Sikkim Manipal University - MBA - PM0010 - Introduction to Project Management

Semester: 3 - Assignment Set: 2

Question 1: List and explain in brief the inputs to the following processes.
a) Acquiring a project team
b) Communication plan

Answer:

a) Inputs to the Acquiring a project team:

The members who belong to different groups and functions and are allocated to the
activities of the same project, form a project team. A team can be divided into sub-teams if
required. Generally, the project teams are only used for a defined period of time. However,
they are disbanded when the project is complete. Sometimes, due to the nature of the
specific formation and disbandment, project teams are usually agile in organizations.

Acquiring a project team is the process of acquiring the specific people needed to
accomplish all phases of the given project. Ultimately the team members will bring all the
specific qualifications and capabilities to the project team. However, the project
management team has control over the selection process. Selection of team mates involves
certain concerns which need to be evaluated.

Important factors that are considered during the process of acquiring the team are:

 The project manager should efficiently discuss and induct others who are in a position to
supply the required Human Resources in a project.

 Failure to obtain the essential Human Resources for the project will affect project
agenda, budgets, consumer satisfaction and quality. It declines the probability of
success and eventually results in project cancellation.

The inputs for acquiring a project team are:

 Enterprise environmental factors: Team members are available from internal

and external sources. When selecting the team members, it is important to evaluate
the following factors:

• Availability
• Ability
• Experience
• Interests
• Costs

 Assets of organizational process:

Assets of organizational process covers reviewing the documented policies,
procedures and guidelines governing staff assignments.

 Roles and responsibilities:

The roles and responsibilities document should be assessed to determine a team
member’s roles, responsibilities, skills, levels of authority, and competencies.

 Project organization charts:

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The project organization chart is an input/output device that serves a valuable role
for the Project Management team and team leader in the process of keeping a
thorough and careful organizational record of the project’s processes.

 Staffing management plan:

The staffing management plan with the project schedule is reviewed to ascertain
when team members are needed.

b) Inputs to the Communication plan:

Planning communication is the process of ascertaining the information and communication

needs of the project stakeholders.

Communication plan helps to communicate the right information, to the right people at the
right time. It is a schedule of communication events used to make sure that the project
stakeholders are kept properly informed. The various factors such as the time, effort and
resources that are required to perform these planned communication activities are the part
of the Project Management. The communication goals, strategies and stakeholders are
described in the communication plan.

The best time for planning communication is at the start up phase of the project life cycle.
It ensures that the plan includes the tasks needed to communicate effectively throughout
the project cycle. The key features influencing the communication plan includes Project
Management team structure, scope of the project and feedback from the stakeholders.

There are two ways of planning communication:

 Constant communication:

Constant or regular communication involves communicating to the project team,

managers and project stakeholders on a regular basis. These types of communication
include regular status reports, project team meetings and monthly status updates about
the project. The constant communication also includes the regular stakeholder report
updates.

 Event driven communication:

The event driven or one-time communication includes sessions discussing critical issues,
stakeholder meetings, training schedules and wrap up sessions.

The advantages of planning communication are:

 It facilitates team development.

 It makes it easier to update stakeholders.
 It saves creation of additional project documentations.

The inputs for planning communication are:

 Stakeholder register:

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Stakeholder records consist of stakeholder identification, assessment and classification

documents.
 Stakeholder management strategy:

Stakeholder management strategy describes the method to gain support and reduce
dissatisfaction from the stakeholders throughout the entire project life cycle.

 Enterprise environmental factors:

All environmental factors such as organizational culture, industry standards are

considered as inputs for the planning communication process.

 Organizational process aspects:

All organizational process assets are applied while planning communications. The
lessons learned and documented information is important as it gives an idea about the
issues resolved.

Question 2: Write short notes on the following idea generation technique:

a) Mind mapping
b) Delphi technique
c) Brainstorming
d) Nominal Group technique

Answer:

a) Mind mapping:

Generation of ideas takes place in any hierarchical level of a firm. A project idea is
conceived from a search for promising project ideas. Certain broad considerations and
guidelines are applied to help generate of project ideas. Some group creativity techniques
to generate a large number of ideas to solve problem are discussed below.

Another way to look at the human levels of thinking is the mind mapping concept. Mind
mapping exercise is aimed at increasing mental energy to utilize creative thinking skills,
enabling the mind to track out ideas which normally lie in obscurity on the edge of thinking.

Following example is taken from the software Buzan‟s iMind Map which was chosen for the
brainstorming session aimed at planning for the future of young and developing minds. The
software replicates the organic shape, form and use of colors and images to convey a
thought or idea – a graphic technique for stimulating creativity and unleashing the truth,
often untapped potential of the mind. This was used in June 2008 at Petra, Jordan, where
30 Nobel Prize winners (scientists, entrepreneurs, academics, and humanitarians)
participated in the conference focused on the theme „Reaching for New Economic, Scientific
and Educational horizons”. Two of the many conclusions of the brainstorming session were -
elimination of child poverty worldwide is essential to move forward with educational
development; new and innovative learning tools are the foundation for a positive future for
the next generation.

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b) Delphi technique:

Generation of ideas takes place in any hierarchical level of a firm. A project idea is
conceived from a search for promising project ideas. Certain broad considerations and
guidelines are applied to help generate of project ideas. Some group creativity techniques
to generate a large number of ideas to solve problem are discussed below.

The Delphi Technique was originally conceived as a way to obtain the opinion of experts
without necessarily bringing them together face to face. In recent times, however, it has
taken on an all new meaning and purpose.

The Delphi Technique is based on the Hegelian Principle of achieving Oneness of Mind
through a three step process of thesis, antithesis, and synthesis. In thesis and antithesis,
all present their opinion or views on a given subject, establishing views and opposing
views. In synthesis, opposites are brought together to form the new thesis. All participants
are then to accept ownership of the new thesis and support it, changing their own views to
align with the new thesis. Through a continual process of evolution, Oneness of Mind will
supposedly occur.

This is a systematic, interactive, forecasting method that relies on a panel whose members
are carefully selected independent experts. It is based on the principle that forecasts from
an unstructured group of individuals are comparatively inaccurate than forecasts from a
structure group of experts. The experts answer prepared questionnaires in two or more
rounds. After each round, a facilitator provides an overall summary of the experts‟
forecasts from the previous round as well as the reasons they provided for their judgments.
The participants revise their earlier answers by knowing the responses of other members of
the group. The process stops after a predetermined stop-criterion like number of rounds or
achievement of consensus. Usually, participants maintain secrecy even after completion of
the final report. The facilitator, who is the coordinator of the Delphi method, sends out the
questionnaire, collects and analyses responses, and identifies common and conflicting
viewpoints.

c) Brainstorming:

This method aims to give people freedom of mind and action to create and reveal new
ideas. All spontaneous ideas from a group are gathered to find a solution for a specific
problem. The rules followed during brainstorming are as follows:

 No criticism of ideas
 Go for large quantity of ideas
 Build on each others ideas
 Encourage wild ideas

Brainstorming consists of a facilitator who composes the brainstorming panel and an idea
collector to record the suggested ideas. Sometimes the facilitator is also the idea collector.
Some of the leading questions that a facilitator asks during the session are “Can we
combine these ideas?” and “How about looking from another perspective?” The idea
collector also numbers each idea for future reference. When a participant exhausts all ideas,
the creativity and experience of another participant is brought out. This often makes group
brainstorming sessions enjoyable experiences. This also facilitates in bringing team

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Semester: 3 - Assignment Set: 2

members together. Individual brainstorming is effective in generating many ideas, but not
at developing the ideas.

Brainstorming is used to generate ideas, for others to evaluate and select. The strategy is
more effective when the brainstorming group evaluates and selects a solution to the
problem proposed. In either case, the organization offers incentives so that participants
maintain their brainstorming efforts.
Brainstorming is a lateral thinking process. It is employed particularly when new ways of
thinking are called for and when there is a need to break out of old established patterns of
thinking. Some instances where brainstorming is used are when there is a need to look at
new opportunities, when there is a need to improve the service offered, or when existing
approaches are just not giving the right results.

d) Nominal Group technique:

Nominal group technique (NGT) is a structured method for group brainstorming that
encourages contributions from everyone. This technique encourages all participants to have
an equal say in the session. Participants are asked to write their ideas anonymously. The
moderator collects the ideas and each idea is voted on by the group. The process of voting
can be simply by show of hands. The top ranked ideas are sent back to the group or
subgroups for further brainstorming. Each subgroup comes back to the whole group for
ranking the listed ideas. Sometimes the group revaluates the ideas that were previously
dropped. This method requires a trained facilitator.

The benefit of the technique is that the group shares and discusses all issues before
evaluation, with each group member participating equally in evaluation. The evaluation
works with each participant "nominating" his or her priority issues, and then ranking them
on a scale of, say, 1 to 10.

Nominal Group Technique is just one group process for achieving consensus. Another group
consensus technique is the Delphi Method, which is used among groups of experts to make
complex decisions, usually without face-to-face meetings.

When to use Nominal Group Technique:

 When some group members are much more vocal than others.
 When some group members think better in silence.
 When there is concern about some members not participating.
 When the group does not easily generate quantities of ideas.
 When all or some group members are new to the team.
 When the issue is controversial or there is heated conflict.

Question 3: Describe in brief the various sources of project financing.

Answer:

Sources of Project Financing:

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Semester: 3 - Assignment Set: 2

The term ‘project finance’ is used loosely by academics, bankers and journalists to describe a
range of financing arrangements. Often bandied about in trade journals and industry
conferences as a new financing technique, project finance is actually a centuries-old financing
method that predates corporate finance. However with the explosive growth in privately
financed infrastructure projects in the developing world, the technique is enjoying renewed
attention. The purposes of this note are to contrast project finance with traditional corporate
financing techniques; to highlight the advantages and disadvantages of project finance and ; to
propose that a single structure underlies every project finance transaction; to explain the
myriad of risks involved in these transactions; and, to raise questions for future research.

Project Financing is a unique financing technique that has been used on many high-profile
corporate projects, including Euro Disneyland and the Euro Tunnel. Employing a carefully
engineered financing mix, it has long been used to fund large-scale natural resource projects,
from pipelines and refineries to electric-generating facilities and hydroelectric projects.
Increasingly, project financing is emerging as the preferred alternative to conventional
methods of financing infrastructure and other large-scale projects worldwide.

Project Financing discipline includes understanding the rationale for project financing, how to
prepare the financial plan, assess the risks, design the financing mix, and raise the funds. In
addition, one must understand the cogent analyses of why some project financing plans have
succeeded while others have failed. A knowledge-base is required regarding the design of
contractual arrangements to support project financing; issues for the host government
legislative provisions, public/private infrastructure partnerships, public/private financing
structures; credit requirements of lenders, and how to determine the project's borrowing
capacity; how to prepare cash flow projections and use them to measure expected rates of
return; tax and accounting considerations; and analytical techniques to validate the project's
feasibility.

Sources of Finance:

Just as financial instruments range from debt to equity and hybrids such as mezzanine finance, project finance
can raise capital from a range of sources. Raising finance depends upon the nature and the structure of the
project. Lender and investor interest will vary depending on the goals and risks related to the financing. In
assembling project financing, all available financing sources should be evaluated. Following are some sources
of capital used in project financing

 Equity:

Equity is often raised in the stock markets and from specialized funds. Equity is generally more expensive
than debt financing. Equity can be raised in the domestic capital markets as well as in the international
capital markets. Delhi Metro Rail Corporation is form by the joint venture of Government of India (GOI) and
Government of National Capital Territory of Delhi (GNCTD).Both GOI and GNCTD holds 50-50% equity. This
50% each of GOI and GNCTD equity holds only 30% of the project cost.

 Developmental loan:

A developmental loan is debt financing provided during a projects developmental period to a sponsor with
insufficient resources. Developmental lenders, who fund the project sponsor at very risky stage of the
project, desire some equity rewards for the risk taken, hence, it is not unusual for developmental lender to
secure rights to provide permanent financing for the project as part of the development financing
agreement.

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 Subordinated loan:

Subordinated loans, also called mezzanine financing or quasi-equity, are senior to equity capital but junior to
senior debt and secured debt. Subordinated debt usually has the advantage of being fixed rate, long. term,
unsecured and may be considered as equity by senior lenders for purposes of calculating debt to equity
ratio. They are usually used to cover over-runs during the construction stage.

 Senior debt:

Commercial banks and institutional lenders are an obvious choice for financing needs of a project. Senior
debt of project finance usually constitutes the largest portion of the financing. These loans usually format
least 50% of the capital needs. The prime reason is that it is cheaper than equity financing. They fall into
two categories secured and unsecured loans. Secured loans are loans where the assets securing the loan
have value as collateral. Such assets are marketable and can readily be converted into cash. Unsecured
loans basically depend on the borrower’s general creditworthiness, as opposed to perfected security
arrangement. Nearly 60% of total estimated cost of Delhi metro project is finance by JBIC (Japan Bank of
International Cooperation).Recently operational planning for Phase III is going on. JBIC appraisal team has
given clearance for their next tranche for the Phase III.

 Syndicated loan:

A syndicated loan is a loan that is provided to the borrower by two or more banks and is governed by a
single loan agreement. The loan is arranged and structured by a lead arranger and is managed by an agent
bank. The best part about a syndicated loan is that the funding can be gathered from the
international lending market, which means such a lending can be used for projects which need
enormous amounts of capital.

 World Bank group financing sources:

Multilateral institutions such as the World Bank provide finds to infrastructure development projects
worldwide. The scope and extent of involvement of such institutions in financing project is very limited.
World banks provide funding through its (a) loan program; (b) guarantee program and (c) indirect support
for projects.

 Bonds:

In recent years the use of the bond markets as a vehicle for obtaining debt funds has increased. Bond
financing is similar to commercial loan structure, except that the lenders are investors purchasing the
borrowers bonds in a private placement or through the public debt market.

 Investment funds:

Investment funds mobilize private sector funds for investment in infrastructure projects. E.g. asset funds or
income funds, investment management companies, venture capital provider and money market funds.

 Institutional lenders:

These include life insurance companies, pension plans, profit-sharing plans and charitable foundations.
These entities can be a substantial source of funding.

 Host government:

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The host government can also be a direct or indirect source of financing. This is more evident in the
emerging markets where the governments are usually eager to fund and support infrastructure projects.
They provide indirect support through tax incentives. GOI and GNCTD have financed
approximately 30% of project incurred cost.

Question 4: Explain the important concepts in Research design?

Answer:

The research designer understandably cannot hold all his decisions in his head. Even if he
could, he would have difficulty in understanding how these are inter-related. Therefore, he
records his decisions on paper or record disc by using relevant symbols or concepts. Such a
symbolic construction may be called the research design or model. A research design is a
logical and systematic plan prepared for directing a research study. It specifies the objectives
of the study, the methodology and techniques to be adopted for achieving the objectives. It
constitutes the blue print for the plan is the overall scheme or program of research. A research
design is the program that guides the investigator in the process of collecting, analysing and
interpreting observations. It provides a systematic plan of procedure for the researcher to
follow elltiz, Jahoda and Destsch and Cook describe, “A research design is the arrangement of
conditions for collection and analysis of data in a manner that aims to combine relevance to the
research purpose with economy in procedure.”

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 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” non-continuous variables. In statistical term, they are also known as „discrete variable.
For example, age is a continuous variable; whereas the number of children is a non-continuous
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:

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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 children’s 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 errors
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.

 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.

 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.

 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

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three different types of fertilizers on the yield of rice crop, then the three types of
fertilizers would be treated as the three treatments.

 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.

 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.

Question 5: Explain the following:

a) Project Vs. Program Vs. Portfolio
b) Project work and Traditional functional work

Answer:

a) Project Vs. Program Vs. Portfolio:

Project Program Portfolio

A temporary endeavor A group of related projects A collection of projects or
undertaken to create a unique managed in a coordinated way programs and other work
product, service, or result. to obtain benefits and control that are grouped together
not available from managing to facilitate effective
them individually. management of that work
to meet strategic business
objectives.
Hopefully we all know what a This is where the confusion A portfolio is a collection of
project is. PMBOK defines a seems to start. A program is a projects or programs
project as “a temporary group of related projects grouped together to
endeavour undertaken to managed together to obtain facilitate effective
create a unique product, specific benefits and controls management of efforts to
service or result”. In my that would likely not occur if meet strategic business
terms, a project has a specific these projects were managed objectives. These projects
start and end date with a individually. While project or programs are not
clearly defined deliverable management focuses on necessarily interdependent
produced. Project delivering the specific or directly related. Portfolio
management is the application objectives of the project – management is the
of knowledge, skill, tools, program management is centralized management of

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techniques and processes to focused on achieving the multiple projects, programs

effectively manage a team strategic objectives and and possibly portfolios. This
towards this final deliverable. benefits of the integrated typically includes
program. identifying, prioritizing and
In real life this means the authorizing projects and
management of a specific The implementation of an programs to achieve specific
project (e.g. implementing a Enterprise Resource Planning strategic business
new accounting system). This (ERP) system is often objectives.
project will start on a specific performed as a program. The
date and end according to our ERP system will include The group of projects and
project plan with the delivery several specific individual programs within a specific
of your new accounting projects (i.e. Finance, business division could be
system. Purchasing, Materials an example of a portfolio.
Management, etc.). Each of This might include the
these specific projects should implementation of a
be run by a project manager Customer Relationship
using a formal project Management (CRM)
management approach. The program; Sales Data
overall grouping of these Warehouse program;
related projects will be run by Commission Tracking
a Program Manager. project; And a project to
launch a new product within
The Program Manager will be the Sales & Marketing
responsible for the rolling up Division. In this case the
of information from each of Portfolio Manager is
the projects and ensuring the managing this broad range
overall program is driving of somewhat unrelated
towards achieving the programs and projects
business objectives. This towards a specific set of
requires each of the project strategic divisional business
managers to manage their objectives.
individual projects in a fashion
that easily integrates into the The Portfolio Manager will
overall program plan (easily become very involved in the
said – more challenging in frontend activities of
actual practice). identifying, prioritizing and
initiating projects and
The Program Manager is also programs. All of these
responsible for tracking and activities will be within the
analysing across the entire context of achieving the
program. This involves strategic business
considering risk management objectives. The
strategies not only for each Portfolio Manager will also
individual project but also track these
analysing the ‘collective’ risk projects/programs to ensure
across the program. The same they continue to deliver
goes for quality management, towards the expected
schedule management, cost strategic outcome in terms
management, of quality, cost, schedule
communications, etc. and scope. They will also be
responsible for analysing
and tracking project

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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.

b) Project work and Traditional functional work:

Project work and traditional functional work differ in many ways. It is important to
understand these differences.

Functional work is routine on-going work. Each day machine operators, car salesmen,
secretaries, accountants, financial analysts and quality inspectors perform functional work
that is routine, notwithstanding some variations from day to day. The functional worker
gets training from a manager assigned to the specific function, and the manager
supervises and manages the worker according to standards of productivity and quality set
for the particular function.

In contrast to functional work, project work is a temporary endeavor undertaken to create

a unique, non-routine product or service. A project manager manages a specific project
with people and other resources assigned to him only for project management support on
the specific project, and not on an ongoing basis. The project manager is responsible for
the approved objectives of a project such as budget, schedule and specifications. Project
terms are typically not organized in the same hierarchical structure as that of functional
group.

Question 6: Describe the following quality control tools:

a) Ishikawa diagram
b) Flow chart
c) Pareto chart
d) Scatter diagram

Answer:

a) Ishikawa diagram:

Ishikawa diagrams (also called fishbone diagrams, cause-and-effect diagrams or

Fishikawa) are causal diagrams that show the causes of a certain event -- created by Kaoru
Ishikawa (1990). 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

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 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

Ishikawa diagrams were first used in the 1940s, and are considered one of the seven basic
tools of quality control. It is known as a fishbone diagram because of its shape, similar to
the side view of a fish skeleton.

The Ishikawa Diagram resembles a fishbone (hence the alternative name "Fishbone
Diagram") - it has a box (the 'fish head') that contains the statement of the problem at
one end of the diagram. From this box originates the main branch (the 'fish spine') of the
diagram. Sticking out of this main branch are major branches that categorize the causes
according to their nature.

Mazda Motors famously used an Ishikawa diagram in the development of the Miata sports
car, where the required result was "Jinba Ittai" or "Horse and Rider as One". The main
causes included such aspects as "touch" and "braking" with the lesser causes including
highly granular factors such as "50/50 weight distribution" and "able to rest elbow on top
of driver's door". Every factor identified in the diagram was included in the final design.

b) Flow chart:

A flowchart is a diagrammatic representation that illustrates the sequence of operations to

be performed to get the solution of a problem. Flowcharts are generally drawn in the early
stages of formulating computer solutions. Flowcharts facilitate communication between

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programmers and business people. These flowcharts play a vital role in the programming
of a problem and are quite helpful in understanding the logic of complicated and lengthy
problems. Once the flowchart is drawn, it becomes easy to write the program in any high
level language. Often we see how flowcharts are helpful in explaining the program to
others. Hence, it is correct to say that a flowchart is a must for the better documentation of
a complex program.

Flowcharts are usually drawn using some standard symbols; however, some special
symbols can also be developed when required

The following are some guidelines in flowcharting:

 In drawing a proper flowchart, all necessary requirements should be listed out in logical
order.
 The flowchart should be clear, neat and easy to follow. There should not be any room
for ambiguity in understanding the flowchart.
 The usual direction of the flow of a procedure or system is from left to right or top to
bottom.
 Only one flow line should come out from a process symbol.

c) Pareto chart:

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Sikkim Manipal University - MBA - PM0010 - Introduction to Project Management

Semester: 3 - Assignment Set: 2

The Pareto Chart is named after Vilfredo Pareto, a 19th century economist who postulated
that a large share of wealth is owned by a small percentage of the population. This basic
principle translates well into quality problems. A Pareto Chart is a series of bars whose
heights reflect the frequency or impact of problems. The bars are arranged in descending
order of height from left to right. This means the categories represented by the tall bars on
the left are relatively more significant than those on the right. This bar chart is used to
separate the “vital few” from the “trivial many”. These charts are based on the Pareto
Principle which states that 80 per cent of the problems come from 20 per cent of the
causes. Pareto charts are extremely useful because they can be used to identify those
factors that have the greatest cumulative effect on the system, and thus screen out the
less significant factors in an analysis. Ideally, this allows the user to focus attention on a
few important factors in a process.

A Simple Example:

A Pareto chart can be used to quickly identify what business issues need attention. By
using hard data instead of intuition, there can be no question about what problems are
influencing the outcome most. In the example below, XYZ Clothing Store was seeing a
steady decline in business. Before the manager did a customer survey, he assumed the
decline was due to customer dissatisfaction with the clothing line he was selling and he
blamed his supply chain for his problems. After charting the frequency of the answers in
his customer survey, however, it was very clear that the real reasons for the decline of his
business had nothing to do with his supply chain. By collecting data and displaying it in a
Pareto chart, the manager could see which variables were having the most influence. In
this example, parking difficulties, rude sales people and poor lighting were hurting his
business most. Following the Pareto Principle, those are the areas where he should focus
his attention to build his business back up.

Understanding the Pareto Principle (The 80/20 Rule):

Originally, the Pareto Principle referred to the observation that 80% of Italy’s wealth
belonged to only 20% of the population.

More generally, the Pareto Principle is the observation (not law) that most things in life are
not distributed evenly. It can mean all of the following things:

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Sikkim Manipal University - MBA - PM0010 - Introduction to Project Management

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 20% of the input creates 80% of the result

 20% of the workers produce 80% of the result
 20% of the customers create 80% of the revenue
 20% of the bugs cause 80% of the crashes
 20% of the features cause 80% of the usage

The Pareto Principle is an observation, not a law of nature.

d) Scatter diagram:

A scatter diagram is a tool for analysing relationships between two variables. One variable
is plotted on the horizontal axis and the other is plotted on the vertical axis. The pattern of
their intersecting points can graphically show relationship patterns. Most often a scatter
diagram is used to prove or disprove cause-and-effect relationships. While the diagram
shows relationships, it does not by itself prove that one variable causes the other. In
addition to showing possible cause and-effect relationships, a scatter diagram can show
that two variables are from a common cause that is unknown or that one variable can be
used as a surrogate for the other.

Scatter diagram is used to examine theories about cause-and-effect relationships and to

search for root causes of an identified problem. It can also be used to design a control
system to ensure that gains from quality improvement efforts are maintained.

In the above example, the points are plotted by assigning values of the independent
variable X to the horizontal axis and values of the dependent variable Y to the vertical axis.
The pattern made by the points plotted on the scatter diagram usually suggests the basic

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Sikkim Manipal University - MBA - PM0010 - Introduction to Project Management

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nature and strength of the relationship between two variables. The scatter diagram also
shows that, subjects with large waist circumferences also have larger amounts of deep
abdominal AT. These impressions suggest that the relationship between the two variables
may be described by a straight line crossing the Y-axis below the origin and making
approximately a 45-degree angle with the X-axis.

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