Project Evaluation and Implementation

Project:

“...A group of one time activity, having well defined sequences, duration, starting, and finishing time and cost”.

A project has following characteristic:

i. A Project has a single, definable purpose.

ii. It is an end item or result oriented approach.

iii. It is specified in terms of cost, schedule, and performance requirements.

iv. It is unique in application, that is it requires doing something different than was done previously

v. Project cut across organizational lines because they need skills and talents of multiple professionals and divisions.

vi. Projects are temporary activities and the organization usually has something at stake, when doing a project.

vii. A project is the process of working to achieve a goal. During the process, a project passes through several distinct phases called the project life cycle.

FUNCTIONS AND NEEDS

1. Planning Function:

a. Identification of project alternatives; b. Formulation of project and setting up organization; c. Preparation of feasibility report and appraisal budgets.

2. Scheduling Function:

a. Identification and breakdown of activities; b. Sequencing of activities; c. Allocation of resources and responsibility; d. Costing and funding the project.

3. Control Function:

a. Preparation of MIS; b. Preparation of work breakdown structure; c. Time control and cost control activities; d. Feedback and analysis.

NEED AND SCOPE

Project management involves great technical complexities and require diversity of skills. Managers are faced with the problems of putting together all the responsibilities and resources subject to certain constraints like limited time schedules and environmental uncertainty. Project management evolved to deal with the several problems and to take advantages of different opportunities.

Today project management differs from earlier day projects in terms of independency, complexity, rapid and radical changes social factors, technological developments, rising costs, increasing competition, resource shortage and pressure from interest groups. Project management is a departure from traditional management philosophy. Traditional Management Philosophy believes in simple ongoing functions, investing on most predictable and least risky resources but the management philosophy is growing and changing fast due to technical advancement and scarcity of resources. Here, Project Management is a one shot activity, which aims at optimum utilization of resources, and developing project management goals. Every project has three overriding goals – Budget, Schedule, and Performance Requirements. Every project should be very much clear about accomplishment of the previously mentioned three goals.

SOME FAMOUS PROJECTS

I) Manhattan Project II) Polaris Ballistic Missile Development Project III) Pathfinder Mission

SCOPE

A. INTERNATIONAL LEVEL:

a. Disagreement Programme b. Minimum Health Care Project c. Refugees’ Rehabilitation Programme

B. NATIONAL LEVEL:

a. Poverty Alleviation Programme b. Five Year Plans c. National Broadcasting Network Programme d. Setting up National Highways e. Building Railway Network etc.

C. STATE LEVEL:

a. Literacy Programme b. Rural area development schemes c. Building up of a Sports Complex etc.

D. FACTORY LEVEL:

a. Setting up a factory

b. Developing technology for a product c. Product diversification d. Vendor development etc.

Cleland and King suggested five general criteria to use project management techniques:

1. Unfamiliarity: Something different from ordinary routine.

2. Broad magnitude of the efforts: All encompassing activities that touch all the resources employed heavily in any organization like people, capital, equipments etc.

3. Changing environment: Applicable in high-tech industries like compilers, electronics, pharmaceuticals and communications also applicable in the industries which are less volatile but work in highly competitive and dynamic environment like chemicals and biotechnology.

4. Interrelatedness: All functional areas are interrelated and work across organizations.

5. Reputation of the organization: Project Management should look into completion of the project in time, falling, which it will result in financial ruin, loss of market share, are damaged reputation or loss of future contracts.

WHERE PROJECT MANAGEMENT NOT APPLICABLE OR NOT APPROPRIATE

I. Where consumers are more familiar with the undertaking business; II. Where environment is stable; III. Where the end item is less unique and more standardised; IV. Production of standardised and continuous industrial and agricultural

outputs.

DIFFERENT FORMS OF PROJECT MANAGEMENT

I. Basic Project Management: Health Education and Welfare Projects.

II. Programme Management: Long time duration and co-ordinated programmes goals. E.g. Housing projects, Urban development programmes.

III. New Venture Management: New product development or new market explorations. Eg. Research and development (R&D) project managemet of solid state engineering department, R&D product development of Alpha Company

IV. Ad-hoc Projects: Very short duration, temporary team development approach. This includes reorganizations, mergers and acquisitions, major audits, marketing expansion and management development programme.

V. Installation Project: This operates in airline accounts, air craft engineering. E.g. Launching of GTE airplane to airlines.

TECHNIQUES OF PROJECT MANAGEMENT

I. PERT/CPM Network scheduling

II. Resource levelling and scheduling

III. Time management techniques like milestone chart

IV. Work breakdown structure

V. Management Information System (MIS)

VI. Integrated Project Management System trough computers.

ORGANIZATION AND HRD ISSUES

PROJECT MANAGER

Project Manager is the most important element of project organization. The main responsibility of project manager is to plan, direct and integrate the work efforts of participants to achieve project goals.

TYPES OF PROJECT MANAGERS:

(A) Project Expeditors: Main responsibility is to achieve unity of communication.

(B) Project Co-ordinator: Main responsibility is to achieve unity of control over project activities.

(C) Matrix Managers: They have responsibilities of both unity of direction and control. Matrix Managers direct functional managers and project team members in criss cross pattern of vertical functional and horizontal project oriented matrix organization.

PROJECT MANAGER’S RESPONSIBILITIES:

(a) Planning project activities, tasks and end results, including doing the breakdown scheduling, budgeting, coordinating, tasks and allocating resources.

(b) Selecting and organizing the project team.

(c) Interfacing with stakeholders.

(d) Negotiating with and integrating functional managers, contractors, consultants users and top management.

(e) Providing contract with the user.

(f) Monitoring project status.

(g) Identifying technical and functional problems.

(h) Solving problems directly or knowing where to find help.

(i) Dealing with crisis and resolving conflicts,

(j) Recommending termination or redirection of efforts when objectives cannot be achieved.

QUALITIES OF A PROJECT MANAGER:

(A) Personal Characteristics:

a. Flexible and adoptable b. Preference for initiative and leadership c. Confidence, persuasiveness, verbal fluency d. Effective communicator and integrator e. Able to balance technical solutions with the time, cost and human

factors f. Well-organized and disciplined g. A generalist rather than a specialist h. Able to devote most of his/her time to planning and controlling i. Able to identify problems and to make decisions.

(B) Behavioural Skills:

A project manager needs strong behavioural and interpersonal skills. In particular, s/he must be an active listener, active communicator and able to capitalize on informal communication channels.

(C) General Business Skills:

These should include:

a. Understanding of the organization and the business.

b. Understanding of general management – marketing, control, contract work, purchasing, law, personal administration and the general concept of profitability.

(D) Technical Skills:

To make informed decisions, project manager must be able to grasp the technical aspects of the project. In none or low-technology environments, understanding can be developed through experience and informal training. In high-technology projects, qualifications are more rigorous, including a career moulded in the technology environment and a knowledge of many fields of science and engineering.

Project Team: Project work is accomplished by a group of people who are main responsible for completion of project and accomplishment of project goals.

ROLES OF DIFFERENT INDIVIDUALS IN A PROJECT TEAM

I. The Project Engineer:

A project engineer shoulders responsibilities for co-ordinating technological areas and assuring integrated design of the project end –item. The responsibilities encompasses system analysis and engineering, design, interface control, system integration and testing.

II. The Contract Administrator:

S/he is responsible for project’s legal aspect such as authorization to begin work and subcontracting with outside firms. Contract administrators are involved in preparing the proposal, defining and negotiating the contract, integrating contract requirements into project plans, ensuring the project fulfils contractual obligations, identifying and defining changes to project scope and communicating the completion of milestones to the customers.

III. Project Controller:

The project controller assists the project manager in planning, controlling, reporting, and evaluation. S/he works with functional managers to define tasks and interrelationships on the work breakdown structure, as well as to identify individuals responsible for controlling tasks. S/he also maintains work packages files and cost summaries, releases approved work authorization documents, monitor work progress, evaluates schedule and cost progress, and revises estimates of time and cost to complete the project.

IV. Project Accountant:

The project accountant provides financial and accounting assistance to the project managers. S/he establishes procedures for utilising the PMIS, assists in identifying tasks to be controlled, establishes cost accounts, prepares cost estimates for tasks, validates reported information, and investigates financial problems.

V. The Customer Liaison:

The customer liaison serves as the customer’s or user’s technical representative. S/he participates in technical discussions and ongoing reviews (with-in the bonds of the contract) and helps expedite contract changes.

VI. The Production Coordinator:

The production coordinator plans, monitors and coordinates production aspect of the project. Responsibilities include reviewing engineering documents released to manufacturing; developing requirements for releases, equipments and parts, monitoring procurement and assembly of parts, materials, and process for the end-item, monitoring manufacturing costs.

VII. The Field Manager:

The field manager oversees installation, testing, maintenance, and handling over of the project end-item to the customer. Responsibilities include scheduling field operations, monitoring field operations costs, supervision of field personnel, and liaison with the project manager.

VIII. The Quality Assurance Supervisor:

S/he establishes and administers inspection procedures to ensure fulfilments of all quality-related requirements.

Members of the office charge their work time to the project or to an overhead account. They are assigned to the office only when they must be in frequent contact with the project manager or other project office personnel, or when their services are required continuously and for an extended period.

PROJECT SYSTEM DEVELOPMENT LIFE CYCLE

In Project System Development Life Cycle, there are four phases:

a) Conception

b) Definition

c) Execution

d) Operation

FIRST PHASE: CONCEPTION

The conception phase comprises of three separate stages:

a) First Stage: Preliminary investigation and request clarification

b) Second Stage-Project Initiation: Initiation of the point where the idea for a system is born. In this stage, a problem can be recognized and a potential solution is sought of. Project initiation requires the need for significant ideas, uncertainty or risk factors, return on investment factors. In project initiation stage the following factors are analysed:

a. The environment b. The needs definition and objective of the project c. Preliminary alternative solutions and estimates of costs, benefit,

strength and weaknesses. d. Estimated budgets e. Affected individuals and organizations f. Potential solutions

c) Third Stage-Project Feasibility Study:

Feasibility is the process of investigating a problem and developing a solution insufficient detail to determine if it is economically viable and worthy of development. In feasibility study after invitation to bid the process starts. The company, which invites bid, is known as the user’s solicitation. The user evaluates all contractors’ response, selects the contractor and feasibility stage is completed. Thus, the top management establishes the relation and finds which contractor is the best. This is the idea of feasibility studies. This study includes request clarification and request approval. The bidders list is prepared and the final contractor is selected.

In India, Mnistry of Programme Implementation gave the following structures for feasibility study and report.

Preamble Summary of the project Chapter I Request for bidding Chapter II General information - origin of project idea, option

examined, methods used for analysis and evaluation of bidders, selecting the best alternative bidders, source of

technology and fund. Chapter III Project formulation Chapter IV Engineering and technology choice of technology, criteria

for its selection, upgradation, obsolescence, technical specification, major inputs, quality standard, documentation, bill of materials etc.

Chapter V Marketing and commerce, supply and demand analysis, market share, payment terms, royalty payments, guarantee, warranty and insurance coverage etc.

Chapter VI Financial analysis – capital costs, operating and distribution costs, contribution, break-even analysis, ROI, payback, NPV, IRR etc.

Chapter VII Project management and organization site selection, capacity planning, product mix, factory layout, PERT-CPM, machine capacity, organizational structure, project team structure and responsibility etc.

Chapter VIII Selection of proposal – Ability to satisfy needs, return on investment, project plan and management, reputation of contractor, likelihood of success and failure, fit to contractor for resources and technical capability.

Criteria 1 2 3 4 5 Technical solution approach

Bad Poor Adequate Good Excellent

Price of Contract >1.8 1.6-1.8 1.4-1.6 1.2-1.4 <1.4 Price organization and management

Bad Poor Adequate Good Excellent

Likelihood of meeting cost/schedule targets

Bad Poor Adequate Good Excellent

Reputation of contractor

Bad Poor Adequate Good Excellent

There are three types of feasibility:

(a) Technical Feasibility:

Can the work for the project be done with the current equipment, existing technology, and available personnel? If new technology is needed what is likelihood that it can be developed?

(b) Economic Feasibility:

Is the project viable enough to meet to cost and economically feasible?

(c) Operational Feasibility:

If the project system is developed and implemented, will it be feasible? Will there be resistance from users that are affected by the application benefits?

PROJECT CONTRACT OR CONTRACT MANAGEMENT

(PROJECT PROCUREMENT PROCESS)

Principle of Contract Management:

All works in project are done according to formal or informal contracts. Even in internal projects where users and contractors belong to the same organization, the statement of work are documented so that the user’s expectation are clearly known and that contracted work will confirm to them. Most projects also involve some degree of external and legal contracting.

(The arrow signs indicate the contract agreement.)

CONTRACTING PARTIES IN THE PROJECT

The contract process starts when the user contracts with principal party (the prime contractor) to be responsible for the overall project. This principal party may contract with secondary parties – subcontractors, vendors, consultants, materials suppliers and contract labour to be responsible for portions of the project. These secondary parties, for example, a general or prime contractor are hired by the user to manage the overall construction project, including fabrication and assembling of the building structure. For specified work such as wiring, pumbling, ventilation, and interior details, the contractor may subcontract with other organizations to do the work. For development projects of large scale systems, major subsystem and its elements are subcontracted.

Prime Contractor

Sub-contractor

Material and Other supplier

Consultants Contract labour

User

In project contract the user while contracts with principal contractor and the principal contractor with subcontractor, the project manager is acting as an agent on behalf of user and principal contractor. A project contract should have the following basic elements –

(a) Offer and acceptance of offer (b) Lawful consideration (c) Lawful object (d) Capacity of parties to make the project contract.

A project contract of project duly signed by the project manager binds both the user and prime contractor. Unless a project agreement is issued in acceptance of a specified bid or offer by a prime contractor or vendor, it is not a contract. Again it becomes a contract when it is accepted by the prime contractor. If acknowledgement is made by the vendor or prime contractor differing in any respect from the original offer, this constitutes only a counter offer, this is not an acceptance. Again equipment details, materials, services provided, price, time of delivery and place, quantity and quality should be mentioned in project contract.

COMPILATION OF PROJECT CONTRACTS:

(a) Pre-qualification and short listing of prospective bidders. (b) Notice inviting tender/enquiry (c) Issue tender documents to prospective bidders (d) Pre-bid conference for clarification of queries to the tenderer. (e) Receive the bids, evaluate them and make comparative statements (scrutiny

of tenders) (f) Technical and commercial negotiations (g) Price negotiation (h) Letter of intent. The receipt of the letter of intent is the date of start of

delivery. (i) Preparing proper agreement (j) Monitoring and control of progress (k) Proper documentation (l) Planning and implementation of corrective actions.

PRACTICAL ASPECTS OF CONTRACT FOR EFFICIENT CONTRACT MANAGEMENT

(a) Proper Planning

Proper product selection and design; Proper process selection; Proper technology selection; Proper location or site selection; Proper time schedule and cost estimate

(b) Collating/ Collecting/ Assembling all relevant detailed information in the

tender document.

(c) Arbitration clause and jurisdiction of court.

(d) Performance guarantee test

(e) Identifying appropriate agencies

(f) Thorough and proper negotiation

(g) Bid Evaluation Criteria (BEC)

(h) Adequate communication and record keeping

(i) Contractor should be asked to develop a detailed programme in the form of network and furnished to the purchaser.

(j) Authority must have the prerogative off loading his work to other agencies at his cost (Risk Purchase).

OBJECTIVE OF CONTRACT MANAGEMENT:

(a) To see that the project contract should be finished in time. For this, the user should prepare quality assurance plan. It is the check system to examine validity of contract. The user should ask the prime contractor to furnish broad frame of contract including GANT chart and networks.

(b) Project should be finished in time.

(c) Projects should have proper cost consideration. Here it is ensured that user and prime contractor should enjoy win-win situation.

(d) Project work has been broken into small packages it means all project is broken into manageable units and user can identify people for responsibility centres.

LEGAL ASPECT OF CONTRACT

In project contract the user while contracts with principal contractor and the principal contractor with subcontractor, the project manager is acting as an agent on behalf of user and principal contractor. A project contract should have the following basic elements –

(a) Offer and acceptance of offer (b) Lawful consideration (c) Lawful object (d) Capacity of parties to make the project contract.

Lawfulness of contract is violated if: (a) Forbidden by law; (b) Fraudulent; (c) Intent to cause injury to person, property of others; (d) Immoral or opposed to public interest.

Common illegal contracts are:

(a) Agreement for obstruction of justice; (b) Unreasonable restraint on trade and employment; (c) Promoting immorality (d) Defrauding (e) Interfering with public officials’ duties.

Termination of Offer:

(a) Rejection of offer; (b) Counter proposal; (c) Revocation by offerer; (d) Reasonable time laps; (e) Illegality, insanity and death; (f) Bankruptcy.

Lawful Consideration:

There should be lawful consideration in agreement of contract. A minor can exceptionally disaffirm or disown the contract. In this case only if court believes that reasonable causes exists for implementation of execution of contract, even though it is found that minor is involved, court may declare validity of contract.

Global Tender:

In case of global contract, the user may sign a contract with Aliens. Aliens have same right regarding contractual matters. However, in case of global contract different countries have different contractual matters. Any fraudulent, immoral, injuries, opposed to public interest global contracts are invalid. The user should give direct and exposed notice, inviting global tenders. Here, care should be taken so that all competent parties have fair and equitable chance to bid. In global contract the user may have right to inspection and right to rejection. The term of payment should specifically mentioned in contract agreement. In global contract it is mentioned whether global tender is agreed upon execution of contract according to –

(a) Free on Board (FOB) contract (b) Free or rail (FOR) contract (c) Cost insurance and freight (CIF) contract.

In case of non-delivery or non-completion on agreed date, it implies breach of contract and the user may cancel the contract. S/he can also sue for damages for non-delivery. Again if the user cancels the contract and the global tender suffers a loss due to anticipatory breach or breach, the global tender can collect the damage to the extent s/he has suffered the loss of profit. But it is due to global tender’s act, the user may recover the loss. Again in case of inviting global tender, the user should make sure that there should not be any infringement of patent rights which is globally applicable anywhere in the world.

NEGOTIATIONS FOR PROJECT

The purpose of negotiation is to clarify technical or other terms in the contract and it is essentially a discussion between a user and a co0ntractor with the view to reading an agreement. Negotiation is not necessarily done on standardised items

for which agreement terms are simple and costs are fairly well known. But, it is common place on complex system that requires development work and involve considerable uncertainty and risk. Different contractual agreements are signed after negotiation. They are:

(a) Fixed Price Contract:

The price paid by the user is fixed regardless of the cost incurred by the contractor. Here, the contractor agrees to perform all work at a fixed price. Clients are able to get the minimum price by putting out the contract to competitive bidders. For example, Contract agreement cost estimates (Cex) = Rs. 1,00,000, Fee = Rs. 10,000 and Price = Rs. 1,10,000. Now, whatever the projects actually ends up costing (Cac) the price to the clients remaining Rs. 1,10,000.

(b) Cost plus contract:

The price paid by the customer for the project is based on the costs incurred in the project plus the contractor’s fees. The contract is reimbursed for all direct costs plus an additional amount to cover overhead and profit. Here, the burden of risk is on the client. For example, Contract agreement cost estimates (Cex) = Rs. 1,00,000. But all allowable costs will be reimbursed. Fee = Rs. 10,000, target price = Rs. 1,10,000. All allowable costs (perhaps, all cost (Cac) will be reimbursed in addition to the fee.

(c) Incentives:

The amount paid by the customer depends on the contractor’s performance. The contractor either receives a bonus for exceeding the requirements or must pay customer a penalty for failing to meet the requirements.

Other types of agreements are:

(d) Supply only contract

(e) Supply and supervision of erection

(f) Supply and erection (including commissioning)

(g) Consultancy contract

(h) Maintenance contract

(i) Other services contract:

This is applied for shipping agents to accredited agents. Shankar and Co. in Germany executes this contract of clearing on behalf of suppliers.

Negotiation process starts during preparation of the proposal. During negotiation, terms related to specifications, schedules and prices are converted to legal and contractual agreements. Performance and costs are also discussed. Throughout negotiation the goal is to obtain an agreement to the best advantage of the company. In countering objections, the project manager’s best defence is a well

thought out project plan that clearly shows what can or must be done t achieve desired parameters. To execute negotiation the project manager must be familiar with technical details of system design, fabrication, related costs and competitive advantages and disadvantages. Final negotiation is the last opportunity to correct the misperception. After that the signed contract becomes the binding agreement for the project.

PROJECT COST : CAPITAL AND OPERATING (PHASE SIX – DEFINTION) CAPITAL COST:

(I) Land and site development: a. Basic cost of land including conveyance and other allied charges; b. Premium payable on lease hold; c. Cost of levelling and development; d. Cost of laying approach roads and internal roads;

(II) Building and civil work:

a. Building for main plant and equipment; b. Building for auxiliary services like steam supply, work shop,

laboratory, water supply etc.; c. Godowns, warehouses etc.; d. Non-factory buildings like canteen, guesthouses, time-office etc.; e. Quarters for essential staffs; f. Garages, sewers, drainage, tanks, wells, basins, bins, cisterns.

(III) Plant and Machinery:

a. Cost of imported machinery: This consists of FOB (Free on Board) value, shipping, freight and insurance cost, import duty, clearing loading and unloading etc.;

b. Cost of indigenous machinery: This consists of FOR (Free on Rail) costs. E.g. sales tax, octroi, railway freight etc.;

c. Cost of stores and spares;

d. Foundation and installation charges.

(IV) Technical know-how and engineering fees

(V) Expenses on foreign technicians and training of Indian technicians abroad

(VI) Miscellaneous fixed assets:

Furniture, office machinery, tools, vehicles, diesel generating sets, transformers, boilers, laboratory and workshop equipment, fire fighting equipments etc.

(VII) Patent, Licences, Trademarks, Copyright

(VIII) Preliminary expenses:

Market survey, feasibility report, drafting of memorandum and article of association etc.

(IX) Capital issue expenses:

Underwriting commissions, brokerage, fees to managers and registers, printing advertising and publicity, stamp duty etc.

OPERATING COSTS:

(I) Material Cost:

a. Direct Material: Direct material can be identified with and allocated to cost unit and cost centres. This includes prime cost material.

b. Indirect Material: Indirect material cannot be identified with the cost units and cost centres. This includes duties and taxes, freight inward, VAT etc.

(II) Labour Costs:

a. Direct wages: Prime cost labour, fringe benefits, employer’s contributions to PF and ESIC, medical benefits, etc.

b. Indirect wages: Ancillary to production. This includes wages for maintenance workers, idle time wages, overtime, night shift, holiday wages, bonus etc.

(III) Expenses:

a. Direct Expenses: Chargeable or process expenses. This includes hire charges for technical jobs, drawing, layout, expenses relating to receipt of contract, travelling etc.

b. Indirect expenses: Rent, rates and taxes, insurance, canteen charges, hospital expenses, power, lighting, heating etc.

FUNCTION-WISE CLASSIFICATION OF COST

(I) Production cost:

a. Direct material b. Direct labour c. Direct expenses d. Factory overhead

(II) Administrative cost: a. Salaries of office staffs, accountants, directors and others; b. Maintenance of factory estate; c. Rent, rates, depreciation of office building; d. Postage, stationary, telephone etc.

(III) Selling and distribution costs:

a. Salaries and commission of salesmen and sales manager; b. Expenses on advertisement; c. Rent, rates and depreciation of sales office, warehouses etc.

PHASE – C: EXECUTION

The execution phase starts when works specified in the project plan input into action. Sometimes the phase is termed as acquisition phase because most of the project resources are acquired here. It is also known as design phase as all the project systems have a pattern, configuration, and structure. Again, when an acceptable design is chosen, the system goes into production. Production involves either fabrication of a single item or mass production. The execution phase has following cycles:

Issue of formal order for executing the project.

(I) Selection and appointment of project manager and his team (II) Prepare detailed budget (III) Initiate discussion with financial institutions, banks, contractors and

consultants. (IV) Issue/publish “Notice for inviting tenders” (NIT) for various works. (V) Initiate and finalise negotiation with collaborators of technology and

suppliers of machinery (VI) Setup liaison cell for effective coordination and control (VII) Prepare detailed project report.

PHASE – D: OPERATION AND IMPLEMENTATION

In the final, the operation phase is applied. Here, the user takes charge, operates the system and evaluates its performance. The contractor may remain involve for providing maintenance support and evaluation services. This phase also include project evaluation and project appraisal.

Success of project management depends heavily on operation and implementation of the project. Defective implementation causes delays, which in turn results in cost escalation, technological obsolescence, non-availability of items and suppliers. Here, project management teams work in a group for successful operation. The project-head should finalise budget and allocate funds for each area and each subsystems. This is called work breakdown structure. Here, project network analysis (PERT-CPM) is implemented. Project financial inventory control is applied like EOQ. Another responsibility of project team in this phase is setting up “cost engineering cell”. Project quality control system and quality standardise applied.

PROJECT EVALUATION

Objective:

Improve performance of project; Obtain better ROI (return on investment) Achieve greater profitability; Effective use of resources.

Principles:

Evaluation must be objective; It must be impartial; It must be carried out by appropriate professionals; It must be practicable; It has the aim to improve effectiveness of system and produce of future

projects

Activities:

(A) Feedback and analysis:

a. Examine:

Files of a company Files of a project

b. Evaluate:

Economical and political climate Management tactics and strategies Process and technology utilised

c. Interview:

Key persons in the project Experts Others

d. Review and assess:

Project organization Management style Contribution team member Top management of the company

(B) Guidelines to future project:

a. Planning:

Market survey and environment scanning Define scope and work carefully Plan the infrastructure and manpower

b. Feasibility study

c. Time and cost

d. Implementation and monitoring:

Award of contract to the lowest bidder is not always wise decision. Check up reliability and past performance.

Setup liaison to improve coordination between various agencies like collaborator and government.

Maintain written records of major events.

Introduce proactive P.M.I.S. (Project management Information System)

e. Develop project management team, systems and procedure:

Design MIS to suit appropriate level. Standardise report and procedure. Select suitable software for MIS. Impart proper training to project team.

COST BENEFIT ANALYSIS

A project involves one time capital investment and a recurring cost for a subsequent period. In return, the project is evaluated to yield benefits for a long time to come. There are certain models for cost benefit analysis:

(I) OECD Model: Little and Mirrlees in 1969 (II) UNIDO Model: Sen, Dasgupta and Stephen Marglin in 1972 (III) GUIDE Model: Coling Bruce in 1976

Methods of evaluations: Estimation of investment and return on investment

(I) Payback period (II) Average or accounting rate of return (III) Net present value (IV) Cost benefit analysis (V) Internal rate of return

QUESTIONS

1. Discuss various types of projects.

2. Explain the project life cycle.

3. List and briefly explain the various steps in identification of a project.

4. What factors have a bearing on the choice of technology for a project?

5. Discuss “Jury of executive opinion” and “Delphi method” of demand forcasting.

6. Discuss various uncertainties in demand forecasting.

7. What points should be kept in mind while estimating the working capital requirements and planning for its funding?

8. Define NPV. Discuss various properties of NPV. What are the advantages and disadvantages of NPV as an appraisal criterion?

9. Discuss in detail the key steps in the sample survey for market appraisal. How would you characterize the market on its basis?

10. Define Social Cost Benefit Analysis (SCBA). What are the five strategies of appraisal in the UNIDO method for SCBA as described in the Guide to practical project appraisal?

11. What is IRR and how it is calculated? What are the various problems with IRR which leads to multiple IRR? Discuss the implications of multiple IRR in project appraisal.

12. Discuss the various means of financing a project. What financing mix do you suggest for a small scale unit.

13. Discuss and evaluate the “variance analysis” approach to project control. Also explain the various prerequisites for successful project implementation.

14. Write a note on techniques of project appraisal.

15. What do you mean by project identification? Explain the various types of projects.

16. Discuss the suggestions helpful in scouting the project ideas.

17. What are the different kinds of relationship commonly used in the trend projection method?

18. Discuss the uncertainties in demand forecasting. How can one cope with these uncertainties?

19. What points should be kept in mind while estimating the working capital requirements and planning for its financing?

20. What are the components found in cash flow statement?

21. What is MIRR? Why it is superior to the regular IRR?

22. Why is payback period method so popular, despite its shortcomings?

23. As per the UNIDO method, how are the following valued?

a. Tradable inputs and outputs

b. Non-tradable inputs and outputs

c. Labour

d. Foreign exchange

24. How are the following determined or defined in the Little-Mirrlees approach?

a. Shadow price of traded goods

b. Accounting price of non-traded goods

c. Shadow wage rate

d. Accounting rate of return

25. Illustrate the problem of scheduling in view of resources constraint with the help of an example.

26. Discuss the various methods of demand forecasting.

27. Discuss various phases in the life cycle of the project.

28. Write a short note on project scheduling and control.

29. Briefly discuss various sources of financing a project.

30. Market and demand analysis plays a crucial role in investment decision making. – Justify.

31. What are the various remedies for non-performance of a contract?

32. What are the important considerations in preparing a project report?

33. What are the various sources, which are helpful in product identification?

34. What is the rational of SCBA?

35. Distinguish between accounting rate of return and internal rate of return.

36. Discuss various problems in implementation of a project.

37. What are the factors considered in technical appraisal of a project?

38. Explain the various stages of Project Life Cycle.

39. What do you mean by Project Management? Also explain the scope of project management.

40. Write a note on types of projects.

41. Write a note on techniques used for Forecasting Future Demand.

42. Explain the basic criterion of project appraisal followed by the banks and other financial institutions.

43. Discuss in detail the various stages involved in the execution and management of a project.

44. Write a note on techniques used to analyse project profitability.

45. What do you mean by market appraisal of a project? Explain the steps involved in market appraisal.

46. Explain the role of capital budgeting techniques in project appraisal and analysis.

47. What do you mean by project scheduling and control? Explain the advantages of project scheduling.

48. What is Social-Cost Benefit analysis? Explain the rationale of social cost benefit analysis.

49. Write in detail the remedies for non-performance of contract.

50. Define Project. Explain the characteristic of a project.

51. Discuss the problems of identification, formulation, appraisal and implementation of new project.

52. What do you mean by Project Management? Also, explain the importance of project management.

53. Write a brief note on consideration involved in Project Appraisal.

54. What do you mean by Technical Appraisal? Explain the process of Technical Appraisal.

55. Write a note on techniques of Market Analysis.

56. What are the sources of finance to meet the short-term financial requirements?

57. What process is followed to measure funds requirements of a project?

58. Critically evaluate the internal rate of return techniques of Capital budgeting.

59. What do you mean by SCBA? What is the need to conduct SCBA?

60. Write in brief about UNIDO approach used to conduct SCBA.

61. What do you mean by project scheduling and control? Explain the advantages of project scheduling.

62. Discuss the uncertainties of demand forecasting.

63. List the key issues to be covered in a technical collaboration arrangement.

64. Discuss the contents of the projected balance sheet.

65. How internal rate of return is calculated? Discuss the accept and reject criteria under IRR method.

66. Describe and evaluate the various forms of project organization.

67. Discuss the authority and orientation problems in project setting.

68. Discuss the prerequisites for successful project implementation.

69. Compare and contrast UNIDO approach and L-M approach of social cost benefit analysis.

70. Why project audit is conducted? Also discuss problems in conducting project audit.

71. Define contract management and also discuss the remedies for non-performance of contract.

72. Discuss the different phases in Project Life Cycle.

73. Why it is important to do a thorough and detailed job of need identification?

74. Describe two methods for measuring the effectiveness of your proposal efforts?

75. What is meant by the term total slack as applied to a path?

76. Describe why it is necessary to develop a baseline budget for a project?

77. Describe what the project manager should do to perform the organising function? Give some specific examples.

78. Explain the approaches of SCBA.

79. Explain the details of preparation of project report.

80. Explain project audit and why it is important for an organization?

81. What is capital budgeting? Give various techniques of capital budgeting.

82. How the detailed project report is prepared? Give various steps involved in it?

83. What are the social cost of a project? What challenges are faced by the developing countries regarding social costs?

84. What is project implementation? What is the role of a project manager in implementation of a project?

85. What is sales forecasting? How it is done?

86. What is cost estimation? How the cost of a project is estimated?

87. What is market survey? Why it is done?

88. What is working capital? How the working capital requirements are estimated?

89. What is ranking of projects? Which are the methods used for ranking a project?

90. Discuss the scope of project management.

Anirban Chakraborty