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Project:
“...A group of one time activity, having well defined sequences, duration, starting,
and finishing time and cost”.
v. Project cut across organizational lines because they need skills and
talents of multiple professionals and divisions.
vi. Projects are temporary activities and the organization usually has
something at stake, when doing a project.
vii. A project is the process of working to achieve a goal. During the process,
a project passes through several distinct phases called the project life
cycle.
1. Planning Function:
2. Scheduling Function:
3. Control Function:
a. Preparation of MIS;
b. Preparation of work breakdown structure;
c. Time control and cost control activities;
d. Feedback and analysis.
NEED AND SCOPE
I) Manhattan Project
II) Polaris Ballistic Missile Development Project
III) Pathfinder Mission
SCOPE
A. INTERNATIONAL LEVEL:
a. Disagreement Programme
b. Minimum Health Care Project
c. Refugees’ Rehabilitation Programme
B. NATIONAL LEVEL:
C. STATE LEVEL:
a. Literacy Programme
b. Rural area development schemes
c. Building up of a Sports Complex etc.
D. FACTORY LEVEL:
a. Setting up a factory
b. Developing technology for a product
c. Product diversification
d. Vendor development etc.
Cleland and King suggested five general criteria to use project management
techniques:
2. Broad magnitude of the efforts: All encompassing activities that touch all
the resources employed heavily in any organization like people, capital,
equipments etc.
PROJECT MANAGER
Project Manager is the most important element of project organization. The main
responsibility of project manager is to plan, direct and integrate the work efforts of
participants to achieve project goals.
(C) Matrix Managers: They have responsibilities of both unity of direction and
control. Matrix Managers direct functional managers and project team
members in criss cross pattern of vertical functional and horizontal project
oriented matrix organization.
(a) Planning project activities, tasks and end results, including doing the
breakdown scheduling, budgeting, coordinating, tasks and allocating
resources.
Project Team: Project work is accomplished by a group of people who are main
responsible for completion of project and accomplishment of project goals.
ROLES OF DIFFERENT INDIVIDUALS IN A PROJECT TEAM
Members of the office charge their work time to the project or to an overhead
account. They are assigned to the office only when they must be in frequent contact
with the project manager or other project office personnel, or when their services
are required continuously and for an extended period.
PROJECT SYSTEM DEVELOPMENT LIFE CYCLE
a) Conception
b) Definition
c) Execution
d) Operation
b) Second Stage-Project Initiation: Initiation of the point where the idea for a
system is born. In this stage, a problem can be recognized and a potential
solution is sought of. Project initiation requires the need for significant ideas,
uncertainty or risk factors, return on investment factors. In project initiation
stage the following factors are analysed:
a. The environment
b. The needs definition and objective of the project
c. Preliminary alternative solutions and estimates of costs, benefit,
strength and weaknesses.
d. Estimated budgets
e. Affected individuals and organizations
f. Potential solutions
Criteria 1 2 3 4 5
Technical Bad Poor Adequate Good Excellent
solution
approach
Price of Contract >1.8 1.6-1.8 1.4-1.6 1.2-1.4 <1.4
Price organization Bad Poor Adequate Good Excellent
and management
Likelihood of Bad Poor Adequate Good Excellent
meeting
cost/schedule
targets
Reputation of Bad Poor Adequate Good Excellent
contractor
Can the work for the project be done with the current equipment, existing
technology, and available personnel? If new technology is needed what is
likelihood that it can be developed?
All works in project are done according to formal or informal contracts. Even in
internal projects where users and contractors belong to the same organization, the
statement of work are documented so that the user’s expectation are clearly known
and that contracted work will confirm to them. Most projects also involve some
degree of external and legal contracting.
User
Prime Contractor
Sub-contractor
The contract process starts when the user contracts with principal party (the prime
contractor) to be responsible for the overall project. This principal party may
contract with secondary parties – subcontractors, vendors, consultants, materials
suppliers and contract labour to be responsible for portions of the project. These
secondary parties, for example, a general or prime contractor are hired by the user
to manage the overall construction project, including fabrication and assembling of
the building structure. For specified work such as wiring, pumbling, ventilation,
and interior details, the contractor may subcontract with other organizations to do
the work. For development projects of large scale systems, major subsystem and its
elements are subcontracted.
In project contract the user while contracts with principal contractor and the
principal contractor with subcontractor, the project manager is acting as an agent
on behalf of user and principal contractor. A project contract should have the
following basic elements –
A project contract of project duly signed by the project manager binds both the
user and prime contractor. Unless a project agreement is issued in acceptance of a
specified bid or offer by a prime contractor or vendor, it is not a contract. Again it
becomes a contract when it is accepted by the prime contractor. If
acknowledgement is made by the vendor or prime contractor differing in any
respect from the original offer, this constitutes only a counter offer, this is not an
acceptance. Again equipment details, materials, services provided, price, time of
delivery and place, quantity and quality should be mentioned in project contract.
(j) Authority must have the prerogative off loading his work to other agencies at
his cost (Risk Purchase).
(a) To see that the project contract should be finished in time. For this, the user
should prepare quality assurance plan. It is the check system to examine
validity of contract. The user should ask the prime contractor to furnish
broad frame of contract including GANT chart and networks.
(c) Projects should have proper cost consideration. Here it is ensured that user
and prime contractor should enjoy win-win situation.
(d) Project work has been broken into small packages it means all project is
broken into manageable units and user can identify people for responsibility
centres.
In project contract the user while contracts with principal contractor and the
principal contractor with subcontractor, the project manager is acting as an agent
on behalf of user and principal contractor. A project contract should have the
following basic elements –
Termination of Offer:
Lawful Consideration:
Global Tender:
In case of global contract, the user may sign a contract with Aliens. Aliens have
same right regarding contractual matters. However, in case of global contract
different countries have different contractual matters. Any fraudulent, immoral,
injuries, opposed to public interest global contracts are invalid. The user should
give direct and exposed notice, inviting global tenders. Here, care should be taken
so that all competent parties have fair and equitable chance to bid. In global
contract the user may have right to inspection and right to rejection. The term of
payment should specifically mentioned in contract agreement. In global contract it
is mentioned whether global tender is agreed upon execution of contract according
to –
The purpose of negotiation is to clarify technical or other terms in the contract and
it is essentially a discussion between a user and a co0ntractor with the view to
reading an agreement. Negotiation is not necessarily done on standardised items
for which agreement terms are simple and costs are fairly well known. But, it is
common place on complex system that requires development work and involve
considerable uncertainty and risk. Different contractual agreements are signed
after negotiation. They are:
The price paid by the user is fixed regardless of the cost incurred by the
contractor. Here, the contractor agrees to perform all work at a fixed price.
Clients are able to get the minimum price by putting out the contract to
competitive bidders. For example, Contract agreement cost estimates (Cex) =
Rs. 1,00,000, Fee = Rs. 10,000 and Price = Rs. 1,10,000. Now, whatever the
projects actually ends up costing (Cac) the price to the clients remaining Rs.
1,10,000.
The price paid by the customer for the project is based on the costs incurred
in the project plus the contractor’s fees. The contract is reimbursed for all
direct costs plus an additional amount to cover overhead and profit. Here,
the burden of risk is on the client. For example, Contract agreement cost
estimates (Cex) = Rs. 1,00,000. But all allowable costs will be reimbursed.
Fee = Rs. 10,000, target price = Rs. 1,10,000. All allowable costs (perhaps,
all cost (Cac) will be reimbursed in addition to the fee.
(c) Incentives:
This is applied for shipping agents to accredited agents. Shankar and Co. in
Germany executes this contract of clearing on behalf of suppliers.
OPERATING COSTS:
(III) Expenses:
a. Direct material
b. Direct labour
c. Direct expenses
d. Factory overhead
(II) Administrative cost:
PHASE – C: EXECUTION
The execution phase starts when works specified in the project plan input into
action. Sometimes the phase is termed as acquisition phase because most of the
project resources are acquired here. It is also known as design phase as all the
project systems have a pattern, configuration, and structure. Again, when an
acceptable design is chosen, the system goes into production. Production involves
either fabrication of a single item or mass production. The execution phase has
following cycles:
In the final, the operation phase is applied. Here, the user takes charge, operates
the system and evaluates its performance. The contractor may remain involve for
providing maintenance support and evaluation services. This phase also include
project evaluation and project appraisal.
Objective:
Principles:
Activities:
a. Examine:
Files of a company
Files of a project
b. Evaluate:
c. Interview:
Project organization
Management style
Contribution team member
Top management of the company
(B) Guidelines to future project:
a. Planning:
b. Feasibility study
A project involves one time capital investment and a recurring cost for a
subsequent period. In return, the project is evaluated to yield benefits for a long
time to come. There are certain models for cost benefit analysis:
7. What points should be kept in mind while estimating the working capital
requirements and planning for its funding?
8. Define NPV. Discuss various properties of NPV. What are the advantages
and disadvantages of NPV as an appraisal criterion?
9. Discuss in detail the key steps in the sample survey for market appraisal.
How would you characterize the market on its basis?
10. Define Social Cost Benefit Analysis (SCBA). What are the five strategies of
appraisal in the UNIDO method for SCBA as described in the Guide to
practical project appraisal?
11. What is IRR and how it is calculated? What are the various problems with
IRR which leads to multiple IRR? Discuss the implications of multiple IRR
in project appraisal.
12. Discuss the various means of financing a project. What financing mix do
you suggest for a small scale unit.
13. Discuss and evaluate the “variance analysis” approach to project control.
Also explain the various prerequisites for successful project implementation.
15. What do you mean by project identification? Explain the various types of
projects.
17. What are the different kinds of relationship commonly used in the trend
projection method?
18. Discuss the uncertainties in demand forecasting. How can one cope with
these uncertainties?
19. What points should be kept in mind while estimating the working capital
requirements and planning for its financing?
23. As per the UNIDO method, how are the following valued?
c. Labour
d. Foreign exchange
30. Market and demand analysis plays a crucial role in investment decision
making. – Justify.
33. What are the various sources, which are helpful in product identification?
39. What do you mean by Project Management? Also explain the scope of
project management.
42. Explain the basic criterion of project appraisal followed by the banks and
other financial institutions.
43. Discuss in detail the various stages involved in the execution and
management of a project.
45. What do you mean by market appraisal of a project? Explain the steps
involved in market appraisal.
46. Explain the role of capital budgeting techniques in project appraisal and
analysis.
47. What do you mean by project scheduling and control? Explain the
advantages of project scheduling.
52. What do you mean by Project Management? Also, explain the importance of
project management.
56. What are the sources of finance to meet the short-term financial
requirements?
57. What process is followed to measure funds requirements of a project?
59. What do you mean by SCBA? What is the need to conduct SCBA?
61. What do you mean by project scheduling and control? Explain the
advantages of project scheduling.
65. How internal rate of return is calculated? Discuss the accept and reject
criteria under IRR method.
69. Compare and contrast UNIDO approach and L-M approach of social cost
benefit analysis.
71. Define contract management and also discuss the remedies for non-
performance of contract.
74. Describe two methods for measuring the effectiveness of your proposal
efforts?
77. Describe what the project manager should do to perform the organising
function? Give some specific examples.
82. How the detailed project report is prepared? Give various steps involved in
it?
83. What are the social cost of a project? What challenges are faced by the
developing countries regarding social costs?
88. What is working capital? How the working capital requirements are
estimated?
89. What is ranking of projects? Which are the methods used for ranking a
project?
Anirban Chakraborty