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Project management

Elective- II
MG University
Mechanical Engineering
Automobile Engineering
S-8

SlipNotes.in

Syllabus

Module 1
Project feasibility Analysis- Marketing, Technical, and financial feasibilities report preparation-case studies.
Module 2
Project Management- nature and scope- PERT and CPM techniques, Estimatestime, cost, resources (man, material, tool).
Module 3
Forecasting Methods- Time series analysis-method pf least square, movingaverage,
curvilinear, correlation analysis.
Module 4
Risk Analysis- r i s k i n e c o n o m i c a n a l y s i s m e a s u r i n g r i s k i n i n v e s t m e n t ; r i s k profiles, decision trees, formulation of
discounted decision trees, simulation.
Module 5
MS Project: (Software Practice)
C r e a t i o n o f t a s k , s e q u e n c i n g o f t a s k , assignment of resources, finding
critical path, ABC activities (discuss), breakingthe activities, colouring techniques, resource
balancing, allocating overtime, usingdifferent calendars (Like 8 or 12 hours
shift, Friday/Sunday holiday,
Special p u b l i c h o l i d a y s e t c ) , c o s t e s t i m a t e s , a s s i g n m e n t o f b l a n k f i e l d s
, c r e a t i o n o f different views on screen.
Reports:
Daily reports for completed activity, lagging activities, overall progress review,
Management high-level reports, individual Departmental reports.
References
1.Corter, Mastering MS Project 2000, BPB Publishers.
2.Harvey Maylor, Project Management, Pearson Education.
3.PrasannaChandra, Project Management, Tata McGraw Hill.

Module 1

PROJECT FEASIBILITY STUDY


Feasibility literally means whether some idea will work or not. It knows before hand
whether there exists a sizeable market for the proposed product/service, what would be
the investment requirements and where to get the funding from, whether and
wherefrom the necessary technical know-how to convert the idea into a tangible
product may be available, and so on. In other words, feasibility study involves an
examination of the operations, financial, HR and marketing aspects of a business on ex
ante (Before the venture comes into existence) basis. Thus, you may simultaneously
read this lesson and the lessons on marketing, finance etc. to have a better idea of the
issues involved. What we present hereunder is a brief outline of the issues impinging
upon the various aspects of the feasibility of the proposed project.
By now, you would have understood that feasibility is a multivariate concept; that is, a
project has to be viable not only in technical terms but also in economic and
commercial terms too. Moreover, there always is a possibility that a project that is
technically possible may not be economically viable. For instance, you can construct a
dust free factory in Rajasthan, but it is more economically sensible to do so in
Chandigarh/ Bangalore. So even as we take up the various aspects of feasibility oneby-one,
it must not mislead into believing that there is a sequence and that there are no
interdependencies.
Examination of the feasibility requires skills that you may fall short of. You may take
the help of the Technical Consultancy Organisations (TCOs) such as HARDICON
(Haryana-Delhi Industrial Consultancy Organisation) towards this purpose. There are
district-wise industrial potential surveys available with the SISIs and DICs that may
serve as a good starting point. You may also make use of the Project Reports
published by the directorate of industries and private consulting firms. Obviously, as
you use these off-the- shelf project reports, you need to re-validate their assumptions
and findings and resist the temptation of jump-starting. Whether you use the already
published project reports or wish to start afresh, you need to examine all the facets of
the feasibility of the proposed project idea, viz., marketing, technical, financial,
economic and legal. 66
MARKET ANALYSIS
A market, whether a place or not, is the arena for interaction among buyers and sellers.
From sellers point of view, market analysis is primarily concerned with the aggregate
demand of the proposed product/service in future and the market share expected to be
captured. Success of the proposed project clearly hinges on the continuing support of
the customers. However, it is very difficult to identify the market for ones
product/service. After all, the whole universe cannot be your market. You have to
carefully segment the market according to some criteria such as geographic scope,
demographic and psychological profile of the potential customers etc. It is a study of
knowing who all comprise your customers, for this you require information on:
- Consumption trends.
- Past and present supply position
- Production possibilities and constraints
- Imports and Exports
-Competition
- Cost structure
- Elasticity of demand

- Consumer behaviour, intentions, motivations, attitudes, preferences and


requirements
- Distribution channels and marketing policies in use
- Administrative, technical and legal constraints impinging on the marketing
of the product
FINANCIAL ANALYSIS
The objective of financial analysis is to ascertain whether the proposed project will be
financially viable in the sense of being able to meet the burden of servicing debt and
whether the proposed project will satisfy the return expectations of those who provide
the capital. While conducting a financial appraisal certain aspects has to be looked into
like:
- Investment outlay and cost of project
- Means of financing
- Projected profitability
- Break- even point
- Cash flows of the project
- Investment worthiness judged in terms of various criteria of merit
- Projected financial position
TECHNICAL ANALYSIS
The issues involved in the assessment of technical analysis of the proposed project
may be classified into those pertaining to inputs, throughputs and outputs.
Input Analysis: Input analysis is mainly concerned with the identification,
quantification and evaluation of project inputs, that is, machinery and 67
materials. You have to ensure that the right kind and quality of inputs would be
available at the right time and cost throughout the life of the project. You have
to enter into long-term contracts with the potential suppliers; in many cases
you have to cultivate your supply sources. When Macdonald entered India,
they developed sustainable sources of supply of potatoes, lettuce and other
ingredients for their burgers. The activities involved in developing and
retaining supply sources are referred to as supply chain management.
Throughput Analysis: It refers to the production/operations that you would
perform on the inputs to add value. Usually, the inputs received would undergo
a process of transformation in several stages of manufacture. Where to locate
the facility, what would be the sequence, what would be the layout, what
would be the quality control measures, etc. are the issues that you would learn
in greater details in subsequent lessons.
Output Analysis: this involves product specification in terms of physical
features- colour, weight, length, breadth, height; functional features; chemical material
properties; as well as standards to be complied with such as BIS, ISI,
and ISO etc.

ECONOMIC ANALYSIS
Economics is the study of costs- and- benefits. In regard to the feasibility of the study
the entrepreneur is concerned whether the capital cost as well as the cost of the product is
justifiable vis--vis the price at which it will sell at the market place.
For

example, technically, silver can be extracted from silver bromide, (a chemical used for
processing the X-ray and photo films); but, the cost of extraction is so high that it would not
be economically feasible to do so. Likewise, until recently cost of harnessing solar power
was prohibitively high. This cost-benefit analysis goes into financial calculations for
profitability analysis that we discussed under financial analysis. At this stage it is also
useful to distinguish between the economic and commercial feasibility; whereas economic
feasibility leads one to the unit cost of the product, commercial feasibility informs whether
enough units would sell.
Apart from the cost-benefit analysis as above, which we also refer to as private cost benefit
analysis, it is also useful to do what is known as social- cost-benefit- analysis (SCBA). For
example, the entrepreneur may be getting subsidized electricity in which case private cost
would be less than social cost. Likewise, exporting units earn precious foreign exchange
resulting into social benefits being more than private earnings. Many a time, a project that
is worthy on SCBA may find greater favour with the support agencies.
ECOLOGICAL ANALYSIS
In recent years, environmental concerns have assumed a great deal of significance
especially for projects, which have significant ecological implications like power
plants and irrigation schemes, and for environment polluting industries (like bulk
drugs, chemicals and leather processing). The concerns that are usually addressed
include the following: 68
- What is the likely damage caused by the project to the environment?
- What is the cost of restoration measures required to ensure that the damage
to the environment is contained within acceptable limits?

Selection
Project is selected based on the following
Criterion

Accept

Reject

Payback period

PBP<target period

PBP>target period

Accounting rate of return

ARR>target rate

ARR<target rate

Net present value

NPV>0

NPV<0

Internal Rate of return

IRR>cost of capital

IRR<cost of capital

Benefit cost ratio

BCR>1

BCR<1

Payback period:-Defined as the length of time required to recover the original investment
through cash flows earned.

Accounting rate of return (Also known as the average rate of return):ARR=Profit after tax/Book value of investment (recorded value of investment)
Profit after tax is the average annual post tax benefit over the life of the project

Net present value


NPV = (Present value of all cash inflows over the life of the project ) (Present value of
cash out flow)
Present value of future cash flows is arrived at by discounting the future
cash inflows at an interest rate equal to the cost of capital.

NPV=

CF1

CF2
.

+
(1+r)1

CFn

(1+r)2

CF0

(1+r)n

Where CF1, CF2,..are the future cash flows occurring at the end of first year, second year
etc.
n = life of the project.

r = discount rate (cost of capital).


CF0 = Present cash outflow.
NPV = 0 indicates that present cash outflow and present value of future cash inflows are
equal.
NPV<1 indicates that the present value of future cash inflows is less than the present cash
outflow.
NPV >1 indicates that the present value of future cash inflow is more than the present
cash outflow.
Internal rate of return (IRR):- IRR is the rate of discount which would equate the present
value of cash outflows to the present value of cash inflows.
Benefit cost ratio (BCR):- Present value of cash inflows/Present value of cash outflows. If
BCR >1 it indicates that the benefits from the project are in excess of the cost incurred
towards the project.

Market Analysis Technical Analysis - Financial Analysis Risk Analysis


Social cost Benefit Analysis.
Introduction to Project Analysis:
Project analysis consists of a number of steps:
1) Market analysis
2) Technical analysis
3) Financial analysis
4) Economical analysis
5) Ecological analysis

Market analysis

Market analysis is done to find the size of the market for the

product and the demand for the project. Market analysis consists of steps like
a) Situational analysis and specification of objectives
b) Collection of secondary information
c) Conduct of market survey
d) Characterization of the market
e) Demand forecasting
f) Market planning
Demand
forecasting

Collection of
secondary
information

Situational analysis
and specification of
objectives

Characterization of
the market

Conduct of
market
survey
a) Situational analysis and specification of objectives

Market
planning

In order to get a feel of the relationship between the product and the market, the
project analyst may informally talk to customers, competitors, middlemen and others in the
industry. Wherever possible, he may look at the experience of the company to study the
preferences and the purchasing power of the customers, actions and strategies of competitors.
After that a formal study of the market and demand has to be conducted. To carry out such a
study, it is necessary to spell out its objectives clearly and comprehensively. A helpful
approach to spell out objectives is to structure them in the form of questions. I.e. The objectives
of the market and demand analysis may be to answer questions like:
What is the demand of the item in the industry?
What price will the customers be willing to pay for the item?

What price and warranty will ensure its acceptance?


b) Collection of secondary information
Secondary information provides the base and starting point for the market and demand
analysis. The sources of secondary information are:1) Census of India A decennial publication of the Government of India. It provides
information on population, demographic characteristics, household size and composition, and
maps.
2) Nation Sample Survey Reports - Issued by the Cabinet Secretariat, Government of India. It
includes information like patterns of consumption, distribution of households, distribution of
industries and characteristics of economically active population.
3) Plan reports - Issued by the Planning Commission usually at the beginning, middle and end
of 5 year plans. It provides information on plan proposals, physical and financial targets, actual
outlays etc.
4) Statistical Abstract of the Indian Union - Publication of the Central statistical organization. It
provides information on demographic information, estimates of national income and
agricultural and industrial statistics
5) India year book - Publication of ministry of information and broad casting. It provides a
wide range of information on economic and other aspects.
6) Statistical Year Book - Publication of United Nations. It provides world statistics relating to
various aspects like population, demography, gross domestic publication, industrial production,
international trade etc.
7) Economic Survey An annual publication of the Ministry of Finance. It provides the latest
data on industrial production, wholesale prices, consumer prices, exports, agricultural
production, national income etc.
8) Guidelines to industries - Publication of Ministry of Industrial development.
9) Annual Survey of Industries - Publication of Central Statistical Organization. It contains
information on various aspects of industry: number of units and state wise distribution,
employment, quantity of products etc.
10) Annual bulletin of statistics of exports & imports - Publication of the Ministry of
commerce. It provides data on imports and exports for a very large number of items.
11) Stock Exchange Directory - Published by Bombay Stock Exchange. It provides a ten-year
picture of performance for all listed companies and other important companies.

12) Monthly studies of production of selected industries Monthly publication of Central


Statistical Organization. It provides all-India data on production, number of units installed,
capacity, state wise break up etc. for selected industries.
The secondary information gathered are then evaluated for its reliability, accuracy and
relevance for the purpose under consideration. The market analyst should seek to know the
following:

Who gathered the information? What was the objective?

When was the information gathered? When was it published?

What was the target population?

How was the sample chosen?

How satisfactory was the process of information gathering?

c) Conduct of market survey


Secondary information needs to be supplemented with primary information
gathered through market survey. Market survey is more specific to project being appraised. It
can be of two types:

1) Census survey

2) Sample survey

Census survey In census survey, entire population is covered. Census


surveys are employed for intermediate goods and investment goods.
Census survey is costly and infeasible. It is difficult to cover every user.
Sample survey Due to the limitations of census survey, the market
survey, in practice, is typically a sample survey. In such a survey, a
sample of population is observed and relevant information is gathered.
The information sought in a market survey may relate to one or more of
the following:

Total demand and rate of growth of demand

Demand in different segments of the market

Income and price elasticities of demand

Motives for buying

Purchasing plans and intentions

Satisfaction with existing products

Unsatisfied needs

Attitudes towards various products

Distributive trade practices and preferences

Socio-economic characteristics of buyers

Steps in Sample Survey are:1) Define target population


Population is divided into various segments based on income range.
2) Select the sampling scheme and sampling size
Sample is a portion of the population. There are several sampling schemes like
simple sampling, random sampling, cluster sampling, sequential sampling etc. Larger the
sample size, greater the reliability of the estimates.
3) Develop the questionnaire
Questionnaire is the best method for getting information. Developing the
questionnaire requires a thorough understanding of the product and its usage. The result of the
market survey depends on the quality of the survey.
4) Recruit and train field investigators
Field investigators should be recruited and training should be given to them.
They need to have knowledge of the product and its technical background.
5) Collect information from questionnaire
Customers can be interviewed personally, telephonically. Personal interviews
ensure a high rate of response, but they are expensive. Mail surveys are economical but have
less response. Telephonic interviews are common in western countries only.
6) Scrutinize the information gathered Information gathered should be thoroughly scrutinized
to eliminate data which is internally inconsistent and which is of dubious validity.
7) Analyze and interpret the information - Results of the data based on the sample survey will
have to be extrapolated to the target population. For this we take the ratio of the size of target
population to the size of the sample.

Market survey can fail due to the following reasons:1) Inadequacies in the questions

2) Failure of the respondents to comprehend the questions


3) Inept handling of the interviews by the investigators
4) Deliberate distortions in the answers given by the respondents
5) Non-representativeness of the sample
d) Characterization of the market Based on the information gathered from secondary
sources and through the market survey, the market for the product/service may be described in
terms of the following:

Effective Demand in the Past and Present

Breakdown of demand

Price

Methods of distribution and sales promotion

Consumers

Supply and competition

Government policy

Effective Demand in the past and present To gauge the effective demand in the past and
present, apparent consumption has to be calculated. Apparent consumption is defined as:
Production + Imports Exports Changes in stock level
The apparent consumption has to be adjusted for consumption of the product by the producers
and the effect of abnormal factors.
Breakdown of Demand To get a deeper insight into the nature of demand, the aggregate
market demand may be broken down into demand for different segments of the market. Market
segments may be defined by i) nature of product ii) consumer group iii) geographical division.
Price Price statistics must be gathered along with statistics pertaining to physical quantities. It
may be helpful to distinguish the following types of prices: i) manufacturers price quoted as
FOB (free on board) price or CIF (cost, insurance and freight) price, ii) landed price for
imported goods, iii) average wholesale price and iv) average retail price.
Methods of Distribution and Sales Promotion The method of distribution may vary with
nature of product. Capital goods, industrial raw materials or intermediates, and consumer
products tend to have different distribution channels. Likewise, methods used for sales
promotion (advertising, discounts, gift schemes etc.) may vary from product to product.

Consumers Consumers may be characterized along two dimensions as follows:

Demographic & Sociological

Attitudinal

Age
Sex
Income
Profession
Residence
Social background

Preferences
Intentions
Habits
Attitudes
Responses

Supply and Competition It is necessary to know the existing sources of supply and whether
they are foreign or domestic. For domestic sources of supply, information along the following
lines may be gathered: location, present production capacity, planned expansion, capacity
utilization level and cost structure. Competition from substitutes and near-substitutes should be
specified because almost any product may be replaced by some other product as a result of
relative changes in price, quality and so on.
Government Policy The role of the government in influencing the demand and market for a
product may be significant. Governmental plans, policies and legislations, which have a
bearing on the market and demand of the product under examination, should be spelt out.
These are reflected in production targets in national plans, import and export trade controls,
import duties etc.

e) Demand Forecasting
After gathering information about various aspects of the market and demand from primary and
secondary sources, an attempt may be made to estimate future demand. The methods of
Demand Forecasting are:
1. Qualitative methods These methods rely on the judgment of experts to translate
qualitative information into quantitative estimates. The important qualitative methods are:
1. a) Jury of executive method This method involves soliciting opinions of a group of
managers on expected future sales and combining them in to a sales estimate.
Advantages
It is an expeditious method for developing a demand forecast.
It permits a variety of factors like economic climate, consumer preferences etc.
Disadvantages

The biases underlying subjective estimates cannot be unearthed easily.


The reliability of this technique is questionable.
1. b) Delphi method The steps involved in this method are:
1. A group of experts is sent a questionnaire by mail and asked to express their views.
2. The responses received from the experts are summarized without disclosing the
identity of the experts and sent back to the experts along with a questionnaire to
probe further the reasons for the extreme views expressed in the first round.
3. The process may be continued for one or more rounds till a reasonable agreement
emerges in the view of the experts.
Advantages
It is intelligible to users.
It is more accurate and less expensive.
2. Time series projection method These methods generate forecasts on the basis of an
analysis of the historical time series. The important time series projection methods are:
2. a) Trend projection method It involves determining the trend of consumption by analyzing
the past consumption statistics and projecting future consumption by extrapolating the trend.
In this method, a linear relationship is used
Yt = a + bT where
Yt = demand for year t
T = time variable
a = intercept of the relationship
b = slope of the relationship
To estimate the parameters a and b of the linear relationship, the least squares method is used.
According to the least squares method, linear relationship is chosen in such a manner that the
sum of squared deviations of the observations from the line is minimized
Sum of squared deviations = (Y-a-bT) 2
To minimize this with respect to a & b, partial derivative of this sum with respect to a & b are
set equal to zero
i.e., /a (Y-a-bT) 2 = -2(Y-a-bT) = 0 ----------------- (1)
/b (Y-a-bT) 2 = -2T(Y-a-bT) = 0 ---------------- (2)
Considering (1) (Y-a-bT) = 0

Y = (a+bT) -------------------------------------- (3)


Considering (2) TY-aT-bT2=0
TY= (aT-bT2) ------------------------------------(4)
Solving (3) & (4) we get the value of a & b
Dividing (3) by n we get
Y/n = a/n + bT/n
y = na/n + b T , a = y -b T

b = (TY-n T y )/ (T2-n T 2)
Where T=time
Y=demand
n = no of observations

T =mean of T
y =mean of Y

a=intercept
b=slope.
We can use other relationships like
1) Exponential relationship
Yt=aebt
2) Polynomial relationship Yt = a0+a1t.antn

2. b) Exponential smoothing method Ft+1=Ft+et where Ft = forecast for year t


Ft+1 = forecast for year t+1
= smoothing parameter lies between 0 & 1
et = error in the forecast for year t. (St-ft) where St is the actual
value for year t.
2. c) Moving average method - According to this method, forecast for the next period is equal
to the average of the sales for several preceding periods.
Ft+1= (St+St-1+St-n-1)/n
Where F t+1 = forecast for the next period.
S t = sales for the current period.

n = period over which averaging is done.


Weighted moving average method - It is likely that the sales for the recent years give a clear
picture of the trend than that in the past .So a weight is assigned to the sales in all the years.

3.) Causal Methods This method develop forecasts on the basis of


cause-effect relationships specified in an explicit, quantitative manner.
3.1 Chain ratio method The chain ratio method uses a simple analytical approach to demand
estimation. Given below is an example of chain ratio method to estimate the potential sales of
stainless steel blades in India.
Adult male population in the country=150 million.
Proportion of adult male population using shaving blades=60%
Adult male population using shaving blades=150*60/100=90 million
No of times in a year a person who uses shaving blades=100
Total shavings done per year = 9000 million.
Proportion of shavings done with stainless steel blades = 40%
Average no of shavings per stainless steel blade = 6
No of stainless steel blades used per year = 600 million
Proportion of the stainless steel blade market the firm could capture = 20%
Potential Sales = 600*20/100 =120 million
3.2 Consumption level method This method estimates consumption level, on the basis of
elasticity coefficients.
Income elasticity of demand: - Reflects the responsiveness of demand to variations in income.
It is measured as
E1=Q2-Q1/I2-I1 * I1+I2/Q2+Q1
where E1=income elasticity of demand
Q1=quantity demanded in the base year.
Q2=quantity demanded in the following year
I1=Income level in the base year
I2=Income level in the following year.

3.3 Price elasticity of demand - This measures the responsiveness of


demand to variations in price. It is defined as
Ep= Q2-Q1/P2-P1 * P1+P2/Q2+Q1 where
Ep=price elasticity of demand.
Q1=quantity demanded in the base year.
Q2=quantity demanded in the following year.
P1=price per unit in the base year.
P2=price per unit in the following year.
3.4 End Use Method It is also known as consumption coefficient method. It involves the
following steps:
1. Identify the possible uses of the product.
2. Define the consumption coefficient of the product for various uses.
3. Project the output levels for the consuming industries.
4. Derive the demand for the product.
The key inputs required for the application of the end use method are: i) projected output
levels of consuming industries ii) consumption coefficients.
3.5 Leading Indicator Method Leading indicators are variables which change ahead of
other variables, the lagging variables. Hence observed changes in leading indicators may be
used to predict the changes in lagging variables. Steps involved in this method are:
i) Identify the leading indicators.
ii) Establish the relationship between the leading indicator(s) and the variable to
forecast.
3.6 Econometric Method Steps involved are:
1. Specification This refers to the expression of an economic relationship in a
mathematical form.
2. Estimation This involves the determination of the parameter values and other
statistics by a suitable method such as the least squares method.
3. Verification This step is concerned with accepting or rejecting the specification as
a reasonable approximation to the truth on the basis of the results of estimation.
4. Prediction This involves projection of the value of the explained variable(s).

Advantages
1. Sharpens the understanding of complex cause-effect relationships.
2. Provides a basis for testing assumptions and for judging how sensitive the results are
to changes in assumptions.
Uncertainties in demand forecasting Demand forecasts are subject to error and
uncertainty arise from three principal sources:

Data about past and present market

Methods of forecasting

Environmental change

f) Market Planning A market planning usually has the following components:


1) Current marketing situation
2) Opportunity and issue analysis
3) Objectives
4) Marketing strategy
5) Action programme
1. Current marketing situation This part of the marketing plan deals with the different
dimensions of the current situation. It examines the market situation, competitive situation,
distribution situation and the macro-environment.
a. Market situation This deals with size, the growth, the consumer aspirations and buying
behavior in the market under consideration.
b. Competitive situation This dwells on the major competitors, their objectives, strategies,
strengths etc.
c. Distribution situation This compares the distribution capabilities of the competitors.
d. Macro environment This describes the effect of social, political, economic,
technological and other external variables on the market.
2. Opportunity and issue analysis In this section a SWOT (Strength, Weakness,
Opportunity, Threat analysis) is conducted and the core issues before the product are
identified.
3. Objectives Objectives have to be clear-cut, specific and achievable.
4. Marketing Strategy The marketing strategy covers the following: target positioning,
product line, price, distribution, sales force, sales promotion and advertising.

5. Action programme Action programmes operationalize the strategy.

Technical analysis
The purpose of technical analysis is to ensure that the project is technically feasible. It deals
with the following aspects:

Manufacturing process/technology

Technical arrangements

Material and inputs

Product mix

Plant capacity

Location and site

Machineries and equipments

Structures and civil works

Environmental aspects

Project charts and layouts

Project implementation schedule

Need for considering alternatives

a) Manufacturing process/technology
There can be 2 or more alternative technologies for manufacturing a product. E.g.:Steel can be manufactured by Bessemer process or open hearth process. Cement can be
made either by the dry process or wet process. Soap can be manufactured by the semi
boiled process or the fully boiled process.
The appropriate technology can be chosen by considering factors like
1) Plant capacity - Plant should have the capacity to accept the new technology.
2) Principal inputs - Inputs for the process must be available.
3) Production cost - Cost of the technology should be feasible.
4) Use by other units The technology adopted must be proven successful by other units.
5) Product mix The technology chosen must be judged in terms of the total product mix
and saleable by-products generated by it.
6) Latest development - The technology adopted must be based on latest development.
7) Ease of absorption - Sometimes a high level technology may be beyond the absorptive

capacity of a developing country. Country may lack trained personnel to handle that
technology.
b) Technical arrangements - Satisfactory arrangements must be made to obtain the
technical know-how needed for the proposed manufacturing process.
The following aspects have to be worked out
a) Nature of support to be provided by the collaborators during the phases of project
development.
b) Process and performance guarantees in terms of plant capacity, product quality etc.
c) Price of technology in terms of one-time licensing fee and periodic royalty fee.
d) Period of collaboration agreement.
e) Restrictions to be imposed by the collaborator with respect to exports.
f) Termination of the agreement when either party fails to meet its obligation.
c) Material inputs and utilities This can be classified into four broad categories:
i) Raw materials
ii) Processed industrial materials and components
iii) Auxiliary materials and factory supplies
iv) Utilities
Raw materials It may be classified into four types: i) Agricultural Products ii) Mineral
Products iii) Livestock and Forest Products iv) Marine Products.
d) Product mix - There can be wide range of items manufactured by a particular company.
Some products can be manufactured in varying size, smell etc. This helps to increase the
market.
e) Plant capacity - The plant capacity depends on factors like
1) Technological requirement
2) Input constraints
3) Investment cost
4) Market conditions
5) Resources of the firm
6) Governmental policy
f) Location and site - The choice of location and site follows an assessment of demand,
size and input requirement. Location refers to the broad area like city and site refers to the
specific piece of land.

g) Machineries and equipment - To select machinery the steps to be followed are


1) Estimate the likely level of production
2) Define the machining operations
3) Calculate the machine hours
4) Select machineries and equipment
The equipments can be classified in to
a) Plant equipment
b) Mechanical equipment
c) Electrical equipment
d) Instruments
e) Controls
f) Internal transportation system
h) Structures and civil works This can be classified into
a) Site preparation and development
b) Buildings and structures
c) Outdoor works
i) Environmental aspects
Project has to consider
a) Types of effluents and emissions generated
b) Proper disposal of effluents and emissions.
c) Statutory requirements
j) Project charts and layouts
1) General functional layout
2) Material flow diagram
3) Production line diagram
4) Transport layout
5) Utility consumption layout etc

Financial Analysis
Introduction to Financial Analysis - To judge a project from financial angle, we need
information about the following: (i) cost of project (ii) means of financing (iii) estimates of
sales and production (iv) Cost of Production (v) working capital

requirement

and its financing (vi) Estimates of Working results (vii) break-even point (viii) projected
cash flow statements and (ix) projected balance sheets.
Cost of Project Cost of Project represents the total of all items of outlay associated with
a project which are supported by long-term funds. It is the sum of the outlays on the
following:

Land and site development

Buildings and civil works

Plant and machinery

Technical know-how and engineering fees

Expenses on foreign technicians and training of Indian technicians abroad

Miscellaneous fixed assets

Preliminary and capital issue expenses

Pre-operative expenses

Margin money for working capital

Initial cash losses

Means of finance To meet the cost of project the following means of finance are
available:
1. Share capital There are two types of share capital equity capital and preference
capital. Equity capital represents the contribution made by the owners of the
business, the equity shareholders. Equity capital does not carry fixed rate of
dividend. Preference capital represents the contribution made by preference
shareholders and the dividend paid on it is generally fixed.
2. Term Loans Term loans represent secured borrowings which are a very important
source for financing new projects as well as for the expansion, modernization and
renovation schemes of existing firms. There are two broad types of term loans
available in India: rupee term loans, given for financing land, building, civil works
etc. and foreign currency term loans, provided for meeting the foreign currency
expenditures towards the import of equipment and technical know-how.
3. Debenture Capital Debentures are instruments for raising long debt capital. There
are two broad types of debentures: non-convertible debentures and convertible
debentures. Non-convertible debentures carry a fixed rate of interest and have a

maturity period of 5 to 9 years. Convertible debentures are convertible, wholly or


partly, into equity shares.
4. Deferred Credit Many a time the suppliers of the plant and machinery offer a
deferred credit facility under which payment for the purchase of plant and
machinery can be made over a period of time.
5. Incentive Sources The government and its agencies may provide financial support
as an incentive to certain types of promoters or for setting up industrial units in
certain locations. These incentives may take the form of seed capital assistance or
capital subsidy or tax deferment or exemption for a certain period.
6. Miscellaneous Sources A small portion of the project finance may come from
miscellaneous sources like unsecured loans, public deposits and leasing and hire
purchase finance.
7. Lease Financing - Lease is a contract where by the lessor (the owner of an asset)
gives to the lessee (user of the asset) the right to use the asset for an agreed period
of time. In return the lessee has to pay the lease rentals.
Financial Evaluation Techniques
Financial evaluation techniques are broadly classified into two types: Non-discounted cash
flow techniques and discounted cash flow techniques. Non-discounted cash flow techniques
are further divided into Payback period (PB) method and Accounting rate of return (ARR)
method. Discounted cash flow techniques are divided into Net Present Value (NPV)
method, Profitability Index (PI) method, Internal Rate of Return (IRR) method and Benefit
Cost Ratio (BCR) method.
Payback period Method Payback period is defined as the length of time required to
recover the original investment on the project through cash flows earned. The cash inflow
includes operating profit, less income tax payable plus depreciation.
Find the payback period of the project with the following details
Investment -14,00,000
Years to implement-2
Expected profit from third year onwards

Year

Profit

1,50,000

1,75,000

2,00,000

2,25,000

2,00,000

Tax

50,000

60,000

68,000

75,000

68,000

1, 48,000

99,000

Depreciation 3, 30,000

2, 21,000

67,000

Solution:

Year

Profit tax + depreciation

Cumulative cash flow

3
4
5
6
7

430000
336000
280000
249000
199000

4,30,000
7,66,000
10,46,000
12,95,000
14,94,000

Cumulative profit
(4 years after implementation)
Cumulative profit
(5 years after implementation)
Difference
Pay back period

= Rs 12, 95, 000


= Rs 14, 94, 000
=1, 99, 000
= 4 + 12*(14, 00,000-12, 95,000)
1, 99,000
= 4 years + 6.33 months

NPV method
Net present value of cash flow = (Present value of all future cash in
flows over the life of the project) (Present value of cash out flow). The
present value of future cash inflows is arrived at by discounting the
future cash inflows at an interest rate equal to the cost of capital.

E.g. compare projects A and B using the given data. Use NPV method of evaluation.
Project-A

Investment on the project

:Rs 10,00,000/-

Life of the project

:5 years

Period of implementation

:1year

Cost of capital

:15%

Year

Cash inflow

2,00,000

3,00,000

4,00,000

3,00,000

1,00,000

Project-B
Investment on the project

:Rs 10,00,000/-

Life of the project

:5 years

Period of implementation

:1year

Cost of capital

:13%

Year

Cash inflow

3,00,000

4,00,000

4,00,000

3,00,000

2,00,000

Solution:
Project A
Present value of future cash inflows is given by
=CF1

CF2

CF3

CF4

CF5

(1+r)1 (1+r)2 (1+r)3 (1+r)4 (1+r)5

=2,00,000
(1+.15)

3,00,000
(1+.15)

+
2

4,00,000
(1+.15)

3,00,000
(1+.15)

1,00,000
(1+.15)5

=1,73,913+2,26,843+2,63,002,1,71527+49,717
=8,85,002
NPV=8,85002-10,00,000
= -1,14,998
The net present value is negative, so the project should not be taken up.
Project B

Present value of future cash inflows is given by


=CF1

CF2

CF3

CF4

CF5

(1+r)1 (1+r)2 (1+r)3 (1+r)4 (1+r)5

=3,00,000

+ 4,00,000

(1+.13)1

4,00,000

(1+.13)2

(1+.13)3

3,00,000
(1+.13)4

2,00,000
(1+.13)5

=2,65487+313259+277219+183993+108548
=1148506
NPV=1148506-10,00,000
=1,48,506/since net present value is positive, project can be taken up.
Profitability Index method
If there are two projects that require the same amount of investment, the project with a
higher net present value can be chosen. If the two projects have different investment
outlays, comparing the net present value of the projects will not give a correct picture since
net present value only indicates the excess of present values of cash inflows over cash
outflow in absolute terms.
E.g. Compare 2 projects using the Profitability Index using the following data

Project A

Project B

Present value of investment

5,00,000

11,00,000

Present value of cash inflows

6,00,000

12,50,000

Net present value

1,00,000

1,50,000

If NPV is compared project B is better


But since investment is different we take P.I for comparison
Profitability Index (PI) = (Present value of cash inflows) (Present value of cash outflows)
P.I for project A = 6,00,000 5,00,000
= 1.200
P.I for project B = 12,50,000 11,00,000
=1.136
Since PI of project A is more than project B, project A is better than project B.

Module 2

CPM and PERT


A project is defined as a combination of inter related activities that must be
executed in a certain order before the entire task can be completed. The
activities are interrelated in a logical sequence in the way
that

some activities cannot start until other are competed. An activity in a project
is usually viewed as a job requiring time and recourses for its competition.
Project management has evolved as a new field with the development of two
analytic techniques for planning scheduling and controlling of projects. These
are the critical path method (CPM) and the project evaluation and review
technique (PERT).
PERT and CPM are basically time anointed methods in the sense that they
both lead to determination of a time schedule. Both techniques are usually
referred as Project scheduling techniques.
Project scheduling by PERT-CPM consist of three phases.

B Planning
C Scheduling
D Controlling

A. PLANNING: The planning phase is done by breaking down the project into
distinct
Activities. The time extras for the another are then determined and a
network
(Or arrow) diagram is constructed with each of in ARCS (arrows) representing of the
interdependencies between the activities of the
project. The construction of the arrow diagram in a planning phase has the
advantage of studying the different jobs in details. Perhaps suggesting
improvement before the project is actually executed.

B. SCHEDULING: The ultimate objective of the scheduling phase is to


construct a time
Chart showing the start and finish times for each activity as well as its
relationship to
Other activities in the project. In addition, the schedule must pin-point
the critical
Activities which require special attention if the project is to be completed
on time. For
The non-critical activities the schedule must show the amount of slack or
float time

Which can be used.

ACTIVITY: The head of the arrow indicated where task ends and the tail
where task
Ends and the tail where the task begin.
EVENTS: An event represent a point in time that signifies the completion
of some
Activities and the beginning of new ones. E.g. wall built, foundations dug
etc.
DUMMY ACTIVITIES: It is an activity which does not consume time or
resources.
NETWORKS: This is the combination of activities, dummy activities and
events.
CRITICAL PATH: It gives shortest time in which the whole project can be
competed.
1. The construction of a building or a highway.
2. Planning and launching a new project.
3. Installing and debugging a computer system.

DIFFERENCES BETWEEN CPM & PERT


1. CPM is activity oriented i.e. CPM network is built on the basis of
activities. Also result
Of carious calculation are considered in terms of activities of the project.
On the other
hand, PERT is event oriented.
2. CPM is a deterministic model i.e. it dose not take into account the
uncertainties

Involved in the estimation of time for execution of a job or an activity. It


completely
Ignores the probabilistic element of the problem. PERT however is a
probabilistic
Model. It uses three estimates of the activity time- optimistic, pessimistic
and most
Likely with a view to take into account time uncertainty. This the
expected duration of
Each activity is probabilistic indicates that there is fifty percent
probability of getting
The job done within the time.
4. CPM place dual emphasis on time and cost and evaluate the trade off
between project
Cost and project time. By deploying allows the project manager to
manipulate project duration within certain limits so that project
duration can be shortened to an optimal cost. On the other hand : PERT
is primanly concerned with time. It helps the manager to schedule and
co-ordinate various activities so that the project can be completed on
schedule time.
FLOAT: Float is the flexibility available in any activity which can be
absorbed either by delaying that activity or by enlarging its duration.
There is no difference between float and slack. FLOAT refers to an
activity and SLACK refers to an event.
1. TOTAL FLOAT: The total float of an activity represents the amount of
time by which
An activity can be delayed without delaying the project completion date.
Total float = LF-EF
= LS-ES
2. FREE FLOAT: Free float is that portion of the total float within an activity
can be
Manipulated without affecting the float of subsequent activities.
Free float = Total float Head slack

3. INDEPENDENCE FLOAT: This is the amount of time an activities are


completed as
Late as possible and all succeeding activities are completed as late
possible and all succeeding activities started as early as possible.
Independence float = Free float Tail slack
4. INTERFERING FLOAT: Interfering float is that part of the total float which
causes a
Reduction in the float of the successor activities.
Interfering float = LF ES+1
Where +1 indicates succeeding activity

NETWORK ANALYSIS
It is a system which plans projects, both large and small by analysing the
project activities.
It helps in designing, planning, coordinating controlling and decision making in order to
accomplish the project in the minimum available time with the limited available resources
There are no. of network techniques;
!.P.E.R.T.-Programme Evaluation and Review Technique
2. C.P.M.-Critical Path Method
3. R.A.M.S.-Resource Allocation and Multiproject Scheduling
4. P.E.P.-Programme Evaluation Procedure
5. L.C.S.-Least Cost Scheduling
6. P.C.S.-Project Control System etc.
The most commonly known and used Network Techniques are PERT and CPM.

Objectives

Minimize total project time and cost

Effective utilization of resources.

Minimizing delays and interruption of the project.

Steps

Specify the individual activity- Define the project and is broken down to individual
activities, which are arranged in logical sequence.

Determine the sequence of the activity- It is also decided as which activity will be
performed simultaneously and which others sequentially.

Draw the network diagram- A network diagram is constructed; which presents


visually the relationship between all the activities involved

Estimate activity completion time- The time required to complete each activity can
be estimated using past experience or the estimates of knowledgeable persons.
Time, costs and other resources are allotted to all the activities.

Identify the critical path- Compute the longest time path through the network.

Use the network.-to plan, schedule, monitor, & control the PJT

Terms related to network planning methods


Event- specific instant of time which marks start or the end of an activity. It consumes
neither time nor resources. It is represented by a circle. Event no. is written within the
circle.
Activity- Every project consists of a no. of tasks which are called activities. It is shown by
an arrow and it begins and ends with an event. It consumes time and resources. It is
normally given name like A, B, C etc (below the arrow) and estimated time to accomplish
the activity is marked above.
Activities are classified in to three:1. Critical activities
2. Non-critical activity
3. Dummy activity

Earliest Start Time(EST)- It is the earliest possible time at which an activity


can start and is calculated by moving from first to last event in a network.

Earliest Finish Time (EFT) - It is the earliest possible time at which an activity
can finish. (EFT=EST+Duration of that activity).

Latest Finish Time (LFT) - It is the latest time by which the operation must be
completed. It is calculated by moving back ward.

Latest Start Time (LST) - It is the latest possible time by which an activity can
start. (LST=LFT-Duration of that activity).

Critical activities are those, if it consumes more than their


estimated time, the project will be delayed. (If EST=LST).
Non-critical activities have provision (float or slack), so that
even if they consume time over and above estimated time, the project will not be
delayed.
Dummy activity :- is an activity which does not consume time.
Dummy activity is denoted by a dotted arrow.
-when two activities started at the same instant of time the head events are joined
by a dotted arrow which is known as dummy activity.

*Critical path- It is the sequence of activities which decide the total project
duration. It is formed by critical activities. It is the largest path and consumes maxi. Time.
*Duration- Time required to complete an activity.
*Total project time- It is the duration of critical path. It is the time which will be
taken to complete a project.
*Float or Slack- Slack is with reference to an event and float is with reference to
an activity. Spare time or extra time over and above duration which a non critical activity
can consume with out delaying the project.

Rules for drawing the network:1. Each activity is represented by one and only one arrow in the network.
2. All the arrows must run from left to right.

3. A circle represents an event.


4. No two activities can be identified by the same head and tail event.
5. Do not use dummy activity unless required. Use dotted line for dummy activity.
6. Avoid looping and crossing of arrows.
7. Isolated activities must be avoided.
8. Use no. for events and alphabets for activities.
(Fig)
Eg:

Critical path method (C.P.M)


- Its a technique used for planning & controlling the logical & economic sequence of
operations for accomplishing a PJT
- Its a mathematically based algorithm for scheduling a set of PJT activities.
Steps involved in C.P.M

Break down the project in to various activities systematically

Label all the activities

Arrange the activities in logical sequence

Construct the arrow diagram

Number all the nodes and activities

Find the time for each activity

Mark the activity times on the arrow diagram

CalculateEST,LST,EFT,LFT

Tabulate them and mark EST,LFT on the arrow diagram

Calculate total float for each activity

Identify and mark the critical activities and critical path on the arrow diagram

Calculate the total project duration

If it is intended to reduce the total project duration, crash the critical activities of
the network

Optimize the cost and update the network

Advantages
*Improves efficiency * Cost saving
Disadvantage *Clear and reliable information should be available * Skilled
management is essential

Programme evaluation Review Technique (PERT)


- Its used to simplify the planning & scheduling of large and complex PJTS.
- to incorporate uncertainty by making it possible to scheduling of large & complex PJTS.
- used more in R & D, PJTS where time ,rather than cost is the major factor.

Features of P.E.R.T
1. Includes planning, monitoring, and control of project
2. IT is commonly employed for conducting initial review of the project
3. helps in decision making
4. usful device for planning the time and resources
5. Because of the uncertainty of activity timings, it acquired the shape of probabilistic
model

Steps involved in PERT

The project is broken in to various activities systematically

Arrange activities in logical sequence

Construct the network diagram

Events and activities are numbered

Using three time estimate ,the expected time for each activity is calculated

EST and LFT are calculated

Expected time,EST,LFT are marked on the network diagram

Slack is calculated

Critical paths are identified and marked on the network diagram

Length of the critical path or total project duration is found out

Probability that the project will finish at due date is calculated

ESTIMATION OF ACTIVITY TIMES IN PERT

For each activity three time estimates are taken.

to ( optimistic time ) its is shortest possible time in which an activity can be


completed.

tm (most likely time )- it is the time in which the activity is normally expected to
complete.

tp (pessimistic time)- it is the time which an activity will take to complete in case
of difficulty i.e. if mostly things go wrong.

te (estimated time) , te = to + ( tm * 4 ) + tp
6

ESTIMATION OF VARIABILITY OF ACTIVITY TIMES

St (standard deviation) = tp to
6
2

Vt ( variance) =

tp to
6

: - the higher the standard deviation, the greater the uncertainty

Length of the crital path & the total pjt duration


Total pjt duration = sum of the duration of each crital activity
Variance of the crital path
Variance of the crital path = sum of thevariance of each crital activity

Standard deviation =

variance of the crital path

The probability that the project will meet the schedule or the due date ;

Z = D Te

(Z= normal deviation; D= due date ;St =standard deviation ;Te= total pjt duration)

St

Difference between P.E.R.T and C.P.M

PERT

CPM

Probabilistic model with uncertainty in


activity duration

Deterministic model with well known


activity times based up on the past
experience

Emphasis on events

Emphasis is given on activities

Time is the controlling factor

Cost is the direct controlling factor

Time estimates are not so accurate &


definite

Time estimates for completion of activities


are with fair degree of accuracy

Used for non repetitive jobs

Used for repetitive jobs

Mainly used for planning & scheduling


research programmes

Used for construction & business problems

Advantages of CPM & PERT

Gives complete information about duration, slackness etc of activities

Provides the best way of planning & scheduling a project

Suggests areas for increasing efficiency & reduction of costs

Helps to formulate new schedules when the existing schedules cannot be


met

Minimizes delay in completion of the project


Helps the management to concentrate their attention to the critical
activities & their completion in time

Dis advantages of CPM & PERT

The realistic time estimates are not obtained

It is not easy to develop a clear logical net work in some cases

The level of network details cannot be determined properly in some cases.


The level of details varies from planner to planner & depends on the judgment &
experience

Trained personnel in the network methodology is necessary but it is


lacking in many managements.

Module 3
Forecasting Methods

Qualitative vs. Quantitative Methods


Qualitative forecasting techniques are subjective, based on the opinion and judgment of consumers,
experts; appropriate when past data is not available. It is usually applied to intermediate-long range
decisions.
Example of qualitative forecasting methods:

Informed opinion and judgment

Delphi method

Market research

Historical life-cycle Analogy.

Quantitative forecasting models are used to estimate future demands as a function of past data;
appropriate when past data is available. It is usually applied to short-intermediate range decisions.
Example of Quantitative forecasting methods:

Last period demand

Arithmetic Average

Simple Moving Average (N-Period)

Weighted Moving Average (N-period)

Simple Exponential Smoothing

Multiplicative Seasonal Indexes

Nave Approach
Nave forecasts are the most cost-effective and efficient objective forecasting model, and provide a
benchmark against which more sophisticated models can be compared. For stable time series data,
this approach says that the forecast for any period equals the previous period's actual value.

Time series methods


Time series methods use historical data as the basis of estimating future outcomes.

Moving average

Weighted moving average

Exponential smoothing

Autoregressive moving average (ARMA)

Autoregressive integrated moving average (ARIMA)

Module 4
Risk analysis
1) Sensitivity analysis
If a small change in one factor leads to a major change in the profitability of the proposed
investment, the project is said to be more sensitive to that factor. The technique used to
measure this is known as sensitivity analysis.
E.g.:- What happens to NPV if the demand of the project drops down.
What happens to the NPV if the economic life of the project reduces?

2) Breakeven analysis
Break even point refers to the level of operation at which the project neither earns profit nor
incur loss. It indicates the minimum capacity utilization the firm should aim inorder to have
a no-gain no-loss situation.
BEP = fixed cost

(Selling price/unit -Variable cost/unit)

Fixed cost - Costs that are fixed in nature are fixed cost. They remain constant irrespective
of the changes in the volume of output.
E.g.:-Rent payable for land
Rent payable for factory
Insurance premium
Interest payable on long term borrowing
Administrative expenses
Annual maintenance charges
Depreciation
Property tax

Variable cost - Cost that vary directly with the level of output.
Eg:-1) Consumable stores
2) Power, fuel, water charges
3) Advertisement expenses.
E.g.:- Estimates for the third year of production of ABC private Ltd with production
capacity of 400000 units/annum of umbrellas are given below.
Cost of raw materials
Cost of consumables
Salary for permanent staff
Wages for casual workers
Repair and maintenance charges
Interest payment

-1, 62, 00,000.


-40,00,000.
60,00,000.
8,00,000.
-6,00,000.
-42,00,000.

Selling expenses
Rent, Insurance etc.
Power, fuel, water etc
Depreciation

-10,00,000.
-4,00,000.
-20,00,000.
-32,00,000

Work out
a) Sales realization.
b) Contribution
c) variable cost/unit.
d) Break-even point in terms of volume of production.

Solution

Fixed cost
60,00,000.+8,00,000+6,00,000+42,00,000+10,00,000+4,00,000+32,00,000=20200000
Variable cost
1, 62, 00,000+20, 00,000=18200000
Sales realization = total cost +fixed cost = 38400000
Selling price/unit=38400000/400000= Rs 96/Variable price/unit=18200000/400000=Rs 45.5/Contribution=Selling price/unit-variable cost/unit = 96-45.5= Rs 50.5/BEP in terms of volume = fixed cost/(contribution) = 20200000/50.5 = 400000 units .
3) Decision tree analysis
It is a graphical technique used to analyze the pros and cons of alternative decisions and
choosing the best possible course of action .A decision tree is made of nodes and branches.
Nodes are of two types
1) Decision nodes (decision point) represented by
2) Chance node (chance point)

Different alternatives available for the given situation emerge from the decision point. At
each chance point this different possible outcomes of one decisions are marked.
1

Alternative 1

chance point

Decision
Point
2
Alternative 2

chance point

E.g.:-A chief executive of a company wants to introduce a new product


There are two alternatives for him.
1) Importing the product from abroad-net benefit is 500,000
2) Setting up a new plant for the manufacture net benefit is 6, 00,000

Draw the decision tree.

Net benefit=5, 00,000


Import

Manufacture

Net benefit=6, 00,000

4) Simulation analysis Sensitivity analysis indicates the sensitivity of each factor on the
performance of the project. But it will not give the combination effect of each factor.
Simulation analysis can find the result of each combination and will help in decision
making.
Monte Carlo simulation method Steps in this method are:
1) From the given probability of events, establish cumulative probability
2) Assign tag numbers to the events
3) Obtain random numbers from random number table
4) Correlate random numbers with the tag numbers
E.g.:
Demand per day
Probability

25
0.15

33
0.25

42
0.45

51
0.15

Solution:
Demand
25
33
42
51

Probability
0.15
0.25
0.45
0.15

Cumulative probability
0.15
0.40
0.85
1.00

Let the random numbers and the simulated demand/day be


Trial no

Random no

1
2
3
4
5
6
7

40
92
47
01
60
05
69

Simulated
demand/day
42
51
42
25
42
25
42

Tag no
0-14
15-39
40-84
85-99

8
9
10
11
12
13
14
15

79
09
66
77
69
45
18
93

42
25
42
42
42
42
33
51

The result will illustrate the effect of each variable in combination on the performance of
the project.

Social Cost benefit analysis


The main objective of company is to earn maximum profit from the investment. So project
promoters are solely interested in wealth maximization. There are some projects which are
undertaken due to their social implications. Such projects are public projects like road,
railway, bridge, irrigation projects etc. Analysis of such projects is known as socio
economic cost benefit analysis. (SCBA)
Objectives of SCBA

Contribution of the project to the GDP of the economy

Contribution of the project to improve the benefits of the poorer sections of the
society.

Justification of the use of scarce resources of the company.

There are 2 approaches to SCBA


1) UNIDO approach
2) Little-Mirrless approach

UNIDO approach

Stages
1) Arriving at the financial profitability of the project based on the market prices
2) Using shadow prices for the resources to arrive at the net benefit of the project at
economic process
3) Adjustment of the net benefit for the projects impact on savings and investment
4) Adjustment of the net benefit for the projects impact on income distribution
5) Adjustment of the net benefit for the goods produced whose social values differ from
their economic values

Shadow prices - For SCBA market prices of both inputs and outputs of a project are
required to be corrected if they do not represent the real prices of inputs/outputs. E.g.:-The
newly setup small scale industries are given subsidy on electricity charges by State
Electricity Board (SEB). SEB produces electricity at the rate of 2.50/unit
The company may be charged as follows:
Year

rate/unit

1.50

1.75

2.00

Here the price of electricity to be taken for SCBA is 2.5/unit which is the actual price
(shadow price).

Numeraire - The unit of account used in UNIDO. It is the domestic rupee.


Tradeability of goods/services - A tradeable good is that one which can be traded without
restrictions. Shadow price for traded goods is border price or international price. A non
tradeable good is that which cant be traded due to the trade policies of the country. A non
tradeable good can become tradeable only if the domestic cost of it becomes cheaper as
compared to international price. A good is non tradeable if its import price (CIF price) is
greater than domestic cost of production and its export price (FOB) is less than domestic
cost of production.

Externalities - Certain effects of the project do not impose a cost or do not confer a benefit
within the domain of the project. But if these effects have a bearing on the achievement of

countries objectives, they need to be considered for economic analysis. They are known as
externalities. For calculating the NPV consumption rate of interest, (CRI) is used as the
discount rate in UNIDO. CRI = [parameter of utility function * growth rate of per capita
consumption] + rate of pure time preference.
Shadow wage rate - When labor is used in one project, its use in the best alternative
project is ruled out. The formula suggested by UNIDO to arrive at the shadow wage rate
(SWR) is
Shadow Wage Rate = Labors forgone marginal product at accounting prices + Net social
cost of increased consumption + Social cost of reduced leisure.
Little mirrless approach
Numeraire Measured in terms of convertible foreign exchange.

L-M shadow price - Measures costs and benefits in terms of


international price (border price)
L-M Standard Wage Rate (SWR)
SWR = C-1/s[c-m]
C = Additional resources devoted to consumption
1/s = Social value of unit of consumption
c = consumption of wage earner
m = marginal productivity of wage earner

UNIDO versus L-M


UNIDO
Measures cost and benefit in terms of
consumption
Measures shadow price in terms of
domestic price

L-M
Measures costs and benefit in terms
of uncommitted social income
Measures shadow price in terms of
border price

Module 5

MS Project 2000 Tutorial: Introduction


- Anjana Srikanth

Stylus Systems is a Internet Technology company located in Bangalore India. One of our
mottos is "a quality process creates a quality product." To encourage this in our company
we are teaching Michael Hammer's book Beyond Reengineering : How the ProcessedCentered Organization is Changing Our Work and Our Lives and evaluating tools like MS
Project and Rational Rose.. We hope that you keep this motto in mind as you learn from
this online course. Please contact us if you have any programming needs or you want to
know about our development process.

Introduction
If you are ever responsible for coordinating a variety of specific tasks that must be
completed within a specific timeframe for a set amount of money, you are a project
manager,then this tutorial is for you.
Developing a software product, publishing a newsletter, implementing a training program,
starting a new business or even building a new home are some of the projects that
millions of people embark upon everyday. How does Microsoft Project 2000 help you do
this? It helps you put together a plan of action, fill in and organize all the details that
must be completed in order to achieve your goal. Right from building a new project to
preparing your project for publication, tracking progress, analyzing costs, assessing the
quality of your project and managing multiple projects, Microsoft Project 2000 does it all.
Project 2000 is based on the Office 2000 software model and is the newest version of this
software. What's new in Project 2000? Apart from being an easy and flexible tool it
expands into web compatible software, thus enabling easy communication. It expands
the workgroup features that originally appeared in Project 98. Along with Microsoft
Project Central 2000 and Microsoft Internet Information server, members in any team can
view project data with any browser and exchange information easily, irrespective of their
locations. A project can be saved into the corporate Intranet and email workgroup
features can then be used for communication. Programs such as text readers and speech
recognition software can be configured easily to work with Project. To summarize,
Microsoft Project 2000 helps you stay in control with minimum effort and in minimum
time.
Before we begin our first lesson, let us acquaint ourselves with a few terms and
definitions that will be used often.

Tasks: They are a division of all the work that needs to be completed in order to
accomplish the project goals.

Scope: of any project is a combination of all individual tasks and their goals.
Resources: can be people, equipment, materials or services that are

needed to complete various tasks. The amount of resources affects the scope and time of
any project.
The Microsoft Project 2000 communicates with you through its interface - charts graphs
and sheets, menus, toolbars and dialog boxes.
Toolbars provide shortcut access to frequently used functions. Although Microsoft Project
displays only the Standard Toolbar and the Formatting Toolbar, Microsoft Project has 12

toolbars in all. To display the remaining toolbars, choose View, Toolbars from the menu
and click an unchecked toolbar to display it. To view more information about that toolbar,
click on its name to display its buttons and their descriptions. Microsoft Project also
allows creating your own custom toolbars in Microsoft Project 2000.
The entry bar display progress messages during actions.
Status bar at the bottom of the window displays messages and information when certain
actions are in progress like entering data, opening or saving a file.
The View bar on the left is a scroll-down bar that displays a column of icons representing
various views.
Before embarking on the project you need to put down a few key points very clearly 1.
2.
3.
4.
5.
6.
7.

conceptualize and identify the purpose of the project


define its objectives
finalize its scope
identify its activities
assign resources to activities
create an estimate of time and costs
make honest assumptions about various relevant factors that can affect the
duration of a project and its costs
8. discuss alternative scenarios and build contingency plans
Microsoft Project 2000 cannot help you with (1), (2), (7) and (8) but it can carry the
remaining on its shoulders and sail you smoothly to your goals.

MS Project Tutorial Lesson 1


- Anjana Srikanth

1. Tasks
2. a. To start a new project file
b. To record properties
c. Views
d. Entering Tasks and assigning task duration
e. Outlining tasks
3. Links
a. To link tasks in F-S dependency
b. Delayed and Overlapped Links
4. Constraints
a. To apply a constraint
b. To remove a constraint and apply an ASAP/ALAP constraint

1. TASKS
a. To start a new project file:

You can create a Project from a Template File by choosing File > New from the menu. In
the New File dialog box that opens, select the Project Templates tab and select the
template that suits your project best and click OK. (You may choose a Blank Project
Template and customize it)
Now, you need to define for Microsoft Project the start or ending date for the project. If
you fill in a start date, Project schedules your tasks from that date, based on the order in
which tasks need to be completed and the availability of resources assigned to work on
each task. But, if you have to finish the project by a deadline date, you can enter the
finish date too. All intermediate schedules will then be set by Project.
Once a new Project page is opened, the Project Information dialog box opens.

Enter the start date or select an appropriate date by scrolling down the list.
Click OK. Project automatically enters a default start time and stores it as part of the
dates entered.
Click on Save and type in the name of your file in the dialog box that opens.

b. To record properties:
1. Choose File, Properties from the menu to display the Properties dialog box.
2. Select Summary tab and fill in information in required fields.
(project title, project manager, company name, project goals)
3. Click OK.
You can set default values for Start Time, Hours per day/week by selecting Options from
the Tools menu.

c. Views:
Views allow you to examine your project from different angles based on what information
you want displayed at any given time. You can use a combination of views in the same
window at the same time.

Project Views are categorized into two types:

Task Views (5 types)


Resource Views (3 types)

To find about more about each view, use the scroll buttons at the top and bottom of the
View bar to scroll down through available views.
The Project worksheet is located in the main part of the application window and displays
different information depending on the view you choose. The default view is the Gantt
Chart View.
Henry Gantt used graphical bars in his industrial management studies to compare and
contrast timeframes. In Microsoft Project, graphical bars are paired with a spreadsheet to
give the Gantt Chart View.
The next step is to create an outline of the work that has to be done on the project. Goals
of any project need to be defined in terms of tasks.
There are four major types of tasks:
1.
2.
3.
4.

Summary tasks - contain subtasks and their related properties


Subtasks - are smaller tasks that are a part of a summary task
Recurring tasks - are tasks that occur at regular intervals
Milestones - are tasks that are set to zero duration and are like interim goals in
the project

d. Entering Tasks and assigning task duration:

Click in the first cell and type the task name. Press enter to move to the next row. By
default, estimated duration of each task is a day. But, there are very few tasks that can
be completed in a day's time. You can enter the task duration as and when you decide
upon a suitable estimate.
Double-clicking a task or clicking on the Task Information button on the standard toolbar
opens the Task Information box. You can fill in more detailed descriptions of tasks and
attach documents related to the task in the options available in this box.

To enter a milestone, enter the name and set its duration to zero. Project represents it as
a diamond shape instead of a bar in the Gantt Chart.
To copy tasks and their contents, click on the task ID number at the left of the task and
copy and paste as usual.

e. Outlining tasks:
Once the summary tasks have been entered in a task table, you will need to insert
subtasks in the blank rows and indent them under the summary task. This is
accomplished with the help of the outlining tool.
Outlining is already active when you launch a project and its tools
are found at the left end of the Formatting bar. To enter a subtask,
enter the task in a blank cell in the Task Name column and click
the Indent button on the Outlining tool bar. The Show feature in
this toolbar is drop down tool that gives you an option of different
Outline levels.
A summary task is outdented to the left cell border, is bold and has a Collapse (-) (Hide
subtasks) button in front of it and its respective subtasks are indented with respect to it.
Advantages of Outlining:

It creates multiple levels of subtasks that roll up into a summary task


Collapse and expand summary tasks when necessary
Apply a Work Breakdown structure
Move, copy or delete entire groups of tasks

You can enter Recurring tasks by clicking on Insert > Recurring task and filling in the
duration and recurrence pattern for the task.
Any action you perform on a summary task - deleting it, moving or copying it apply to its
subtasks too.
You can also create a custom outline code by choosing Tools > Customize > Fields and
select the outline code in the Type down list and click Define Outline Code and Help. This
will take you to online help for outline code creation.

2. LINKS
Tasks are usually scheduled to start as soon as possible i.e. the first working day after
the project start date.
The remaining schedule can be defined in a base calendar to which Project is linked.
Project supplies three calendars and any one of them can be used. The Standard
calendar, 24 Hours calendar and the Night Shift calendar schedule tasks on different
working days and hours. The Standard calendar is usually used as a base calendar.
The duration of any task can be seen in the form of gray bars of varying length on the
Gantt Chart in the timeline section.

Sometimes, even after designing a schedule many unforeseen changes can affect the
completion of tasks midway. This could lead to a disruption to completion of other related
tasks. To solve this problem, Project allows you to link tasks in various ways. By linking
tasks Project adjusts the schedule whenever there are changes that affect duration of
other tasks.
A task that needs to be completed before (painting the walls of a home before moving
the furniture) are called predecessor task and the linked tasks are its successors.
Tasks can be linked in four ways:

Links

Code

Description

Finish-Start

FS

Predecessor finishes and the other


starts

Start-Finish

S-F

Task begins at the same time as its


predecessor

Finish-Finish

F-F

Both tasks finish at the same time

Start-Start

S-S

Start of the predecessor determines


when the other starts

Gantt Chart View

a. To link tasks in FS dependency:


1. Select the tasks you want to link. Tasks with a lower ID number are taken as
predecessors, but if you want to set the order of tasks yourself, select tasks by
holding Control while you click the tasks in order.
2. Click Link Tasks button on Standard Tool bar or choose Edit > Link tasks or
Control+F2.
Summary tasks can be linked to other summary tasks or to subtasks between summary
groups. Subtasks can be linked to each other too.
To unlink tasks, select tasks and click the Unlink Task in the Standard Tool bar.
Do not attempt to remove a link by deleting a cell in the predecessor's column and
pressing delete as this will delete the entire task.

b. Delayed and Overlapped Links:


Sometimes tasks may be dependent on other factors causing a delay time or an overlap
time, necessitating a lag or lead-time to be incorporated in a link. Lag and lead-time can
be entered as units of time or as a percentage of the duration of the predecessor.
1. Double-click a task and open the Task Information dialog box.

2.
3.
4.
5.

Click the predecessor tab.


Select the lag/lead field.
Enter a number or a percentage in the cell.
Click OK.

The Split task button splits tasks that may be completed in parts at different times with
breaks in their duration times.
The AutoLink feature is enabled by default and keeps linked tasks intact when they are
linked in the FS dependency. It can be disabled in the Options dialog box if necessary.

3. CONSTRAINTS
Certain tasks need to be completed within a certain date. Intermediate deadlines may
need to be specified. By assigning constraints to a task you can account for scheduling
problems. There are about 8 types of constraints and they come under the flexible or
inflexible category.

a. To apply a constraint:
1. Open the Task Information dialog box.
2. Click the Advanced tab and open the Constraint type list by clicking on the dropdown arrow and select it.
3. Select a date for the Constraint and click OK.
Flexible constraints (demarcated by a red dot in Microsoft Project 2000) restrict
scheduling to a great extent whereas flexible constraints (blue dot) allow Project to
calculate the schedule and make appropriate adjustments based on the constraint
applied.
Inflexible constraints can cause conflicts between successive and preceding tasks at times
and you may need to remove such a constraint.

b. To remove a constraint and apply an ASAP/ALAP constraint:


1. Select the tasks by holding Control and clicking on them in the order you want.
2. Click Task Information button on the Standard Toolbar and the Multiple task
dialog box opens.
3. Click the Advanced tab and click the drop down arrow to open the constraint type
list.
4. Choose ASAP if the project has been scheduled from the Start date and ALAP (As
late as possible) if it has been scheduled from the Finish date.
5. Click OK.

OR
Select Tools > Options > Schedule and clear the 'Tasks will always honor their constraint
dates' checkbox.

OR

Set deadline date instead of adopting an inflexible constraint. Setting a task deadline
does not affect the task schedule in any way. If a deadline passes without the task being
completed Project indicates it in the Indicator column (a downward pointing arrow in the
Gantt Chart view).

MS Project Tutorial Lesson 2


- Anjana Srikanth

In this lesson we will learn to successfully schedule all the resources required to complete
a project - people, equipment, supplies and materials. We will also learn to include costs
of various kinds and assign resources to tasks.
There are three main parts to this lesson:
1. Resources
a. Entering Resource Information
b. Resource lists
c. Resource information dialog box
d. Assigning a base calendar other than the project calendar to the resource
e. Editing a resource calendar
2. Assignments
a. Assigning a resource to a task
b. Task Types
c. Changing the default task type
d. Assigning work resources to Tasks
e. Assigning work resources in the Task Form
f. Assigning Material Resources to Tasks
g. Assigning material resources to a task in Gantt Chart View
3. Costs
a. Defining and Controlling costs
b. Accrual methods
c. Entering Cost Information
d. To enter costs for a resource

1. RESOURCES
Once you determine that you need to include resources into your project you will need to
answer the following questions:

What kind of resources do you need?


How many of each resource do you need?
Where will you get these resources?
How do you determine what your project is going to cost?

Resources are of two types - work resources and material resources.


Work resources complete tasks by expending time on them. They are usually people and
equipment that have been assigned to work on the project.
Material resources are supplies and stocks that are needed to complete a project.
A new feature in Microsoft Project 2000 is that it allows you to track material resources
and assign them to tasks.

When a set of resources is available for working they are called the resource pool. After
you determine the number of resources that you need, you need to establish the time
and availability of each resource. In the case of work resources, the amount of time that
they can work for, be it in hours, days or months, or years and the amount (units of
measurement) of material resources need to be specifically defined.
The next step is to assign these resources to their respective tasks. When you allocate a
resource's time to work on a task you are assigning resources. Once this is done Project
can recalculate the schedule to accommodate the working times of the assigned
resources. Vacations and nonworking times can be identified and included for each
resource. It goes one step ahead and tells you when you have overallocated a resource,
i.e. when you have assigned a resource to multiple tasks in the same time period or when
a resource is assigned to do more work than it can complete in a certain time.

a. ENTERING RESOURCE INFORMATION IN PROJECT:


The Assign Resources dialog box is used to create list of names in the resource pool.

b. To enter resource lists:


1. Click the Assign Resources button on the Standard Tool bar or Tools > Resources
> Assign resources.
2. Select a cell in the name column and type a response name. Press Enter. (You
can also click Addresses and add addresses from Microsoft Outlook Express)
3. Repeat step 2 until you enter all the resource names.
4. Click OK.
Resource names cannot contain slash (/), brackets [ ] and commas (,).
Another way of defining your resource list is through the Resource Sheet View.
1. Display Resource Sheet View by choosing View > Resource Sheet or click the
Resource Sheet icon on the View bar.
2. Enter your information. (To enter material resource use the Material Label field)

The Max Unit's column contains the maximum capacity for which a work resource is
available to accomplish any tasks in a certain time period. The default format is the
percentage format. For example, if the assigned units are 100% this will imply that this
resource will work for all the eight hours in a normal working day. If the assigned units
are 50%, then this resource will work for four hours a day. In the case of a resource pool
consisting of 5 workers, their maximum units will be 500% or a decimal value of 5.
You can change the default format to decimals using Tools > Options > schedule tab >
Show Assignment Units as.
Material resources don't have Max Units. Their resource units show their consumption
rates that could be fixed or variable.
The other three columns in the Resource Sheet View are concerned with Costs and we
shall take a look at them a little later in this lesson.

c. Resource information dialog box:

Clicking on a resource name in the Resource Sheet will display it's Resource Information
dialog box that gives information about a resource, the Workgroup, resource type,
material labels, working time, costs and resource specific notes. All the above information
can be customized to suit your needs.
With the Working Time tab in this box, you can assign a different base calendar to each
resource and change the working times of that resource as and when required.

d. To assign a base calendar other than the project calendar to the resource:
In the Resource Information dialog box switch to resource view and double-click resource
and click on the Working Time tab to make your changes.

e. To edit a resource calendar:


Tools > Change Working Times > Select the calendar you want to edit.
Workgroup defines how you intend to communicate with the resources in the project. You
can use Microsoft Project Central to communicate using the Web.

2. ASSIGNMENTS
a. To assign a resource to a task:
1. Open the Gantt Chart View and the Assign Resources Dialog box.
2. In the Entry Table select the tasks for which you want to assign resources.
3. In the Assign Resources Dialog box, select the resource (resources) you want to
assign.
4. Click the Assign button.
You can change or assign more resources to tasks using the Assign Resources Dialog box.
Setting up a project file, assigning resources to tasks and changing resource assignments
during the course of the Project are fine, but how do you incorporate unpredictable
factors that can affect task duration and work assignments.
How does Project 2000 help you with this?
When you assign resources to tasks, Project takes the task's duration and multiplies it by
the specific percentage or number of units of the resource to arrive at the hours of work
that will be done in the task.
Work is amount of time or effort that a work resource expends on a task i.e. 16 hours of
shipping, 5 days of training, and so on.
Duration is the amount of clock time between the beginning and ending of a task.
So,
Work = Duration * Units
(W = D * U)
For a particular task, lets say, in developing a certain training program, the duration is 5
days and 3 resources have been assigned to work at 100% units. Considering that the
normal working hours in a day (by default) are 8 hours, each one of these resources will
work for 8 hours on all 5 days.
Now, if two part-timers with units of 50% were assigned to the project, then, they would
work for 4 hours a day. This will result in the work being completed earlier than the
stipulated 5 days and the amount of work (time) expended by the first 3 resources will
decrease. In such a case, Project will need to recalculate schedules from its default
settings.
Given the choice between duration, work and units, Project will choose to change
duration. If the duration happens to be fixed, then it will change work before it changes
units.

You can assign a greater control over Project's calculations by defining the Task type as
described in the next section.

b. TASK TYPE
Project defines three task types that help it recalculate variables when resources are
assigned to it:

Fixed Units
Fixed Work
Fixed Duration

Each task type definition is based on the variable that is kept constant. For the Fixed
Units task type, Project will recalculate work or duration as whenever necessary, but
work units will remain fixed.
Similarly, in Fixed Duration tasks, if the units are changed, work will be recalculated
accordingly.
When using Project 2000 to manage a project, a project manager will need to analyze
each task and then choose the suitable task type.
The default task type is the Fixed Units task.

c. To change the default task type:


1. Tools > Options > Options Dialog box.
2. Schedule tab > Fixed Duration or Fixed Work from the Default Task Type dropdown list.
3. Click OK.

Also, the default settings for Tasks are effort-driven. The task's duration is completely
dependent on the resources you assign to it. If you change the number of resources after
the initial assignment, Project will recalculate duration but leave work alone.
You can use Tools > Options > Options Dialog box > Schedule, to turn off "New Tasks
are Effort-driven" check box.

d. Assigning work resources to Tasks:


The Task Form can display resource assignment details like Units and work. To display
the Task Form along with the Gantt Chart click View > Gantt Chart > Split the view by
choosing Windows > Split. The Task Form is automatically displayed in the lower half
pane. Right-clicking there will display the short-cut menu.

e. To assign work resources in the Task Form:


1.
2.
3.
4.

Select the task in the Gantt Chart View.


In the Task Form, select a resource from the Resource name drop-down list.
In the Units and work columns, use spin box controls to enter units, work or both.
Repeat steps 2 and 3 until all the resources are chosen for the selected task and
click OK in the Task Form to assign the resource.

You can also assign resources using the Assign Resources Dialog box described earlier.

f. Assigning Material Resources to Tasks:

When you assign a material resource, you specify the way the material is consumed.
Choosing 'variable material consumption' changed the task duration. (For example, 6
gallons/hour or 4 pk/h) Fixed material consumption will not change task duration.

g. To assign material resources to a task in Gantt Chart View:


1.
2.
3.
4.

Select the tasks in the Gantt Chart pane.


Select the Resource Name field in the task form.
Select the resource name from the drop-down list.
Select the units field and enter the units you want to assign. If you leave this field
blank, Project will set default of 1.
5. Project will append the Material Label to your decimal entry.
6. Work Field Entries: For fixed consumption rates, the value in the Work Field and
Units Field will be the same, whereas for variable consumption rates, the Work
Field value will be the Units Field value multiplied by the task duration.
7. After all the resource assignments are made for the task, Click OK.
If you intend removing an assignment from a task, select the task and then the resource
name you want to remove and press the Delete key.
The Effort Driven Task Field appears on the Task form and in the Task Information Dialog
box as a checkbox that is filled by default in Microsoft Project.

COSTS
a. Defining and Controlling costs:
Project multiplies the number of hours a resource works and the hourly cost rate to give
you the resource cost rate. For multiple resources the individual resource cost is added.
The number of units used reflects material costs.
The Standard Rate or the Rate of pay per time unit for regular working hours or the cost
per unit of a material resource and the Overtime Rate defined for overtime hours are the
two rate values that have to be filled in the Resource Sheet view. Fixed costs and the
resource costs add up to the total costs.

b. Accrual methods:
The accrual methods describe the ways in which Project calculates costs. Sometimes, you
may have to pay a resource in full before it starts work, then the accrual method adopted
by Project is 'Start'. Likewise, when payments have to be made only after completion of
the task, the 'End' method is used. For tasks that are partially completed, estimated costs
are prorated i.e. if 20% of the work is completed, the calculated cost at that time will be
20% of the estimated cost. This is where accrual methods play an important role. They
don't have any effect on the final cost of the project.

c. Entering Cost Information:

On the costs tab of the Resources Information Dialog box you can record up to 5 different
rates for a selected resource that is assigned to 5 different tasks.
You can also enter separate rates like the Standard Rate, Overtime Rate and a Per Use
Cost.

d. To enter costs for a resource:


1. Open Resource Information Dialog box and click costs tab.
2. Effective date of the cost may be the same as the project start date. If not so,
enter a date or select a date from the drop-down calendar.
3. Enter the Standard Rate. For work resources the default is $/h, but you can type
in /y, /m as necessary. Material resources use the Material Label assigned to the
resource (gallons or boxes).
4. Enter an Overtime rate (enter it even if it is the same as the Standard Rate)
5. Enter any additional Per Use Costs for a resource (costs for shipping and so on).
6. If you know that rates may change, click in the second row, type an effective date
and enter new standard, overtime and Cost Per Use rates. You can fill in the
actual rates or enter them as a % decrease or increase from the rates in the first
row.
7. If resources have different accrual methods, select your choice from the Cost
Accrual drop-down list.
Project supports fixed and variable costs. Fixed costs are those that do not change over
the life of the project. To enter fixed costs choose View > Table > Cost and open the Cost
table. Select the Fixed Cost field for the task and enter the amount.
In addition to the costs listed above, you can also have a fixed resource cost. This is
when a stipulated amount has to be paid to a resource irrespective of the work done by
it.
To include these costs, split the Gantt Chart View and activate the bottom Resource pane
and follow these steps:
1.
2.
3.
4.
5.
6.

Choose Format > Details > Resource Costs to display cost details.
Select the task and set its Task Type to fixed duration.
Enter the Resource name and type % in the units field.
Click OK. (This tells Project not to calculate work)
Enter values in the Cost Field.
Click OK.

Additional changes to resources assignments can be made using the Task or Resource
Usage View and the Assignment Information Dialog box.

MS Project Tutorial Lesson 3


- Anjana Srikanth

Now that we have seen how resources are assigned to tasks and costs are assigned to
resources, let us take a look at handling contours and overallocated resources. We will
also learn to fine-tune our project and prepare it for publication.

1. Contours
2. Overallocated Resources
3. Fine Tuning and Preparing the Project for Publication

CONTOURS
Resources are usually human beings and therefore they bring a lot of unpredictability
with them - dates can change, resources may be assigned too much of work or they may
have to leave in the middle of a project. We have to leave room for changes in
assignments and work distributions.
Project allows you to arrange for resources to start or finish work at different dates,
interrupt assignments to allow for work on other tasks and also assign overtime work if
necessary - in other words a contouring of assignments is possible. The Task Usage View
and the Resource Usage Views offer such possibilities.
What does the term contour mean in Project? It is the shape of the distribution of work
within an assignment. Usually, if a resource is assigned 100% to a 40-hour task with no
predecessors, the task will begin immediately with 8 hours of work/day for 5 days. This is
the default flat work contour where each unit's work is spread evenly across the duration
of the task.
Sometimes, you may need to change the distribution of an assignment's work by
applying a predefined contour or creating a custom contour for it. Project 2000 includes 8
predefined contours as listed below:

Flat: The default contour with an even distribution of work.


Back-loaded: Peak activity happens at the end of the project.
Front-loaded: Peak activity is at the beginning of the project.
Double Peak: A Project that has two major periods of peak activity.
Early Peak: the same as the Front-loaded but with a ramp up to peak activity
Late peak: a Back-loaded contour with a ramp.
Bell: single peak in the middle of the project
Turtle: A bell with a ramp up and ramp down.

To change the work contour for an assignment in either Task Usage View or the Resource
Usage View, double-click an assignment to open the Assignment Information Dialog box
and choose a contour from the Work Contour drop-down list.
Contours interact with task and resource settings as you manage and adjust assignments
during the life of the project. The contour shape is preserved with the assignment when
you move the task or when the project schedule changes.
When you manually change the work assignments in the Resource Usage View or the
Task Usage View, the result is an edited contour. Whenever you edit a contour, Project
distributes the work duration and recalculates the units.

OVERALLOCATED RESOURCES
A resource is overallocated when the total of its timephased work (work that is
distributed over specific periods in the project) exceeds the resource's maximum units. If
a resource is already scheduled to be working on a different task, the resource may

become overallocated. Sometimes, Project also accidentally includes overallocated


resources.
In every resource view, overallocated resources are formatted in red. In the Resource
Sheet, Project displays a caution icon in the Indicator column of overallocated resources.
Hover over this icon and Project will display a tip to correct this overallocation.

Locating the overallocations:


Combine the Resource Graph with the Resource Form to view assignments and resource
information with the resource's schedule. Choose View > Resource Graph and Window >
split to open all the above mentioned views. Right clicking on the graph will open the
shortcut menu.

Choose Overallocation and ways to resolve overallocations.


You can choose to:

To delay a task
Split a task
Assign additional or different resources

Check the Remaining Availability option in the shortcut menu to check on times available
for that resource.
To assign additional or different resources display the Resource Usage View and choose
Group from the Group drop-down list to arrange resources in groups.
Project 2000 offers a leveling feature that can resolve resource allocations by splitting or
delaying tasks. It uses factors like:

Available time
Task priority, dependencies and constraints
Task ID
Scheduling dates

To apply the leveling feature:


1. Select any task.
2. Choose Tools > Resource Leveling. This will open the Resource Leveling Dialog
box.
3. Select Level From/To option and use the drop-down calendar to select beginning
and ending dates between which Project should search for overallocations. After it
identifies overallocations, it delays tasks based on the leveling order selected.
Tasks with constrains like Must Finish On, As Soon as Possible or As Late as Possible are
left alone, so also tasks that have already begun.

Three leveling orders are:


1. ID: Higher ID tasks are delayed (It would be useful to enter tasks in order of
importance).
2. Standard: This is the Default leveling order.

Tasks without successors are delayed first.


Tasks that are not on a critical path (most important work path of the
project) are delayed first.
o Lower-Priority and non-constrained tasks are delayed first.
o Tasks with later Start dates are allowed to begin later.
3. Priority/Standard Leveling Order:
The only factor of importance is the priority of tasks. Task Priority is set to any
value between 0 and 1000 on the General Tab of the Task Information Form. (If
you don't want Project to delay a task set its priority to 1000 and use this leveling
order).

o
o

To level your resources on your own:


Display the Resource Allocation View with assignment delay and task delay fields visible.
1.
2.
3.
4.
5.
6.
7.
8.
9.

Choose View > More Views > Resource Allocation


Click in the Gantt Chart in the lower pane.
Choose View > Table > More Tables and the More Tables Dialog box opens.
Select Delay.
Click Apply
In the Resource Usage Table in the upper pane, right-click on Work Column.
Choose Insert Column from the shortcut menu.
Select Assignment Delay Column in the Column Definition Dialog box.
Click OK.

To add delay to a task:


1. Select any assignment for the task you want to delay.
2. In the Leveling Delay Field in the lower pane, enter the duration of the delay.

To delay an assignment:
When you delay an assignment, you are effectively delaying the time when the resource
begins working on an Assignment after the task's start date has been set.
1. Select the assignment that you want to delay in the Resource Usage Table.
2. Enter the duration for the delay in the Assignment Delay Field.

FINE TUNING AND PREPARING THE PROJECT FOR PUBLICATION


So far you have dealt with tasks, resources, assignments and costs in detail. Your project
design is almost complete, leveled and ready for presentation and you are waiting for the
go ahead to implement the project.
Just before you make that all-important presentation it would be useful to step back and
evaluate your work.
To zoom in on the overall quality and finesse of your project, Microsoft Project 2000
provides you with a number of tools.

You can:

Display a summary of all the important statistics using the Summary table display
Use filters to zero in on the information you want to view
Sort and group information
Identify and implement strategies to reduce duration and costs

The Project Statistics Dialog box provides summary information about your project.
At the top of this box you will see the current start and finish dates. When you initially
save a project, Project's Planning Wizard prompts you to save the project with or without
a baseline. Now, what is a baseline? It is a project plan with original estimates for tasks,
resources, assignments and costs. With it, you can compare task, resource and other
updates as the project work is completed. These variances help identify potential
problems in the project.
In the Project Statistics Dialog box, Actual row gives you current dates while the variance
row displays the variance between baseline and scheduled dates.
This Dialog box gives information about duration and costs too.

Changing Timescales
The default timescale in the Gantt Chart view are weeks and days. If you choose to get a
broader picture of the project you can zoom out the timescale to months and weeks.
Clicking on the Zoom Out button on the Standard Tool bar will allow you to select the set
of time units of your choice.

Collapsing the task outline


Display any view showing the task lists.
1. Click the Show Drop-down arrow on the Formatting Tool bar and select an outline
level to view. These outline levels display subtasks indented in various ways.
2. To get back to normal viewing of all the tasks, click the Show Arrow and select All
Subtasks.

Filtering
Filtering allows you to impose certain conditions on the way in which you want to display
your information at any time. You can choose to hide information that you don't want to
view or highlight the information that is important to you. The Auto Filters are most
suitable for this need.

To apply an Auto Filter:


1. Choose Project > Filtered For > Auto Filter.
2. Click on one of the drop-down lists to view the various headings and select the
one you want.
3. Once the table is filtered the column headings and filter drop-down arrow turns
blue.
4. To include additional filter conditions use the drop-down list to select other
headings.
5. To turn off the Auto Filter select Project > Filtered for > Click Auto Filter to turn
the feature off.

You can also filter tasks using the predefined filters that Project provides you with. You
can use them to filter tasks like milestones, summary tasks, critical tasks, resourcespecific tasks and incomplete tasks.

Sorting and Grouping


Changing the sort order of your data organizes them in a clearer manner. You can sort by
ascending (default order), cost, priority, Start and Finish dates. For resource lists,
standard sorts are available for name, ID and costs. You can apply multilevel sorting
using Project > Sort > Sort by to open the Sort Dialog box.
In addition to sorting resources or tasks you can categorize them into groups. For
example, your resources may belong to different categories like management, support or
training.

To create a custom group:


1. Display the Gantt Chart View or Resource Sheet View and select View > Table.
2. Select Project > Group by and choose from the cascading menu of existing group
definitions.
3. To add a new group definition choose More Groups to open the More Groups
dialog box and create a group of you choice.

Viewing Costs
The Summary Table gives you a quick look at cost and work.
1. Display the Gantt Chart or other list views.
2. Choose View > Table > Summary. Columns for duration, start, finish, cost, work
and percentage of completion are displayed.

Reducing Costs
After opening the Summary Table and viewing the costs you can open the Gantt Chart
View along with the Task Form and select a task in the Gantt Chart.
Right- click on the Task Form and select Resource Cost settings to take a look at the
complete list of costing fields.
As we learnt in Lesson 2, resource and fixed costs add up to total costs. Among these two
cost types, the resource costs are usually the higher costs in any project. Reducing
resource costs (without compromising on quality), keeping a watchful eye on any task
that may go over the budget and doing away with tasks that are quite unnecessary are
sure ways to reduce project costs.
The all-important sets of tasks in any project - those that are vital to the completion of a
project are the critical ones and their path or sequence is referred to as the critical path.
These tasks may not allow interruptions but it makes sense to look at ways to shorten
this critical path.

To view critical tasks:

In the More Filters Dialog box, select Critical from the list of filters and click on Highlight.
All critical tasks will appear in a different color from the other tasks.

To reduce the critical path:


1.
2.
3.
4.
5.

Overlap tasks
Schedule overtime
Break large tasks into smaller ones
Identify and correct any errors
Reduce the scope - complete all planned tasks within a timeframe

MS Project Tutorial: Lesson 4


- Anjana Srikanth

In this lesson we will learn to customize how information in Project is displayed, format
and modify views (refer lesson 1 for a recap on views) and print the finalized schedule.
We will see how project files can be saved as web pages and create hyperlinks to
navigate to other files and web pages.
1. Formatting Views
2. Publishing Projects on the Web or Intranet
3. Hyperlinks

FORMATTING VIEWS
There are dozens of predefined views available in Project 2000 that can be customized to
suit your needs. Selected text and timescales can be formatted, one can zoom in and out
to get a closer look at the view shown. Formatting options help customize the way you
want your information displayed.

Formatting Text
You can use the Formatting toolbar buttons or the Format Menu options to format
selected text. The Format Painter on the standard toolbar helps you copy the formatting
style that you applied to any one section of text elsewhere.
1. Select the cell that you want to format.
2. Choose Format, Font to display the Font Dialog box. This allows you to assign font
attributes to selected text.
3. Select a new Font type and make the necessary style, size and color changes and
click OK.

Formatting Timescales
A timescale area on a Gantt Chart displays two time unit levels:

Major Units scale


Minor Units scale

The time units, dates can be formatted to fit into your viewing needs.
To format Timescale area:
1. In the Gantt Chart View, choose Format, Timescale to open the Timescale Dialog
box.
2. In the Major and Minor scale sections, select the units of time you want.
3. Each set of units has a Label and an Align box. Select the desired values and click
OK.
If you wish to adjust the appearance of the nonworking time, click the Nonworking time
tab of the Timescale Dialog box and choose your options here.

Formatting Gridlines
When information is displayed across rows and columns, the appropriate placement of
gridlines is very useful in obtaining a good view. Format Gridlines will open the
Gridlines dialog box
The different lines for Gantt Chart Rows are displayed in a row.
1. Select the line you want to change from the list.
2. In the Normal section of the dialog box, select the type and pattern for the
gridline.
3. To get rid of an existing gridline, select it from the list and check the blank area in
the Type drop-down list.
4. Select an Interval, line type and color.
5. In the At Interval section, choose None to display all lines of the selected type or
choose an interval to display lines only at that interval.
6. Click OK.
In addition to the above mentioned formatting methods you can format Tables, fields and
other views and modify them accordingly. The Drawing Tools on the Drawing Toolbar can
create objects and buttons that format existing objects in interesting ways.
Okay, budget and schedule optimizations complete, your project is ready for printing and
distributing among workgroup members and stakeholders. Views and Reports of various
kinds from Project 2000 can be printed easily.
Let us explore printing options in a little detail

Printing Views
Before printing a view, it is important to select the type of view, do the necessary
formatting and change the page setup if necessary. In order to change the print settings
for an active view, File, Page Setup will display the Page setup dialog box.

This box gives you information on margins, page headers/footers etc. The Header/Footer
tabs have 7 buttons and two drop-down lists that can be used to format text, insert
graphics into the header or footer.
Using File, Print Preview to display your View and choose Print to print it. The Print Dialog
box shows you choices for printing the current screen view.
Project 2000 allows you to set the starting page number for printouts.

To print Gantt Charts


The page Setup Dialog box gives you a few options regarding printing a Gantt Chart
View.
1. You can choose to print all sheet columns of the Gantt Chart Table, regardless of
whether they are completely visible on the screen or you may print specified
number of columns on all pages.
2. You can print the task notes on a separate page.
3. Fit the Timescale to extend all the way to the right margin.

Printing Reports
With Project 2000, you can print reports about every aspect of your project - Overview
reports, Top Level Tasks Report, Critical Tasks Report, Milestones Report, Working Days
Report, Cost Reports, Assignment reports and workload reports.
As with printed views, you can change reports using tables and filters.

To print a Report:
1. Choose View Reports to open the Report Dialog box and double-click the
category of report that you want to print.
2. Double-click a report and Project opens it in the Print preview window.
3. Click Print.
4. If you choose to hide a few report details, once you click on the report in the
Report Dialog box, click the Edit button. The Report Definition Dialog box appears
and select the Details tab.
5. Unclick the check mark in the check box next to the Details option you choose to
hide.
6. Click OK.

To create a new Report:


1. Select View, Reports.

2. Double-click the Custom category to open the Custom Reports Dialog box. It
gives you a few options
New Creates a completely new report
Copy Creates a copy of the selected report.
Organizer Shares reports in Project 2000.
3. Type a name for the report created.
4. Customize it using the Organizer button ( Opens the Organizer Dialog box )

PUBLISHING PROJECTS ON THE WEB OR INTRANET


As with all Microsoft Office applications, Project 2000 allows you to save your Project as
an HTML document that can be viewed on any browser such as Microsoft Internet
Explorer or Netscape Navigator.
With Microsoft Project 2000, you can do the following:
1. Use a hyperlink (a place on a Web page that navigates you to another location ).
2. Select a specific task, resource and assignment using an Import/Export map and
publish it in your HTML document.
3. Customize your HTML document to include graphics.
4. Track progress by communicating among team members via your corporate
Intranet.

To save a project file as an HTML document:


1. Choose Menu, File and Save as a Web Page.
2. Click Save in the Save as Dialog box.
3. Project displays the Export Mapping Dialog box that allows you to select the map
on which to base your document. This map instructs Project about the type of
Data saved in the document. Project comes with 12 predefined map files, but by
default it saves your HTML file with the extension -. html.
4. From the Selective Data option on the Export Mapping Dialog box, select the Task
List with Embedded Assignment Rows map and click Save.
To view this saved document in a web browser, open any browser and select File, open
and Browse to navigate to the HTML file that you want to view.
In addition to the 12 maps defined in Project, to create your own Export Map do the
following:
1. From Menu, File choose Save as Web page to open the Save as Dialog box and
select the filename and location for your HTML file and click Save.

2. From the Export Mapping Dialog box, click New Map. Define Import/Export Dialog
box will be displayed.
3. Select Critical Tasks in the Name type.
4. In the Data to Import/Export section, select the tasks check box.
5. Select the Task Mapping tab to display mapping options for your projects task
data in the Define Import/Export Map Dialog box.
6. In the Destination HTML Table Title field, type the text that you would like to
appear above the task table. (Critical Tasks in this case)
7. From the Export Filter drop-down list, select Critical Filter.
8. Click the Base on Table, button and select Base Table For field to display the Field
Mapping Dialog box.
9. Select the schedule tab and click OK to include all the fields into the Task Mapping
tab.
10. To display the total work for a task select Total Slack row and click on the Insert
Row button. In the From: Microsoft Project Field columns select the Work Field
from the drop-down list.
11. In the To: HTML Table field column, change the text Scheduled Work to Task
Work Estimate. This text will become the new column header for the Work Field in
the HTML document.
12. Click OK. The Export Mapping Dialog box will be displayed. Click on Save and
open any browser to view the critical task path.

To display Resource Assignments in your HTML document:


Follow all the steps listed earlier, in the Define Import/Export map dialog box, check the
Include Assignment Rows in the In Output option in the HTML options section and click
OK and save the document.

To display a Gantt Chart Graphic in a Web page:


1. View the Gantt Chart and on the Standard Toolbar, click Copy Picture button to
open the Copy Picture Dialog box.
2. Select To GIF Image File option. The image field will be given the same name as
the project file with a .GIF extension. (Graphic Interchange Format is a
compressed graphics file format)
3. In the Timescale section, select the dates range or select As Shown on Screen to
capture the timescale that is currently displayed on the screen.
4. Click OK.
5. On Menu, File, Save as HTML and select the filename and location and click Save.

6. In the Export Mapping Dialog box, select the map file that you want to modify and
click on Edit.
7. In the HTML options section, check the option Include Image File in HTML Page
and Project will display the information for the Gantt Chart GIF image.
8. Click OK and from the Export Mapping Dialog box, click Save.
9. Open the saved document in the browser to view it.

HYPERLINKS
As we described earlier, hyperlink fields navigate you to another document or web site
from your project. You can add hyperlinks to tasks, resources or assignments in any of
the Project Views.

To add a Hyperlink:
1. Open a view.
2. Select the task, resource or assignment that you want to add a hyperlink to and
open Menu, Insert, Hyperlink to open the Insert Hyperlink Dialog box
3. Enter a Web site URL or a filename from Microsoft Word or Excel in the Type the
File or Web Page Name Box.
4. Enter information in the Text to Display and Screen Tip to Display when the user
moves the mouse over the hyperlink indicator.
5. The Bookmark button enables you to insert hyperlinks to other Microsoft Projects
files.
6. Click OK.
To delete a hyperlink select the task, resource or assignment and choose Edit, Clear,
Hyperlinks.

Navigating to a Hyperlink from a Task or Resource:


View, Table Hyperlink displays the Hyperlink table. This allows you to navigate to a
hyperlink associated with a task or resource in your project.
Click the blue, underlined hyperlink to navigate to the document referenced by it.

Publishing documents on the Internet and Intranet:


Use the Web Publishing Wizard included in the Microsoft Office 97 and 2000 CD ROMs
that will help you publish all your web pages in easy-to-follow-steps.

To publish on the corporate Intranet, copy all HTML files to a location on the network
server to view from your Intranet.

MS Project Tutorial: Lesson 5


- Anjana Srikanth

Once your Project is underway, it may be necessary to revise and change information
about tasks and resources due to sudden and unforeseen changes in plans and deadlines.
Tracking progress in an orderly manner will help keep your plan up to date and in this
lesson you will learn to use these tracking tools.
This lesson will also show you how to consolidate many projects into one and
communicate with team members (workgroup) and exchange information such as team
member assignments and task updates and other project data between various other
applications.
1.
2.
3.
4.

Tracking Work on MS Project


Working with multiple projects
Workgroups
Exchanging project data with other applications

.............................................................................................

Tracking Work on MS Project


Apart from being able to manage a project well, an effective project manager needs to
ensure that the project goals are met on time and are within the budget. Anticipating the
implications of a task that is slipping behind schedule, revising project plans, reassigning
resources and finding ways to minimize the impact on time and costs require an orderly
approach to tracking project progress.
As already mentioned in Lesson 3, it is important to save your project as a baseline and
then later compare it with the actual schedules. The date, duration, work and cost fields
are in the current schedule. The actual fields are where you enter actual dates and costs
to show what actually happens.
There are baseline and actual fields for both tasks and assignments. The variance fields
show the difference between the current value and the baseline value for each task. A
positive variance means that your task will take longer to complete than originally
scheduled.
Project calculates variances to the baseline for start and finish dates, duration, work and
costs. You can display this variance by switching to tracking Gantt Chart View and
selecting the Variance Table.
The Tracking Gantt Chart shows a baseline task bar in gray and blue or red bars for
actual or scheduled tasks (dates). The Variance table contains fields that show the
baseline date and variances and you can add additional fields to compare actual and
scheduled dates and interim plans.
After capturing and saving the Baseline, you can make subsequent changes and update it
using the Save Baseline command on the menu.

Tracking information like Start and Finish dates, percentage of scheduled task duration
completed, updating and rescheduling tasks will afford greater accuracy in finishing your
project on time.

Entering Task Update Data


You can update most project data by using the Tracking table in the Task Sheet View.
This view contains the Actual Start and Finish, Percent Complete, Actual Duration,
Remaining Duration, Actual Cost and Actual Work Fields.
To switch to the Task Sheet/Tracking Table View:
1. Choose View, More Views Task Sheet and click OK.
2. Choose Views, Table Tracking.
To enter data into a table:
1. Click the cell you want to enter data into, for example: Act. Start
2. Click the down arrow to select a date from the drop-down calendar.
To enter numeric values in the % completed and Actual Duration fields, use the up and
down arrows on the spin box controls to change the values or type a number in the cell.

Tracking Toolbar
Description of the Tracking toolbar buttons:

Project
Statistics

Opens a message box that displays current,


baseline, actual and variance for Start, Finish,
Duration, Work and Costs

Update as
Scheduled

Changes the actual dates of all or selected tasks to


match the schedule

Reschedule
work

Reschedules the remaining duration on all or


selected tasks to continue from the Status Date

Add Progress
Lines

Add progress lines to a Gantt Chart View to view


whether the project is ahead or behind schedule

% Complete

Sets the % complete on a task

Update Tasks

Opens the Update Tasks dialog box

Workgroup
Toolbar

Opens the Workgroup toolbar

Using the Update tasks Dialog Box


Click the Update Tasks button from the Tracking toolbar and type a date. Click Set % or
100% complete only. Select Entire project/Selected Tasks and click OK.

To update Percent Complete


Select the tasks you want to update and click the appropriate % complete button on the
toolbar

Adding progress lines to the Gantt Chart


Project draws a line that connects in-progress tasks and tasks that should have started.
Peaks pointing to the left represent work behind schedule and those pointing to the right
represent work ahead of schedule.

To define progress lines


1. Choose Tools, Tracking Progress lines to open the Progress Lines Dialog box.
2. Select the Always Display Current Progress line checkbox.
3. Click At Project Status Date or At Current Date to indicate where you want the
project lines to appear.
4. Select Display Project Lines at Recurring Intervals Checkbox; then check Daily,
Weekly, Monthly to specify a time that you want to display the progress lines
5. Turn on Display Selected Progress lines and select dates.
6. Check the Line styles tab and select line type, color, and progress point shape,
point color for the current and all progress lines.
7. Click OK to close the dialog box and apply the project lines.

Earned Value Analysis


Earned Value Analysis is a set of simple calculations that separate budget performance
from work performance so you can manage costs and work in the midst of chaos.
Three task-related values used to calculate variances and ratios that drive performance
and management are
1. Budgeted cost of work schedules BCWS or base line budget (baseline cost *
baseline hours)
2. Budgeted cost of work performed - (BCWP) or actual hours budget (baseline cost
* actual hours)
3. Actual cost of work performed (ACWP) or actual cost incurred for tasks ( actual
cost * actual hours)
The three values are used to calculate two variances and two ratios that are:
1. Schedule Performance Index = Actual work performed/scheduled work
2. Cost Performance Index = Baseline budget costs/actual costs

These ratios that can be positive or negative numbers and are important values. The
larger the number the greater the variance between performance and schedule.
The Earned Value Table, applied to a task view like the Gantt Chart, lists all the relevant
Earned value data. For more precise definitions and help on this analysis, refer to
Projects online help.

WORKING WITH MULTIPLE PROJECTS


Project allows you to manage smaller files individually and then combine and link
subprojects when necessary. With Project, you can have multiple projects open at once
and switch back and forth between them with ease.
Projects come in various sizes, but regardless of the size of the overall project, it may be
more convenient to work with smaller subprojects and then link them together through
one master project.
To divide a project into smaller pieces:
1. Open the large project that you want to subdivide.
2. Create a view that puts all the tasks you want to move in consecutive order.
3. Select these tasks and click the Cut button.
4. Click the New button and create a new project.
5. Click in the first cell of the Gantt Chart and click the Paste button.
6. Save the new project.
7. Repeat steps 3 6 for all the task groups that you want to move.
A master project is one that contains other projects. You can consolidate a number of
projects into a master project that can be linked to subprojects in these ways

Consolidate multiple projects into a new project file


Insert projects into an existing project file
Open a resource pool and add it to a master project

You can create a master project that handles all projects within an organization and
divide it into subprojects and then create reports, apply views and analyze data across
each project.

To create a link between tasks that cross projects


1. Open both the projects and choose Window, Arrange All to see the two projects in
the same window.
2. Double click the task that you want to name as the successor and this will open
the Task ID Dialog box.
3. Click the predecessors tab to establish the task as the predecessor.

4. Select the ID field and type the project name and ID # of the predecessor task
using this format: Project Name/Task ID #.
5. Press Enter. Project automatically adds External Project to the Type and Lag
fields.
6. Click OK.

WORKGROUPS
Communication between the project manager and team members is vital to tracking and
managing any project. Regular update of a projects status within a workgroup is the
ideal way to keep a project on track.
A workgroup comprises people who are directly involved in the project - the manager and
team in a project and external contractors and customers.
You can communicate project information electronically vie email or Intranet or Internet
and set up various efficient methods of messaging between a workgroup. When using
the Intranet, all workgroup members need access to a network and to the networks Web
server. Team members do not require to have Project 2000 installed on their systems,
only the workgroup manager must have it installed.
To configure Workgroup settings:
1. Select Tools, Options to open the Options Dialog box.
2. Select the Workgroup tab to choose an option from the Default Workgroup
Messaging for Resources drop-down list.
3. Select Email/Web (Type the URL for the Web)
4. Identification of Web Client Server prompt appears. Select the Create Account
Button and following the directions on the General tab or as given by the system
administrator.
5. Click OK.
Both email and the Web can be used to send messages. On the web-based system, team
members use Microsoft Project Central to read and reply to messages.
Microsoft Project Central is a database of Project 2000 files and fields with
detailed security control regarding who can assess the database and what they
see when they do. It is a Web site on the Intranet and is devoted to tracking a
companys active projects.

EXCHANGING PROJECT DATA WITH OTHER APPLICATIONS

If you want to use a resource list from your Human Resources Department and a task
from a workgroup leader in Project 2000, instead of manually typing in the information,
you can import the data.
Importing moves data from another application into Project while exporting saves Project
data so that it can be used in other applications. Importing data directly prevents typing
errors and saves time. The copy and paste facilities of the Windows Clipboard help link
files from Project to Excel or Access.
Using the Save as Menu commands, entire projects or selected data can be transferred in
formats other than Project 2000s native MPP format.

Files Formats supported by Project are:

Project Database (*.mpd)


Microsoft Project 98 (*.mpp)
Microsoft Access 8.0 Database (*.mdb)
Microsoft Excel Workbook (*.xls)
Microsoft Excel Pivot table (*.xls)
Hypertext Markup Language (*.htm)
Text files

To import a file:
1. Select the data to be imported.
2. Map the datas relationship to project data files (data exchange map).
3. Import the data.
Select the file you want to import and click open. After clicking the Open button in the
Open Dialog box, the Import Mapping Dialog box is opened. In the Import File text box,
is the name of the file you want to import. The Import Dialog box gives you the options
of importing the entire project or importing Selective Data.
We have encountered the Define Import/Export Map Dialog box that was used to create
an Export map in an HTML document in Lesson 4. It allows you to customize the Import
Settings.
In addition to exporting or importing data using the File, Open or the File, Save as
Command, you can also use the Edit, Copy and Edit, Paste commands to copy selected
data from one document to another.
If you use the Edit, Paste Special command, you can choose the Paste Link option to
create a link between the copy data you paste in the Project document and the external
data.
If you select the Link check box when pasting an object into a project, the object is linked
to its original application and will change if the original object is modified.
This is the end of the Microsoft Project Tutorial and you will find that you can now create
reports and review your work and communicate your project successfully with others.

IfWhen
you want
to useaaproject,
resource
from
your
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Resources
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and a task
you finish
it list
would
help
identify
those
things that
may be useable
in
future projects. Keep a summary of each project you manage and use your
experience to guide your decision-making about new ventures.
Heres wishing you success on every project you undertake!
You can reach the author of this tutorial at anjana@stylusinc.com . The
Online Version of this tutorial is available at :
http://www.stylusinc.net/ms_project_tutorial/project_management.sht
ml

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