You are on page 1of 8


Write short notes on :

Commercial and economic feasibility
Technical feasibility
Commercial and economic feasibility
o The economic feasibility aspect of a project relates to the earning capacity of the
project. Earnings of the project depend on the volume of sales.
o Future demand can be estimated after taking into consideration the potentialities of the
export market, the charges in the income and prices, the multiple uses of the product,
the probable expansion of industries and the growth of new industries.
o The commercial feasibility of a project involves a study of the proposed arrangements
for the purchase of raw materials and sale of finished products, etc. This study
comprises the following two aspects:
o Arriving at the physical requirement of production inputs such as raw materials, power,
labour, etc at various levels of output and converting them into cost. In other words,
deciding costing pattern.
o Matching costs with revenues with a view to estimating the profitability of the project
and the break-even point. The possibility ultimately decides whether the project will be a
feasible proposition or not. The technical analysis of a project feasibility study serves to
establish whether or not the project is technically feasible and it also provides a basis
for cost estimating.
Technical feasibility
o The examination of this aspect requires a thorough assessment of the various
requirements of the actual production process and includes a detailed estimate of the
goods and services needed for the project.
o The feasibility report should give a description of the project in terms of the technology
to be used and the requirement of equipment, labour, and other inputs. Location of the
project should be given special attention in relevance to technical feasibility.
o Technical feasibility relates to the types of technology to be adopted for the project.
The exercise of technical feasibility is not done in isolation. The scheme has to be
viewed also from economic considerations; otherwise, it may not be a practical
o The technical feasibility analysis is an attempt to study the project basically from a
technicians angle. The main aspects to be considered under this study are technology
of the project, size of the plant, location of the project, pollution caused by the project,
production capacity of the project, strength of the project, emergency or stand-by
facilities required by the project sophistication such as automation, mechanical
handling, required collaboration agreements, production inputs, and implementation of
the project.

Question 2: Define Project type organization and discuss in detail

1 | Page

The Project type organization defines the human infrastructure of the project. This task is
designed to define the project organization chart, the roles, and the relationships of the
project team. The organizational structure clearly identifies roles and responsibilities of
each position, augmenting the existing role definitions where necessary to cover all of the
responsibilities in a team.
Teams are put together for a project. Each project is headed by a project leader. Each team
will have employees to suit its demands and complete the project successfully. Only
employees with requisite specialized skills are considered for project teams. These
members of project team will join back their parent company once the project gets finished.
In project-type organisational structure, each project is handled like a small company. All
the essential resources and paraphernalia needed to execute projects are procured for fulltime till the project closes out. Employees having specialised knowledge and exposure to
similar project environment will be appointed on contractual terms to work in a group and
deliver the project expectations.
Advantages of Project type organization
Clear line of authority- The project manager has complete authority over the project.
High level of commitment- The project team has a separate and strong identity, and
all members are committed to the project and to each other strongly.
Swift decision making- Because the authority is only with the project manager, the
capacity to make swift decisions is increased.
Simple and flexible- Project-type organizations are structurally flexible and simple,
which makes them comparatively easy to implement.
Disadvantages of Project type organization
Duplication of effort- Each project team is fully staffed, which can result in a
duplication of effort in every area from clerical staff to technological support.
Cost inefficient - The project organization structure can be cost- inefficient because
of underutilization of resources or stockpiling equipment for future use.
Stretching out work during slow periods - During slack times, team members may
not work at high level of productivity.
Low level of knowledge transfer - There is low level of knowledge transfer between
projects as employees are committed to working only on one project.
Job insecurity - At the completion of a project, the employees may be fired if there is
no similar type of project.
Examples of project-type organisation
Rapid transit projects
Construction projects
IT projects

Question 3: What is project performance evaluation? Explain the various types of project
performance evaluation techniques
2 | Page

Performance evaluation is an important tool for the assessment of a system or service according to
the measurements specified. We can define it as the systematic process of assessment of
effectiveness against predetermined norms, standards, or expressed goals.
The project performance evaluation is important because
Evaluations of project performance are an independent study which is systematically
conducted from time to time to identify the progress of a project and often these studies are
conducted by including both experts from within and outside the project.
Evaluation inspects the output of a project, program or policy against its objectives. It also
adds the additional value by providing lessons from experience to help future management
or development of a specific project, program or policy.
It establishes accurately what is to be evaluated and how past outturns can be measured.
It chooses the alternative condition of the world and/or alternative management decisions as
It evaluates the actual outcome with the target outcome, and with the effects of the chosen
alternative condition of the world and/or management decisions.
It provides the results and recommendations.
Disseminates the results and recommendations.
Types of project performance evaluation and the explanation are
1. Process (or implementation) evaluation
It is also called formative evaluations which are designed to improve the implementation
of a program, policy or strategy as it unfolds.
In this type of evaluation we measure the level to which a program is effective as it was
planned. It usually considers the program activities conformance to statutory and
regulatory requirements, program design, and professional standards or customer
2. Outcome evaluation
It is also called summative evaluations which are designed to judge a program, policy or
strategys relevance, success and/or cost-effectiveness which includes its relative
contribution to the intended outcomes.
This type of evaluation measures the level to which a program attains its outcomeoriented objectives. It mainly focuses on outputs and outcomes including unintended
effects to evaluate program effectiveness but may also consider program process to
understand how outcomes are produced.
3. Impact evaluation
This is a type of outcome evaluation that measures the net effect of a program by
evaluating program outcomes with an estimate of what would have happened in the
absence of the program.
This type of evaluation is used when external factors are known to influence the
programs outcomes, in order to isolate the programs contribution to achievement of its
4. Cost-benefit and cost-effectiveness analyses
It compares a programs outputs or outcomes with the costs (resources expended) in
order to produce them. When applied to existing programs, they are also regarded as a
variety of program evaluation.
It measures the cost of meeting a single goal or objective, and can be used to identify
the least cost alternative to meet that goal. This analysis aims to recognize all relevant
costs and benefits, generally expressed in dollar terms.

Question 4: Discuss the major contents of the projects final report

The purpose of the final project report are
The final project report should present project evolution, its success, its management, any
outstanding and team recommendation.

3 | Page

The final project report is not another evaluation, rather it is the history of the project. It is the
chronicle of the life and times of the project, a compendium of what went right and what did
not, who served the project in what capacity, what was done to create the substance, and
how it was managed.

The suggested contents of a final project report are given below with what it should contain:
Evolution of project
o Narrate the various activities undertaken from project selection, planning, execution,
control, and termination phase; problem faced, what went well, what did not, and why.

Overall success of the project

Some typical criteria to measure the overall success of the project are given below:
o Business objectives: Restate the business objectives as given in the business case
including any changes incorporated later. Comment on how far these objectives have
been or likely to be met.
o Project efficiency: State the actual cost, resource, and schedule against the plan.
Closure statement:
States the circumstances under which the project is being closed as one of the following:
o The project has been successfully completed.
o The project has been terminated prior to the completion. In this case, describe the
reason for termination.
Outstanding issues and deliverables
List any issues or key deliverables not yet accepted. For each, give:
o The nature of the issue and reason of non-acceptance
o Proposed resolution (include date, person responsible)
Managing of projects
How the projects different phases were managed? Specifically, comment on the following
o Quality of decision making (fact based, timeliness, etc)
o Use of tools/techniques in selection, planning, and control phase
o Use of best practices
Lessons learnt and recommendations
A number of insight and innovative methods have been adopted in tackling the various
problems. Specifically, the following aspects are to be covered:
o What worked well and why?
o Recommend methods, processes, procedures, best practices, and tools which can be
gainfully used in the future.
o Identify the areas where time, money, or resources could have been better utilised.
Acknowledge all the individuals who have made special contributions to the project.

Question 5: Explain the various types of risk that can affect a business project.
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
Macro Risks

4 | Page

A chance of a loss or injury is called risk. It has two components the systematic risk and
unsystematic risk.
Systematic risk:
o 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.
o The changes in the economic, political and the sociological conditions affect the security
market. These are the factors that cannot be controlled by the organization and investor.
The smartest way to tackle this risk is to simply recognize that this type of risk will occur
and plan for your project to be affected by it.
Example: The stock market is in bear hug or in bull grip. This shows that the whole
market is moving in particular direction either downward or upward.
Unsystematic risk:
o 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.
o Unsystematic risk stems from managerial inefficiency, technological change in the
production process, availability of raw material, changes in the consumer preference, and
labour problems.
Example: The changes in the consumer preference affect the consumer products like
TV, washing machines, refrigerators, etc more than that of consumer product industry

Micro Risks
As compared to Macro risks there are micro risk (small scale ) types of risks that are vital when
talking about a business.
Project risk:
o Project risk relates to the uncertain events or situations that have the potential to adversely
affect a planned project, usually in terms of cost, schedule, and/or product quality.
o Project risk is a function of two components: likelihood and consequence.
Country risk:
o Country risk, also referred to as political risk, is an important risk for investors today. With
more investors investing internationally, both directly and indirectly, the political and
economic stability and viability of a country's economy needs to be considered.
o Factors affecting country risk are
1) Political climate
2) Economic environment
3) Financial conditions
4) Social institution
Market risk:
o The price fluctuations or volatility increases and decreases in the day-to- day market. It is
defined as that portion of total variability of return caused by the alternating forces of bull and
bear market.
o It is also called as bull market, in bull market, the index moves from a low level to the peak.
Bear market is just a reverse to the bull market.
Interest rate risk:
o 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.
o Financial institutions create assets and at the same time create liabilities. These loans are
invested by the financial institutions at a certain rate of interest and similarly interest cost has
to be paid to the lenders of deposit. The mismatches of interest rates of the assets and
liabilities expose to interest rate risk.

5 | Page

Purchasing power risk:

o 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.
o The level of inflation proceeds faster than the increase in capital value. Purchasing power
risk is the probable loss in purchasing power of the returns to be received.
Liquidity risks:
o 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.
o It is a condition wherein it may not be possible to sell the asset. Assets are inclined at great
inconvenience and cost in terms of money and time.

Question 6: What are the common features of project management software.

ANS: The common features of project management software are as follows

Data entry features

Project data and calendar

Human resourcesLabour cost
Human resources available
Cost of construction materials
Activity identifier

6 | Page

Activity description
Precedence relationship
Data entry error

One of the important features of PM software is its ability to generate a
variety of charts including network diagram, activity-linked Gantt chart, and
Gantt chart quickly. Further, changes in base line plan are quite easy.
Time analysis
If there is unlimited and flexible resource or if resource can be outsourced,
the network may be prepared at the earliest start time of activities. In the
real world, many projects are managed on this basis.
PM packages carry out time analysis which includes calculation of early start,
early finish, late start, and late finish; free slack and total slack with ease.
Manually carrying out time analysis is tedious.
Resources scheduling
Resources scheduling problems are of two types:
o Resource leveling where unlimited and flexible resources are available
o Resource allocation problem where resources are limited
In resource leveling, activities are scheduled to minimize the variation in
level of resource deployment.
Resource allocation problem is concerned with scheduling activities in such a
way so as to find the shortest project schedule.
Output reports
Most PM software packages have extensive report generation capabilities.
They can generate a range of reports in various forms (graphical, tabular, or
textual). The reports are standard or customized.
Project schedule
Network (based on AON systems), linked Gantt chart, Gantt chart : Work-to
Cost related report
Budgeted vs. actual cost (daily and cumulative)
Resources utilization report
Progress report
Overall project, milestone chart, critical path
Chart showing responsibility of department/function to carry out particular
Progress summary report
A change to the project parameter, an unexpected increase or decrease in
the resource available, changed cost rate, or new target dates.
A change in network logic due to change in project scope, design change,
To have a new schedule that take into account the progress made to date.
The process of bringing information into the PM software from other
application such as word processing, spread sheet, etc is called importing.
Similarly, sending information from PM software to other application is called
7 | Page

The exporting and importing obviates typing/data entry effort and eliminates
the possibility of associated error.
Project monitoring and tracking
Tracking the progress about schedule and cost is an important aspect of
project management.
Most PM software packages permit the users to define a baseline plan and
compare the actual progress with respect to those in the baseline plan.
What if analysis
This is a useful feature of PM software. This permits to know the effect of
changes in project variable (people, cost, and change in scope) on project
This analysis helps the project manager in taking an appropriate decision.

8 | Page