SPRING 2014

Master of Business Administration MBA Semester 2

MB 0049 Project Management 4 Credits
Book ID B1632
Roll No. 1308002393
Q.No.1 Write short notes on:
1. Commercial and economic feasibility
2. Technical feasibility
ANS. COMMERCIAL AND ECONOMIC FEASIBILITY The
commercial feasibility of a project involves a study of the proposed
arrangements for the purchase of raw materials and sale of finished products,
etc. It comprises of the following two aspects:
1. Arriving at the physical requirement of production inputs such as raw
materials, power, labour, etc. at various levels of output and converting
them into cost. Or we can say, deciding costing pattern.
2. Matching costs with revenues with a view to estimating the profitability
of the project and the break-even point. The possibility ultimately decides
whether the project will be a feasible proposition or not.
The economic feasibility aspect of a project relates to the earning capacity of the
project. Earnings of the project depend on the volume of sales. For economic
feasibility, following important indicators are taken into consideration:
1. Present demand of the goods.
2. Future demand of the goods.
3. Determining the extent of supply to meet the expected demand and
arriving at the gap.
4. Anticipated rate of return on investment.
TECHNICAL FEASIBILITY The technical feasibility report should give a
description of the project in terms of the technology to be used and the
requirement of equipment, labour and other inputs. Location of the project
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should be given special attention in relevance to technical feasibility. The

exercise of technical feasibility is not done in isolation. The scheme has to be
viewed also from economic consideration. The promoter of the project can
approach the problem of preparation of technical feasibility studies by
undertaking a preliminary study of technical requirements to have a quick
evaluation. Thus, the technical feasibility analysis is an attempt to study the
project basically from a technicians angle. The main aspects to be considered
under this study are technology of the project, size of the plant, location of the
project, pollution caused by the project, production capacity of the project,
strength of the project, emergency or stand-by facilities required by the project
sophistication such as automation, mechanical handling, required collaboration
agreements, production inputs and implementation of the project.
Q.No.2 Define Project type organization and discuss in detail.
ANS. PROJECT-TYPE ORGANIZATION - Project organizational structure
refers to the creation of an independent project team, the teams management is
separated from the parent organizations other units, have their own technical
staff and management, enterprise assigns certain resources to project team, and
grant project manager of the largest free implementation of the project .
In a project-type organizational structure, the employees work for different
projects in a team-like structure. For example construction companies where
different teams work on different projects.
Each project is handled like a small company in project-type organizational
structure. All the essential resources and paraphernalia needed to execute
projects are procured for full-time till the project closes out. Employees having
specialized knowledge and exposure to similar project environment will be
appointed on contractual terms to work in a group and deliver the project
expectations.
ADVANTAGES OF PROJECT-TYPE ORGANIZATION
1. Clear line of authority: The project manager has complete authority over
the project.
2. High level of commitment: The project team has a separate and strong
identity, and all members are committed to the project and to each other
strongly.
3. Swift decision making: Because the authority is only with the project
manager, the capacity to make swift decisions is increased.
4. Simple and flexible: Project type organizations are structurally flexible
and simple, which makes them comparatively easy to implement.

DISADVANTAGES OF PROJECT-TYPE ORGANIZATION

1. Duplication of effort: Each project team is fully staffed, which can result
in a duplication of effort in every area from clerical staff to technological
support.
2. Cost inefficient: It can be cost-inefficient because of underutilization of
resources or stockpiling equipment for future use.
3. Stretching out work during slow period: During slack times, team
members may not work at high level of productivity.
4. Job insecurity: At the completion of a project, the employees may be
fired if there is no similar type of project.
5. Low level of knowledge transfer: There is low level of knowledge
transfer between projects as employees are committed to working only
on one project. So, there is no source of knowledge transfer and shared
functional expertise.
EXAMPLES OF PROJECT-TYPE ORGANIZATION
1. Rapid transit projects
2. Construction projects
3. IT projects
Q.No.3 What is project performance evaluation? Explain the various types of
project performance evaluation techniques.
ANS. PROJECT PERFORMANCE EVALUATION It is defined as the
systematic process of assessment of effectiveness against predetermined norms,
standards or expressed goals.
IMPORTANCE OF PROJECT PERFORMANCE EVALUATION TOOL
Evaluations of project performance are an independent study which is
systematically conducted from time to time to identify the progress of a project
and often these studies are conducted by including both experts from within and
outside the project. Evaluation inspects the output of a project, programme or
policy against its objectives. It also adds the additional value by providing
lessons from experience to help future management or development of a
specific project, programme or policy.
TYPES OF PROJECT PERFORMANCE EVALUATION
There are four types of project performance evaluation techniques:
1. Process evaluation
2. Outcome evaluation
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3. Impact evaluation
4. Cost-benefit and cost-effectiveness analyses
1. Process (or implementation) evaluation It is also called formative
evaluations which are designed to improve the implementation of a
program, policy or strategy as it unfolds. In this type of evaluation we
measure the level to which a program is effective as it was planned.
2. Outcome evaluation It is also called summative evaluations which are
designed to judge a program, policy or strategys relevance, success and
cost-effectiveness which includes its relative contribution to the intended
outcomes. This type of evaluation measures the level to which a program
attains its outcome-oriented objectives. It mainly focuses on outputs and
outcomes including unintended effects to evaluate program effectiveness
but may also consider program process to understand how outcomes are
produced.
3. Impact evaluation This type of evaluation measures the net effect of a
program by evaluating program outcomes with an estimate of what would
have happened in the absence of the program. It is used when external
factors are known to influence the programs outcomes, in order to isolate
the programs contribution to achievement of its objectives.
4. Cost-benefit and cost-effectiveness analyses It compare a programs
outputs or outcomes with the costs in order to produce them. When
applied to existing programs, they are also regarded as a variety of
program evaluation. It measures the cost of meeting a single goal or
objective and can be used to identify the least cost alternative to meet that
goal. This analysis aims to recognize all relevant costs and benefits,
generally expressed in dollar terms.
Q.No.4 Discuss the major contents of the projects final report.
ANS. THE PURPOSE OF THE PROJECT FINAL REPORT The project
report should present project evolution, its success, its management, any
outstanding and team recommendation. It is the chronicle of the life and times
of the project, a compendium of what went right and what did not, who served
the project in what capacity, what was done to create the substance, and how it
was managed.
CONTENTS OF PROJECT FINAL REPORT The suggested contents of a
final project report are as follows:
1. Evolution of project
2. Overall success of the project
3. Closure statement
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4. Outstanding issues and deliverables

5. Managing of projects
6. Lessons learnt and recommendations
7. Acknowledgement
1. Evolution of project Narrate the various activities undertaken from
project selection, planning, execution, control and termination phase.
2. Overall success of the project Some typical criteria to measure the
overall success of the project are:
Business objectives: Restate the business objectives as given in the
business case including any changes incorporated later.
Project efficiency: State the actual cost, resources and schedule against
the plan.
3. Closure statement State the circumstances under which the project is
being closed as one of the following:
The project has been successfully completed
The project has been terminated prior to the completion.
4. Outstanding issues and deliverables List any issues or key
deliverables not yet accepted. For each, give:
i. The nature of the issue and reason of non-acceptance,
ii. Proposed resolution
5. Managing of projects How the projects different phases were
managed? Specifically, comment on the following aspects:
i. Quality of decision making
ii. Use of tools/techniques in selection, planning and control phase
iii. Use of best practices.
6. Lessons learnt and recommendations A number of insight and
innovative methods have been adopted in tackling the various problems.
These should be recorded for posterity.
7. Acknowledgement Acknowledge all the individuals who have made
special contributions to the project.
Q.No.5 Explain the various types of risk that can affect a business project.
ANS. TYPES OF RISKS There are various types of risk that can affect
business project. The types of risks are: Macro risk levels and Micro risk level.
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1. MACRO RISK LEVEL It describes political risks that affect all

businesses that operate in a foreign country. Examples of macro risks
include the possibilities that a nation could raise taxes, fall into civil war
or devalue its currency.
There are different types of macro risks.
i. Systematic risk: Risks that are caused by factors external to the
particular organization and cannot be controlled by the company are
termed as systematic risk.
ii.

Unsystematic risk: It is sometimes referred to as specific risk. It is

unique and peculiar to a firm or an industry and can usually be
eliminated through a process called diversification.

iii.

Business risk: It is that portion of unsystematic risk caused by the

operating environment of the business which arises from the inability
of a firm to maintain its competitive edge.

iv.

Financial risk: It refers to the variability of the income to the equity

capital due to the debt capital.

2. MICRO RISKS It describes political risks that do not affect all

business. For example, if a country enacts new strict environmental
regulations on factories, it would affect industrial operations in the
country but it might not affect certain industries like service and
restaurants.
The micro types of risk are:
i.

Project risk: It relates to the uncertain events or situations that have the
potential to adversely affect a planned project.

ii.

Country risk: It is also referred to as political risk. With more investors

investing internationally, both directly and indirectly, the political and
economic stability and viability of a countrys economy needs to be
considered.

iii.

Market risk: It is defined as that portion of total variability of return

caused by the alternating forces of bull and bear market.

iv.

Interest rate risk: IT is the risk to which an institution is exposed

because future interest rates are uncertain.

v.

Purchasing risk: It is the probable loss in purchasing power of the

returns to be received.
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vi.

Liquidity risk: It is that part of an assets total inconsistency of returns

which consequences from price discounts given or sales commissions
paid in order to sell the asset without delay.

Q.No.6 What are the common features of project management software?

ANS. COMMON FEATURE OF PROJECT MANAGEMENT
SOFTWARE
1. Data entry features
i. Project data and calendar A project start date is specified. A
calendar can be used to define the working days and hours for each
individual resource on a project. Most system provides a default for
the standard working period. The calendar can be modified for
each resource.
ii. Human resources Suppose a particular activity needs two
different types of resources to complete the task, then the two
resources may be entered separately and will appear on activity
description in network.
iii. Labour cost One of the many ways to specify labour cost is as
skilled worker and unskilled worker.
iv. Human resources available All software requires periods and
amount of resources that are available for the project.
v. Cost of construction materials Materials needed for each task and
their estimated costs for the project may be given in the form of
table.
vi.
Activity identifier Each activity of the project is assigned a code
or identifier.
vii. Activity description Each activity has a description. The number
of characters should be within the number of characters specified
by the software for the activity name field.
viii. Precedence relationship There are various options to show the
linkage between two consecutive activities in a network.
2. Graphics One of the important features of project management
software is its ability to generate a variety of charts including network
diagram, activity-linked Gantt chart and Gantt chart quickly.
3. Time analysis Project management packages carry out time analysis
which includes calculation of early start, early finish, late start, and late
finish; free slack and total slack with ease.

4. Resources scheduling Resources scheduling problems include resource

leveling and resource allocation. The project management software uses
heuristics to solve both types of problems.
5. Output reports Most project management software packages have
extensive report generation capabilities. They can generate a range of
reports in various forms. The reports are standard or customized.
6. Importing/exporting The process of bringing information into the
project management software from other application such as word
processing, spread sheet, etc is called importing. Sending information
from project management software to other application is called
exporting.
7. Project monitoring and tracking Most project management software
packages permit the users to define a baseline plan and compare the
actual progress with respect to those in the baseline plan.
8. What if analysis This is a useful feature of project management
software. This permits to know the effect of changes in project variable
on project objective. This analysis helps the project manager in taking an
appropriate decision.