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Question 1: Give a brief introduction, description including main points and

conclusion on

a) Commercial and economic feasibility

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. Here, the following important indicators are taken intoconsideration:

Present demand of the goods produced through the project i.e. market facility (or) getting a feel of themarket. Future demand of the goods. A projection may be made about the future demand. The period normallydepends upon the scale of investment. Determining the extent of supply to meet the expected demand and arriving at the gap. Deciding in what way the project under consideration will have a reasonable chance to share the market.Anticipated rate of return on investment. If it is positive, the project justifies the economic norm in therelationship between cost and demand.

Future demand can be estimated after taking into consideration the potentialities of the export market, thecharges in the income and prices, the multiple uses of the product, the probable expansion of industriesand the growth of new industries. The market share of the proposed project could be identified byconsidering the factors affecting the supply position such as competitive position of the unit, existing andpotential competitors, the extent of capacity utilisation, unit cost advantages and disadvantages, structuralchanges, and technological innovations bringing substitute into the market.

The commercial feasibility of a project involves a study of the proposed arrangements for thepurchase of raw materials and sale of finished products, etc. This study comprises the following twoaspects:Arriving at the physical requirement of production inputs such as raw materials, power, labour, etc atvarious levels of output and converting them into cost. In other words, deciding costing pattern. Matching costs with revenues with a view to estimating the profitability of the project and the break-evenpoint. The possibility ultimately decides whether the project will be a feasible proposition or not. Thetechnical analysis of a project feasibility study serves to establish whether or not the project is technicallyfeasible and it also provides a basis for cost estimating.

b) Technical feasibility

The examination of this aspect requires a thorough assessment of the various requirements of the actualproduction process and includes a detailed estimate of the goods and services needed for the project. So,the feasibility report should give a description of the project in terms of the technology to be used and therequirement of equipment, labour, and other inputs. Location of the project should be given specialattention in relevance to technical feasibility. Another important feature of technical feasibility relates to the

types of technology to be adopted for the project. The exercise of technical feasibility is not done inisolation. The scheme has to be viewed also from economic considerations; otherwise, it may not be apractical proportion, however sound, technically it may be.

The promoter of the project can approach the problem of preparation of technical feasibility studies in thefollowing order:

Undertaking a preliminary study of technical requirements to have a quick evaluation. If preliminary investigation indicates favourable prospects working out further details of the project, theexercise begins with engineering and technical specifications and covers the requirements of the proposedproject as to the quality, quantity, and specification type of components of plant and machinery,accessories, raw materials, labour, fuel, power, water, effluent disposal, transportation, etc.

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, locationof the project, pollution caused by the project, production capacity of the project, strength of the project,

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emergency or stand-by facilities required by the project sophistication such as automation, mechanicalhandling, required collaboration agreements, production inputs, and implementation of the project.

Question 2:

Define project type organisation in your own words:In a project-type organisational structure, the employees work for different projects in a team-like

structure. Examples are construction companies, where different teams work on different projects.

Give a brief outline of project type organisation:

Teams are put together for a project. Each project is headed by a project leader. Each team will haveemployees to suit its demands and complete the project successfully. Only employees with requisitespecialised skills are considered for project teams. These members of project team will join back theirparent company once the project gets finished.

In project-type organisational structure, each project is handled like a small company. All the essentialresources and paraphernalia needed to execute projects are procured for full-time till the project closes out.

Employees having specialised knowledge and exposure to similar project environment will be appointed oncontractual terms to work in a group and deliver the project expectations.

List the advantages of project type organisation:

Clear line of authority: The project manager has complete authority over the project. All the members ofthe project team are responsible only to the project manager.

High level of commitment: The project team has a separate and strong identity, and all members arecommitted to the project and to each other strongly.

Swift decision making: Because the authority is only with the project manager, the capacity to make

swift decisions is increased.

Simple and flexible: Project-type organisations are structurally flexible and simple, which makes themcomparatively easy to implement.

List the disadvantages of project type organization:

Duplication of effort: Each project team is fully staffed, which can result in a duplication of effort in everyarea from clerical staff to technological support.

Cost inefficient: The project organisation structure can be cost inefficient because of underutilization of

resources or stockpiling equipment for future use.

Stretching out work during slow periods: During slack times, team members may not work at highlevel of productivity.

Low level of knowledge transfer: There is low level of knowledge transfer between projects asemployees are committed to working only on one project. So, there is no source of knowledge transfer andshared functional expertise.

Job insecurity:At the completion of a project, the employees may be fired if there is no similar type ofproject.

Give a few examples of project type organization: Rapid transit projects Construction projects IT projects

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Question 3:

a. Define project performance evaluation:

Evaluations of project performance are an independent study which is systematically conductedfrom time to time to identify the progress of a project and often these studies are conducted by includingboth experts from within and outside the project.

b. Explain why project performance evaluation is tool is important

Performance evaluation is an important tool for the assessment of a system or service according tothe measurements specified. We can define it as the systematic process of assessment of effectivenessagainst predetermined norms, standards, or expressed goals. In management evaluation of any service,process or activity typically refers to "determining its worth".

c. List the types of project performance evaluation

(i) Process (or implementation) evaluation

(ii) Outcome evaluation

(iii) Impact evaluation

(iv) Cost-benefit and cost-effectiveness analyses

d. Briefly explain each technique

(i) Process (or implementation) evaluation: It is also called formative evaluations which are designed toimprove the implementation of a program, policy or strategy as it unfolds. In this type of evaluation wemeasure the level to which a program is effective as it was planned. It usually considers the programactivities conformance to statutory and regulatory requirements, program design, and professionalstandards or customer expectations.

(ii) Outcome evaluation: It is also called summative evaluations which are designed to judge a program,policy or strategys relevance, successand/or cost-effectiveness which includes its relative contribution tothe 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 evaluateprogram effectiveness but may also consider program process to understand how outcomes are produced.

(iii) Impact evaluation: This is a type of outcome evaluation that measuresthe net effect of a program by evaluating program outcomes with an estimate of what would havehappened in the absence of the program. This type of evaluation is used when external factors are knownto influence the programs outcomes, in order to isolate theprograms contribution to achievement of itsobjectives.

(iv) Cost-benefit and cost-effectiveness analyses: Cost-benefit and cost effectiveness analysescompare a programs outputs or outcomes with the costs (resources expended) in order to produce them.When applied to existing programs, they are also regarded as a variety of program evaluation. It measuresthe cost of meeting a single goal or objective, and can be used to identify the least cost alternative to meetthat goal. This analysis aims to recognize all relevant costs and benefits, generally expressed in dollarterms.

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Question 4: Discuss the major contents of the projects final report

Explain the purpose of the project final report

The PR should present project evolution, its success, its management, any outstanding and teamrecommendation. The final Project Report (PR) should be written by the project manager himself. The finalreport is not another evaluation; rather it is the history of the project. It is the chronicle of the life and timesof 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.

List suggested content of project final report

Evolution of project Overall success of the project Closure statement Outstanding issues and deliverables Managing of projects Lessons learnt and recommendations Acknowledgement

Explain each content and what it should contain

Evolution of project: Narrate the various activities undertaken from project selection, planning,execution, control, and termination phase; problem faced, what went well, what did not, and why. Overall success of the project: Some typical criteria to measure the overall success of the project aregiven below:

o Business objectives: Restate the business objectives as given in the business case includingany changes incorporated later. Comment on how far these objectives have been or likely to be met.

o Project efficiency: State the actual cost, resource, and schedule against the plan which includesOriginal baseline, Actual, Variance, Cost (Lacs of Rs.), Human Resource (Man days), Schedule (days). Closure statement: State the circumstances under which the project is being closed as one of thefollowing:o The project has been successfully completed.o The project has been terminated prior to the completion. In this case, describe the reason for termination. Outstanding issues and deliverables: List any issues or key deliverables not yet accepted. For each,

give:o The nature of the issue and reason of non-acceptanceo Proposed resolution (include date, person responsible) Managing of projects: How the projects different phases were managed? Specifically, comment on thefollowing aspects:o Quality of decision making (fact based, timeliness, etc)o Use of tools/techniques in selection, planning, and control phaseo Use of best practices Lessons learnt and recommendations:A number of insight and innovative methods have beenadopted in tackling the various problems.These should be recorded for posterity. Specifically, the following aspects are to be covered:o What worked well and why?o Recommend methods, processes, procedures, best practices, and tools which can be gainfully used inthe future.o Identify the areas where time, money, or resources could have been better utilised. Acknowledgement:Acknowledge all the individuals who have made special contributions to the project.

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Question 5: Explain the various types of risk that can affect a business project.

Macro risk

A chance of a loss or injury is called risk. It has two components the systematic risk andunsystematic risk. Risks that are caused by factors external to the particular organisation and cannot becontrolled by the company are termed as systematic risks. Such a risk affects the market as a whole. Onthe other hand, in case of unsystematic risk the factors are unique, specific and related to the particularindustry or organisation.

Systematic risk:A systematic risk cannot be controlled or foreseen in any manner, therefore it is almostimpossible to predict or protect the organisation or a project against this type of risk. Such a risk affects theentire market. Often we hear that the stock market is in bear hug or in bull grip. This shows that the wholemarket is moving in particular direction either downward or upward. The changes in the economic, politicaland the sociological conditions affect the security market. These are the factors that cannot be controlledby the organisation and investor. The smartest way to tackle this risk is to simply recognise that this type ofrisk will occur and plan for your project to be affected by it.

Unsystematic risk: Unsystematic risk is sometimes referred to as "specific risk". It is unique and peculiarto a firm or an industry and can usually be eliminated through a process called diversification. Unsystematicrisk stems from managerial inefficiency, technological change in the production process, availability of rawmaterial, changes in the consumer preference, and labour problems. For example, the changes in theconsumer preference affect the consumer products like TV, washing machines, refrigerators, etc more thanthat of consumer product industry.

The nature and mode of raising finance and paying back the loans involve a risk element.

Business risk: It is that portion of unsystematic risk caused by the operating environment of the businesswhich arises from the inability of a firm to maintain its competitive edge and the growth or stability ofearnings. Variation that occurs in the operating environment is reflected on the operating income andexpected dividends. The variation in expected operating income indicates the business risk.

Financial risk: It refers to the variability of the income to the equity capital due to the debt capital.Financial risk in a company is associated with the capital structure of the company. Capital structure of thecompany consists of equity funds and borrowed funds.

Micro risk levels

The types of risks discussed above were the macro scale levels of risk, but in addition to these,there are some more significant micro (small-scale) types of risks that are vital when talking about abusiness.

Project risk: Project risk relates to the uncertain events or situations that have the potential to adverselyaffect a planned project, usually in terms of cost, schedule, and/or product quality. Project risk is a function

of two components: likelihood and consequence. Country risk: Country risk, also referred to as political risk, is an important risk for investors today. Withmore investors investing internationally, both directly and indirectly, the political and economic stability andviability of a country's economy needs to be considered.

The United States has the lowest country risk, and other countries can be judged on a relative basis usingthe United States as a benchmark. For example, the countries that needed careful monitoring in the 1990sbecause of country risk included the former Soviet Union and Yugoslavia, China, Hong Kong, and SouthAfrica.

Market riskThe price fluctuations or volatility increases and decreases in the day-today market. It is defined as thatportion of total variability of return caused by the alternating forces of bull and bear market. When thesecurity index moves upward haltingly for a significant period of time, it is known as bull market. In bullmarket, the index moves from a low level to the peak. Bear market is just a reverse to the bull market.

Interest rate risk

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Interest rate risk is simply the risk to which an institution is exposed because future interest rates areuncertain. The assets and liabilities of a financial institution have different maturity and liquidity. Financialinstitutions create assets and at the same time create liabilities. These loans are invested by the financialinstitutions at a certain rate of interest and similarly interest cost has to be paid to the lenders of deposit.The mismatches of interest rates of the assets and liabilities expose to interest rate risk.

For example: An Indian bank borrows Rs. 200 crore from the market for 4 years @ 10% (Floating p.a.) andcreates a loan asset of the same amount for 4 Year period @ 13% (Fixed p.a.). If, there is a an upward

trend of interest rate after 2 years and the rate of interest goes up to 15% then Interest Loss = Crores = 200(15%13%)

Purchasing power riskVariations in the returns are caused also by the loss of purchasing power of currency. Inflation is the reasonbehind the loss of purchasing power. The level of inflation proceeds faster than the increase in capitalvalue. Purchasing power risk is the probable loss in purchasing power of the returns to be received. Therise in price penalises the returns to the investor, and every potential rise in price is a risk to the investor.

Liquidity risksLiquidity risk is that part of an assets total inconsistency of returns which consequences from pricediscounts given or sales commissions paid in order to sell the asset without delay. It is a condition wherein

it may not be possible to sell the asset. Assets are inclined at great inconvenience and cost in terms ofmoney and time. Any asset that can be bought and sold promptly is said to be liquid. Failure to realise withminimum discount to its value of an asset is called liquidity risk.

Question 6: What are the common features of project management software?

Briefly describe the common features:

Data entry features

o Project data and calendar:A project start date is specified. A calendar can be used to definethe working days and hours for each individual resource on a project. The calendar is used in calculatingthe schedule for the project. Most systems provide a default for the standard working period, such asMonday to Friday from 8:00 AM to 5:00 AM, with an hour for lunch. The calendar can be modified for eachresource.

For example, work hours can be modified, company holidays can be entered as non-workingdays, and various shifts can be entered.

o Human resources: Suppose a particular activity needs 2 unskilled person and 1 skilled personto complete the task. These two resources may be entered separately and will appear as 2L and 1S onactivity description in network.

o Labour cost: One of the many ways to specify labour cost is as, Skilled worker$ 2.0 Unskilled worker$1.2

o Human resources available:All software requires periods and amount of resources that areavailable for the project.

o Cost of construction materials: Materials needed for each task and their estimated costs forthe project may be as given below:

o Activity identifier: Each activity of the project is assigned a code or identifier.

o Activity description: Each activity has a description. The number of characters should be withinthe number of characters specified by the software for the activity name field.

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o Precedence relationship: There are various options to show the linkage between twoconsecutive activities in a network. One common option is Finish-Start type. It means that the succeedingactivity can start only if all preceding activities to it have been completed. This option (Finish-Start type) isthe default option in all project management software today for linking two activities.

o Data entry error:All good management software contains error detection routines that identifyand reports errors. However, there are certain errors which cannot be detected by software. These include:

An incorrect activity duration

An incorrect activity name An Incorrect precedence logic An Incorrect cost data A wrong resource entered

Graphics: For a project involving a large number of activities, drawing a correct network, manuallytakes a lot of time and effort. One of the important features of PM software is its ability to generate a varietyof charts including network diagram, activity-linked Gantt chart, and Gantt chart quickly. Further, changes inbase line plan are quite easy.

Time analysis: If there is unlimited and flexible resource or if resource can be outsourced, the networkmay be prepared at the earliest start time of activities. In the real world, many projects are managed on this

basis.

PM packages carry out time analysis which includes calculation of early start, early finish, late start, andlate finish; free slack and total slack with ease. Manually carrying out time analysis is tedious.

Resources scheduling: Resources scheduling problems are of two types:o Resource leveling where unlimited and flexible resources are availableo Resource allocation problem where resources are limited In resource leveling, activities are scheduled tominimise the variation in level of resource deployment. Resource allocation problem is concerned withscheduling activities in such a way so as to find the shortest project schedule.

The project management software uses heuristics to solve both types of problems. For a moderate size

problem involving 100 activities, it becomes extremely difficult to carry on resource scheduling. PMsoftware is an invaluable tool to deal with this problem.

Output reports: Most PM software packages have extensive report generation capabilities. They cangenerate a range of reports in various forms (graphical, tabular, or textual). The reports are standard orcustomised.