PROJECT MANAGEMENT

ASSIGNMENT
1. The success of an industrial venture depends a great deal on the geographical location
where its plant is set up. Various factors are considered to select the site for setting up
the plant, such as plant should be set up at a location where production and distribution
costs can be kept to a minimum or where there is more scope for expansion. The
decision to select a proper plant location depends on various factors such as demand of
the product, size of the market, availability of raw materials, and production cycle.

Determining the location for a vehicle production operation is no straightforward

matter. While the major pull for a carmaker is usually based on serving a particular
sales region, as well as costs relating to labour, taxes and incentives; manufacturers
consider many factors, not just those related to supply chain and logistics. These
include a potential location’s transport infrastructure, local government incentives and
regulations, free-trade deals and the suitability to the local labour pool.

The following objectives should be considered before choosing a plant location:

 It must be comfortable for workers and cater to their tastes and likings.
 It must have good working conditions.
 It must contribute in minimising production delays and make efficient use of the
available space.
 It must allow managers to have a better control over the production cycle by
having greater flexibility for changes in the design of the product.

Before beginning a site selection project, it is critical to first define the proposed
manufacturing facility of the automobile plant and its operational requirements in order to
evaluation location opportunities. The final site should be selected on the basis of a complete
survey of the advantages and disadvantages of various geographical areas. I would suggest
that the location for car manufacturing plant must be outside the main city area but must have
good transportation links with the city.
Main factors that affect the selection of an automobile plant location are:

1) Proximity to Market

There are many benefits is a plant is located near market. Some of these benefits
include low transportation cost, timely delivery of final products to the customers at
a lesser cost, which eventually results in a larger market share.

2) Proximity to Raw Materials

It is necessary for any organisation to procure raw materials on time and at

reasonable price, as these comprises almost 50-60 percent of the cost of a project.
By keeping raw materials near to the plant, the transportation and inventory cost
can be greatly reduced as the organisation can avail these materials at a short notice.
 3) Proper Infrastructure

The plant must be located at a place having an adequate supply of power, water,
and waste decomposition facilities. Apart from this, the road and transportation
facilities and the electronic means of communication also play an important role in
the overall operations of any organisation. Power is needed to run machines, good
roads and transportation facilities to carry goods from one place to another, and
electronic means of communication are needed for proper and timely sharing of
information.

4) Labour and Wages

Easy availability of labour on low cost is also a fundamental requirement of any

organisation. Hiring labour from distant places leads to increased cost; whereas,
hiring individuals from local areas saves the organisation from bearing extra costs
of their transportation and accommodation.

5) Government Policies

The location for setting up a plant must also be approved by certain rules and
regulations made by the government regarding the approval of the project location.
The government directly selects the plant location in case of public sector projects;
whereas it imposes certain restrictions in case of private projects.

6) Climatic Conditions

The plant must be located at a place with suitable adaptable climatic conditions.
Modernisation has minimized the impact of climatic conditions on the productivity
of the organisations.

7) Safety Needs

Adequate safety mechanism must be installed in the factory for the safety of the
labour working there. The labour must be given proper training to operate machines
and protect themselves in case of any accidents.

2. Estimation of the cost of a project

It is the initial move taken to assess the economic viability which aims at calculating
different types of expenses involved in the project.

The economic viability of any project cannot be assessed without calculating the
expenses involved in it. The total cost includes both fixed and variable costs. The fixed
cost involves the expenditure of the organisation that does not change with the change
in the production level. Some examples of the fixed cost are rent, taxes, etc. Fixed cost
of a project always remains the same irrespective of the quality of the product
produced. On the other hand, variable costs change with the change in the production
level. Some examples of variable costs are the expenses incurred in procuring raw
material, labour, etc.
 The correct estimation of the both fixed and variable cost helps in ascertaining the
economic viability of the project.

The elements which i will consider for estimating cost of the project are:
 Land and Sight Development
 Construction Cost
 Technical Expenses
 Preliminary Expenses
 Plant and Machinery
 Preoperative Expenses
 Utility
 Contingency
 Miscellaneous Fixed Assets

Land and Site Development: This includes the costs incurred in the acquirement and
development of land. Some of these costs are linked with buying of land, constructing
boundaries, wiring, levelling of land, constructing internal roads, etc.

Construction Cost: This involves cost encountered while constructing a factory and other
commercial buildings. One must note that the cost of reduction charged for factory buildings
varies from that charged for other commercial buildings. The charges for other commercial
buildings are less as compared to factory buildings. Factory buildings may include boiler
house, transformer room, laboratory, production unit, workshop, etc. On the other hand, non-
factory buildings may consist of stores, parking, security house, etc.

Technical Expenses: This includes costs encountered while giving training to the staff and
incorporating machinery. Technical costs include training employees, buying machinery, etc.

Preliminary Expenses: This is also called opening expenses as the costs are sustained by
the organisation before the start of a project. Initial costs may consist of legal fees,
registration, investment done in early inventory, inspection of the market, etc.

Plant and Machinery: This involves costs sustained by an organisation while buying or
making use of imported and original technology. Such costs include machine/technology,
piping, excise/custom duty, sales tax, shipment, etc.

Preoperative Expenses: These are the costs that are sustained before the start of viable
production. Preoperative costs are normal costs and may include wages, rents, commuting
expenses and costs related to the formation of the company.

Utility: This includes costs sustained by the organisation by making use of the general
facilities of the plant. The different types of utilities are boiler, compressor, generator,
underground water tank, sewage treatment plant, etc.

Contingency: This relates to the fund kept as a safeguard for any untoward happening like
price rise, slump, change in the rules of the government, etc.
 Miscellaneous Fixed Assets: This includes the cost of buying various materials. Some
examples of miscellaneous fixed assets are furniture and fittings, means of transportation,
computers, etc.

It is very important to estimate the cost of the project. Before even approaching a project, it’s
important to get a handle on cost estimation to help keep you on task and in touch with
project constraints and limitations. In project management, it is very important to estimate the
cost of your projects otherwise it would be difficult to allocate the proper resources! In fact,
accurate cost estimates are the basis of sound project management and planning.

3(a). Here, Resource Risk was overlooked in this case. If a project has unskilled, untrained
and ineffective staff, then it is likely to fail or it may result in delay of project schedule.

As a project manager project time management must be exercised to calculate and analyse the
effect of such kinds of risks for the project as a whole. A project is generally undertaken by
an organisation to obtain certain aims and objectives. Conversely, a project will not fetch the
desired outcome till all the project activities are finished within the given time frame.
Therefore, to ensure that all the activities linked with a project are finished on time, it is
relevant that the concerned project manager reviews timely all the activities taking place in
the organisation.

The project manager must make the resource estimation to describe the resources required.
Resource estimation concentrates on finding the necessary resources, their quantities,
qualities and the duration for which they will be required. Resources comprise people,
equipment, material, etc. The person who has in-depth knowledge of the project work
generally provides the estimates.

Schedule control must also be kept. This entails updating the project schedule frequently to
integrate changes in the schedule. Project time management requires keeping track of the
time spent by those involved in the project. This process involves recording the time depleted
on tasks by using timesheets. The project time management process enables the manager to
understand the type of tasks being performed, when they are to be performed and the time
required for their completion.

One more important factor to be taken care of is resource scheduling. A necessary factor of
resource scheduling is understanding the nature of the job and the size of the work team
necessary to finish the job. Resource scheduling enables visibility on the amount of flexibility
with respect to the availability of resources. In resource scheduling, a project manager first
requires to recognise the resources required to finish a project on time. The resources needed
to complete the project should be monitored regularly so that they can be procured easily
whenever they are in short supply. So in order to keep a steady supply of resources, a project
manager resort to resource planning.

3(b). Yes the triple constraints involved here are time, project cost and resources.
Constraints refer to the dependencies that have to be factored in while estimating the
completing time of a project. These three constraints are dependent on each other and affect
the project schedule as a whole. If one gets disturbed then the whole schedule gets delayed.
If I would have been at the place of Mr. Iyer then I would have kept continuous monitoring
on all these three constraints in order to finish the project in the scheduled time