FACULTY:

Dr. CH. VENKATAIAH

B.Tech, MBA, PhD
Associate Professor (Operations, Quality & Project Management)

UNIT
V

PROJECT CLOSURE

Project Audit - Objectives

Evaluate the efficiency and effectiveness
with which the project was managed, the
level of customer satisfaction and the extent
to which the project delivered the expected
benefits to all the stake-holders.
Assess what was done wrong and what
contributed to success.
Identify lessons which will improve the
delivery of future projects.
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

When to Audit
In Process Project Audit - concerned with
the progress and performance of the
project so that corrective changes can be
made.
Post Project Audit - emphasis towards
managing projects in a better manner in the
future

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

How to Audit
Project audit is not a witch hunt (a campaign

directed against a person or group).

Should address project issues and refrain from

commenting on individual performances.
Determine what went wrong and why it went wrong,
and how such mistakes can be avoided in the future.
The audit must be constructive and corrective and
not punitive in its observations.
Audit activities should be sensitive to human
emotions and reactions, and the inherent threat to
those being evaluated should be reduced to the
minimum.
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

Who Should Audit

Team from within the organisation
Special team of experts hired from outside
Co-opt project team members
Potential project managers

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

Audit Report
From organisations perspective:
Organisational culture
Senior management support
Project goals
Risk management
Project team
External evaluation
Customer satisfaction.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

Audit Report
From Project Teams perspective
Planning and control systems
Conformity to schedule, cost and quality
Management information system
Adequacy of resources

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

Project Closure
Normal project closure
Premature closure
Perpetual (never ending ) projects
Failed projects

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

10

Project Closure Process

Project closure plan:
What tasks are required to close the project?
Who will be responsible for these tasks?
When will closure begin and end?
How will the project be delivered?

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

11

Project Closure Activities

Getting delivery acceptance from the
customer.
Shutting down resources and shifting them to
new uses.
Closing accounts and seeing that all
outstanding bills are cleared.
Reassigning project team members.
Evaluating the project team, team members,
and the project manager
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

12

Performance Evaluation
Evaluate the project team collectively and
individually.
Set performance measurement criteria for team
before project begins. Some of these are:
Goals
Responsibilities and performance standards
Reward System
Carreer Planning
Authority
Trust
Evaluation Criteria
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

13

Performance Evaluation
Individual Performance
Appraisal by functional heads
Appraisal by functional heads with inputs
from Project Manager
Appraisal by functional head and Project
Manager especially in Matrix organizations
Appraisal by Project Manager.
360 feed back or multi-rater appraisal.
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

14

Any Queries???

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

15

Agencies Involved

The Planning Commission of India Functions

Assess material, capital and human resources of the country,

including technical personnel, and investigate possibilities of
augmenting resources found to be deficient in relation to the
nations requirement;
Formulate a Plan for the most effective and balanced utilisation
of country's resources;
Prioritise and define the stages in which the Plan should be
carried out and propose the allocation of resources for the due
completion of each stage;
Identify factors tending to retard economic development, and
determine conditions which should be established for the
successful execution of the Plan;

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

17

Planning Commission - Functions

Determine the nature of the machinery which will be necessary
for securing the successful implementation of each stage of the
Plan in all its aspects;
Periodically appraise the progress achieved in the execution of
each stage of the Plan and recommend adjustments of policy
and measures that be necessary; and
Make such interim or ancillary recommendations as appear
appropriate based on consideration of prevailing economic
conditions, current policies, measures and development
programmes or on an examination of specific problems as may
be referred to it for advice by Central or State Governments.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

18

Agencies Involved
Project Appraisal and Management Division.
Set up in 1972 as a special division of the Planning
Commission under the name Project Appraisal Division.
Later changed to Project Appraisal and Management
Division.
The PAMD is responsible for techno-economic appraisal
of all plan projects or schemes of Ministries and
Departments of Government of India.
Proposals of the Ministry of Defence and the Department
of Atomic Energy and Space not within its purview.
Appraises all projects costing Rs 50 crores or more.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

19

Other Agencies
Standing Finance Committee (SFC)

Appraises projects costing over Rs 15 crore and less than

Rs 50 Crores.
Composition
Secretary of the Administrative Ministry/Department
Chairperson
Financial Advisor of the Administrative Ministry/Department
Member
Joint Secretary in Charge of the Subject Division Member
Representative of the Planning Commission, Department of
Expenditure and any other Ministry/Department that the
Secretary/Financial Advisor may suggest can also be invited, as
per requirement.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

20

Other Agencies
Expenditure Finance Committee (EFC)
Appraises projects costing over Rs 50 crores
(For proposals costing less than Rs 150 Crore)

Secretary of the Administrative Ministry/Department Chairman

Secretary (Planning Commission) or his representative Member
Secretary (Department of Expenditure) or his representative Member
Financial Advisor of the Administrative Ministry/Department Member
Secretary

(For proposals above Rs 150 Crores)

Secretary (Department of Expenditure) Chairman

Secretary (Planning Commission) or his representative
Member
Secretary of the Administrative Ministry Member
Financial Advisor of the Administrative Ministry/Department
Member Secretary

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

21

Other Agencies
Public Investment Board (PIB) Appraises projects
over Rs 150 Crores where results are quantifiable
Secretary (Department of Expenditure) Chairman
Secretary (Department of Economic Affairs) Member
Secretary (Planning Commission) Member
Secretary (Ministry of Statistics and Programme
Implementation) Member
Secretary (Ministry of Environment and Forests) Member
Secretary of the Administrative Ministry concerned with the
Public Investment proposal Member
Joint Secretary (PF.II), Department of Expenditure
Member Secretary .
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

22

Other Agencies
Power Projects Investment Committee

Secretary (Ministry of Power) Chairman

Secretary (Department of Expenditure) Member
Secretary (Department of Economic Affairs) Member
Secretary (Planning Commission) Member
Secretary (Ministry of Statistics and Programme
Implementation) Member
Secretary (Ministry of Environment and Forests) Member
Financial Advisor, Ministry of Power Member Secretary
Chairman, Central Electricity Authority Special Invitee
Chairman, Central Water Commission Special Invitee

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

23

Other Agencies
Committee of Public Investment Board
Secretary (Department of Expenditure) Chairman
Secretary (Planning Commission) Member
Secretary of the Administrative Ministry/Department
concerned with the Public Investment proposal
Member
Joint Secretary (PF.II), Department of Expenditure
Member Secretary

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

24

Committes Broad Functions

To examine, in detail, an Investment Proposal at the Project

Formulation stage, and to decide whether investment of Public funds
therein is justified on socio-economic considerations;
To examine whether the objectives sought to be met by the
Project/Scheme and/or activities proposed can be combined in existing
Projects/Schemes in a more rational manner and unwanted
proliferation/multiplicity avoided;
To examine whether issues relating to displacement, resettlement and
rehabilitation of affected families/persons have been suitably taken
care of;
To examine, in detail whether risk factors in project execution and
management are expressly specified and taken note of; and, mitigation
strategies spelt out in detail in respect of the same; and,
To recommend the proposal, to the appropriate forum of approval, if the
factors stated above and other factors found to be relevant in the
peculiar circumstances in which the Project/Scheme has been
formulated, have been addressed to the satisfaction of the appraisal
forum.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

25

Appraisal Limits
Limit( Rs Crores)

Appraisal Forum

Less than 15.0

Ministry in Normal Course

15.0 to < 50.0

Standing Finance Committee (SFC)

50.0 to <150.0

Expenditure Finance Committee (EFC) chaired by

Secretary of Administrative Ministry/Department

Over 150.0

Public Investment Board (PIB)/Expenditure Finance

Committee (EFC) chaired by Secretary (Expenditure);
projects/schemes where financial returns are
quantifiable will be considered by PIB and others by
EFC.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

26

Approval Limits
Limit( Rs Crores)

Approval Forum

Less than 15.0

Secretary Administrative Ministry/Department

15.0 to < 75.0

Minister-in-Charge of Ministry/Department

75.0 to <150.0

Minister-in-Charge of Ministry/Department and

Minister of Finance

Over 150.0

Cabinet Committee on Economic Affairs (CCEA)

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

27

Formulation, Appraisal and Approval

Govt Funded Projects and Schemes
Step 1. Project identification and Feasibility Report.
Prepared by Administrative Ministry.
Focus on:

Analysis of the existing situation

Nature and magnitude of the problems
Need and justification for the project
Alternative strategies
Initial environmental and social impact analysis
Preliminary site investigations
Stake holder commitment
Risk factors
Rough cost estimate
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

28

 Step 2. In-principle approval of Planning

Commission
Step 3.Preparation of detailed project
report (DPR).
Step 4. Inter-ministerial consultations

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

29

Approval Procedure
In principle approval based on Feasibility Report (FR)
Preparation of DPR by Administrative Ministry/Department and circulating it
along with Draft EFC/PIB Memo
Comments to be offered on DPR and Draft EFC/PIB Memo by Planning
Commission and concerned Ministries/Departments/Agencies.
Preparation of final EFC/PIB Memo based on DPR and comments received, and
circulating the same to Planning Commission, Department of Expenditure and
other concerned Ministries/Departments/Agencies.
Convening of EFC/PIB meeting after receiving final EFC/PIB Memo.
Issue of minutes after EFC/PIB meeting.
Submission of proposal for approval of Administrative Minister and Finance
Minister.
Circulation of Draft CCEA Note.
Issue of comments by different Ministries/Departments on draft CCEA Note with
approval of Minister-in-Charge.
Forwarding the proposal finalized by Administrative Ministry to Cabinet
Secretariat for consideration by CCEA.
Meeting of CCEA and final approval.
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

30

Guidelines for Preparation of

Feasibility Report
Guidelines for preparation of feasibility report
were issued by the PAMD in 1966. These
were revised in 1987 and fresh guidelines
have been now issued in 1992. The
guidelines spell out the details required for
the preliminary feasibility report (FR) which is
needed to accord in-principle approval, and
the details to be included in the detailed
feasibility report (DFR).
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

31

Preliminary Feasibility Report

Brief outline/ salient features of the proposal.

Need and justification of the project based on technical necessity
and / or demand supply analysis of the product.
Identification and analysis of broader alternatives available for
meeting the objectives or need.
Location, technology, feedstock, capacity of the plant and the product
mix proposed for each techno-economically feasible alternative
should be included.
Broad item-wise estimate of capital cost together with the basis and
year-wise phasing of capital expenditure for all the alternatives
considered should be included.
Broad item-wise estimate of operating and maintenance costs and
financial and economic benefits from the project for each alternative.
Linkages of raw materials and details of infrastructural facilities, such
as land, water, power, transport and environmental quality of the
region.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

32

Preliminary Feasibility Report

Economic and financial viability analysis of the project including
determination of IRR/NPV, cost of production and generation, Domestic
Resource Cost, breakeven point, pay back period and so on. The data is
required for each alternative considered.

Complete list of studies and investigations proposed to be carried for

preparation of DFR.

For location specific projects, the clearance for site and acquisition of land
required, if any, should be considered at this stage. The environmental and
forest clearance for studies and investigations and for the site should be
obtained before putting up a PFR. While the requirements of an
environmental appraisal are to be met separately, the PFR should include
the following information:
Quantification of characteristics of effluent emissions and waste from
different technology options.
Land use of proposed site, soil conditions with respect to microbes and
leachability, distance from sanctuaries, base line information on
meteorology, noise level, existing flora and fauna and so on.

Estimate of costs and time frame involved for studies and investigations
proposed and preparation of DFR.

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

33

Detailed Project Report Generic Structure

Context / background
Problems to be addressed
Project Objectives
Target Beneficiaries
Project Strategy
Legal Framework
Environmental Impact Assessment
On-going Initiatives
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

34

Detailed Project Report Generic Structure

Technology Issues
Management Arrangements
Means of Finance and Project Budget
Time Frame
Risk Analysis
Evaluation
Success Criteria
Financial and Economic Analysis
Sustainability
Dr. CH. VENKATAIAH
Associate Professor
310-Project Management

35

Any Queries???

Dr. CH. VENKATAIAH

Associate Professor
310-Project Management

36