 Controlling
◦ Additional management Process
 Initiating
 Closing
◦ Technical Processes
Project Identification
Feasibility Report
 Before starting a small-scale industry, it is mandatory for
entrepreneurs to consult the Director of Industries Service Institute
(SISI).
 The SISI guides entrepreneurs as to the type of industry to start,
where to start and how to start it.
 The SISI help them odd select the various items of manufacture
which have scope for development in different areas.
 It suggests the lines on which project report for the proposed units
should be prepared for the consideration of various financial
institution with a view to securing financial assistance.
 Similarly, technical guidance in the selection of proper raw
materials and type of machinery is also provided.
 The SISI gives valuable information on various incentives
available to the small-scale industries from various organizations.
 Project Feasibility Analysis
 A project feasibility analysis includes market analysis, technical analysis,
financial analysis and social profitability analysis.
 The starting point of a project analysis is the establishment of objectives to be
attained. The next stage is the pre – selection stage – the advisability of having an
in depth study. The analysis stage consists mainly of three factors – market,
technical and financial analysis. A market analysis is a method of screening
project ideas as well as means of evaluating a project’s feasibility in terms of the
market. A market analysis should cover the following areas:
◦ A brief market description including the market are, methods of transportation,
existing rates of transport, channels of distribution and general trade practices.
◦ An analysis of past and present demand, determination of quantity value of
consumption and identification of the major consumers of the product.
◦ An analysis of past and present supply, broken down as source (whether imported
or domestic) as well as information to assist in determining the competitive
position of the product such as selling process quality and marketing practices of
competitors.
 The technical analysis of a project feasibility study establishes whether project is
technically feasible or not, and whether if offers basis for the estimation of costs.
Moreover it provides an opportunity for a consideration of the effect of various
technical alternatives on employment, ecology, infrastructure demands, capital
services, support of other industries, balance of payments and other factors. A
technical analysis should review the techniques or processes to be applied and
should incorporate.
◦ A description of the product including specification relating to its physical,
mechanical and chemical properties, as well as the uses of the product.
•A description of the selected manufacturing process, showing detailed flow charts and
presenting alternative processes which may have been considered and the justification
for the adoption of the selected process.
•A determination of the plant size and production schedule which includes the expected
volume for a given time period on the basis of start up and technical factors.
•Selection of machinery and equipment including specifications, equipment to be
purchased and its origin, quotations from suppliers, delivery dates, terms of payment
and a comparative analysis of alternatives in terms of cost reliability performance and
spare parts availability.
•An identification of plant’s location and as assessment of its desirability in terms of its
distance from raw material sources and markets. For a new project this part may
include a comparative study of different sites, indicating the advantages and
disadvantages of each.
•A design of the plant layout and an estimate of the cost of the erection of the proposed
buildings and land improvements.
•A study of the availability of raw materials and utilizes including a description of
physical and chemical properties, quantities needed, current and prospective costs,
terms of payment, location of sources of supply and continuity of supply.
•An estimate of labour requirements, including a detailed break – down of direct and
indirect labour requirements and the supervision required for the manufacture of the
product.
•A determination of the type and quantity of waste to be disposed of together with a
description of the waste disposal method, its costs and the necessary clearance from
proper authorities.
•An estimate of the production cost of the product.
 In the financial analysis of this feasibility study, the emphasis is
on the preparation of financial statements, so that the project
may be evaluated in terms of the different measures of
commercial profitability followed by the magnitude of
financing which requires the assembly of the market and also
technical cost estimated in various proforma statements. If it is
necessary to have more information on which to base an
investment decision a sensitivity analysis or possibly a risk
analysis may be conducted. This financial analysis should
include:
◦ For projects that involve new companies, statements of total project
cost, for initial capital requirements and cash flows relative to the
project schedule. For all projects financial projections for future
time periods including income statements, cash flows and balance
sheets.
◦ For all projects supporting schedules for financial projection, stating
the assumption made as to the collection period of sales, inventory
levels, payment period of purchases and expenses and the element
of production cost, selling, administrative and financial expenses.
◦ For all projects a financial analysis showing returns on investments
returns on equity , break even volume and price analysis.
◦ For all projects, if necessary a sensitivity analysis to identify which
have a substantial impact on profitability or possibly a risk analysis.
 For the small entrepreneur, the studies conducted during the
analysis stage of the project provide the material for an
assessment. If positive results are obtained, the entrepreneur in
seeking finance, will want to prepare an investment proposal.
The planners or government officials, however having obtained
positive conclusions from the economic feasibility study will
want to evaluate the element of social profitability.
 The purpose of the investment or loan application is to
convince a lender ( financial institution) that the project is a
desirable investment; that it not only possesses the potential for
profit but that the proposed management team has the
capability to achieve the potential. The investment proposal
normally contains:
◦ General information on the product, company history, the nature of
the industry and the reputation and qualifications of the existing or
proposed management.
◦ A description of the project, which usually consists of extracts from
economic feasibility selected manufacturing methods ( with detailed
indication of the cost of equipment and operational expenses) and a
financial statement.
◦ Miscellaneous information such as the steps taken for the
implementation of the project and the qualifications of the technical
partners envisaged or selected.
 Project Formulation
 Meaning
 Project formulation is defined as taking a first a look carefully and
critically at a project idea by an entrepreneur to build up an all round
beneficial to project after carefully weighing its various components.
 It is formulated by the entrepreneur with the assistance of specialists or
consultants.
 The aim of project formulation is to achieve the project objectives with
the minimum expenditure and adequate resources.
 In other words it is to derive maximum benefits from minimum
expenses in a short span of time.

Fig: Phases of Project Formulation

Steps in Project formulation
 The objectives may be social, economic, or a
combination of both and they can be defined
under the following categories:
◦ General objectives
◦ Operational objectives
 A general objective merely states in broad terms
the achievements expected whereas an
operational objective specifically mentions results
expected from the implementation of the project
or scheme.
 The definition of objective in clear terms helps in
quantifying physical, financial, human and other
resources requirements.
Sequential Stages of Project Formulation
 The process of project development has been categorized into seven
distinct and sequential stages.They are:
 Feasibility analysis: This is the very first stage in project formulation.
At this stage the project idea is examined from the point of view of
whether to go in for a detailed investment proposal or not. As project
for a detailed investment proposal or not. As project idea is examined in
the context of internal and external constraints three alternatives could
be considered. First the project idea seems to be feasible, second the
project idea is not a feasible one and third, unable to arrive at a
conclusion for want of adequate data. If it is feasible we proceed to the
second step if not feasible we abandon the idea and if sufficient data are
not available, we make more efforts to collect the required data and
design development.
 Techno – economic analysis: In this step estimation of project
demand potential and choice of optimal technology is made.
 Project Design and Network analysis: This important step defines
individual activities which constitute the project and their inter –
relationship with each other. The sequence of events of the project is
presented. A detailed work plan of the project is prepared with time
allocation for each activity and presented in a network drawing. Project
design is the heart of the project entity. This paves the way for detailed
identification and qualification of the project inputs, an essential step in
the development of the financial and cost – benefit profile of the project.
 Input analysis: The step process the input requirements during the
construction of the project and also during the operation of the project.
In the earlier step a project was divided into several activities. Now it is
better to see the inputs required for each activity and sum it up to get
the total input requirements on qualitative and quantitative terms. Inputs
include materials, human resources.
 Financial analysis: This stage mainly involves estimating the project
costs, estimating its operating costs and fund requirements. Financial
analysis also help in comparing various project proposals on a common
scale, thereby aiding the decision maker. Some of the analytical tools used
in financial analysis are discounted cash flow, cost – volume – profit
relationship and ratio analysis.
 Social cost benefit analysis: When we talk of cost benefit analysis we
not only take in to account the apparent direct costs and direct benefits
of the project but also the costs which all entities connected with the
project have to bear and the benefits which will be enjoyed by all such
entities.
 Pre – investment analysis: The project proposal gets a formal and final
shape at this stage. All the results obtained in the above steps are
consolidated and various conclusions arrived at to present a clear
picture. At his stage, the project is presented in such a way that the
project – sponsoring body, the project – implementing body and the
external consulting agencies are able to decide whether to accept the
proposal or not.
Project Evaluation
 With a view to evaluate the project, the
social cost-benefit analysis is used.
 All cost and benefits can be classified into
three categories as:
◦ Primary costs and benefits
◦ Secondary costs and benefits
◦ Tertiary costs and benefits.
Project Design and Network Analysis:
Introduction
 The execution of a project follows a definite path of planning,
scheduling and controlling. The first and the foremost aspect of a project is
the project design.
 It defines the individual activities which go into the corpus of the
project and their interrelationship with each other.
 Project design enables to identify the flow of event which must take
place for the successful implementation of the project.
 Network techniques help the management of an organization in
performing these functions efficiently and effectively.

Fig: Relation between Project Design and Network

 Importance of Network Analysis
 The network analysis has the potential to unfolding unknown snags involved
in project estimates which, when detected, may provide management not only
to improve on the ongoing project estimates but also to take serious lesson for
future applications.
◦ The whole project should be considered with reference to the sequence of
activities and events.
◦ This would also require that the events should be thought of in different
streams of operations and their relationship understood clearly.
◦ The whole project may be put on one network while different segments of
the project may be detailed out in separate networks for final integration in
the overall network.
◦ The time estimates may be made taking into view two discrete aspects: one
projects in which previous experience does not exist and two, time
estimates may be deterministic.
◦ Cost estimates would depend on the project time estimates and the changes
in the prices of different factors of production.
◦ The physical progress of the projects, individuality and simultaneity of
events, jobs farmed out snags in different areas of project work would all
require adequate notice and application of correctives in proper time.
Origin of PERT and CPM
 The Programme Evaluation and Review Techniques
(PERT) and Critical Path Method (CPM) techniques
were developed in U.S. independently, while CPM
came into focus about 1957 as an offshoot of
collaboration between Du Pont and Remington Rand.
 The emphasis was on the trade-off between the cost of
the project and its overall completion time.
 PERT, which was developed about 1958 as a result of
collaboration between the Operational Research
Division of the United States Navy and a firm of
business consultants.
 The emphasis was on completing the program in the
shortest possible time. In addition PERT had the
ability to cope with uncertain activity completion
times.
 Network
 A network comprises a set of exponents connected with
each other in a sequential relationship with each step till the
completion of a project.
 Network analysis is a system which plans both large and
small projects by analyzing the project activities.
 Projects are broken down into simple activities, which are
then arranged in a logical sequence.
 It is also decided as to which task will be performed
simultaneously and which other sequentially.

Fig: Network Design

 Network Techniques
 Several techniques of project scheduling and control
such as Bar charts, Programme Evaluation and
Review Techniques (PERT) and Critical path method
(CPM) are used.
 Of these CPM have some to be widely used in
project management as they are very useful in the
basic management functions of planning, scheduling
and control.
 These techniques can be applied in diverse kinds of
projects like construction of a projects, scheduling
ship construction and repairs, end of the month
closing of accounts, large, research projects etc.
 Need for Network Techniques
 Network analysis helps in designing, planning, coordinating, controlling
and decision-making in order to accomplish the project economically in
the minimum available time with the limited available resources. The
conventional planning method like bar chart had limitations the
following disadvantages are:
◦ A bar chart becomes too cumbersome while dealing with big and complex
projects.
◦ A bar chart does not point out which tasks should be given priority as regards
resources.
◦ The effect of changes in schedule cannot be evaluated with the help of a bar
chart.
◦ A bar chart neither satisfactorily tells the time at which the activates begin and
end nor does it indicate tolerances in activity timing.
 PERT is one of the management techniques which is considerably more
useful.
 It works a method of minimizing production delays, interruptions, and
conflicts; of co-ordinating and synchronizing the various parts of the
overall job; and of expediting of projects.
 PERT is concerned with two concepts:
◦ Events: An event is a specific accomplishment that occurs at a recognizable
point of time and does not call for either the need of time or resources.
◦ Activities: An activity is the work required to complete a specific event.
 Steps in PERT
 The first step in the development of a PERT network is the establishment
of objectives.
 The second step is to schedule work breakdown in great detail.
 In the third step both technical and managerial persons should begin to
work together.
 The fourth step is that each person who participants in the application of
PERT to the control of the project should have some basic familiarity with
the general nature of the work and with the ultimate objective desired.
 In PERT, time is the basic measure. It is usually expressed in calendar
weeks the project should be completed within stipulated optimistic time.
 In order to arrive at the most reliable estimate of time, three time
estimates are usually employed under this technique as given below:
◦ The optimistic time: It is the shortest time possible if everything goes
perfectly well with no complications, the chance of this optimum actually
occurring might be one in a hundred.
◦ The pessimistic time: It is longest time conceivable, it includes time for
unusual delays and thus the chance of its happening might be only one in a
hundred;
◦ The most likely time: It would be the best estimate of what normally would
occur.
 The difference in these three times give a measure of the relative
uncertainty involved in the activity.
 ADVANTAGES OF PERT
◦ This technique gives the management the ability to plan the
best possible use of resource to achieve a given goal within
the overall time and cost limitations.
◦ It helps management to handle the uncertainties involved in
programmes where no standard time data of the Taylor – Gantt
variety are available.
◦ Use of this technique for active control of project requires
frequent updating and revising the PERT calculations and this
proves quite a costly affair.

 LIMITATIONS OF PERT
◦ The basic difficulty comes in the way of time estimates for the
completion of activities because activities are of non –
repetitive type.
◦ This technique does not consider resources required at various
stages of the project.
◦ Use of this technique for active control of a project requires
updating and revising the PERT calculations and this proves
quite a costly affair.
 CRITICAL PATH METHODS (CPM)
 CPM was developed in 1956 at the E.I. Dupont Nemours & Co. U.S.A in
connection with the Periodic overhauling and maintenance of a chemical plant. It
resulted in reducing the shut down period from 130 hours to 90 hours and saving
hours and saving the company $ 1 million. CPM has two time cost estimates for
each activity ( one time cost estimates for the normal situation and the other
estimate for the crash situation) but does not incorporate any statistical analysis in
determining such time estimates. CPM operates on the assumptions that there is a
precise known time that each activity in the project will take.
 ADVANTAGES OF CPM
◦ It helps in ascertaining the time schedule.
◦ With its aid, control by the management is made easy.
◦ It makes better and detailed planning possible.
◦ It proves a standard method for communicating project plans, schedules time and
cost performance.
◦ It identifies most critical elements and thus more attention can be paid to these activities.
 LIMITATIONS OF CPM
◦ CPM fails to incorporate statistical analysis in determining the time estimates.
◦ It operates on the assumption that there is a precise known time that each activity in
the project will take but his may not be true in actual life.
◦ It is difficult to use CPM as a controlling device for the simple reason that one must
repeat the entire evaluation of the project each time when changes are introduced
into the network. It may be remembered that CPM was initially developed as a
static planning model and not as a dynamic controlling device .
 Differences between PERT and CPM
PERT CPM
The origin is military (Naval) The origin is industrial.
It is an event-oriented approach. It is an activity-oriented system.
There is allowance for uncertainty. No such allowance.
It has three time estimates. There is only one single estimate of time
and the emphasis is on cost.
It is a probabilistic model with It is a deterministic model with well-
uncertainty in activity duration. known activity time based upon past
experience.
It does not demarcate between critical It marks critical activities
and non-critical activities.
It is especially suitable when high It is suitable when reasonable prediction
prediction is required in time estimates. is required.
Time is averaged No averaging of time is involved.
The concept of ‘crashing’ is not applied. The concept of crashing is applied.
It is time - based. It is cost - based.