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SIKKIM MANIPAL UNIVERSITY

Masters of Business Administration


Assignment ( Sem.-III) Specialization- Project Management

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MB 0050 Research Methodology


(Book ID: B1206)

Assignment Set- 1

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Q1. a. Differentiate between nominal, ordinal, interval and ratio scales, with an example of each. b. What are the purposes of measurement in social science research? Ans. 1a .Levels of Measurement Measurement may be classified into four different levels, based on the characteristics of order, distance and origin. 1. Nominal measurement This level of measurement consists in assigning numerals or symbols to different Categories of a variable. Example of male and female applicants to an MBA program mentioned earlier is an example of nominal measurement. The numerals or symbols are just labels and have no quantitative value. The numbers of cases under each category are counted. Nominal measurement is therefore the simplest level of measurement. It does not have characteristics such as order, distance or arithmetic origin. 2. Ordinal measurement

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In this level of measurement, persons or objects are assigned numerals which indicate ranks with respect to one or more properties, either in ascending or descending order. Example: - Individuals may be ranked according to their socio-economic class, which is measured by a combination of income, education, occupation and wealth. The individual with the highest score might be assigned rank 1, the next highest rank 2, and so on, or vice versa. The numbers in this level of measurement indicate only rank order and not equal distance or absolute quantities. This means that the distance between ranks 1 and 2 is not necessarily equal to the distance between ranks 2 and 3. Ordinal scales may be constructed using rank order, rating and paired comparisons. Variables that lend themselves to ordinal measurement include preferences, ratings of organizations and economic status. Statistical techniques that are commonly used to analyze ordinal scale data are the median and rank order correlation coefficients. 3. Interval measurement This level of measurement is more powerful than the nominal and ordinal levels of Measurement, since it has one additional characteristic equality of distance. However, it does not have an origin or a true zero. This implies that it is not possible to multiply or divide the numbers on an interval scale. Example: - The Centigrade or Fahrenheit temperature gauge is an example of the interval level of measurement. A temperature of 50 degrees is exactly 10 degrees hotter than 40 degrees and 10 degrees cooler than 60 degrees. Since interval scales are more powerful than nominal or ordinal scales, they also lend themselves to more powerful statistical techniques, such as standard deviation, product moment correlation and t tests and F tests of significance. 4. Ratio measurement This is the highest level of measurement and is appropriate when measuring characteristics which have an absolute zero point. This level of measurement has all the three characteristics order, distance and origin. Examples:- Height, weight, distance and area. Since there is a natural zero, it is possible to multiply and divide the numbers on a ratio scale. Apart from being able to use all the statistical techniques that are used with the nominal, ordinal and
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interval scales, techniques like the geometric mean and coefficient of variation may also be used. The main limitation of ratio measurement is that it cannot be used for characteristics such as leadership quality, happiness, satisfaction and other properties which do not have natural zero points. The different levels of measurement and their characteristics may be summed up. In the table below Levels of measurement Characteristics Nominal No order, distance or origin Ordinal Order, but no distance or origin Interval Both order and distance, but no origin Ratio Order, distance and origin Ans. 1 b. Definition and Purpose of Measurement Different definitions of measurement have been offered by different authors 1. According to Stevens, measurement is the assignment of numerals to objects or events according to rules. A simple example of assignment of numerals according to a rule is described below Suppose a survey is conducted to study the applicants of an MBA program and one of the objectives of the study is to find out the sex-wise break-up of applicants. In this case, we may assign the number 0 to male applicants and the number 1 to female applicants. Thus numbers may be used to label individuals, events or things. 2. Campbell defines measurement as the assignment of numbers to represent properties. 3. In the words of Torgerson, measurement is the assignment of numbers to objects to represent amounts or degrees of a property possessed by all of the objects. In research, it is necessary to distinguish between objects and
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properties or characteristics of these objects. For example, a person is an object and his/her physical characteristics include height, weight, color, etc. while his or her psychological characteristics include intelligence and attitudes. The important point to remember is that the researcher is concerned with measuring properties and not the objects themselves. While physical properties may be directly observed, psychological properties such as intelligence are inferred. For example, a childs score in an IQ test indicates his or her level of intelligence. Measurement also has several purposes The researcher constructs theories to explain social and psychological phenomena (e.g. labor unrest, employee satisfaction), which in turn are used to derive hypotheses or assumptions. These hypotheses can be verified statistically only by measuring the variables in the hypotheses. Measurement makes the empirical description of social and psychological phenomena easier. Example When conducting a study of a tribal community, measuring devices help the researcher in classifying cultural patterns and behaviors. Measurement also makes it possible to quantify variables and use statistical techniques to analyze the data gathered. Measurement enables the researcher to classify individuals or objects and to compare them in terms of specific properties or characteristics by measuring the concerned variables. Examples Comparison of male and female students performance in college exams or of length of stay on the job of older and younger employees. Q2. a. What are the sources from which one may be able to identify research problems? b. Why literature survey is important in research? Ans. 1 a. Meaning of Research Problem Research really begins when the researcher experiences some difficulty, i.e., a problem demanding a solution within the subject-are of his discipline. This general area of interest, however, defines only the range of subject-matter within which the researcher would see and pose a specific problem for research. Personal values play an important role in the selection of a topic for research. Social conditions do often shape the preference of investigators in a subtle and imperceptible way.
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The formulation of the topic into a research problem is, really speaking the first step in a scientific enquiry. A problem in simple words is some difficulty experienced by the researcher in a theoretical or practical situation. Solving this difficulty is the task of research. R. L. Ackoffs analysis affords considerable guidance in identifying problem for research. He visualizes five components of a problem. 1) Research-consumer: There must be an individual or a group which experiences some difficulty. 2) Research-consumers Objectives: The research-consumer must have available, alternative means for achieving the objectives he desires. 3) Alternative Means to Meet the Objectives: The research-consumer must have available, alternative means for achieving the objectives he desires. 4) Doubt in Regard to Selection of Alternatives: The existence of alternative courses of action in not enough; in order to experience a problem, the research consumer must have some doubt as to which alternative to select. 5) There must be One or More Environments to which the Difficulty or Problem Pertains: A change in environment may produce or remove a problem. A research-consumer may have doubts as to which will be the most efficient means in one environment but wouldhave no such doubt in another. Objectives: After studying this unit you should be able to understand: The meaning of Research Problem Choosing the problem Review of Literature Criteria for formulating the problem Objective of Formulating the Problem Techniques involved in Formulating the Problem Criteria of Good Research Problem 3.2 Choosing the Problem The selection of a problem is the first step in research. The term problem means a
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question or issue to be examined. The selection of a problem for research is not an easy task; it self is a problem. It is least amenable to formal methodological treatment. Vision, an imaginative insight, plays an important role in this process. One with a critical, curious and imaginative mind and is sensitive to practical problems could easily identify problems for study. The sources from which one may be able to identify research problems or develop problems awareness are: Review of literature Academic experience Daily experience Exposure to field situations Consultations Brain storming Research Intuition Ans. 2 b. Review of Literature Frequently, an exploratory study is concerned with an area of subject matter in which explicit hypothesis have not yet been formulated. The researchers task then is to review the available material with an eye on the possibilities of developing hypothesis from it. In some areas of the subject matter, hypothesis may have been stated by previous research workers. The researcher has to take stock of these various hypotheses with a view to evaluating their usefulness for further research and to consider whether they suggest any new hypothesis. Sociological journals, economic reviews, the bulletin of abstracts of current social sciences research, directory of doctoral dissertation accepted by universities etc afford a rich store of valuable clues. In addition to these general sources, some governmental agencies and voluntary organizations publish listings of summaries of research in their special fields of service. Professional organizations, research groups and voluntary organizations are a constant source of information about unpublished works in their special fields. Q3. a. What are the characteristics of a good research design? b. What are the components of a research design?
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Ans. 3 a. Needs of Research Design The need for the methodologically designed research:
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In many a research inquiry, the researcher has no idea as to how accurate the results of his study ought to be in order to be useful. Where such is the case, the researcher has to determine how much inaccuracy may be tolerated. In a quite few cases he may be in a position to know how much inaccuracy his method of research will produce. In either case he should design his research if he wants to assure himself of useful results. In many research projects, the time consumed in trying to ascertain what the data mean after they have been collected is much greater than the time taken to design a research which yields data whose meaning is known as they are collected. The idealized design is concerned with specifying the optimum research procedure that could be followed were there no practical restrictions.

Characteristics of a Good Research Design 1. It is a series of guide posts to keep one going in the right direction. 2. It reduces wastage of time and cost. 3. It encourages co-ordination and effective organization. 4. It is a tentative plan which undergoes modifications, as circumstances demand, when the study progresses, new aspects, new conditions and new relationships come to light and insight into the study deepens. 5. It has to be geared to the availability of data and the cooperation of the informants. 6. It has also to be kept within the manageable limits Ans3 b. Components of Research Design It is important to be familiar with the important concepts relating to research design. They are: 1. Dependent and Independent variables: A magnitude that varies is known as a variable. The concept may assume different quantitative values, like height, weight, income, etc. Qualitative variables are not quantifiable in the strictest sense of objectivity. However, the qualitative phenomena may also be quantified in terms of the
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presence or absence of the attribute considered. Phenomena that assume different values quantitatively even in decimal points are known as continuous variables. But, all variables need not be continuous. Values that can be expressed only in integer values are called noncontiguous variables. In statistical term, they are also known as discrete variable. For example, age is a continuous variable; where as the number of children is a noncontinuous variable. When changes in one variable depends upon the changes in one or more other variables, it is known as a dependent or endogenous variable, and the variables that cause the changes in the dependent variable are known as the independent or explanatory or exogenous variables. For example, if demand depends upon price, then demand is a dependent variable, while price is the independent variable. And if, more variables determine demand, like income and prices of substitute commodity, then demand also depends upon them in addition to the own price. Then, demand is a dependent variable which is determined by the independent variables like own price, income and price of substitute. 2. Extraneous variable: The independent variables which are not directly related to the purpose of the study but affect the dependent variable are known as extraneous variables. For instance, assume that a researcher wants to test the hypothesis that there is relationship between childrens school performance and their self-concepts, in which case the latter is an independent variable and the former, the dependent variable. In this context, intelligence may also influence the school performance. However, since it is not directly related to the purpose of the study undertaken by the researcher, it would be known as an extraneous variable. The influence caused by the extraneous variable on the dependent variable is technically called as an experimental error. Therefore, a research study should always be framed in such a manner that the dependent variable completely influences the change in the independent variable and any other extraneous variable or variables. 3. Control: One of the most important features of a good research design is to minimize the effect of extraneous variable. Technically, the term control is used when a researcher designs the study in such a manner that it minimizes the effects of extraneous independent variables. The term control is used in experimental research to reflect the restrain in experimental conditions. 4. Confounded relationship: The relationship between dependent and independent variables is said to be confounded by an extraneous variable, when the dependent variable is not free from its effects.
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5. Research hypothesis: When a prediction or a hypothesized relationship is tested by adopting scientific methods, it is known as research hypothesis. The research hypothesis is a predictive statement which relates a dependent variable and an independent variable. Generally, a research hypothesis must consist of at least one dependent variable and one independent variable. Whereas, the relationships that are assumed but not be tested are predictive statements that are not to be objectively verified are not classified as research hypothesis. 6. Experimental and control groups: When a group is exposed to usual conditions in an experimental hypothesis-testing research, it is known as control group. On the other hand, when the group is exposed to certain new or special condition, it is known as an experimental group. In the afore-mentioned example, the Group A can be called a control group and the Group B an experimental one. If both the groups A and B are exposed to some special feature, then both the groups may be called as experimental groups. A research design may include only the experimental group or the both experimental and control groups together. 7. Treatments: Treatments are referred to the different conditions to which the experimental and control groups are subject to. In the example considered, the two treatments are the parents with regular earnings and those with no regular earnings. Likewise, if a research study attempts to examine through an experiment regarding the comparative impacts of three different types of fertilizers on the yield of rice crop, then the three types of fertilizers would be treated as the three treatments. 8. Experiment: An experiment refers to the process of verifying the truth of a statistical hypothesis relating to a given research problem. For instance, experiment may be conducted to examine the yield of a certain new variety of rice crop developed. Further, Experiments may be categorized into two types namely, absolute experiment and comparative experiment. If a researcher wishes to determine the impact of a chemical fertilizer on the yield of a particular variety of rice crop, then it is known as absolute experiment. Meanwhile, if the researcher wishes to determine the impact of chemical fertilizer as compared to the impact of bio-fertilizer, then the experiment is known as a comparative experiment. 9. Experiment unit: Experimental units refer to the predetermined plots, characteristics or the blocks, to which the different treatments are applied. It is worth mentioning here that such experimental units must be selected with great caution.
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Q.4.a. Distinguish between Doubles sampling and multiphase sampling. b. What is replicated or interpenetrating sampling? Ans.4.a. DOUBLE SAMPLING Definition: A standard form of sample design for industrial inspection purposes. In accordance with the characteristics of a particular plan, two samples are drawn, n1 and n2, and the first sample inspected. The batch can then be accepted or rejected upon the results of this inspection or the second sample be inspected and the decision made upon the combined result. Double sampling plans was invented to give a questionable lot another chance. For example, if in double sampling the results of the first sample are not conclusive with regard to accepting or rejecting, a second sample is taken. Application of double sampling requires that a first sample of size n1 is taken at random from the (large) lot. The number of defectives is then counted and compared to the first sample's acceptance number a1 and rejection number r1. Denote the number of defectives in sample 1 by d1 and in sample 2 by d2, then: If d1 a1, the lot is accepted. If d1 r1, the lot is rejected. If a1 < d1 < r1, a second sample is taken. If a second sample of size n2 is taken, the number of defectives, d2, is counted. The total number of defectives is D2 = d1 + d2. Now this is compared to the acceptance number a2 and the rejection number r2 of sample 2. In double sampling, r2 = a2 + 1 to ensure a decision on the sample. If D2 If D2 a2, the lot is accepted. r2, the lot is rejected.

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MULTI-PHASE SAMPLING

Definition: It is sometimes convenient and economical to collect certain items of information from the whole of the units of a sample and other items of usually more detailed information from a sub-sample of the units constituting the original sample. This may be termed two-phase sampling, e.g. if the collection of information concerning variate, y, is relatively expensive, and there exists some other variate, x, correlated with it, which is relatively cheap to investigate, it may be profitable to carry out sampling in two phases. At the first phase, x is investigated, and the information thus obtained is used either (a) to stratify the population at the second phase, when y is investigated, or (b) as supplementary information at the second phase, a ratio or regression estimate being used. Two-phase sampling is sometimes called "double sampling". Multistage sampling is a complex form of cluster sampling. Advantages cost and speed that the survey can be done in convenience of finding the survey sample normally more accurate than cluster sampling for the same size sample Disadvantages Is not as accurate as SRS if the sample is the same size More testing is difficult to do

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Using all the sample elements in all the selected clusters may be prohibitively expensive or not necessary. Under these circumstances, multistage cluster sampling becomes useful. Instead of using all the elements contained in the selected clusters, the researcher randomly selects elements from each cluster. Constructing the clusters is the first stage. Deciding what elements within the cluster to use is the second stage. The technique is used frequently when a complete list of all members of the population does not exist and is inappropriate.

Ans.4.b. Replication is not the same as repeated measurements of the same item: they are dealt with differently in statistical experimental design and data analysis. For proper sampling, a process or batch of products should be in reasonable statistical control; inherent random variation is present but variation due to assignable (special) causes is not. Evaluation or testing of a single item does not allow for item-to-item variation and may not represent the batch or process. Replication is needed to account for this variation among items and treatments. Example: As an example, consider a continuous process which produces items. Batches of items are then processed or treated. Finally, tests or measurements are conducted. Several options might be available to obtain ten test values. Some possibilities are: One finished and treated item might be measured repeatedly to obtain ten test results. Only one item was measured so there is no replication. The repeated measurements help identify observational error. Ten finished and treated items might be taken from a batch and each measured once. This is not full replication because the ten samples are not random and not representative of the continuous nor batch processing. Five items are taken from the continuous process based on sound statistical sampling. These are processed in a batch and tested twice each. This includes replication of initial samples but does not allow for batch-to-batch variation in processing. The repeated tests on each provide some measure and control of testing error.
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Five items are taken from the continuous process based on sound statistical sampling. These are processed in five different batches and tested twice each. This plan includes proper replication of initial samples and also includes batch-to-batch variation. The repeated tests on each provide some measure and control of testing error. Each option would call for different data analysis methods and yield different conclusions Q5. a. How is secondary data useful to researcher? b. What are the criteria used for evaluation of secondary data? Ans. 5 a. Advantages of Secondary Data 1. Secondary data, if available can be secured quickly and cheaply. Once their source of documents and reports are located, collection of data is just matter of desk work. Even the tediousness of copying the data from the source can now be avoided, thanks to Xeroxing facilities. 2. Wider geographical area and longer reference period may be covered without much cost. Thus, the use of secondary data extends the researchers space and time reach. 3. The use of secondary data broadens the data base from which scientific generalizations can be made. 4. Environmental and cultural settings are required for the study. 5. The use of secondary data enables a researcher to verify the findings bases on primary data. It readily meets the need for additional empirical support. The researcher need not wait the time when additional primary data can be collected Ans. 5 b. Evaluation of Secondary Data When a researcher wants to use secondary data for his research, he should evaluate them before deciding to use them. 1. Data Pertinence The first consideration in evaluation is to examine the pertinence of the available
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secondary data to the research problem under study. The following questions should beconsidered. What are the definitions and classifications employed? Are they consistent ? What are the measurements of variables used? What is the degree to which they Conform to the requirements of our research? What is the coverage of the secondary data in terms of topic and time? Does this Coverage fit the needs of our research? On the basis of above consideration, the pertinence of the secondary data to the research on hand should be determined, as a researcher who is imaginative and flexible may be able to redefine his research problem so as to make use of otherwise unusable available data. 2. Data Quality If the researcher is convinced about the available secondary data for his needs, the next step is to examine the quality of the data. The quality of data refers to their accuracy, reliability and completeness. The assurance and reliability of the available secondary data depends on the organization which collected them and the purpose for which they were collected. What is the authority and prestige of the organization? Is it well recognized? Is it noted for reliability? It is capable of collecting reliable data? Does it use trained and well qualified investigators? The answers to these questions determine the degree of confidence we can have in the data and their accuracy. It is important to go to the original source of the secondary data rather than to use an immediate source which has quoted from the original. Then only, the researcher can review the cautionary ands other comments that were made in the original source. 3. Data Completeness The completeness refers to the actual coverage of the published data. This depends on the methodology and sampling design adopted by the original organization. Is the methodology sound? Is the sample size small or large? Is the sampling method appropriate? Answers to these questions may indicate the appropriateness and adequacy of the data for the problem under study. The question of possible bias should also be examined. Whether the purpose for which the original organization collected the data had a particular orientation? Has the study been made to promote the organizations own interest? How the study was conducted? These are important clues. The researcher must be on guard when the source does not report
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the methodology and sampling design. Then it is not possible to determine the adequacy of the secondary data for the researchers study. Q 6. What are the differences between observation and interviewing as methods of data collection? Give two specific examples of situations where either observation or interviewing would be more appropriate. Ans. 6:- Observation means viewing or seeing. Observation may be defined as a systematic viewing of a specific phenomenon in its proper setting for the specific purpose of gathering data for a particular study. Observation is classical method of scientific study. Observation as a method of data collection has certain characteristics. 1. It is both a physical and a mental activity: The observing eye catches many things that are present. But attention is focused on data that are pertinent to the given study. 2. Observation is selective: A researcher does not observe anything and everything, but selects the range of things to be observed on the basis of the nature, scope and objectives of his study. For example, suppose a researcher desires to study the causes of city road accidents and also formulated a tentative hypothesis that accidents are caused by violation of traffic rules and over speeding. When he observed the movements of vehicles on the road, many things are before his eyes; the type, make, size and colour of the vehicles, the persons sitting in them, their hair style, etc. All such things which are not relevant to his study are ignored and only over speeding and traffic violations are keenly observed by him. 3. Observation is purposive and not casual: It is made for the specific purpose of noting things relevant to the study. It captures the natural social context in which persons behaviour occur. It grasps the significant events and occurrences that affect social relations of the participants. 4. Observation should be exact and be based on standardized tools of research and such as observation schedule, social metric scale etc., and precision instruments, if any. Interviewing is one of the prominent methods of data collection.
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It may be defined as a two way systematic conversation between an investigator and an informant, initiated for obtaining information relevant to a specific study. It involves not only conversation, but also learning from the respondents gesture, facial expressions and pauses, and his environment. Interviewing requires face to face contact or contact over telephone and calls for interviewing skills. It is done by using a structured schedule or an unstructured guide. Interviewing may be used either as a main method or as a supplementary one in studies of persons. Interviewing is the only suitable method for gathering information from illiterate or less educated respondents. It is useful for collecting a wide range of data from factual demographic data to highly personal and intimate information relating to a persons opinions, attitudes, values, beliefs past experience and future intentions. When qualitative information is required or probing is necessary to draw out fully, and then interviewing is required. Where the area covered for the survey is a compact, or when a sufficient number of qualified interviewers are available, personal interview is feasible. Interview is often superior to other data-gathering methods. People are usually more willing to talk than to write. Once report is established, even confidential information may be obtained. It permits probing into the context and reasons for answers to questions. Interview can add flesh to statistical information. It enables the investigator to grasp the behavioural context of the data furnished by the respondents. Observation is suitable for a variety of research purposes. It may be used for studying (a) The behavior of human beings in purchasing goods and services.: life style, customs, and manner, interpersonal relations, group dynamics, crowd behavior, leadership styles, managerial style, other behaviours and actions; (b) The behaviour of other living creatures like birds, animals etc. (c) Physical characteristics of inanimate things like stores, factories, residences etc. (d) Flow of traffic and parking problems. (e) Movement of materials and products through a plant.

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MB 0050 Research MethodologyAssignment Set- II


Q1.a. Explain the General characteristics of observation
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b. What is the Utility of Observation in Business Research? Ans.1 a. General Characteristics of Observation Method Observation as a method of data collection has certain characteristics. 1. It is both a physical and a mental activity: The observing eye catches many things that are present. But attention is focused on data that are pertinent to the given study. 2. Observation is selective: A researcher does not observe anything and everything, but selects the range of things to be observed on the basis of the nature, scope and objectives of his study. 3. Observation is purposive and not casual: It is made for the specific purpose of noting things relevant to the study. It captures the natural social context in which persons behaviour occur. It grasps the significant events and occurrences that affect social relations of the participants. 4. Observation should be exact and be based on standardized tools of research Ans.1b. Use of Observation in Business Research Observation is suitable for a variety of research purposes. It may be used for studying (a) The behaviour of human beings in purchasing goods and services (b) The behaviour of other living creatures like birds, animals etc. (c) Physical characteristics of inanimate things like stores, factories, residences etc. (d) Flow of traffic and parking problems (e) movement of materials and products through a plant. 2. a. Briefly explain Interviewing techniques in Business Research? b. What are the problems encountered in Interview? Ans.2 a. Interviewing techniques in Business Research The interview process consists of the following stages:
1. Preparation :The interviewing requires some preplanning and preparation. The interviewer should keep the copies of interview schedule/guide ready to use. He should have the list of names and addresses of respondents, he should regroup them into
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contiguous groups in terms of location in order to save time and cost in traveling. The interviewer should find out the general daily routine of the respondents in order to determine the suitable timings for interview. 2. Introduction The investigator is a stranger to the respondents. Therefore, he should be properly introduced to each of the respondents.After getting himself introduced to the respondent in the most appropriate manner, the interviewer can follow a sequence of procedures as under, in order to motivate the respondent to permit the interview: 1. With a smile, greet the respondent in accordance with his cultural pattern. 2. Identify the respondent by name. 3. Describe the method by which the respondent was selected. 4. Mention the name of the organization conducting the research. 5. Assure the anonymity or confidential nature of the interview. 6. Explain their usefulness of the study. 7. Emphasize the value of respondents cooperation 3. Developing Rapport Before starting the research interview, the interviewer should establish a friendly relationship with the respondent. This is described as rapport. It means establishing a relationship of confidence and understanding between the interviewer and the respondent.
4. Carrying the Interview Forward

After establishing rapport, the technical task of asking questions from the interview schedule starts. This task requires care, self-restraint, alertness and ability to listen with understanding, respect and curiosity. 5. Additional Sittings In the case of qualitative interviews involving longer duration, one single sitting will not do, as it would cause interview weariness. Hence, it is desirable to have two or more sittings with the consent of the respondent. 6. Recording the Interview

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It is essential to record responses as they take place. If the note taking is done after the interview, a good deal of relevant information may be lost. Nothing should be made in the schedule under respective question. It should be complete and verbatim. The responses should not be summarized or paraphrased. 7. Closing the Interview After the interview is over, take leave off the respondent thanking him with a friendly smile. In the case of a qualitative interview of longer duration, select the occasion for departure more carefully. Assembling the papers for putting them in the folder at the time of asking the final question sets the stage for a final handshake, a thank-you and a good-bye. Ans.2 b. The problems encountered in Interview
1. Non-availability

Some respondents may not be available at home at the time of call. This depends upon the nature of the respondent and the time of calls. 2. Refusal Some persons may refuse to furnish information because they are ill-disposed, or approached at the wrong hour and so on 3. Inaccessibility Some respondents may be inaccessible. Some may not be found due to migration and other reasons. Q3. a. What are the various steps in processing of data? b. How is data editing is done at the Time of Recording of Data? Ans.3 a. Meaning of Data Processing Data processing is an intermediary stage of work between data collections and data interpretation. Processing of data requires advanced planning and this planning may cover such aspects as identification of variables, hypothetical relationship among the variables and the tentative research hypothesis. The various steps in processing of data may be stated as:
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Identifying the data structures Editing the data Coding and classifying the data Transcription of data Tabulation of data.

Checking for Analysis In the data preparation step, the data are prepared in a data format, which allows the analyst to use modern analysis software such as SAS or SPSS. The major criterion in this is to define the data structure. A data structure is a dynamic collection of related variables and can be conveniently represented as a graph where nodes are labelled by variables. Editing The next step in the processing of data is editing of the data instruments. Editing is a process of checking to detect and correct errors and omissions. Data editing happens at two stages, one at the time of recording of the data and second at the time of analysis of data. i.Completeness: The first step of editing is to check whether there is an answer to all the questions/variables set out in the data set. If there were any omission, the researcher sometimes would be able to deduce the correct answer from other related data on the same instrument. If this is possible, the data set has to rewritten on the basis of the new information. ii.Accuracy: Apart from checking for omissions, the accuracy of each recorded answer should be checked. A random check process can be applied to trace the errors at this step. Consistency in response can also be checked at this step. iii.Uniformity: In editing data sets, another keen lookout should be for any lack of uniformity, in interpretation of questions and instructions by the data recorders. Coding :
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The edited data are then subject to codification and classification. Coding process assigns numerals or other symbols to the several responses of the data set. It is therefore a pre-requisite to prepare a coding scheme for the data set. The recording of the data is done on the basis of this coding scheme. i.Numeric Coding: Coding need not necessarily be numeric. It can also be alphabetic. Coding has to be compulsorily numeric, when the variable is subject to further parametric analysis. ii.Alphabetic Coding: A mere tabulation or frequency count or graphical representation of the variable may be given in an alphabetic coding. iii.Zero Coding: A coding of zero has to be assigned carefully to a variable. In many instances, when manual analysis is done, a code of 0 would imply a no response from the respondents. Hence, if a value of 0 is to be given to specific responses in the data sheet, it should not lead to the same interpretation of non response Ans.3 b. Data Editing at the Time of Recording of Data Document editing and testing of the data at the time of data recording is done considering the following questions in mind. Do the filters agree or are the data inconsistent? Have missing value been set to values, which are the same for all research questions? Have variable descriptions been specified? Have labels for variable names and value labels been defined and written? All editing and cleaning steps are documented, so that, the redefinition of variables or later analytical modification requirements could be easily incorporated into the data sets. Q4. a. What are the fundamental of frequency Distribution? b. What are the types and general rules for graphical representation of data?
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Ans.4 a. Frequency Distribution and Class Intervals Frequency Distribution : Variables that are classified according to magnitude or size are often arranged in the form of a frequency table. In constructing this table, it is necessary to determine the number of class intervals to be used and the size of the class intervals. A distinction is usually made between continuous and discrete variables. A continuous variable has an unlimited number of possible values between the lowest and highest with no gaps or breaks. Examples of continuous variable are age, weight, temperature etc. A discrete variable can have a series of specified values with no possibility of values between these points. Each value of a discrete variable is distinct and separate Class Intervals: Ordinarily, the number of class intervals may not be less than 5 not more than 15, depending on the nature of the data and the number of cases being studied. After noting the highest and lower values and the feature of the data, the number of intervals can be easily determined. For many types of data, it is desirable to have class intervals of uniform size. The intervals should neither be too small nor too large. Whenever possible, the intervals should represent common and convenient numerical divisions such as 5 or 10, rather than odd division such as 3 to 7. Class intervals must be clearly designated in a frequency table in such a way as to obviate any possibility of misinterpretation of confusion. Every class interval has a mid point. Once class intervals are determined, it is routine work to count the number of cases that fall in each interval. One-Way Tables: One-way frequency tables present the distribution of cases on only a single dimension or variable.. One way tables are rarely used since the result of frequency distributions can be described in simple sentences. For instance, the gender distribution of a sample study may be described as The sample data represents 58% by males and 42% of the sample are females. Two-Way Table: Distributions in terms of two or more variables and the relationship between the two variables are show in two-way table. The categories of one variable are presented one below another, on the left margin of the table those of another variable at the upper part of the table, one by the side of another. The cells represent particular combination of both variables. To compare the
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distributions of cases, raw numbers are converted into percentages based on the number of cases in each category Ans.4.b. Types of Graphs and General Rules The most commonly used graphic forms may be grouped into the following categories: a) Line Graphs or Charts b) Bar Charts c) Segmental presentations. d) Scatter plots e) Bubble charts f) Stock plots g) Pictographs h) Chesnokov Faces The general rules to be followed in graphic representations are: 1. The chart should have a title placed directly above the chart. 2. The title should be clear, concise and simple and should describe the nature of the data presented. 3. Numerical data upon which the chart is based should be presented in an accompanying table. 4. The horizontal line measures time or independent variable and the vertical line the measured variable. 5. Measurements proceed from left to right on the horizontal line and from bottom to top on the vertical. 6. Each curve or bar on the chart should be labelled. 7. If there are more than one curves or bar, they should be clearly differentiated from one another by distinct patterns or colours. 8. The zero point should always be represented and the scale intervals should be equal. 9. Graphic forms should be used sparingly. Too many forms detract rather than illuminating the presentation.
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10. Graphic forms should follow and not precede the related textual discussion. Q5. Strictly speaking, would case studies be considered as scientific research? Why or why not? Ans.5. Meaning and Definition of Research Research simply means a search for facts answers to questions and solutions to problems. It is a purposive investigation. It is an organized inquiry. It seeks to find explanations to unexplained phenomenon to clarify the doubtful facts and to correct the misconceived facts. Research and Scientific Method Research is a scientific endeavour. It involves scientific method. The scientific method is a systematic step-by-step procedure following the logical processes of reasoning. Scientific method is a means for gaining knowledge of the universe. It does not belong to any particular body of knowledge; it is universal. It does not refer to a field of specific subject of matter, but rather to a procedure or mode of investigation. The scientific method is based on certain articles of faith. These are: Reliance on Empirical Evidence: Truth is established on the basis of evidence. Conclusion is admitted, only when it is based on evidence. The answer to a question is not decided by intuition or imagination. Relevant data are collected through observation or experimentation. The validity and the reliability of data are checked carefully and the data are analyzed thoroughly, using appropriate methods of analysis.

Use of Relevant Concepts: We experience a vast number of facts through our sense. Facts are things which actually exist. In order to deal with them, we use concepts with specific meanings. They are symbols representing the meaning that we hold. We use them in our thinking and communication. Otherwise, clarity and correct understanding cannot be achieved. Commitment of Objectivity: Objectivity is the hallmark of the scientific method. It means forming judgement upon facts unbiased by personal

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impressions. The conclusion should not vary from person to person. It should be the same for all persons.

Ethical Neutrality: Science does not pass normal judgment on facts. It does not say that they are good or bad. According to Schrdinger Science never imposes anything, science states. Science aims at nothing but making true and adequate statements about its object. Generalization: In formulating a generalization, we should avoid the danger of committing the particularistic fallacy, which arises through an inclination to generalize on insufficient or incomplete and unrelated data. This can be avoided by the accumulation of a large body of data and by the employment of comparisons and control groups. Verifiability: The conclusions arrived at by a scientist should be verifiable. He must make known to others how he arrives at his conclusions. He should thus expose his own methods and conclusions to critical scrutiny. When his conclusion is tested by others under the same conditions, then it is accepted as correct. Logical reasoning process: The scientific method involves the logical process of reasoning. This reasoning process is used for drawing inference from the finding of a study or for arriving at conclusion.

Q6. a. Analyze the case study and descriptive approach to research. b. Distinguish between research methods & research Methodology. Ans.6 a. Case Study and descriptive approach to research: Descriptive research, also known as statistical research, describes data and characteristics about the population or phenomenon being studied. Descriptive research answers the questions who, what, where, when and how. Although the data description is factual, accurate and systematic, the research cannot describe what caused a situation. Thus, Descriptive research cannot be used to create a causal relationship, where one variable affects another. In other words, descriptive research can be said to have a low requirement for internal validity. The description is used for frequencies, averages and other statistical calculations. Often the best approach, prior to writing descriptive research, is to conduct a survey investigation.
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Qualitative research often has the aim of description and researchers may followup with examinations of why the observations exist and what the implications of the findings are. In short descriptive research deals with everything that can be counted and studied. But there are always restrictions to that. Your research must have an impact to the lives of the people around you e.g. finding the most frequent disease that affects the children of a town. The reader of the research will know what to do to prevent that disease thus; more people will live a healthy life. Descriptive research does not fit neatly into the definition of either quantitative or qualitative research methodologies, but instead it can utilize elements of both, often within the same study. The term descriptive research refers to the type of research question, design, and data analysis that will be applied to a given topic. Descriptive statistics tell what is, while inferential statistics try to determine cause and effect. A case study is a research method common in social science. It is based on an in-depth investigation of a single individual, group, or event. Case studies may be descriptive or explanatory. The latter type is used to explore causation in order to find underlying principles. They may be prospective, in which criteria are established and cases fitting the criteria are included as they become available, or retrospective, in which criteria are established for selecting cases from historical records for inclusion in the study. Rather than using samples and following a rigid protocol (strict set of rules) to examine limited number of variables, case study methods involve an in-depth, longitudinal (over a long period of time) examination of a single instance or event: a case. They provide a systematic way of looking at events, collecting data, analyzing information, and reporting the results. As a result the researcher may gain a sharpened understanding of why the instance happened as it did, and what might become important to look at more extensively in future research. Case studies lend themselves to both generating and testing hypotheses. Another suggestion is that case study should be defined as a research strategy, an empirical inquiry that investigates a phenomenon within its real-life context. Case study research means single and multiple case studies, can include quantitative evidence, relies on multiple sources of evidence and benefits from the prior development of theoretical propositions. Case studies should not be confused with qualitative research and they can be based on any mix of quantitative and qualitative evidence. Single-subject research provides the statistical framework for making inferences from quantitative case-study data Case Study Case study is a method of exploring and analyzing the life of a social unit or entity, be it a person, a family, an institution or a community. The aim of case study
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method is to locate or identify the factors that account for the behavior patterns of a given unit, and its relationship with the environment. The case data are always gathered with a view to attracting the natural history of the social unit, and its relationship with the social factors and forces operative and involved in this surrounding milieu. In short, the social researcher tries, by means of the case study method, to understand the complex of factors that are working within a social unit as an integrated totality. Looked at from another angle, the case study serves the purpose similar to the clue-providing function of expert opinion. It is most appropriate when one is trying to find clues and ideas for further research. The major credit for introducing case study method into social investigation goes to Frederick Leplay. Herbert Spencer was the first social philosopher who used case study in comparative studies of different cultures. William Healey used case study in his study of juvenile delinquency. Anthropologists and ethnologists have liberally utilized cast study in the systematic description of primitive cultures. Historians have used this method for portraying some historical character or particular historical period and describing the developments within a national community. Ans.6 b. Research Methods and Research Methodology are two terms that are often confused as one and the same. Strictly speaking they are not so and they show differences between them. One of the primary differences between them is that research methods are the methods by which you conduct research into a subject or a topic. On the other hand research methodology explains the methods by which you may proceed with your research. Research methods involve conduct of experiments, tests, surveys and the like. On the other hand research methodology involves the learning of the various techniques that can be used in the conduct of research and in the conduct of tests, experiments, surveys and critical studies. This is the technical difference between the two terms, namely, research methods and research methodology. In short it can be said that research methods aim at finding solutions to research problems. On the other hand research methodology aims at the employment of the correct procedures to find out solutions. It is thus interesting to note that research methodology paves the way for research methods to be conducted properly. Research methodology is the beginning whereas research methods are the end of any scientific or non-scientific research.
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Let us take for example a subject or a topic, namely, employment of figures of speech in English literature. In this topic if we are to conduct research, then the research methods that are involved are study of various works of the different poets and the understanding of the employment of figures of speech in their works. On the other hand research methodology pertaining to the topic mentioned above involves the study about the tools of research, collation of various manuscripts related to the topic, techniques involved in the critical edition of these manuscripts and the like. If the subject into which you conduct a research is a scientific subject or topic then the research methods include experiments, tests, study of various other results of different experiments performed earlier in relation to the topic or the subject and the like. On the other hand research methodology pertaining to the scientific topic involves the techniques regarding how to go about conducting the research, the tools of research, advanced techniques that can be used in the conduct of the experiments and the like. Any student or research candidate is supposed to be good at both research methods and research methodology if he or she is to succeed in his or her attempt at conducting research into a subject.

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MB 0051 Legal Aspects of Business


(Book ID: B1207)

Assignment Set- 1

Q.1. Distinguish between fraud and misrepresentation? Ans.1 - MEANING OF FRAUD

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Fraud means and includes any of the following acts committed by a party to a contract with an intent to deceive the other party thereto or to induce him to enter into a contract: (i) The suggestion as a fact of that which is not true by one who does not believe it to be true; (ii) Active concealment of a fact by one having knowledge or belief of the fact; (iii) Promise made without any intention of performing it; (iv) any other act fitted to deceive; (iv) Any such act or omission as the law specifically declares to be fraudulent. MEANING OF MISREPRESENTATION Misrepresentation is also known as simple misrepresentation whereas fraud is known as fraudulent misrepresentation. Like fraud, misrepresentation is an incorrect or false statement but the falsity or inaccuracy is not due to any desire to deceive or defraud the other party. Such a statement is made innocently. The party making it believes it to be true. In this way, fraud is different from misrepresentation. Fraud is a crime punishable by the law because it is an intentional wrong committed by the party. In misrepresentation there are no such consequences, generally speaking. If a fraud is to proven, then each of the following parameters need to be proven in a court of law: 1. The physical proof presented by the defendant 2. The proof thus presented is incorrect 3. The defendant purposely made false representations (was aware of the falsehood) 4. The false proofs were made with the intention of duping the plaintiff 5. The defendant succeeded in duping the plaintiff 6. The plaintiff suffered loses due to the fraud If you are a plaintiff involved in committing a misrepresentation then you must prove the following parameters:
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1. Validity of the evidence presented by the plaintiff 2. The claims were with regard to some legal agreement between the defending and the pleading party 3. False representation of facts at the time of entering into the agreement 4. The plaintiff was induced into entering the agreement by the defendant 5. The agreement resulted in loss for the plaintiff 6. This loss was a gain for the defendant Although it may not be possible for the plaintiff to prove the defendant as a fraudster, it is still possible for the former to validate his situation as that of a misrepresentation. DIFFERENCE BETWEEN FRAUD AND MISREPRESENTATION:The main difference in fraud and misrepresentation are, 1) In misrepresentation the person making the false statement believes it to be true. In fraud the false statement is person who knows that it is false or he does not care to know whether it is true or false. 2) There is no intention to deceive the other party when there is misrepresentation of fact. The very purpose of the fraud is to deceive the other party to the contract. 3) Misrepresentation renders the contract voidable at the option of the party whose consent was obtained by misrepresentation. In the case of fraud the contract is voidable It also gives rise to an independent action in tort for damages. 4) Misrepresentation is not an offence under Indian penal code and hence not punishable. Fraud, in certain cases is a punishable offence under Indian penal code. 5) Generally, silence is not fraud except where there is a duty to speak or the relations between parties is fiduciary. Under no circumstances can silence be considered as misrepresentation. 6) The party complaining of misrepresentation cant avoid the contract if he had the means to discover the truth with ordinary diligence. But in the case of fraud, the party making a false statement cannot say that the other party had the means to discover the truth with ordinary diligence.

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Q.2.What are the remedies for breach of contract? Ans.2 - REMEDIES FOR BREACH OF CONTRACT Remedies for breach of contract being a fountainhead of a correlative set of rights and obligations for the parties, would be of no value, if there were no remedies to enforce the rights arising there under. The party committing breach of contract is called the guilt party and the other party is called the injured or aggrieved party. In case of breach of contract, the aggrieved party would have one or more, but not all, of the following remedies against the guilty party. The remedies are: 1. Suit for rescission 2. Suit for damages 3. Suit for quantum meruit 4. Suit for specific performance 5. Suit for injunction
1.

Suit for rescission :

The breach of contract no doubt discharges the contract, but the aggrieved party may sometimes need to approach the court to grant him a formal rescission, i.e. cancellation, of the contract. This will enable him to be free from his own obligations under the contract. 2. Suit for damages : The word damages means monetary compensation for loss suffered. Whenever a breach of contract takes place, the remedy of damages is the one that comes to mind immediately as the consequence of breach. A breach of contract may put the aggrieved party to some disadvantage or inconvenience or may cause a loss to him. The court would desire the guilty part to accept responsibility for any such loss of the aggrieved party and compensate him adequately. The quantum of damages is determined by the magnitude of loss caused by breach. 3. Suit for quantum meruit : The term quantum meruit means as much as earned. It implies a payment
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deserved by a person for the reason of actual work done. When a party has done some work under a contract, and the other party repudiates the contract or somehow the full performance of the contract becomes impossible, then the party who has done the work can claim remuneration for the work under a suit for quantum meruit. Likewise, where one party has expressly or impliedly requested another to render him a service without specifying any remuneration, but the circumstances of the request imply that the service is to be paid for, there is implied a promise to pay quantum meruit. Even in the case of where the person who has done the work is the one who is guilty of breach of contract, he too is entitled to be paid quantum meruit. But there is an exception such a contract must have involved work that was indivisible and it must not have been a contract for lumpsum remuneration. 4. Suit for specific performance: In certain cases of breach of a contract, damages may not be an adequate remedy. Then the Court may direct the party in breach to carry out his promise according to he terms of the contract. This is a direction by the Court for specific performance of the contract at the suit of the party not in breach. But in general, Courts do not wish to compel a party to do that which he has already refused to do. Chapter 2 of the Specific Relief Act,1963 lays down detailed rules on the specific performance of Contracts. Cases where specific performance may be ordered: a) Where there exists no standard for ascertaining the actual damage b) caused to the aggrieved party by the non- performance c) Where monetary compensation will not be adequate relief. Example d) contract for sale of a rare antique e) Where plaintiffs property is held by the defendant in the capacity of his agent or trustee f) Where the act to be done is in performance of trust Cases where specific performance will not be ordered: 1) Where monetary compensation is adequate relief. 2) Where contract is made by the agent or trustee in violation of his powers. 3) Where the contract is of a personal nature, such as a contract to
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4) 5) 6) 7)

marry or a contract of service. Where the court cannot supervise the performance of promise as it involves performance of a continuous duty. Where the contract is in its nature revocable. Where the contract is made by a company in excess of its powers as laid. down in its Memorandum of Association.

5. Suit for injunction : Injunction is a court order or decree to a person asking him to refrain from doing a contemplated act or from continuing an ongoing act. Such an order of injunction becomes a remedy for the aggrieved party when the court orders the guilty party to refrain from doing precisely that which is causing the breach of contract. In a way, injunction is a mode of securing the specific performance of the negative terms of a contract. But for the performance of the positive terms of the contract, the aggrieved party may seek other remedies like damages. BUYERS REMEDIES AGAINST SELLER The buyer has the following rights against the seller for breach of contract: (i) damages for non-delivery; (ii) right of recovery of the price; (iii) specific performance ; (iv) suit for breach of condition; (v) suit for breach of warranty ; (vi) anticipatory breach; (vii) recovery of interest .) Q.3. Distinguish between indemnity and guarantee. Ans.3 -INDEMNITY For a contract of indemnity provides that a contract of indemnity is a contract whereby one party promises to save the other from loss caused to him (the promisee) by the conduct of the promisor himself or by the conduct of any other person. A contract of insurance is a glaring example of such type of contracts. A contract of indemnity may arise either by (i) an express promise or (ii) operation of law, e.g. the duty of a principal to indemnify an agent from consequences of all lawful acts done by him as an agent. The contract of indemnity, like any other
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contract, must have all the essentials of a valid contract. These are two parties in a contraction of indemnifier and indemnified. The indemnifier promises to make good the loss of the indemnified (i.e. the promisee). GUARANTEE In law and common usage: A promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another person, who is, in the first instance, liable to such payment or performance, an engagement which secure or insures another against a contingency, a warranty, a security. Same as guaranty. Difference between indemnity and guarantee:There are distinguishing differences between Indemnity and Guarantee in the Indian Contract Act. Section 124 of the Indian Contract Act, 1872 defines the "Contract of Indemnity". It is a contract by which one party promises to save the other from loss caused to him by the contract of the promissory himself, or by the conduct of any other person. 'A' contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 20000 rupees. This is a contract of indemnity. A contract of guarantee is defined in Section 126 of the Act. It is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the surety; the person in respect of whose default the guarantee is given is called the principal debtor and the person to whom the guarantee is given is called the creditor. In contract of indemnity there are only two parties viz the indemnifier or provisory and the indemnity holder or promise. In contract of guarantee there are three parties viz the creditor, principal debtor and surety. In indemnity, there is primary and independent liability. In guarantee the surety has collateral liability. There is no existing debt generally in the case of contract of indemnity where there is existing debt in the case of guarantee.
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There are two contracts in a contract of indemnity where there are three contracts in the case of guarantee. In Indemnity the promissory is discharged by payment. In guarantee the surety is discharged by payment made by principal debtor. Indemnifier may have some interest in the transaction where the surety will not have any connection with the transaction.

Indemnity

Guarantee

Liability of the indemnifier is primary

The liability of the surety is secondary. The surety is liable only if the principal debtor makes a default. The primary liability being that of the principal debtor. There is an existing debt or duty, the performance of which is guarantee by the surety.

The possibility of any loss happening is the only contingency against which the indemnifier undertakes to indemnify.

Q.4. What is the distinction between cheque and bill of exchange? Ans.4 - Cheques and bills of exchange are negotiable instruments and have been used by many people worldwide for many decades. Understanding these two instruments would be a fundamental task for any person who wishes to undertake banking as a career or even a past time activity. WHAT IS A NEGOTIABLE INSTRUMENT?
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The term negotiable instrument literally means a written document transferable by delivery. It can be a promissory note, bill of exchange or check payable either to order or to a bearer. BILL OF EXCHANGE A bill of exchange is defined by Sec.5 as an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person, or to the bearer of the instrument. CHEQUES A cheque is the usual method of withdrawing money from a current account with a banker. Savings bank accounts are also permitted to be operated by cheques provided certain minimum balance is maintained. A cheque, in essence, is an order by the customer of the bank directing his banker to pay on demand, the specified amount, to or to the order of the person named therein or to the bearer. Sec.6 defines a cheque. The Amendment Act 2002 has substituted new section for Sec.6. It provides that a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic from.

Cheque

Bill of Exchange

It has three parties - the drawer, the drawee, and payee. It does not require acceptance by the drawee.

It has three parties - the drawer, the drawee, and payee. It must be accepted by the drawee can be made liable to pay the bill before he

No stamp duty is payable on checks

Stamp duty has to be paid on bill of exchange.


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Q.5. Distinguish between companies limited by shares and companies limited by guarantee. Ans.5 - A company limited by guarantee is normally incorporated for non-profit making functions. The company has no share capital. A company limited by guarantee has members rather than shareholders. The members of the company guarantee/undertake to contribute a predetermined sum to the liabilities of the company which becomes due in the event of the company being wound up. The Memorandum normally includes a non-profit distribution clause and these companies are usually formed by clubs, professional, trade or research associations. The main difference between a company limited by guarantee and a company limited by shares is that the company has no share capital. A Company limited by guarantee is a lesser known type of business entity which is generally formed by non-profit purposes and has members instead of shareholders. There are both some similarities and differences between the two groups. Members and shareholders enjoy limited liability, however in cases where a share based company is liquidated; the latter might be required to pay all amounts of unpaid monies relating to the shares they hold. For example, if an individual shareholder holds 100 shares of Rs.100 each, all of which remains unpaid at the time of dissolution, then they would be required to pay Rs.10000 to the company. Most companies limited by guarantee have a constitution which states that each member is only required to pay Rs.100 should it be dissolved. Assuming that an average shareholder holds more than one share in a company, members in a business limited by guarantee do appear to have less risk attached to their positions. PROFIT MAKING STATUS Perhaps the most fundamental difference between the two types of limited companies is that those with shares generally exist for profit making purposes. Companies limited by guarantee however, are non-profit making organizations and are usually registered to provide a specified service to the public or a particular segment of the population. The memorandum and articles of association of each would also differ as companies limited by shares usually have very general objects clauses which allow them to pursue any legal trade or activity. OBJECTS OF COMPANIES LIMITED BY GUARANTEE
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Companies limited by guarantee however, often have very specific objects and detailed rules pertaining to which areas they can engage in. Charities, which are often of this type, might have restrictions imposed on them by their major donors who wish to ensure that their donations will be spent according to their wishes and not in a manner which they would not approve REMOVING THE WORD LIMITED Companies limited by guarantee can have the word limited removed from their name under section 30 of the Companies Act. COMPANY DIRECTORS, SECRETARY AND DECLARANT Both types of companies are bound by the same requirements to have at least one director, a secretary and a declarant at the time of incorporation and throughout any period of its existence. When forming a company limited by guarantee, members are listed in the same manner in which shareholders would be, even though no allotments are made to them. Q.6.What is the definition of cyber crime. Ans.6 - Computer crime, or cyber crime, refers to any crime that involves a computer and a network. The computer may have been used in the commission of a crime, or it may be the target. Net crime refers, more precisely, to criminal exploitation of the Internet. Issues surrounding this type of crime have become high-profile, particularly those surrounding hacking, copyright infringement, child pornography, and child grooming. There are also problems of privacy when confidential information is lost or intercepted, lawfully or otherwise. Cyber crime includes anything from downloading illegal music files to stealing millions of dollars from online bank accounts. Cyber crime also includes non-monetary offences, such as creating and distributing viruses on other computers or posting confidential business information on the Internet. Perhaps the most prominent form of cyber crime is identity theft, in which criminals use the Internet to steal personal information from other users. Two of the most common ways this is done is through phishing and pharming. Both of these methods lure users to fake websites, where they are asked to enter personal information. This includes login information, such as usernames and passwords, phone numbers, addresses, credit card numbers, bank account numbers, and other
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information criminals can use to "steal" another person's identity. For this reason, it is smart to always check the URL or Web address of a site to make sure it is legitimate before entering your personal information. CYBERCRIME Cybercrime is defined as crimes committed on the internet using the computer as either a tool or a targeted victim. It is very difficult to classify crimes in general into distinct groups as many crimes evolve on a daily basis. Even in the real world, crimes like rape, murder or theft need not necessarily be separate. However, all cybercrimes involve both the computer and the person behind it as victims; it just depends on which of the two is the main target. Hence, the computer will be looked at as either a target or tool for simplicitys sake. For example, hacking involves attacking the computers information and other resources. It is important to take note that overlapping occurs in many cases and it is impossible to have a perfect classification system.

Computer as a tool When the individual is the main target of Cybercrime, the computer can be considered as the tool rather than the target. These crimes generally involve less technical expertise as the damage done manifests itself in the real world. Human weaknesses are generally exploited. The damage dealt is largely psychological and intangible, making legal action against the variants more difficult. These are the crimes which have existed for centuries in the offline. Scams, theft, and the likes have existed even before the development in high-tech equipment. The same criminal has simply been given a tool which increases his potential pool of victims and makes him all the harder to trace and apprehend. Computer as a target These crimes are committed by a selected group of criminals. Unlike crimes using he computer as a tool, these crimes requires the technical knowledge of the perpetrators. These crimes are relatively new, having been in existence for only as long as computers have - which explains how unprepared society and the world in general is towards combating these crimes. There are numerous crimes of this nature committed daily on the internet. But it is worth knowing that Africans and indeed Nigerians are yet to develop their technical knowledge to accommodate and perpetrate this kind of crime.
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Cyber crime encompasses any criminal act dealing with computers and networks (called hacking). Additionally, cyber crime also includes traditional crimes conducted through the Internet. For example; hate crimes, telemarketing and Internet fraud, identity theft, and credit card account thefts are considered to be cyber crimes when the illegal activities are committed through the use of a computer and the Internet. Crime committed using a computer and the internet to steal a person's identity or sell contraband or stalk victims or disrupt operations with malevolent programs MODE AND MANNER OF COMMITING CYBER CRIME
1)

2)

Unauthorized access to computer systems or networks / HackingThis kind of offence is normally referred as hacking in the generic sense. However the framers of the information technology act 2000 have no where used this term so to avoid any confusion we would not interchangeably use the word hacking for unauthorized access as the latter has wide connotation. Theft of information contained in electronic formThis includes information stored in computer hard disks, removable storage media etc. Theft may be either by appropriating the data physically or by tampering them through the virtual medium.

3) Email bombingThis kind of activity refers to sending large numbers of mail to the victim, which may be an individual or a company or even mail servers there by ultimately resulting into crashing. 4) Data diddlingThis kind of an attack involves altering raw data just before a computer processes it and then changing it back after the processing is completed. The electricity board faced similar problem of data diddling while the department was being computerised. 5) Virus / worm attacksa. Viruses are programs that attach themselves to a computer or a file and then circulate themselves to other files and to other computers on a network. They usually affect the data on a computer, either by altering or deleting it. Worms, unlike viruses do not need the host to attach themselves to. They merely make functional copies of
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themselves and do this repeatedly till they eat up all the available space on a computer's memory. E.g. love bug virus, which affected at least 5 % of the computers of the globe. The world's most famous worm was the Internet worm let loose on the Internet by Robert Morris sometime in 1988. Almost brought development of Internet to a complete halt.

MB 0051 Legal Aspects of Business


Assignment Set- II
Q1: What are the situations which cannot be referred to arbitration? Ans.1: Arbitration law is a process that involves the assistance of one or more neutral parties known as arbitrators. Arbitrators are charged with hearing evidence from numerous involved parties in a dispute, and their main duty is to issue an award deciding who gets what in order to resolve the situation. In some instances of arbitration law, an arbitrator may also issue an opinion in conjunction with the
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award, which is designed to explain the award and the reasoning that led to it. Arbitration law and mediation law are two different processes and should not be confused. The award and the opinion are not capable of being reviewed by a court, and there is no availability for appeal. The purpose of arbitration law is to serve as a substitution to a trial and a review of the decision by a trial court. Subject matter of arbitration: Any commercial matter including an action in tort if it arises out of or relates to a contract can be referred to arbitration. However, public policy would not permit matrimonial matters, criminal proceedings, insolvency matters anti-competition matters or commercial court matters to be referred to arbitration. Employment contracts also cannot be referred to arbitration but director - company disputes are abatable (as there is no master servant relationship here)5. Generally, matters covered by statutory reliefs through statutory tribunals would be non-abatable. Arbitration is an Alternative Dispute Resolution process whereby a person chosen as an arbitrator settles disputes between parties. Arbitration is similar to a court trial, with several exceptions: The arbitrator makes the decision called an "arbitration award The arbitration does not take place in a courtroom The arbitration award is binding. With rare exceptions, there is no right to appeal Arbitration is not a matter of public record. It is private and confidential There is no court reporter or written transcripts Lawyers generally prepare their cases in an extremely limited manner The rules of evidence are relaxed so that the parties have a broader scope, more expanded opportunity to tell their stories to present their cases With very few exceptions, it is much less expensive than legal litigation An arbitration time frame is substantially less than that of litigation and going to trial No jury. The Arbitrator(s) maintain neutrality and conflicts of interests Generally, all paperwork and evidence presented are destroyed after the Arbitration The arbitration and arbitration award does not have to adhere to Judicial Case precedent nor formality of traditional court proceedings.
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In India, Arbitration is one of the most effective and trusted proceedings in regard to private dispute settlement are guided by the Arbitration & Conciliation Act, 1996. Kind of matters cannot be referred for arbitration: As per general practice, matters involving moral questions or questions of public law cannot be resolved by arbitration. For instance, the following matters are not referred to arbitration: Matrimonial matters Guardianship of a minor or any other person under disability Testamentary matters Insolvency, proceedings Criminal proceedings Questions relating to charity or charitable trusts Matters relating to anti-trust or competition law Dissolution or winding up of a company Indian Arbitration Act follows the guideline of: The Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 The New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards The Geneva Protocol on Arbitration Clauses of 1923

Q 2: What is the role of a Conciliator? Ans.2: Conciliation Conciliation is a process in which the parties to a dispute, with the assistance of a neutral third party (the conciliator), identify the disputed issues, develop options, consider alternatives and endeavour to reach an agreement.
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The conciliator may have an advisory role on the content of the dispute or the outcome of its resolution, but not a determinative role. The conciliator may advise on or determine the process of conciliation whereby resolution is attempted, and may make suggestions for terms of settlement, give expert advice on likely settlement terms, and may actively encourage the participants to reach an agreement. In order to understand what Parliament meant by Conciliation, we have necessarily to refer to the functions of a Conciliator as visualized by Part III of the 1996 Act. It is true, section 62 of the said Act deals with reference to Conciliation by agreement of parties but sec. 89 permits the Court to refer a dispute for conciliation even where parties do not consent, provided the Court thinks that the case is one fit for conciliation. This makes no difference as to the meaning of conciliation under sec. 89 because; it says that once a reference is made to a conciliator, the 1996 Act would apply. Thus the meaning of conciliation as can be gathered from the 1996 Act has to be read into sec. 89 of the Code of Civil Procedure. The 1996 Act is, it may be noted, based on the UNCITRAL Rules for conciliation. Role of conciliator: The conciliator shall assist the parties in an independent and impartial manner in their attempt to reach an amicable settlement of their dispute. The conciliator shall be guided by principles of objectivity, fairness and justice, giving consideration to, among other things, the rights and obligations of the parties, the usages of the trade concerned and the circumstances surrounding the dispute, including any previous business practices between the parties. The conciliator may conduct the conciliation proceedings in such a manner as he considers appropriate, taking into account the circumstances of the case, the wishes the parties may express, including any request by a party that the conciliator hear oral statements, and the need for a speedy settlement of the dispute. The conciliator may, at any stage of the conciliation proceedings, make proposals for a settlement of the dispute. Such proposals need not be in writing and need not be accompanied by a statement of the masons therefore. Conciliators do not:
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Make decisions for disputing parties. Make judgments about who is right, who is wrong or what the outcome of the dispute should be. Tell people what to do Make rulings Force parties to participate in the conciliation process.

Q 3: What are the unfair trade practices under the MRTP Act? Ans.3: THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969 - OBJECTIVES AND POLICY: The Monopolies and Restrictive Trade Practices Commission has been constituted under Section 5(1) of the MRTP Act, 1969. The Commission is empowered to enquire into Monopolistic or Restrictive Trade Practices upon a reference from the Central Government or upon its own knowledge or information. The MRTP Act also provides for appointment of a Director General of Investigation and Registration for making investigations for the purpose of enquiries by the MRTP Commission and for maintenance of register of agreements relating to restrictive trade practices. The MRTP Commission receives complaints both from registered consumer and trade associations and also from individuals. Complaints regarding Restrictive Trade Practices or Unfair Trade Practices from an association are required to be referred to the Director General of Investigation and Registration for conducting preliminary investigation. The Commission can also order a preliminary investigation by the Director General of Investigation and Registration when a reference on a restrictive trade practice is received from the Central/State Government, or when Commission's own knowledge warrants a preliminary investigation. Enquiries are instituted by the Commission after the Director General of Investigation and Registration completes preliminary investigation and submits an application to the Commission for an enquiry.

Unfair Trade Practices:


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An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice. 1. False Representation: The practice of making any oral or written statement or representation which: Falsely suggests that the goods are of a particular standard quality, quantity, grade, composition, style or model; Falsely suggests that the services are of a particular standard, quantity or grade; Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new goods; Represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which they do not have; Represents that the seller or the supplier has a sponsorship or approval or affiliation which he does not have; Makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that is not based on an adequate or proper test; Makes to the public a representation in the form that purports to be warranty or guarantee of the goods or services, a promise to replace, maintain or repair the goods until it has achieved a specified result, If such representation is materially misleading or there is no reasonable prospect that such warranty, guarantee or promise will be fulfilled Materially misleads about the prices at which such goods or services are available in the market; or Gives false or misleading facts disparaging the goods, services or trade of another person.
1. False Offer Of Bargain Price: Where an advertisement is published in a newspaper or otherwise, whereby goods or services are offered at a bargain price when in fact there is no intention that the

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same may be offered at that price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice. The bargain price, for this purpose means: the price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price, or The price which any person coming across the advertisement would believe to be better than the price at which such goods are ordinarily sold. Free Gifts Offer And Prize Scheme: The unfair trade practices under this category are:
1.

Offering any gifts, prizes or other items along with the goods when the real intention is different, or Creating impression that something is being offered free along with the goods, when in fact the price is wholly or partly covered by the price of the article sold, or Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business. Non-Compliance Of Prescribed Standards: Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority, in relation to their performance, composition, contents, design, construction, finishing or packing, as are necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an unfair trade practice.
1.

Hoarding, Destruction, Etc.: Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or provide any services, with an intention to raise the cost of those or other similar goods or services, shall be an unfair trade practice.
2.

Inquiry Into Unfair Trade Practices: The Commission may inquire into any unfair trade practice:
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Upon receiving a complaint from any trade association, consumer or a registered consumer association, or Upon reference made to it by the Central Government or State Government Upon an application to it by the Director General or Upon its own knowledge or information.

Relief Available: After making an inquiry into the unfair trade practices if the Commission is of the opinion that the practice is prejudicial to the pubic interest, or to the interest of any consumer it may direct that? The practice shall be discontinued or shall not be repeated; The agreement relating thereto shall be void in respect of such unfair trade practice or shall stand modified. Any information, statement or advertisement relating to such unfair trade practice shall be disclosed, issued or published as may be specified The Commission may permit the party to carry on any trade practice to take steps to ensure that it is no longer prejudicial to the public interest or to the interest of the consumer.
1.

However no order shall be made in respect a trade practice which is expressly authorized by any law in force. The Commission is empowered to direct publication of corrective advertisement and disclosure of additional information while passing orders relating to unfair trade practices. Q 4: What are essentials of a valid offer? Ans.4: Offer A proposal is an expression of will or intention to do or not to do something. It is also called an "offer". It is one of the essential elements of an agreement. It is the very basis of the contract. It becomes a promise when it accepted. Section 2 (a) of the Contract Act defines the proposal as "when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other, to such act or abstinence, he is said to make a proposal". The
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person making the proposal is called the proposer or offer or the promisor. The person to whom the proposal is made is called the offeree or promisee. For example; Sunil offers to sell his car to Padmaja for Rs. 50000. This is a proposal. Sunil is the offeror and Padmaja is the offeree. An offer may be express or implied. An offer which is expressed by words, written or spoken, is called an express offer. An offer which is expressed by conduct is called an implied offer. An offer may be positive or negative. It may be in the form of a statement or a question. for example; Sridhar says to Radhika that he will sell his scooter to her for Rs.20000. This is an express offer. The Karnataka State Road Transport Corporation runs omnibuses on various routes to carry passengers at the scheduled fares. This is an implied offer by KSRTC. The offer must be made in order to create legal relations otherwise there will be an agreement. If an offer does not give rise to legal obligations between the parties it is not a valid offer in the eye of law. In business transactions there is a presumption that the parties propose to make legal relationships. For example a person invite to another person to diner if the other person accepts the invitation then it is not any legal agreement between the parties it is social agreement. An offer must be definite and clear. If the terms of an offer are not definite and clear it cannot be called a valid offer. If such offer is accepted it cannot create a binding contract. An agreement to agree in future is not a contract because the terms of an agreement are not clear. A person has two motorbikes. He offers to another person to sell his one bike for a certain price then it is not a legal and valid offer because there is an ambiguity in the offer that which motorcycle the person wants to sell. There is a difference between the offer and invitation of offer. Sometime people offer the invitation for the sale. Essentials of a valid offer: 1) A valid offer must intend to create legal relations. It must not be a casual statement. If the offer is not intended to create legal relationship, it is not an offer in the eyes of law e.g. Sunil invites Sridhar to a dinner party and Sridhar accepts the invitation. Sridhar does not turn up at the dinner party. Sunil cannot sue Sridhar for breach of contract as there was no intention to
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create legal obligation. Hence, an offer to perform social, religious or moral acts without any intention of creating legal relations will not be a valid offer. 2) The terms of an offer must be definite, unambiguous and certain. They must not be loose and vague. A promise to pay an extra Rs. 500 if a particular house proves lucky is too vague to be enforceable. E.g. Sridhar says to Sunil "I will give you some money if you marry my daughter". This is not an offer which can be accepted because the amount of money to be paid is not certain. 3) An offer may be made to a definite person or to the general public. When offer is made to a definite person or to a special class of persons, it is called "specific offer". When an offer is made to the world at large or public in general, it is called "general offer". A specific offer can be accepted only by that person to whom it has been made and a general offer can be accepted by any person. E.g. Sunil promises to give Rs.100 to Sridhar, if he brings back his missing dog. This is a specific offer and can only be accepted by Sridhar. Sunil issues a public advertisement to the effect that he would give Rs.100 to anyone who brings back his missing dog. This is a general offer. Any member of the public can accept this offer by searching for and bringing back Sunil's missing dog. An offer to do or not to do must be made with a view to obtaining the assent of the other party. Mere enquiry is not an offer. An offer should may contain any term or condition. The offeror may prescribe any mode of acceptance. But he cannot prescribe the form or time of refusal so as to fix a contract on the acceptor. He cannot say that if the acceptor does not communicate his acceptance within a specified time, he is deemed to have accepted the offer. The offeror is free to lay down any terms any terms and conditions in his offer. If the other party accepts it, then he has to abide by all the terms and conditions of the offer. It is immaterial whether the terms and conditions were harsh or ridiculous. The special terms or conditions in an offer must be brought to the notice of the offeree at the time of making a proposal. An offer is effective only when it is communicated to the offeree. Communication is necessary whether the offer is general or specific. The offer or may communicate the offer by choosing any available means such as a word of mouth, mail, telegram, messenger, a written document, or even signs and gestures. Communication may also be implied by his conduct. A person can accept the offer only when he knows about it. If he does not
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know, he cannot accept it. An acceptance of an offer, in ignorance of the offer, is no acceptance at all. It should be noted that an invitation to offer is not an offer. The following are only invitations to offer but not actual offers: Invitations made by a trade for the sale of goods. A price list of goods for sale. Quotations of lowest prices. An advertisement to sell goods by auction. An advertisement inviting tenders. Display of goods with price-tags attached. Railway time-table. Prospectus issued by a company. Loud speaker announcements.

Q 5: Find out a case where a person appealed under the Consumer protection Act and won. Ans.: The Consumer Protection Act was born in 1986. It is described as a unique legislation of its kind ever enacted in India to offer protection to the consumers. The Act is claimed to have been designed after an in-depth study of consumer protection laws and arrangements in UK, the USA, Australia and New Zealand. The main objective of this Act is to provide better protection to the consumers. Unlike other laws, which are punitive or preventive in nature the provisions of this Act are compensatory in nature. The Act intends to provide simple, speedy and inexpensive re-dressal to the consumers grievances. Q 6: What does the Information Technology Act enable? Ans.6: Information Technology Act: In May 2000, at the height of the dot-com boom, India enacted the IT Act and became part of a select group of countries to have put in place cyber laws. In all these years, despite the growing crime rate in the cyber world, only less than 25 cases have been registered under the IT Act 2000 and no final verdict has been passed in any of these cases as they are now pending with various courts in the country.
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Although the law came into operation on October 17, 2000, it still has an element of mystery around it. Not only from the perception of the common man, but also from the perception of lawyers, law enforcing agencies and even the judiciary. The prime reason for this is the fact that the IT Act is a set of technical laws. Another major hurdle is the reluctance on the part of companies to report the instances of cyber-crimes, as they don't want to get negative publicity or worse get entangled in legal proceedings. A major hurdle in cracking down on the perpetrators of cyber-crimes such as hacking is the fact that most of them are not in India. The IT Act does give extra-territorial jurisdiction to law enforcement agencies, but such powers are largely inefficient. This is because India does not have reciprocity and extradition treaties with a large number of countries. The Indian IT Act also needs to evolve with the rapidly changing technology environment that breeds new forms of crimes and criminals. We are now beginning to see new categories and varieties of cyber-crimes, which have not been addressed in the IT Act. This includes cyber stalking, cyber nuisance, cyber harassment, cyber defamation and the like. Though Section 67 of the Information Technology Act, 2000 provides for punishment to whoever transmits or publishes or causes to be published or transmitted, any material which is obscene in electronic form with imprisonment for a term which may extend to two years and with fine which may extend to twenty five thousand rupees on first convection and in the event of second may extend to five years and also with fine which may extend to fifty thousand rupees, it does not expressly talk of cyber defamation. The above provision chiefly aim at curbing the increasing number of child pornography cases and does not encompass other crimes which could have been expressly brought within its ambit such as cyber defamation.

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Specialization- Project Management


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PM 0010 Introduction to Project Management


(Book ID: B1236)

Assignment Set- 1

Q.1 Explain the following a. Project Vs. Program Vs. Portfolio b. Project work and Traditional functional work Ans.1a. Project Vs. Program Vs. Portfolio: Businesses use various terms to represent a range of project management services. Unfortunately these terms are
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often used interchangeably and inconsistently. This article attempts to clear the confusion and establish a common definition. Project Management Hopefully we all know what a project is. PMBOK defines a project as a temporary endeavor undertaken to create a unique product, service or result. In my terms, a project has a specific start and end date with a clearly defined deliverable produced. Project management is the application of knowledge, skill, tools, techniques and processes to effectively manage a team towards this final deliverable. In real life this means the management of a specific project (e.g. implementing a new accounting system). This project will start on a specific date and end according to our project plan with the delivery of your new accounting system. Pretty simple something we can all understand. Program Management This is where the confusion seems to start. A program is a group of related projects managed together to obtain specific benefits and controls that would likely not occur if these projects were managed individually. While project management focuses on delivering the specific objectives of the project program management is focused on achieving the strategic objectives and benefits of the integrated program. The implementation of an Enterprise Resource Planning (ERP) system is often performed as a program. The ERP system will include several specific individual projects (i.e. Finance, Purchasing, Materials Management, etc.). Each of these specific projects should be run by a project manager using a formal project management approach. The overall grouping of these related projects will be run by a Program Manager. The Program Manager will be responsible for the rolling up of information from each of the projects and ensuring the overall program is driving towards achieving the business objectives. This requires each of the project managers to manage their individual projects in a fashion that easily integrates into the overall program plan (easily said more challenging in actual practice). The Program Manager is also responsible for tracking and analyzing across the entire program. This involves considering risk management strategies not only for each individual project but also analyzing the collective risk across the program. The same goes for quality management, schedule management, cost management, communications, etc. Portfolio Management
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A portfolio is a collection of projects or programs grouped together to facilitate effective management of efforts to meet strategic business objectives. These projects or programs are not necessarily interdependent or directly related. Portfolio management is the centralized management of multiple projects, programs and possibly portfolios. This typically includes identifying, prioritizing and authorizing projects and programs to achieve specific strategic business objectives. The group of projects and programs within a specific business division could be an example of a portfolio. This might include the implementation of a Customer Relationship Management (CRM) program; Sales Data Warehouse program; Commission Tracking project; and a project to launch a new product within the Sales & Marketing Division. In this case the Portfolio Manager is managing this broad range of somewhat unrelated programs and projects towards a specific set of strategic divisional business objectives. The Portfolio Manager will become very involved in the frontend activities of identifying, prioritizing and initiating projects and programs. All of these activities will be within the context of achieving the strategic business objectives. The Portfolio Manager will also track these projects/programs to ensure they continue to deliver towards the expected strategic outcome in terms of quality, cost, schedule and scope. They will also be responsible for analyzing and tracking project management elements across the entire portfolio looking for ways to leverage economies of scale, reduce risk and improve the probability of successfully delivering expected business results. Ans.1 b: Project work and Traditional functional work Project work and traditional functional work differ in significant ways, and it is important to understand these differences. Functional Work Functional work is routine, ongoing work. Each day, secretaries, financial analysts, and car salespeople perform functional work that is routine, even if their activities vary somewhat from day to day. A manager assigned to the specific function provides training and supervision, and manages them according to standards of productivity in terms of typing speed or sales quotas. The following are distinguishing characteristics of functional work: Functional work is ongoing, routine work. Managers manage the specific function and provide technical direction. People and other resources are assigned to the functional department.
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Functional departments are responsible for the approved objectives of the function, such as technical competency, standards of performance and quality, and efficient use of resources. Functional work is typically structured as a hierarchical organization with traditional formal lines of authority, as shown in Diagram 1. Diagram 1 Functional Organizational Structure Vice President
Director

Manager, Writing

Manager, Editing

Manager, Design

Writer

Editor

Designer

Writer

Designer

Project Writer Work In contrast to ongoing, functional work, a project is a temporary endeavor undertaken to create a unique product or service (A Guide to the Project Management Body of Knowledge (PMBOK Guide), Project Management Institute, 2000, p. 4). Projects are temporary because they have a definite beginning and a definite end. They are unique because the product or service they create is different in some distinguishing way from similar products or services. The construction of a headquarters building for ABC Industries is an example of a project. The unique work is defined by the building plans and has a specific beginning and end. A project manager is responsible for the project, overseeing the contractors and managing the schedule and budget.
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The following are distinguishing characteristics of project work: Project work is a unique, temporary endeavor. A project manager manages a specific project. People and other resources are not assigned to project managers on an ongoing basis, except for project management support. A project manager is responsible for the approved objectives of a project, such as budget, schedule, and scope. Project teams typically are not organized in the same hierarchical structure as that of traditional functional groups. Diagram 2 Functional and Project Responsibilities

Diagram 2 illustrates how functional and project responsibility fit together, using the functional departments in a publishing company, with project managers assigned to accomplish specific publication projects. Solid vertical lines show the functional responsibilities of the writing, editing, design, printing, and distribution departments. Broken horizontal lines show the project responsibilities of specific project managers assigned to given publications (projects). Because not all projects require the services of every functional department, circles indicate where people are assigned to a project. Project #2 uses outsourced resources. Project #3 is a video that uses an external video duplication company rather than the internal printing facility.
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A project manager manages horizontally via projects rather than vertically via functional experts. Diagram 2 shows that Dennis is responsible for Project #1. To get the job done, he must enlist the help of editors and designers from one functional manager, and printers and distributors from another functional manager. In some organizations, functional managers are called resource managers because they are responsible for assigning resources to the project. In the real world, there are at times overlaps between project and functional managers. If functional resources (other than a project management staff) are assigned to a project manager, then the manager has functional responsibility and is acting as both project manager and functional manager. If projects are assigned to a functional manager, then the functional manager also has project responsibility and is acting in both roles. Diagram 3 compares functional and project work. Diagram 3 Comparison of Project and Functional Work

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Q.2 Compare Operation and project procurement. Also list and explain the project procurement process. Ans.2: Operations Procurement and Project Procurement The differences between the procurement carried out for the overall operation of an organization, and the procurement carried out for a specific project, are shown in Table 1. Table 1: Differences between Operations Procurement and Project Procurement

Project Procurement Management Process The project procurement method varies depending on the category of the contracted product or service. The broad categories are: Materials or products Equipment or tools Labors Professional services Totally engineered systems Total project Project Procurement Management generally involves the following: Deciding to Make or Buy Outsourcing the work for a Buy decision.
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Managing risk (although risk management is often addressed separately, it is noteworthy that contracts are, at their core, risk management tools.) All procurement requires some level of planning. The intensity and the effort required in planning depend on the complexity of the scope of work in the procurement package. For a manufacturing company deciding to starts a project, the make or buy decision forms the first step in the procurement planning. This decision is based on a cost comparison between make and buy, and the timely availability of the manufacturing equipment or shop personnel for meeting deliveries without adversely affecting their other job orders. Several companies in India exist, wherein; the company or a division of the company already manufactures a product, and the company is also executing projects for its clients which require the same product as part of another project scope. For example, Larsen & Turbo manufactures switchgear, pressure vessels, heat exchangers etc. These products are also required in several electrical projects or petrochemical projects that they execute for clients. Another example, Kamani Engineering manufactures transmission towers, and also executes large power transmission projects for Power Grid Corporation of India, where the bulk of the transmission towers are their in-house supply. The Table 2 shows the comparison of costs for in-house development and outsourcing. Table 2: Comparison of Costs for In-house Development and Outsourcing

The additional investment of Rs 30000 for In-house option will break even if the software usage is for more than 20 months i.e. (Rs. 3500/month Rs. 2500/month) x 20 months. Therefore if you plan to use the software for less than 20 months then go for outsourcing but if plan to use the software for more than 20 months then go for In65 | P a g e

house development. The market scenario for the product or service to be procured gives rise to any of the following three conditions: Sole Source: In this case there is only one qualified seller in the market. For example, Dow Chemicals under their patent was the only manufacturer Reverse Osmosis (RO) membranes which were utilized for desalinating saline water and all water treatment package vendors had to buy RO membranes only from them or their licensee in a country. Single Source: This is a case when your organization prefers to work with an identified seller, even though other sellers may offer a lower price. Sometimes companies show a preference for a supplier with a view to create a long term relationship for a niche product which the company may require to procure often. Oligopoly: This is a condition where the providers of the product or service are so few in number that the actions and pricing of one seller affect the actions and pricing of the other sellers. Examples of airline fares, oil prices, and hardware prices can fall in this category. The Table 3 summarizes the actual procurement processes involved in each of the process groups. The function performed by each process is explained below. Plan Purchases and Acquisition Plan Purchases and Acquisitions is the process for deciding what to buy or acquire and when and how to buy that. It is a process of identifying the risks involved in each make or buy decision. It also reviews the type of contract with regard to mitigating the risk by determining what risks can be transferred to seller. The outputs of this process are: Project management plan describing how procurement process will be managed starting with development of procurement documentation and culminating in contract closure. Contract Statement of Work (SOW) (describes the portion of the project scope which is included in the particular contract). Table 3: Procurement Management Processes (As per PMBoK)

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Plan Contracting This process includes preparation of a procurement document for each contract planned. This document is issued to prospective sellers who are invited to bid. The invitation is termed Invitation To Bid (ITB), Request For Quotation (RFQ), tender notice, Request For Proposal (RFP), invitation for negotiation or contractor initial response. ITB and RFQ (both imply the same type of invitation) are focused on getting the sellers price, and not his ideas. For example if RFP asks for a price that means in addition, it necessarily asks for the sellers and ideas on how the project work should be done, which implies that there is a bit of consultancy service demanded from the sellers in their response. Evaluation criteria: The first category of evaluation relates to prequalification of a firm for receiving the ITB. Here, a prior assessment of the capability of a firm to perform the intended scope of work is made. For large value contracts, the ITB is preceded by an invitation to submit a prequalification offer, in which the seller is asked to submit his experience list for similar works carried out by enumerating the following: List of projects completed with contract value, completion period, and scope of work.
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Audited financial statements like balance sheet, Profit and Loss (P & L) account for the last 3 to 5 years. Contract completion certificates from his clients. Firms organizational structure List of key personnel of the firm List of construction equipment/production machinery owned. Any other technical/financial/organizational data considered relevant by the owner. This data submitted by all prospective bidders is analyzed to arrive at a list of prequalified bidders, eligible to receive the ITB/RFP. The second category of evaluation criteria relates to evaluating the bids received in response to the ITB/RFP. These may involve price loading criteria for technical and commercial deviations stipulated by the bidders in their bids, as well as specific criteria for price loading on utilities consumption (electricity, water etc.) where system performance is evaluated based on system life-cycle costs. Request Seller Responses While the prospective sellers are expected to submit their bids in response to the ITB/RFP as issued to them, it is a common practice in large value contracts to host a bidders conference, where all bidders are present and are permitted to ask questions concerning the SOW. This method is followed to ensure that all bidders possess the same information on which to base their prices and proposals. After satisfactory completion of this step, a due date for submission of the bid/proposal is communicated to all bidders. This process is called solicitation. The output of this process is a bunch of bids proposals from the bidders. The proposals are the sellers prepared document that describes the sellers ability to provide the requested products/services at his quoted price. Select Sellers This process involves complete evaluation (techno-commercial evaluation and price evaluation) of the bids received, followed by negotiations with the bidders. Here the bidders have been pre-qualified following a fairly extensive evaluation; the final selection of the seller is usually based on the lowest evaluated price. The outputs of this process are: The Contract: This can be a simple purchase order or a complex document. A contract is a legal document backed by the countrys legal system (as long as it does not include illegal activities).

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Contract Management Plan: This covers contract administration activities through the life of the contract. Contract Administration Contract administration is a process of managing the contract between buyer and seller. It is also provides: Regular review of sellers performance in executing the SOW, as well as documentation of this performance. Continuously manage contract related changes. Provide a basis for future relationship with the seller. Contract Closure Contract closure is a process of completing the contract by resolving all open items. Sometimes, a contract may be foreclosed or terminated by mutual agreement between buyer and seller.

Q.3 Describe the role of project managers in Human resource management and communication management. Ans.3: Role of Project Manager in HR and Communications Management A project manager is responsible for managing various tasks, activities and processes to ensure that the project is delivered in the defined time. He is responsible for defining the goals and objectives of the project and ensures that the resources that are required for the smooth working of the project are available. He also monitors and controls the project process to keep track of the status of the work. This ensures that the progress, schedule, procedures and the cost of the project are well monitored. Apart from monitoring and controlling the implementation and execution of the project, a project manager also plays a vital role in Human Resources and communications management such as: Assists in effective communications among the team members, Consistency in methodology, Consistency in process, documentation, procedure, Meet deadlines and commitments Facilitate formal metrics and reporting to upper management/project sponsors. Entrusted with the authority and accountability necessary to get the job done.

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Able to cope with conflicting scope, quality, schedule, risk, and other requirements. Single point of integration to meet customers needs. Held accountable for project failure. Maintain control over the project by measuring performance and correcting as necessary. Q.4 If the optimistic estimate of an activity is 12 days & pessimistic estimate is 18 days. What is the variance of this activity? Ans.4: If three standard deviations are chosen for the optimistic and pessimistic times, then there will be six standard deviations between them. In this case the variance of each activity completion time is given by tp = 18 days to = 12 days Variance = [(tp - to) / 6]2 = [(18 12) / 6]2 = 2 days Q.5 Describe the following quality control tools: a. Ishikawa diagram b. Flow chart c. Pareto chart d. Scatter diagram Ans.5: a. Ishikawa diagrams (also called fishbone diagrams, cause-and-effect diagrams or Fishikawa) are diagrams that show the causes of a certain

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event

--

created

by

Kaoru

Ishikawa

(1990).

Ishikawa diagram, in fishbone shape, showing factors of Equipment, Process, People, Materials, Environment and Management, all affecting the overall problem. Smaller arrows connect the sub-causes to major causes. Ishikawa diagram

One of the Seven Basic Tools of Quality First described by Kaoru Ishikawa Purpose To break down (in successive layers of detail) root causes that potentially contribute to a particular effect
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Common uses of the Ishikawa diagram are product design and quality defect prevention, to identify potential factors causing an overall effect. Each cause or reason for imperfection is a source of variation. Causes are usually grouped into major categories to identify these sources of variation. The categories typically include: People: Anyone involved with the process Methods: How the process is performed and the specific requirements for doing it, such as policies, procedures, rules, regulations and laws Machines: Any equipment, computers, tools etc. required to accomplish the job Materials: Raw materials, parts, pens, paper, etc. used to produce the final product Measurements: Data generated from the process that are used to evaluate its quality Environment: The conditions, such as location, time, temperature, and culture in which the process operates
a.

Flowchart: is a type of diagram that represents an algorithm or process, showing the steps as boxes of various kinds, and their order by connecting these with arrows. This diagrammatic representation can give a step-by-step solution to a given problem. Process operations are represented in these boxes, and arrows connecting them represent flow of control. Data flows are not typically represented in a flowchart, in contrast with data flow diagrams; rather, they are implied by the sequencing of operations. Flowcharts are used in analyzing, designing, documenting or managing a process or program in various fields.

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A simple flowchart representing a process for dealing with a non-functioning lamp.


b.

A Pareto chart, named after Vilfredo Pareto, is a type of chart that contains both bars and a line graph, where individual values are represented in descending order by bars, and the cumulative total is represented by the line. The left vertical axis is the frequency of occurrence, but it can alternatively represent cost or another important unit of measure. The right vertical axis is the cumulative percentage of the total number of occurrences, total cost, or total of the particular unit of measure. Because the reasons are in decreasing order, the cumulative function is a concave function. To take the example above, in order to lower the amount of late arriving by 80%, it is sufficient to solve the first three issues. The purpose of the Pareto chart is to highlight the most important among a (typically large) set of factors. In quality control, it often represents the most common sources of defects, the highest occurring type of defect, or the most frequent reasons for customer complaints, and so on.

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Simple example of a Pareto chart using hypothetical data showing the relative frequency of reasons for arriving late at work Pareto chart

One of the Seven Basic Tools of Quality First described Joseph M. Juran by
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Purpose
c.

To assess the most frequently-occurring defects by category

Scatter Diagram: A scatter plot or scattergraph is a type of mathematical diagram using Cartesian coordinates to display values for two variables for a set of data. The data is displayed as a collection of points, each having the value of one variable determining the position on the horizontal axis and the value of the other variable determining the position on the vertical axis. This kind of plot is also called a scatter chart, scatter diagram and scatter graph. A scatter plot is used when a variable exists that is under the control of the experimenter. If a parameter exists that is systematically incremented and/or decremented by the other, it is called the control parameter or independent variable and is customarily plotted along the horizontal axis. The measured or dependent variable is customarily plotted along the vertical axis. If no dependent variable exists, either type of variable can be plotted on either axis and a scatter plot will illustrate only the degree of correlation (not causation) between two variables. A scatter plot can suggest various kinds of correlations between variables with a certain confidence interval. Correlations may be positive (rising), negative (falling), or null (uncorrelated). If the pattern of dots slopes from lower left to upper right, it suggests a positive correlation between the variables being studied. If the pattern of dots slopes from upper left to lower right, it suggests a negative correlation. A line of best fit (alternatively called 'trendline') can be drawn in order to study the correlation between the variables. An equation for the correlation between the variables can be determined by established best-fit procedures. For a linear correlation, the best-fit procedure is known as linear regression and is guaranteed to generate a correct solution in a finite time. Unfortunately, no universal bestfit procedure is guaranteed to generate a correct solution for arbitrary relationships. A scatter plot is also very useful when we wish to see how two comparable data sets agree with each other. In this case, an identity line, i.e., a y=x line, or a 1:1 line, is often drawn as a reference. The more the two data sets agree, the more the scatters tend to concentrate in the vicinity of the identity line; if

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the two data sets are numerically identical, the scatters fall on the identity line exactly. One of the most powerful aspects of a scatter plot, however, is its ability to show nonlinear relationships between variables. Furthermore, if the data is represented by a mixture model of simple relationships, these relationships will be visually evident as superimposed patterns. The scatter diagram is one of the basic tools of quality control. Scatter plot

One of the Seven Basic Tools of Quality First described Francis Galton by Purpose To identify the type of relationship (if any) between two variables

Q.6 List the benefits of WBS? Need for risk management in an organizationcomment. Ans.6: Work Breakdown Structure
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Work breakdown structure (WBS) is a fundamental component of project management process that helps in defining and organizing the total scope of a project using hierarchical tree structure. According to Project Management Body of Knowledge (PMBoK), WBS is a deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. The hierarchy structure approach of WBS helps the project team to know the requirements of total project more accurately and specifically. WBS can also be used to assign responsibilities and allocate resources to the project. It helps the team to monitor and control the project. WBS is the critical input to various project management processes and deliverables like activity definitions, project schedule network diagrams, project and program schedules, performance reports, risk analysis and response, control tools or project organization. WBS has several levels in its hierarchy structure. These can be further used as an input to the scheduling process that supports elaboration of tasks, activities, resources and milestones which can be cost estimated, monitored, and controlled. Development of WBS WBS is a tool used in project management that defines a project and groups the discrete element of project in a way that helps to organize and define the total work scope of the project. A WBS element may be a product, data, service or any combination of it. WBS provides the necessary framework for detailed cost estimating, and controls it by providing guidance for schedule development. WBS is a dynamic tool. It can be revised and updated as required by the project manager. Each descending level of WBS represents an increased level of detailed definition of the project work. The successful implementation of any project depends on the ability of the subject professionals such as project manager to break down a large project into smaller manageable sub-projects. The process of breaking down of mammoth projects into several smaller projects is called as work breakdown structure. Although not all successful projects have a work breakdown structure, there are enough reasons to go for WBS, since WBS:

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Provides a framework for organizing and managing the approved project scope. Helps to ensure that the project team has identified all the activities and tasks that complete the project. Provides a framework for planning and controlling the cost and schedule information. It is very common that many organizations and companies work on many projects simultaneously. Each project is competing for the limited resources available in the company. WBS helps in distinguishing the need of one project from the other within the organization. This helps the organization to identify resource requirements and allocate resources more effectively. While developing a WBS, one must know that there are multiple ways to develop it for a given project. One way of developing a WBS may be better than the other. The two most important things to remember are that the WBS must contain all approved scope and the project manager should ensure that the developed WBS reflects the way he/she intends to manage the project. The other items to be given importance while developing a work breakdown structure for a project are: Reporting requirements. Size of the project. Resource executing the work or activities. Complexity of the project.

WBS is a hierarchy structure where the first two levels of hierarchy are set up first. The first level is usually the name of project or project title. The second level of the WBS hierarchy consists of all the deliverables of the project. At this level, the WBS should include 100% of all the work defined in the project scope statement and project management plan. Although in actual practice, 100% may not be achieved (it will most likely be about 95 98%, depending on the size of the project and the diversity of its various components), the goal should be 100%. This is called the 100% rule. After setting up the first two levels in the WBS hierarchy, the project team works on the decomposition or breakdown of the larger project into smaller chunks of work. The breaking down of the deliverables into successively smaller chunks of
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work is continued until a work package level is reached which is the lowest level of WBS. Project manager assigns a person or a specific team to complete each work identified in the WBS. There are number of steps involved is developing a WBS of project. Every step should be given equal importance in order to ensure that the developed structure helps the project team to arrive at successful completion of the project. The steps to follow to develop the work breakdown structure of a project are: Benefits of WBS Work breakdown structure represents family tree hierarchy structure of project operations required to accomplish the objectives of the project. Tasks identified in the WBS collectively describe the overall project. It serves to describe the link between the end objective and activities required to reach that objective. Implementing work breakdown structure approach in project planning offers various benefits which are given in table 10.1.

Table 1: Benefits of Work Breakdown Structure


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PM 0010- Introduction to Project Management


Assignment Set- II

Q.1 Describe the various ways of representing network diagram logic. Ans,1: Network Logic Diagrams The logic development in project planning is an iterative process. Initial logic development starts after identification of the activities of the project and before scheduling process occurs. The logic development process is further refined during schedule development and optimization. There are two common methods of logic diagramming which are referred as network logic diagrams. Before knowing the types of network logic diagrams, we should be familiar with rules to be followed while developing and analyzing it. The rules are described in the table 1. Table 1: Rules to Develop a Network Logic Diagram

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The two types of network logic diagram are: Precedence Diagramming Method This method is also known as Activities On Node (AON). In this network logic diagram, each activity is represented by a node and connecting lines represents the relationships between activities. Each preceding activity controls the start and finish of the succeeding activity. In precedence diagramming method, all the four dependency relationships can be implemented between the activities. Finish to Start dependency relationship is the most commonly used in this network logic diagram. Start to Finish dependency relationship is rarely used and it is typically used only by professional scheduling engineers. Usage of start-to-start, finish-to-finish, or start-to-finish relationship with project management software can produce unexpected results, since these relationships are not consistently implemented. The figure 1 shows the implementation of activities on node network logic diagram where the alphabets within the circle represents the activities of the project and linking lines shows the relationship between them. Precedence Diagramming Method network logic diagram has the various advantages, they are:
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It is amendable with most of project management software. It is does not need introduction of a dummy activity in the network. It offers greater flexibility as it can incorporate any of the four dependency relationships.

Figure 1: Activity on Node Network Logic Diagram Arrow Diagramming Method This method of network logic diagram is also known as Activity On Arrow (AOA). This is the historical basis for network diagrams. It was used for the development of PERT networks in the 1950s by the Department of Navy for tracking very large, complex Polaris program. In this method, each activity of the project is represented by an arrow between the nodes of the network and the nodes are mere symbols representing the connection points. In AOA method of network logic diagram, finish to start relationships is used. The activities follow the order of precedence as defined by their immediate predecessors. When there is more than one immediate predecessor for an activity, the network must show that the activity can be started only after all of its immediate predecessors activities have been completed. The dummy activity defined above is used for this depiction in the network. In AOA network logic diagram, the important points mentioned below should be followed to ensure the correct representation: Activities of the project are represented by Arrows. Events are numbered and are represented by Nodes.
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Two dummy activities should be introduced to show the precedence relationships. The figure 2 shows the representation of AOA, where alphabets on the arrow are the activities of the project and nodes between them represents the relationships between the activities.

Figure 2: Activity on Arrow Network Logic Diagram Q.2 Explain the following: a. Organizational breakdown structure. b. Cost breakdown structure Ans.2: Organization Breakdown Structure Organization Breakdown Structure (OBS) depicts the relationships within the organization. It is used as a framework for assigning the work responsibilities for every person in an organization. OBS is the next step in project planning after developing the work breakdown structure. This process defines the responsibility of each team involved in the project. It assigns each work package identified in WBS to an individual team who are held responsible to deliver the expected output of the project. The OBS, groups similar project activities together and relates them to the organization structure. OBS also defines the responsibilities of project management, costing, budgeting, and project monitoring and control. It provides an organizational based perspective of the project rather than task oriented. The hierarchical structure of the OBS aggregates the project information to higher levels. After defining the responsibilities of the project, both the OBS and WBS of the project are merged and together assure that all the elements and scope of the project are assigned to a responsible team. OBS has various functions to perform. It helps to: Decompose the necessary resources to perform job.
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Identify and organize the resources responsible for carrying out the activities associated with the project. Keep the track of specific work assignments and resource allocations. To develop an organization breakdown structure of an organization. The steps given below should be followed: Draw the entire organization hierarchy structure for the resources involved in the project. Identify all the team members after drawing the structure. Assign each team member a position in the structure. If there are extra positions that have not been filled in the structure, fill them now. If there are additional resources left free, assign those resources so that all resources and positions are accounted for. Ensure that the OBS is structured from the most responsible department and followed by the performing departments at the lower levels. The lower levels of the structure are where the project responsibilities are matched up with the resource needed. Specify the functional group to every user where cost for the work the user does is allocated. Specify the approval group to every user who approves the work of the user and any leave approvals. The figure 1 shows the organizational structure of resources which depicts the various teams involved in a software development organization.

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Ans.2 b: Cost Breakdown Structure Cost of a specific project activity refers to the monetary value or financial pricing. It includes all anticipated expenditures that are expected to be part of the entire project, as well as the monetary value of the total sum of resources to be expended during the process. Cost estimation and control is vital for success of a project. This is the reason that Cost Breakdown Structure (CBS) is considered to be a major part of project breakdown structure. CBS describes how different cost elements contribute to the total cost of a project. According to Hundal, the contributions to the cost of a product can be estimated in a variety of ways. These breakdowns are expressed in the forms of cost structures. A CBS is a document which outlines the criteria and activities that should be carried out as part of project management. It provides details about the input/output cost estimates and the amount of money being spent. It provides the plan and structure necessary to control costs of the project and keep them within the limits of the project budget. In CBS, a specific project cost is broken down into sub costs, which includes number of unique categories. The identified categories of cost breakdown structure include direct labor hours, indirect labor hours and other direct/indirect costs of the project. It also includes the purchased price of any specific materials and equipment which falls into resource cost category. In a business, providing a budget that is adjusted to time is referred as a cost baseline. It is the integral part of the cost breakdown structure. A cost baseline is an essential facet of the project management plan used by companies to ensure success of the project. Most larger projects have a variety of cost baselines which should be calculated. The basic cost baselines of a project are resources baselines and production variations baselines. These cost baselines measurement ensure that the cost is evaluated in regards to the overall yield of a specific project. CBS defines and arranges all relevant cost elements suitable for a specific project. It is a framework which shows the estimated cost requirement of the project divided among different activities of the project identified at work breakdown. A
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cost breakdown structure must have the following characteristics shown in the table 2. Table 2: Characteristics of Cost Breakdown Structure

There are five major forms of cost breakdown structures. They are: Grouped on the basis of the components that the product is made of and thus following the bill of materials. Divided on the basis of organizational departments. Divided based on the product functionalities which are very beneficial for a product development purposes. Divided based on the various activities and operations of the project. Divided based on any desired way and then the result is arranged using the Pareto chart rule. This indicates the most important and the least important cost elements from the desired point of view. The cost elements of a CBS are usually associated with the three basic elements. They are: Resources Activities Product Q.3 If optimistic time for an activity is 5 days, estimated time to complete the activity 85 and most likely time 10 days. What is the variance of the activity? Ans.3: to = 5 days te = 85 days tm = 10 days tp = ? Estimated time of the project (te) = (to + 4*tm + tp) 85 = (5 + 4*10 + tp) 85 = (45 + tp)
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tp = 85-45 tp = 40

Variance = [(tp - to) / 6]2 = [(40 5) / 6]2 Variance = 11.667 Q.4 Explain the following types of contract: a. Cost reimbursable and its variation b. Fixed price and lump sum contract c. Time & material contract

= 35/6 * 2

Ans.4 a: Cost-reimbursable contracts: Here the seller is paid for his actual costs plus a fee to cover his profit. The actual cost includes direct cost (salaries of fulltime project staff) and indirect cost (salaries of management and support staff indirectly involved in the project plus cost of office facilities like rent, electricity etc.). The variations in this category are: Cost-Plus-Fee (CPF) or Cost-Plus-Percentage of Cost (CPPC): The payment is made for the actual cost plus an agreed percentage of the actual cost as fee. Cost-Plus-Fixed-Fee (CPFF): This is same as CPPC except that the fee is fixed and does not increase or decrease with the actual cost unless project scope changes. Cost-Plus-Incentive-Fee (CPIF); Here, in addition to the payment as per the CPPC or CPFF mode, an incentive is paid upon achieving certain specified performance levels of the project. Ans.4 b: Traditional lump sum fixed cost/time (Fixed Price Contracts) In fixed type contracts, the design is already developed by the owner (usually through a design consulting firm). Subsequently, the project is tendered and awarded to a construction contractor at a fixed price and then the construction delivery is completed. Theoretically, each of these phases, i.e., design, tendering and contract award is discrete and separate. First, the owner fixes a Design Consultant, based on which a design is generated which is as comprehensive as possible. Tenders for construction are invited for this design. Tendering can be either open tendering or pre-qualified tendering. By pre-qualified tendering, it is implied that bidders are pre-qualified. The evaluation of the bids received leads

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to selection of the seller at a fixed cost/time, on the premise that the design is complete and comprehensive. The advantage of this type of contract is that the owner is aware of the cost at the time of award based on which the design was finalized. In practice, however, the designs always have gaps which lead to the undermentioned possible disadvantages: The construction contractor makes extra cost claims to the owner if the design is not complete before tendering. Additional cost claims by the construction contractor on account of consequential damages due to the changes are also likely. The construction contractor is excluded from the design development phase, and thus a substantial value addition opportunity by valuable management and constructability information is lost. The construction contractor becomes answerable to the principal design consultant, while he cannot make suggestions on improved design for constructability[4]. Many owners perceive that they may be at the mercy of construction contractors looking for opportunities to create additional revenue and profit from such gaps in the tender. This may lead to a confrontational approach over disputes which may ultimately need to be settled by arbitration or a court of law. Notwithstanding these disadvantages, fixed contracts are in vogue where designs can be more or less frozen prior to tendering for construction, with some contractual provisions for price variations incorporated in the contract. Ans.4 c: Time and Material (T&M) contracts: Here the contract contains the feature of both cost reimbursable and fixed price contracts. Unit rate contracts are an example, where the unit rates for specific items of work are fixed, but the contractor is paid for the actual quantities executed, since quantities are not known at the time of signing the contract with the contractor. Q.5 Describe the factors to be considered when feasibility of a project is examined. Also explain the various qualities that a good project management process encompasses. Ans.5: Feasibility Study on Project
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Feasibility study on project defines the probabilities associated with it. Various measures are taken to identify whether a project is feasible or not. Initially, an analysis is performed to determine if the project meets all the requirements to proceed to next stage. However, when a feasibility of the project is to be examined, the following factors have to be taken into consideration: Cost: The project management team makes a cost analysis to ensure that the estimated costs of the project fall within the range set by the organization. However, there are certain factors that have to be considered while determining the costs of the projects. It includes the implications of the capital expenditure, the project costs, determining the effects of finances on the organization, determining the expenses required in the current year as well as the subsequent years. Timing: The project manager makes a timing analysis to ensure that the project meets its delivery date with the expected quality outcome. The timing phase of the project ensures that any legal or requirements from the government are complied on date. It also ensures that the finances are used by the company in the restricted period of time. Timing policies are also important for the operational concerns such as requirement of equipments or systems to meet the defined deadlines and specific procedures. Performance: The project manager fixes the job responsibilities to the members of the team based on the skill set they possess. It is vital to monitor the performance both technically and personally. It is necessary that the performance of the members participating in the project meet the standards as specified by the client as well as the organization internally. Quality of a Project Management Process The various qualities that a good Project Management process should encompass are as listed below: Creativity: A good Project Management process should be creative that facilitates integrating various categories of the project into a unified structure. It should provide abilities to create enthusiasm and appeal in the process. Structure: The structure of the organization will have a set of specifications, parameters, limitations as well as certain guidelines that has to be followed. The members of the organizations are expected to work effectively within the defined framework and structure of the organization.
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Intuition: Intuition is very important part of maintaining a good Project Management process. It is that ability of understanding the uncertainties and the things forth coming without the use of any rational processes. It is the foundation of emotional intelligence. It is vital to have a stronger intuition that enables to sense what the other members are feeling and thinking. Knowledge: Knowledge is an important part of the Project Management process. It is required for the deeper understanding of the project with ease and also to delegate the technical aspects training to the other members participating in the project team. Commitment: The commitment of the project manager is responsible for holding the team together to pull the project to meet its delivery dates successfully. Commitment ensures that there are fixed allotted timings for every activity to be performed in the process. Being Considerate: Being considerate infers that a task allotted to the members of the team can be well completed in the allotted time. It ensures that no employee is heavily loaded with unnecessary work he is not responsible for. Thus, the loyalty and humbleness of the manager will further take the project team to meet its objectives defined. Versatility: The primary qualities of a Project Management process include flexibility to any kind of environment. It requires versatility that enables the project manager to change any decisions with respect to resources and other constraints quickly. Lightness: It complements the importance of the tasks as well as provides options to resolve them. This leads to strong team results and team maintenance. Discipline/focus: It is very essential to be self focused and disciplined to maintain the moralities and ethics of self and the company. Big picture, small actions: It is very essential for a good Project Management process to visualize things in a broader perspective. This leads to thinking in a wider range meanwhile paying attention to the details of the project. However, it requires good communication skills to interact with the team members in order to establish the clear expectations of the clients. It is required that the members of the team are also given the authority to make shared decisions regarding developing the project. It gives a clear picture of the people who are assigned to the specific tasks. Effective Project Management process adopts various customs and ways in order to correspond and share the relevant information such as conducting meetings
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and informal conversations with the relevant and concerned people such as with the other members of the team, the clients and other senior officials of the project. This requires that the manager of the project have good communication skills and believe in listening skills than talking skills. Q.6 Describe the following project management approaches: a. Critical chain project management approach b. Event chain methodology approach c. Incremental approach d. Phased approach Ans.6 a: Critical Chain Project Management Approach (CCPM): It is an approach of scheduling and managing the projects with respect to resources. It ensures planning and structuring of projects so that resources are available when the critical chain begins. It ensures that the project plan undertakes resource leveling. Resource leveling is a part of the project management process. It inspects resources that are not balanced. These resources can include people or equipment. For example, when requirements of resources such as equipment or manpower are far more than that is available at that instant, the resources need to be rescheduled. When a team member is a critical resource for multiple tasks, the responsibilities of that person need to be redistributed among other personnel in order to complete the tasks simultaneously. Project resource leveling resolves such conflicts by balancing the resources and the workload. Ans.6 b: Event Chain Methodology Approach: This method allows modeling of uncertainties in an easy and simple way in the project. The various principles that event chain methodology works on are as follows: Probabilistic moment of risk: It monitors the uncertain risks that occur at the some point when the project is in flow. Event chains: An analysis is performed to determine an increasing effect of event chains in the project. Critical events or event chains: Critical events are defined as those events that have the ability to disturb the progressive workflow of the entire project. An analysis is performed to determine such uncertain situations in the project.
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Project tracking with events: tracking makes it possible to gather information about future events from the incomplete information available. Event chain visualization: Event chain diagrams are used to visualize events and event chains. Ans.6 c: Incremental Approach: The incremental approach adopts a sequential approach in preparing a project for delivery. The main objective of incremental approach is to reduce development time to a large extent. This is achieved by adopting measures such as finding the most deserving and suitable people for the task, facilitating good human relations and communication within the project team and providing solutions to anticipate customer wants and queries. This approach is very useful in situations where complete funding is not readily available or when there is a delay in the delivery of the deliverables. Ans.6 d: Phased Approach: A project life cycle includes initiation, planning, execution, control and close. The phased approach is responsible in fitting the requirements according to the need of the organizations of various sizes. There are various benefits of using phased approach in project development. This approach assists in laying down a firm and structured foundation for the project.

PM 0011 Project Planning and Scheduling


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(Book ID: B1237)

Assignment Set- 1

Q.1

Explain the following a. Rolling wave planning b. Decomposition c. Precedence diagramming method d. Dependency determination

Ans.1 a: Rolling wave planning: The requirements were vague. I couldnt possible plan for the entire project. However, at least some degree of planning was
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required to get the project started. So, I used the Rolling Wave Planning technique to plan as far as the requirements were clear enough. Fundamentals of Rolling Wave Planning Rolling Wave Planning is a technique that enables you to plan for a project as it unfolds. Therefore, Rolling Wave Planning requires you to plan iteratively. The planning technique is very similar to those used in SCRUM or other Agile Methodologies. Essentially, when you use Rolling Wave Planning, plan until you have visibility, implement, and then re-plan. For example, suppose you expect to complete the project in eight months, but only have clarity for the first three months. Then, you would plan only for these three months. As the project progresses and you gain more clarity, you would then plan for the remaining months. The Rolling Wave Planning technique uses progressive elaboration, which is the act of elaborating the work packages in greater detail as the project unfolds. Rolling Wave Planning does not exempt you from creating a list of milestones and assumptions for the entire project. As a matter of fact, it is necessary to provide key milestones and assumptions as it will help stakeholders see why you are using Rolling Wave Planning and what to expect as the project progresses.

Usage of Rolling Wave Planning in Project Management

Rolling Wave Planning is used when you just dont have enough clarity to plan in detail the entire project. This lack of clarity could come from various factors, such as emerging requirements. Rolling Wave Planning is particularly useful in projects with high uncertainty. Therefore, you must use the Risk Management best practices. For example, in product development it is common practice to prototype before going into the actual product development. Therefore, in such an environment you would use Rolling Wave Planning to plan the prototype and then make a decision to proceed to implementation. Post the Prototype phase, you would plan once again.

Benefits of Rolling Wave Planning


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This iterative approach to planning is commonly found in SCRUM and other Agile Project Management Methodologies. Similar to Agile, Rolling Wave Planning: Encourages adaptability Encourages planning Is great for R&D, High-Tech, Invention projects Is good for projects with changing scope Ans. 1 b: Decomposition Defining Decomposition: While it sounds like something you dont want to happen when planning a project, decomposition can be a useful tool when managing projects. Decomposition is a technique used in project management that breaks down the workload and tasks before the creation of the work breakdown structure. This important step can save time in the long run. Overview of the Decomposition Process Roughly, there are six steps involved with the decomposition process. Once you have determined the project objectives, you will need to gather the information involving the projects deliverables and the tasks that have already been determined. Knowing what needs to be produced as the end products and knowing the important milestones will help guide the project to keep it on course. Once deliverable and task information has been gathered, decomposition takes a top-down approach to determining tasks and subtasks. The project manager will break down the biggest items (deliverables, milestones, major tasks) into the smallest tasks. This process can occur in the work breakdown structure format, or it can be completed as a mind map and structured later. The idea is to move from the most general aspects of the project to the most specific and detailed tasks in the project. For example, if you are writing a technical manual, you would break it down into its smallest components chapters. Each chapter could be broken down into research, outline, draft, revision, print-ready copy. Once the project has been broken down into the smallest tasks, then work packages can be created. A work package is a collection of related action items that can be assigned to a resource as a sub-set of the whole of work that must be
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created. Double-check that the project has been sufficiently decomposed into the smallest parts possible. Finally, the project manager will organize the work packages into the work breakdown structure. Each package can be assigned a specific code. Once the work breakdown structure creation is completed, then the work packages are assigned to resources. Ans.1 c: Precedence diagramming method: Before creating a project schedule, you need to identify and understand the dependencies between project activities. Incorrectly identifying these dependencies typically causes projects to come in late. One of the benefits of PDM is that it helps in understanding project dependencies visually. Introduction to PDM PDM is a visual representation technique that depicts the activities involved in a project. Precedence Diagrams are also known as Project Network Diagrams. In this article, both terms are used interchangeably. PDM helps you to:

Communicate: The visual representation make it easier for you to communicate the flow of project execution or the project activity flow. Identify missing activities: When an activity is not identified, itll never be done. By visually representing the activities, there is a greater chance for your team to identify missing activities. Identify dependencies: Each activity is dependent on some other activity. When a dependency is not identified, the project will be delayed until such a time that identification occurs. For example, if there is a critical component that is being produced by a third-party vendor, the final product is dependent on the vendor. So, even if you complete all other activities, the project will not be complete until the vendor supplies the critical component. Identify critical activities: Certain activities have a greater impact on project schedule than others. By using PDMs, you can determine the activities critical to the project schedule. This is known as theCritical Path Method (CPM). Create a project schedule: The final goal of PDM is to create a practical and robust project schedule.
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Types of Dependencies There are four types of dependencies that you need to be aware of before creating a Precedence Diagram. Finish-Start: In this dependency, an activity cannot start before a previous activity has ended. For example, you cannot cook a stew before gathering all the ingredients. Therefore, the activity Gather Ingredients needs to finish, before the activity Cook Stew can begin. This is the most commonly used dependency. 1) Start-Start: In this dependency, there is a defined relationship between the start of activities. 2) Finish-Finish: In this dependency, there is a defined relationship between the end dates of activities. 3) Start-Finish: In this dependency, there is a defined relationship between the start of one activity and the end date of a successor activity. This dependency is rarely used. 4) Precedence Diagram Notation The image displays a simple Precedence Diagram

5)

6) 7)

Events: The Start and End oval shapes signify events. An event is a point in time having no duration, which is also known as a milestone. A Precedence Diagram will always have a Start and an End event. Activity: There are four activities (Activity 1, 2, 3, and 4), each activity is represented by a node. Dependencies: Each node (Activities and Events) is connected by using uni-directional arrows. This signifies the relationship between activities. The relationship between activities can either be predecessor or successor. For example in the image, Activity 1 has no dependency, Activities 2 and 3 are dependent on Activity 1, while Activity 4 is dependent on Activities 2 and 3.
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Note: Since the activities are represented by the node, Precedence Diagrams are also called activity-on-the-node diagrams. A Network Diagram will always have the Start and End events. They may also have other events called milestones. For example, kill-points are milestones. In a Network Diagram, the start of an activity must be linked to the end of another activity. Ans.1 d: Dependency determination: In a project network, a dependency is a link amongst a project's terminal elements. There are four kinds of dependencies with respect to ordering terminal elements (in order of decreasing frequency of use): 1. Finish to start (FS)

A FS B = B can't start before A is finished

(Foundations dug) FS (Concrete poured) 2. Finish to finish (FF)

A FF B = B can't finish before A is finished

(Last chapter written) FF (Entire book written) 3. Start to start (SS).

A SS B = B can't start before A starts


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(Project work started) SS (Project management activities started) 4. Start to finish (SF)

A SF B = B can't finish before A starts

(New shift started) SF (Previous shift finished) Finish-to-start is considered a "natural dependency" whereas all the others are constraints imposed by the scheduler to reflect resource constraints or preferential dependencies. SF is rarely used, and should generally be avoided. There are three kinds of dependencies with respect to the reason for the existence of dependency: 1. Causal (logical) It is impossible to edit a text before it is written
2.

It is illogical to pour concrete before you dig the foundations Resource constraints

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It is logically possible to paint four walls in a room simultaneously but there is only one painter 3. Discretionary (preferential) I want to paint the living room before painting the dining room, although I could do it the other way round, too Early critical path-derived schedules often reflected only on causal (logical) or discretionary (preferential) dependencies because the assumption was that resources would be available or could be made available. Since at least the mid-1980s, competent project managers and schedulers have recognized that schedules must be based on resource availability. The critical chain method necessitates taking into account resource constraint-derived dependencies as well. In addition, these dependencies can be modified by leads, and lags. For example: When building two walls from a novel design, one might start the second wall 2 days after the first so that the second team can learn from the first. This is an example of a lag in a Start-Start relationship. It may also be useful to specify lead time when tasks are performed in parallel in a Finish-Finish relationship. For example: The work for 'Document A' should finish 5 days before the work for 'Document B' so that the reviewers have time to read each individually. Although Document A and Document B may take different times to write, they will be planned to finish 5 days apart.

Q.2 State and describe process of estimating resource & duration for the activity Ans.2: As we know that for every step we take has a time frame and every move needs some resources and both these parameters need to be consider before each action. Thus even though the activity is identified and sequenced, we get only partial schedule, to get further clarity on the schedule. It is very important to understand the resource requirement and time required to complete each activity. The importance of the two parameters can be understood from the fact, that project management has two separate processes for finding the two requirements. The two processes are:
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Determining resource requirement for each activity. Calculating the time required for each activity. Determining resource requirement for each activity: There are various resources used on a project. Some of which are people, machinery, money. And for each activity, to be accomplished we have a particular resource requirement. The reason for calculating this requirement is that there is a cost factor attached to each resource and to execute the project successfully, it is very important that we are aware of the cost components. The information or input to this process may be similar or different form of the previous processes. The basic inputs to this process are:
1.

2. 3. 4. 5.

List of activity Activity Characteristics Resource Colander Enterprise Environmental Factor Organizational Asset

The outcomes of this process are: Activity Resources Requirement Resource Breakdown Structure Project Document Updated Calculating time requirement for each activity: Once we have the calculated the resources requirement based on their availability, we can get idea about the time it would take to complete the activity. In this process we use outcomes from previous processes and organizational documents to calculate the time taken or each activity. The major inputs required for this process are:
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1. 2. 3. 4. 5. 6. 7.

List of activities Activity Characteristics Activity Resource Requirement. Resource Colander Scope Statement Enterprise Environmental Factor Organizational Asset

The major outcomes of this process are: Activity Duration Estimate Project Document Updated Q.3 Describe the basic elements of a project plan.

Ans.3: Project Plan Elements: Although the process of creating the project plan may differ from organization to organization, the basic elements of the project plan remains the same. The basic elements of the project plan are: Project Requirement: The project plan list the basic requirement if the project and the objective of undertaking the project. General Approach: In this section the both the managerial and the technical approaches for the project is listed. It describes the project guidelines. This part of the plan describes the various approaches which need to be followed all through the project. These approaches may include the decision documents, the instructional designing approach etc. List of Stakeholders: Stakeholders can impact a project both positively or negatively. Thus it is very important to identify all the project stakeholders at the starting of the project. Project plan should contain the list of stakeholders and their relation to the project and the mode of communication to be followed for managing the same. Contractual Aspects: This important section describe the reporting requirement, customer related information, list of resources supplied by client, liaison agreement, project review and abortion process, list of deliverables and project specification, schedules. Resources: The section lists the resources required for the project, their availability, their cost.
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Risk: The risk management plan of the project plan talks about the various risks identified in the project. The alternative choices, mitigation and contingency plans. Steps to monitor and control the risks. Quality: Every project should be evaluated against standard and by methods established at the project inception. This section describes these quality standards. Complete the below mentioned chart Pessimi st 20 30 105 200 145 Most optimi likely st 12 25 80 145 112 10 18 56 85 89 : PER T Varianc e

Q.4

Activity A B C D E

Ans.4: In the given problem PERT and variance need to be calculated: The formula for calculating the PERT is PERT = (te) = (to +4tm + tp)/6 The formula for calculating the Variance is

Variance = (tv) = (tp - to)2 /6

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Where to = Optimistic or activity duration in best scenario. tm = Most likely or activity duration resource availability and dependencies are as assumed. tp = Pessimistic or activity duration in worst scenario.

The solution of the given problem is as below:

Activity A B C D E

Pessimis Most t likely 20 30 105 200 145 12 25 80 145 112

optimis t PERT 10 18 56 13 24.67 80.17

Varianc e 1.67 2 8.17 19.17 9.34

144.1 85 7 113.6 89 7

Q.5 Describe inputs and outputs for the following processes a. Determining resource requirement for each activity b. Calculating time requirement for each activity.
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Ans.5: Determining resource requirement for each activity:There are various resources used on a project. Some of which are people, machinery, money. And for each activity, to be accomplished we have a particular resource requirement. The reason for calculating this requirement is that there is a cost factor attached to each resource and to execute the project successfully, it is very important that we are aware of the cost components. The information or input to this process may be similar or different form of the previous processes. The basic inputs to this process are: List of activity Activity Characteristics Resource Colander Enterprise Environmental Factor Organizational Asset

To outcomes of this process are: Activity Resources Requirement Resource Breakdown Structure Project Document Updated Calculating time requirement for each activity:Once we have the calculated the resources requirement based on their availability, we can get idea about the time it would take to complete the activity. In this process we use outcomes from previous processes and organizational documents to calculate the time taken or each activity. The major inputs required for this process are: List of activities Activity Characteristics Activity Resource Requirement. Resource Colander Scope Statement Enterprise Environmental Factor
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Organizational Asset The major outcomes of this process are: Activity Duration Estimate Project Document Updated Q.6 Describing the most important components of a project planning tool.

Ans.6: One of the critical factors for project success is having a well-developed project plan. This article provides a 10-step approach to creating the project plan, not only showing how it provides a roadmap for project managers to follow, but also exploring why it is the project manager's premier communications and control tool throughout the project. Step 1: Explain the project plan to key stakeholders and discuss its key components. One of the most misunderstood terms in project management, the project plan is a set of living documents that can be expected to change over the life of the project. Like a roadmap, it provides the direction for the project. And like the traveler, the project manager needs to set the course for the project, which in project management terms means creating the project plan. Just as a driver may encounter road construction or new routes to the final destination, the project manager may need to correct the project course as well. A common misconception is that the plan equates to the project timeline, which is only one of the many components of the plan. The project plan is the major work product from the entire planning process, so it contains all the planning documents for the project. Typically many of the project's key stakeholders, that is those affected by both the project and the project's end result, do not fully understand the nature of the project plan. Since one of the most important and difficult aspects of project management is getting commitment and buying, the first step is to explain the planning process and the project plan to all key stakeholders. It is essential for them to understand the importance of this set of documents and to be familiar with its content, since they will be asked to review and approve the documents that pertain to them.
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Components of the Project Plan Include: Baselines. Baselines are sometimes called performance measures, because the performance of the entire project is measured against them. They are the project's three approved starting points and include the scope, schedule, and cost baselines. These provide the 'stakes in the ground.' That is, they are used to determine whether or not the project is on track, during the execution of the project. Baseline management plans. These plans include documentation on how variances to the baselines will be handled throughout the project. Each project baseline will need to be reviewed and managed. A result of this process may include the need to do additional planning, with the possibility that the baseline(s) will change. Project management plans document what the project team will do when variances to the baselines occur, including what process will be followed, who will be notified, how the changes will be funded, etc. Other work products from the planning process. These include a risk management plan, a quality plan, a procurement plan, a staffing plan, and a communications plan. Step 2: Define roles and responsibilities. Not all key stakeholders will review all documents, so it is necessary to determine who on the project needs to approve which parts of the plan. Some of the key players are:

Project sponsor, who owns and funds the entire project. Sponsors need to review and approve all aspects of the plan. Designated business experts, who will define their requirements for the end product. They need to help develop the scope baseline and approve the documents relating to scope. They will be quite interested in the timeline as well. Project manager, who creates, executes, and controls the project plan. Since project managers build the plan, they do not need to approve it. Project team, who build the end product. The team needs to participate in the development of many aspects of the plan, such as identifying risks, quality, and design issues, but the team does not usually approve it. End users, who use the end product. They too, need to participate in the development of the plan, and review the plan, but rarely do they actually need to sign off.
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Others, such as auditors, quality and risk analysts, procurement specialists, and so on may also participate on the project. They may need to approve the parts that pertain to them, such as the Quality or Procurement plan.

Step 3: Hold a kickoff meeting. The kickoff meeting is an effective way to bring stakeholders together to discuss the project. It is an effective way to initiate the planning process. It can be used to start building trust among the team members and ensure that everyone's ideas are taken into account. Kickoff meetings also demonstrate commitment from the sponsor for the project. Here are some of the topics that might be included in a kickoff meeting: Business vision and strategy (from sponsor) Project vision (from sponsor) Roles and responsibilities Team building Team commitments How team makes decisions Ground rules How large the group should be and whether sub-groups are necessary

Step 4: Develop a Scope Statement. The Scope Statement is arguably the most important document in the project plan. It's the foundation for the rest of the project. It describes the project and is used to get common agreement among the stakeholders about the scope. The Scope Statement clearly describes what the outcome of the project will be. It is the basis for getting the buy-in and agreement from the sponsor and other stakeholders and decreases the chances of miscommunication. This document will most likely grow and change with the life of the project. The Scope Statement should include: Business need and business problem Project objectives, stating what will occur within the project to solve the business problem Benefits of completing the project, as well as the project justification Project scope, stated as which deliverables will be included and excluded from the project.

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Key milestones, the approach, and other components as dictated by the size and nature of the project. It can be treated like a contract between the project manager and sponsor, one that can only be changed with sponsor approval. Step 5: Develop scope baseline. Once the deliverables are confirmed in the Scope Statement, they need to be developed into a work breakdown structure (WBS), which is a decomposition of all the deliverables in the project. This deliverable WBS forms the scope baseline and has these elements: Identifies all the deliverables produced on the project, and therefore, identifies all the work to be done. Takes large deliverables and breaks them into a hierarchy of smaller deliverables. That is, each deliverable starts at a high level and is broken into subsequently lower and lower levels of detail. The lowest level is called a "work package" and can be numbered to correspond to activities and tasks. The WBS is often thought of as a task breakdown, but activities and tasks are a separate breakdown, identified in the next step.

Step 6: Develop the schedule and cost baselines. Here are the steps involved in developing the schedule and cost baselines. 1. Identify activities and tasks needed to produce each of the work packages, creating a WBS of tasks. 2. Identify resources for each task, if known. 3. Estimate how long it will take to complete each task. 4. Estimate cost of each task, using an average hourly rate for each resource. 5. Consider resource constraints, or how much time each resource can realistically devoted to this project. 6. Determine which tasks are dependent on other tasks, and develop critical path. 7. Develop schedule, which is a calendarization of all the tasks and estimates. It shows by chosen time period (week, month, quarter, or year) which resource is doing which tasks, how much time they are
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expected to spend on each task, and when each task is scheduled to begin and end. 8. Develop the cost baseline, which is a time-phased budget, or cost by time period. This process is not a one-time effort. Throughout the project you will most likely be adding to repeating some or all of these steps. Step 7: Create baseline management plans. Once the scope, schedule, and cost baselines have been established, you can create the steps the team will take to manage variances to these plans. All these management plans usually include a review and approval process for modifying the baselines. Different approval levels are usually needed for different types of changes. In addition, not all new requests will result in changes to the scope, schedule, or budget, but a process is needed to study all new requests to determine their impact to the project. Step 8: Develop the staffing plan. The staffing plan is a chart that shows the time periods, usually month, quarter, year, that each resource will come onto and leave the project. It is similar to other project management charts, like a Gantt chart, but does not show tasks, estimates, begin and end dates, or the critical path. It shows only the time period and resource and the length of time that resource is expected to remain on the project. Step 9: Analyze project quality and risks. Project Quality: Project quality consists of ensuring that the end product not only meets the customer specifications, but is one that the sponsor and key business experts actually want to use. The emphasis on project quality is on preventing errors, rather than inspecting the product at the end of the project and then eliminating errors. Project quality also recognizes that quality is a management responsibility and needs to be performed throughout the project. Creating the Quality Plan involves setting the standards, acceptance criteria, and metrics that will be used throughout the project. The plan, then, becomes the foundation for all the quality reviews and inspections performed during the project and is used throughout project execution. Project Risks: A risk is an event that may or may not happen, but could have a significant effect on the outcome of a project, if it were to occur. For example, there may be a 50% chance of a significant change in sponsorship in the next few
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months. Analyzing risks includes making a determination of both the probability that a specific event may occur and if it does, assessing its impact. The quantification of both the probability and impact will lead to determining which are the highest risks that need attention. Risk management includes not just assessing the risk, but developing risk management plans to understand and communicate how the team will respond to the high-risk events. Step 10: Communicate! One important aspect of the project plan is the Communications Plan. This document states such things as: Who on the project wants which reports, how often, in what format, and using what media. How issues will be escalated and when. Where project information will be stored and who can access it. For complex projects, a formal communications matrix is a tool that can help determine some of the above criteria. It helps document the project team's agreedon method for communicating various aspects of the project, such as routine status, problem resolution, decisions, etc. Once the project plan is complete, it is important not just to communicate the importance of the project plan to the sponsor, but also to communicate its contents once it's created. This communication should include such things as: Review and approval of the project plan. Process for changing the contents of the plan. Next stepsexecuting and controlling the project plan and key stakeholder roles/responsibilities in the upcoming phases.

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PM 0011- Project Planning and Scheduling


Assignment Set- II
Q.1 Describe the five process groups and 9 knowledge areas of project management. Ans.1: Mapping of planning process with Knowledge areas Most of the experienced project managers believe that project management can be dichotomized in two major ways; firstly as process groups and secondly as Knowledge areas. As per the project management fraternity, project management can be dissected into 9 knowledge area and 5 process groups. The authority and responsibility of decisions for all the project management processes lies with the project manager. The five process groups are based on Demings cycle,

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considering a project as a solution to a given problem. As per the cycle, these are four steps to a problem solving process. These four steps are Plan-Do-Check-Act.

Project process group include processes which are linked by their inputs or results, where the output of one process may be the input for the other. These five process groups are as listed below: Initiation: Processes in this group launch a project or project phase. The key activities in this group include, but are not limited to, creating a feasibility study. Identifying a business needs, creating project charter, product description and selecting project manager. Planning: The process in this group collect information from various constituent processes unto the degree of completion and confidence. Project managers should include stakeholders in the planning process group. Project management plan integrates scope, cost, schedule, risk etc. to produce a realistic plan which is acceptable to the stakeholders. Execution: Process groups consist of processes to complete the work in each of the phases. These processes help the project manager coordinate and direct project resources to meet the objectives of the project plan. The key activities in this group are acquire project team, perform quality assurance, develop project team, vendor solicitation and selection, distributing project information and direct and manage project execution. Monitoring and Controlling: Processes in this process group ensure that the project goes according to plan. Activities in this process group are actions to be implemented when project is not going as per plans. In this process group variances from the project baseline are identified and necessary corrective measures are undertaken. Key activities in this process group are ensuring quality control, providing scope verification, implementation change control, and configuration management, controlling key parameters like cost, schedule and scope and monitoring risk response.
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Closing: This process group included all processes to close all activities in a project or project phase. The activities in this process group are to be performed even for the projects which have been terminated in the middle or aborted projects. Key activities which are a part of this process group include, but are not limited to auditing procurement documents, scope verification, closing procurements, document lessons learned, submitting final reports, and archiving project records

The 42 processes are also grouped into various knowledge areas. The nine knowledge areas are:

Project Integration Management: The processes in this knowledge area amalgamate all the forty two processes of project management. Integration includes characteristics of confederacy, consolidation, enunciation and integrative events that are important for project management. The processes in this knowledge area are used for balancing processes in all the other knowledge areas. The major activities in this knowledge area include but are not limited to creating the project management plan, monitoring the plan, performing change control and closing the project. Project Scope Management: is required to define the work required in a project. The processes in this knowledge area define the boundary of the project, control and manage change in scope, verify that the work required is completed and manage customer and stakeholders satisfaction. Project Time Management: relates to the processes which need to be accomplished to complete the project within the defined schedule. Effective time management helps saving project cost and quality. In the processes in this knowledge area project schedules are drawn up, without relation to the estimates for size, cost and development resources. Project Cost Management: Cost estimation is difficult since there are many factors that influence the cost of a project and not on all of them are under the projects direct control. The processes in this knowledge area handle project cost that goes into planning, executing, monitoring and closing a project. Project Quality Management: PMI defines quality as the degree to which a set of inherent characteristics fulfil requirements. Quality of the product impacts customer satisfaction and interns impact business growth and also
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team morale. Project quality management deals with quality processes, roles and responsibilities and quality goals of the organization. Project Human Resource Management: One of the most important tasks in project management is resource management and the most tedious managed resource, which impacts all other project parameters, is human resource. The processes in this knowledge area help project manager in planning for team acquisition to team reliving. Project Communication Management: Communication is essentially the interpersonal process of sending and receiving messages. It is believed that about 85-90% of a project managers profile requires communication. Miscommunication or absence of communication can impact a projects performance. The processes in this knowledge area helps project manager to identify what to communicate, whom to communicate, how to communicate and when to communicate. Project Risk Management: Project risk is an uncertain event that can have a negative or positive impact on the project. An appropriate contingency or mitigation plan is required to face risks. The processes in this knowledge area help identify risks, plan for them, and monitor them. Project procurement management: Frequently project teams or subproducts need to be outsourced. The decision to outsource or create a product in-house is made in the procurement management processes. Procurement is a set of processes to evaluate, purchase, and administer an agreement with vendors for such products/goods, service or result, as required by the project but not available within the project organization. Planning process group collects information from various constituent processes upto the degree of completion and confidence. As per PMI, there are 21 processes in the planning process group, which is half of the total project management processes. This very fact, emphasis on the importance of planning process in project management. These twenty one processes are spread across nine knowledge areas. The distribution can be well understood from the table given below: Table 1.0: Mapping processes to knowledge area

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Q.2 List the inputs, outputs, tools and techniques for the vendor management process. Ans.2: For vendor management the basic requirements the existence of a vendor, which would only happen if product, good or service is acquired at the best cost to meet the need of the project This process is about documentation of purchasing decisions and policies and approaches for product outsourcing. The major inputs required for this process are: Scope baseline: this is the component of project plan which gives information about the project scope, listed in the scope statement, lists the work breakdown structure and description of the WBS elements. Requirement documentation: This document would have information about the project requirements both technical and legal along with the legal implications. Teaming agreement: They are contractual agreements made between two or more parties as a result of partnership or joint venture. Risk register: is document which lists the identified risks, risks which have already occurred in similar projects in the past, and cost involved in risk mitigation. Activity resource requirements: This document lists the types and quantity of resource required for project activities. It also lists the skillset required and quality of material required and other characteristics of the resources. Project schedule: this structured document gives us the start and end date of each activity. It gives a detailed description of the activities to be performed in the project, their dependencies and requirements. They can be represented in the following format: 1) Milestone chart 2) Bar charts 3) Project schedule network diagrams Activity cost estimates: They are measurable calculation of the feasible cost required to complete project work. Cost performance baseline: is an approved budget at competition, which is used for monitoring and controlling cost and cost variances. Enterprise environmental factors: Information about organizational culture, processes, infrastructure, government standards, human resource data, PMIS, stakeholder information etc.
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Organizational Assets: this includes all process related assets, which an organization captures, which can impact project success. This can range from organization policies, procedure, processes to knowledge base created from previous project experiences.

The tools and techniques used for this process are: Make-or-Buy analysis: This analysis helps take a call whether it is beneficial to buy a product from third party or make it. Even making should happen in-house or should be outsourced. Depending on what gives the maximum profit, choice is made. Expert judgment: this is about taking opinion from an experienced about whether the product should be made or bought, or its production should be outsourced. Contract types: whenever the product is to be created and procurement form third-party is done, it is assumed that the failure of the product risk i8s shared with the third party. Contract type defines how the risk shared. The various types of contract are Fixed = price, cost reimbursable, time material contact. The major outputs of this process are: Procurement documents: The procurement documents are procurement management plan, which consists of the contract type, issues management, type of estimates, how to manage the multiple vendors, procurement statement of work, which defines the work to be accomplished as a part of the procurement contract, the proposal sent to the vendor, list of vendors who bid for the proposal, terms and conditions of the contract, RFP (request for proposal) etc. Make-or-buy decisions: this document mentions whether the product is to be bought or made, if any risk sharing policy used etc. Q.3 The below example depicts the preparation of cake. Here, some of the interdependent activities where some follow a particular order, whereas others are performed independently.
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D Activity F E G B H C END

Start D,A D,A F,E F,E G H C,B 0

4 6 7 8 5 5 7 8

In the above mentioned example, a sequence of events is maintained. Each of the Activity is interdependent with the other. Using CPA determines the critical path for the above and draw the CP diagram. Q.4 Write a paragraph on each: a. Non-linear programming formulation b. Integer programming formulation c. Dynamic programming formulation d. Disjunction programming formulation e. Linear programming formulation Ans.4 a. Non Linear Programming Formulations:A non linear program (NLP) is a generalization of a linear program that allows the objective function and the constraints to be non linear in x1..xn. Under certain convexity assumptions on the objective function and the constraints there are necessary and sufficiency conditions for a solution to be optimal. If the objective function and constraints satisfy the required convexity assumptions, then the optimality of a solution can be verified easily via these conditions. There are a number of methods for solving non linear programming problems. These methods tend to be different from the methods used for linear programming problems. (However, they may use linear programming methods as subroutines in their overall framework). The most commonly used methods for non linear programming are:
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1) Gradient methods 2) Penalty and barrier function methods In both applications, the objective functions are non linear and the constraints linear. Consider a non linear programming problem with multiple equality constraints. Such a problem can be transformed into an unconstrained problem using so-called lagrangian multipliers. For example, consider the non linear programming problem Minimize of (x1..xn) Subject to f1 (x1.xn) = O fm (x1xn ) = O This problem can be transformed into the following unconstrained optimization problem with the objective function. Minimize of (x1xn) + 1 f1 (x1xn) + 3 fm (x1xn ) If the original objective function of (x1xn ) satisfies certain convexity conditions, then the optimal solution can be obtained by taking the partial derivative of the un constrained problem with respective to xj and set that equal to zero. This yields n equation with n + m unknowns (x1xn + 1 m) .These n equations together with the original set of m constraints result in a system of n + m equations with n + m unknowns. Ans.4 b: Integer Programming Formulations : An integer program (IP) is a linear program with the additional requirement that the variables x1xn have to be integers. If only a subset of the variables are required to be integer and the remaining ones are allowed to be real, the problem is referred to as a mixed integer program (MIP). In contrast with the LP an efficient algorithm for the IP or MIP does not exist. Many scheduling formulations can be presented as integer programs. Ans.4 c: Dynamic Programming : There are various classes of methods that are useful for obtaining optimal solutions for such NP-Hard problems. One class of methods is referred to us Dynamic programming. Dynamic programming is one of the more widely used techniques for dealing with combinational optimization problems. It is a procedure that is based on a divide and conquers approach. Dynamic programming can be applied to problems that are solvable in polynomial time, as well as problems that are NP Hard.
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Ans.4 d: Disjunctive Programming Formulations: There is a large class of mathematical programs in which the constraints can be divided into a set of conjunctive constraints and one or more sets of disjunctive constraints. A set of constraints is called conjunctive if each one of the constraints has to be satisfied. A set of constraints is called disjunctive if at least one of the constraints has to be satisfied but not necessarily all. In the standard linear program all constraints are conjunctive. A mixed integer program contains paires of disjunctive constraints. The fact that the integer variable xjk has to be either 0 or 1 can be enforced by a pair of disjunctive linear constraints, either xjk = 0 or x jk = 1. This implies that the single machine problem with precedence constraints and the total weighted completion time objective can be formulated as a disjunctive program as well. Ans.4 e: Linear Programming Formulation: The most basic mathematical program is the linear program (LP). An LP prefers to an optimization problem in which the objective and the constraints are linear in the variables to be determined. An LP can be expressed as follows:

The objective is the minimization of costs. The c1.cn vector is referred to as the cost vector. The variables x1 xn have to be determined so that the objective function c1 x1 + cn xn is minimized. The column rector refers to the level at which this activity j is performed. The b1 ..bm is referred to as the resource vector. The fact that in linear programming n denotes the number of activities and in scheduling theory n refers to the number of jobs is a more coincidence that in liner programming m denotes the number of resources and in scheduling theory m refers to the number
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of machines in a coincidence as well. The representation above can write in matrix form:

There are several algorithms or classes of algorithms for solving an LP. The two most important over are i) The simplex methods and ii) The interior point methods Although simplex methods work very well in practice, it is not known if there is any version of the simplex method that solves the LP problem in polynomial time. The best known example of an interior point method is the Karmakar algorithm, which is known to solve the LP problem in polynomial time.

Q.5 What is a business case? List the business related questions answered using a business case. Ans.5: The Business Case is a one-off, start-up document used by senior management to assess the justification of a proposed project, or to assess the options for a project that has already received funding. If approved, it confirms senior management support and/or resourcing for a recommended course of action (option). The business case answers the following business related questions How did the initiative come about? What is the opportunity / treat / issue improvement being addressed? Why in clear and concise terms, is the initiative necessary? What is the desired product, service or result?
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What are the benefits to the enterprise and its customers? What are the qualitative benefits, such as customer satisfaction, strategic value cycle time improvements? What are the linkages to the enterprises vision, mission and value drivers ( that is mental , quality, efficiency) Why will the initiative succeed? What must be invested to get the desired product, service, result or benefit? What are the expected incremental productions or operational costs for the new or modified product, service, or production process? What are the proposed spending reductions, revenue improvements or profit improvements related to justify the initiative? What is the enterprises capital to successfully implement the initiative while meeting financial objectives? What other factors materially impact the potential success of the initiative such as additional services, required efficiencies, minimum or maximum quantities required product quality and development objectives? What are the concerns, issues and risks? What are the parameters and criteria used for prioritizing the initiative with respect to other business strategic initiatives? What is the exit strategy if the strategic initiative is not delivering the desired return or investment? Q.6 What is delay analysis? Explain the various types of delay analysis methodology. Ans.6: Delay analysis is a forensic investigation into the events or issues that caused a project to run late resulting in Schedule Variances. Delay analysts refer to `critical' and `non-critical' delays; the first are events causing delay to the project's completion date and the second type affect progress on the project but do not directly impact the project completion date. During the past decade developments in computer technology and the availability of more advanced planning software packages changed the way in which delay claims and the results of a delay analysis are presented. Delay analysis methodology There are two types. The first type of delay analysis methodology is prospective; which demonstrates the theoretical or likely impact of the consequences of delaying events rather than showing what in fact occurred. The basis of this
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methodology is to establish a programming model of the project, usually the contractor's as planned programme, then impact the model by the application of delaying events. This type of methodology is commonly used to demonstrate what extension of time a contractor is due, as a result of the application of employer responsible delaying events. This is said to be the contractor's entitlement. Entitlement in this context is derived from the results of a delay analysis and is not to be confused with contractual entitlement. In summary the prospective type of methodology is a theoretical calculation of the likely delay a delaying event(s) would cause to project completion. In other words, it focuses firstly on the delaying event and then demonstrates the likely delay to progress and ultimately project completion that is likely to flow from the event. The second type of delay analysis methodology is retrospective. The retrospective analysis tries to show what actually occurred on a project; where the delays were; and what caused the delay to project completion. The analysis shows how actual progress differed from what was planned. By focusing on how the works actually progressed, the analysis will show when work activities were delayed, and from the results of the analysis, investigation of what caused the actual delays can be carried out. In summation, this type of methodology looks at what actually happened, what activities were actually delayed and only thereafter what caused the delay. Both types of delay analysis methodology are to some degree subjective. The prospective analysis relies heavily on a programming model of the project and the delay analyst's opinion on how the delay event was likely to influence the model. The retrospective analysis is less subjective as it relies on actual progress. However, interpretation of the results as to what caused delay is subjective. This is because the delay analyst will usually have to consider a number of related issues as to what caused delay and apply his own experience and judgment.

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PM 0012 Project Financing and Budgeting


(Book ID: B1238)

Assignment Set- 1

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Q.1 Describe the types of tools and techniques used in cost management Ans.1: Types of Tools and Techniques We have many tools and techniques used in Cost Management. Let us now discuss on some of the tools and techniques of Cost Management. They are: 1. Cost aggregation 2. Reserve analysis 3. Expert judgment 4. Historical relationships 5. Funding limit reconciliation 6. Cost performance baseline 7. Project funding baseline

Cost aggregation: Individual costs are aggregated in many different ways for budgeting purposes, including at the deliverable, work package, summary activity, or other classification levels. Reserve analysis: Reserves are time or cost buffers in the project schedule or budget that help the project counter or respond to uncertainties. Reserve analysis monitors these buffers and will reduce, use, or eliminate them based on the current situation. Expert judgment: Expert judgment is based upon the experience and knowledge of subject matter experts. It is used to assess and evaluate the inputs and the information the experts contain. Historical relationships: A historical relationship refers to the characteristics of the current and past projects that can be used to develop models that aid in budgeting. Funding limit reconciliation: Funding limit reconciliation matches the project's planned need for funding with the organizations ability to provide that funding. It can be thought of as "resource leveling" for finances because it reschedules activities to make sure that the budget for the scheduled activities does not exceed the available budget for that period. For instance,
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if the estimated cost for scheduled activities in the second month of a project is estimated to be Rs 50,000, but the organization can only provide funding for Rs 40,000 then there is Rs 10,000 of work that has to be rescheduled to another month. Cost performance baseline: The cost performance baseline is a durationphased budget that is used for project cost management, monitoring, and reporting. Though they are both derived from the same source, the project budget and project cost baseline are not interchangeable terms. The cost baseline is a component of the project performance baseline.

Q.2 Describe various types of financial risks. Ans.2: Commercial risks are those that are innate in the projects. They are also called project risks. The lenders who are engaged in the limited recourse of a project need a specific flow of cash for the project liability term. They also need project revenues which are allocated to risks, and are mitigated by the company or sponsors. For example, to make sure that there are sufficient project revenues to service project debt, lenders can include it in the project liability documentation provision. This includes: Risks related to the development, construction, operation and maintenance of assets, and searching an adequate market for the project output. Broader risks which is related to changes in the interest rate, inflation, currency risks, price movements of raw materials, and energy inputs. Q.3 If there is an initial investment of rupees 2000 and 3 years of positive cash flow of rupees 700 each. The discount rate is 10%. What is the present value of each cash flow? Ans.3: NPV = Present value of net cash flows

Where: Ct = the net cash receipt at the end of yeart Co = the initial investment outlay r = the discount rate/the required minimum rate of return on investment
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n = the project/investment's duration in years


Year Y1 Y2 Y3 Y4 Cash Flow 2000 700 700 700

NPV = (0 + 578.51 + 525.92 + 478.11) 2000 = -417.46 Q.4 What is credit risk appraisal? Explain the 5Cs of credit analysis? Ans.4 : Credit appraisal involves analysis of liquidity position/ financial soundness of the company. Although, the analysis also covers understanding growth trends in revenues and earnings, and profit margins, more emphasis is required to be placed on liquidity-both long term and short term. Credit analysis or credit appraisal typically involves micro-analysis of the key financial statements i.e. Income Statement, Balance Sheet and Cash flow Statement. The important parameters that are to be looked while analyzing liquidity are: a. Debt Equity Ratio b. Total Debt to Total Assets c. Current Ratio and Quick Ratio d. Sales to Working capital Ratio e. Inventory Turnover Ratio Along with the above mentioned ratios, one needs to look at aspects like aging schedule of debtors, quality of inventory (fast-moving, slow-moving and obsolete). Credit risk analysis or credit appraisal basically revolves around the premise of ability of borrower to service its debt through cash flows. Primary cash flows are those that are generated through operations while secondary cashflows are cash & cash equivalents plus marketable securities.

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While analyzing credit risk of the borrower, the bank/ credit rating agency needs to consider even the future growth potential of the business and incorporate in its judgment, those issues that can possibly put business at risk. For this one needs to understand the future growth strategy & business outlook and how the company wants to move ahead with its plans. The potential impact of any future growth initiatives can be critical today as it may put additional stress on current profitability and liquidity of the business.

Q.5 Classify projects based on the ways they influence investment decision process. Ans.5: Classification of Investment Projects: Investment projects are classified into three categories on the basis, of the way they influence the investment decision process: independent projects, mutually exclusive projects and contingent projects. 1. Independent projects An independent project is one, where the acceptance or rejection does not directly eliminate other projects from consideration or affect the likelihood of their selection. For example, if management plans to introduce a new product line, as well as, replace a machine which is currently producing a different product. These two projects can be considered independent of each other, if there are sufficient resources to adopt both, provided, they meet the firms investment criteria. 2. Mutually exclusive projects The mutually exclusive projects are projects that cannot be followed at the same time. The acceptance of one prevents the substitute proposal from accepting. Most of them have either or decisions. You will not be able to follow more than one project at the same time. The evaluation is done on a separate basis so that one that brings the highest value to the company is chosen. 3. Contingent projects A contingent project is one where the acceptance or rejection depends on the decision to accept or reject multiple numbers of other projects. Such projects may be complementary or substitutes. Let us take the example of bio fuel plant cultivation in a large scale and the decision to set up a bio fuel manufacturing unit. In this case, the projects are complementary to each other. The cash flows
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of the plant cultivation will be enhanced by the existence of a nearby manufacturing plant. Conversely, the cash flows of the manufacturing unit will be enhanced by the existence of a nearby cultivation farm. Q.6 List the advantages and disadvantage of project finance. Ans.6: The major advantages of project finance are: Allows the promoters to undertake projects without exhausting their ability to borrow amount for traditional projects. Limits financial risks to a project to the amount of equity invested. Enables raising more debts as lenders are sure that cash flows from the project will not be siphoned off for other corporate uses. Provides stronger incentives for careful project evaluation and risk assessment. Facilitates the projects to undergo careful technical and economic review. Eliminates the dependency on alternative nature of funding a project. Facilitates the arrangement of liability financing and credit improvement, accessible to the project but unavailable to the project sponsor. Enables the diversification of the project sponsors investments to reduce political risk. Gives more incentive for the lender to cooperate in an atmosphere of a troubled loan. Enables to have prolonged credit opportunities. Matches specific assets with specific liabilities. The major disadvantages of project finance are: Complexity of the process due to the increase in the number of parties and the transaction cost. Expensive as the project development and diligence process is a costly affair. Litigious with regard to negotiations. Complexity due to lengthy documentation. Requires broad risk analysis and evaluation to be performed. Requires qualified people for performing the complicated procedures of project finance. Obligations regarding the trust fund account need to clearly specify.
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Higher level of control which might be exercised by the banks, which might bring conflict with the businesses or contracts.

PM 0012- Project Financing and Budgeting


Assignment Set- II

Q.1 Explain Break-even analysis? Ans.1: Break Even Analysis The break-even point or break even analysis is the specific point at which, gains equal the losses. A break-even point describe the time when, an investment makes a positive return. It is at this point that the total costs become equivalent to the total amount of revenues. At this point, there is no loss or profit incurred. This point is

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crucial for everyone who manages the business. Because, breakeven point is the lowest limit of profit where there are set prices and determined margins. The Break-Even Chart The break even chart is the pictorial representation of the costs at different stages of activity. This is the point at which there is neither profit nor is loss incurred. In figure 4.2, the line OA stands for the dissimilarity in income, at different stages of production activity. Line OB stands for the total of fixed costs in the business. As there is an increase in the output, uneven costs are incurred. In such a case, the total of the costs also increase.

Break-even analysis is one of the most effective tools, which are used in studying the connection between the fixed costs, variable costs, and the returns. Break-even analysis measures the production volume at a specific price provided, which is essential for covering all the expenses. Fixed costs do not have direct association with the level of production. Fixed costs include reduction on machinery, costs of interest, taxes, and the overhead costs. Even if the business has a result, which is equal to zero or has a high output, the level of these fixed costs will be the same. The examples of fixed costs include rental and rates, depreciation, research and development, marketing costs, and administration costs. Variable costs vary in direct association with the volume of result. This include the cost of sold commodities and the production costs like labor, electricity expenses,
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feed, fuel, veterinary, and irrigation. They also include other expenses that are associated directly with the production of a good or an asset. Total Variable Costs (TVC) is the total of the uneven costs for the specific production level or the output. The average variable costs are the variable costs for a unit of output, or TVC divided by units of output. Returns are the performance gauge used in order to assess the competence of an investment or to make a comparison regarding the efficiency of a number of different savings. For example, a marketing person makes a comparison between two different products by dividing the revenue each product produces. Semi-Variable Costs The calculation of the difference between the fixed and variable costs is the most convenient method of dividing the business expenses. Some of the costs have a stable nature. But, there will be an increase in these costs while the results reach a certain stage. For example, when a particular business produces lower level of result and sales, it will not need the costs that are related to functions like human resource management and resource finance management. But, when there is a growth in the business, the business will require more reserves. If there is a rise in the production, there will also be an increase in the transport and warehousing. In such cases, we say that the cost is partially fixed and variable. Benefits of Break-Even Analysis The main prominent benefit of break even analysis is that it describes the association between expense, production volume, and returns. It also shows the changes in the association between fixed and variable costs, product prices, revenues and so on. The concept of break even analysis is useful, when it is used along with partial budgeting and capital budgeting methods. It also shows the lowest amount possible in a business, so that you can prevent mistakes in the project. Limitations of Break-Even Analysis All benefits mentioned above do not mean that break even analysis is devoid of any limitations. Some of the limitations of break even analysis include: 1. Inappropriateness to the analysis of a multiple projects, at a single stretch. 2. Difficulty to categorize a cost as variable or fixed. 3. Tendency to make use of break-even analysis, often after a change in the cost and income functions. Q.2 Write short note on:
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a. Payback period b. Discounted cash flow Ans.2 a: Payback period is the period in which the total investment in permanent assets pays back itself. This method lists the various investments that are ranked according to the length of their pay-back period and the investment with a shortest payback period is preferred. The payback period can be ascertained in the following manner: Payback period = Investment / (Cash Flow/year) Ans.2 b: Discounted Cash Flow (DCF) is a method to estimate the project, company or assets investment opportunity by means of the conception of time value for money. In DFC method, the projects value is the future estimated cash flows discounted at a rate that reflect the risk of the projected cash flow. A common practice is to use the DCF method to value companies or projects. There are three major discounted cash flow analyses for project evaluation and selection. They are: 1. Internal Rate of Return (IRR) 2. Net Present Value (NPV) 3. Profitability Index (PI) DFC is based on free cash flow which is a reliable method to cut through the unpredictability and guesstimates involved in reported earnings. The free cash flow models examine the money left for investors regardless of the cash outlay whether counted as an expense or turned into an asset on the balance sheet. The DFC model applies as a sanity check.

Q.3 List the various criterions to be considered before identifying a project for investment. Ans.3: Criteria for Selecting a Project

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The task of identifying suitable projects for an investment involves in-depth study and appraisal. The following are the criterias that one needs to look into before identifying a project: Investment size: The investment cost of the proposed project must enable it to provide an acceptable profit with a competitive price. The factors like cost of input materials, wage costs, factory overhead expenses, general administration expenses, selling/distribution expenses, service charges and economies of scale has to be analyzed. Technology to be used: The new evolving technologies and new methods/processes of production have to be identified. The impact on the cost structure of the companys product has to be analyzed. Market size: The market size must be sufficient enough to offer satisfactory sales volume support production. There must also be rapid growth potential and high return on investment. The competitors and their shares in the market must be examined. The barriers to enter new units have to be examined and after identifying the project. Equipment: The equipments required for running the project has to be considered. The organization estimates the cost required for purchasing these equipment. Location: The location for setting up the project has to be identified and the cost for setting up the location has to be estimated. If an entrepreneur is starting a new business, he/she has to identify and finalize the location for the project before undertaking the project.

Q.4. A firms market value of liability is 400 Rs. And the market value of equity is 600Rs. Cost of liability is 7% and corporate tax 30% & cost of equity is 15%. What will be the weighted average cost of capital? Ans.4: Weighted Average Cost of Capital (WACC) WACC = rD (1- Tc )*( D / V )+ rE *( E / V ) Where,
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Re = Cost of equity = 15% Rd = Cost of debt = 7% E = Market value of the firm's equity = 600 Rs D = Market value of the firm's debt = 400 Rs V = E + D = 600 + 400 = 1000 Rs E/V = Percentage of financing that is equity = 600/1000 = 0.6 D/V = Percentage of financing that is debt = 400/1000 = 0.4 Tc = Corporate tax rate = 30% So, WACC = 0.6 * 15% + 0.4 * 7% * (1-30%) WACC = 10.96% Q.5 Explain & compare Finance & Budget concept. Ans.5: Terms Budget and Finance might seem to be same, they are entirely different. Budget is an ordinary estimate of a persons or organizations income and expenses for an explicit period in the future. With the help of a budget, an individual/firm is able to look at the amount of money they can use during a particular period. The process of budgeting can be carried out by persons or by firms to assess whether they can continue with the proposed revenue and costs. Finance is the providing of funds or capital for any particular kind of expenses. It can be described as a process of channeling of finances from savers to users in a variety of forms such as credit, loans and invested funds. For example, imagine that you are in the process of starting a firm. You borrow money in the form of loans or other credit to invest in the firm. The borrowed amount is regarded as finance. Once you borrow the money from various financial organizations, you make a forecast of the income and expenditures the firm is going to have for a specific period. This amount which is assigned is the budget of the firm. The Table 1 shown below gives the comparison between budget and finance.

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Table 1 Comparison between Finance and Budget


Budget 1. Budgets are estimate to match revenues against expenditure. Finance

1. Finance is to plan long-term sources


and uses of funds, assess the effectiveness of programs and departments, and focus financial resources on programs that help attain the organizations aim. 1. Finance identifies and evaluates the particular areas where the funds are being overspent. They also check whether these funds were spent on programs which are not worth.

1. The Budgeting procedure usually involves routine review of annual expenditures. Budget centre directors are provided with directions regarding the limits of spending, estimated increases and the introducing of new programs. 1. Budget considers day-to-day operating needs, like staff, supplies, utilities, and benefits.

1. Finance concentrates on allocating resources efficiently, building longrange plans for new funds, ensuring that funds aim to meet the goals and priorities of a strategic plan. 1. Finance, in contrast, normally provide two or more years of history and a three- to five-year projection of future expenditures, based upon strategic documents. 1. Finance ask, what will you achieve with the level of funding requested for the next five years, and how does that compare to other alternatives for the same goal or service? 1. Finance addresses critical issues. For example, when new funding will be needed, the cost of alternatives for improving the performance of a project, the long-range impact of

1. Traditional budgets generally give data for the budget year and the previous year.

1. Traditional budgets asks and answers the question, how is your organization going to spend its funds on a project next year? 1. Budgets address the direct operating needs of the project.

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reducing the funds or providing more funds, and the total annual capital and operating costs to fully implement and support technology. 1. Budgets affect what happens during the coming year and show categorical spending only. 1. Finance show whether the funds are being used effectively, what funds are used for, what they will accomplish and most importantly, what affect the money will have on the organization.

Q.6 Total cost of project is 250,000Cr. Expected return of project amount is 42,000 Cr. What is the shortest payback period? Ans.6: Payback Period PP = The Cost of Cash Inflows / Annual Cash Inflows Here, Cost of Cash Inflows = 250,000 Cr., Annual Cash Inflows = 42,000 Cr. So, PP = 250,000/42,000 = 5.95 Years

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PM 0013 Managing Human Resources in Project


(Book ID: B1239)

Assignment Set- 1
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Q.1 Write short notes on a. McGregors theory b. Maslows Theory c. Precedence diagramming method Staffing Management Plan d. Dependency determination

Ans.1 a. McGregors theory: X and Y are appealing to managers and dramatically demonstrate the divergence in management viewpoints toward employees. As such, Theory X and Y have been extremely helpful in promoting management understanding of supervisory styles and employee motivational assumptions.
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There are two aspects of McGregors Theory: a. X theory b. Y theory X theory: 1. Employees normally do not like to work and will try to avoid it 2. Since employees do not like working, they have to be coerced, controlled, directed and threatened with punishment to motivate them to work 3. The average employee is lazy, shuns responsibility, is not ambitious, needs direction and principally desires security Y theory: 1. Work is as natural as play and therefore people desire to work 2. Employees are responsible for accomplishing their own work objectives 3. Comparable personal rewards are important for employee commitment to achieve work goals 4. Under favorable conditions, the average employee will seek and accept responsibility 5. Employees can be innovative in solving organizational problems 6. Most organizations utilize only a small proportion of their employees' abilities Ans.1 b: Maslows Theory: The focus on human influences in organizations was reflected most noticeably by the integration of Abraham Maslow's "hierarchy of human needs" into organization theory. Maslow's theories have two important implications for organization theory: 1. People have different needs and are therefore motivated by different incentives to achieve organizational objectives 2. People's needs change predictably over time, which means that new needs arise as the needs of people lower in the hierarchy are met The various levels of Maslows theory are:

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Ans.1 c: Staffing management plan: It is an important output of the Human Resource planning process which establishes the timing and methods for meeting project Human Resource requirements. The components of the Staffing management plan are:
1.

2.

3. 4.

Staff acquisition Staff acquisition describes how the project will be staffed, where the team will be working and the level of expertise needed. Resource calendars The resource calendars show the timeframes for the project team members either individually or collectively when resources are available for the project. Release criteria Release criteria lists the method and timing of releasing team member. Training needs Training needs is a plan which explains how to train the project team members. The plan also identifies the need of it.
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5.

6. 7.

Recognition and rewards Recognition and rewards are the criteria for rewarding and promoting the desired team behaviors. To be more precise, recognition and rewards should be based on the activities performed by each person in a team. Compliance Compliance details the strategies for complying with regulations, contracts and Human Resources policies. Safety Safety procedures are listed to protect the team members.

Ans.1 d: Precedence Diagramming Method (PDM) (also known as Activity On Node (AON) technique) is that method for documenting an activity sequence, by which each activity is represented as a node and each node is connected to its successors by an arrow. (mathematically expressed: an acyclic directed graph, but not necessarily a tree: Nodes may have more than one father, but no daughter can indirectly become a father of its own father). Because in this case the nodes represents activities with a durance, one can determine the successor- or predecessor-relation by subtypes: 1. Finish-to-Start :- the predecessor has to be finished before successor can start 2. Finish-to-Finish :- the predecessor has to be finished before successor can be finished 3. Start-to-Start :- the predecessor has to be start before successor can be started 4. Start-to-Finish :- the predecessor has to be start before successor can be finished Ans.1 e: Dependency Determination tries to clear the relationship between activities: Mandatory dependencies "[...] are inherent in the nature of the work being done". Discretionary dependencies are dependencies evoked by tradition or best practice and so on and are also known as those, which base on "soft logic" or "preferential logic". (But of course best practice might be inadequate for the concrete single case.) External dependencies are dependencies on states or products and so on which must be reached, given etc. but which don't are generated by

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Q.2 Describe the following conflict resolution styles a. Avoidant Approach b. Accommodating Approach c. Consensus Approach d. Collaborative Approach Ans. 2 a: Some people will do anything to avoid a direct confrontation. They agree even though they are opposed to the outcome. This style cannot be tolerated on the project team. Each person's input and opinion must be sought. It is the responsibility of the project manager to make sure that this happens. A simple device is to ask each team member in turn what he or she thinks about the situation and what he or she suggests be done about it. Often this approach will diffuse any direct confrontation between two individuals on the team. Ans.2 b: Here, one party is ready for keeping the psychological door open to the other party. When the issue is more important to oneself than to the other person, this strategy works better under such situations. Forgetting or Forgiving on one issue may be key to moving the conflict to a new level where issues may be discussed better. It can be a useful, but a temporary fix among the parties. Ans.2 c:Consensus building is a process that a team can follow to reach agreement on which alternative to proceed with for the item (action, decision, and so forth) under consideration. The agreement is not reached by a majority vote, or any vote for that matter. Rather, the agreement is reached through discussion, whereby each participant reaches a point when he or she has no serious disagreement with the decision that is about to be taken. The decision will have been revised several times for the participants to reach that point. Ans. 2d: In this approach, the team looks for win-win opportunities. The approach seeks out a common ground as the basis for moving ahead to a solution. This approach encourages each team member to put his or her opinions on the table and not avoid the conflict that may result. At the same time, team members do not seek to create conflict unnecessarily. The approach is constructive, not destructive. Q.3 List and explain in brief the key features of a project. Ans.3: Key features of a project are:
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Project is a temporary endeavor: this implies that the team and the organizations relationship may also be temporary, thus staff related project management process must address these transitory relationships. Cross functional Team: the team may have people from varied culture, having different nature and perception. Also the number of members in the project team may vary at each step of the project life cycle. Human resource management processes should keep these changing needs of the project in mind and address the project issues accordingly. Divided Human resource management activities: Several times sit so happens that the HR activities are split between the project manager and other managers in the organization. The responsibilities of the project manager may range from just coordinating with other managers outside the project like the functional manager, people development manager to selecting the sourcing organization, acquiring team and managing team performance to coordination In certain organizations we may have two managers for the team member, out of which one would be a project manager, who takes care of the day-to-day project activities and other people manager, who would take care of the teams competencies and the people development aspects like promotion, salary hike etc.

Q.4 Write a note on human resource planning. Ans.4: A Human Resource (HR) plan is a systematic approach to ensure that organizations have the right people in the right jobs to effectively and efficiently perform their operations. A Human Resource (HR) plan is a planning tool that allows the project manager to: Determine the Human Resource needs Determine the Human Resource supply Determine the gaps and build strategies to fill the gaps Creating a Human Resource (HR) Plan Creating a Human Resource (HR) plan is the method of identifying and documenting project roles, responsibilities, and required skills, reporting relationships and creating a staffing management plan. Staffing management plan depicts how and when team members are added to the team, and how the team members are released from the project. Human Resource planning is utilized to
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decide and recognize. Human Resources with the necessary skills are essential for the success of a project. One key result of Human Resource planning is the Effective Human Resource planning must think and plan for these factors and widen Human Resource options. Q.5 what do we mean by developing a project team process. Enumerate the 5 stages of team development. Ans. 5 : Developing a project team is a process of enhancing the interaction among the team members and also the project manager. The process refers to increasing competencies of individuals and building up the team spirit, which finally leads to a quality project. 1. To achieve project success, there should be good communication among the team members. Project managers should administer the development of the project team. The project manager should create the relevant environment for teamwork, provide new goals for the team to compete and achieve. Project managers should encourage feedback from the team. The project manager should provide effective review and good support to the team staff. 2. Open communication between the project manager and team reduces conflicts. The project stakeholders should provide the required support to the development of the project team. 3. Projects are done in diversified environments. The project team may experience variance in language, industry and culture while at work. The project team should be dedicated to the project and the team members should work together, without losing their individuality. The goals for developing a project team are: To develop technical knowledge about the project, this leads to quality output, meeting delivery schedules with reduced cost To enhance trust among team members, thus reducing conflicts To develop cohesiveness in the project To allow sharing knowledge among team members

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Q.6 List & explain the 3 major issues related to delegation which need close scrutiny. Ans.6: The issues relating to delegation which need close scrutiny are: 1. What to delegate? 2. When to delegate? 3. How to delegate? What to Delegate: Delegation does not take place when a project manager is merely asked to go ahead with a project without authority. The project manager, in that case, is being merely asked to do a task and not manage a task. He cannot be expected to assume responsibility nor held accountable for results. He has nothing to sub-delegate nor can he demand results from others. Authority has to be granted to make commitments, use resources, issue instructions, demand adherence and take necessary actions for the performance of tasks. As far as possible delegation should be in writing, and in case of institutional delegation this should always be in writing, it is true that some authority can be acquired by individuals by virtue of personal qualities and technical competence. However, this can rarely happen between institutions. Institutional delegation has not only to be in writing and appear formal but should contain legal overtones too. When authority is delegated a managerial position is created. The recipient of the authority now becomes a manager and can be expected to perform managerial functions. But mere assignment of the task and delegation of authority will not ensure performance unless the recipient considers it his moral obligation to produce results. This is what all of us refer to as responsibility, and it must have become clear by now that this is not a thing which can be delegated in writing this is something which one undertakes by himself. Though, one may legitimately expect responsibility to be passed on concurrently with delegation of authority, yet it may not necessarily happen this way. Responsibility is an attitude of mind which cannot be passed on in writing; and to that extent the delegator, whatever authority he may pass on, will still be responsible for the tasks from which he cannot absolve himself. Thus responsibility cannot be delegated, but only authority can be delegated, and to the extent necessary for the accomplishment of the task. And since
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authority, like money, has to be used for a cause, it must likewise be accounted for in order to ensure its best use. This is referred to as accountability. So when authority is delegated, the delegate remains accountable to the delegator about the use of the authority. This can ensure compliance of the delegator's plans and directives and enable the delegator to discharge his responsibilities. Further, because the delegate is accountable, he invariably assumes the responsibilities, matching the extent of authority he receives. Where this does not happen, rather than withdrawing authority the incumbent should be replaced; for authority, as we have discussed, is essential for the accomplishment of the task. When to Delegate: Delegation, whether institutional or individual, enhances one's capability of doing things. One stands to gain from delegation: 1. When one is simply overburdened and cannot handle all the tasks in the required time though one has the know-how; 2. When one does not have the know-how and is not interested in building up the same as it may not be of any use in future; 3. When the job is so specialized that it is either not possible to build up the capability or build it by the time it is needed; 4. When someone can do it better qualitatively, economically and on time; 5. When the work is not secret, or when delegation will not cause problems even if it is a secret; 6. When the intention is to develop staff or growth of ancillary organizations and there are capable individuals and organizations available; and 7. When the work is routine and the delegator's time can be more profitably utilized by diverting his attention from routine areas. In practice, however, delegation may not take place even though the situation may be ideally suited for delegation. Project managers may not be delegated requisite authorities which, in turn, may reduce them to dummies incapable of functioning effectively. Some owner organizations may attempt doing everything themselves. They may even build up a full-fledged project engineering division even though they may not have further projects in the pipeline and their main business is only the operation of the plant and not engineering of the same.
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The problems which one has to often confront in a project management situation are: 1. What tasks to retain and what to pass on? What authority needs to be delegated for the performance of the tasks being passed on? 2. How to package the work satisfactorily so that there is no overlap and also nothing is left uncovered? 3. How to establish the trustworthiness of the delegate with whom no working relationship ever existed in the past? 4. How much authority can be shared without risking failure? How to make the delegate fully accountable morally and legally? 5. Will the delegate assume responsibility matching the authority delegated? If not, what could be done to make him see reason? 6. Which controls to be installed? Would the procedures for control be acceptable to the delegate? Would the controls in any way inhibit the initiative of the delegate? 7. How could the interventions be planned so as not to be considered as unnecessary interferences by the delegate? 8. How to ensure continuous flow of communication and how to make it prompt, accurate and to the point? 9. How to motivate the delegate to assume total responsibility and give best performance commensurate with the authority delegated? How to Delegate: To get the most from delegation, the delegate must be given a complete picture of what he has to do, how to do it and how much authority he has to get it done. It is also necessary that the entire thing is put on record as otherwise the delegate would not know what the delegator has in mind and also the basis for accountability will not be established. It is also quite possible that one might overstep the authority delegated, not necessarily in his anxiety to get a task completed faster or better, but merely to satisfy his egoistic needs or hunger for power. Only written delegation can provide the delegator the power to discipline the delegate should the occasion so arise. Delegation, whether at individual or institutional level, involves a certain amount of bargaining. The delegator may like to pass on a 'hot potato but the delegate would not like to accept it unless the return would more than compensate the trouble. However, what the delegate would consider adequate compensation may
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vary, and unless the delegator has a few options it may indeed call for tough bargaining. Delegation, thus, is not a simple and a casual affair. To realize best results both the delegator and the delegate must have a proper appreciation of what is to be delegated, when delegation is called for and how delegation has to be made. If delegation is not properly done it may boomerang on the delegator, and instead of helping will hinder the progress of work.

PM 0013- Managing Human Resources in Projects


Assignment Set- II

Q.1 Explain effect on individuals of work environment Ans.1: The working environment has the following effect on individuals: The job provides enough to meet the individuals basic needs and often much more. For example, 50 years ago in the United Kingdom, food and shelter were a person's basic needs. Today, most families consider that the basic needs also include a car, television, overseas holiday, etc. The job may or may not provide ample security. Most individuals seek a secure job, whereas there are others who seek high pay for a limited period but with limited security. The job provides an identity to an individual. As a member of an organization, the person carries out a specific function. The job gives the worker companionship, freedom from boredom, and an interest during the persons working life.
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The job provides self-fulfillment for individuals, where the job is creative in nature and gives job satisfaction. The job provides status to an individual. The job will: 1) Affect the spirit of the team 2) Determine whether the team achieves the objectives set by the organization 3) Determine the degree of cooperation provided by the team 4) Motivate the team to give their best 5) Determine whether the human relations within an organization. Q.2 Explain organizational chart and its various types. Ans.2: Organization charts and position description: Organization charts and position description clarifies and communicates the roles and responsibilities of the team members and ensures that each work package is assigned accordingly. Organization charts can have three formats: Hierarchical-type organization chart Matrix-based responsibility chart Text-oriented format
1.

2.

3.

Hierarchical-type organization chart: The structure of traditional organization charts is used to show positions and relationships among team members in a graphic, top-down format. Matrix-based responsibility chart: Responsibility assignment matrix (RAM) illustrates the connections between work packages or activities and project team members. Text-oriented format: The required detailed descriptions of the responsibilities of team members are specified in text-oriented formats. The documents generally provide information such as responsibilities, authority, competencies, and qualifications in outline form.

Q.3 Describe the elements of enterprise environmental factors-the input to creating HR plan process.

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Ans.3: Enterprise environmental factors: The enterprise environmental factors comprises of individuals of an organization interacting and relating with one another. The enterprise environmental factors that play a major role includes are existing organizational culture, knowing how different technical disciplines work, existing Human Resources and policies and procedures, interpersonal, logical and political issues with respect to Human Resources. Organizational culture Organizational culture is an idea in the field of organizational studies and management which describes the psychology, attitudes, experiences, beliefs and values (personal and cultural values) of an organization. It is defined as "the specific collection of values and norms that are shared by people and groups in an organization and that controls the way they interact with each other and with stakeholders outside the organization. List the organizations or departments that are going to be engaged in the project. Enquire whether there are any existing working arrangements between them. Know the formal and informal relationships between the departments. Technical To accomplish the project successfully, list the fields of expertise needed. Interpersonal List formal and informal reporting relations existing among the team members. Know the team members existing job descriptions. Logistical Find whether people are in different locations or time zones. Political List the individual goals and agendas of stakeholders. Find the informal authority base and how that can impact the project. List the informal agreements that are present. Besides these aspects, there are some restrictions. In human planning, the instances of rigidity are: Structure of organization The usual constraint in an organization is a weak matrix structure. Collective bargaining agreements Contractual agreements with service organizations can require nuances to certain roles and reporting arrangements. Economical conditions Some of the restrictions on staffing options can be freezing of hiring, little or no training funds, and lack of traveling budget.
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Q.4 Describe people management skills that a project manager should possess. Ans.4: Projects are often complex and multidimensional. Managing these projects or Programs represents a challenge requiring skills in several areas of management especially in the areas of People management, technical aspects to handle employees, effective leadership abilities etc., some of such skills are explained below. 1. Team Building: Building the program is one of the prime responsibilities of the project manager. This involves maintaining a. Effective Communications b. Sincere interest in professional growth of team members. c. Commitment to the project. 2. Leadership: It involves the ability to integrate individual demands, requirements and limitations into decisions that benefit the overall project performance. 3. Conflict resolution: This includes understanding the determinants of conflicts so as to respond to the conflicts effectively. Dysfunctional conflicts result in poor program decision making, lengthy delay over issues and disruption of the teams effort. Thus, the manager needs a Sixth sense. To determine when a conflict is desirable what kind of conflict will be useful and how much conflict is optional for a given situation. 4. Technical Skill: It is essential for the project manager to understand the technology, markets and the business environment to participate effectively in the search for integrated solution and technological innovations. Technical expertise is necessary to evaluate technical concepts and solutions, to communicate effectively in technical terms with the project teams and to assess the risks and make tradeoff between cost, schedule and technical issues. 5. Planning skill: It requires the ability to negotiate the necessary resource and commitments from key personnel in the various supporting organizations with little or no formal authority. The planning must be done such that at any point of time in the project, the plan remains viable. 6. Organizational skill: The project manager must be a social architect, that is, he must understand how the organization works. And how to work with the
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organization. Organizational skills are particularly important during the project formation when the project manager establishes the project organization by integrating people from different discipline into an effective work team. 7. Entrepreneurial Skill: The project manager needs a general management perspective. For example, economic considerations are one component area that normally affects the organizations financial performance. Thus the project manger must understand the importance of reducing costs in the project. 8. Administration skill: The project manager must be experiences in planning, staffing, budgeting, scheduling and other control techniques 9. Management support building skill: The project manager is surrounded by a variety of organizations that either support him or control his activities. An understanding of these interfaces is important to a project management as it enhances their ability to build favorable relationship with senior managements. 10. Resource allocation skill: Once the project begins, different types of resources are needed at different stages. The project manager must understand this need for varying resources and be capable of allocating resources as and when wanted. In many cases, the project manager will just have to take a calculated risk that the team member possesses these characteristics even though the individual has not previously demonstrated that he or she has them. It will become obvious very quickly whether or not the individual possesses these characteristics. If not, and if those characteristics are critical to the team member's role in the project, the project manager or the team member's line manager will have to correct the team member's behavior. Thus the project manager must be both socially and technically aware to understand how the organization functions and how these functions will affect the project organization of the particular job to be done. The project manger must also understand the culture and value system of the organization he is working with. These business developments resulted in a profound change in organizational structures and how work was being managed. The traditional hierarchical structure was replaced with natural teams, self managed. The traditional hierarchal structure was replaced with natural teams; self managed teams, cross functional teams, employee networks, and project team. A team operated as a group of people with shared objectives and process and possessed complementary skills, knowledge and experiences.
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Some of these team structures such as project teams and cross functional teams were not necessarily new, but how the teams operated and the impact of these teams on organizations were far different and much more empowered than in the past to make changes. The team-based structure quickly become a norm in organizations Business and projects benefited when people together well as a team. Successful team based companies saw higher employee morale, innovation, and financial success. But creating a productive, sustainable team environment took more work. In the past decade, the focus on strategies and process has significantly shifted to team behaviors and project executions. It has been recognized that successful execution requires a stronger emphasis on people skills such as leadership and collaborations, and team behaviors around decision making, problem solving, and conflict resolution. To help, companies began personalizing their value statements by defining specific behaviors that supported those values. These values define how people work together on a day to day basis. 1. Having balance on the team in all of the characteristics discussed in the previous section is certainly a worthy goal, but it is a goal not likely to be reached. In reality, the team is formed more on availability than on any need to balance its membership. That means that teams are not balanced, but they are the team nevertheless. What's a project manager to do? 2. First of all, the project manager had better know where the imbalance exists. What characteristics does the team have? Where are its strengths and where are its weaknesses? For example, suppose a confrontation has arisen with the client. We would much rather send an accommodator than a converger to resolve the confrontation. However, there might not be an accommodator on the team. 3. Teams are most likely to be formed without knowledge of this kind of information. It is only after the fact that these imbalances are discovered. On a larger scale, the project manager needs to determine which team members have a greater likelihood of success on which types of work assignments. Build the strategy. If you still have gaping holes, you need a team development plan. That is the topic of the next section. Q.5 Explain staffing management plan. also describe Responsibility Assignment Matrix

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Ans.5: The staffing management plan, a part of human resources plan within the project management plan, describes when & how human resource requirements will be met. The staffing management plan can be formal or informal, highly detailed or broadly framed, depending upon the needs of the project. The plan is updated continually during the project to direct ongoing team member acquisition & development actions. Information in the staffing management plan varies by application areas & project size, but items to consider include: Staff acquisition Resource Calendars Staff release plan Training needs Recognition & Rewards Compliance Safety After acquiring the project team, you must create a proper Project Management procedure that allows feedback and maximum productivity to occur. A staffing management plan or process is ultimately a document that explains the various human resources requirements that will be met for both staff management and employees alike. The plan is essentially a portion of the project management plan in which allows projects to be successful by properly managing various teams to complete tasks effectively and efficiently. A project management plan is created to showcase specific target goals as well as project deadlines for various tasks that your company may need to complete. A staffing management plan can be created in two ways whether informal and broad, or formal and details, each staffing management plan are tailored to the various needs of each specific project. The information provided within said staffing management plan is determined by the application being completed as well as the size of the project. Thus, creating a staffing management plan that is tailored to your business is imperative to its overall success in your daily operations. Responsibility Assignment Matrix A Responsibility assignment matrix (RAM) is a chart displaying the resources assigned to a project. It also shows the assignments that are responsible for. The RAM allows easy identification of all responsibilities for a given resource. A specific type of RAM is the RACI matrix. This shows the resources that are responsible, accountable, consulted, and informed in project activities. Table 1 shows a typical RACI matrix
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Activity A Design Build Test B Responsible Accountable Inform

Person C Consult Responsible Accountable Accountable Consult Consult

The matrix is typically created with a vertical axis (left-hand column) of tasks (e.g., from a work breakdown structure or WBS) or deliverables (e.g., from a product breakdown structure or PBS), and a horizontal axis (top row) of roles (e.g., from an organizational chart) as illustrated in the image of an example responsibility assignment (or RACI) matrix. There is a distinction between a role and individually identified people: a role is a descriptor of an associated set of tasks; may be performed by many people; and one person can perform many roles. For example, an organization may have 10 people who can perform the role of project manager, although traditionally each project only has one project manager at any one time; and a person who is able to perform the role of project manager may also be able to perform the role of business analyst and tester. The responsibility assignment matrix is commonly known as a RACI matrix. RACI is an acronym derived from the four key responsibilities most typically used: Responsible: Is the one who has the liability to give account of his/her action towards accomplishing the task. There is typically one role with a participation type of Responsible, although others can be delegated to assist in the work required (see also RASCI below for separately identifying those who participate in a supporting role). Accountable (also Approver or final Approving authority): Those who are ultimately accountable for the correct and thorough completion of the deliverable or task, and the one to whom Responsible is accountable. In other words, an Accountable must sign off (Approve) on work that Responsible provides. There must be only one Accountable specified for each task or deliverable. Consulted:
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Those whose opinions are sought; and with whom there is two-way communication. Informed: Those who are kept up-to-date on progress, often only on completion of the task or deliverable and with whom there is just one-way communication. Q.6 Why we need HR skills in a project manager-Comment Ans.6: Projects are often complex and multidimensional. Managing these projects or Programs represents a challenge requiring skills in several areas of management especially in the areas of People management, technical aspects to handle employees, effective leadership abilities etc., some of such skills are explained below. 1. Team Building: Building the program is one of the prime responsibilities of the project manager. This involves maintaining a. Effective Communications b. Sincere interest in professional growth of team members. c. Commitment to the project. 2. Leadership: It involves the ability to integrate individual demands, requirements and limitations into decisions that benefit the overall project performance. 3. Conflict resolution: This includes understanding the determinants of conflicts so as to respond to the conflicts effectively. Dysfunctional conflicts result in poor program decision making, lengthy delay over issues and disruption of the teams effort. Thus, the manager needs a Sixth sense. To determine when a conflict is desirable what kind of conflict will be useful and how much conflict is optional for a given situation. 4. Technical Skill: It is essential for the project manager to understand the technology, markets and the business environment to participate effectively in the search for integrated solution and technological innovations. Technical expertise is necessary to evaluate technical concepts and solutions, to communicate effectively in technical terms with the project teams and to assess the risks and make tradeoff between cost, schedule and technical issues.
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Planning skill: It requires the ability to negotiate the necessary resource and commitments from key personnel in the various supporting organizations with little or no formal authority. The planning must be done such that at any point of time in the project, the plan remains viable. 6. Organizational skill: The project manager must be a social architect, that is, he must understand how the organization works. And how to work with the organization. Organizational skills are particularly important during the project formation when the project manager establishes the project organization by integrating people from different discipline into an effective work team. 7. Entrepreneurial Skill: The project manager needs a general management perspective. For example, economic considerations are one component area that normally affects the organizations financial performance. Thus the project manger must understand the importance of reducing costs in the project. 8. Administration skill: The project manager must be experiences in planning, staffing, budgeting, scheduling and other control techniques 9. Management support building skill: The project manager is surrounded by a variety of organizations that either support him or control his activities. An understanding of these interfaces is important to a project management as it enhances their ability to build favorable relationship with senior managements. 10. Resource allocation skill: Once the project begins, different types of resources are needed at different stages. The project manager must understand this need for varying resources and be capable of allocating resources as and when wanted.
5.

In many cases, the project manager will just have to take a calculated risk that the team member possesses these characteristics even though the individual has not previously demonstrated that he or she has them. It will become obvious very quickly whether or not the individual possesses these characteristics. If not, and if those characteristics are critical to the team member's role in the project, the project manager or the team member's line manager will have to correct the team member's behavior. Thus the project manager must be both socially and technically aware to understand how the organization functions and how these functions will affect the
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project organization of the particular job to be done. The project manger must also understand the culture and value system of the organization he is working with. These business developments resulted in a profound change in organizational structures and how work was being managed. The traditional hierarchical structure was replaced with natural teams, self managed. The traditional hierarchal structure was replaced with natural teams; self managed teams, cross functional teams, employee networks, and project team. A team operated as a group of people with shared objectives and process and possessed complementary skills, knowledge and experiences. Some of these team structures such as project teams and cross functional teams were not necessarily new, but how the teams operated and the impact of these teams on organizations were far different and much more empowered than in the past to make changes. The team-based structure quickly become a norm in organizations Business and projects benefited when people together well as a team. Successful team based companies saw higher employee morale, innovation, and financial success. But creating a productive, sustainable team environment took more work. In the past decade, the focus on strategies and process has significantly shifted to team behaviors and project executions. It has been recognized that successful execution requires a stronger emphasis on people skills such as leadership and collaborations, and team behaviors around decision making, problem solving, and conflict resolution. To help, companies began personalizing their value statements by defining specific behaviors that supported those values. These values define how people work together on a day to day basis. Having balance on the team in all of the characteristics discussed in the previous section is certainly a worthy goal, but it is a goal not likely to be reached. In reality, the team is formed more on availability than on any need to balance its membership. That means that teams are not balanced, but they are the team nevertheless. What's a project manager to do? First of all, the project manager had better know where the imbalance exists. What characteristics does the team have? Where are its strengths and where are its weaknesses? For example, suppose a confrontation has arisen with the client. We would much rather send an accommodator than a converger to resolve the confrontation. However, there might not be an accommodator on the team. Teams are most likely to be formed without knowledge of this kind of information. It is only after the fact that these imbalances are discovered. On a larger scale, the project manager needs to determine which team members have a greater likelihood
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of success on which types of work assignments. Build the strategy. If you still have gaping holes, you need a team development plan. That is the topic of the next section.

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