Project Management Basics

PROJECT MANAGEMENT NOTES
Paper IV (Elective) : Project Management
1) The reference books as specified in the syllabi will be followed except the book
project management by M. Pete Spinner.
2) Question pattern was discussed. There will be a 20 mark compulsory question

on case study. The case study will deal with the important points of project
management.
3) Other than the compulsory question, there will be six questions out of which
students will attempt any 4. each question for 20 marks. The question will have
only 2 divisions of a & b of 10 marks each.
4) The syllabi depth was discussed in each topic. There are some notes of IGNOU
for some topic like the feasibility study.
5) The weight-age of marks was also discussed upon.
There are totally 10 topics in which topic 1 & 2 for 20

3 for 10
4 for 10
5 for 10
6 for 20
7& 8 for 10
9 & 10 for 20
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100
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Project Management – The Basics 3
1. Project Management - The Basics
This section of the Tasmanian Government Project Management Guidelines includes:

What is a project?
What is project management?
What are the Key Elements that must be considered no matter what the size and
complexity of the project?
A generic high-level conceptual view of the life of a project which links the key project
management documents to each stage.
Why is it important to determine project size?
1) What is a Project?
• A project involves a group of inter-related activities that are planned and
then executed in a certain sequence to create a unique product or service
within a specific time frame.
• Projects are often critical components of an organization’s business
strategy or relate directly to policies and initiatives of the Government.
Project consists of a group of interlinked activity. It has been defined in various
ways.
1) By Harrison –
A project can be defined as non-routine, non repetitive one off undertaking,
normally with discrete time, financial and technical performance goals.
2) By Dennis-Lock –
A project is a single, non- repetitive enterprise, it is usually undertaken to
achieve planned results within a time limit and cost budgets.
3) By little & Mirrlees – A project is any skill or part of a skill for investing
resources which can be reasonably be analyzed and evaluated is an independent
unit.
Projects vary in size or complexity, for example they may:
• Involve changes to existing systems, policies, legislation and/or

procedures;
• Entail organizational change;
• Involve a single person or many people;
• Involve a single unit of one organization, or may cross organizational
boundaries;
• Involve engagement and management of external resources;
• Cost anywhere from $10,000 to more than a $million;
• Require less than 100 hours or take several years.
Why Project Management
Companies have experienced:

- Better control
- Better customer relations
- Shorter development times
- Lower costs - Higher quality and reliability
- Higher profit margins
- Sharper orientation toward results
- Better interdepartmental coordination
- Higher worker morale
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2) What are the essential characteristics?
A significant project in the Tasmanian State Government is usually

characterized as having:
1. Definable, measurable project outcomes that relate to the corporate goals;

2. Project outputs (required for the attainment of the project outcomes)
produced by a Project Team(s); project governance structure; well defined
Project Team(s); and criteria to measure project performance.
3. The structure of a project will vary depending on the benefits it is intended

to provide. To achieve these benefits, a project may need to be structured
into a number of sub-projects.
3) What is Project Management?
1. Project Management is a formalized and structured method of managing

change in a rigorous manner. It focuses on achieving specifically defined
outputs that are to be achieved by a certain time, to a defined quality and
with a given level of resources so that planned outcomes are achieved.
Effective project management is essential for the success of a business
project.
2. The application of any general project management methodology requires
an appropriate consideration of the corporate and business culture that
forms a particular project's environment.
Q.1) what is a project?
A) 1) A project is initiated to achieve a mission. A project is completed as soon as

the mission is fulfilled.
2) A project is a one-shot; time limited, goal-directed, major undertaking,
requiring the commitment of varied skills and resources.
3) It can also be described as the combination of human and non-human resources
pooled together in a temporary org. to achieve a specific purpose. The purpose
and the activities that can achieve the project distinguish one project from the
other.
4) A temporary endeavor undertaken to create a unique product or service.
5) Projects have some attributes like:
1) Purpose – A project has a well-defined set of desired end results.

2) Lifecycle – Most projects go through similar stages on the path from origin to
completion. These stages like conception, Selection, Planning, scheduling, monitoring,
control, evaluation and termination etc. are termed as the project life cycle.
3) Interdependencies – Projects often interact with other projects being carried out
simultaneously by their parent organization. They also interact with the standard
ongoing operations of the parent organization.
4) Uniqueness – Every project has some elements that are unique.
5) Conflict – Projects always causes conflict in the organization as they compete with
functional departments or other projects for resources.
6) Projects have three general objectives namely Performance, time and cost.
Q.2) Discuss the need of project management.
1. There is a rapid increase in number of firms that use projects as the way of
accomplishing almost everything they undertake and achieve their profit objectives.
Work in the context of a project is not mere conversion of input to output but work is
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done when the objective for which the work was undertaken is achieved. This concern
for achieving the objectives is the motivating force for the Project Management.
2. Three forces that lead to the emergence of project management are:
a. Exponential expansion of the human knowledge.
b. Growing demand for a broad range of complex, sophisticated,
customized goods and services.
c. The evolution of world wide competitive markets for the production and
consumption of goods and services.
d. This greatly increases the complexity of the goods and services, which in
turn leads to the need for more sophisticated systems to control both outcomes and
processes.
3. Also due to the above-mentioned forces large teams are necessary for solving
problems, which calls for a high level of coordination and cooperation between
groups of people not particularly used to such interaction. Traditional
organization structures and management systems are not adequate
to the task of successfully managing such large and diverse teams. Project
management is.
Q.3) what are the different types of projects?
A) Projects are often categorized in terms of their speed of implementation. They can
be classified as:
1) Normal Projects:
• Adequate time is allowed for the implementation of the project.
• All phases in the project are allowed to take the time they should normally.
• Requires minimum capital cost and no sacrifice in terms of quality.
2) Crash Projects:
• Additional capital costs are incurred to gain time.
• Maximum overlapping of project phases is encouraged.
• There may be compromises in terms of quality.
• Time required may be less than normal.
3) Disaster Projects:
• Capital costs are high.
• Quality is compromised.
• Project time will be drastically reduced.
Q.4) what are the advantages of project management?

A)
1) Use of Project Management gives relatively good outputs with respect to
Performance, Time & Cost.
2) Better control.
3) Better Customer relations.
4) Increase in the project’s ROI.
5) Shorter development times.
6) Lower costs.
7) Higher quality and reliability.
8) Higher profit margins.
9) Orientation towards results.
10)Better interdepartmental coordination.
11)Higher worker morale.
12)Faster communication.
13)Proper resource management and utilization.
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Q.5) What are the disadvantages of project management?

A)
1) Greater organizational complexity.
2) Organizational policy could be violated.
3) Higher costs.
4) More management difficulties.
5) Low personnel utilization.
Q.6) Describe the project life cycle in terms of:

Degree of project completion(fig 1.3 on page 14,fig 1.5 on page 16 – Meredith &
Mantel). Required effort (fig 1.4 on page 15 – Meredith & Mantel). Answer on page nos. 14,
15,16 – Meredith & Mantel.
Q.7) Describe the goals or objectives of the project.
A) Objectives or goals of any project are:

1) Performance
2) Time
3) Cost
4) Client Satisfaction
5) Profit
Q.8) Describe the project life cycle phases.

A) By & large all the projects have to pass through the following 5 phases:
1) Conception.
2) Definition.
3) Planning & Organization.
4) Implementation phase.
5) Project clean up phase.
1) Conception phase:
This is the phase where the project idea germinates. The ideas need
to be analyzed before they can be considered and compared to
competitive ideas. This phase should not be avoided or the project
will contain innate defects. A well conceived project would have a
successful implementation and operation.
2) Definition phase:
Idea generated during the conception phase is developed during this
phase. A feasibility report is prepared so that all the concerned
parties can make up their minds on the project idea. This phase
clears out the ambiguities and uncertainties associated with the
conception phase. This phase also establishes the risks involved in
going ahead with the project. A project may be either accepted or
dropped in this phase. A project is said to be born only after it has
been cleared for implementation at the end of the definition phase.
3) Planning & Organizing phase:

This phase can effectively start only after the definition phase but in
practice it starts almost immediately after the conception phase. This
phase overlaps so much with the conception and the implementation
phases that no formal recognition is given to this by most
organizations.
But some organizations prepare a document called the Project
Execution Plan (PEP) to mark this phase. This document deals with
the basics of the project that has to be implemented. It is therefore
essential that this phase is completely gone through before the
implementation phase. If the project jumps into the implementation
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phase without freezing the basics, the projects are bound to falter
and flounder if not fail altogether.
4) Implementation phase:
This is the first time that the project is visible. 80-85% of the work is
completed in this phase. The stakeholders want this phase to start as
early as possible and terminate in as short a time as possible. The
techniques of project management are applied to this area
essentially. This phase has a high need for coordination & control. All
the time lost in the earlier planning phases will be made up in the
implementation phase.
5) Project Clean-up phase:

The drawings, documentation and the operation & maintenance
manuals must be catalogued and handed over to the customer.
Project accounts are closed, outstanding payments are made and
dues are collected during this phase. The most important issue in this
phase is the planning of staff and workers involved in the project. All
project personnel cannot be suddenly asked to go and hence the
preparation for this phase has to start a long time before.
Diagram on Pg.10 of Choudhury.
Q.9) What are the limitations of project management?
1. Mere creation of the project may be an admission that the parent organization
and its managers cannot accomplish the desired outcomes through the functional
organization.
2. In a project organization conflicts are way of life.
3. It needs more sophisticated and expensive technological support as well as
clerical staff and skilled personnel to implement project management.
4. The Project Manager often lacks authority that is consistent with the level of
responsibility which some times leads to frustration.
5. Project groups seem to foster inconsistency in the way in which policies and
procedures are carried out.
Q.10) Describe the project management approach.

A) The project management approach basically consists of 5 steps:
1. Grouping the work into packages that are related to each other.
2. Entrusting the whole project to a single responsibility center known as the
Project Manager for managing the various project processes.
3. Supporting & servicing the project internally within the organization by
matrixing or through total projectisation, and externally through vendors & contractors.
4. Building up commitment through negotiations, coordinating and directing
towards goals through schedules, budgets & contracts.
5. Ensuring adherence to goals through continuous monitoring and control.
Q.11) How do projects, programs, tasks and work packages differ?
A) Programs are exceptionally large, long-range objectives that are broken down into a
set of projects. A project is further divided into tasks, which are split into work packages
that are composed of work units.
1.1. The Life of a Project
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A high-level project management approach that fits most projects at a macro

level is presented diagrammatically in Figure 1. It should be emphasized that this
model represents an over-simplification of most projects, but is included to make
sense of what can be a quite messy and non-linear process in reality.
Figure 1: High-level conceptual view of the generic life of a project
1) INITIATE:
• Project initiatives may originate directly from Government policy or from

an Agency's corporate and business unit planning processes that in turn is
driven by Government policy. Other new initiatives may be identified
outside these processes, due to changes in Government policy or other
external factors, or just a good idea!
• Projects are usually justified in terms of corporate objectives and should

be closely aligned to them. This alignment is explored through initial
scoping and planning documents, such as the Feasibility Report, the
Project Proposal/Brief or the Project Business Case.
• Once a project is approved and funded, there is an initial Set Up period

involving the appointment of the Project Manager and team, and the
organization of the resources required to produce the outputs. This period
must be allowed for in any initial planning. If the project is not approved,
obviously it will not continue to the other phases.
2) MANAGE
This is viewed as the most productive (and hectic) phase that involves the
production of the project outputs. Ongoing management of the stakeholders,
risks, quality, resources, issues, and work of the project is indicative of this period
in the life of the project. The main management documents are the Project
Business Plan and the Project Execution Plan. At the same time, the business
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unit(s) is preparing to make the changes necessary to utilize and manage the
outputs. This is documented in the Outcome/Benefits Realization Plan.
3) FINALISE
Closing a project involves the handover of the project outputs to the Project
Business Owner for utilization, in order to generate the project outcomes. The
strategies to support the change management process, and appropriate methods
of measuring and reporting the progress toward achieving these benefits, are
documented in the Outcome/Benefits Realizations Plan. After the project's success
has been evaluated, the Steering Committee formally closes the project and
celebrations can commence. This is the phase that involves moving from the
project (operational) activities to the ongoing business operational (transactional)
activities.
Table 1 further describes the relationship of the documentation to each of the

Project Life Phases. Project Documentation is detailed in Section 13.
PHASE Initiate
Document Project Feasibility Report Project Business Case
Proposal/Brief
Purpose Converts an idea A report that is A one-off, start-up document used
or policy into the developed as a by senior management to assess
details of a result of a the justification of a proposed
potential project. feasibility study, to project, or the development
determine whether options for a project that has
the initiative has already received funding.
sufficient merit to
continue.
Owned by Project Proposer or Project Proposer or Project Sponsor
Sponsor Sponsor
Produced by Responsible Officer Responsible Officer Project Officer
Accepted / Cabinet Cabinet Cabinet
endorsed by Senior Senior Senior Management
Management Management Line Manager
Line Manager Line Manager
PHASE Manage Finalise
Document Project Business Project Execution Outcome/Benefits Realisation Plan
Plan Plan
Purpose The high-level The 'road map' Describes how the project outputs
management used by the will be utilized by the business
document for the Project Team to unit(s) in order for the benefits of
project. It is deliver the agreed the project to be realized.
utilized by the project outputs.
Steering
Committee to
ensure the delivery
of defined project
outcomes.
Owned by Steering Project Manager Steering Committee
Committee
Maintained by Project Manager Project Manager Business Owners
Produced by Project Manager Project Manager Business Owners
Project Team Project Team
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Accepted / Steering Project Sponsor Steering Committee

endorsed by[1] Committee Senior Senior Management
Senior Management Line Manager
Management Line Manager
Line Manager
Table 1: Main Documents and Project Life Phases
1.2. Key Elements in the Project Life
Details the Key Elements that the Project Manager needs to consider no matter
what the size or complexity of the project. The extent to which each of these is
documented depends once again upon the size and complexity of the project.
Many of these Key Elements exist in an embryonic state in the Initiation Phase
and are further developed if the project progresses through the other two phases.
Figure 2: Key Elements in the Project Life
Below is a brief explanation of each of these Key Elements:
a) PLANNING AND SCOPING:
No matter how small the project, a clear definition and statement of the areas of
impact and boundaries of the project needs to be established. The scope of the
project includes the outcomes, customers, outputs, work and resources (both
human and financial). For larger projects, this should be fully detailed in the
Project Business Plan. For smaller projects, a Project Plan with a brief description
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of each of these with a timeframe for implementation may be all that is required.
(Refer to Section 2: Planning and Scoping and Section 13: Documentation)
b) GOVERNANCE
It is important to establish the management structure for the project that

identifies the specific players, their roles and responsibilities, and the interaction
between them for the life of the project. For small projects, this may only be the
Project Manager and a senior or Line Manager. For larger projects, it will be
necessary to establish a more formalized Governance structure as outlined in
Section 3: Governance of the Guidelines.
c) ORGANISATIONAL CHANGE MANAGEMENT
Organizational Change Management is the management of realigning an

organization to meet the changing demands of its business environment,
including improving service delivery and capitalizing on business opportunities,
underpinned by business process improvement and technologies. It includes the
management of changes to the organizational culture, business processes,
physical environment, job design/responsibilities, staff skills/knowledge and
policies/procedures. Project management methodology is often used to bring
about change to the business processes within an agency or organization. Any
project planning activities must consider the amount of organizational change
required to deliver the project outputs and realize the project outcomes. For
smaller projects, this may not be formally documented, except in any
implementation plans developed. For larger projects, planning for this change is
closely linked with Stakeholder Management, Communication Strategy and
Outcome/Benefits Realization Planning. (Refer to Section 4: Organisational
Change Management)
d) STAKEHOLDER MANAGEMENT
Stakeholder Management involves the identification of people or organizations

who have an interest in the project processes, outputs or outcomes, and planning
for how their involvement will be managed on an ongoing basis. This may be done
very quickly for a small project, whereas a larger, more complex project will
require a formal stakeholder analysis, documentation of a Stakeholder
Management Plan and ongoing monitoring and review of progress. This is closely
related to Communication Strategy and Planning. (Refer to Section 5:
Stakeholder Management)
e) RISK MANAGEMENT
Risk Management is the process concerned with identifying, analyzing, and

responding to project risk. It consists of risk identification, risk quantification, risk
response development, and risk response control. For smaller projects, a brief
scan and ongoing monitoring may be all that is required. For larger projects, a
formalized system for analyzing, managing and reporting should be established.
(Refer to Section 6: Risk Management)
f) ISSUES MANAGEMENT
Issues Management involves monitoring, reviewing and addressing issues or

concerns as they arise through the life of a project. If issues are not
addressed they may become a risk to the project. For smaller projects, a brief
scan and ongoing monitoring may be all that is required. In larger projects, it
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is advisable to maintain an Issues Register and this should be reported upon

regularly to the Steering Committee. (Refer to Section 7: Issues Management)
g) RESOURCE MANAGEMENT
Planning for managing the people, finances, and physical and information
resources required to perform the project activities is vital no matter what the
project size or complexity. For smaller projects, this may not be documented,
but for larger projects detailed documentation will enable better management
of the resources, as well as transparency for the key stakeholders. Formalized
monitoring and reporting on progress against budget is an important element
in reporting to the Steering Committee in larger projects. (Refer to Section 8:
Resource Management)
h) QUALITY MANAGEMENT
Quality Management is the policy and associated procedures, methods and

standards required for the management of projects. The purpose of quality
management is to increase certainty by reducing the risk of project failure. It also
provides the opportunity for continuous improvement. For larger projects,
formalized procedures must be in place for issues management, risk
management, stakeholder management, resource management, time/task
management and formalized project status reporting. These Quality Management
procedures need to be planned for by the Project Manager, just as importantly as
the actual work of the project. For smaller projects, these procedures may not be
formalized, but should be scanned for during the life of the project. (Refer to
Section 9: Quality Management)
i) STATUS REPORTING
Formalized regular reporting on the status of the project, with regard to project
performance, milestones, budget, issues and risks, is a major requirement for
larger projects. This is usually to the Business Owner, Project Sponsor and
Steering Committee. The frequency of this reporting varies. With very small
projects, this may consist of fortnightly consideration of any issues that could
affect progress and a regular meeting with the Senior Manager/Project Sponsor.
For larger projects, this forms an integral part of the quality management of the
project. (Refer to Section 10: Status Reporting)
j) EVALUATION
No matter what the size or complexity of the project, the measurement of project
success against well-defined criteria is necessary. Criteria established will help to
determine whether the project is under control, the level of adherence to
documented plans, methodologies and standards, and achievement of outcomes.
For smaller projects, evaluation might consist of ongoing monitoring through
discussions with the 'line' manager and affected staff, with a debriefing at the
end. For larger projects, formalized reviews, both during the project, at the end of
major phases, and post completion, are highly recommended. (Refer to Section
11: Evaluation)
k) CLOSURE
The closing down of a project needs to be planned for. Essentially, successful

project finalization involves formal acceptance of project outputs by the Business
Owner, an internal review of project outputs and outcomes against the Project
Business Plan, disbanding the team and 'tying up loose ends'. In a large or
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complex project, an external post-completion review/audit before formal closure

by the Steering Committee often occurs. The extent to which procedures for
closure are formalized depends upon the nature and size of the project. (Refer to
Section 12: Closure)
Table 2 broadly summarizes where each of these Key Elements sit within the Life
of a Project.
Key Element INITIATE SET MANAGE FINALISE
UP
Planning & Scoping 
Governance   
Organisational Change   
Management
Stakeholder   
Management
Risk Management   
Issues Management  
Resource Management  
Quality Management  
Status Reporting  
Evaluation  
Closure 
Table 2: Key Elements in the Life of a Project
4) Why is it important to determine project size?
1. One of the major problems facing any project is the extent to which the
Key Elements of the project management methodology should be prepared
and the level of detail in any of those elements. It is not appropriate for all
projects to do all project management activities to the same level of detail
and with the same level of discipline.
2. The Project Sponsor or Project Officer preparing the Project Proposal/Brief

and/or the Project Business Case makes an initial determination of the
project size. Once a project has been approved and funded and a Project
Manager appointed, the size of the project should be formally determined.
One of the first tasks for a Project Manager is to determine the size of the
project.
3. As the size of the project will determine the level of detail and discipline of
project management activity to be applied, it is important that the project
size is approved. For a small project, the Project Sponsor should approve
the level of application of the project management methodology.
4. For a medium or large project, the proposed project sizing and level of
application of the project management methodology should be approved
by the Steering Committee.
5. The result of the process should be a clearly defined and accepted

agreement as to how the project will be managed and the level of detail
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and discipline that will be employed. (Refer to the Project Management

Fact Sheet: Project Sizing)
Project Plan
- The final approved result of this procedure is the project plan, also known as a
Master or Baseline plan
- Once planning phase is complete, it is beneficial to hold a post-planning review
- The major purpose of the review is to ensure that all necessary elements of a
project plan have been properly developed and communicated
Project Plan Elements

The process of developing the project plan varies among organizations, but any
project plan must contain the following elements:
a. Overview - a short summary of the objectives and scope of the

project
b. Objectives - A more detailed statement of the general goals noted
in the overview section.
c. General Approach- describes both the managerial and technical
approaches to the work.
d. Contractual Aspects - includes a complete list and description of
all reporting requirements, customer supplied resources, liaison
arrangements, advisory committees, project review and
cancellation procedures, etc.
e. Schedules - this section outlines the various schedules and lists all
the milestone events
f. Resources - this includes the budget (both capital and expense
requirements) as well as cost monitoring and control procedures
g. Personnel - this section lists the expected personnel requirements
of the project including special skill, training needs, and security
clearances
h. Evaluation Methods - every project should be evaluated against
standards and by methods established at the project's inception
i. Potential Problems - this section should include any potential

difficulties such as subcontractor default, technical failure, tight
deadlines, resource limitations and the like.
Budgeting and Cost Estimation
1. The budget serves as a standard for comparison

2. It is a baseline from which to measure the difference
between the actual and planned use of resources
3. Budgeting procedures must associate resource use with
the achievement of organizational goal or the
planning/control process become useless
4. The budget is simply the project plan in another form
Estimating project Budgets
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In order to develop a budget, we must:
Forecast what resources the project will require

Determine the required quantity of each- Deiced when they will be need
Understand how much they will cost – including the effects of potential price
inflation
There are two fundamentally different strategies for data gathering: -
Top-down - Bottom-up
Top-Down Budgeting- This strategy is based on collecting the judgment and

experiences of top and middle mangers
- These cost estimate are then given to lower level mangers , who are expected
to continue the breakdown into budget estimates
- This process continues to the lowest level
- Advantages: 1) Aggregate budgets can often be developed quite accurately

2) Budgets are stable as a percent of total allocation
3) The statistical distribution is also stable , making for high predictability
4) Small yet costly tasks do not need to be individually identified
5) The experience and judgment of the executive accounts for small but
important tasks to be factored into the overall estimate
Bottom-Up Budgeting
In this method elemental , tasks their schedules , and their individual budgets
are constructed following the WBS or the project action plan
The people doing the work are consulted regarding times and budgets for the
tasks to ensure the best level of accuracy
Initially , estimates are made in terms of resources , such as labor hours and
materials
Bottom-Up budgets should be and usually are , more accurate in the detailed
tasks , but it is critical that all elements be included
Budgeting
Top-Down budgeting is very common

True bottom-up budgets are rare
Senior managers see the bottom-up process as risky
They tend not to be particularly trusting of ambitious subordinates who they fear
may overstate resources requirements
They are reluctant to hand over control to subordinates whose experience and
motives are questionable
Scheduling
- A schedule is the conversion of project action plan into an operating timetable

It serves as the basis for monitoring and controlling project activity
- Taken together with the plan and budget , it is probably the major tool for the
management of projects
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- In a project environment , the scheduling function is more important than it

would be in an ongoing operation
- Projects lacks the continuity of day-to day operation and often present much
more complex problems of coordination
- The basic approach of all scheduling techniques is to form a network of activity
and event relationships
- This network should graphically portray the sequential relation between the
tasks in a project
- Tasks that must precede or follow other tasks are then clearly identified , in
time as well as function
- Such networks are a powerful tool planning and controlling a project
and have the following benefits:
a) It is a consistent framework for planning , scheduling , monitoring , and
controlling the project
b) It illustrate the interdependence of all tasks , work packages , and work
elements
c) It denotes the times when specific individuals must be available for work on a
given task
d) It aids in ensuring that the proper communication take place between
departments and functions
e) It determines an expected project completion date
f) It identifies so-called critical activities that , if delayed , will delay the project
completion time
g) It identifies activities with slack that can be delayed for specific period without
penalty
h) It determines the dates on which tasks may be started – or must be started if
the project is to stay on schedule
i) It illustrate which must be coordinated to avoid resource timing conflicts
k) It illustrates which tasks may run , or must be run , in parallel to achieve the
predetermined project completion date
l) It relieves some interpersonal conflict by clearly showing task dependencies
PERT and CPM

• With the exception of Gantt charts , the most common approach to scheduling
is the use of network techniques such as PERT and CPM
• The Program Evaluation and Review Technique was developed by the U. S.
Navy in 1958
• The critical Path Method was developed by Dumont , Inc during the same time
period ]
• PERT has been primarily used for research and development projects
• CPM was designed for construction projects and has been generally embraced
by the construction industry
• The two methods are quite similar and often combined for educational
presentation
Terminology
• Activity – A specific task or set of tasks that are required by the project , use
up resources , and take time to complete
• Event – The result of completing one or more activities. An identifiable end
state occurring at a particular time. Events use no resources
• Network – The combination of all activities and events define the project and
the activity precedence relationships
• Path – The series of connected activities (or intermediate events) between
any two events in a network
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• Critical – Activities , events , or paths which , delayed , will delay the

completion of the project. A project’s critical path is understood to mean that
sequence of critical activities that connect the project’s start events to its finish
event
Drawing Networks
Activity – on – Arrow (AOA) networks use arrows to represent activities while

nodes stand for events
Activity –on- Node (AON) networks use nodes to represent activities with arrows
to show precedence relationships
The choice between AOA and AON representation is largely a matter of personal
preference
- Greater organizational complexity - Increased likelihood of organizational
policy violations - Higher costs - More management difficulties
- Low personnel utilization
Human Factors and the Project Team

1. Meeting schedule and cost goals, without compromising performance is a
technical problem, with a human dimension
- Project professionals tend to be perfectionists
- Pride in workmanship leads the team member to improve (and thus change) the
product
- These changes cause delays in the project
2. Motivating Project team Members:

The project manager often has little control over the economic rewards and
promotions of project team members, but this does not mean he/she cannot
motivate members of the team
How are technical employees motivated?
A. Recognition
b. Achievement
c. The work itself
d. Responsibility
e. Advancement
f. The chance to learn new skills
3. Empowerment of project teams is also a motivational factor: a. It

harnesses the ability of team members to manipulate tasks so that project
objectives are met The team is encouraged to find better ways of doing things
b. Professionals do not like being micromanaged Participative management does
not tell them how to work but given a goal, allows them to design their own
methods
c. The team members know they are responsible and accountable for achieving
the project deliverables
d. There is good chance that synergistic solutions will result from team interaction
e. Team members get timely feedback on their performance
f. The project manager is provided a tool for evaluating the team’s performance
2.Project manager
Following qualities that should be considered while selecting project
manager:
1. Strong technical background
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2. Mature individual
3. Someone who is currently available
4. Someone who keeps good terms with senior executive.
5. A person who can keep the project team happy
6. One who has worked in several different dept.
7. One who can accept new challenges
8. One who can get job done
Following points are very important from project manager view:
1. Credibility : The PM needs to know two kinds of credibility.

a) Technical credibility :
perceived by the client, snior executives, the functional departments, and the
project team as possesing suffiecient technical knowledge to direct the project.
b) Administrative credibility:
keeping the project on schedule and within costs and making sure reposrts are
accurate and timely. Must also make sure the project team has material,
equipment and labor when needed.
2. Sensitivity : These are several ways for project managers to display

sensitivity:
- Understanding the organization’s political structure
- Sense interpersonal conflict on the project team or between team members and
outsiders
- Does not avoid conflict, but confronts it and deals with it before it escalates
- Keeps team members “Cool”
- Sensitive set of technical sensors
3. Leadership and Management Style : Leadership has been defined as:
a) “Interpersonal influence, exercised in situation and directed through the
communication process, toward the attainment of a specified goal or goals.”
B) Other attributes may include:

- enthusiasm - optimism – energy - tenacity - courage - personal
maturity
4. Ability to Handle Stress :
Four major causes of stress associated with the management of projects:
1. Never developing a consistent set of procedures and techniques with

which to manage their work
2.. Many project managers have “too much on their plates”
3. Some project managers have a high need to achieve that is

consistently frustrated
4. The parent organization is in the middle of major change
Criteria for project selection models. SOUDER criteria

1. Realism:
The model should reflect the reality of managers decision situation. Consider
an example where project A may strengthen a firms market share by
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extending its facilities and project B might improvr its competitive position by
strengthening its technical staff. Question comes which is better? The model
should take into account the realites of firm’s limitation on facilites, capital
and personal. The model should also include factor that reflect project factor
risk including the technical risk of performance cost and time as well as
market.
2. Capability:
The model should be sophisticated enough to deal with multiple time

periods. Simulate various situation both internal and external, For eg :
strikes, interest rate etc. A optimising model will make comparision &
consider major risk & they select best overall project or send off project.
3. Flexibility:
The model should give valid results within the range of condition. It should have
the ability to be easily modified or be self aadjusting in response to changes in
firms enviornment. For eg: Tax law change or new technological advancement
in that case the organizational core may change.
4.Ease of use:
The model should be reasonably convinient and not take long time to execute. It
should be easily understood. It should have special interpretation. The models
variables should also realte one to one with real world parameters and it should
be easily to simulate the expexted outcomes associated with investment in
different projects.
2. Cost: Data gathering and modeling cost should be low related to the cost
of project and must be surely be less than potential benefits of the project. All
cost should be considered including the cost of data mgmt. and running the
model.
3. Easy computerization: It must be easy and convinient to gather and

store the info. on computer and to manipulate the data with the s/w’s like Excel
etc. and some decision should be made.
Types of project selection models.
A. There are two basic selection model:1) Numeric and 2) Non Numeric
I. Non Numeric Model:
1.Operating Necessity:
If the project is required in order to keep the system operating, the primary
question becomes is the system worth saving at the estimated cost of project
and if the answer is ‘Yes’, project cost will be examined to make sure they are
kept as low.
2.The product line extension:

In this case a project to develop and distribute new products would be judged
on the degree to which it fits the firms existing product line. Sometimes careful
calculations of profit are not required. Decision makers can act on their belief
about what will be the likely impact on the total system performance if a new
product is added to the line.
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3. Competitive Necessity: Based on the competition i.e. what other companies

are doing, a new product is launched to give extra benefit. This requires a
careful market research.
4.Comparative Benefit Model: In an organization there may be several

projects, the senior mgmt. woild like to select a subset of the project that
would benefit the firm, but the project do not seem to be easily caparative. In
such case Q-sort technic is used which can be explanied from the following
diagram.
Diagram:
a) For each paricipant assemble a deck of card with name and description of one
project on each card
b) Instruct each participant to divide the deck into two piles, one is high priority
other is low priority
c) Instruct each participant to select cards from each piles and classified as
medium level pripority.
D) Instruct each participant to select fromhigh level pile to form very hig hlevel
priority cards and similarly from low level classify as low level priority. Now a
sequence is formed in pripority order with very high priority as first and high
priority as second etc. From these sequence select the required project.
II. Numeric Model:
1. Payback Period:
The payback period for a project is the initial fixed investment in the project
divided by the estimated annual cash inflows from the project.For eg: If the
project costs Rs. 100000 and the annual cash inflow is 25000, then the
payback period is 100000/25000 = 4 yrs.
2. Average rate of return:

It is the ratio of average annual profit to the initial investment. For Eg:
Suppose a project cost Rs. 100000 and 10000 is average return. The n average
rate of return is 10000/100000 = 0.1
4. Discounted Cash flow:
It is calculated from the formula: NPV(project) = A0 + nEt=1 Ft/(1+K+Pt)t

{NPV = Net Present value of project}
Take an example at Rs. 100000 is invested in project and net cash flow is
25000 per year for a period o 8 yrs and the requires rate of return is 15% with
an inflation rate of 3% then the net presetn value of the project is NPV =
-100000+ nEt=1 25000/I1+.15+.03)8 = 1938 If the NPV values comes
positive then the project is accepted otherwise rejected.
3.PROJECT ORGANIZATION:
1)Functional Organization:
Advantages:
1. Max. flexibility in the use of of staff.
2. Individual experts can be utilized with different projects.
3. Experienced people cqan share knowledge
4. Functional division help in development of individual.
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Disadvantage:
1. Client is not the focus of activity because the functional event has its own work
to do.
2. The functional division tends to oriented towards activity particular to its
function. 3. In functional organization no individual is given full
responsibilty of project, this might cause failure in the project.
4. Lack of coordination because there are several layers of management with the
project and client.
5. Motivation of people assigned to project tends to be weak because the project
is not the main stream of activity.
2) Pure Project Organization
Advantages:
1. The project manager has full line of authority over the project though the
project manager must report to senior executive.
2. All the members of project work are directly under the cntrol of project
manger. There are no no functional division head whose permission is required.
3. When the project is removed from the functional division, the line of
communication is shortned and the entire function of structure is bypassed and
the PM communicates directly with senoir managers.
4. When there are several successive projects of similar kind the pure project
organization, it can make permanent experts who develop skill in specific
technologies and the existance o such skill will attract the customers.
5. The project team that has strong and separate identity of its own tends to
develop a high level of commitment for its members as the motivation is high.
6. Unity of command exists.
Disavantages:
1. When the organization takes several projects it is common for each one to be
fully staffed. This can lead to duplication of effort in every area.
2. Removing the project has disadvantages in the sense the individual experts are
removed who could have been utilized for other work in the organization.
3. There is a common insecurity among the people that what will be the situation
after the project ends.
4. Communication gap is high because it makes an isolated system.
3) Matrix Organization
Diagram:
Matrix organization takes the advantage of pure organization with some
advantage of functional organization, in short it takes advantage of both. In
the above diagram as shown the project manager of PM1 reports to the program
manager, similarly PM2, PM3 also reprt to the program manager. Project 1 has
assigned 3 people from manufacturing dept 1½ from marketing, ½ from
finance, 4 from R&D amd ½ from personal. This ½ indicated that the person
employed is portion for project1. This person also works in their respective
department. PM controls what and when this people will do? While the functional
manager control who will be assigned to the project and what technologies will be
used.
Advantages:
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1. The project is the point of imp. The PM takes responsibility for managing the
project and bringing it on time
2. Even if the project is over people are employed back to the department, so
there is no chance of insecurity.
3. In matrix organization, responseto the client is flexible.
4. When there are several projects running matrix organization allows better
balance of resources in terms of time, cost and performance.
Disadvantages:
1. In case of functionally organized project there is no doubt that the functional

division is in the focus of decision making power. Where as in pure project
organization PM is the center of power; but in matrix organization the PM as well
as respective dept. controls the employee or person. So unity of command may
not exist.
2. To give the resources to various projecs is controlled by the functional dept.
This functional dept. may not do justice to all the project.
4) Mixed Organization Systems
- Divisionalization is a means of dividing a large organization into smaller more

flexible units - This enables the parent organization to capture some of the
advantages of small , specialized organization units while retaining some of the
advantage that come with large size units
- Pure functional and pure project organizations may coexists in a firm
Advantages
• The hybridization of the mixed from leads to flexibility

• The firm is able to meet special problem by appropriate adaptation of its
organizational structure
Disadvantages:
Dissimilar groupings within the same accountability center tend to encourage

overlap, duplication, and friction because of incompatibility of interests
Conditions still exist that result in conflict between functional and project
managers
3. Leadership and Management Style :
Leadership has been defined as:
B) Other attributes may include:

- enthusiasm - optimism – energy - tenacity - courage - personal maturity
4. Ability to Handle Stress :
Four major causes of stress associated with the management of projects:
1. Never developing a consistent set of procedures and techniques with

which to manage their work.
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2.. Many project managers have “too much on their plates
3. Some project managers have a high need to achieve that is

consistently frustrated
4.PROJECT CONTROL
Q.1 Explain the necessity of project control or what are the things that
cause a project to require the control
1.Performance:
• Controlling the project often improves the performance.
• Performance is required so that next time similar project can be done with
ease.
• Unexpected technical problem may arise. Insufficient resources are
available when needed.
• Client requires changes in system specification, quality or reliabilty
problem occurs, complication can arise as project goes on.
• Due to the above points project performance can be affected, hence the
control is required.
2. Cost: Following are the things which are taken care of:
a) Technical difficulties require more resouces

b) ii) Scope of work increases
c) Correcting control was not exercised in time
d) Budget was inadequate.
3. Time:
Following points are considered
i) Intial time estimates was optimistic
ii) Task sequence was incorrect
iii) Technical difficulties took longer time than the planned one
iv) Customer changed the requirement
v) Government regulations were changed
Q.2 What are the fundamental purpose of control?
A. The fundamental purpose of control are :

1. The regulation of result through the changes of activities.
2. The organizational assest must be controlled.
The PM manages the project by guarding the physical asset, the human
resource, financial resource.
A) Physical asset control:
The physical asses control requires control of use of physical assets. It is

concerned with assest maintainance and also the timing of replcament and quality
maintainance.
B) Human Resource Control :
It requires controlling the growth and development of the people. Because the
project are unique differing from each other in many ways, it is possible for
people working on project to gain a wide range of experience in a reasonably
short time.
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c)Financial Resource Control:
Captial investment controls work to conserve the organization asset by insisting

that certain condition bbe met before captial can be extended and those same
condition usually regulate the use of capital to achieve the organizations goal of
high return on investment. They include current asset control and project budget
as well as captial investment control.
Types of control processes:
1. Cybernetic control :
A cybernetic control system is a control that tries to reduce the deviation from the
standard by using feedback loop. There are 3 types of cybernetic control
which are : First Order, Second Order, Third Order
a) First Order: Diagram :
In the above diagram system is operating with inputs being subjevted a

process that transforms them into output. It is this system that we wish to
control. In order to do so we must monitor the system output, this function is
performed by the sensor that measures one or more aspects of o/p.
Measurement taken by sensor are transmitted to the comparator which
compares them with the set of predetermined standard. The difference
between actual and the standard is send to the decision maker which
determines whether or not the difference is sufficient size to deserve
correction. If the difference is large a signal is sent to the effector which acts
on the process or on the inputs to produce outputs which is closer to the
standard.
b) Second Order :Diagram :

The diagram shown above, this control system can alter the
systems std. according to some predetermined set of rules. The complexity of
second order system can change.For eg: The addition of a clock to the
thermostat allows it to maintain different std. during day and night makes
thermostat a second order controller. A interactive controller program may
alter its responses according to complex set of preprogrammed rules. Many
indutrial project involve second order controllers.
c)Third Order Cybernetic control:Diagram :

A third order cybernetic control system can change its goal without specific
programming. It can reflect on system performance and decide to act inways that
are not contained in its instruction. The third order control should have human to
make some conscoius decision under critical circumstances. Eg: The pilot in a
plane controlling the plane is third order cybernetic control.
Advantage of 3rd order is that they can deal with unforseen and unexpected
situations.
Disadvantage of 3rd order is if the human person is not capable then a disaster
can happen.
2. Go/No go Control:
Go/No go control takes the form of testing to see if some specific precondition
have been met. Most of the control fall inthis category. The project plan, budget
and schedule are all control document, sso the PM has a predesigned controlled
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system complete with the prespecified milestone as the check points. Control can
be exercised at any level of detail that is supported in plan budget.
Now parts of the project plan may either be allowed to go or blocked or modifired
and then allowed to go. Project milestone need not occur at neat periodic
intervals thus control should be linked to the actual plan and to the occurance of
real plan and not just the calender.Senoir mgmt. may need the monthly or
quaterly status of the project. This will make the project to me on track. Also the
gantt should be prepared that keeps overall execution of project as per time
scheduling.
3.Post Control:
Post control is directed towards improving the chances of future projects to meet
their goals.Cybernetic and Go/No-go control are directed towards achieving the
goals of ongoing projects. The post control is documented in the following area.
1) Project objectives :
The post control report will control a description of objectives of the project.
Usually this description is taken from project proposal. Because actual project
performance depends in part on uncontrollable events like employee leaving the
company or failure of trusted suppliers. Therefore the key initial assumptions
made during preparation of project budget and schedule should be noted. A
certain amount of care must be taken in reporting these assumptions and no
excuse should be made for poor performance.
2) Milestone checkpoint and budget:

This section of post control starts with full report of document against the
planned schedule and budget. This can be prepared by combining and editing the
various project status report made during the project life. Significant deviation of
actual schedule and budget from plan schedule and budget should be
highlighted. Explanation should be given against the deviation.
3) Final Report on project result:

When significant variation of actual from planned project performane are
indicated no distinction is made between favourable and unfavourable variation.
The concern here is not on what on how it did it. Basically this part of the find
report should cover organization explanztionof method used to plan and direct
the project.
Project manager
Following qualities that should be considered while selecting project manager:

1. Strong technical background
2. Mature individual
3. Someone who is currently available
4. Someone who keeps good terms with senior executive.
5. A person who can keep the project team happy
6. One who has worked in several different dept.
7. One who can accept new challenges
8. One who can get job done
25
a) Technical credibility : perceived by the client, snior executives, the

functional departments, and the project team as possesing suffiecient technical
knowledge to direct the project.
b) Administrative credibility: keeping the project on schedule and within costs

and making sure reposrts are accurate and timely. Must also make sure the
project team has material, equipment and labor when needed.
2. Sensitivity :
These are several ways for project managers to display sensitivity:
- Understanding the organization’s political structure
outsiders - Does not avoid conflict, but confronts it and deals with it
before it escalates - Keeps team members “Cool” - Sensitive set of
technical sensors
5.PROJECT TERMINATION
A project is said to be terminated when work on the substance of project has

seized or slowed to the point that further progress on the project is no longer
possible.
Following are the types of termination:
1. Termination by extinction:
The project is stopped. It may end because it has achieved its goal. Like the
new product has been developed and handed over to the client or s/w has been
installed and is running. The project may also be stopped because it is
unsuccessful. For eg: If a medicine is prepared for a disease but selling at
higher rate and in the market there are other medicines at lower rate for same
disease then launching of this new medicine may not benefit and this project
may be carried on further.
2. Termination by addition:
Most projects are inhouse i.e. carried out by project team for the use in parent
organization. If a project is a major success it is terminated by the parent
organization. For eg: Suppose the Maths dept creates a BSc[IT] course taken
as a project. Now if after several years the BSc[IT] course can run on its own,
then the Maths dept can terminate this BSc[IT] project which can be
considered as a full fledged dept. now.
3. Termination by intefration:
This method of terminating a project is most common and it is done when the
complexity arises. The property equipment, material, personnel and functions
of the project are distributed among existing element of the parent
organization. The output of the project becomes the std. part of operating
system of the parent or client
For eg: The merger of global trust bank with oriental bank is
termination by integration.
Following points must be considered when the project functions are

distributed during integration.
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A.Personnel:Where wil the project team go? Will it remain a team.

B.Manufacturing:
Is the training complete? Are input materials and required facilities available? Are
new control procedures needed.
C. Accounting:
Have the project accounts closed and auidited? Have the new accounts been
vreated and a/c nos been distributed.
D. Engineering:
Are all the drawings complete and the files complete? Have maintenance schedule
been adjusted.
E. S/w or info System:
Has the new system been throughly tested and is the s/w properly documented?
Is the new system fully integrated with current system.
F. Termination by starvation:
In this type a slow starvation arises by budget decrement. Every one involved
with the project has to cope with budget cut. In some firms, for eg: they don’t
want to admit the failure, so the project is continued even if it is not fruitful.
Inshort the progress has slowed down, so the company may change the
employees but the project may continue.
Q. When a project should be terminated?

1. If a project is successfully completed, then it is terminated.
2. Does the project is consistant with organizational goals.
3. Is the project useful or is it practical, if not it is terminated
4. Is the mgmt. enthusiastic about the project to support the implementation.
5. Does the project represent more advance over current technology.
6. Is the project team still inovative.
7. Has the project lost its key person.
Project audit
Project audit is an examination of mgmt of a project. Its methodologies and

procedures, its records, its budgets and expenditure. It may deal with the project
as a whole or only the part of project. A formal report must be presented which
takes the following points into account.
1. Current status of project: Which tells that the work actually completed does
match with the plant activity.
2. Future status: Are significant schedule changes likely if so indicate the nature
of changes.
3. Status of crucial task: What progress has beeen made on task that to decide
the success or failure of the project.
4. Risk Assessment: Are the risk taken care of.
5. Information from other project: What lessons are learned from the project
autied earlier.
Depth of auditing : To what depth the auditing should be done is decided by the
organization. The factors which decide the depth of auditing are :
1.Cost.
2. The clerical time used in conducting the audit.
3. The storage.
4. The maintenance of the auditable data.
The general audit is normally carried out by the qualified technicians under the
direct guidance of project auditor.
Timing of audit :
27
1.The timing of audit will depend on the circumstances of a particular project. The
first audit are usually done early in projects life. The problem is discovered the
easier it is to deal with. Early audits often focussed on the technical issues inorder
to make sure that the key technical problems have been solved.
2. The audit done later in the life cycle of project are of less immediate value to
the project but are of more value to the parent organization. As the project
develops technical issues are less likely to be the matter of concern.
3. Post project audits are conducted with several basic objectived in mind like
legal necessity, feedback for manageral level, to account for all project property
and expenditure.
Responsibility of project auditor:
Following steps are carried out in a audit:

1. Essentially a small team of experienced experts
2. Familiarized the team with the project.
3. Audit the project on site
4. After completion brief the project management.
5. Produce a written report according to specified format.
6. Distribute the report to project manager and project team for their response.
7. Follow up to see if recommendation have been
implemented.
Project audit lifecycle.
There are 6 phases in the project audit lifecycle.
1) Project Audit initiation:
This step involves starting the audit proces, defining the purpose and scope of
audit and gathering sufficient info. to determine proper audit methodologe.
2. Project Baseline Definition:

The purpose of this phase is to establish performance std. against which the
project performance can be evaluated. This phase consist of identifying the
performance area to be evaluated, determining std. for each area for bench
marking and develop a program to measure and assemble the required info.
3. Establishing an audit database:
Once the baseline std. are established execution of audit begins. Depending on
the purpose and scope of audit the database might include the information
needed for assessment for project organization, control, past and current project
status, schedule performance and cost performance.
4. Preliminary Analysis of Project:
After the std. are set and data collected judgemetns are made. The judgements
should be fare enough. It is auditors duty to brief the PM on all findings and
judgement before releasing the audit report. The purpose of audit is to improve
the entire process of managing projects.
5. Audit Reort Preparation
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6. Rpoject Audit termination
Risk Analysis:
There are mainly the foll. s/w risk.
1. Project Risk:
It includes cost budget, the staff i.e. whether the people working in
organization wil continue to remain till end of the project. There is risk
associated with customer because the customer keeps on changing his
requirement. Also there is risk associated with final project impact.
2. Techical Risk:
Technical risk deals with the design issue, interface validation of data and
finally maintenanace of project.
3. Business risk:
• The project might be excellent but no one wants it. Eg: The project written
in COBOL has less chances of being sold.
• How to sell the project is not clear
• Risk arises because of losing budget commitment
• Losing support of senoir mgmt. due to change in people or change in
focus.
II Risk Identification:
1. Product Size: Size of the s/w to be built should be estimated.

2. Business: One should take care of constraint imposed by mgmt or
constraint in market.
3. Customer characteristic: With communication identify the nature of the
customer.
4. Process Definition: Identify the risk with s/w process in each
development phase.
5. Technology to be used:The risk associated with new technology
incorporated
6. Staff size and experience: All the staff should be well paid, have
experience and have degree. If staff leaves in between problem arises.
7. Performance risk: Does the product designed meet the requirements of
the client?
8. Cost risk:
One must identify whether the project will run under the estimated
budget.
9. Support risk: The s/w should be easy to correct and enhance.
10. Schedule risk: Is the project schedule propoerly maintained? And is the
project delivered on time
Various s/w teams discuss on each.
A. The various s/w teams are:

1) DD(Democratic Decentralized) 2) CD(Controlled Decentralized)
3) CC(Controlled Centralized)
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1. DD : Here there are no permanent leaders. But the person who is good in
particular area is assigned a project for the duration till when the project goes.
Here the decision is taken by the group and communication among team
members is horizontal. Once the project is over, project manager is changed
and a new person is apponted among the group for the project in the subject
area where he has expertise. Now he carries the task similarly.
2. CD: Diagram In this s/w team there is horizontal communication

among team members and there is vertical communication between secondary
leader and the leader. This type of team is made in large projects because a
single leader cannot handle all project simultaneously so he appoints sub leader
and direct them as per need of the project.
3. CC: In CC the top level; leader is responsible for all decision making and
problem solving. Here al the communication is vertical and the internal team
coordination is done by team leaders who have to report to the top level. This
type of team is used inproject which carry crucial info. For eg: Nuclear plan
project , the DRDO project etc.
W5HH Principle :
In this principle the following points are considered:
1. Why the system is being developed and does it justify the eexpenditure
of people, time and money
2. What will be done
3. When will it be done. This helps to schedule the project.
4. Who is responsible for the functions . i.e. the s/w team is defined and
responsibilites are given
5. 5.Where are they organizationally located. i.e not all the roles are
responsiblites of s/w but the customer and user also have the
responsibility.
6. How will the job be done technically and managerally
7. How much resource are needed.
6.FEASIBILITY STUDY
Feasiblity is a measure of how benificial or practical is the project and whether or
not the project is worth doing. Once it has been determined that project is
feasiblethe analyst canb go ahead and prepare the project specification which
finalizes the project requirement. Generally feasibility study are undertaken with
time constraint.
Types of feasiblity study:

1. Technical feasiblity
2. Operational feasiblity
3. Economical feasiblity
4. Social feasiblity
5. Management feasiblity
6. Legal feasiblity
7. Time feasiblity
8. Schedule feasiblity
1.Technical Feasiblity:
30
It has three major issues.

A) Is the proposed technology or solution practical.
b) Do we currently posses the necessary technology.
c) Do we posses the necessary technical expertise
In examining technical feasibilty configuration of system is given more importance

then the actual work of hardware. The configuration should give complete picture
about system requirement and how these units are incorporated so that they
could operate and communicate smoothly, what speed of input and output should
be achieved. Specific s/w and h/w products can be evolved keeping in view with
logical needs. At the feasibilty stage it is desirable that 2 or 3 diff. configuration
should be kept. Out of all the types of feasiblity technical feasiblity is not difficult
to determine.
2.Operational Feasibility:
It is mainly realted to human organization and political aspect. The points to be

considered are
i) What changes to be brought with the system
ii) What organization structures are distrubd
iii) What new skills will be required and do the existing staff members have the
skills, if not can they be trained in a course of time.
The feasiblity study is carried out by a small group of people who are familiar with
information system techniques who understand the part of business that are
relavant to the project and are skilled in system and design process.
3.Economic Feasiblity:
Economic analysis are most frequently used for evaluating the

affectiveness of proposed system or more commonly known as cause of benefit
analysis. The procedure is to determine the benefits and saving that are expected
from the proposed system and compare them with the cost. If the benefit
outweight the cost a decision is taken to design and implement the system
otherwise further justification or alternative in the proposed system will have to
be made. If it is to have a chance of being approved, this is an ongoing effort that
improves the accuracy of each phase of system life cycle.
4. Social Feasibility:
It is a dertermination of whether a proposed project is acceptabl or not. This
determination typically examies the probability of project being accepted by the
group directly affected by the proposed system change.
5. Management Feasibility:
It is a determination of whether a proposed project will be acceptable to
management. If the management does not accept or gives a negligilbe support to
it the analyst will tend to view the project as non feasible.
6. Legal Feasibility :
Is a determination of whether the project follows the laws. Any project should be
well aware with the company rights and access rules. Following thses guidelines
the project should be prepared.
7. Time Feasibility:
Is a determination of whether a proposed project can be implemented fully within
a given time. If the project takes too much time then the project is likely to be
rejected.
31
8. Schedule Feasibility:
Given technical expertise the project deadline reasonable some projects are
initiated with specific deadlines. You need to determine whether the deadlines are
mandatory or desirable. If the deadlines are desirable rather than mandatory the
analyst can propose alternative schedules.It is preferable to deliver proper
functioning information system two months late than to deliver error code or
useless inforamtion on time.
7.COST BENIFIT ANALYSIS

1. Since the cost plays imp. role in deciding the new system it must be
identified and estimated propoerly. Developing a cost benefit analysis is a
three step process.The first step is to estimate the anticipated
development and operational cost. Development cost are those that are
incurred during the developmetn of new system. Operation cost are those
that will be incurred after the system is put into production system.
2. The second step is to estimate the financial benefit.
3. The third step is calculation based on detailed estimates of cost and
benefits.
 Development Cost:
Although the project manager has final responsibity for estimating the cost of
development, Senior analyst always assist with the calculation.Generally project
costs comes in the following categories:
a) Salaries of employees b) Equipment and installation

c) Software and licence d) Consulating fees and payment to third party
e) Training f) Facilities
g) Travelling and Miscellaneous
 Operational Cost:
Once the system is up and running normal operating cost are incurred every year.
These annual operating cost must also be accomodated for calculating cost and
benefit of the new system. The following list identifies the major category cost
that may be allocated to the operation of new system.
A) Connectivity b) Equipment maintainenace c) Computer operation d)

Programming support e) Training and ongoing assistance f) Supplies
 Source of Benefits: Cost saving come from mainly the

following a) Reducing staff due to automating manual function
b) Maintaining constant staff with increasing volume of work c) Decreasing
operating expenses d) Reducing error rates due to auditing and validation
e) Reducing bad accounts or bad credit losses f) Collecting accounts more
quickly g) Reducing the cost of goods with volume and purchases h)
Reducing paper work cost with electronic data interchange and other
automation
 Financial Calculation:
There are three popular techniques to access the economical feasibility.
a) Payback Analysis:
32
The payback analysis techniques is simple ans popular method for determining
if and when an investment will be beneficial or not. the payback period is a
point in time in which the benefits exactly pays development and operation.
We can calculate the payback period using either persent value amounts or
cash flow amounts do not take the time value of money into consideration and
only calculate based on nondiscounted amount. Another approach is to
considere only the initail annual operational cost in the calculation.
b) Return on Investment Analysis (ROI) :

The Return on Investment Analysis technique compares the profitability of
alternatives solution or projects. The ROI fo a project is a percentage grade
that measures the realtionship between the amount the business gets back
from an investment and amount invested. It is given by the following formula:
ROI = [ (Estimated benefit – Estimated Cost)/ Estimated Cost] * 100
8.FACT FINDING TECHNIQUE

Fact finding technique is a formal process of using research, interviews,
questioners, sampling and other techniques to collect information about problems
requirements and preference. It is also called as information gathering or data
collection. Fact finding skills must be learned and practiced.
Common Fact Finding Techniques:

1.Sampling of existing documents, forms and database.
2. Research and site visit
3. Observation of work environment
4. Questioners
5. Interviews
1. Sampling of existing documents, forms and database:

When you are studying an existing system you can develop a good feel of system
by studying existing documentation, forms and files. An good analyst always gets
facts first from existing documents rather than from people. Collecting facts from
existing documents is done first. Inaddition to documents there are usually
documents that describe the business function being studied or designed. These
documens may include:
a) Compaines mission statement strategic plan
b) Formal objectives for organization
c) Policy manuals that may place constraints on any proposed system Sampling
is a process of collecting a representative sample of documents, forms and
records.
2) Research and Site Visit:

A second fact finding technique is to throughly research the problem domain. The
comp. journals and refrence book are good resources of info. They can provide
you with the info. of how others can solve the similar problems, even internet can
be used.
3) Observation of work environment:
Observation is an effective data collection technique for obtaining and

understanding of system. Observation is a fact finding technique where the
system analyst either participate or watches a person perform activites to learn
about the system. This technique is often used when the validity of data collected
33
to other method in question or when the complexity of certain aspects of the

system is not clear.
Advantages of Observation:
a) Data gathered by the observation is highly reliable.

B) The system analyst is able to see exactly what is going on also the analyst will
obtain data describing the physical environment of the task.
C) Observation is relatively inexpensive method.
D) Through observation certain complex task becomes clear.
Disadvantages:
a) Because usually people feel uncomfortable being watched, so they perform

activity differently.
B) Some system activities may take place at odd times causing a scheduling
inconvience for the analyst.
C) The task being observed are subject to varoius types of interruption.
There are certain guidelines that help you to observe.
A) Determine who, what, where, when, why and how of observation.

B) Obtain permission from appropriate supervisors or managers.
C) Inform those will be observed and also the purpose of observation.
D) Take notes during or immediately following the observation.
E) Don’t interrupt the individuals work.
F) Don’t make assumptions
Questioners:
They are special purpose documents that allow the analyst to collect info. and
opinions from people. Questioners allow analyst to collect facts from a large no. of
people by maintaining uniform responses. While dealing with large audience no
other fact finding techniques is as effective as questioners.
Advantages:
1. Most questioners can be asked quickly. People can complete and return at their
convience.
2. Questioners provide a inexpensive means for gathering data from lagre no. of
individuals.
3. Questioners allow individual to maintain anonymity. Therefore individual are
more likely to provide real facts.
4. Response can be quickly tabulated and analysed quickly.
Disadvantages:
a) The no. of people responding is often low.

b) There is no guarentee that an individual will answer all questions.
c) Questioners tend to be inflexible sometimes
d) It is not possible for a system analyst to observe and analyse the body
language of a person.
e) Good questioners are difficult to prepare.
F) There is no immediate opportunity to clarify the answer to any question.
Types of Questioners:
There are 2 formats of questioners
1) Free Format:
34
• Offers the repondent great latitude of answer. A question is asked and the
respondent writes the answer in space provided after the question.
• For eg: The question can be what reports you currently receive and how
they are classified. To ensure good response in free format questioners
the analyst should frame in simple sentences and not use words that can
confuse or interpreted differently.
2) Fixed Format:
Contains questions that require selection of predefined sentences. Given any
questio the responder must choose from available answer. This makes the
result much eaiser to tablulate but the responder cannot provide additional
info.
There are 3 types of fixed format:
i) Multiple choice question ii) Rating questions iii) Ranking questions
5. Interview:
1. Interview are fact finding system whereby the system analyst collect info.
from individuals through face to face interview. The system analyst is an
interviewer responsible for organizing and conducting the interview.
2. System user are asked to response to the series of questions, no other
fact finding technique plays as much emphasis on much people as
interview. Since people have different view, motivations, personalites
therefore while using interview technique one must use good human
relation skills for dealing effectively.
3. To conduct effective interview the analyst need to organize in three areas:
1. Prepare for interview 2. Conduct interview 3. Follow up the
interview.
4. Also following question can helpto accomplish the goal.

A) Who is involved ? b) What do you do? C) Where do you do?
d) When do you do? E) Why do you do? F) How do you do?
G)Do you hae any suggestions for the charge?
Guidelines for conducting an interview:
Before the interview:

a) Establish the objective of interview
b) Determine correct users to be involved.
C) Bulit a list of questions and issues to be discussed
d) Review documents and materials
e) Set the time and location
f) Inform all participants of objective time location
During the interview:

a) Dress properly b) Arrive on time c) Look for exception and error condition
d) Take through notes e) Identify and document unanswered question
After the interview:

a) Review notes for accuracy, completeness and understanding.
b) Transfer info. to appropriate document.
c) Identify areas leading further clarification.
35
Advantages:
1. Interview allow the system analyst to grow for more feedback from the
interviewee.
2. Intrview gives the analyst an opportunity to observe the persons nonverbal
communication.
3. Interviews gives the analyst an opportunity to respond freely and openly to
questions. By establishing report the system analyst is able to give a person a
feeling of actively contributing to systems project.
Disadvantages:
1. Interview is time consuming and therefore very costly fact finding approach.
2. Success of interviews is highly depended on system analyst human relation
skills, 3. Interview may be in practical due to location of space.
There are two types of interviews:

1. Structure Interview 2. Unstructure Interview
1.Structure Interview:
In this approach specific set of question is asked, how depending on
persons response the interviewer may direct addition question to obtain
clarification. Some of this questions may be planned and others
spontaineously.
Types of questions are: a) open ended questions b) Closed ended
questions
2.Unstructure Interviews:
Unstructure Interviews are conducted with a general goal or subject in
mind. This type of interview often gets off track and the analyst must be prepared
to redirect the interview to the main goal. There is a direct conversion, often this
unstructured interviews don’t work well.
PROJECT ORGANIZATION:
Functional Organization
Advantages: 1. Max. flexibility in the use of of staff 2. Individual
experts can be utilized with different projects.
3. Experienced people cqan share knowledge 4. Functional division help in
development of individual.
Disadvantage: 1. Client is not the focus of activity because the functional
event has its own work to do. 2. The functional division tends to oriented
towards activity particular to its function. 3. In functional organization no
individual is given full responsibilty of project, this might cause failure in the
project. 4. Lack of coordination because there are several layers of
management with the project and client.
5. Motivation of people assigned to project tends to be weak because the project
is not the main stream of activity.
Pure Project Organization
Advantages: 1. The project manager has full line of authority over the
project though the project manager must report to senior executive.
2. All the members of project work are directly under the cntrol of project
manger. There are no no functional division head whose permission is required.
3. When the project is removed from the functional division, the line of
communication is shortned and the entire function of structure is bypassed and
the PM communicates directly with senoir managers. 4. When there are
several successive projects of similar kind the pure project organization, it can
make permanent experts who develop skill in specific technologies and the
existance o such skill will attract the customers. 5. The project team that
36
has strong and separate identity of its own tends to develop a high level of
commitment for its members as the motivation is high.
6. Unity of command exists.
Disavantages: 1. When the organization takes several projects it is
common for each one to be fully staffed. This can lead to duplication of effort in
every area. 2. Removing the project has disadvantages in the sense the
individual experts are removed who could have been utilized for other work in the
organization. 3. There is a common insecurity among the people that what will be
the situation after the project ends.
4. Communication gap is high because it makes an isolated system.
Matrix Organization
Diagram: Matrix organization takes the advantage of pure organization
with some advantage of functional organization, in short it takes advantage of
both. In the above diagram as shown the project manager of PM1 reports to the
program manager, similarly PM2, PM3 also reprt to the program manager. Project
1 has assigned 3 people from manufacturing dept 1½ from marketing, ½ from
finance, 4 from R&D amd ½ from personal. This ½ indicated that the person
employed is portion for project1. This person also works in their respective
department. PM controls what and when this people will do? While the functional
manager control who will be assigned to the project and what technologies will be
used.
Advantages: 1. The project is the point of imp. The PM takes responsibility for
managing the project and bringing it on time 2. Even if the project is
over people are employed back to the department, so there is no chance of
insecurity. 3. In matrix organization, responseto the client is flexible.
4. When there are several projects running matrix organization allows better
balance of resources in terms of time, cost and performance.
Disadvantages: 1. In case of functionally organized project there is no doubt
that the functional division is in the focus of decision making power. Where as in
pure project organization PM is the center of power; but in matrix organization
the PM as well as respective dept. controls the employee or person. So unity of
command may not exist. 2. To give the resources to various projecs is
controlled by the functional dept. This functional dept. may not do justice to all
the project.
Mixed Organization Systems
- Divisionalization is a means of dividing a large organization into smaller more

flexible units - This enables the parent organization to capture some of the
advantages of small , specialized organization units while retaining some of the
advantage that come with large size units - Pure functional and pure project
organizations may coexists in a firm
Advantages - The hybridization of the mixed from leads to flexibility - The firm
is able to meet special problem by appropriate adaptation of its organizational
structure
Disadvantages - Dissimilar groupings within the same accountability center
tend to encourage overlap, duplication, and friction because of incompatibility of
interests - Conditions still exist that result in conflict between
functional and project managers
FACT FINDING TECHNIQUE

Fact finding technique is a formal process of using research, interviews,
questioners, sampling and other techniques to collect information about problems
requirements and preference. It is also called as information gathering or data
collection. Fact finding skills must be learned and practiced.
Common Fact Finding Techniques:
37
1.Sampling of existing documents, forms and database. 2. Research and

site visit 3. Observation of work environment
4. Questioners 5. Interviews
1. Sampling of existing documents, forms and database. When you are
studying an existing system you can develop a good feel of system by studying
existing documentation, forms and files. An good analyst always gets facts first
from existing documents rather than from people. Collecting facts from existing
documents is done first. Inaddition to documents there are usually documents
that describe the business function being studied or designed. These documens
may include: a) Compaines mission statement strategic plan b) Formal
objectives for organization c) Policy manuals that may place constraints on any
proposed system Sampling is a process of collecting a representative sample
of documents, forms and records.
5. Research and Site Visit: A second fact finding technique is to throughly
research the problem domain. The comp. journals and refrence book are good
resources of info. They can provide you with the info. of how others can solve
the similar problems, even internet can be used.
6. Observation of work environment: Observation is an effective data
collection technique for obtaining and understanding of system. Observation is a
fact finding technique where the system analyst either participate or watches a
person perform activites to learn about the system. This technique is often used
when the validity of data collected to other method in question or when the
complexity of certain aspects of the system is not clear. Data gathered by the
observation is highly reliable. Observation is relatively inexpensive method.
4. Questioners: They are special purpose documents that allow the analyst
to collect info. and opinions from people. Questioners allow analyst to collect facts
from a large no. of people by maintaining uniform responses. While dealing with
large audience no other fact finding techniques is as effective as questioners.
Most questioners can be asked quickly. People can complete and return at their
convience. Questioners provide a inexpensive means for gathering data from
lagre no. of individuals. Questioners allow individual to maintain anonymity.
Therefore individual are more likely to provide real facts. Response can be quickly
tabulated and analysed quickly.
5. Interview: Interview are fact finding system whereby the system analyst
collect info. from individuals through face to face interview. The system analyst is
an interviewer responsible for organizing and conducting the interview.
System user are asked to response to the series of questions, no other
fact finding technique plays as much emphasis on much people as interview.
Since people have different view, motivations, personalites therefore while using
interview technique one must use good human relation skills for dealing
effectively.
To conduct effective interview the analyst need to organize in three areas: 1.
Prepare for interview 2. Conduct interview 3. Follow up the interview.
Also following question can helpto accomplish the goal. A) Who is involved ?
b) What do you do? C) Where do you do?
d) When do you do? E) Why do you do? F) How do you do? G) Do
you hae any suggestions for the charge?
Observation of work environment: Observation is an effective data

collection technique for obtaining and understanding of system. Observation is a
fact finding technique where the system analyst either participate or watches a
person perform activites to learn about the system. This technique is often used
when the validity of data collected to other method in question or when the
complexity of certain aspects of the system is not clear.
Advantages of Observation: a) Data gathered by the observation is highly
reliable. B) The system analyst is able to see exactly what is going on also
the analyst will obtain data describing the physical environment of the task. C)
38
Observation is relatively inexpensive method. D) Through observation certain

complex task becomes clear.
Disadvantages: a) Because usually people feel uncomfortable being
watched, so they perform activity differently. B) Some system activities
may take place at odd times causing a scheduling inconvience for the analyst. C)
The task being observed are subject to varoius types of interruption.
There are certain guidelines that help you to observe. A) Determine who, what,
where, when, why and how of observation. B) Obtain permission from
appropriate supervisors or managers. C) Inform those will be observed
and also the purpose of observation. D) Take notes during or immediately
following the observation. E) Don’t interrupt the individuals work. F) Don’t
make assumptions
Questioners:They are special purpose documents that allow the analyst to

collect info. and opinions from people. Questioners allow analyst to collect facts
from a large no. of people by maintaining uniform responses. While dealing with
large audience no other fact finding techniques is as effective as questioners.
Advantages: 1. Most questioners can be asked quickly. People can complete and
return at their convience. 2. Questioners provide a inexpensive means for
gathering data from lagre no. of individuals. 3. Questioners allow
individual to maintain anonymity. Therefore individual are more likely to provide
real facts. 4. Response can be quickly tabulated and analysed quickly.
Disadvantages: a) The no. of people responding is often low. B)
There is no guarentee that an individual will answer all questions.
c) Questioners tend to be inflexible sometimes d) It is not possible for a system
analyst to observe and analyse the body language of a person.
e) Good questioners are difficult to prepare. F) There is no immediate
opportunity to clarify the answer to any question.
Types of Questioners: There are 2 formats of questioners
Free Format: Offers the repondent great latitude of answer. A question is asked
and the respondent writes the answer in space provided after the question.
For eg: The question can be what reports you currently receive and how they are
classified. To ensure good response in free format questioners the analyst
should frame in simple sentences and not use words that can confuse or
interpreted differently.
Fixed Format: Contains questions that require selection of predefined sentences.
Given any questio the responder must choose from available answer. This
makes the result much eaiser to tablulate but the responder cannot provide
additional info. There are 3 types of fixed format:
i) Multiple choice question ii) Rating questions iii)
Ranking questions
Interview: Interview are fact finding system whereby the system analyst
collect info. from individuals through face to face interview. The system analyst is
an interviewer responsible for organizing and conducting the interview.
System user are asked to respponse to the series of questions, no other
fact finding technique plays as much emphasis on much people as interview.
Since people have different view, motivations, personalites therefore while using
interview technique one must use good human relation skills for dealing
effectively.
To conduct effective interview the analyst need to organize in three areas: 1.
Prepare for interview 2. Conduct interview 3. Follow up the interview.
Also following question can helpto accomplish the goal. A) Who is involved ?
b) What do you do? C) Where do you do?
d) When do you do? E) Why do you do? F) How do you do? G) Do
you hae any suggestions for the charge?
Giudelines for conducting an interview:
39
Before the interview: a) Establish the objective of interview b) Determine

correct users to be involved. C) Bulit a list of questions and issues to be
discussed d) Review documents and materials e) Set the time and
location f) Inform all participants of objective time location
During the interview: a) Dress properly b) Arrive on time c) Look
for exception and error condition d) Take through notes
e) Identify and document unanswered question
After the interview: a) Review notes for accuracy, completeness and
understanding b) Transfer info. to appropriate document
c) Identify areas leading further clarification
Advantages: 1. Interview allow the system analyst to grow for more feedback
from the interviewee 2. Intrview gives the analyst an opportunity to observe
the persons nonverbal communication. 3. Interviews gives the analyst an
opportunity to respond freely and openly to questions. By establishing report the
system analyst is able to give a person a feeling of actively contributing to
systems project.
Disadvantages: 1. Interview is time consuming and therefore very costly
fact finding approach. 2. Success of interviews is highly depended on
system analyst human relation skills, 3. Interview may be in practical due
to location of space.
There are two types of interviews: 1. Structure Interview 2.
Unstructure Interview
1. Structure Interview: In this approach specific set of question is asked,
how depending on persons response the interviewer may direct addition
question to obtain clarification. Some of this questions may be planned and
others spontaineously.
Types of questions are: a) open ended questions b) Closed ended
questions
2. Unstructure Interviews: Unstructure Interviews are conducted with a general
goal or subject in mind. This type of interview often gets off track and the analyst
must be prepared to redirect the interview to the main goal. There is a direct
conversion, often this unstructured interviews don’t work well.
FEASIBILITY STUDY
Feasiblity is a measure of how benificial or practical is the project and whether or
not the project is worth doing. Once it has been determined that project is
feasiblethe analyst canb go ahead and prepare the project specification which
finalizes the project requirement. Generally feasibility study are undertaken with
time constraint.
Types of feasiblity study: 1. Technical feasiblity 2. Operational
feasiblity 3. Economical feasiblity 4. Social feasiblity
5. Management feasiblity 6. Legal feasiblity 7. Time feasiblity
8. Schedule feasiblity
1.Technical Feasiblity: It has three major issues. A) Is the proposed
technology or solution practical b) Do we currently posses the necessary
technology c) Do we posses the necessary technical expertise
In examining technical feasibilty configuration of system is given more
importance then the actual work of hardware. The configuration should give
complete picture about system requirement and how these units are incorporated
so that they could operate and communicate smoothly, what speed of input and
output should be achieved. Specific s/w and h/w products can be evolved keeping
in view with logical needs. At the feasibilty stage it is desirable that 2 or 3 diff.
configuration should be kept. Out of all the types of feasiblity technical feasiblity
is not difficult to determine.
2.Operational Feasibility: It is mainly realted to human organization and
political aspect. The points to be considered are i) What changes to be
brought with the system ii) What organization structures are distrubd
40
iii) What new skills will be required and do the existing staff members have
the skills, if not can they be trained in a course of time. The feasiblity
study is carried out by a small group of people who are familiar with information
system techniques who understand the part of business that are relavant to the
project and are skilled in system and design process.
3.Economic Feasiblity: Economic analysis are most frequently used for
evaluating the affectiveness of proposed system or more commonly known as
cause of benefit analysis. The procedure is to determine the benefits and saving
that are expected from the proposed system and compare them with the cost. If
the benefit outweight the cost a decision is taken to design and implement the
system otherwise further justification or alternative in the proposed system will
have to be made. If it is to have a chance of being approved, this is an ongoing
effort that improves the accuracy of each phase of system life cycle.
4. Social Feasibility: It is a dertermination of whether a proposed project
is acceptabl or not. This determination typically examies the probability of project
being accepted by the group directly affected by the proposed system change.
5. Management Feasibility: It is a determination of whether a proposed
project will be acceptable to management. If the management does not accept or
gives a negligilbe support to it the analyst will tend to view the project as non
feasible.
6. Legal Feasibility : Is a determination of whether the project
follows the laws. Any project should be well aware with the company rights and
access rules. Following thses guidelines the project should be prepared.
7. Time Feasibility: Is a determination of whether a proposed project can
be implemented fully within a given time. If the project takes too much time then
the project is likely to be rejected.
8. Schedule Feasibility: Given technical expertise the project deadline
reasonable some projects are initiated with specific deadlines. You need to
determine whether the deadlines are mandatory or desirable. If the deadlines are
desirable rather than mandatory the analyst can propose alternative schedules.
It is preferable to deliver proper functioning information system two
months late than to deliver error code or useless inforamtion on time.
COST BENIFIT ANALYSIS

Since the cost plays imp. role in deciding the new system it must be identified
and estimated propoerly. Developing a cost benefit analysis is a three step
process. The first step is to estimate the anticipated development and
operational cost. Development cost are those that are incurred during the
developmetn of new system. Operation cost are those that will be incurred after
the system is put into production system.
The second step is to estimate the financial benefit. The third step is
calculation based on detailed estimates of cost and benefits.
 Development Cost: Although the project manager has final responsibity
for estimating the cost of development, Senior analyst always assist with the
calculation. Generally project costs comes in the following categories: a)
Salaries of employees b) Equipment and installation
c) Software and licence d) Consulating fees and payment to third party
e) Training f) Facilities g) Travelling and Miscellaneous
 Operational Cost: Once the system is up and running
normal operating cost are incurred every year. These annual operating cost
must also be accomodated for calculating cost and benefit of the new system.
The following list identifies the major category cost that
may be allocated to the operation of new system. A) Connectivity b)
Equipment maintainenace c) Computer operation d) Programming support
e) Training and ongoing assistance f) Supplies
41
 Source of Benefits: Cost saving come from mainly the

following a) Reducing staff due to automating manual function
b) Maintaining constant staff with increasing volume of work c) Decreasing
operating expenses d) Reducing error rates due to auditing and validation
e) Reducing bad accounts or bad credit losses f) Collecting accounts more
quickly g) Reducing the cost of goods with volume and purchases h)
Reducing paper work cost with electronic data interchange and other
automation
 Financial Calculation: There are three popular techniques to access
the economical feasibility.
a) Payback Analysis: The payback analysis techniques is simple ans popular
method for determining if and when an investment will be beneficial or not. the
payback period is a point in time in which the benefits exactly pays
development and operation. We can calculate the payback period using either
persent value amounts or cash flow amounts do not take the time value of
money into consideration and only calculate based on nondiscounted amount.
Another approach is to considere only the initail annual operational cost in the
calculation.
b) Return on Investment Analysis (ROI) : The Return on Investment Analysis
technique compares the profitability of alternatives solution or projects. The ROI
fo a project is a percentage grade that measures the realtionship between the
amount the business gets back from an investment and amount invested. It is
given by the following formula: ROI = [ (Estimated benefit – Estimated
Cost)/ Estimated Cost] * 100
42
RUPAREL NOTES
PROJECT CONTROL
Q. Explain the necessity of project control or what are the things that
cause a project to require the control
1.Performance: Controlling the project often improves the performance.
Performance is required so that next time similar project can be done with
ease.
Unexpected technical problem may arise. Insufficient resources are available
when needed. Client requires changes in system specification, quality or
reliabilty problem occurs, complication can arise as project goes on. Due to the
above points project performance can be affected, hence the control is required.
2. Cost: Following are the things which are taken care of: a) Technical
difficulties require more resouces b) ii) Scope of work increases
c) Correcting control was not exercised in time d) Budget was inadequate.
3. Time: Following points are considered i) Intial time estimates was
optimistic ii) Task sequence was incorrect iii) Technical difficulties
took longer time than the planned one iv) Customer changed the requirement
v) Government regulations were changed
Q. What are the fundamental purpose of control?
A. The fundamental purpose of control are : 1. The regulation of
result through the changes of activities 2. The organizational assest must
be controlled The PM manages the project by guarding the physical asset, the
human resource, financial resource. A) Physical asset control: The
physical asses control requires control of use of physical assets. It is concerned
with assest maintainance and also the timing of replcament and quality
maintainance. B) Human Resource Control : It requires controlling the
growth and development of the people. Because the project are unique differing
from each other in many ways, it is possible for people working on project to gain
a wide range of experience in a reasonably short time.
c)Financial Resource Control: Captial investment controls work to conserve the
organization asset by insisting that certain condition bbe met before captial can
be extended and those same condition usually regulate the use of capital to
achieve the organizations goal of high return on investment. They include current
asset control and project budget as well as captial investment control.
Types of control processes.
1. Cybernetic control : A cybernetic control system is a control that tries to
reduce the deviation from the standard by using feedback loop. There are 3 types
of cybernetic control which are : First Order, Second Order, Third Order
a) First Order: Diagram : In the above diagram system is
operating with inputs being subjevted a process that transforms them into
output. It is this system that we wish to control. In order to do so we must
monitor the system output, this function is performed by the sensor that
measures one or more aspects of o/p. Measurement taken by sensor are
transmitted to the comparator which compares them with the set of
predetermined standard. The difference between actual and the standard is
send to the decision maker which determines whether or not the difference is
sufficient size to deserve correction. If the difference is large a signal is sent to
the effector which acts on the process or on the inputs to produce outputs which
is closer to the standard.
b) Second Order : Diagram : The diagram shown above, this control
system can alter the systems std. according to some predetermined set of rules.
The complexity of second order system can change. For eg: The addition of a
clock to the thermostat allows it to maintain different std. during day and night
makes thermostat a second order controller. A interactive controller program may
alter its responses according to complex set of preprogrammed rules. Many
indutrial project involve second order controllers.
c)Third Order Cybernetic control: Diagram : A third order cybernetic
control system can change its goal without specific programming. It can reflect on
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system performance and decide to act inways that are not contained in its
instruction. The third order control should have human to make some conscoius
decision under critical circumstances. Eg: The pilot in a plane controlling the
plane is third order cybernetic control.
Advantage of 3rd order is that they can deal with unforseen and unexpected
situations. Disadvantage of 3rd order is if the human person is not capable then
a disaster can happen.
2. Go/No go Control: Go/No go control takes the form of testing to see if some
specific precondition have been met. Most of the control fall inthis category.
The project plan, budget and schedule are all control document, sso the
PM has a predesigned controlled system complete with the prespecified milestone
as the check points. Control can be exercised at any level of detail that is
supported in plan budget. Now parts of the project plan may either be allowed to
go or blocked or modifired and then allowed to go. Project milestone need not
occur at neat periodic intervals thus control should be linked to the actual plan
and to the occurance of real plan and not just the calender. Senoir mgmt.
may need the monthly or quaterly status of the project. This will make the project
to me on track. Also the gantt should be prepared that keeps overall execution of
project as per time scheduling.
3.Post Control: Post control is directed towards improving the chances of future
projects to meet their goals.
Cybernetic and Go/No-go control are directed towards achieving the goals of
ongoing projects. The post control is documented in the following area.
a) Project objectives : The post control report will control a description of
objectives of the project. Usually this description is taken from project proposal.
Because actual project performance depends in part on uncontrollable events
like employee leaving the company or failure of trusted suppliers. Therefore the
key initial assumptions made during preparation of project budget and schedule
should be noted. A certain amount of care must be taken in reporting these
assumptions and no excuse should be made for poor performance.
b) Milestone checkpoint and budget: This section of post control starts with
full report of document against the planned schedule and budget. This can be
prepared by combining and editing the various project status report made
during the project life. Significant deviation of actual schedule and budget from
plan schedule and budget should be highlighted. Explanation should be given
against the deviation.
c) Final Report on project result: When significant variation of actual from
planned project performane are indicated no distinction is made between
favourable and unfavourable variation. The concern here is not on what on how
it did it. Basically this part of the find report should cover organization
explanztionof method used to plan and direct the project.
Project manager
Following qualities that should be considered while selecting project manager:
1. Strong technical background 2. Mature individual
3. Someone who is currently available 4. Someone who keeps good terms
with senior executive. 5. A person who can keep the project team happy
6. One who has worked in several different dept. 7. One who can accept
new challenges 8. One who can get job done
a) Technical credibility : perceived by the client, snior executives, the functional
departments, and the project team as possesing suffiecient technical knowledge
to direct the project.
b) Administrative credibility: keeping the project on schedule and within costs
and making sure reposrts are accurate and timely. Must also make sure the
project team has material, equipment and labor when needed.
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2. Sensitivity : These are several ways for project managers to display

sensitivity: - Understanding the organization’s political structure
outsiders - Does not avoid conflict, but confronts it and deals with it
before it escalates - Keeps team members “Cool” - Sensitive set of
technical sensors
3. Leadership and Management Style : Leadership has been defined as:
B) Other attributes may include: - enthusiasm - optimism
- energy - tenacity - courage - personal maturity
4. Ability to Handle Stress : Four major causes of stress associated with the
management of projects: 1. Never developing a consistent set of
procedures and techniques with which to manage their work 2.. Many
project managers have “too much on their plates” 3. Some project
managers have a high need to achieve that is consistently frustrated
Criteria for project selection models. SOUDER criteria

1. Realism: The model should reflect the reality of managers decision situation.
Consider an example where project A may strengthen a firms market share
by extending its facilities and project B might improvr its competitive position
by strengthening its technical staff. Question comes which is better?
The model should take into account the realites of firms limitation on facilites,
capital and personal. The model should also include factor that reflect
project factor risk including the technical risk of performance cost and time as
well as market.
2. Capability: The model should be sophisticated enough to deal with multiple
time periods. Simulate various situation both internal and external,
For eg : strikes, interest rate etc. A optimising model will make comparision &
consider major risk & they select best overall project or send off project.
3. Flexibility: The model should give valid results within the range of condition.
It should have the ability to be easily modified or be self aadjusting in
response to changes in firms enviornment. For eg: Tax law change or new
technological advancement in that case the organizational core may change.
4.Ease of use: The model should be reasonably convinient and not take long
time to execute. It should be easily understood. It should have special
interpretation. The models variables should also realte one to one with real world
parameters and it should be easily to simulate the expexted outcomes associated
with investment in different projects.
7. Cost: Data gathering and modeling cost should be low related to the cost
of project and must be surely be less than potential benefits of the project. All
cost should be considered including the cost of data mgmt. and running the
model.
8. Easy computerization: It must be easy and convinient to gather and
store the info. on computer and to manipulate the data with the s/w’s like Excel
etc. and some decision should be made.
Types of project selection models.

A. There are two basic selection model: Numeric and Non Numeric
I. Non Numeric Model:
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1.Operating Necessity: If the project is required in order to keep the system

operating, the primary question becomes is the system worth saving at the
estimated cost of project and if the answer is ‘Yes’, project cost will be
examined to make sure they are kept as low.
2.The product line extension: In this case a project to develop and distribute new
products would be judged on the degree to which it fits the firms existing
product line. Sometimes careful calculations of profit are not required. Decision
makers can act on their belief about what will be the likely impact on the total
system performance if a new product is added to the line.
3. Competitive Necessity: Based on the competition i.e. what other companies are
doing, a new product is launched to give extra benefit. This requires a careful
market research.
4.Comparative Benefit Model: In an organization there may be several projects,
the senior mgmt. woild like to select a subset of the project that would benefit
the firm, but the project do not seem to be easily caparative. In such case Q-
sort technic is used which can be explanied from the following diagram.
Diagram:
a) For each paricipant assemble a deck of card with name and description of
one project on each card b) Instruct each participant to divide the deck into
two piles, one is high priority other is low priority c) Instruct each
participant to select cards from each piles and classified as medium level
pripority. D) Instruct each participant to select fromhigh level pile to form
very hig hlevel priority cards and similarly from low level classify as low level
priority. Now a sequence is formed in pripority order with very high priority as
first and high priority as second etc. From these sequence select the required
project.
II. Numeric Model:
1. Payback Period: The payback period for a project is the initial fixed investment
in the project divided by the estimated annual cash inflows from the project.
For eg: If the project costs Rs. 100000 and the annual cash inflow is
25000, then the payback period is 100000/25000 = 4 yrs.
2. Average rate of return: It is the ratio of average annual profit to the initial
investment. For Eg: Suppose a project cost Rs. 100000 and 10000 is average
return. The n average rate of return is 10000/100000 = 0.1
3. Discounted Cash flow: It is calculated from the formula : NPV(project) =
A0 + nEt=1 Ft/(1+K+Pt)t {NPV = Net Present value of project}
Take an example at Rs. 100000 is invested in project and net cash flow is
25000 per year for a period o 8 yrs and the requires rate of return is 15% with
an inflation rate of 3% then the net presetn value of the project is NPV =
-100000+ nEt=1 25000/I1+.15+.03)8 = 1938 If the NPV values comes
positive then the project is accepted otherwise rejected.
Risk Analysis:
I. There are mainly the foll. s/w risk.
1. Project Risk: It includes cost budget, the staff i.e. whether the people
working in organization wil continue to remain till end of the project. There is
risk associated with customer because the customer keeps on changing his
requirement. Also there is risk associated with final project impact.
2. Techical Risk: Technical risk deals with the design issue, interface
validation of data and finally maintenanace of project.
3. Business risk: a) The project might be excellent but no one wants
it. Eg: The project written in COBOL has less chances of being sold.
b) How to sell the project is not clear c) Risk arises because of losing budget
commitment d) Losing support of senoir mgmt. due to change in people
or change in focus.
II Risk Identification:
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1. Product Size: Size of the s/w to be built should be estimated. 2.

Business: One should take care of constraint imposed by mgmt or constraint in
market. 3. Customer characteristic: With communication identify the
nature of the customer. 4. Process Definition: Identify the risk with s/w
process in each development phase. 5. Technology to be used: The risk
associated with new technology incorporated
6. Staff size and experience: All the staff should be well paid, have experience
and have degree. If staff leaves in between problem arises.
7. Performance risk: Does the product designed meet the requirements of the
client? 8. Cost risk: One must identify whether the project will run
under the estimated budget. 9. Support risk: The s/w should be
easy to correct and enhance. 10. Schedule risk: Is the project schedule
propoerly maintained? And is the project delivered on time
Various s/w teams discuss on each.

A. The various s/w teams are: 1) DD(Democratic Decentralized) 2)
CD(Controlled Decentralized) 3) CC(Controlled Centralized)
4. DD : Here there are no permanent leaders. But the person who is good in
particular area is assigned a project for the duration till when the project goes.
Here the decision is taken by the group and communication among team
members is horizontal. Once the project is over, project manager is changed
and a new person is apponted among the group for the project in the subject
area where he has expertise. Now he carries the task similarly.
5. CD: Diagram In this s/w team there is horizontal communication
among team members and there is vertical communication between secondary
leader and the leader. This type of team is made in large projects because a
single leader cannot handle all project simultaneously so he appoints sub leader
and direct them as per need of the project.
6. CC: In CC the top level; leader is responsible for all decision making and
problem solving. Here al the communication is vertical and the internal team
coordination is done by team leaders who have to report to the top level. This
type of team is used inproject which carry crucial info. For eg: Nuclear plan
project , the DRDO project etc.
W5HH Principle : In this principle the following points are considered:

1. Why the system is being developed and does it justify the eexpenditure of
people, time and money 2. What will be done 3. When will it be done.
This helps to schedule the project. 4. Who is responsible for the
functions . i.e. the s/w team is defined and responsibilites are given
5.Where are they organizationally located. i.e not all the roles are responsiblites
of s/w but the customer and user also have the responsibility.
6. How will the job be done technically and managerally 7. How much resource
are needed.
PROJECT TERMINATION
A project is said to be terminated when work on the substance of project has

seized or slowed to the point that further progress on the project is no longer
possible. Following are the types of termination:
1. Termination by extinction: The project is stopped. It may end because it has
achieved its goal. Like the new product has been developed and handed over
to the client or s/w has been installed and is running. The project may also be
stopped because it is unsuccessful. For eg: If a medicine is prepared for a
disease but selling at higher rate and in the market there are other medicines
at lower rate for same disease then launching of this new medicine may not
benefit and this project may be carried on further.
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2. Termination by addition: Most projects are inhouse i.e. carried out by project
team for the use in parent organization. If a project is a major success it is
terminated by the parent organization. For eg: Suppose the Maths dept creates
a BSc[IT] course taken as a project. Now if after several years the BSc[IT]
course can run on its own, then the Maths dept can terminate this BSc[IT]
project which can be considered as a full fledged dept. now.
3. Termination by intefration: This method of terminating a project is most
common and it is done when the complexity arises. The property equipment,
material, personnel and functions of the project are distributed among existing
element of the parent organization. The output of the project becomes the
std. part of operating system of the parent or client For eg: The merger of
global trust bank with oriental bank is termination by integration.
Following points must be considered when the project functions are distributed
during integration.
a. Personnel: Where wil the project team go? Will it remain a team. B.
Manufacturing: Is the training complete? Are input materials and required
facilities available? Are new control procedures needed. C. Accounting:
Have the project accounts closed and auidited? Have the new accounts been
vreated and a/c nos been distributed. D. Engineering: Are all the
drawings complete and the files complete? Have maintenance schedule been
adjusted. E. S/w or info System: Has the new system been throughly tested
and is the s/w properly documented? Is the new system fully integrated with
current system. F. Termination by starvation: In this type a slow starvation
arises by budget decrement. Every one involved with the project has to cope
with budget cut. In some firms, for eg: they don’t want to admit the failure, so
the project is continued even if it is not fruitful. Inshort the progress has slowed
down, so the company may change the employees but the project may
continue.
Q. When a project should be terminated?

A. 1. If a project is successfully completed, then it is terminated. 2. Does
the project is consistant with organizational goals. 3. Is the project useful
or is it practical, if not it is terminated 4. Is the mgmt. enthusiastic
about the project to support the implementation. 5. Does the project represent
more advance over current technology. 6. Is the project team still inovative.
7. Has the project lost its key person.
Project audit
Project audit is an examination of mgmt of a project. Its methodologies and
procedures, its records, its budgets and expenditure. It may deal with the project
as a whole or only the part of project. A formal report must be presented which
takes the following points into account. 1. Current status of project: Which
tells that the work actually completed does match with the plant activity. 2.
Future status: Are significant schedule changes likely if so indicate the nature of
changes. 3. Status of crucial task: What progress has beeen made on
task that to decide the success or failure of the project.
4. Risk Assessment: Are the risk taken care of. 5. Information from other
project: What lessons are learned from the project autied earlier.
Depth of auditing : To what depth the auditing should be done is decided by the
organization. The factors which decide the depth of auditing are :
1.Cost 2. The clerical time used in conducting the audit 3. The storage 4.
The maintenance of the auditable data.
The general audit is normally carried out by the qualified technicians under the
direct guidance of project auditor.
Timing of audit :
1.The timing of audit will depend on the circumstances of a particular project. The
first audit are usually done early in projects life. The problem is discovered the
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easier it is to deal with. Early audits often focussed on the technical issues inorder
to make sure that the key technical problems have been solved. 2.
The audit done later in the life cycle of project are of less immediate value to the
project but are of more value to the parent organization. As the project develops
technical issues are less likely to be the matter of concern. 3. Post project
audits are conducted with several basic objectived in mind like legal necessity,
feedback for manageral level, to account for all project property and expenditure.
Responsibility of project auditor:
Following steps are carried out in a audit: 1. Essentially a small team of
experienced experts 2. Familiarized the team with the project.
3. Audit the project on site 4. After completion brief the project management.
5. Produce a written report according to specified format.
6. Distribute the report to project manager and project team for their response.
7. Follow up to see if recommendation have been implemented.
Project audit lifecycle.

There are 6 phases in the project audit lifecycle.
1. Project Audit initiation: This step involves starting the audit proces,
defining the purpose and scope of audit and gathering sufficient info. to
determine proper audit methodologe. 2. Project Baseline Definition: The
purpose of this phase is to establish performance std. against which the project
performance can be evaluated. This phase consist of identifying the
performance area to be evaluated, determining std. for each area for bench
marking and develop a program to measure and assemble the required info. 3.
Establishing an audit database: Once the baseline std. are established execution
of audit begins. Depending on the purpose and scope of audit the database
might include the information needed for assessment for project organization,
control, past and current project status, schedule performance and cost
performance. 4. Preliminary Analysis of Project: After the std. are
set and data collected judgemetns are made. The judgements should be fare
enough. It is auditors duty to brief the PM on all findings and judgement before
releasing the audit report. The purpose of audit is to improve the entire process
of managing projects.
5. Audit Reort Preparation 6. Rpoject Audit termination
Decision Making
A decision making is defined as a choice made from available alternative to take
an effective decision. The decision making process includes identifying and
defining nature of situation, identifying acceptable alternative courses of action,
choosing the best and placing into separation. The best decision would be one
that maximizes factors such as sales, profits, units produced.
Types of Decisions 1) Programmed Decisions - decisions that are applied to
routine situations that have occurred often and for which decision rules and
procedures have been developed and used again and again. These rules and
procedures are frequently used and placed in the organization standard operating
manual. 2) Non-Programmed decision – decisions that are applied to
non-routine situations that are new and different from situations experienced in
the past so that managers apply judgment and creative thinking to the
development of alternatives that are compatible with the operating procedures
and organizational policy.
Factors affecting Decision making 1) Certainty – A state of certainty
exist only when the manager knows the available alternatives as well as the
conditions and consequences of the actions. 2) Risk – A state of risk
exist when the manager is aware of all the alternatives but is unaware of their
consequences. 3) Incorrect Information – the alternative course of
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action are difficult to identify and information about the consequences can be
made.
Decision Making process 1. Recognizing and defining the situation 2.
Identifying different alternatives 3. Evaluating the alternatives.
4. selecting the best alternative 5. Implementing the chosen alternative
6. Follow up and evaluation.
Economic Analysis
Economic Analysis is also known as social cost benefit analysis and it is concerned
with judging the project from the larger social point of view. In such an evaluation
the focus is on the social cost and benefit of a project which may often be
different form its monitoring cost and benefits.
From the social cost benefit analysis we conclude that: 1. the direct
economic benefits and cost of the project measured in terms of prices, efficiency.
2. The impact of the project on the distribution of income in the society. 3.
the impact of the project on the level of saving and investment in the society.
4. the contribution of the project towards the fulfillment of certain factors
like self sufficiency, employment and social order.
Management Design
Design is the meaningful representation of something that is to be built. In the
project management concept design focuses on 4 major areas:
1. Data 2. Architecture 3. Interfaces 4. Components
Project Design is the first of the 3 technical activities that are required to build
and verify the software. 1. the data design transforms the information created
during analysis into the data structure that will be required to implement the
software. The data objects and relationship defines in the ER diagram and the
detail data contents depicted in the data dictionary provides the basis in data
design activity. 2. the architecture design defines the relationship between
the structure elements and the design platforms that can be used to achieve the
requirements that have been designed for the system. 3. The interface design
describes how the software communicates with itself and the system and
interface implies a flow of information and the specific type of behavior. 4.
the component level design transforms the structural elements of the software
architecture into a procedural description of software component.
Project Negotiations
Negotiation is defined as the process in which 2 or more parties seek an
acceptable rate of exchange for the products. Conflicts are involved in the
organization and settle down the contractual obligations become necessary. To
establish the lateral relation and allow the decisions to be made horizontally
across the lines of authority.
Principles of Project Negotiation
1) Separate the people from the problem – the conflicting parties are often
highly emotional. The emotions and objective facts get confused when it is not
clear and the conflicting parties tend to attack one another rather than to
discuss the problem.
2) Focus on interest rather that the position – the negotiator must determine
the concerned of the other party factors such as time, resources, funds,
workload, etc must be clearly discussed.
3) Before trying to reach agreement invent options for the mutual gain – as
soon as the problems are spelled out some effort should be made to find a wide
variety of problem solution.
4) Insist on using objective criteria – instead of bargaining on position main
attention should be given to find the standards such as marked values, expert
option, how company policy that can be used to determine the quality of the
outcome.
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Project Review
The project review is meant for evaluating actual performance with the projected
performance with the assurance and cost. When the actual performance is
measured and it is not as per the objectives then the reason for such performance
is evaluated.
Steps in review plan: the review team prepares a formal review plan around the
objectives of the review, the type of evaluation to be carried out and the time
schedule required.
1. Administrative Plan – the review group performs a) user objectives b)
operating cost and benefits
2. Personal Requirement Plan – evaluates all the activities which are involved with
the system personal and the staff that deal directly with the system. The
emphasis is one productivity, moral and job satisfaction.
3. Hardware Plan – the hardware of the project is also reviewed & the target is
comparison of current performance specification with design specification.
4. Documentation Plan – to evaluate the accuracy and the completeness of the
documentation compiled to date and its conformity with the pre-established
documentation standards.
Types of Projects
1) New Project: Projects for the creation of new production or service facility.
The rate of return on investment and the net cash flow are required to be higher
than the required rate.
2) Expansion Project: In case of project for the expansion of the existing
capacity, the differential return and the differential cost from the existing to the
planned level both are considered
3) Extension Project: In case of projects for the extension of the capacity or
scope of the existing plant/facility/service, the differential return and the
differential cost both are considered.
4) Replacement Projects: In case of projects involving replacement of the old,
obsolete and worn-out plant, equipment etc an assessment of the impact of
such replacement on returns with or without the replacement has to be
considered.
5) Improvement/Up gradation Projects: In case of Projects involving
improvements in the existing plant or process or its upgradaton by introducing
better technology at any one stage or over-all an assessment of the impact on
returns with or without the improvements has to be considered.
6) Research and Development Projects: The research and development
projects form part of the long range planning of an enterprise. Such projects
may have to be cleared in consideration of long-term objectives of the
organization.
Implementation of the project

Implementation of a Project is a complex exercise. Preliminary preparation for
Project implementation as follows
1. A comprehensive and detailed project survey should be done
2. A suitable project report should be set up.
3. A network-chart of the project activities should be prepared for effective
monitoring and control over the activities.
4. Effective monitoring and supervision over the project implementation
should be ensured by setting up a Project Information System.
5. Delegation of authority and responsibility at different levels in the Project
organization should be specified.
Stages of Project Implementation
1. Preparation of Engineering Designs: Detailed blue-prints and designs of
buildings, plant, machines, supporting facilities etc are prepared.
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2. Negotiation and Contracting: Legal documents are drafted and

arrangements are finalized for purchase of technology, etc
3. Installation and Construction Work: the contractors are engaged for
installation of plant and machinery and are provided with necessary funds, blue
prints and other support so that the work may progress as per schedule.
4. Recruitments and Training of Personnel: includes the engineers, the
technicians, the managers, the workers and other staff.
5. Plant Commissioning: the plant has been installed & other infrastructural
facilities have been provided plant is commissioned & trial production starts.
Project Monitoring and Control

Systematic and periodic review of the performance of a project during
implementation is an essential aspect of project management. In this process
under ‘financial control’ the actual Inflows and outflows, such a review is essential
for planning and control of the use of resources including cash.
The knowledge of estimation error provides a useful basis for adjustment and in
making more accurate and reliable estimate for future. It creates a sense of
responsibility and the Project management feels committed to certain targets and
levels. Feedback received from review is used for coordination between different
activities departments and functions and in balancing the investment. Large
variations not only indicate inefficiency but also lack of commitment and may be
lack of honesty on the part of project team.
Contractual Arrangements
1. Most inter-organizational work on projects is contractual in nature. 2.
CONTRACT – A forma; agreement between 2 parties wherein one party – the
contractor obligates itself to perform a service and the other party – the client –
obligates itself to do something in return. 3. Contractual arrangement is more
than just an agreement between parties. 4. Contractual Arrangement is a
codification of the private law - it defines the responsibilities, rights of the
parties in relationship to each other. 5. An ambiguous or inconsistent
contractual arrangement is difficult to understand and enforce. 6. Types of
Contractual Arrangements - Fixed price: price is agreed upon in advance and
remains fixed as long as there are no changes to scope of the agreement. -
Cost plus: the Contractor is reimbursed for all of the expenses incurred during the
performance of the contract.
Project Success / Failure Criteria

The criterion upon which the relative success or failure of a project may be judged
is called the project success/failure criteria. 3 basic sets of criteria are
- the sponsoring organization - project profitability - the classical
project management a. on time b. in budget c. to
specification.
Factors for Project Success
1. Clearly define the project goal 2. Provide a change control system
3. Provide a way of ensuring that planned resourcing is achieved.
4. Provide a way of including contingency in the plan 5. Enable the
upfront production of the project plans 6. Make it clear that project managers
are accountable for projects 7. Provide simple and effective monitoring methods
8. Provide simple and effective monitoring methods. 9. Provide
simple and effective reporting mechanisms
Factors for Project Failure
1. the goal of the project isn’t defined properly. 2. the goal of the project is
defined properly but then changes to it aren’t controlled
3. The project is planned properly but then it isn’t resourced as was planned
4. the project is planned such that it has no contingency
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5. the project isn’t planned properly. 6. the project isn’t led properly
7. the expectations of project participants aren’t managed
8. the project is planned properly but then progress against plan is not monitored
& controlled properly. 9. Project reporting is inadequate or non existent.
Project
Project consists of a group of interlinked activity. It has been defined in various
ways.
1. By Harrison – A project can be defined as non-routine, non repetitive one
off undertaking, normally with discrete time, financial and technical
performance goals.
2. By Dennis-Lock – A project is a single, non- repetitive enterprise, it is
usually undertaken to achieve planned results within a time limit and cost
budgets.
3. By little & Mirrlees – A project is any skill or part of a skill for
investing resources which can be reasonably be analysed and
evaluated is an independent unit.
Why Project Management
Companies have experienced: - Better control - Better customer

relations - Shorter development times - Lower costs - Higher quality
and reliability - Higher profit margins - Sharper orientation
toward results - Better interdepartmental coordination
- Higher worker morale
Companies have experienced some negatives; - Greater organizational
complexity - Increased likelihood of organizational policy violations -
Higher costs - More management difficulties - Low personnel
utilization
Human Factors and the Project Team

1. Meeting schedule and cost goals, without compromising performance is a
technical problem, with a human dimension - Project professional s tend
to be perfectionists - Pride in workmanship leads the team member to
improve (and thus change) the product - These changes cause delays in the
project
2. Motivating Project team Members: - The project manager often has little
control over the economic rewards and promotions of project team members, but
this does not mean he/she cannot motivate members of the team -
How are technical employees motivated? A. Recognition
b. Achievement c. The work itself d. Responsibility e. Advancement
f. The chance to learn new skills
3. Empowerment of project teams is also a motivational factor: a. It
harnesses the ability of team members to manipulate tasks so that project
objectives are met The team is encouraged to find better ways of doing things
b. Professionals do not like being micromanaged Participative
management does not tell them how to work but given a goal, allows them to
design their own methods c. The team members know they are responsible and
accountable for achieving the project deliverables d. There is good chance
that synergistic solutions will result from team interaction e. Team
members get timely feedback on their performance f. The project manager
is provided a tool for evaluating the team’s performance
Project Plan
54
- The final approved result of this procedure is the project plan, also known as a
Master or Baseline plan - Once planning phase is complete, it is beneficial to
hold a post-planning review - The major purpose of the review is to ensure that
all necessary elements of a project plan have been properly developed and
communicated
Project Plan Elements
The process of developing the project plan varies among organizations, but any
project plan must contain the following elements:
- Overview - a short summary of the objectives and scope of the project -
Objectives - A more detailed statement of the general goals noted in the overview
section. - General Approach - describes both the managerial and technical
approaches to the work. - Contractual Aspects - includes a complete list and
description of all reporting requirements, customer supplied resources, liaison
arrangements, advisory committees, project review and cancellation procedures,
etc. - Schedules - this section outlines the various schedules and lists all
the milestone events - Resources - this includes the budget (both capital and
expense requirements) as well as cost monitoring and control procedures -
Personnel - this section lists the expected personnel requirements of the project
including special skill, training needs, and security clearances -
Evaluation Methods - every project should be evaluated against standards and by
methods established at the project's inception - Potential Problems -
this section should include any potential difficulties such as subcontractor default,
technical failure, tight deadlines, resource limitations and the like.
Budgeting and Cost Estimation
- The budget serves as a standard for comparison- It is a baseline from which to

measure the difference between the actual and planned use of resources
- Budgeting procedures must associate resource use with the achievement
of organizational goal or the planning/control process become useless - The
budget is simply the project plan in another form
Estimating project Budgets In order to develop a budget, we must: -

Forecast what resources the project will require - Determine the required
quantity of each - Deiced when they will be need - Understand how
much they will cost – including the effects of potential price inflation
There are two fundamentally different strategies for data gathering:
- Top-down - Bottom-up
Top-Down Budgeting- This strategy is based on collecting the judgment and

experiences of top and middle mangers - These cost estimate are then
given to lower level mangers , who are expected to continue the breakdown
into budget estimates - This process continues to the lowest level
- Advantages: 1) Aggregate budgets can often be developed quite accurately

2) Budgets are stable as a percent of total allocation
3) The statistical distribution is also stable , making for high predictability

4) Small yet costly tasks do not need to be individually identified
5) The experience and judgment of the executive accounts for small but
important tasks to be factored into the overall estimate
Bottom-Up Budgeting - In this method elemental , tasks their schedules ,

and their individual budgets are constructed following the WBS or the project
55
action plan - The people doing the work are consulted regarding
times and budgets for the tasks to ensure the best level of accuracy
- Initially , estimates are made in terms of resources , such as labor hours and
materials - Bottom-Up budgets should be and usually are , more
accurate in the detailed tasks , but it is critical that all elements be included
Budgeting - Top-Down budgeting is very common - True bottom-up

budgets are rare - Senior managers see the bottom-up process as risky -
They tend not to be particularly trusting of ambitious subordinates who they
fear may overstate resources requirements
- They are reluctant to hand over control to subordinates whose experience and
motives are questionable
Scheduling - A schedule is the conversion of project action plan into an

operating timetable - It serves as the basis for monitoring and controlling project
activity - Taken together with the plan and budget , it is probably the major
tool for the management of projects
- In a project environment , the scheduling function is more important than it
would be in an ongoing operation - Projects lacks the continuity of day-
to day operation and often present much more complex problems of coordination
- The basic approach of all scheduling techniques is to form a network
of activity and event relationships - This network should graphically
portray the sequential relation between the tasks in a project
- Tasks that must precede or follow other tasks are then clearly identified , in
time as well as function - Such networks are a powerful tool planning
and controlling a project and have the following benefits: a) It is a
consistent framework for planning , scheduling , monitoring , and controlling the
project b) It illustrate the interdependence of all tasks , work packages ,
and work elements c) It denotes the times when specific individuals must be
available for work on a given task d) It aids in ensuring that the proper
communication take place between departments and functions e) It determines
an expected project completion date f) It identifies so-called critical
activities that , if delayed , will delay the project completion time g) It
identifies activities with slack that can be delayed for specific period without
penalty h) It determines the dates on which tasks may be started – or must
be started if the project is to stay on schedule i) It illustrate which must be
coordinated to avoid resource timing conflicts k) It illustrates which tasks may
run , or must be run , in parallel to achieve the predetermined project completion
date
l) It relieves some interpersonal conflict by clearly showing task dependencies
PERT and CPM
• With the exception of Gantt charts , the most common approach to scheduling
is the use of network techniques such as PERT and CPM
• The Program Evaluation and Review Technique was developed by the U. S.
Navy in 1958
• The critical Path Method was developed by Dumont , Inc during the same time
period ]
• PERT has been primarily used for research and development projects
• CPM was designed for construction projects and has been generally embraced
by the construction industry
• The two methods are quite similar and often combined for educational
presentation
Terminology
56
• Activity – A specific task or set of tasks that are required by the project , use
up resources , and take time to complete
• Event – The result of completing one or more activities. An identifiable end
state occurring at a particular time. Events use no resources
• Network – The combination of all activities and events define the project and
the activity precedence relationships
• Path – The series of connected activities (or intermediate events) between
any two events in a network
• Critical – Activities , events , or paths which , delayed , will delay the
completion of the project. A project’s critical path is understood to mean that
sequence of critical activities that connect the project’s start events to its finish
event
Drawing Networks
Activity – on – Arrow (AOA) networks use arrows to represent activities while

nodes stand for events
Activity –on- Node (AON) networks use nodes to represent activities with
arrows to show precedence relationshipsThe choice between AOA and AON
representation is largely a matter of personal preference
57

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PROJECT MANAGEMENT NOTES

Paper IV (Elective) : Project Management

2) Question pattern was discussed. There will be a 20 mark compulsory question

5) The weight-age of marks was also discussed upon.

There are totally 10 topics in which topic 1 & 2 for 20

1. Project Management - The Basics

This section of the Tasmanian Government Project Management Guidelines includes:

Projects vary in size or complexity, for example they may:

• Involve changes to existing systems, policies, legislation and/or

Why Project Management

Companies have experienced:

2) What are the essential characteristics?

A significant project in the Tasmanian State Government is usually

1. Definable, measurable project outcomes that relate to the corporate goals;

3. The structure of a project will vary depending on the benefits it is intended

3) What is Project Management?

1. Project Management is a formalized and structured method of managing

Q.1) what is a project?

A) 1) A project is initiated to achieve a mission. A project is completed as soon as

1) Purpose – A project has a well-defined set of desired end results.

Q.2) Discuss the need of project management.

Q.3) what are the different types of projects?

Q.4) what are the advantages of project management?

Q.5) What are the disadvantages of project management?

Q.6) Describe the project life cycle in terms of:

Q.7) Describe the goals or objectives of the project.

A) Objectives or goals of any project are:

Q.8) Describe the project life cycle phases.

3) Planning & Organizing phase:

5) Project Clean-up phase:

Diagram on Pg.10 of Choudhury.

Q.9) What are the limitations of project management?

Q.10) Describe the project management approach.

Q.11) How do projects, programs, tasks and work packages differ?

1.1. The Life of a Project

A high-level project management approach that fits most projects at a macro

Figure 1: High-level conceptual view of the generic life of a project

• Project initiatives may originate directly from Government policy or from

• Projects are usually justified in terms of corporate objectives and should

• Once a project is approved and funded, there is an initial Set Up period

Table 1 further describes the relationship of the documentation to each of the

Accepted / Steering Project Sponsor Steering Committee

1.2. Key Elements in the Project Life

Figure 2: Key Elements in the Project Life

Below is a brief explanation of each of these Key Elements:

a) PLANNING AND SCOPING:

It is important to establish the management structure for the project that

c) ORGANISATIONAL CHANGE MANAGEMENT

Organizational Change Management is the management of realigning an

Stakeholder Management involves the identification of people or organizations

Risk Management is the process concerned with identifying, analyzing, and

Issues Management involves monitoring, reviewing and addressing issues or

is advisable to maintain an Issues Register and this should be reported upon

Quality Management is the policy and associated procedures, methods and

The closing down of a project needs to be planned for. Essentially, successful

complex project, an external post-completion review/audit before formal closure

Table 2: Key Elements in the Life of a Project

4) Why is it important to determine project size?

2. The Project Sponsor or Project Officer preparing the Project Proposal/Brief

5. The result of the process should be a clearly defined and accepted

and discipline that will be employed. (Refer to the Project Management

Project Plan Elements