PROGRAM MBA - SEMESTER IV

SUBJECT CODE & NAME - PM0015 QUANTITATIVE

METHODS IN PROJECT MANAGEMENT
1.

Explain Business Value Models in detail.

Answer:
(I) Balanced scorecard model
The balanced scorecard model defines four scoring areas for business value
and was first published by Robert S. Kaplan and David P. Norton in an article, The
Balanced Scorecard Measures that Drive Performance. The model was
developed as a replacement for earlier systems; those only included the financial
perspective to measure performance. The business scorecard model is an
educational, informational, and communication instrument, instead of being a
controlling instrument. As the name of the model suggests, it is a balance
between the internal and external factors of the company. Areas present on the
scorecard are referred to as perspectives, namely, financial perspective,

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2.
What is parametric estimating? Explain the
steps involved in the development of a parametric
model.
Parametric Estimating

Parametric estimating is an estimating technique that uses a statistical

relationship between historical data and other variables, such as square
footage in construction and lines of code in software development for
calculating an estimate for activity parameters, such as scope, cost, budget,
and duration. Parametric estimating can produce higher levels of accuracy
depending upon the accuracy and sophistication of the underlying data. This
technique is used for estimates that are quantitatively based such as dollars per
square foot or number of installations per day. It is relatively a simple method, but
not every activity or cost can be estimated quantitatively. This method is also

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3. What is Capital Budgeting? What aspects of

capital budgeting must be considered while
selecting a project?
Meaning of Capital Budgeting
Capital budgeting is a cost-benefit analysis. In simple words, it means that if
a company purchases an asset or makes any investment, it needs to ensure
that benefits to the company are greater than the total cost. In
essence, capital budgeting compares the cash inflows and outflows in
a project.
Capital budgeting also assists project managers to evaluate whether to
continue or discontinue with a project. Let us have an overview of the

steps involved in the capital budgeting process. First, we need to list all
the cash flows in a project. This is a difficult task

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4. Explain the concept and application of Earned

Value. What is Time Centric Earned Value.
Application of Earned Value
If a project is fairly complex, EVM can assist in controlling the performance. By
providing cost and schedule performance assessments of both the total project and
its major parts, EVM allows identifying the likely problem areas so that an effective
corrective action can be taken.
The viability of EV in measuring SV can be seen clearly in the illustration shown
in fig:

Part a of above figure shows a two-task project experiencing schedule

slippage. The first task, valued at $700, is complete, but the second task, valued
at $300, is only partially complete.

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5. Explain Benefit-Cost Ratio Analysis and BreakEven Analysis.

Benefit-Cost Ratio Analysis
BCR analysis refers to an approach that compares the cost to be incurred
and financial benefits to be received from a project. It is conducted to make
project decisions. BCR analysis involves weighing total expected costs and
expected benefits to select the most profitable option. An accurate
estimation of costs and benefits would result in an accurate outcome of the
BCR analysis.
A BCR indicates the overall value of money invested in a project. In simple
words, BCR refers to the ratio of the benefits of a project proposal to
its costs (both expressed in monetary terms). All the costs and
benefits are expressed in terms of present value. If the

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6. What are the steps that should be followed to

construct a house of quality?
House of Quality
The following steps need to be followed to construct a house of quality:
Step-1 Voice of the customer: This step includes determining and
identifying the customers needs. The main objective of this step is to
translate the needs of every customer into engineering specifications.
Customers buy products that have the desired characteristics, and
manufacturers offer the desired characteristics. There should be a proper
alignment between the needs of the customers and the offerings of the
manufacturer.
After determining the most important features, their translation into particular
specifications is carried out. Each aspect, such as heights, torques, weights, etc., of
the desired item must be defined. For

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