MB 0049- PROJECT MANAGEMENT

Question 1- Describe the CPM model. Briefly explain. Answer - For projects considered uncertain, the PERT model was developed and for projects which are comparatively risk-free the CPM model was developed. Both the approaches start with the development of the network and a focal point on the critical path. The PERT approach is 'probabilistic' while the CPM approach is 'deterministic'. The main focus of CPM analysis is on variations in activity times as a consequence of changes in resource assignments. These variations are planned plus related to resource assignments as well as are not caused by random factors outside the control of management as in the case of PERT analysis. The major focus of CPM analysis is on time cost relationships and it seeks a project schedule that minimizes total cost. The usual assumptions underlying CPM analysis are: 1. The costs associated with a project can be divided into two components: direct costs and indirect costs. Direct costs are incurred on direct material and direct labor. Indirect costs consist of overhead items like indirect supplies, rent, insurance, managerial services, etc. 2. Activities of the project can be expedited by crashing which involves employing more resources. 3. Crashing reduces time but enhances direct costs because of factors like overtime payments, extra payments, and wastage. The relationship between time and direct activity cost can be reasonably approximated by a downward sloping straight line. The bulk of CPM analysis is concerned with the relationship between total direct cost and project duration. The procedure used in this respect is generally as follows: Step 1: Obtain the critical path in the normal network. Determine the project duration and direct cost. Step 2: Examine the cost time slope of activities on the critical path obtained and crash the activity which has the least slope. Step 3: Construct the new critical path after crashing as per step 2. Determine project duration and cost. Step 4: Repeat steps 2 and 3 till activities on the critical path (which may change every time) are crashed.

Question 2- Define risk management. What the different types are of risks that can affect a project? Answer:It is the process of minimizing the impact of risks by using some tools and techniques like risk avoidance, risk retention, risk transfer, etc. The risk can be classified as project risk, country risk, systematic and unsystematic risks, and liquidity risk. There are various types of risk that can affect business project. While some of these risks can be controlled through a number of options, some of them simply have to be accepted and planned for any project environment. Macro risk levels: A chance of a loss or injury is called risk. It has two components the systematic risk and unsystematic risk. Systematic risk: A systematic risk cannot be controlled or foreseen in any manner, therefore it is almost impossible to predict or protect the organization or a project against this type of risk. Such a risk affects the entire market. Unsystematic risk: Unsystematic risk is sometimes referred to as "specific risk". It is unique and peculiar to a firm or an industry and can usually be eliminated through a process called diversification. Business risk: It is that portion of unsystematic risk caused by the operating environment of the business which arises from the inability of a firm to maintain its competitive edge and the growth or stability of earnings. Financial risk: It refers to the variability of the income to the equity capital due to the debt capital. Micro risk levels: Project risk: Project risk relates to the uncertain events or situation that has the potential to adversely affect a planned project, usually in terms of cost, schedule, and/or product quality. Country risk: Country risk, also referred to as political risk, is an important risk for investors today. Market risk: The price fluctuations or volatility increases and decreases in the day-today market. It is defined as that portion of total variability of return caused by the alternating forces of bull and bear market. Interest rate risk: Interest rate risk is simply the risk to which an institution is exposed because future interest rates are uncertain. The assets and liabilities of a financial institution have different maturity and liquidity. Purchasing power risk: Variations in the returns are caused also by the loss of purchasing power of currency. Inflation is the reason behind the loss of purchasing power. Liquidity risks: Liquidity risk is that part of an assets total inconsistency of returns which consequences from price discounts given or sales commissions paid in order to sell the asset without delay.

Question 3 - Briefly discuss the steps to close the project. Answer:- To make sure that the project is completed and finished in a proper manner, a sequential process should be followed: Finishing the remaining work: Many issues crop up during the various stages of a project and some of them remain unresolved. For proper closure of the project, such tasks and issues are to be listed and a network may be drawn to complete them. Get client acceptance of the deliverables: The first task of a project manager is to prepare a checklist of all activities which must be completed before we seek acceptance of the deliverables. Contractual aspects and final accounting All contractual commitment to clients, vendors, and suppliers are settled. Also, the final project accounting is carried out. Update and archive all documents A project generates substantial volumes of documents, and it is essential that these are collated and filed for future use. Conduct post-implementation audit of the project Valuable experience and information are gained during the various phases of a project. The PostImplementation Review (PIR) is to reflect on the events that took place in the course of the project Prepare final project report The final Project Report (PR) should be written by the project manager himself. The PR should present project evolution, its success, its management, any outstanding and team recommendation. Release all resources materials, equipment, and people On completion of the project, all resources materials, equipments, and people are to be released from the project. Organizing closure meeting Once the project manager is satisfied that the project is complete in all respects, he or she fixes a date in consultation with other stakeholders to organize the closure meeting. After the closure meeting Finalize the project closure report Prepare a communication enclosing the approved closure report to the sponsor, project team, and stakeholders, confirming the decision to close the project Feedback any suggested process improvement to the relevant project office and/or process support group.

Question 4 - Discuss the various steps of PMIS planning. Answer: The PMIS is used for many purposes by a project manager like budget estimation of costs, creating a schedule, define the scope, etc. Hence, these should be considered while planning for PMIS. The planning of PMIS includes the following steps: Identify the information needed Identification of the information that is needed is necessary for improving the decision making and the structure of the PMIS. Who needs information? Recipients of information may include any stakeholder of a project. They are persons or groups that have claim or ownership rights or interests in a project and its activities that may have occurred in past, present, or future. What type of information is needed? The information need of various stakeholders differ in contents and time of need. Selection phase: Organizational guidance and support information Information from other projects. Statutory approvals and clearances Planning phase: Project scope Project cost Details of activities which include descriptions, time, cost, resource needs, and precedence relationships Project schedule and budget Drawing and documents: Specifications, civil and structural drawings, and layouts and schematics. Communication: Correspondences, minutes of the meetings, reports, and communication scheduled. Execution and control phase: Project Organization, Project reporting: Project reporting comprises of three phases. They are project scope, resource requirement and the closure phase. Project scope: Project schedule and cost: Two methods (variance analysis and earned value methods) are used to provide information on cost and schedule. Quality Records: A project sets up quality system to ensure that incoming items (materials, parts, and equipment), construction work construction work, erection of equipments, etc., conforms to design specification.
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 Project Risk assessment: It should be carried out at the start of the project as well as during the execution of the project; covering anything noticed or identified that may affect the future project schedule/cost.

Resource requirement: Manpower: Report on manpower requirement can be presented in a tabular/graphical form or a combination of both. Manpower requirements may be prepared for different skill Separately Materials, parts and equipment: A project needs a large number of materials, parts and equipment. Based on network, requirements of such materials at different points of time can be determined. Contracts: Besides other things, this function should include the following: Sources of inputs materials/services. Closure Phase: The closure phase consists of the following: Review of achievement of goals Feedbacks on the performance, supports during post handover and the defect liability period Lessons learnt: These include key challenges, bottlenecks faced and their mitigations and miscalculations in terms of cost, scope, lead time or project execution environment. The lessons learnt may be used as inputs for the future projects.

Question 5 - What are the important approaches to project control? Answer: The following are the key approaches to project control:

Variance analysis: It involves a comparison of the actual cost incurred on the project with the budgeted cost of the project for a given time period to determine the variants The approach is inadequate for project control because of the following reasons: It is backward looking rather than forward looking. It only indicates budget variance within a given time period and provides no information on the value of work done on that period which is vital for integrated project control. Performance analysis: The effective control over a project can be exercised by systematic performance analysis. It provides useful information on variations in project schedules and costs, whenever they occur indicating their cause, their implications and fixing responsibility. The performance analysis provides an analytical framework for project control based on the following terms: BCWS (Budgeted Cost for Work Scheduled): It represents the total of three components: Budgets for all work packages scheduled to be completed Budgets for the portion of in-process work scheduled to be completed Budgets for the overheads for the period. BCWP (Budgeted Cost for Work Performed): This is equal to the sum of three components: Budgets for work packages actually completed Budgets applicable to the completed in-process work Overhead budgets ACWP (Actual Cost for Work Performed): This represents the actual cost incurred for accomplishing the work performed during a particular time period. BCTW (Budgeted Cost for Total Work): This is the total budgeted cost for the entire project work. ACC (Additional Cost for Corporation): It represents the estimate for the additional cost required for completing the project.

Question 6 - Describe the project planning process and explain it in detail. Answer: Project planning involves three processes. The identification process: The main steps in the identification process of any project are: Identifying initial requirements. Validating them against the project objective. Identifying the criteria such as quality objectives and quantitative requirements for assessing the success of both the final product and the process used to create it. Identifying the framework of the solution. Preparing a template of the framework of solution to illustrate the project feasibility. Preparing relevant charts to demonstrate the techniques of executing the project and its different stages. Preparing a proper project schema of achieving the defined business requirements for the project. Identifying training requirement. Making a list of the training programme necessary for the personnel working on the project. Identifying the training needs of the individuals working in various functions responsible in the project. Preparing a training plan and a training calendar. Assessing the capabilities and skills of all those identified as part of the project organization. The review process: The main steps in the review process of any project are: Instituting a training plan to explain the project team members with the methodologies, technologies and business areas under study. Updating the project schedule to accommodate scheduled training activities Identifying the needs for review and reviewing the project scope Re-evaluating a project with respect to its stages and progress by organizing a plan for the review, fixing an agenda to review the project progress and maintaining the reports ready for discussion about stage performance Reviewing the project scope, the objective statement, and the nonconformances in the project stages. Preparing a proper project plan indicating all the requirements from start to finish of the project and also at every stage of the project Preparing a checklist of items to be monitored and controlled during the course of execution of the project The analysis process: The main steps in the analysis process of any project are: Comparing the actual details with that in the plan with reference to project stages Measuring various components of the project and its stages frequently to control the project from deviating and also monitor the performance Deciding how the task, the effort, and the defects are to be tracked; what
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tools to be used; and what reporting structure and frequency will be followed at various stages Identifying the preventive and corrective steps to be taken in case of any variance Performing root cause analysis for all problems encountered