M.M.S.

SEMESTER - IV (CBCS)

PROJECT MANAGEMENT

SUBJECT CODE : UMMSIV.6

 © UNIVERSITY OF MUMBAI
Prof. (Dr.) D. T. Shirke
Offg. Vice Chancellor
University of Mumbai, Mumbai.
Prin. Dr. Ajay Bhamare Prof. Prakash Mahanwar
Offg. Pro Vice-Chancellor, Director
University of Mumbai. IDOL, University of Mumbai.

Programe Co-ordinator : Dr. Rajashree Pandit

Assistant Professor (Economics),
Head Faculty of Commerce & Management,
IDOL, University of Mumbai, Mumbai.
Course Co-ordinator : Ms. Anitha Menon
Assistant Professor (Management Studies),
IDOL, University of Mumbai, Santacruz (E.), Mumbai-400098.
Course Writers : Mr. Sumit S. Kati
Founder - Tiksna & LearnerBay
And Visiting Faculty at TISS
Deonar Farm Road, BS Ambedkar Nagar,
Chembur, Mumbai, Maharashtra 400085.

: Dr. Ajit Ashok Katkar

Assistant Professor
Sanjeevan Engineering and Technology,
Shivaji University,
Kolhapur - 416201.

April 2023, Print I,

Published by
Director
Institute of Distance and Open Learning, University of Mumbai,Vidyanagari, Mumbai - 400 098.

DTP COMPOSEDAND PRINTED BY

Mumbai University Press,
Vidyanagari, Santacruz (E), Mumbai - 400098.
 CONTENTS
Unit No. Title Page No

1. Overview of Project Management 1

2. Project Planning 25

3. Project Scheduling & Risk Management 42

4. Project Organization 70

5. Earned Value Analysis 83

6. Financial Analysis 97

7. Computer Applications & Softwares 114

*****
 SYLLABUS
MMS
SEMESTER - 4
PROJECT MANAGEMENT
Semester : IV Core
Title of the Subject / Course : Project Management
Course Code :
Credits : 4 Duration in Hrs. : 40

Learning Objectives
1 To introduce students of Management to concepts of Project
2 To apply and evaluate success parameters of cost ,time and quality in
project management
To apply various techniques as cpm/pert/earned value analysis and
3 projected financial
statements
4 To enable student to conceive an idea, evaluate it’s feasibility and
make it workable.

Module:

Sr. Content Activity Learning outcomes

No.
Overview of Project
Management: Concepts and
attributes of Project, Project
lifecycle and stake holders,
6 hrs
Project Organization, WBS,
Introduce concepts of
Scope and priorities, Project Numerical
1. basics ofproject
Identification, Market examples
management, Evaluate
feasibilitywith Moving and lectures
new project proposals,
Average and Exponential
preparedetailed project
smoothing methods,Techno-
report.
economic feasibility,
Government policy to
location,
legal aspects, Preparation of
DPR
Project Planning : Time and
9 hrs
costestimates with AON and
Numerical Understand network
2. AOA conventions, Budget
examples diagram,critical path,
estimates, Network analysis,
and lectures concepts of crashing
Float analysis,
network.
crashing concepts
6 hrs
Project scheduling and Risk Define risks in
Management: Gantt chart, Numerical project
3.
splitting and multitasking examples management, make
,Risks in time estimates, and lectures resourcecharts, find
Sources of Historical PERT analysis probability of
Research completion of
project.
Project Organization : Role
3 hrs
andresponsibilities of Project
understand
4. Manager, Team development Lectures
organization structure,
model, sources of conflicts,
flow of authority and
conflict resolution
responsibility
3 hrs
Earned value analysis : ‘S’
Numerical Understand concepts
curve,Cost and schedule
5. examples of earnedvalue,
performance indices using
and lectures prepare revised
network, Revised estimates of
estimates of cost and
cost and time
time.
Financial analysis: 6 hr
Profitability analysis ,Using Numerical Evaluate project
NPV, IRR, Payback and examples Financially, make
6.
discounted Paybackperiod, PI. and lectures projectedstatements
Preparation of projected of proposal
statements of Income-
expenditure and balance-sheet
3 hr
Demonstration
7. Computer applications and introduce student to
lectures
Softwares for Project different softwares.
Management

4 hr
8. Project Management Cases cases, apply all above
presentation principles Tocases,
students
Presentations.

Text books:

1 Project Planning estimation and assessment by Prasanna Chandra

Project Management : The Managerial Process by Gray and Larson 3E
2 Tata McGraw-
Hill
3 Quantitative Techniques in Management by N D Vohra

Reference books:

1 Project Management Managerial Emphasis by Meredith and Mantel

Assessment
Internal 40%
Semester end 60%

*****
 1
OVERVIEW OF PROJECT
MANAGEMENT
Unit Structure
1.0 Objectives
1.1 Introduction to Project Management
1.2 Importance of Project Management
1.3 Concepts and Attributes of a Project
1.4 Project Lifecycle
1.5 Stakeholders
1.6 Stakeholder Management
1.7 Project Organization
1.8 WBS
1.9 Scope and Priorities
1.10 Project Identification
1.11 Market Feasibility with Moving Average and Exponential Smoothing
Methods
1.12 Techno-Economic Feasibility
1.13 Government Policy to Location
1.14 Legal Aspects in Project Management
1.15 Preparation of DPR
1.16 Summary
1.17 Questions
1.18 References

1.0 OBJECTIVES
 Identify the concepts and attributes associated with project

 Explain project lifecycle

 Explain the process of WBS

 Evaluate project proposals using various tools

 Identify the government policies and legal aspects associated with a

project.

 Explain the steps of preparing a detailed project report.

1.1 INTRODUCTION TO PROJECT MANAGEMENT

1
Project Management Project management is a set of skills and techniques used to plan, organize,
and execute projects effectively and efficiently. For successful project
management, one must have a clear understanding of the project goals,
scope, timelines, and budget.
Project management requires developing a project plan, which outlines the
tasks to be completed, the resources needed, and the timelines for each task.
This plan will also need to identify risks and potential issues that may arise
during the project and include contingency plans to mitigate them.
During the project, one needs to manage the team, track progress, and
communicate regularly with stakeholders to ensure that the project is on
track and meeting expectations. The project plan must also accommodate
changes and unforeseen events.
Let’s understand this with the help of an example:
Suppose you are planning a birthday party for a friend. This simple task can
also be broken down in terms of a project. The key steps you might take to
manage this project are as follows:

Define the project:

In this case, the project is to plan and execute a birthday party for your
friend.

Develop a project plan:

This plan should outline all the tasks you need to complete, such as
selecting a venue, creating a guest list, ordering food and drinks, and
decorating the space. You will also need to set timelines for each task and
assign responsibilities to team members who might join you on the plan.

Monitor progress:
As you work through the project plan, you should regularly monitor
progress and adjust the plan as needed. For example, if you realize that the
venue backed out you need to adjust the timeline for finding a new venue to
complete the task.

Manage the team:

If you have other people helping you with the party planning, you will need
to manage the team to ensure that everyone is on the same page and
working toward the same goals.

Communicate with stakeholders:

You should communicate regularly with your friend to ensure that the party
is meeting their expectations. You may also need to communicate with
vendors or other stakeholders (such as other guests) to ensure that
everything is running smoothly.

Evaluate the results:

2
After the party is over, you should evaluate how it went and identify areas Overview of Project Management
for improvement. For example, you may realize that you could have ordered
more food or that the venue was too crowded or that it must have been
better if you had shared google map location with the guests.
By using these project management techniques, you can successfully plan
and execute a birthday party that meets your friend's expectations and runs
smoothly. The same basic principles can be applied to larger-scale projects
in a business setting, such as launching a new product or opening a new
office location.

1.2 IMPORTANCE OF PROJECT MANAGEMENT

Develops essential skills:
Project management helps develop essential skills such as planning,
organization, communication, leadership, problem-solving, and decision-
making. These skills are crucial for students to excel in their future careers
and become effective leaders in the workplace.

Promotes efficiency and effectiveness:

Project management ensures that projects are completed efficiently and
effectively. By following a structured process, project managers can identify
potential problems early on and develop strategies to overcome them. This
approach helps reduce waste, minimize risk, and increase productivity.

Enhances teamwork:
Project management emphasizes the importance of teamwork and
collaboration. By working together towards a common goal, team members
can leverage their strengths, share knowledge and expertise, and develop
new skills. This collaborative approach helps foster a positive work culture
and strengthens relationships within the team.

Improves decision-making:
Project management provides students with a structured approach to
decision-making. By considering different options and evaluating the
potential outcomes, project managers can make informed decisions that
align with the project goals and objectives.

Increases employability:
Project management is a highly sought-after skill in today's job market.
Employers are looking for candidates with strong project management skills
who can lead projects, manage teams, and deliver results. By gaining
experience in project management, management students can enhance their
employability and increase their chances of securing a job in their chosen
field.

3
Project Management
1.3 CONCEPTS AND ATTRIBUTES OF A PROJECT
A project is a temporary endeavor that is designed to achieve specific goals
and objectives within a defined timeline, budget, and scope. It involves a
unique set of activities that are planned and executed to achieve a desired
outcome. Some key concepts and attributes of a project are as follows:

Goals and Objectives:

Projects are designed to achieve specific goals and objectives. These goals
and objectives provide a clear direction for the project team and serve as a
benchmark for measuring success. The goals and objectives must be clearly
defined, measurable, and achievable within the given constraints.

Scope:
The scope of a project defines the boundaries of the project and identifies
what is included and excluded from the project. A well-defined scope helps
ensure that the project team stays focused on delivering the desired
outcome.

Timeline:
Projects have a defined timeline or schedule. The timeline outlines the key
milestones, deadlines, and deliverables that must be achieved within a
specific timeframe. It helps the project team to stay on track and deliver the
project on time.

Budget:
Projects have a budget or cost associated with them. The budget outlines the
resources required to complete the project, including labor, materials,
equipment, and other expenses. It helps to ensure that the project is
completed within the allocated resources.

Risk:
Projects are associated with risk. Risk can be defined as any event or
circumstance that can impact the project outcome. Identifying and
managing risk is essential to ensure that the project is completed
successfully.

Stakeholders:
Projects involve multiple stakeholders, including the project team, sponsors,
customers, and other interested parties. It is important to identify the
stakeholders and their requirements and manage their expectations
throughout the project.

Quality:
Projects must adhere to certain quality standards. The quality of the project
is defined by the requirements and expectations of the stakeholders. Quality

4
assurance and control processes must be put in place to ensure that the Overview of Project Management
project meets the required standards.
Change:
Projects are subject to change. Changes can occur due to various factors
such as changes in requirements, scope, or external factors. It is important to
manage changes effectively to ensure that the project stays on track.

1.4 PROJECT LIFECYCLE

The project life cycle is a series of phases that a project goes through from
its initiation to its completion. The life cycle is divided into various phases,
each with its own set of deliverables, activities, and milestones.
Understanding the project life cycle is essential for effective project
management.

Fig 1.1
The different phases of product life cycle are as follows:
Initiation:
The initiation phase marks the start of the project. This is the phase where
the project is defined, its goals and objectives are established, and its
feasibility is assessed. During this phase, the project team is identified,
stakeholders are identified, and the project charter is developed.
Planning:
The planning phase is where the project plan is developed. This includes
identifying the scope of the project, creating a work breakdown structure,
identifying resources, developing a schedule, and defining the budget. The
project team also identifies and analyzes potential risks during this phase
and comes up with risk management strategies.
Execution:
The execution phase is where the project work is performed. This includes
implementing the project plan, managing resources, and monitoring and
controlling the project work. The project team also communicates progress
to stakeholders and makes necessary adjustments to keep the project on
track.

5
Project Management Monitoring and Control:
The monitoring and control phase is where the project team monitors the
project's progress against the plan, identifies variances, and takes corrective
action. This includes tracking progress, managing change requests, and
managing risk.
Closure:
The closure phase marks the end of the project. During this phase, the
project team completes all the remaining tasks, obtains final approval from
stakeholders, and closes the project. The team also conducts a final review
to identify the lessons learned from the project.

1.5 STAKEHOLDERS
Stakeholders are individuals or groups who have an interest or stake in the
outcome of a project. They can affect or be affected by the project's
activities, decisions, and results. Effective stakeholder management is
essential for project success.
There are multiple stakeholders involved in each project. Some of the
common stakeholders involved in project management are as follows:

Project Sponsor:
The project sponsor is the person or group who initiates the project and
provides the resources and support required for the project's success. They
are usually senior executives or managers within the organization.

Project Manager:
The project manager is responsible for managing the project and ensuring
that it meets its objectives. They are accountable for the project's success
or failure.

Fig 1.2
6
Project Team: Overview of Project Management

The project team is responsible for executing the project's activities and
delivering the project's outputs. They may include individuals from
different departments or functions within the organization or external
consultants.

Customers:
Customers are the people or organizations who will use or benefit from the
project's outputs. They may be internal or external to the organization.
Suppliers:
Suppliers are the people or organizations who provide the resources,
materials, or services required for the project's success. They may include
vendors, contractors, or service providers.

Regulators:
Regulators are the government or regulatory bodies that have an interest in
the project's outcomes. They may set standards or guidelines that the
project must adhere to.

1.6 STAKEHOLDER MANAGEMENT

Effective stakeholder management involves identifying the stakeholders,
understanding their interests, expectations, and requirements, and
engaging them throughout the project's lifecycle. It is essential for
managing project risks, managing change, and ensuring successful
completion of the project.

Some of the ways to manage stakeholders are as follows:

Identify Stakeholders:
Identify all stakeholders who are involved or affected by the project.
These may include project sponsors, team members, customers, suppliers,
regulators, and the community. It's essential to have a clear understanding
of their interests, expectations, and requirements.

Prioritize Stakeholders:
Prioritize stakeholders based on their level of influence, interest, and
power. This can help you determine the level of engagement and
communication required for each stakeholder.

Communicate Effectively:
Develop a communication plan to keep stakeholders informed of project
progress, changes, risks, and issues. The communication plan should
outline the stakeholders' communication needs, frequency, mode of
communication, and the information to be shared.

7
Project Management Manage Expectations:
Ensure that stakeholder expectations are aligned with project goals,
deliverables, and timelines. Manage expectations by setting realistic goals,
providing regular updates, and addressing concerns promptly.

Engage Stakeholders:
Engage stakeholders by involving them in the project's planning, decision-
making, and review processes. This can help build support and
commitment to the project.

Resolve Conflicts:
Identify and resolve conflicts among stakeholders promptly. Addressing
conflicts in a timely and effective manner can help minimize their impact
on the project's success.

Monitor and Evaluate:

Monitor stakeholder engagement and satisfaction throughout the project
lifecycle. Evaluate the effectiveness of stakeholder management strategies
and adjust them as needed.
Thus, by identifying, prioritizing, communicating, managing expectations,
engaging stakeholders, resolving conflicts, and monitoring and evaluating
stakeholder engagement, project managers can achieve project goals and
outcomes while building strong relationships with stakeholders.

1.7 PROJECT ORGANIZATION

Project organization refers to the specific structure, roles, and
responsibilities assigned to individuals and teams involved in a project.
Let's understand this with the help of an example. Suppose a large
manufacturing company wants to launch a new product line. To do so,
they will need to create a project team with the necessary skills and
resources to manage the project from start to finish. The project
organization structure may look something like this:

Project Sponsor:
This person is typically a senior executive who champions the project and
provides the necessary resources and support to the project team. They
ensure that the project aligns with the company's strategic goals and
objectives.

Project Manager:
This person is responsible for leading the project team, developing and
executing the project plan, managing risks and issues, and ensuring the
project is delivered on time, within budget, and to the required quality
standards.

8
Project Team: Overview of Project Management

This group of individuals are responsible for executing the project plan
and delivering the project's outputs. They may include subject matter
experts, designers, engineers, marketers, and other specialists.

Steering Committee:
This group of senior executives provides oversight and guidance to the
project manager and project team. They review project progress, provide
direction, and make key decisions.

Stakeholders:
These are individuals or groups who are affected by the project's
outcomes. They may include customers, suppliers, regulators, and
employees.
In this example, the project organization is designed to ensure that the
project is aligned with the company's strategic goals, and the right people
with the necessary skills and resources are involved. The project sponsor
provides the necessary resources and support to the project team, while the
project manager leads and manages the team. The steering committee
provides oversight and guidance, while stakeholders are kept informed and
engaged throughout the project lifecycle.

Types of Project Organization

There are three main types of project organization structures:

Functional Organization:
In this type of project organization, the project team members are drawn
from different functional areas of the organization, such as engineering,
marketing, and finance. Each team member reports to their respective
functional manager, and the project manager has limited authority. The
functional manager is responsible for the team member's performance, and
the project manager is responsible for coordinating and integrating the
team's work. This structure is often used in organizations with a stable and
routine project environment.

Fig 1.3
9
Project Management Projectized Organization:
In this type of project organization, the project team members are
organized into a separate project team for each project. Each team member
reports directly to the project manager, who has complete authority and
control over the project. The project manager is responsible for managing
the project budget, schedule, and resources. This structure is often used in
organizations where project work is the primary business function.

Matrix Organization:
In this type of project organization, the project team members are drawn
from different functional areas of the organization, and each team member
has two reporting lines – to their functional manager and to the project
manager. The project manager has moderate authority, and the functional
manager has partial authority. This structure combines the strengths of
functional and projectized organizations, allowing organizations to
balance resources and expertise while maintaining flexibility. This
structure is often used in organizations where projects are critical to the
business but not the primary business function.
Choosing the appropriate project organization structure depends on several
factors, such as the nature of the project, the organization's business
strategy, and the project's complexity.

1.8 WBS
Work Breakdown Structure (WBS) is a hierarchical decomposition of
project tasks, deliverables, and work elements that organizes and defines
the total scope of the project. It is a critical tool in project management,
used to break down the project into smaller, more manageable
components, and to establish a framework for organizing and tracking
project tasks.
The WBS typically starts with the main project deliverable, and then
breaks it down into smaller, more manageable components or work
packages. These work packages can then be further broken down into
smaller, more specific tasks, which can be assigned to individual team
members for execution. The WBS should be developed in collaboration
with the project team and stakeholders to ensure that all key project
elements are included and that everyone is clear on their responsibilities.

Benefits of using a WBS in project management include:

Improved project planning:
The WBS allows project managers to better plan, estimate, and allocate
resources by breaking the project into smaller, more manageable
components.

Better communication:

10
The WBS provides a clear and structured way of communicating project Overview of Project Management
tasks and responsibilities to team members, stakeholders, and other project
participants.

Enhanced project tracking and monitoring:

The WBS provides a framework for tracking progress, monitoring
budgets, and identifying potential project risks and issues.
Increased stakeholder engagement:
The WBS allows project stakeholders to see the project's overall structure
and understand how their contributions fit into the project as a whole.
Overall, the WBS is an essential tool for project managers to ensure that
the project is well-planned, well-executed, and achieves its objectives on
time and within budget.
Let us understand this with the help of an example of a breakdown of a
marketing campaign.
The work breakdown for a certain marketing campaign can be as follows:

Campaign Planning

 Objective Setting

 Target Audience Identification

 Campaign Strategy Development

Creative Development

 Concept Development

 Creative Execution

 Asset Creation (graphics, videos, copy)

Campaign Execution

 Media Planning and Buying

 Creative Deployment

 Campaign Tracking and Optimization

Reporting and Analysis

 Metrics Tracking

 ROI Calculation

 Post-Campaign Analysis

11
Project Management This structure can vary depending on the type and the complexity of the
project. However, the key is to break down the project into smaller,
manageable components that can be executed and tracked effectively

1.9 SCOPE AND PRIORITIES

Scope and priorities are two critical elements in project management that
help ensure the success of a project.

Scope:
The scope of a project defines the boundaries of what will be delivered
and what won't be delivered. It is a statement of the project's objectives,
deliverables, and the work required to achieve those objectives. The scope
outlines what is included in the project, and also what is not included.
Defining the scope of a project is critical to ensure that all stakeholders
have a clear understanding of what the project will deliver. This clarity is
essential in managing expectations and avoiding scope creep, where
additional work is added to the project without proper evaluation of its
impact on budget, timeline, and resources. A well-defined scope helps in
developing realistic project plans, identifying potential risks and
constraints, and allocating resources effectively.

Priorities:
Priorities are the relative importance of project objectives, tasks, and
deliverables. Prioritization is the process of ranking project tasks based on
their level of importance or urgency. Priorities are determined based on
the project's goals and objectives, stakeholder needs, and available
resources.
Setting priorities helps project managers to focus on the most critical and
high-impact tasks, which improves project outcomes. Prioritization helps
in effective resource allocation, time management, and risk management.
It also helps in avoiding delays and bottlenecks, as tasks are completed in
order of importance.
Setting scope and priorities helps in effective allocation of resources,
developing realistic project plans, improved communication with the
stakeholders and manages risk associated with the project.

1.10 PROJECT IDENTIFICATION

Project identification is the first step in the project management process. It
involves identifying potential projects that align with an organization's
goals and objectives, evaluating them, and selecting the best project(s) to
pursue. The goal of project identification is to determine whether a project
is worth pursuing and whether it has the potential to provide a return on
investment.
The steps involved in project identification are as follows:

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Idea generation: Overview of Project Management

The first step in project identification is to generate ideas for potential

projects. Ideas can come from various sources, including customers,
employees, management, and stakeholders. Brainstorming sessions and
market research can also help in generating ideas.
Screening:
After generating project ideas, the next step is to screen them. The
screening process involves evaluating the ideas against a set of criteria,
such as feasibility, market potential, and alignment with organizational
goals. The purpose of screening is to eliminate ideas that are not feasible
or do not align with organizational goals.
Feasibility study:
Once the ideas have been screened, the next step is to conduct a feasibility
study on the remaining ideas. The feasibility study helps in determining
whether the project is technically feasible, financially viable, and meets
other criteria such as legal and regulatory compliance.

Project selection:
Based on the results of the feasibility study, the next step is to select the
best project(s) to pursue. The selection process involves evaluating the
potential projects against the organization's goals, objectives, and
available resources

Project charter:
After selecting a project, the next step is to develop a project charter. A
project charter outlines the project's objectives, scope, timelines, budgets,
resources, and stakeholders. The project charter helps in providing a clear
direction and framework for the project.

1.11 MARKET FEASIBILITY WITH MOVING

AVERAGE AND EXPONENTIAL SMOOTHING
METHODS
Market feasibility is a critical aspect of project identification and
evaluation. Two commonly used methods to analyze market feasibility are
Moving Average and Exponential Smoothing.

Moving Average Method:

Moving Average is a statistical method used to identify trends in data. In
market feasibility analysis, the moving average method involves
calculating the average of a set of data points over a specific period. For
example, if we want to analyze market trends over the last 12 months, we
would take the sum of the sales for the past 12 months and divide it by 12
to get the moving average.

13
Project Management The moving average method helps in identifying trends in the market,
including changes in demand or supply. By analyzing the moving average,
we can determine whether the market is growing, declining or stagnant.
We can also identify seasonal trends in the market.
Let us understand this with the help of an example:
Let's say a company wants to analyze the market demand for a product
over the past 6 months. The sales data for the past 6 months are as follows:
Month 1: 100 units
Month 2: 120 units
Month 3: 110 units
Month 4: 130 units
Month 5: 140 units
Month 6: 150 units
To calculate the moving average, we would add up the sales data for the
past 6 months and divide by 6:
Moving Average = (100+120+140+130+110+150)/6 = 117.
The moving average for the past 6 months is 117 units. This indicates that
the market demand is relatively stable, and there is no significant increase
or decrease in demand.

Exponential Smoothing Method:

Exponential Smoothing is another statistical method used to analyze
market feasibility. This method involves forecasting future sales based on
past sales data. The method works by assigning different weights to
different data points, with more weight assigned to recent data points.
The exponential smoothing method helps in identifying changes in the
market and forecasting future sales. By analyzing the exponential
smoothing curve, we can determine whether the market is growing,
declining, or stagnant. We can also forecast future sales based on the trend
identified in the data.
Let's say a company wants to forecast future sales for a product using
exponential smoothing. The sales data for the past 6 months are as
follows:
Month 1: 100 units
Month 2: 120 units
Month 3: 110 units
Month 4: 130 units

14
Month 5: 140 units Overview of Project Management

Month 6: 150 units

To forecast future sales using exponential smoothing, we would assign
different weights to each data point, with more weight assigned to recent
data points. For example, we could use a smoothing factor of 0.3, which
means that 30% of the weight is assigned to the most recent data point,
and 70% of the weight is assigned to the previous forecast.
Using this smoothing factor, we can forecast future sales as follows:
Forecast for Month 7 = (0.3 x 150) + (0.7 x 140) = 144 units
Forecast for Month 8 = (0.3 x 144) + (0.7 x 150) = 147 units
Forecast for Month 9 = (0.3 x 147) + (0.7 x 144) = 145 units
The exponential smoothing method helps in identifying changes in the
market and forecasting future sales. In this example, we can see that the
forecasted sales are relatively stable, indicating that the market demand is
steady.

1.12 TECHNO-ECONOMIC FEASIBILITY

Techno-economic feasibility is an assessment of whether a particular
technology or project is both technically and economically viable.
In other words, it involves evaluating the potential of a technology or
project to achieve its technical objectives while also generating enough
financial returns to justify its investment.
To determine the techno-economic feasibility of a project, a range of
factors are considered, including:

Technical feasibility:
This refers to the ability of the technology or project to deliver the desired
outcomes or meet the specified performance standards.

Economic viability:
This refers to the potential financial returns that can be generated from the
technology or project, taking into account factors such as market demand,
pricing, production costs, and potential revenue streams.

Market demand:
This refers to the level of demand for the technology or project in the
target market, and its potential growth prospects.

Competitiveness:
This refers to the ability of the technology or project to compete
effectively with other existing or potential alternatives in the market.
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Project Management Environmental and social impact:
This refers to the potential impact of the technology or project on the
environment and society, and the extent to which it can be mitigated.
Let us understand this better with the help of an example.
Suppose a company wants to invest in a new wind farm project. The
company's technical team has determined that it is feasible to construct a
wind farm in a specific location, but before making the investment, the
company needs to determine whether the project is economically viable or
not.
To assess the techno-economic feasibility of the project, the company
would consider the following factors:

Technical feasibility:
The company would evaluate the potential of the wind farm project to
generate electricity and meet the required energy production targets. This
would involve analyzing the wind resource at the location, assessing the
suitability of the wind turbines to the site, and identifying any technical
issues that could affect the project's success.

Economic viability:
The company would evaluate the financial returns that can be generated
from the project, taking into account factors such as the capital costs of the
project, operating costs, revenue from energy sales, and potential revenue
streams such as subsidies or tax incentives. The company would also
evaluate the expected return on investment, considering the time horizon
of the project.

Market demand:
The company would evaluate the level of demand for the energy produced
by the wind farm, including assessing the current market conditions, the
availability of buyers for the energy, and the potential for future growth in
the market.

Competitiveness:
The company would evaluate the potential for competition from other
renewable energy sources, such as solar or hydroelectric power, and
consider how to position the project to remain competitive in the market.

Environmental and social impact:

The company would evaluate the potential environmental and social
impact of the wind farm project, considering factors such as the impact on
wildlife, the effect on the local community, and any regulatory
requirements that need to be met.

16
Based on the analysis of these factors, the company would be able to Overview of Project Management
determine whether the wind farm project is technically and economically
feasible. If the analysis shows that the project is feasible, the company
may decide to invest in the project, considering the risks and potential
returns. If the analysis shows that the project is not feasible, the company
may decide to abandon the project or explore alternative options.

1.13 GOVERNMENT POLICY TO LOCATION

The Indian government has formulated several policies to promote project
management and to guide the location of projects in the country. Some of
the key policies are as follows:

National Project Management Policy (NPMP):

The NPMP aims to provide a framework for effective project management
across various sectors. The policy sets out guidelines for project
management, including project planning, implementation, monitoring, and
evaluation.

Industrial Location Policy:

The Industrial Location Policy aims to promote balanced regional
development by encouraging industries to set up in backward regions. The
policy offers incentives such as tax holidays, capital subsidies, and interest
subsidies to industries that set up in these regions.

Special Economic Zones (SEZs):

The government has set up SEZs to promote exports and attract foreign
investment. SEZs offer various incentives such as tax holidays, duty-free
imports, and relaxed labour laws to companies that set up operations in
these zones.

National Industrial Corridor Development Programme (NICDP):

The NICDP aims to promote industrial development by creating industrial
corridors across the country. These corridors will have world-class
infrastructure and offer various incentives to attract industries.

Make in India:
The Make in India initiative aims to promote manufacturing in India and
increase the share of manufacturing in the GDP. The initiative offers
various incentives to companies that invest in manufacturing in India.

Environmental Regulations:
The government has various environmental regulations that companies
must comply with when setting up a project. These regulations aim to
protect the environment and ensure sustainable development.
These policies aim to promote industrial development while ensuring
sustainable development and balanced regional growth.
17
Project Management
1.14 LEGAL ASPECTS IN PROJECT MANAGEMENT
In India, project managers need to be aware of the legal aspects that apply
to their projects. Some of the legal aspects of project management in India
are as follows:

Contracts and agreements:

Project managers need to ensure that they have proper contracts and
agreements in place with stakeholders such as clients, vendors, and
contractors. These contracts should comply with the Indian Contract Act,
1872, and should clearly define the scope of work, timelines, and
responsibilities of each party, as well as provisions for dispute resolution
and breach of contract.

Intellectual property:
Project managers need to be aware of the various laws related to
intellectual property in India, including the Patents Act, 1970, the
Trademarks Act, 1999, and the Copyright Act, 1957. They need to ensure
that any intellectual property created during the project is properly
protected and that they have the necessary licenses and permissions to use
any intellectual property owned by others.

Labour laws:
Project managers need to comply with the various labour laws in India,
including the Minimum Wages Act, 1948, the Employees Provident Fund
and Miscellaneous Provisions Act, 1952, and the Payment of Bonus Act,
1965. They need to ensure that their employees are provided with
appropriate wages, benefits, and working conditions.

Environmental regulations:
Project managers need to comply with environmental regulations in India
to ensure that their projects do not have a negative impact on the
environment. This may involve obtaining environmental clearances from
the Ministry of Environment, Forest and Climate Change, conducting
environmental impact assessments, and implementing measures to
mitigate any environmental impact.

Taxation laws:
Project managers need to be aware of the various taxation laws in India,
including the Income Tax Act, 1961, the Goods and Services Tax (GST)
Act, 2017, and the Customs Act, 1962.

Data privacy laws:

Project managers need to comply with data privacy laws in India,
including the Information Technology Act, 2000, and the Personal Data
Protection Bill, 2019. They need to ensure that they obtain consent from

18
individuals, implement appropriate security measures, and ensure that data Overview of Project Management
is processed lawfully.
Overall, project managers in India need to be aware of the various legal
aspects involved in their projects and take appropriate measures to ensure
compliance with relevant laws and regulations. They might need to seek
legal experts to seek their advice to ensure compliance.

1.15 PREPARATION OF DPR

A Detailed Project Report (DPR) is a comprehensive document that
outlines the various aspects of a project in detail. It serves as a roadmap
for project execution and provides a clear understanding of the project's
scope, objectives, timelines, resource requirements, risks, and
deliverables.

Contents of a DPR:
The DPR typically includes the following sections:

Introduction:
This section provides an overview of the project, including its background,
objectives, and scope.

Project Description:
This section provides a detailed description of the project, including its
methodology, timelines, deliverables, and resource requirements.

Market Analysis:
This section provides a detailed analysis of the market in which the project
will operate, including an assessment of the competition, customer needs,
and market trends.

Technical Feasibility:
This section assesses the technical feasibility of the project, including the
availability of technology, infrastructure, and human resources.

Financial Analysis:
This section assesses the financial viability of the project, including an
analysis of the project's costs, revenue potential, and profitability.

Risk Analysis:
This section identifies and assesses the risks associated with the project
and provides a risk management plan to mitigate those risks.

Project Organization and Management:

19
Project Management This section outlines the organizational structure of the project team,
including roles and responsibilities. It also provides details on project
management tools, communication channels, and reporting mechanisms.

Project Implementation Plan:

This section provides a detailed implementation plan, including timelines,
milestones, and resource allocation.

Monitoring and Evaluation Plan:

This section outlines the monitoring and evaluation plan for the project,
including the indicators to be used to measure progress and the methods to
be used to evaluate project outcomes.

Conclusion:
This section summarizes the key findings of the report and provides
recommendations for project implementation.
Let us understand this with the help of an example:
The project is to design and develop a mobile application that helps users
track their daily water intake and reminds them to stay hydrated
throughout the day. The application will be available for both iOS and
Android platforms.
The DPR for this project can be prepared in the following manner.

Define the Project Objectives and Scope:

The project objectives are to:

 Develop a mobile application that helps users track their daily water
intake and reminds them to stay hydrated.

 Improve users' health and well-being by promoting healthy hydration

habits.

 Generate revenue by selling the application to users.

The project scope includes:

 Designing and developing the application for both iOS and Android
platforms.

 Integrating the application with third-party tools for tracking and

analysis.

 Testing and debugging the application.

 Launching the application in the market.

Conduct a Feasibility Study:

20
The feasibility study includes: Overview of Project Management

 Technical feasibility: We have the necessary expertise in mobile app

development and can leverage existing technologies to develop the
application.

 Financial feasibility: The project budget is estimated to be $100,000,

which can be funded through a combination of investment and
revenue generated from the sale of the application.

 Operational feasibility: We have a skilled team of developers who can

work on the project, and we can source additional resources as
needed.

Develop a Project Implementation Plan:

The project implementation plan includes:

 Establishing a project team with a project manager, developers, and a

quality assurance team.

 Assigning roles and responsibilities to team members.

 Developing a project schedule with clear milestones and deadlines.

 Establishing a communication plan with regular team meetings and

progress reports.

 Creating a development environment with the necessary tools and

infrastructure.

Prepare a Financial Plan:

The financial plan includes:

 Identifying the project costs, including salaries, infrastructure, and

marketing expenses.

 Developing a revenue model based on the application's price and

projected sales volume.

 Analyzing the project's financial viability, including the return on

investment and break-even analysis.

Develop a Risk Management Plan:

The risk management plan includes:

 Identifying potential risks such as technical issues, market

competition, and regulatory compliance.

 Developing strategies to mitigate the risks, such as implementing a

quality assurance process, conducting market research, and adhering
to regulatory guidelines.

21
Project Management
 Establishing a contingency plan in case of unforeseen circumstances.

Create a Monitoring and Evaluation Plan:

The monitoring and evaluation plan includes:

 Establishing key performance indicators such as application

downloads, user engagement, and revenue.

 Developing a reporting mechanism to track progress and evaluate

outcomes.

 Conducting periodic reviews to assess the project's performance and

identify areas for improvement.

Compile the Detailed Project Report:

The DPR should be structured in a logical manner, with clear headings
and sections. It should include all the relevant information needed to make
informed decisions about the project, such as the project description,
feasibility study, project implementation plan, financial plan, risk
management plan, and monitoring and evaluation plan.

1.16 SUMMARY
 Project management requires developing a project plan, which outlines
the tasks to be completed, the resources needed, and the timelines for
each task.

 The project life cycle is a series of phases that a project goes through
from its initiation to its completion. The life cycle is divided into
various phases, each with its own set of deliverables, activities, and
milestones.

 \

 Effective stakeholder management involves identifying the

stakeholders, understanding their interests, expectations, and
requirements, and engaging them throughout the project's lifecycle. It
is essential for managing project risks, managing change, and
ensuring successful completion of the project.

 Choosing the appropriate project organization structure depends on

several factors, such as the nature of the project, the organization's
business strategy, and the project's complexity.

 Work Breakdown Structure (WBS) is a critical tool in project

management, used to break down the project into smaller, more
manageable components, and to establish a framework for organizing
and tracking project tasks.

22
 Setting scope and priorities helps in effective allocation of resources, Overview of Project Management
developing realistic project plans, improved communication with the
stakeholders and manages risk associated with the project.

 The goal of project identification is to determine whether a project is

worth pursuing and whether it has the potential to provide a return on
investment.

 Project managers need to be aware of the various legal aspects

involved in their projects and take appropriate measures to ensure
compliance with relevant laws and regulations. They may need to
seek legal advice from experts in each area to ensure compliance.

 A Detailed Project Report (DPR) serves as a roadmap for project

execution and provides a clear understanding of the project's scope,
objectives, timelines, resource requirements, risks, and deliverables.

1.17 QUESTIONS
OBJECTIVE QUESTIONS
1. Fill in the Blanks
1. ______ and ______ are two critical elements in project management
that help ensure the success of a project.
2. The WBS should be developed in collaboration with the ______ and
_____________.
3. In __________ type of project organization, the project team
members are organized into a separate project team for each project.
4. There are ___________ stakeholders involved in each project.
5. In ____________ phase, the project work is performed.

2. True or False
1. In matrix organization, the project team members are drawn from
different functional areas of the organization.
2. The WBS typically starts with the main project deliverable
3. A well-defined scope helps in developing realistic project plans.
4. Project identification is the last step in the project management
process
5. The DPR should have clear headings and sections.

SUBJECTIVE QUESTIONS
1. List the importance of project management.
2. Describe the 5 stages of project lifecycle
23
Project Management 3. Who are the common stakeholders in a project?
4. Explain the ways to manage stakeholders.
5. List the factors to determine the techno-economic feasibility of a
project
6. Describe the contents of DPR.
7. Explain moving average method with an example.
8. Explain exponential smoothing method with an example.
9. List the steps involved in project identification.
10. Describe the benefits of WBS in project management

ANSWER FOR OBJECTIVE QUESTIONS

1. Fill in the Blanks
1. Scope and priorities
2. The project team and stakeholders
3. Projectized Organization
4. Multiple
5. Execution phase

2. True or False
1. True
2. True
3. True
4. False: Project identification is the first step in the project management
process
5. True

1.18 REFERENCES
 Project Planning estimation and assessment by Prasanna Chandra
 Indeed.com
 Project Management : The Managerial Process by Gray and Larson
3E Tata McGraw-Hill

 Educba.com
*****

24
 2
PROJECT PLANNING
Unit Structure
2.0 Objectives
2.1 Introduction to Network Diagrams
2.2 AOA and AON Diagrams
2.3 Estimating Time & Cost Using AOA & AON Methods
2.4 Estimating Project Budget
2.5 Float Analysis
2.6 Crashing
2.7 Summary
2.8 Questions
2.9 References

2. 0 OBJECTIVES
 Identify network diagrams.

 Explain AOA and AON diagrams.

 Explain the process of estimating time and cost using AOA and AON
methods.

 Explain float analysis.

 Explain crashing.

2.1 INTRODUCTION TO NETWORK DIAGRAMS

Network diagrams provide a way to visually depict the interrelationships
and dependencies between various activities that constitute a project. In
order to ensure effective oversight and control, it is crucial to break down
a project into smaller tasks. The fundamental idea is that completing each
task in a timely manner should result in the timely completion of the
project as a whole.

Activity:
In project management, an activity refers to a self-contained unit of work
that requires a specific amount of time and resources to complete. It is the
smallest element of productive effort that can be planned, scheduled, and
monitored. Typically, activities are depicted as arrows in a network
diagram and are labeled with activity codes and estimated durations.

25
Project Management There are four types of activities in a network:
1. Predecessor activity: An activity that must be completed before
another activity can begin.
2. Successor activity: An activity that cannot begin until one or more
other activities have been completed but immediately follows them.
3. Concurrent activity: An activity that can be carried out at the same
time as one or more other activities. It may be a predecessor or
successor to an event.
4. Dummy activity: A dummy activity does not require any resources
and is used solely to represent technological dependencies in the
network. It is used in the network in the following cases:
a) To differentiate between activities with the same start and end points.
b) To maintain proper precedence relationships between activities that
are not linked by events.

Event:
In project management, an event marks the beginning or end of an activity
and occurs at a specific point in time. Unlike activities, events are not self-
contained work elements.

Fig 2.1
Events are represented by small circles. There are three types of events:

Merge Event:
This type of event occurs when two or more activities start from the same
event.

Burst Event:
This event occurs when more than one activity ends at the same event.

Merge & Burst Event:

This type of event acts as both a merge and burst event. It receives
multiple activities and also sends out multiple activities.

26
 Project Planning

Fig 2.2
When creating a network diagram, it is important to adhere to certain
conventions. The diagram comprises of a sequence of circles that
represent events and arrows that represent activities. The length and
direction of the arrows do not inherently signify anything. Events are
usually numbered sequentially as 1, 2, 3, and so on, while activities are
identified using codes like A, B, C, etc.
To maintain consistency, the number of the head event for any activity
should always be greater than that of the corresponding tail event. The
arrows are generally directed from left to right to indicate the passage of
time in a broad sense. It is advisable to minimize the crossing of arrows to
ensure clarity and prevent confusion.
Furthermore, it is recommended to depict the beginning and end of the
project with single events. Additionally, the use of dummy activities
should be minimized whenever possible.

2.2 AOA & AON DIAGRAMS

AOA and AON are both project management techniques used to represent
and analyze the tasks involved in a project.
AOA stands for "Activity on Arrow," which is a method of representing
project tasks as arrows (or lines) on a network diagram. Each arrow
represents an activity or task, and the length of the arrow represents the
duration of the task. AOA also uses nodes or circles to represent the
starting and ending points of each activity.
AON stands for "Activity on Node," which is another method of
representing project tasks as nodes (or boxes) on a network diagram. Each
node represents an activity or task, and the arrows connecting the nodes
represent the dependencies between tasks. AON also uses arrows to
represent the flow of tasks and the duration of each task.
Both AOA and AON are commonly used in project management to help
plan, schedule, and manage projects. They can help identify critical paths,
manage resources, and track progress. The choice between AOA and AON
often depends on the specific needs of the project and the preferences of
the project manager.

27
Project Management

Fig 2.3
In the AOA diagram, circles represent events, and arrows represent
activities.
In the AON diagram, circles represent activities, and arrows represent the
dependencies between them. Both AOA and AON diagrams are useful
tools for project management, and one of them can be used based on the
specific need of the project.

Rules for constructing AOA network

When constructing an AOA network, the following rules must be
followed:
● Activities are represented by arrows and events by circles in the
network diagram. The length of an arrow is not significant.
● Each activity must be represented by a single arrow that starts and
ends in an event circle. The tail of an arrow indicates the start, and the
head indicates the completion of the work.
● The direction of an arrow represents the direction of workflow. The
usual convention is to depict the workflow from left to right.
● All networks are constructed based on the principle of dependency.
● An event cannot occur until all incoming activities into it have been
completed.
● An activity cannot start until all preceding activities have been
completed.
● No set of activities can form a circular loop.
To reflect the flow of a logically constructed network, each event is
assigned a number, indicated by a sequence of numbers inside the circle.
D.R. Fulkerson's rule is used to determine the numbering sequence.

28
To apply this rule, start by identifying the initial event that has all Project Planning
outgoing arrows and no incoming arrows. Then, delete all arrows
emerging from the numbered events and continue this process until a
terminal event is reached. The steps involved are:
● Ensure event numbers are unique.
● Number events sequentially from left to right.
● The initial event is numbered as 1.
● Delete all arrows emerging from numbered events, creating new start
events.
● Number all new start events 2, 3, and so on, and repeat the process
until a terminal event without any successor activity is reached.
Number the terminal node accordingly.

Comparison between AOA and AON Networks

Fig 2.4

2.3 ESTIMATING TIME & COST USING AOA & AON

METHODS
To estimate the time and cost of a project using Activity-On-Node (AON)
and Activity-On-Arrow (AOA) techniques, you can follow the steps
below:

Define the project scope:

Clearly define the scope of the project, including its objectives,
deliverables, and the timeline for completion.

29
Project Management Identify the activities:
Identify all the activities required to complete the project. List them in
order and break them down into smaller, manageable tasks.

Determine the dependencies:

Determine the dependencies between activities. Identify which activities
need to be completed before others can begin.

Create a network diagram:

Create a network diagram using either AON or AOA. AON uses nodes to
represent activities, and arrows to represent dependencies, whereas AOA
uses arrows to represent activities, and nodes to represent dependencies.

Estimate activity durations:

Estimate the time required to complete each activity. This can be done by
consulting experts, historical data, or other sources of information.

Determine critical path:

Identify the critical path, which is the path of activities that will take the
longest time to complete.

Calculate project duration:

Calculate the total duration of the project by summing the durations of all
activities on the critical path.

Estimate costs:
Estimate the costs of each activity, including labor, materials, and other
resources. Add up all the costs to get the total project cost.

Monitor and control:

Monitor the project regularly to ensure that it stays on track. If there are
any delays or issues, take corrective action to get the project back on
schedule.

Example of estimating time and cost of a project using Activity-On-

Arrow (AOA) method:
Let's say you are managing a project to develop a new software
application. The project can be broken down into the following activities:
Activity A: Requirements gathering
Activity B: Design
Activity C: Development
Activity D: Testing

30
Activity E: Deployment Project Planning

The dependencies between activities are as follows:

A→B
B→C
C→D
D→E
The estimated duration of each activity is:
Activity A: 2 weeks
Activity B: 4 weeks
Activity C: 6 weeks
Activity D: 3 weeks
Activity E: 1 week
In this case, each activity is represented by an arrow, with the duration
next to it.
To calculate the critical path and project duration, we need to find the
longest path through the network diagram. In this case, the critical path is
A → B → C → D → E, with a total duration of 16 weeks.
To estimate the project cost, we need to estimate the cost of each activity.
Let's assume that the cost of each activity is:
Activity A: 10,000
Activity B: 20,000
Activity C: 30,000
Activity D: 15,000
Activity E: 5,000
The total project cost would be the sum of the costs of each activity on the
critical path, which is:
Total cost = 10,000 + 20,000 + 30,000 + 15,000 + 5,000 = 80,000
So, based on this analysis, it can bd estimated that the project will take 16
weeks to complete and cost 80,000 using AOA method.
Example of estimating time and cost of a project using Activity-On-
Node (AON) method:
Let's say you are a project manager tasked with organizing a software
development project. The project involves creating a new mobile app for a
31
Project Management client and the client has provided you with a detailed project scope and
requirements document.
To estimate the time and cost of the project using the AON (Activity on
Node) method, you would follow these steps:
Break down the project scope and requirements document into smaller
tasks or activities. For example:

 Research and choose a programming language and framework

 Develop wireframes and prototypes

 Develop the user interface

 Develop the backend and front-end functionality

 Test and debug the mobile app

 Deploy the app

Let us suppose the time and cost for each scope of work is as follows:
1. Research and choose a programming language and framework (Time:
2 Weeks, Cost: 10,000)
2. Develop wireframes and prototypes
(Time: 4 Weeks, Cost: 20,000)
3. Develop the user interface (Time: 6 Weeks, Cost: 30,000)
4. Develop the backend and front-end functionality (Time:18 Weeks,
Cost: 90,000)
5. Test and debug the mobile app (Time: 2 Weeks, Cost: 10,000)
6. Deploy the app (Time: 1 Week, Cost: 5,000)
This path takes a total of 33 weeks and costs Rs 165,000.

2.4 ESTIMATING PROJECT BUDGET

The process of estimating the budget of a project involves identifying all
the costs that will be incurred during the project's lifecycle, and then
calculating the total amount of funds required to complete the project.
A general method for estimating the budget of a project is as follows:

Identify all project costs:

Make a list of all costs associated with the project, including direct and
indirect costs. Direct costs are those directly related to the project, such as
labor, materials, and equipment. Indirect costs are those that are not

32
directly related to the project but are still necessary for its completion, Project Planning
such as rent, utilities, and administrative expenses.

Determine the cost drivers:

Cost drivers are factors that influence the cost of the project. For example,
the number of team members, the project duration, and the complexity of
the project are all cost drivers. Identify the key cost drivers that will
impact the project and estimate their costs.

Estimate labor costs:

Estimate the labor costs associated with the project by determining the
number of hours required for each team member, their hourly rate, and the
duration of the project. Multiply the number of hours by the hourly rate to
calculate the total labor cost for each team member, and then add up the
total labor costs for all team members.

Estimate material costs:

Estimate the cost of materials required for the project, such as software
licenses, hardware, and other supplies. This can be done by obtaining
quotes from suppliers or by using historical data.

Estimate equipment costs:

Estimate the cost of any equipment required for the project, such as
computers or machinery. This can be done by obtaining quotes from
suppliers or by using historical data.

Estimate indirect costs:

Estimate the cost of any indirect costs, such as rent, utilities, and
administrative expenses. This can be done by using historical data or by
obtaining quotes from vendors.

Calculate the total project cost:

Add up all the costs identified in the previous steps to calculate the total
project cost.

Add a contingency reserve:

A contingency reserve is an amount of money set aside to cover
unforeseen events or risks that may arise during the project. Add a
contingency reserve to the total project cost to ensure that there is enough
funding to cover unexpected costs.

Review and refine the budget:

Review the budget to ensure that it is accurate and comprehensive. Refine
the budget as necessary based on any changes to the project scope,
schedule, or other factors.

33
Project Management
2.5 FLOAT ANALYSIS
Float analysis, also known as float or slack analysis, is a project
management technique that helps in identifying the flexibility or slack in a
project schedule. It helps to determine the amount of time that a particular
activity can be delayed without delaying the entire project completion
date.
In project management, float analysis is done by calculating two types of
floats - total float and free float.

Total Float:
Total float represents the duration an activity can be postponed without
impacting the scheduled completion date of the project. It is the amount of
time that an activity can slip or float without affecting the project's
deadline. The total float is calculated by determining the difference
between the early start date and the late start date of an activity.

Free Float:
Free float refers to the duration that an activity can be postponed without
delaying the start date of its subsequent activity. In other words, it is the
amount of time that an activity can float or slip without affecting the start
date of the following activity in the project schedule. The calculation of
free float involves subtracting the early start date of an activity from the
early start date of its subsequent activity, and then subtracting the duration
of the predecessor activity.
Float analysis can help project managers to prioritize critical activities and
identify those that can be delayed or fast-tracked to optimize the project
schedule. It can also help in resource allocation and identifying potential
risks and delays in the project schedule.

Steps involved in float analysis:

Identify the project network:
The first step in float analysis is to identify the project network. This
involves creating a visual representation of the project tasks and their
interdependencies using a network diagram, such as a Gantt chart or a
PERT chart.
Example: Let's say you are managing a construction project to build a new
office building. The project network would include tasks such as design,
excavation, foundation, framing, electrical, plumbing, HVAC, and
finishing.

Calculate the duration and dependencies:

The second step is to calculate the duration of each task and their
dependencies. This involves determining the time required to complete
each task and the order in which they need to be completed.
34
Example: For the construction project, the duration of each task could be Project Planning
estimated as follows: design (4 weeks), excavation (2 weeks), foundation
(4 weeks), framing (8 weeks), electrical (6 weeks), plumbing (4 weeks),
HVAC (6 weeks), and finishing (6 weeks). The dependencies would be
such that excavation cannot start until design is complete, foundation
cannot start until excavation is complete, and so on.

Calculate the early start and early finish:

The third step is to calculate the early start and early finish dates for each
task. This involves determining the earliest date each task can start and the
earliest date it can be completed based on its dependencies and duration.
Example: Using the construction project, the early start and early finish
dates for each task could be calculated as follows:
Design: early start = 1, early finish = 4
Excavation: early start = 5, early finish = 6
Foundation: early start = 7, early finish = 10
Framing: early start = 11, early finish = 18
Electrical: early start = 19, early finish = 24
Plumbing: early start = 19, early finish = 22
HVAC: early start = 25, early finish = 30
Finishing: early start = 19, early finish = 24

Calculate the late start and late finish:

The fourth step is to calculate the late start and late finish dates for each
task. This involves determining the latest date each task can start and the
latest date it can be completed without delaying the project completion
date.
Example:
Using the construction project, the late start and late finish dates for each
task could be calculated as follows:
Design: late start = 1, late finish = 4
Excavation: late start = 5, late finish = 6
Foundation: late start = 7, late finish = 10
Framing: late start = 11, late finish = 18
Electrical: late start = 19, late finish = 24
Plumbing: late start = 23, late finish = 26

35
Project Management HVAC: late start = 25, late finish = 30
Finishing: late start = 25, late finish = 30

Calculate the float:

The final step is to calculate the float for each task. This involves
determining the amount of time each task can be delayed without delaying
the project completion date (total float) or the start date of its successor
task (free float).

Example:
Using the construction project, the float for each task could be calculated
as follows:
Design: total float = 0, free float = 0
Excavation: total float = 0, free float = 0
Foundation: total float = 0, free float = 0
Framing: total float = 2, free float = 2
To calculate float time (also known as slack time or slack), there are two
types of floats that can be calculated: total float and free float. The
formulas for calculating each type of float are as follows:
Total Float: Total float is the amount of time that an activity can be
delayed without delaying the entire project completion date. It can be
calculated using the following formula:
Total Float = Late Finish Date - Early Finish Date - Duration
Free Float: Free float is the amount of time that an activity can be delayed
without delaying the start date of its successor activity. It can be calculated
using the following formula:
Free Float = Early Finish Date of
Successor Activity - Early Finish Date of Current Activity - Duration of
Current Activity
In order to compute the float time for a project, it is necessary to compute
the float time for each activity within the project network. This would
necessitate determining the early start, early finish, late start, late finish,
and duration for each activity, and then applying the aforementioned
formulas to determine both the total float and free float.

2.6 CRASHING
Crashing is a concept in project management that involves shortening the
project schedule by compressing the project activities. The goal of
crashing is to reduce the project duration while still meeting the project
requirements.
36
The concept of crashing is based on the understanding that the longer a Project Planning
project takes to complete, the more it will cost. By shortening the project
duration, a project manager can reduce costs, meet project deadlines, and
stay competitive.
Crashing is important in project management because it allows project
managers to accelerate the completion of a project when there is a need to
meet tight deadlines or when the project is behind schedule. By adding
more resources to critical path tasks, project managers can reduce the
overall project duration and ensure that the project is completed on time.
There are several benefits to crashing a project. For example, it can help to
increase customer satisfaction by delivering the project on or ahead of
schedule. It can also help to reduce the overall cost of the project by
shortening the duration and minimizing the need for additional resources.
Crashing can also help to improve team morale and motivation by
demonstrating a commitment to completing the project on time and under
budget. Additionally, it can help to identify critical path tasks and areas
where additional resources can be added to maximize project efficiency.

Techniques for crashing:

There are two main techniques for crashing a project:

Fast Tracking:
This technique involves overlapping activities that would normally be
performed sequentially. For example, instead of waiting for the design
phase to be completed before starting development, both activities can be
done simultaneously. Fast tracking can help to reduce project duration but
can also increase risk and rework if not managed carefully.

Resource Leveling:
This technique involves adding additional resources to a project to
complete it more quickly. For example, adding more programmers to a
development team to speed up the coding process. Resource leveling can
help to reduce project duration but can also increase costs.
When deciding which technique to use for crashing a project, project
managers must consider the tradeoffs between time, cost, and risk.
Crashing a project can have a number of benefits, including:

 Meeting tight project deadlines

 Reducing project costs

 Improving project quality

 Gaining a competitive advantage

37
Project Management Tips for crashing a project:
Some of the tips for effectively crashing a project in project management
are as follows:

Identify the critical path:

Before you can begin crashing a project, it's important to identify the
critical path tasks that are driving the overall project duration. By focusing
on these tasks, you can maximize the impact of your efforts to reduce the
project timeline.

Evaluate your options:

There are several ways to crash a project, including adding more
resources, working longer hours, or compressing the schedule. Evaluate
each option carefully and choose the one that will have the greatest impact
on the critical path tasks while minimizing cost.

Develop a plan:
Once you've identified the critical path tasks and evaluated your options,
develop a plan for how you will implement the changes. This may include
hiring additional resources, adjusting the project schedule, or re-
sequencing tasks to optimize project efficiency.

Communicate with stakeholders:

Keep all stakeholders informed of the changes you're making to the
project timeline and the potential impacts on cost and quality. This makes
sure that everyone is on the same page.

Monitor progress:
Continuously monitor progress to ensure that the changes you've made are
having the desired impact on the critical path tasks. If necessary, make
adjustments to your plan to maximize efficiency and minimize cost.

Evaluate the outcome:

Once the project is completed, evaluate the outcome to determine whether
the changes you made were effective in reducing the overall project
duration. Use this information to inform future projects and refine your
project management processes.

2.7 SUMMARY
 Network diagrams provide a way to visually depict the
interrelationships and dependencies between various activities that
constitute a project.

 An activity refers to a self-contained unit of work that requires a

specific amount of time and resources to complete.

38
 An event marks the beginning or end of an activity and occurs at a Project Planning
specific point in time.

 AOA stands for "Activity on Arrow," which is a method of

representing project tasks as arrows (or lines) on a network diagram.
Each arrow represents an activity or task, and the length of the arrow
represents the duration of the task.

 AON stands for "Activity on Node," which is another method of

representing project tasks as nodes (or boxes) on a network diagram.
Each node represents an activity or task, and the arrows connecting
the nodes represent the dependencies between tasks.

 The process of estimating the budget of a project involves identifying

all the costs that will be incurred during the project's lifecycle, and
then calculating the total amount of funds required to complete the
project.

 Float analysis, also known as float or slack analysis, is a project

management technique that helps in identifying the flexibility or slack
in a project schedule. It helps to determine the amount of time that a
particular activity can be delayed without delaying the entire project
completion date.

 Crashing is a concept in project management that involves shortening

the project schedule by compressing the project activities. The goal of
crashing is to reduce the project duration while still meeting the
project requirements.

2.8 QUESTIONS
OBJECTIVE QUESTIONS
Fill in the Blanks
1. ________ crashing technique involves overlapping activities that
would normally be performed sequentially.
2. In the AON diagram, circles represent _________, and arrows
represent ___________.
3. ____________ is a project management technique that helps in
identifying the flexibility or slack in a project schedule.
4. __________ diagrams provide a way to visually depict the
interrelationships and dependencies between various activities that
constitute a project.
5. ___________ refers to a self-contained unit of work that requires a
specific amount of time and resources to complete.

39
Project Management 2. True or False

1. The first step in float analysis is to identify the project network.

2. Total float represents the duration an activity can be postponed

without impacting the scheduled completion date of the project.

3. Activities are not self-contained work elements.

4. Monitor the project regularly to ensure that it stays on track.

5. Events are depicted as arrows in a network diagram.

SUBJECTIVE QUESTIONS

1. What are activities and events?

2. List the rules for constructing an AOA network.

3. List the steps to estimate budget.

4. What are the steps involved in float analysis?

5. List the tips for crashing a project.

ANSWER FOR OBJECTIVE QUESTIONS

1. Fill in the Blanks

1. Fast-tracking

2. Activities, dependencies

3. Floating

4. Network

5. Activity

2. True or False

1. True

2. True

3. False

4. True
40
5. False Project Planning

2.9 REFERENCES

 Projectmanagement.com

 Project Planning estimation and assessment by Prasanna Chandra

 Indeed.com

 Projectengineer.com

*****

41
 3
PROJECT SCHEDULING & RISK
MANAGEMENT
Unit Structure
3.0 Objectives
3.1 Introduction and Importance of Project Scheduling
3.2 Steps in Project Scheduling
3.3 Sources of Risks in Project Management
3.4 Gantt Chart
3.5 Splitting and Multi-Tasking
3.6 Risk in Time Estimates
3.7 Preparing a Resource Chart
3.8 PERT Analysis
3.9 Summary
3.10 Questions
3.11 References

3.0 OBJECTIVES
 Explain the steps involved in project scheduling.

 Identify the sources of risks in project management.

 Explain Gantt Chart.

 Identify the risks associated in time estimates.

 Explain the process to prepare a resource chart.

 Explain PERT analysis.

3.1 INTRODUCTION AND IMPORTANCE OF PROJECT

SCHEDULING
Scheduling is a critical component of project management. It helps to
ensure that all tasks are completed on time and within budget, and that the
project is delivered to the required quality standard. By identifying all
tasks, sequencing them, allocating resources, estimating durations,
developing a schedule, and monitoring and controlling progress, project
managers can ensure that the project is completed successfully.

42
Importance of Project Scheduling: Project Planning

Time management:
Scheduling helps project managers to manage time effectively by
providing a timeline for completing all tasks and activities. This enables
the project team to work efficiently, prioritize tasks, and meet deadlines.

Resource management:
Scheduling helps project managers to allocate resources effectively by
providing a clear understanding of the resources required for each task and
activity. This enables project managers to plan resource allocation in
advance and avoid resource conflicts.

Coordination:
Scheduling helps project managers to coordinate the activities of the
project team, ensuring that tasks are completed in the correct order and
that dependencies between tasks are identified and managed. This helps to
avoid delays and ensure that the project progresses smoothly.

Risk management:
Scheduling helps project managers to identify potential risks and plan for
contingencies. By identifying critical tasks and their dependencies, project
managers can plan for potential delays and avoid risks that could impact
the project's success.

Communication:
Scheduling provides a common understanding of the project timeline for
all stakeholders. This ensures that everyone involved in the project
understands the tasks, timelines, and dependencies and can communicate
effectively with each other.

Performance tracking:
Scheduling provides a baseline against which project progress can be
measured. By tracking progress against the schedule, project managers can
identify any deviations and take corrective action to keep the project on
track.

3.2 STEPS IN PROECT SCHEDULING

Task identification:
The first step in scheduling is to identify all the tasks required to complete
the project. This involves breaking down the project into smaller,
manageable tasks.

43
Project Management Task sequencing:
Once the tasks have been identified, the next step is to determine the order
in which they need to be completed. This involves identifying
dependencies between tasks, such as tasks that need to be completed
before others can start.

Resource allocation:
After task sequencing, the next step is to allocate resources to each task.
This includes determining the personnel, equipment, and materials
required for each task.

Duration estimation:
After resources have been allocated, the next step is to estimate the
duration of each task.

Schedule development:
After duration estimation, the next step is to develop a project schedule.
This involves creating a timeline for all tasks and activities, taking into
account task dependencies, resource allocation, and duration estimation.

Schedule monitoring and control:

Finally, the project schedule must be monitored and controlled throughout
the project to ensure that it remains on track. This involves tracking
progress against the schedule, identifying and addressing deviations from
the schedule, and making adjustments as necessary.
Let us understand this with the help of an example of creating a product
for a client. In such a case, the breakdown of the scheduling process will
be as follows:

Define the project scope and goals:

The first step in scheduling is to define the scope of the project and its
goals. For product creation, the scope might include understanding the
client's requirements, creating product design, manufacturing the product,
quality control, and shipping.

Break down the project into tasks:

Once the scope is defined, break down the project into smaller tasks that
need to be completed to achieve the project's goals. For the product
creation, the tasks might include conducting client interviews, analyzing
the client's requirements, creating a product design, preparing a prototype,
testing the prototype, and finalizing the product design.

44
Determine task dependencies: Project Planning

Identify the tasks that are dependent on each other, meaning one task
cannot start until another is completed. For example, you cannot create a
product design until you have analyzed the client's requirements.
Estimate task duration and assign resources:
For each task, estimate the time required to complete it and assign the
necessary resources, such as personnel or equipment. For the product
creation, you might estimate that analyzing the client's requirements will
take two weeks and require a team of three people.

Create a project timeline:

Once you have estimated the task durations and assigned resources, create
a project timeline that outlines the start and end dates for each task. Project
management software tools can be used to create the timeline.

Monitor and adjust the project schedule:

As the project progresses, monitor the actual time spent on each task and
compare it to the estimated time. If there are any delays or issues, adjust
the project schedule accordingly to ensure the project is completed on
time.

3.3 SOURCES OF RISK IN PROJECT MANAGEMENT

There are risks in business decisions because businesses operate in a
complex and dynamic environment that is constantly changing. Successful
businesses are those that are able to identify and manage these risks
effectively. This requires a combination of sound decision-making
processes, effective risk management strategies, and ongoing monitoring
and assessment of the business environment.
Project management involves a range of risks that can impact the success
of a project. Some of these risks are as follows:
Uncertainty:
Business decisions are often made based on incomplete or uncertain
information. This can lead to risks associated with incorrect or inaccurate
decisions.
Competition:
Businesses operate in a competitive environment, and decisions made by
one business can impact the success of another. This can lead to risks
associated with market changes, new competitors, and shifting consumer
preferences.

45
Project Management Economic factors:
Economic conditions can change rapidly, leading to risks associated with
changes in interest rates, inflation, and foreign exchange rates.
Resource constraints:
This occurs when there are not enough resources (such as personnel, time,
or budget) to complete the project. It can lead to delays, a failure to deliver
the project on time, or to deliver it at a lower quality than expected.
Technological changes:
Technological changes can disrupt industries and change the way
businesses operate. This can lead to risks associated with changes in
technology and the need to adapt to new business models.
Technical problems:
This occurs when there are problems with the technical aspects of the
project, such as software bugs or hardware failures. It can lead to delays,
budget overruns, or a failure to deliver the project at the required quality.
Regulatory changes:
Government regulations can change rapidly, leading to risks associated
with compliance issues and changes in the legal environment.
Internal factors:
Businesses also face risks associated with their own internal operations,
such as employee turnover, supply chain disruptions, and financial issues.
Communication breakdowns:
This occurs when there is a breakdown in communication between project
team members, stakeholders, or customers. It can lead to
misunderstandings, delays, or a failure to deliver the project at the
required quality.

3.4 GANTT CHART

A Gantt chart is a popular project management tool used to visually
represent a project schedule. Gantt charts not only show the timeline and
status of a project but also who’s responsible for which task in a particular
project. The chart helps to show the progress of the project, identify any
delays, and track the critical path.
A Gantt chart can capture the following details about a project:
● The broken down tasks
● Beginning and end of each task
● Duration for each task
46
● People assigned to each task Project Planning

● When important meetings, approvals, or deadlines need to happen

● The progress happening on the project
● The complete project schedule from start to finish

Sections of a Gantt Chart:

The Gantt chart is divided into the following sections:

Task List:
The task list is on the left-hand side of the chart and lists all the tasks
involved in the project. Each task is identified by a unique name or
number.

Timeline:
The timeline runs horizontally across the chart and shows the project
timeline, broken down into days, weeks, or months, depending on the
project duration.

Task Bars:
The task bars represent each task on the chart. They are color-coded to
show the status of the task - complete, in progress, or not started. The
length of the task bar represents the duration of the task, and the arrows
connecting the task bars show the dependencies between tasks.
Dateline:
Dateline is a vertical line that highlights the current date on the Gantt
chart.
Bars:
Bars are the Horizontal markers on the right side of the Gantt chart that
represent the progress of task, duration, and start and end dates.
Milestones:
It highlights the major events, dates, decisions, and deliverables.
Dependencies:
These connect tasks that need to happen in a certain order.

Progress:
Shows how far along work is and may be indicated by percent complete
and/or bar shading.

47
Project Management Resource assigned:
This gives information about the number of persons involved to complete
a certain task.

Fig 3.1
Factors to consider while making Gantt Charts:
● Major Deliverables
● Project duration and deadline
● Milestones to reach
● Dependencies that could impact the timeline
● The team and allotment of tasks

Steps to build a Gantt chart:

List tasks:
Make a list of all the tasks involved in your project and assign a unique
identifier to each task.

Determine the duration of each task:

Estimate the time it will take to complete each task and note it down.

Define task dependencies:

Identify which tasks are dependent on others and which can be done in
parallel.

48
Determine start and end dates: Project Planning

Decide on the project start date and calculate the expected end date based
on the duration of each task and task dependencies.

Draw a horizontal time axis:

Create a horizontal axis for the timeline of your project. The time scale
can be in days, weeks, or months, depending on the duration of your
project.

Draw task bars:

Draw a rectangle for each task on the timeline. The length of the rectangle
should represent the duration of the task, and the position of the rectangle
should correspond to the start and end dates of the task.

Add task dependencies:

Use arrows to connect dependent tasks. The arrows should point from the
end date of the predecessor task to the start date of the successor task.

Label and format the chart:

Add labels to the chart to identify the tasks, duration, and dependencies.
Format the chart to make it easier to read, such as by adding colors,
shading, or borders to the task bars.

Update the chart:

As the project progresses, update the Gantt chart with the actual start and
end dates of each task, and adjust the timeline and dependencies
accordingly.

Share and communicate the chart:

Share the Gantt chart with team members, stakeholders, and clients to
keep everyone informed about the project status and timelines.
One can either use traditional desktop apps such as excel and google
sheets to create a gantt chart, or use collaborative project management
software for the same.

Steps to create a Gantt Chart in Excel:

Step 1:
Begin by adding tasks and their corresponding dates to an Excel
worksheet that will serve as the basis for your Gantt Chart. Create
columns for Task Name, Start Date, End Date, and Duration, and ensure
that the columns are formatted correctly: Task Name should be in Text
format, Start Date and End Date in Date format, and Duration in Number
format. If you want to group your tasks into phases with subtasks, add a
row before the first task in each phase and enter the Start Date and End
Date for the group or phase.
49
Project Management

Fig 3.2
Step 2:
Use a formula in Excel to calculate the duration of each task by
subtracting the Start Date from the End Date. This will enable Excel to
automatically calculate the duration for each task in your Gantt Chart. For
example, you can use the formula =C2-B2 for the first task. You can then
copy this formula to the remaining cells in the Duration column by placing
your mouse on the right corner of D2 until you see a black + sign, and
double-click or drag your mouse down.

Fig 3.3
50
 Project Planning

Fig 3.4

Fig 3.5
Step 3:
Insert a Stacked Bar Chart from the Insert menu in Excel by selecting the
bar chart icon from the Insert tab, and then choosing Stacked Bar from the
2-D Bar section. This chart type is closest in appearance to a Gantt Chart.

51
Project Management

Fig 3.6
Step 4:
Set up your Gantt Chart data by selecting the blank chart that appears in
your Excel worksheet after inserting the Stacked Bar Chart. Right-click
the chart and choose Select Data, then click the plus sign (+) under the
Legend entries section to add the first data set, which you should name
"Start Date." Next, click on the Y values field and select the data in the
Start Date column.

Fig 3.7

52
 Project Planning

Fig 3.8
Repeat this process to add a second entry called “Duration,” ensuring that
you select the data in the Duration column for the Y values. Finally, click
the Horizontal Axis Labels field and select the entire Task Name column.

53
Project Management

Fig 3.9
Step 5:
Add the project title to your chart by double-clicking the Chart Title
textbox to select the full title, and then entering the name of your project
to replace the default text.

54
 Project Planning

Fig 3.10
Step 6:
Change the chart date range to your project start and end dates by copying
the Start Date for the first task in your project to a blank cell below your
task list and formatting that cell as a number. Do the same for the End
Date of the last task in your project.

Fig 3.11

55
Project Management Then, select the horizontal axis of your Gantt Chart, right-click and choose
Format Axis. Under Bounds, input the numbers for the first and last
“dates” in the chart, respectively.

Fig 3.12

Fig 3.13
Step 7:
Format the horizontal axis as dates by clicking the Number section of the
Format Axis window to expand it. Change the category from Number to
Date to display readable dates on the horizontal axis.

56
 Project Planning

Fig 3.14
Step 8:
Set your Excel Gantt Chart at weekly intervals by specifying the timeline
intervals for your chart in the Axis Options section. Enter 7.0 into the
Major field to set the project timeline in your Gantt Chart at weekly
intervals.

Fig 3.15
Step 9:
Reorder tasks and move the date axis to the top of your Gantt Chart by
selecting the vertical axis, right-clicking, and choosing Format Axis.

57
Project Management

Fig 3.16
Tick the Categories in reverse order checkbox to move the date axis to the
top of the chart.

Fig 3.17
Step 10:
Format your stacked bar chart to look like a Gantt Chart by selecting the
first portion of a taskbar with 2 colors to highlight all the bars in your first
data series. Then click the Paint Bucket tab and expand the Fill section,
and select No fill to remove the blue bars that precede your task start
dates.

58
 Project Planning

Fig 3.18

Fig 3.19
Step 11:
Customize the colors of your taskbars by clicking on a single bar twice,
and then choosing a color

Fig 3.20

59
Project Management
3.5 SPLITTING AND MULTI-TASKING
Splitting and multi-tasking are two concepts related to project scheduling
and project management that can be used to manage the workload and
resources of a project. Here is an explanation of each concept:
Splitting:
Splitting is the process of dividing a single task into smaller, more
manageable subtasks that can be worked on separately. This technique is
often used when a task is too complex or time-consuming to complete all
at once. By breaking the task into smaller pieces, team members can focus
on one part at a time, which can make it easier to manage the workload
and stay on schedule.
For example, suppose a project task involves developing a software
program. The project manager might break this task into smaller subtasks,
such as designing the user interface, developing the code, and testing the
program. Each subtask can then be assigned to a different team member,
making it easier to manage the workload and track progress.

Multi-tasking:
Multi-tasking is the process of working on multiple tasks simultaneously.
This technique is often used when there are several small, low-priority
tasks that can be completed quickly, allowing team members to free up
time for more important tasks.
For example, suppose a team member is waiting for feedback on a project
task from a client. While waiting for the feedback, they might work on
other smaller tasks, such as responding to emails or preparing a
presentation for another project.
While splitting and multi-tasking can be effective techniques for managing
the workload and resources of a project, they can also lead to increased
stress and decreased productivity if not managed properly.

3.6 RISKS IN TIME ESTIMATES

Estimating time in project management is a critical aspect of project
planning and execution. It involves determining how long it will take to
complete a project or a particular task, and the resources required to
achieve it. However, there are several risks associated with estimating
time in project management, including:

Overestimating or underestimating time:

Estimating time inaccurately can lead to significant delays or missed
deadlines. If the time is overestimated, it can result in unnecessary delays,
increased costs, and frustration among team members. Conversely,
underestimating the time required can lead to rushed work, subpar quality,
and missed deadlines.

60
Changing requirements: Project Planning

Projects are dynamic, and requirements can change throughout the project
lifecycle. If the requirements change significantly, the estimated time for
completion may no longer be accurate. This can lead to delays, increased
costs, and may require re-planning.
Uncertainty and unpredictability:
There are always uncertainties in project management, and predicting the
future can be challenging. External factors, such as weather conditions or
market changes, can impact the project timeline, making it difficult to
estimate the time accurately.

Availability of resources:
The availability of resources, such as equipment, staff, and funding, can
impact the project timeline. If resources are not available as planned, it can
cause delays or require a change in project scope.

Human error:
Estimating time involves making assumptions and judgment calls, which
are prone to human error. Bias or inaccurate assumptions can lead to
inaccurate time estimates.

3.7 PREPARING A RESOURCE CHART

A resource chart, also known as a resource allocation chart or a resource
histogram, is a visual representation of the resources required for each task
in a project. It is used in project scheduling to help project managers
allocate resources efficiently and identify any potential resource
constraints. The steps to create a resource chart are as follows:

Identify the tasks:

First, you need to identify all the tasks required to complete the project.
You can use a work breakdown structure (WBS) to break the project down
into smaller, manageable tasks.

Estimate the resource requirements:

For each task, estimate the resources required, such as staff, equipment,
and materials. This can be done by consulting with team members,
reviewing project plans, and analyzing historical data from previous
projects.

61
Project Management

Fig 3.21
Create a spreadsheet or chart:
Create a spreadsheet or chart to display the resource requirements for each
task. You can use software such as Microsoft Excel or Google Sheets, or
project management softwares to do this
.Assign resources:
Assign the necessary resources to each task in the spreadsheet or chart. Be
sure to include the name of the resource, the number of hours or days
required, and the start and end dates.

Fig 3.22
Analyze the resource allocation:
Analyze the resource allocation to identify any potential resource
constraints or over allocation of resources. This will help you make
adjustments to the schedule to ensure that resources are allocated
efficiently.

62
Make adjustments: Project Planning

Make adjustments to the schedule as needed to ensure that resources are

allocated efficiently and that there are no resource conflicts or constraints.
You may need to adjust the timing of tasks or reassign resources to
different tasks.

Update the resource chart:

As the project progresses, update the resource chart to reflect any changes
in resource requirements or allocation. This will help you to stay on track
and ensure that the project is completed on time and within budget.

Fig 3.23

3.8 PERT ANALYSIS

PERT analysis, which stands for Program Evaluation and Review
Technique, is a project management tool used to analyze and evaluate the
time required to complete a project. PERT analysis is often used in
complex projects where there is a high degree of uncertainty or risk, as it
allows project managers to identify critical tasks, estimate the time
required to complete each task, and identify potential risks or constraints
that may impact the project timeline.

Steps in Pert Analysis:

The PERT analysis process involves the following steps:

Identify tasks:
The first step in PERT analysis is to identify all the tasks required to
complete the project. This can be done by using a work breakdown
structure (WBS) or a project management software tool.

Determine task dependencies:

Once all the tasks have been identified, the next step is to determine the
dependencies between tasks. This involves identifying which tasks must
be completed before others can begin.

63
Project Management Estimate task duration:

The next step is to estimate the time required to complete each task. This
can be done by consulting with team members, reviewing historical data
from previous projects, and analyzing other relevant information.

A PERT chart is a graphical representation of the project tasks and their

dependencies. It is used to visualize the project timeline and identify
critical tasks that may impact the overall project schedule.

Calculate critical path:

The critical path is the longest path of dependent tasks in the project,
which determines the minimum time required to complete the project. By
calculating the critical path, project managers can identify potential risks
or constraints that may impact the project timeline and make adjustments
as needed.

Monitor progress:

As the project progresses, it is important to monitor progress and make

adjustments as needed. This may involve updating the PERT chart,
revising task durations, or reassigning resources to ensure that the project
stays on track.

Creating a PERT chart:

A PERT chart uses circles or rectangles, called nodes, to represent project

events or milestones. The nodes are linked by vectors or lines that
represent various tasks.

Dependent tasks are items that must be performed in a specific manner.

For example, if an arrow is drawn from Task No. 1 to Task No. 2 on a
PERT chart, Task No. 1 must be completed before work on Task No. 2
begins.

Items at the same stage of production but on different task lines within a
project are referred to as parallel tasks. They're independent of each other,
and occur at the same time.

64
 Project Planning

Fig 3.24
Let us understand this with the help of an example
Let's say we are planning a construction project to build a new office
building. The project has the following tasks:
1. Obtain permits
2. Hire architect
3. Develop blueprints
4. Obtain financing
5. Hire contractor
6. Clear site
7. Pour foundation
8. Construct building
9. Install utilities
10. Finish interior
11. Final inspection

Task dependencies:
Task 1 (Obtain permits) must be completed before Task 2 (Hire
architect) can begin.
Task 2 (Hire architect) must be completed before Task 3 (Develop
blueprints) can begin.
65
Project Management Task 3 (Develop blueprints) must be completed before Task 5 (Hire
contractor) can begin.
Task 4 (Obtain financing) can begin at the same time as Task 2 (Hire
architect).
Task 5 (Hire contractor) must be completed before Task 6 (Clear site)
can begin.
Task 6 (Clear site) must be completed before Task 7 (Pour foundation)
can begin.
Task 7 (Pour foundation) must be completed before Task 8 (Construct
building) can begin.
Task 8 (Construct building) must be completed before Task 9 (Install
utilities) can begin.
Task 9 (Install utilities) must be completed before Task 10 (Finish
interior) can begin.
Task 10 (Finish interior) must be completed before Task 11 (Final
inspection) can begin.

Estimate task duration:

Task 1 (Obtain permits) = 1 week
Task 2 (Hire architect) = 2 weeks
Task 3 (Develop blueprints) = 4 weeks
Task 4 (Obtain financing) = 2 weeks
Task 5 (Hire contractor) = 2 weeks
Task 6 (Clear site) = 1 week
Task 7 (Pour foundation) = 2 weeks
Task 8 (Construct building) = 20 weeks
Task 9 (Install utilities) = 3 weeks
Task 10 (Finish interior) = 6 weeks
Task 11 (Final inspection) = 1 week
Now that we have identified the tasks, their dependencies, and their
estimated durations, we can draw a PERT chart:

 Start by drawing a box for each task, and label each box with the task
number and description.

 Draw arrows to show the dependencies between tasks. The arrow

should point from the predecessor task to the successor task.
66
 Label each arrow with the estimated duration of the predecessor task. Project Planning

 Draw a circle at the end of the last task to indicate the end of the
project.

3.9 SUMMARY
 Scheduling helps to ensure that all tasks are completed on time and
within budget, and that the project is delivered to the required quality
standard.

 A Gantt chart is a popular project management tool used to visually

represent a project schedule. The chart helps to show the progress of
the project, identify any delays, and track the critical path.

 Successful businesses require a combination of sound decision-

making processes, effective risk management strategies, and ongoing
monitoring and assessment of the business environment.

 Splitting is the process of dividing a single task into smaller, more

manageable subtasks that can be worked on separately. This technique
is often used when a task is too complex or time-consuming to
complete all at once.

 Multi-tasking is the process of working on multiple tasks

simultaneously. This technique is often used when there are several
small, low-priority tasks that can be completed quickly, allowing team
members to free up time for more important tasks.

 Estimating time in project management involves determining how

long it will take to complete a project or a particular task, and the
resources required to achieve it.

 A resource chart, also known as a resource allocation chart or a

resource histogram, is a visual representation of the resources required
for each task in a project. It is used in project scheduling to help
project managers allocate resources efficiently and identify any
potential resource constraints.

 PERT analysis, is a project management tool used to analyze and

evaluate the time required to complete a project.

 PERT analysis is often used in complex projects where there is a high

degree of uncertainty or risk, as it allows project managers to identify
critical tasks, estimate the time required to complete each task, and
identify potential risks or constraints that may impact the project
timeline.

67
Project Management
3.10 QUESTIONS
OBJECTIVE QUESTIONS
1. Fill in the Blanks
1. __________ provides a baseline against which project progress can be
measured.
2. ___________chart uses circles or rectangles, called nodes, to
represent project events or milestones.
3. __________ is the process of dividing a single task into smaller, more
manageable subtasks that can be worked on separately.
4. _____________ is the process of working on multiple tasks
simultaneously.
5. ___________ chart, is a visual representation of the resources required
for each task in a project.

2. True or False
1. The first step in scheduling is to identify all the tasks required to
complete the project.
2. The project schedule must be monitored and controlled in the
beginning of the project.
3. Businesses operate in a complex and dynamic environment that is
constantly changing.
4. Estimating time involves making assumptions and judgment calls,
which are prone to human error.
5. Technological changes can disrupt industries and change the way
businesses operate.

SUBJECTIVE QUESTIONS:
1. List the importance of project scheduling.
2. Describe the steps in project scheduling.
3. List the sources of risks in project management.
4. List the sections of Gantt chart.
5. Explain the steps to build a Gantt chart.
6. List the risks associated with time estimates.
7. Describe the steps to create a resource chart.
8. List the steps in PERT analysis.

68
ANSWER FOR OBJECTIVE QUESTIONS Project Planning

1. Fill in the Blanks

1. Scheduling
2. PERT
3. Splitting
4. Multi-tasking
5. Resource

2. True or False
1. True
2. True
3. False
4. True
5. True

3.11 REFERENCES
 Project Planning estimation and assessment by Prasanna Chandra
 Teamgantt.com
 Project Management : The Managerial Process by Gray and Larson
3E Tata McGraw-Hill
 Wrike.com

*****

69
 4
PROJECT ORGANIZATION
Unit Structure
4.0 Objectives
4.1 Importance of Project Organization
4.2 Role and Responsibilities of a Project Manager
4.3 Team Development Model
4.4 How to Build a Team
4.5 Conflict and Sources of Conflict
4.6 Understanding Conflict Resolution Process
4.7 Ways to Resolve Conflict
4.8 Summary
4.9 Questions
4.10 References

4.0 OBJECTIVES
 Identify the role and responsibilities of a project manager.

 Explain the process of building a team in an organization.

 Identify sources of conflict.

 Explain the ways to resolve conflict.

4.1 IMPORTANCE OF PROJECT ORGANIZATION

Effective project organization is critical for successfully completing a
project. Project organization is important in project management for
several reasons such as:

Defines clear roles and responsibilities:

A well-organized project structure clearly defines the roles and
responsibilities of team members, which helps to ensure that everyone
knows what they are responsible for and what is expected of them. This
helps to avoid confusion and ensure that tasks are completed on time and
to the required standard.

Promotes efficient communication:

A well-organized project structure ensures that communication channels
are established and maintained throughout the project. This facilitates the
sharing of information, ideas, and feedback, which helps to identify and
address issues and risks as they arise.

70
Helps manage risks: Project Organization

Project organization enables project managers to identify and manage

risks throughout the project lifecycle. This helps to reduce the likelihood
of delays, budget overruns, and other issues that can impact project
success.

Facilitates decision-making:
A well-organized project structure ensures that decision-making processes
are established and followed. This helps to ensure that decisions are made
in a timely and effective manner, and that all relevant stakeholders are
consulted and informed.

Ensures efficient resource allocation:

Project organization allows for the efficient allocation of resources, such
as personnel, time, and budget. This ensures that resources are used
effectively and efficiently, which helps to minimize waste and reduce the
risk of overruns.

Increases accountability:
By clearly defining roles and responsibilities, project organization
increases accountability for project outcomes. This helps to ensure that
team members are held responsible for their work and that project goals
are achieved.
Thus, effective project organization ensures that a project is completed on
time, within budget, and to the expected quality standards.

4.2 ROLE AND RESPONSIBILITIES OF PROJECT

MANAGER
A project manager is responsible for overseeing the planning, execution,
and closing of a project. The role of a project manager involves a variety
of tasks and responsibilities, including:

Project Planning:
It is perhaps the most important role. The project manager is responsible
for developing a project plan, which includes defining project goals,
scope, tasks, and timelines. They must also identify risks, issues, and
dependencies and create a plan to mitigate these.

Resource Management:
The project manager must effectively manage personnel, budget, and
materials. They must ensure that resources are allocated appropriately and
that team members are working efficiently.

71
Project Management Team Management:
The project manager must manage and motivate team members to ensure
that they are working in unison towards the project goals. They must also
provide guidance, feedback, and support to team members and resolve
conflicts whenever necessary.

Project Execution:
The project manager must ensure that the project is getting executed
according to the project plan. They must track progress, identify and
resolve issues, and manage any changes to the project scope.

Communication:
The project manager must communicate regularly with stakeholders, team
members, and other project managers to ensure that everyone is aware of
the project's progress and any changes to the project plan. Clear
communication can do wonders when it comes to executing a project.

Risk Management:
The project manager must identify and manage risks throughout the
project lifecycle. They must create a risk management plan and regularly
review and update it as necessary.

Quality Management:
The project manager must ensure that the project deliverables meet the
required quality standards. They must establish quality metrics, perform
quality assurance, and manage quality control activities.

Project Closure:
The project manager must ensure that the project is closed in an orderly
manner. They must complete a project evaluation, document lessons
learned, and obtain sign-off from stakeholders.
Thus, the project manager is responsible for ensuring that the project is
completed on time, within budget, and to the required quality standards.

4.3 TEAM DEVELOPMENT MODEL

Team Development Model is a framework that explains the stages a team
goes through as they work together to complete a project. The model helps
project managers understand how teams evolve, identify the strengths and
weaknesses of each stage, and provide the necessary support to move
through the stages effectively. This model typically consists of four stages:
Forming, Storming, Norming, and Performing.

72
 Project Organization

Fig 4.1
Forming Stage:
In this stage, team members are getting to know each other and the
project's requirements. They may feel excited about the project, but they
are also uncertain about their role and responsibilities. During this stage,
the project manager needs to provide a clear project vision, set
expectations, and establish team goals.
Example:
A new team is formed to develop a mobile application. The team members
meet for the first time and discuss their backgrounds, skills, and
experiences. They review the project requirements and discuss the
project's scope and timeline.

Storming Stage:
In this stage, team members may have conflicting ideas and opinions, and
there may be tension and disagreements. The project manager needs to
encourage open communication, establish ground rules, and facilitate
discussions to resolve conflicts.
Example:
The team members have different opinions about the design of the mobile
application. Some team members want to focus on the aesthetics, while
others believe functionality is more important. They discuss their ideas
and concerns, and the project manager facilitates the discussion to reach a
consensus.

Norming Stage:
In this stage, team members have resolved their conflicts and established a
sense of trust and respect for each other. They work together effectively to
achieve the project goals. The project manager needs to encourage
collaboration, provide feedback, and recognize team achievements.

73
Project Management Example:
The team members have agreed on the mobile application's design and
functionality. They work together to develop a prototype and review each
other's work. The project manager provides feedback and recognizes the
team's efforts.

Performing Stage:
In this stage, the team is highly motivated and committed to achieving
project success. They work efficiently and effectively to deliver high-
quality work. The project manager needs to provide support and resources
to ensure the team's continued success.

Example:
The team has developed the mobile application and is conducting final
testing. They work together to identify and resolve any and all sorts of
issues. The project manager provides resources to ensure the project's
completion and recognizes the team's achievements.

4.4 HOW TO BUILD A TEAM?

Building a successful project team requires careful planning, effective
communication, and collaboration. While there are many ways in which
one can build a team. Some of the common steps to build a team for
successful project management are as follows:

Establish Goals and Objectives:

Set clear project goals and objectives. This will help the team understand
the project's purpose and what is expected of them.

Select the Right People:

Select team members based on their skills, experience, and expertise.
Look for people who are motivated, collaborative, and have a positive
attitude.

Promote Effective Communication:

Encourage open communication among team members. This can be done
by establishing regular team meetings, providing feedback, and creating a
collaborative work environment.

Foster Collaboration:
Encourage team members to work together and share ideas. Foster
collaboration by providing opportunities for team members to collaborate
and work together on tasks.

74
Provide Training and Development: Project Organization

Provide training and development opportunities for team members to

enhance their skills and knowledge. This can help them work more
effectively and efficiently on the project.

Build Trust and Respect:

Build trust and respect among team members by promoting a positive
team culture. Recognize team achievements and provide feedback to help
team members improve.

Set Realistic Expectations:

Set realistic expectations for the project timeline, budget, and scope. This
will help the team stay on track and ensure that the project is completed
successfully.
Let us understand this concept of building a team with the help of an
example.
Suppose you work for a large Indian software development company and
have been tasked with building a team to execute a new software project
for a client. In such a scenarios, you could follow the following steps:

Define the project:

Start by defining the project and determining the scope of work. This will
help you identify the specific skills and expertise needed for the team. For
example, the project may involve developing a new e-commerce platform
for the client, requiring skills in software development, web design, and
user experience.

Identify team roles:

Based on the project requirements, identify the specific roles that need to
be filled on the team. For the e-commerce platform project, you may need
a project manager, a software developer, a web designer, a user experience
specialist, and a quality assurance analyst.

Determine skillsets:
For each role, determine the necessary skillsets and experience required.
For example, the software developer should have experience with relevant
programming languages and frameworks, the web designer should have
expertise in front-end design, and the user experience specialist should
have experience with user research and design thinking methodologies.

Select team members:

Once you've identified the roles and necessary skills, it's time to map the
skills required with the skills of the already available team in the
company. If required, you can also recruit from outside to meet a specific
goal.
75
Project Management Build team rapport:
Once the team has been formed, it's important to build rapport and
establish clear communication channels. In the Indian corporate world, it's
common to have team building activities such as outings, lunches, or team
dinners to establish personal connections among team members.

Establish goals and milestones:

Once the team is formed and rapport is established, establish clear goals
and milestones for the project. This will help ensure that everyone is
working towards the same objectives and that progress is being made on
the project.
By following these steps, you can successfully build a team to execute a
project. It's important to prioritize building rapport and establishing clear
communication channels to ensure that the team can work effectively
together towards finishing the project.

4.5 CONFLICT AND SOURCES OF CONFLICT

Project management conflicts are inevitable, as team members may have
different perspectives, goals, and priorities. Conflict can arise due to
various reasons such as personality clashes, differences in opinions,
unclear roles, and responsibilities, inadequate communication, or lack of
resources. If not handled effectively, conflicts can escalate, resulting in
negative outcomes such as delays, decreased productivity, or even project
failure. Therefore, it is crucial to address conflicts promptly and efficiently
to avoid any adverse consequences.

Sources of conflict in project management:

Conflict is a common occurrence in project management, and it can arise
from various sources. Some of the common sources of conflict in project
management are as follows:
Resource Allocation:
Conflicts can arise when team members have competing demands for
resources, such as time, money, or equipment.

Goals and Objectives:

Conflicts can arise when team members have different goals or objectives
for the project. Conflicts can also occur when the project goals are unclear
or ambiguous.

Roles and Responsibilities:

Conflicts can arise when team members have unclear or overlapping roles
and responsibilities, leading to misunderstandings and confusion.

76
Communication: Project Organization

Conflicts can arise due to inadequate communication, such as

miscommunication, lack of communication, or misinterpretation of
messages.

Personality Clashes:
Conflicts can arise when team members have different personalities,
values, or work styles, leading to differences in opinions or perspectives.

Stakeholder Interests:
Conflicts can arise when project stakeholders have competing interests,
priorities, or agendas.

Change Management:
Conflicts can arise when changes are made to the project scope, schedule,
or budget, leading to disagreements over the impact of the changes.

Technical Issues:
Conflicts can arise when team members have different technical expertise
or opinions on the project's technical aspects.
It is essential for project managers to identify the source of conflict and
address it promptly and effectively to avoid negative outcomes such as
project delays, decreased productivity, or even project failure. Effective
conflict management strategies can help project managers manage
conflicts and maintain project success.

4.6 UNDERSTANDING CONFLICT RESOLUTION

PROCESS
The key to conflict resolution is to first identify the conflict and the
concerns of the stakeholders which is creating the conflict. It is only after
identification of conflict is that we can move towards finding a resolution
to the conflict.

Identify the problem:

Identify the problem and clarify the underlying issues causing the conflict.
Understanding the root cause of the conflict is critical in developing an
effective solution.

Encourage communication:
Encourage open and honest communication between parties. Encouraging
parties to express their viewpoints can help in understanding each other's
perspectives.

77
Project Management Seek common ground:
Focus on finding a common ground that meets everyone's needs. It is
important to recognize and respect differences in opinion, but also look for
areas of agreement.

Brainstorm solutions:
Once the problem is identified, brainstorm potential solutions to resolve
the conflict. Involve the parties in the brainstorming process to ensure that
all perspectives are considered.

Evaluate solutions:
Evaluate the potential solutions and their feasibility. Choose a solution
that satisfies all parties and is feasible within the constraints of the project.
Implement the solution:
Once a solution is chosen, implement it and monitor its effectiveness.
Ensure that everyone understands and agrees to the solution.

Document the resolution:

Document the resolution to the conflict to prevent it from recurring in the
future. Include the solution and the steps taken to resolve the conflict.

Seek mediation:
Seek the help of a neutral third party if the conflict cannot be resolved by
the parties involved. A mediator can help parties identify the root cause of
the conflict and work towards a mutually acceptable solution.
While above are some of the generic steps to identify conflict and taking
action on it, a project manager must be aware of the specific steps to do
the same in the Indian setting and environment. So, a project manager
must keep in mind the following points while identifying and resolution of
conflict.

Relationship-based culture:
In India, relationships are highly valued, and building personal
relationships is often a prerequisite for successful business relationships.
Project managers must consider this when resolving conflicts and focus on
preserving relationships.
Hierarchy and authority:
India has a hierarchical culture, and authority plays an important role in
decision-making. Project managers must be aware of this cultural norm
and consider the hierarchy when resolving conflicts. It may be necessary
to involve senior management or other authority figures to resolve
conflicts effectively.

78
Indirect communication style: Project Organization

Indian communication style is often indirect, and conflict may be

expressed indirectly. Project managers must be able to read between the
lines and understand the underlying messages. Effective communication is
critical in conflict resolution, and project managers must ensure that
everyone understands the situation and the solution.
Emotional expression:
Indians tend to express emotions more openly, and conflicts may be
emotionally charged. Project managers must be prepared to deal with
emotional responses and handle conflicts with sensitivity and empathy.

Cultural diversity:
India is a culturally diverse country, and different regions and religions
have their own unique cultural norms. Project managers must be aware of
these differences and be open to accept different habits and approaches
which people from different culture bring with them.

4.7 WAYS TO RESOLVE CONFLICT

So, you have set the project in place, ensuring that the goal is clearly
defined, the team is performing their roles and they know what is expected
from them, also the timelines are such that project will be easily
completed well before the expected time and with the desired output. But,
no matter how much you prepare beforehand or how much you put
everything in place, conflict still finds a way to hamper the progress of the
project.
Thus, conflict resolution is an important aspect of project management.
Some of the ways to resolve conflicts that may arise during project
management are as follows:

Fig: 4.2

79
Project Management Collaborating:
Collaborating involves working together to find a mutually acceptable
solution that satisfies all parties involved. This approach is useful when
both parties' interests are vital, and the relationship needs to be preserved.
For example, two team members may have different approaches to a
problem. By collaborating and exploring both approaches, they may find a
solution that combines the best aspects of both approaches.
Compromising:
Compromising involves finding a middle ground that partially satisfies
each party's needs. This approach is useful when both parties have equal
power, and time is of the essence. For example, two team members may
have competing demands for a shared resource, such as a computer. By
compromising and agreeing to share the resource, they may find a solution
that meets both their needs.
Competing:
Competing involves using force or authority to resolve conflicts. This
approach is useful when immediate action is necessary, and one party has
more power or authority than the other. However, it can damage
relationships in the long run. For example, a project manager may have to
make a decision that goes against the team's wishes if it is in the project's
best interest.
Avoiding:
Avoiding involves ignoring or withdrawing from the conflict, hoping it
will resolve itself. This approach is useful when the issue is minor or when
the timing is not right. However, it can lead to resentment and unresolved
conflicts. For example, a team member may decide to ignore a minor issue
with a colleague, hoping that it will resolve itself over time.
Accommodating:
Accommodating involves giving in to the other party's demands. This
approach is useful when preserving relationships is more important than
the outcome of the conflict. However, it can lead to one party feeling
exploited or resentful. For example, a team member may allow a colleague
to take credit for their work to avoid conflict, even though they deserve the
credit.

4.8 SUMMARY
1. The project manager is responsible for ensuring that the project is
completed on time, within budget, and to the required quality standards.
2. Team Development Model helps project managers understand how
teams evolve, identify the strengths and weaknesses of each stage, and
provide the necessary support to move through the stages effectively.

80
 The model typically consists of four stages: Forming, Storming, Project Organization
Norming, and Performing.
3. Building a team involves various steps such as identifying team roles,
determining skill sets, selecting team members, building team rapport,
setting team goals.
4. Project management requires developing a project plan, which outlines
the tasks to be completed, the resources needed, and the timelines for
each task.
5. Conflict can arise due to various reasons such as personality clashes,
differences in opinions, unclear roles, and responsibilities, inadequate
communication, or lack of resources.
6. Conflict can be resolves through collaborating, compromising,
competing, avoiding, accommodating,

4.9 QUESTIONS
OBJECTIVE QUESTIONS
1. _________ involves finding a middle ground that partially satisfies
each party's needs.
2. ___________ involves ignoring or withdrawing from the conflict,
hoping it will resolve itself.
3. A __________ can help parties identify the root cause of the conflict
and work towards a mutually acceptable solution.
4. ______________ helps the team stay on track and ensure that the
project is completed successfully.
5. In ________ stage, the team is highly motivated and committed to
achieving project success.

2. True or False
1. Conflict arises due to various reasons
2. Project managers must be prepared to deal with emotional responses.
3. Project management conflicts are evitable.
4. Team development model consists of 3 stages.
5. A well-organized project structure helps to avoid confusion.

SUBJECTIVE QUESTIONS
1. List the sources of conflict in project management.
2. Describe the steps to build a team for successful project management.

81
Project Management 3. Explain the 4 stages of team development model.
4. Describe the role and responsibilities of a project manager.
5. Explain the steps involved in conflict resolution.
6. Explain the ways to resolve conflict.

ANSWER FOR OBJECTIVE QUESTIONS

1. Fill in the Blanks
1. Compromising
2. Avoiding
3. A mediator
4. Setting realistic expectations
5. Performing

2. True or False
1. True
2. True
3. False
4. False
5. True

4.10 REFERENCES
 Projectmanager.com
 Project Planning estimation and assessment by Prasanna Chandra
 Indeed.com
 Hubspot.com

*****

82
 5
EARNED VALUE ANALYSIS
Unit Structure
5.0 Objectives
5.1 Introduction to Earned Value Analysis
5.2 Matrices used to Perform Earned Value Analysis
5.3 Steps to Calculate Earned Value
5.4 S-Curve and its types
5.5 Applications of S-Curve
5.6 Cost and Schedule Performance Indices
5.7 Revised Estimate of Cost and Time
5.8 Summary
5.9 Questions
5.10 References

5.0 OBJECTIVES
 Identify the concepts related to earned value analysis.

 Identify the key matrices used to perform earned value analysis.

 Explain the steps to calculate earned value analysis.

 Identify and explain the types of S-curves.

 Explain cost and schedule performance indices.

 Explain the process of preparing revise estimate of cost and time.

5.1 INTRODUCTION TO EARNED VALUE ANALYSIS

Earned Value Analysis (EVA) is a project management technique that

provides a way to measure project progress and performance against the
project plan. It is used to determine if a project is on track, behind
schedule or ahead of schedule, and if it is within budget or over budget.
The basic concept of EVA is to measure the value of the work that has
been completed, in relation to the value of the work that was planned to be
completed at a particular point in time. EVA compares the actual cost and
time spent on a project against what was budgeted and scheduled.

Uses of Earned value analysis:

The uses of earned value analysis in project management are as follows:

83
Project Management Assessing project status:
EVA helps project managers assess the status of a project by comparing
the planned, earned, and actual values of a project. This allows project
managers to determine whether the project is on track, ahead of schedule,
or behind schedule.

Identifying potential problems:

By monitoring schedule and cost variances, project managers can identify
potential problems early on and take corrective action to keep the project
on track. For example, if the schedule variance indicates that the project is
behind schedule, the project manager can adjust the project plan or add
resources to speed up the work.
Monitoring project performance:
EVA provides project managers with a way to monitor project
performance against a baseline plan. This allows project managers to track
progress and identify areas where performance could be improved.

Forecasting project completion:

EVA provides project managers with a way to forecast project completion
dates and costs based on the current performance of the project. This
allows project managers to adjust the project plan if necessary and
communicate potential delays or cost overruns to stakeholders.

Evaluating project success:

EVA provides project managers with an objective way to evaluate the
success of a project based on whether it was completed on time and within
budget. This allows project managers to assess the effectiveness of the
project team and the project management process.

5.2 MATRICES USED TO PERFORM EARNED VALUE

ANALYSIS
To perform EVA, three key metrics are used:

Planned Value (PV):

PV represents the planned value of the work to be completed up to a
particular point in time. It is calculated by multiplying the budgeted cost
for a task or activity by the percentage of the work that is scheduled to be
completed at that point in time.

Earned Value (EV):

EV represents the value of the work that has actually been completed up to
a particular point in time. It is calculated by multiplying the budgeted cost
for a task or activity by the percentage of the work that has been
completed at that point in time.

84
Actual Cost (AC): Earned Value Analysis

AC represents the actual cost of the work that has been completed up to a
particular point in time.
Once these three metrics have been calculated, several other key
performance indicators can be derived:
Schedule Variance (SV) = EV - PV:
This indicates whether the project is ahead of or behind schedule. A
positive value means that the project is ahead of schedule, while a
negative value indicates that the project is behind schedule.
Cost Variance (CV) = EV - AC:
This indicates whether the project is within budget or over budget. A
positive value means that the project is under budget, while a negative
value indicates that the project is over budget.
Schedule Performance Index (SPI) = EV / PV:
This measures the efficiency of the project team in completing work on
time. An SPI greater than 1.0 means that the project is ahead of schedule,
while an SPI less than 1.0 indicates that the project is behind schedule.
Cost Performance Index (CPI) = EV / AC:
This measures the efficiency of the project team in managing costs. A CPI
greater than 1.0 means that the project is under budget, while a CPI less
than 1.0 indicates that the project is over budget.
EVA helps project managers to understand the progress of their projects in
a more meaningful way, and to identify potential problems early on, so
that corrective action can be taken.

5.3 STEPS TO CALCULATE EARNED VALUE

Step 1) Determine the percent complete of each task.
Let's say you have a project to build a website, and it has 3 tasks:
Task 1: Design (50% complete)
Task 2: Development (25% complete)
Task 3: Testing (0% complete)

Step 2) Determine Planned Value (PV):

The Planned Value is the total budgeted cost for the project up to the
current point in time. Let's say the total budgeted cost for the project is Rs
10,000, and you're 30% of the way through the project. So the Planned
Value for the project up to this point would be:

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Project Management PV = Rs 10,000 x 30% = Rs 3,000

Step 3) Determine Earned Value (EV):

The Earned Value is the value of the work that has been completed up to
the current point in time. Based on the percent complete of each task, we
can calculate the Earned Value as follows:
Task 1: 50% of Rs 3,000 = Rs 1,500
Task 2: 25% of Rs 3,000 = Rs 750
Task 3: 0% of Rs 3,000 = Rs 0
So, the total Earned Value for the project up to this point would be:
EV = Rs 1,500 + Rs 750 + Rs 0 = Rs 2,250
Obtain Actual Cost (AC).
The Actual Cost is the total actual cost incurred up to the current point in
time. Let's say the Actual Cost for the project up to this point is Rs 2,500.

Step 4) Calculate Schedule Variance (SV):

Schedule Variance is the difference between the Planned Value and the
Earned Value. We already calculated the Planned Value and Earned
Value, so we can calculate the Schedule Variance as follows:
SV = EV - PV = Rs 2,250 - Rs 3,000 = -Rs 750
A negative Schedule Variance indicates that the project is behind
schedule.

Step 5) Calculate Cost Variance (CV):

Cost Variance is the difference between the Earned Value and the Actual
Cost. We already calculated the Earned Value and Actual Cost, so we can
calculate the Cost Variance as follows:
CV = EV - AC = Rs 2,250 - Rs 2,500 = -Rs 250
A negative Cost Variance indicates that the project is over budget.
Step 6) Calculate Other Status Indicators (SPI, CPI, EAC, ETC, and
TCPI):
Based on the values we've already calculated, we can determine the
following status indicators:
Schedule Performance Index (SPI) = EV / PV = Rs 2,250 / Rs 3,000 =
0.75
Cost Performance Index (CPI) = EV / AC = Rs 2,250 / Rs 2,500 = 0.9

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Estimate at Completion (EAC) = Budget at Completion / CPI = Rs 10,000 Earned Value Analysis
/ 0.9 = Rs 11,111
Estimate to Complete (ETC) = EAC - AC = Rs 11,111 - Rs 2,500 = Rs
8,611
To-Complete Performance Index (TCPI) = (Budget at Completion - EV) /
(Budget at Completion - AC) = (Rs 10,000 - Rs 2,250) / (Rs 10,000 - Rs
2,500) = 0.79

Step 7) Compile Results:

To get an overall progress indicator for the project, each metric must be
calculated for each individual task. The total variance of the project can
then be obtained by adding up the variances for each task, and this can be
reported to management, clients, and stakeholders.
The reported status is as up-to-date as the input data. For instance, if the
percent complete is inputted at the current moment, the reported status will
reflect the current moment as well. It's interesting to note that even a small
variance may not cause any concern until it's presented as a number, and it
can be rectified before it turns into a bigger issue.

Step 8) Interpret Results:

The first two calculations (SV and CV) give you the basic indicator of
project progress. A negative value indicates an undesirable situation.
If the schedule variance (SV) is negative, you are behind schedule.
If the cost variance (CV) is negative, you are over budget.

5.4 S-CURVE AND ITS TYPES

An S-curve is a graphical representation of cumulative project data, such
as project cost or person-hours, plotted against time. Its distinctive S-shape
gives it its name. The S-curve is commonly used to monitor work
progress, predict cash flow, and evaluate project performance. Its
popularity stems from its ability to display current cumulative data and
compare it to planned progress in real-time.
The s-shape of the graph is not intentional, but rather a result of plotting
project data from start to finish. As time goes on, there is a gradual
acceleration in growth, reflected by the middle section of the s-curve
where there is a steep incline. The inflection point, which marks a change
in growth, is a critical point on the curve. Once the inflection point is
passed, growth reaches a plateau, forming the upper portion of the s-curve,
which signifies the project's maturity. This is because the majority of
project work has been completed, and the winding-down process is
underway.

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Project Management Types of S Curve:
The various types of S curve are as follows:
● Baseline S-curve
● Target S-curve
● Costs Vs Time S-curve
● Value and Percentage S-curve
● Man-Hours versus Time S-curve
● Actual S-curve

Baseline S-curve:
To establish the expected resource allocation and task sequencing for a
project, a schedule is created prior to its commencement. This schedule is
referred to as the baseline schedule, and the corresponding s-curve is
called the baseline s-curve. The baseline s-curve represents the project's
predicted progress. If there are any changes in project parameters like
duration or scope, the baseline schedule can be modified accordingly.

Fig: 5.1 Baseline S-Curve

Target S-Curve:
The baseline schedule, which outlines the expected task sequencing and
resource allocation, is often subject to revisions once the project
commences. The modified schedule is referred to as the production
schedule and reflects the project's progress to date, as well as any
adjustments made along the way. A target s-curve can be derived from the
production schedule, which represents the ideal progress of the project as
if the actual progress matched the planned progress. In a perfect scenario
where the project is on schedule and within budget, the target s-curve
would intersect the baseline s-curve upon project completion. However, in
reality, the target s-curve usually concludes above and to the right of the
baseline s-curve due to project delays and overspending.
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 Earned Value Analysis

Fig: 5.2 Target S-Curve

Cost vs Time S-Curve:
The S-curve for costs and time is a valuable tool for projects that involve
both labor and non-labor expenses, including expenses related to
subcontracting, hiring, and the procurement of materials. This curve
illustrates the total cost accrued over the course of the project's lifecycle
and can be utilized to determine the project's overall expenses and cash
flow.

Fig: 5.3 Cost vs Time S-Curve

Value and Percentage S-curve:
S-curves can be graphed in various ways, including as absolute quantities
such as values or costs plotted against time, or as person-hours plotted
against time. Value s-curves are helpful in calculating both the amount of
man-hours or money spent up to a given point in the project, as well as the
estimated number of person-hours or costs required to complete the
project.
Alternatively, percentage s-curves can be utilized to compare the project's
planned versus actual completion percentage, as well as the project's
percentage growth or contraction over time.

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Project Management Man-Hours versus Time S-curve:
The S-curve depicting man-hours versus time is particularly well-suited
for projects that require a significant amount of labor and displays the
cumulative number of man-hours devoted to the project over time. Man-
hours represent the total amount of required manpower and the time
needed to complete each task.

Fig: 5.4 Man-Hours vs Time S-Curve

Actual S-curve:
During the course of a project, the production schedule is subject to
frequent revisions. These updates incorporate information from completed
tasks, allowing for the creation of an actual S-curve reflecting the project's
real progress.
By comparing this actual S-curve to the baseline S-curve representing the
target progress, project managers can assess performance. The actual S-
curve extends until the cut-off date, which marks the final day for
updating the production schedule. At the end of the project, the actual S-
curve should intersect with the target S-curve.

Fig: 5.5 Actual S-Curve

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Interpreting lines in S Curve: Earned Value Analysis

A front-loaded S-curve features a rapid rise at the outset, followed by a

gradual flattening. Such curves reflect a situation where a considerable
amount of time and resources are allocated to the initial stages of a project.
This pattern is common in projects that require minimal planning and
preparation time and involve a significant amount of repetition. Front-
loaded S-curves are frequently observed in projects that are rushed from
the start.
A back-loaded S-curves have a gentler slope at the beginning, with a
steeper incline later on as more resources are deployed. Such curves are
indicative of extensive planning and design in the initial stages of a
project, with the development phase being relatively short.

5.5 APPLICATIONS OF S-CURVE

The S-curve has several applications in project management, including:

Performance and Progress Evaluation:

S-curves are instrumental in assessing a project's progress and
performance using earned value management (EVM). By comparing
actual costs, earned value, and planned value against the designed S-curve,
project managers can determine the project's current status, progress, and
future projections. These comparisons help identify whether a project is
over/under budget or ahead of/behind schedule. The difference between
the target S-curve and the actual S-curve shows the project's progress over
time. Typically, the actual S-curve is lower than the target S-curve due to
factors such as delays in updating the production schedule. The two curves
only intersect near the project's end.

Growth Determination:
Comparing the baseline and target S-curves allows project managers to
identify whether the project's scope has changed. A scope change may
require additional resources or contract variation. If the project has fixed
resources, project managers may need to request a project extension.

Determining Slippage:
Slippage refers to the duration that a task is delayed from its scheduled
start or finish date relative to the baseline schedule. By comparing the
baseline and target S-curves, project managers can instantly identify
slippage, as the target S-curve terminates to the right of the baseline S-
curve. If avoiding slippage is not possible, project managers can raise a
change request to update the schedule baseline or allocate extra resources
to mitigate the delay.

Forecasting Cash Flows:

A cash flow curve based on the S-curve allows project managers to
evaluate the timing of cash inflows and outflows. This information is
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Project Management crucial for managing the project's finances and ensuring that funds are
available when needed.

5.6 COST AND SCHEDULE PERFORMANCE INDICES

Cost and schedule performance indices are tools used in project
management to assess the project's performance and progress. These
indices are calculated using the project's schedule network and the earned
value management (EVM) technique.
The schedule network is a graphical representation of the project's
activities and their interdependencies. It shows the project's timeline,
critical path, and the planned start and end dates of each activity. The
EVM technique is a method used to measure and track the project's
progress against the planned schedule and budget.
The cost performance index (CPI) measures the project's efficiency by
comparing the earned value (EV) to the actual cost (AC) of the work
completed. CPI is calculated by the formula CPI = EV/AC. If the CPI is
greater than 1, it indicates that the project is under budget, while a CPI less
than 1 indicates that the project is over budget.
The schedule performance index (SPI) measures the project's progress by
comparing the earned value (EV) to the planned value (PV) of the work
scheduled to be completed. The formula for calculating the SPI is SPI =
EV/PV. If the SPI is greater than 1, it indicates that the project is ahead of
schedule, while an SPI less than 1 indicates that the project is behind
schedule.
By using the cost and schedule performance indices with the network,
project managers can identify potential issues and take corrective action to
keep the project on track. For example, if the CPI is less than 1, the project
manager can identify the areas where the project is over budget and take
corrective action to reduce costs. Similarly, if the SPI is less than 1, the
project manager can identify the activities that are behind schedule and
take corrective action to bring the project back on track.

5.7 REVISED ESTIMATE OF COST and TIME

The Revised Estimate of Cost and Time (RECT) is a concept in project
management that involves revising the original project budget and
schedule due to changes in project scope, unforeseen events, or other
factors that affect the project's cost or duration.
The RECT is usually prepared when a significant change occurs that alters
the project's budget or schedule by more than a predetermined percentage.
The RECT includes an updated budget and schedule, and it is used to
manage the project's cost and schedule going forward.
The RECT is prepared by analyzing the impact of changes on the project's
cost and schedule, identifying the tasks affected by the changes, and
estimating the cost and time required to complete the tasks. The RECT
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also considers any new risks or opportunities that arise due to the changes Earned Value Analysis
and factors them into the new budget and schedule.
The RECT is important because it provides a realistic estimate of the
project's cost and schedule based on current project conditions. It helps
project managers to make informed decisions about resource allocation,
project priorities, and risk management.

Preparing Revised estimate of cost and time:

Let's take an example to understand the steps involved in revising cost and
time in project management.
Suppose we have a construction project to build a new office building.
The original cost estimate for the project was Rs 5,000,000, and the
original time estimate was 12 months. However, after 6 months of work,
we realize that the project is behind schedule and over budget.
The steps involved in revising the cost and time estimates are as
follows:
Analyze the current situation: The first step is to analyze the current
situation and identify the causes of delay and cost overruns. In our
example, we find that the delays are due to unexpected weather conditions
and delays in obtaining permits, and the cost overruns are due to higher
material and labor costs.
Estimate the remaining work: The next step is to estimate the remaining
work required to complete the project. We break down the project into
smaller tasks and estimate the time and cost required to complete each
task. We also identify any tasks that can be fast-tracked or delayed to
shorten the schedule.
Update the project schedule: Based on the estimates of the remaining
work, we update the project schedule to reflect the new timeline for
completion. In our example, we estimate that the remaining work will take
another 10 months to complete, instead of the original estimate of 6
months.
Update the cost estimate: Based on the estimates of the remaining work
and the new schedule, we update the cost estimate for the project. We take
into account the higher material and labor costs and any additional costs
incurred due to delays. In our example, we estimate that the remaining
work will cost an additional Rs 3,000,000, bringing the total project cost
to Rs 8,000,000.
Communicate the revised estimates: Finally, we communicate the revised
estimates to all stakeholders, including the project team, management, and
clients. We explain the reasons for the revisions and the impact on the
project schedule and budget.

93
Project Management By following these steps, we can revise the cost and time estimates for a
project and ensure that the project stays on track and within budget.

5.8 SUMMARY
 Earned Value Analysis (EVA) is a project management technique that
provides a way to measure project progress and performance against
the project plan. It is used to determine if a project is on track, behind
schedule or ahead of schedule, and if it is within budget or over
budget.

 Planned Value (PV) represents the planned value of the work to be

completed up to a particular point in time. It is calculated by
multiplying the budgeted cost for a task or activity by the percentage
of the work that is scheduled to be completed at that point in time.

 Earned Value (EV) represents the value of the work that has actually
been completed up to a particular point in time. It is calculated by
multiplying the budgeted cost for a task or activity by the percentage
of the work that has been completed at that point in time.

 An S-curve is a graphical representation of cumulative project data,

such as project cost or person-hours, plotted against time.

 A front-loaded S-curve features a rapid rise at the outset, followed by

a gradual flattening. Such curves reflect a situation where a
considerable amount of time and resources are allocated to the initial
stages of a project.

 A back-loaded S-curves have a gentler slope at the beginning, with a

steeper incline later on as more resources are deployed. Such curves
are indicative of extensive planning and design in the initial stages of
a project, with the development phase being relatively short.

 Cost and schedule performance indices are tools used in project

management to assess the project's performance and progress. These
indices are calculated using the project's schedule network and the
earned value management (EVM) technique.

 The Revised Estimate of Cost and Time (RECT) is a concept in

project management that involves revising the original project budget
and schedule due to changes in project scope, unforeseen events, or
other factors that affect the project's cost or duration.

5.9 QUESTIONS
OBJECTIVE QUESTIONS
1. Fill in the Blanks
1. __________ compares the actual cost and time spent on a project
against what was budgeted and scheduled.
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 Earned Value Analysis

2. The _________ s-curve represents the project's predicted progress.

3. __________ is the total budgeted cost for the project up to the current
point in time.
4. _____________ is the difference between the Planned Value and the
Earned Value.
5. _______________ is a graphical representation of cumulative project
data, such as project cost or person-hours, plotted against time.

2. True or False
1. To get an overall progress indicator for the project, each metric must
be calculated for each individual task.
2. If the schedule variance (SV) is positive, you are behind schedule.
3. If the cost variance (CV) is positive, you are over budget.
4. In a perfect scenario the target s-curve would intersect the baseline s-
curve upon project completion.
5. S-curves can be graphed in various ways.

SUBJECTIVE QUESTIONS
1. List the uses of earned value analysis.
2. List the steps to calculate earned value.
3. Write a note on Baseline S-Curve.
4. Write a note on Tangent S-Curve.
5. Write a note on Value and Percentage S-Curve.
6. Write a note on Actual S-Curve.
7. List the applications of S-curve.

ANSWER FOR OBJECTIVE QUESTIONS

1. Fill in the Blanks
1. EVA
2. Baseline s-curve
3. Planned Value
4. Schedule Variance
5. S-Curve

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Project Management 2. True or False
1. True
2. False
3. False
4. True
5. True

5.10 REFERENCES
 Projectmanager.com
 Project Planning estimation and assessment by Prasanna Chandra
 Indeed.com
 Projectengineer.com

*****

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 6
FINANCIAL ANALYSIS
Unit Structure
6.0 Objectives
6.1 Introduction to Financial Analysis
6.2 Components of Financial Analysis
6.3 Profitability Analysis
6.4 NPV
6.5 IRR
6.6 Profitability Index
6.7 Payback and Discounted Payback period
6.8 Preparation of Projected Statements
6.9 Summary
6.10 Questions
6.11 References

6.0 OBJECTIVES
 Identify the benefits of financial analysis.

 Identify the components of financial analysis.

 Explain NPV.

 Explain IRR

 Explain Profitability Index.

 Explain payback and discounted payback period.

 Identify and explain the process of preparing projected balance sheet.

6.1 INTRODUCTION TO FINANCIAL ANALYSIS

Financial analysis involves evaluating the financial aspects of a project to
determine its feasibility, profitability, and risk. By conducting financial
analysis, project managers can make informed decisions about project
resources, timelines, and budgets, and ensure that the project is financially
sustainable in the long run.

Benefits of Financial Analysis

Financial analysis provides several benefits to project managers,
including:

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Project Management Improved decision making:
Financial analysis provides project managers with valuable insights into
the financial performance of the project. This information can help project
managers make informed decisions about budgeting, resource allocation,
and risk management.
Risk mitigation:
Financial analysis helps project managers identify potential financial risks
and develop strategies to mitigate those risks. This can help prevent
financial losses and ensure the financial sustainability of the project.
Resource optimization:
Financial analysis helps project managers identify areas where resources
can be optimized or reallocated. This can help reduce costs, improve
efficiency, and maximize project profitability.
Enhanced stakeholder communication:
Financial analysis provides project managers with clear and concise
financial information that can be used to communicate with stakeholders,
such as investors, shareholders, and clients. This can help build trust and
improve stakeholder engagement.
Improved project performance:
Financial analysis helps project managers monitor the financial
performance of the project and identify areas where performance can be
improved. This can help ensure that the project is completed on time,
within budget, and to the required quality standards.

6.2 COMPONENTS OF FINANCIAL ANALYSIS

Cost estimation:
This involves identifying and estimating the costs associated with the
project, including labor, materials, equipment, and overhead costs.

Budgeting:
This involves creating a budget for the project that includes all the
estimated costs and resources required to complete the project.

Financial forecasting:
This involves predicting the financial performance of the project based on
various assumptions and scenarios, such as sales projections and cost
estimates.

98
Financial modeling: Financial Analysis

This involves using mathematical models to analyze and optimize

financial performance, such as calculating the return on investment (ROI)
or net present value (NPV) of the project.

Risk analysis:
This involves identifying and evaluating the risks associated with the
project and developing strategies to mitigate those risks.

Financial reporting:
This involves preparing financial reports that summarize the financial
performance of the project, including income statements, balance sheets,
and cash flow statements.

Variance analysis:
This involves comparing the actual financial performance of the project to
the budgeted performance and identifying variances or deviations. This
information can be used to adjust the project plan and budget as needed.

6.3 PROFITABILITY ANALYSIS

Profitability analysis is a key financial analysis technique used in project
management to evaluate the profitability of a project. It is the process of
assessing the costs and revenues associated with a project to determine its
overall profitability.
The objective of profitability analysis is to identify the expected return on
investment (ROI) of a project and to assess whether the project will
generate enough profits to justify the resources and effort invested. It is an
important tool for project managers to make informed decisions regarding
the feasibility and financial viability of a project.
Profitability analysis involves analyzing various financial metrics and
ratios, such as net present value (NPV), internal rate of return (IRR),
profitability index (PI), payback period, and others, to evaluate the
financial performance of a project.
By assessing the potential risks and rewards of a project through
profitability analysis, project managers can make better decisions about
the allocation of resources, funding, and timelines. They can also use
profitability analysis to monitor the financial performance of a project
over time, and make any necessary adjustments to ensure that the project
remains on track to meet its financial goals.

6.4 NPV
Net present value (NPV) is a commonly used financial metric that is used
in profitability analysis. NPV is used to estimate the present value of a
project's expected future cash flows, taking into account the time value of
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Project Management money. In other words, NPV calculates the current value of all the cash
inflows and outflows associated with a project, discounted back to their
present value using a discount rate.
To use NPV in profitability analysis, project managers typically follow
these steps:

Estimate the cash flows:

Project managers need to estimate the expected cash inflows and outflows
associated with the project over its lifetime. These cash flows could
include revenue, operating expenses, capital expenditures, and taxes.

Determine the discount rate:

The discount rate is the rate of return required by investors to invest in the
project. The discount rate reflects the opportunity cost of investing in the
project, and takes into account the risk associated with the project. More
the risk, more the discount rate.
Calculate the present value of cash flows:
Project managers then discount the future cash flows back to their present
value using the discount rate. This provides an estimate of the current
value of the project's cash flows.

Calculate the NPV:

The NPV is calculated by subtracting the total present value of the
project's cash outflows from the total present value of the project's cash
inflows. If the NPV is positive, the project is considered profitable,
whereas if it is negative, the project is considered unprofitable.
Interpret the NPV:
A positive NPV indicates that the project is expected to generate more
cash inflows than outflows and is therefore considered profitable. A
negative NPV indicates that the project is expected to generate fewer cash
inflows than outflows and is therefore considered unprofitable.
Project managers can use NPV to compare different projects or investment
opportunities and to determine which one is the most financially viable.
By using NPV in profitability analysis, project managers can make
informed decisions about project resources, timelines, and budgets, and
ensure that the project is financially sustainable in the long run.
The formula to calculate the Net Present Value (NPV) of a project is as
follows:
NPV = (CF0 / (1+r)^0) + (CF1 / (1+r)^1) + (CF2 / (1+r)^2) + ... +
(CFn / (1+r)^n)

100
Where: Financial Analysis

CF0 represents the initial cash outflow or investment required for the
project at time zero.
CF1 to CFn represent the expected cash inflows or outflows from the
project in each period from year 1 to year n.
r represents the discount rate or the rate of return required by investors to
invest in the project.
To calculate NPV, you need to discount each cash inflow or outflow back
to its present value using the discount rate. Then, you add up all of the
present values of the cash flows to arrive at the net present value.
If the NPV is positive, the project is expected to generate a positive return
and is considered financially viable. If the NPV is negative, the project is
expected to generate a negative return and is considered financially
unviable.
Let us understand this with the help of a numerical example:
Suppose you are considering investing in a project that requires an initial
investment of Rs 100,000. The project is expected to generate cash
inflows of Rs 30,000 at the end of each year for the next 5 years. You
estimate that the required rate of return for this project is 8%.
To calculate the NPV of the project, we use the formula:
NPV = (CF0 / (1+r)^0) + (CF1 / (1+r)^1) + (CF2 / (1+r)^2) + ... + (CFn /
(1+r)^n)

where:
CF0 = -Rs 100,000 (the initial cash outflow or investment required for the
project)
CF1 to CF5 = Rs 30,000 (the expected cash inflows from the project in
each period from year 1 to year 5)
r = 8% (the required rate of return)
Plugging in the values, we get:
NPV = (-Rs 100,000 / (1+0.08)^0) + (Rs 30,000 / (1+0.08)^1) + (Rs
30,000 / (1+0.08)^2) + (Rs 30,000 / (1+0.08)^3) + (Rs 30,000 /
(1+0.08)^4) + (Rs 30,000 / (1+0.08)^5)
NPV = -Rs 100,000 + Rs 27,777.78 + Rs 25,694.44 + Rs 23,767.02 + Rs
21,985.20 + Rs 20,339.05
NPV = Rs 18,563.49
The resulting NPV of Rs 18,563.49 is positive, which means that the
project is expected to generate a positive return and is considered
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Project Management financially viable. Therefore, the project would be worth pursuing,
assuming all other factors are favorable.

6.5 IRR
Internal rate of return (IRR) is another commonly used financial metric
that is used in profitability analysis. IRR is used to estimate the rate of
return that a project is expected to generate over its lifetime. The IRR is
the discount rate that makes the NPV of the project's expected cash flows
equal to zero.
To use IRR in profitability analysis, project managers typically follow
these steps:

Estimate the cash flows:

Project managers need to estimate the expected cash inflows and outflows
associated with the project over its lifetime. These cash flows could
include revenue, operating expenses, capital expenditures, and taxes.
Calculate the NPV:
Project managers then calculate the NPV of the project's expected cash
flows using a range of discount rates. The discount rates tested typically
range from the cost of capital to a high-end estimate of the project's
required rate of return.

Determine the IRR:

The IRR is the discount rate that makes the NPV of the project's expected
cash flows equal to zero. It is the rate at which the project is expected to
generate a return on investment.

Interpret the IRR:

A higher IRR indicates that the project is expected to generate a higher
return on investment. Projects with an IRR that exceeds the cost of capital
are typically considered financially viable, while projects with an IRR that
falls short of the cost of capital are typically considered financially
unviable.
The formula to calculate the Internal Rate of Return (IRR) of a project is
as follows:
IRR = CF0 + (CF1 / (1+IRR)^1) + (CF2 / (1+IRR)^2) + ... + (CFn /
(1+IRR)^n)

Where:
CF0 represents the initial cash outflow or investment required for the
project at time zero.
CF1 to CFn represent the expected cash inflows or outflows from the
project in each period from year 1 to year n.
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IRR represents the discount rate at which the net present value of the cash Financial Analysis
flows is equal to zero.
To calculate IRR, you need to solve for the discount rate (IRR) that makes
the net present value (NPV) of the cash flows equal to zero. This is
typically done using trial and error or with the help of a financial
calculator or software.
If the resulting IRR is greater than the required rate of return (i.e., the cost
of capital), the project is considered financially viable and is worth
pursuing. If the IRR is lower than the required rate of return, the project is
not financially viable and should be rejected. If the IRR is equal to the
required rate of return, the project is expected to break even and is
considered marginal.
Let us Suppose you are considering investing in a project that requires an
initial investment of Rs 100,000. The project is expected to generate cash
inflows of Rs 30,000 at the end of each year for the next 5 years. You
want to determine the IRR of the project to evaluate its financial viability.
To calculate the IRR of the project, we use the formula:
IRR = CF0 + (CF1 / (1+IRR)^1) + (CF2 / (1+IRR)^2) + ... + (CFn /
(1+IRR)^n)

where:
CF0 = -Rs 100,000 (the initial cash outflow or investment required for the
project)
CF1 to CF5 = Rs 30,000 (the expected cash inflows from the project in
each period from year 1 to year 5)
IRR = the discount rate at which the net present value of the cash flows is
equal to zero.
We can use trial and error or a financial calculator or software to solve for
the IRR that makes the NPV equal to zero. For this example, let's assume
that the IRR is 10%.

Plugging in the values, we get:

IRR = -Rs 100,000 + (Rs 30,000 / (1+0.10)^1) + (Rs 30,000 / (1+0.10)^2)
+ (Rs 30,000 / (1+0.10)^3) + (Rs 30,000 / (1+0.10)^4) + (Rs 30,000 /
(1+0.10)^5)
IRR = -Rs 100,000 + Rs 27,272.73 + Rs 24,794.37 + Rs 22,540.34 + Rs
20,486.67 + Rs 18,611.52
IRR = Rs 13,705.63
Since the NPV is not equal to zero with the assumed IRR of 10%, we need
to try a different rate. Let's assume an IRR of 12%.

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Project Management Plugging in the values, we get:
IRR = -Rs 100,000 + (Rs 30,000 / (1+0.12)^1) + (Rs 30,000 / (1+0.12)^2)
+ (Rs 30,000 / (1+0.12)^3) + (Rs 30,000 / (1+0.12)^4) + (Rs 30,000 /
(1+0.12)^5)
IRR = -Rs 100,000 + Rs 26,785.71 + Rs 23,976.34 + Rs 21,447.84 + Rs
19,162.38 + Rs 17,087.33
IRR= Rs 8,360.60
Since the NPV is positive with an IRR of 12%, we can assume that this is
the IRR of the project. Therefore, the project is expected to generate a
return of 12% and is considered financially viable, assuming all other
factors are favorable.

6.6 PROFITABILITY INDEX

Profitability index (PI) is a financial metric used in capital budgeting to
evaluate the potential profitability of an investment project. It is also
known as the Profit Investment Ratio (PIR) or the Benefit-Cost Ratio
(BCR). The PI is calculated as the present value of the future cash flows
divided by the initial investment.

Formula for calculating PI:

PI = Present value of cash inflows / Initial investment
If the PI is greater than 1, it means that the present value of the expected
cash inflows is greater than the initial investment, and the project is
expected to be profitable. A PI of 1 indicates that the present value of the
expected cash inflows is equal to the initial investment, and the project is
expected to break even. A PI of less than 1 indicates that the present value
of the expected cash inflows is less than the initial investment, and the
project is expected to result in a net loss.
The PI is useful for comparing multiple investment projects with different
initial investments and cash flow patterns, as it provides a standardized
measure of profitability relative to the investment required. It also takes
into account the time value of money by discounting the future cash flows
to their present value.
Let us see an example to illustrate how to calculate and interpret the
Profitability Index:
Suppose a company is considering investing Rs 50,000 in a project that is
expected to generate cash inflows of Rs 10,000 per year for the next 5
years. In this case, the required rate of return for the company would be
10%.

104
Step 1: Calculate the present value of the future cash flows. Financial Analysis

Using the formula for the present value of an annuity, we can calculate the
present value of the expected cash inflows as follows:
PV = C x [ (1 - (1 + r)^-n) / r ]
Where,
PV = present value
C = cash flow per period
r = discount rate
n = number of periods
In this case, C = Rs 10,000, r = 10%, and n = 5 years. Putting these values
into the formula, we get:
PV = Rs 10,000 x [ (1 - (1 + 0.10)^-5) / 0.10 ]
PV = Rs 39,465.10
So, the present value of the expected cash inflows is Rs 39,465.10.

Step 2: Calculate the Profitability Index:

The Profitability Index is calculated by dividing the present value of the
expected cash inflows by the initial investment:
PI = Present value of cash inflows / Initial investment
PI = Rs 39,465.10 / Rs 50,000
PI = 0.7893
So, the Profitability Index for this project is 0.7893.

Step 3: Interpret the results:

Since the Profitability Index is less than 1, it indicates that the present
value of the expected cash inflows is less than the initial investment. This
suggests that the project is not expected to be profitable, and may result in
a net loss.
In this case, the company may want to reconsider the project or explore
other investment opportunities with a higher expected return.

6.7 PAYBACK AND DISCOUNTED PAYBACK PERIOD

Payback and discounted payback are two techniques used in profitability
analysis to evaluate the time it takes for a project to recover its initial
investment.

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Project Management Payback is the period of time required for a project to recoup its initial
investment through cash inflows. It is calculated by dividing the initial
investment by the expected cash inflows per period. The payback period is
typically expressed in years or months.
For example, if a project has an initial investment of Rs 100,000 and
generates annual cash inflows of Rs 25,000, the payback period would be
4 years (i.e., Rs 100,000 / Rs 25,000 = 4 years). This means that it would
take 4 years for the project to recover its initial investment through cash
inflows.
One limitation of payback is that it does not take into account the time
value of money, or the fact that money has a different value over time due
to inflation and the cost of capital. This is where the concept of discounted
payback comes in.
Discounted payback is similar to payback, but it takes into account the
time value of money by discounting the expected cash inflows to their
present value. This involves applying a discount rate to the expected cash
inflows to reflect the opportunity cost of capital and inflation.
For example, if a project has an initial investment of Rs 100,000 and
generates annual cash inflows of Rs 25,000 over 5 years, with a discount
rate of 10%, the discounted payback period can be calculated as follows:
Year 1: Rs 25,000 / (1 + 0.10)^1 = Rs 22,727.27
Year 2: Rs 25,000 / (1 + 0.10)^2 = Rs 20,661.16
Year 3: Rs 25,000 / (1 + 0.10)^3 = Rs 18,783.78
Year 4: Rs 25,000 / (1 + 0.10)^4 = Rs 17,077.98
Year 5: Rs 25,000 / (1 + 0.10)^5 = Rs 15,527.26
The discounted payback period is the point at which the sum of the
discounted cash inflows equals the initial investment. In this case, the
discounted payback period is between years 4 and 5, when the sum of the
discounted cash inflows is Rs 94,777.35 (i.e., Rs 22,727.27 + Rs
20,661.16 + Rs 18,783.78 + Rs 17,077.98 + Rs 15,527.26).
Therefore, the discounted payback period for this project is between 4 and
5 years, depending on the specific assumptions made about the discount
rate and cash flows.
Overall, payback and discounted payback are useful techniques for
evaluating the time it takes for a project to recover its initial investment,
but they have some limitations and should be used in conjunction with
other financial analysis techniques such as NPV, IRR, and PI to assess the
overall profitability and financial viability of a project.

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 Financial Analysis
6.8 PREPARATION OF PROJECTED STATEMENTS
Projected balance sheets are financial statements that show the expected
financial position of a business at a specific point in the future, usually
over a period of one year or more. They are prepared based on
assumptions about future revenues, expenses, assets, and liabilities, and
are typically used in financial planning and forecasting.
A projected balance sheet contains two main sections: assets and liabilities
and equity. The assets section shows the estimated value of the company's
resources, such as cash, inventory, property, and equipment. The liabilities
and equity section shows the estimated value of the company's debts and
ownership, such as loans payable and retained earnings.

Benefits of preparing projected balance sheets

There are several benefits to preparing a projected balance sheet,
including:
Financial planning:
Projected balance sheets can help businesses to plan and forecast their
financial position, which is important for making informed decisions about
investments, financing, and other financial matters.

Risk management:
By projecting future financial performance, businesses can identify
potential risks and take steps to mitigate them before they become serious
issues.
Budgeting:
Projected balance sheets can be used as a basis for creating budgets and
monitoring actual performance against projected performance.
Investment decisions:
Projected balance sheets can help businesses to evaluate investment
opportunities and determine whether they are likely to generate a positive
return on investment.

Financing decisions:
Projected balance sheets can be used to assess a company's ability to
obtain financing and to determine the most appropriate financing options.
Performance evaluation: By comparing actual financial performance
against projected performance, businesses can evaluate their performance
and make adjustments as needed to improve their financial position.

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Project Management Steps to prepare projected balance sheet
The steps to prepare projected statements of income and expenditure and
balance sheet for a project are as follows:

Identify the time horizon:

Determine the time period for which the projected financial statements
will be prepared (e.g., 1 year, 3 years, 5 years).

Develop revenue projections:

Estimate the project's future revenues based on market research, historical
data, and other relevant factors.

Estimate expenses:
Identify the expected costs of operating the project, including direct
expenses such as salaries, marketing expenses, and materials costs, and
indirect expenses such as rent and utilities.

Calculate the net income or loss:

Subtract the total expenses from the total revenues to determine the net
income or loss for each period.

Develop a projected balance sheet:

Use the projected income and expenditure statements to estimate the
project's assets and liabilities over the forecasted period. The balance sheet
should show the projected values for assets such as cash, inventory, and
equipment, and liabilities such as accounts payable and loans.

Review and adjust assumptions:

Review the projected statements of income and expenditure and balance
sheet to ensure that the assumptions used to develop them are reasonable
and accurate. Adjust the projections as necessary based on new
information or changes in circumstances.

Present the projections:

Present the projected statements of income and expenditure and balance
sheet in a clear and concise format, including supporting documentation
such as assumptions and notes.
Let's assume we are preparing projected statements of income and
expenditure and balance sheet for a startup company in its first year of
operation. The details are as follows:
The company expects to generate Rs 500,000 in revenue from the sale of
its product
The cost of goods sold (COGS) is expected to be Rs 150,000

108
The company expects to incur Rs 200,000 in operating expenses, Financial Analysis
including salaries, rent, utilities, and marketing expenses
The company has Rs 50,000 in cash and Rs 25,000 in inventory at the
beginning of the year
The company will need to borrow Rs 100,000 to finance its operations
Using this information, we can prepare the following projected statements
of income and expenditure and balance sheet:

Projected Income and Expenditure Statement

Revenue: Rs 500,000
Cost of Goods Sold: (Rs 150,000)
Gross Profit: Rs 350,000
Operating Expenses: (Rs 200,000)
Net Income: Rs 150,000

Projected Balance Sheet:

Assets:
Cash: Rs 50,000
Inventory: Rs 25,000
Accounts Receivable: Rs 0
Total Assets: Rs 75,000

Liabilities and Equity:

Accounts Payable: Rs 0
Loans Payable: (Rs 100,000)
Total Liabilities: (Rs 100,000)
Equity:
Retained Earnings: Rs 150,000
Total Equity: Rs 150,000
Total Liabilities and Equity: Rs 50,000

Calculations:
To calculate net income, we subtract the cost of goods sold and operating
expenses from revenue:
Net Income = Revenue - COGS - Operating Expenses
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Project Management Net Income = Rs 500,000 - Rs 150,000 - Rs 200,000
Net Income = Rs 150,000
To calculate the total assets in the projected balance sheet, we add the cash
and inventory:
Total Assets = Cash + Inventory
Total Assets = Rs 50,000 + Rs 25,000
Total Assets = Rs 75,000
To calculate the total liabilities and equity in the projected balance sheet,
we subtract the loans payable from the retained earnings:
Total Liabilities and Equity = Retained Earnings - Loans Payable
Total Liabilities and Equity = Rs 150,000 - Rs 100,000
Total Liabilities and Equity = Rs 50,000
As we can see from the projections, the company is expected to generate a
net income of Rs 150,000 in its first year of operation. However, it will
have negative equity due to the need to borrow Rs 100,000 to finance its
operations. This highlights the importance of carefully managing expenses
and financing to ensure the long-term financial health of the company.

6.9 SUMMARY
 Financial analysis involves evaluating the financial aspects of a
project to determine its feasibility, profitability, and risk.

 Profitability analysis is a key financial analysis technique used in

project management to evaluate the profitability of a project. It is the
process of assessing the costs and revenues associated with a project
to determine its overall profitability.

 Profitability analysis involves analyzing various financial metrics and

ratios, such as net present value (NPV), internal rate of return (IRR),
profitability index (PI), payback period, and others, to evaluate the
financial performance of a project.

 Net present value (NPV) is a commonly used financial metric that is

used in profitability analysis. NPV is used to estimate the present
value of a project's expected future cash flows, taking into account the
time value of money.

 If the NPV is positive, the project is expected to generate a positive

return and is considered financially viable. If the NPV is negative, the
project is expected to generate a negative return and is considered
financially unviable.

110
 Internal rate of return (IRR) is a commonly used financial metric that Financial Analysis
is used in profitability analysis. IRR is used to estimate the rate of
return that a project is expected to generate over its lifetime. The IRR
is the discount rate that makes the NPV of the project's expected cash
flows equal to zero.

 A higher IRR indicates that the project is expected to generate a

higher return on investment. Projects with an IRR that exceeds the
cost of capital are typically considered financially viable, while
projects with an IRR that falls short of the cost of capital are typically
considered financially unviable.

 Profitability index (PI) is a financial metric used in capital budgeting

to evaluate the potential profitability of an investment project.

 Payback is the period of time required for a project to recoup its initial
investment through cash inflows. It is calculated by dividing the
initial investment by the expected cash inflows per period. The
payback period is typically expressed in years or months.

 Discounted payback is similar to payback, but it takes into account the

time value of money by discounting the expected cash inflows to their
present value. This involves applying a discount rate to the expected
cash inflows to reflect the opportunity cost of capital and inflation.

 Projected balance sheets are financial statements that show the

expected financial position of a business at a specific point in the
future, usually over a period of one year or more.

6.10 QUESTIONS
OBJECTIVE QUESTIONS
Fill in the Blanks
1. ___________ analysis is a key financial analysis technique used in
project management to evaluate the profitability of a project.
2. ___________ is used to estimate the present value of a project's
expected future cash flows, taking into account the time value of
money.
3. ___________ is used to estimate the rate of return that a project is
expected to generate over its lifetime.
4. The PI is calculated as the present value of the future cash flows
divided by the ____________.
5. IRR represents the discount rate at which the net present value of the
cash flows is equal to _______.

111
Project Management 2. True or False
1. A positive NPV indicates that the project is expected to generate more
cash inflows than outflows.
2. A lower IRR indicates that the project is expected to generate a higher
return on investment.
3. Payback is the period of time required for a project to recoup its initial
investment through cash inflows.
4. The assets section shows the estimated value of the company's
resources
5. A PI of more than 1 means the project is expected to result in a net
loss.

SUBJECTIVE QUESTIONS
1. List the benefits of financial analysis.
2. Describe the steps to use NPV in profitability analysis.
3. Describe the steps to use IRR in profitability analysis.
4. Write a note on profitability index.
5. List the benefits of preparing projected balance sheets.
6. List the steps to prepare projected balance sheet

ANSWER FOR OBJECTIVE QUESTIONS

1. Fill in the Blanks
1. Profitability
2. NPV
3. IRR
4. Initial investment
5. Zero

2. True or False
1. True
2. False
3. True
4. True
5. False

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 Financial Analysis
6.11 REFERENCES
 Projectmanagement.com
 Project Planning estimation and assessment by Prasanna Chandra
 Indeed.com
 Projectengineer.com

*****

113
 7
COMPUTER APPLICATIONS &
SOFTWARES
Unit Structure
7.0 Objectives
7.1 Introduction to Project Management Softwares
7.2 Features of Project Management Softwares
7.3 Commonly Used Project Management Softwares
7.4 Factors for Choosing Project Management Softwares
7.5 Summary
7.6 Questions
7.7 References

7.0 OBJECTIVES
 Identify the features of project management softwares.

 Classify types of project management softwares.

 Identify the factors to consider for selecting project management

softwares.

7.1 INTRODUCTION TO PROJECT MANAGEMENT

SOFTWARES
Project management software is a type of computer application designed
to help plan, organize, and manage projects. These software tools typically
include features such as task management, scheduling, budgeting, resource
allocation, and team collaboration.

7.2 FEATURES OF PROJECT MANAGEMENT

SOFTWARES
The features of project management software can vary depending on the
specific software, but some common features include:

Task management:
The ability to create, assign, and track tasks for team members.

Gantt charts:
A visual representation of project timelines and dependencies.

114
Resource management: Computer Applications &
Softwares
The ability to manage and allocate resources, such as people, equipment,
and materials.

Budgeting and cost tracking:

The ability to create and manage project budgets and track costs.

Collaboration tools:
The ability to communicate and collaborate with team members, such as
through chat, file sharing, and comments.

Reporting and analytics:

The ability to generate reports and analyze project data to help identify
issues, track progress, and make informed decisions.
Time tracking:
The ability to track the time spent on tasks and projects, and to monitor
progress against deadlines.

Risk management:
The ability to identify, assess, and mitigate potential risks to the project.

Integration with other tools:

The ability to integrate with other software tools, such as calendar apps,
email, and project management tools, to streamline workflows.

Customization:
The ability to customize the software to fit the needs of the project and the
team, such as by adding custom fields or workflows.

7.3 COMMONLY USED PROJECT MANAGEMENT

SOFTWARES MICROSOFT PROJECT
Microsoft Project is a project management software application that
allows users to plan, track, and manage projects of various sizes and
complexity. It is part of the Microsoft Office suite of software and is
designed to help project managers and team members collaborate on
projects and stay organized.

Key features of Microsoft Project:

Task management:
This allows users to create and assign tasks, set task dependencies, and
track task progress.

115
Project Management Resource management:
This allows users to manage resources such as people, equipment, and
materials, and allocate resources to tasks.

Gantt charts:
This provides users with a visual representation of the project timeline,
tasks, and dependencies.

Budgeting and cost tracking:

This allows users to create and manage project budgets, track costs, and
analyze project financials.
Collaboration:
Microsoft Project provides team members with a central location to
communicate, share files, and collaborate on project tasks.

Reporting:
Microsoft Project includes a variety of reporting tools to help users track
progress, identify issues, and make informed decisions.

ASANA:
Asana is a cloud-based project management tool that allows teams to
organize, track, and manage their work. It was designed to help teams
collaborate and stay on top of their projects in real-time.

Key features of Asana:

Task management:
Asana allows users to create, assign, and organize tasks within a project.
Tasks can be categorized and prioritized to ensure that the most important
work is completed first.

Project tracking:
Asana provides a real-time view of project progress, allowing team
members to see what has been completed and what still needs to be done.

Communication and collaboration:

Asana includes tools for team members to communicate and collaborate
on tasks, including commenting, attachments, and mentions.

Customizable dashboards:
Asana provides customizable dashboards that allow users to view project
progress and key metrics at a glance.

116
Automation: Computer Applications &
Softwares
Asana allows users to automate repetitive tasks and workflows, saving
time and reducing errors.

Integrations:
Asana integrates with a wide range of other tools and platforms, including
email, calendars, and file-sharing services.

TRELLO:
Trello is a web-based project management tool that helps individuals and
teams organize tasks and collaborate on projects. The tool uses a visual
approach to task management, using a system of digital "boards" to
represent projects, and "cards" to represent tasks within those projects.

Key features of Trello:

Boards:
Trello boards represent projects or workflows, and allow users to organize
tasks and information.
Lists:
Within each board, users can create lists to represent stages in a workflow
or project.
Cards:
Cards are used to represent individual tasks or items within a list. Users
can add due dates, descriptions, checklists, attachments, and more to each
card.
Labels:
Labels can be used to categorize cards or to indicate priority or status.
Comments:
Users can add comments to cards to collaborate and communicate with
team members.
Notifications:
Trello sends notifications when tasks are assigned, updated, or completed.
Integrations:
Trello integrates with a wide range of other tools and platforms, including
Google Drive, Slack, and GitHub.

117
Project Management Search:
Trello's search feature allows users to quickly find cards, boards, or other
content.
Mobile App:
Trello has a mobile app for iOS and Android, allowing users to access and
update their boards and cards on-the-go.

JIRA:
JIRA is a web-based project management tool developed by Atlassian,
designed to help software development teams plan, track, and manage
their work. JIRA is primarily used for issue tracking and project
management, but can also be used for other types of projects.
JIRA uses a system of digital "issues" to represent tasks, bugs, or other
items that need to be tracked and managed. These issues can include
information such as task descriptions, attachments, comments, and status
updates. Users can create custom workflows to represent the stages of
their development process, such as "To Do," "In Progress," and "Done."
Issues can be moved between different workflow stages as they are
worked on.

Key Features of JIRA:

Agile project management:
JIRA supports Agile development methodologies such as Scrum and
Kanban, allowing teams to manage sprints, backlog, and iterations.

Customizable dashboards:
JIRA provides customizable dashboards that allow users to view project
status, team workload, and other key metrics.
Integrations:
JIRA integrates with a wide range of other development tools, including
GitHub, Bitbucket, and Confluence.
Reporting and analytics:
JIRA provides built-in reporting and analytics tools that allow users to
track project progress, identify bottlenecks, and optimize their workflows.

Mobile app:
JIRA has a mobile app for iOS and Android, allowing users to access and
update their issues on-the-go.

118
BASECAMP: Computer Applications &
Softwares
Basecamp is a web-based project management and team collaboration tool
developed by Basecamp, LLC. It is designed to help teams organize and
manage their projects, communicate with team members, and track
progress.

Key features of Basecamp:

Project management:
Users can create projects and assign tasks, set deadlines, and track
progress. The tool provides a centralized location for all project-related
information, including files, messages, and comments.

Communication:
Basecamp includes a range of communication tools, such as messaging,
comments, and chat, allowing team members to stay connected and
collaborate in real-time.

Document management:
Basecamp provides a central repository for files, documents, and other
project-related assets, allowing team members to easily access and
collaborate on these items.

Scheduling:
Basecamp allows users to create and share schedules and calendars,
allowing team members to see important dates and deadlines.

Reporting:
Basecamp provides a range of reporting tools, allowing users to track
progress, analyze data, and identify areas for improvement.

Integration:
Basecamp integrates with a range of other tools and platforms, such as
Google Drive, Slack, and Trello, allowing users to easily integrate their
workflows.
Basecamp is designed to be user-friendly and intuitive, with a simple and
clean user interface. It is particularly popular among small businesses and
freelancers, although it is used by teams of all sizes across a variety of
industries. Basecamp is available as a web application, as well as mobile
apps for iOS and Android.

SMARTSHEET:
Smartsheet is a cloud-based project management and collaboration tool
that is designed to help teams manage their work, automate processes, and
improve productivity. It is used by businesses of all sizes across a range of
industries, including construction, healthcare, and technology.
119
Project Management Key features of Smartsheet:
Project management:
Smartsheet allows users to create projects and tasks, assign owners, and
set deadlines. Users can also track progress, set reminders, and collaborate
with team members.

Collaboration:
Smartsheet provides a range of collaboration tools, including comments,
notifications, and file sharing, allowing team members to work together in
real-time.

Resource management:
Smartsheet provides tools to manage resources, such as staff, equipment,
and inventory, allowing users to allocate resources to projects and track
availability.

Workflow automation:
Smartsheet allows users to automate repetitive tasks and processes, such
as data entry and approvals, improving efficiency and reducing errors.

Reporting:
Smartsheet provides a range of reporting tools, allowing users to track
progress, analyze data, and identify areas for improvement.
Integration:
Smartsheet integrates with a range of other tools and platforms, such as
Google Drive, Salesforce, and JIRA, allowing users to easily integrate
their workflows.
Smartsheet is also highly customizable, allowing users to create
customized workflows, forms, and reports. Smartsheet is available as a
web application, as well as mobile apps for iOS and Android.

WRIKE:
Wrike is a cloud-based project management and collaboration tool that is
designed to help teams manage their work, collaborate with team
members, and track progress. It is used by businesses of all sizes across a
range of industries, including marketing, creative, and technology.

Key features of Wrike:

Project management:
Wrike allows users to create projects and tasks, assign owners, and set
deadlines. Users can also track progress, set reminders, and collaborate
with team members.

120
Collaboration: Computer Applications &
Softwares
Wrike provides a range of collaboration tools, including comments,
notifications, and file sharing, allowing team members to work together in
real-time.
Resource management:
Wrike provides tools to manage resources, such as staff, equipment, and
inventory, allowing users to allocate resources to projects and track
availability.

Time tracking:
Wrike allows users to track time spent on tasks, enabling teams to manage
their time and resources more effectively.

Reporting:
Wrike provides a range of reporting tools, allowing users to track
progress, analyze data, and identify areas for improvement.

Integration:
Wrike integrates with a range of other tools and platforms, such as Google
Drive, Salesforce, and JIRA, allowing users to easily integrate their
workflows.
Wrike is designed to be flexible and adaptable, with a range of
customization options to suit different workflows and business needs. It
offers a variety of views, including Kanban boards, Gantt charts, and
calendars, to help users manage their work more efficiently. Wrike is
available as a web application, as well as mobile apps for iOS and
Android.

MONDAY:
Monday.com is a cloud-based project management and team collaboration
software that helps teams plan, organize, and track work in a visually
appealing and intuitive way. It is designed for teams of all sizes and
industries to help them manage their projects, tasks, and workflows
efficiently.

Key features of Monday:

Project management:
Monday.com can be used to create projects, assign tasks, set deadlines,
and track progress. The tool provides a centralized location for all project-
related information, including files, messages, and comments.

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Project Management Collaboration:
Monday.com includes a range of collaboration tools, such as messaging,
comments, and @mentions, allowing team members to stay connected and
collaborate in real-time.

Task management:
Users can create and assign tasks, set priority levels, and track progress.

Customization:
Monday.com allows users to customize their workflows, including adding
custom fields, automating repetitive tasks, and creating custom views.

Reporting:
Monday.com provides a range of reporting tools, allowing users to track
progress, analyze data, and identify areas for improvement.

Integration:
Monday.com integrates with a range of other tools and platforms, such as
Google Drive, Slack, and Trello, allowing users to easily integrate their
workflows.
Monday.com is user-friendly and intuitive, with a modern and colorful
user interface. It is particularly popular among teams in marketing,
creative, and tech industries. Monday.com is available as a web
application, as well as mobile apps for iOS and Android.

ZOHO:
Zoho is a cloud-based software suite that offers a range of business
applications, including project management, CRM, finance, and HR. It is
designed to help businesses of all sizes manage their operations and
improve productivity.

Key features of ZOHO:

Project planning:
Users can create projects, assign tasks, set deadlines, and track progress.
The tool provides a centralized location for all project-related information,
including files, messages, and comments.

Collaboration:
Zoho Project Management includes a range of collaboration tools, such as
messaging, comments, and @mentions, allowing team members to stay
connected and collaborate in real-time.

Task management:
Users can create and assign tasks, set priority levels, and track progress.
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Resource management: Computer Applications &
Softwares
Zoho Project Management provides tools to manage resources, such as
staff, equipment, and inventory, allowing users to allocate resources to
projects and track availability.

Reporting:
Zoho Project Management provides a range of reporting tools, allowing
users to track progress, analyze data, and identify areas for improvement.

Integration:
Zoho Project Management integrates with a range of other tools and
platforms, such as Google Drive, Slack, and Trello, allowing users to
easily integrate their workflows.
Zoho has a range of customization options to suit different workflows and
business needs. Zoho is available as a web application, as well as mobile
apps for iOS and Android.

MEISTERTASK:
MeisterTask is a cloud-based project management and collaboration tool
that is designed to help teams manage their work, collaborate with team
members, and track progress. It is used by businesses of all sizes across a
range of industries, including marketing, creative, and technology.

Key features of MeisterTask:

Project management:
MeisterTask allows users to create projects and tasks, assign owners, and
set deadlines. Users can also track progress, set reminders, and collaborate
with team members.

Collaboration:
MeisterTask provides a range of collaboration tools, including comments,
notifications, and file sharing, allowing team members to work together in
real-time.

Task management:
MeisterTask allows users to create and assign tasks, set priority levels, and
track progress.

Workflow automation:
MeisterTask provides tools to automate repetitive tasks, such as sending
reminders or updating tasks based on changes in other tasks.

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Project Management Time tracking:
MeisterTask allows users to track time spent on tasks, enabling teams to
manage their time and resources more effectively.

Integration:
MeisterTask integrates with a range of other tools and platforms, such as
Slack, Google Drive, and GitHub, allowing users to easily integrate their
workflows.
MeisterTask offers a variety of views, including Kanban boards, Gantt
charts, and calendars, to help users manage their work more efficiently.
MeisterTask is available as a web application, as well as mobile apps for
iOS and Android.

7.4 FACTORS FOR CHOOSING PROJECT

MANAGEMENT SOFTWARES
There are many factors that should be considered when choosing a project
management software. Some of the most important factors to consider are
as follows:
Project complexity:
Consider the complexity of the projects you will be managing with the
software. Some tools are better suited for small, simple projects, while
others are better for complex, large-scale projects.

Team size:
Consider the size of your team and how many people will need access to
the software. Some tools charge per user, so a larger team could
significantly increase the cost.

Features:
Consider the features that are important to you and your team. Look for a
tool that has the features you need, such as task management,
collaboration, reporting, and time tracking.
Integrations:
Consider the other tools and platforms you use in your workflow, such as
email, chat, or document management, and check if the project
management tool you are considering integrates with them.

Ease of use:
Consider how easy the software is to use and whether it requires a lot of
training or technical expertise.

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Cost: Computer Applications &
Softwares
Consider the cost of the software and whether it fits within your budget.
Some tools are free or offer a trial period, while others require a monthly
or annual subscription fee.

Security:
Consider the security features of the software and whether it meets your
organization's security requirements. Look for a tool that has robust
security features such as data encryption, user authentication, and secure
backups.

Support:
Consider the level of support provided by the software vendor, including
technical support, training resources, and user communities.
Many project management tools offer a free trial or demo period. Take
advantage of these options to test out the tool and see if it meets your
needs before making a final decision

7.5 SUMMARY
 Project management software is a type of computer application
designed to help plan, organize, and manage projects.

 Microsoft Project is a project management software application that

allows users to plan, track, and manage projects of various sizes and
complexity.

 Asana is a cloud-based project management tool that allows teams to

organize, track, and manage their work. It was designed to help teams
collaborate and stay on top of their projects in real-time.

 Trello is a web-based project management tool that helps individuals

and teams organize tasks and collaborate on projects. The tool uses a
visual approach to task management, using a system of digital
"boards" to represent projects, and "cards" to represent tasks within
those projects.

 JIRA is a web-based project management tool developed by

Atlassian, designed to help software development teams plan, track,
and manage their work. JIRA is primarily used for issue tracking and
project management, but can also be used for other types of projects.

 Basecamp is a web-based project management and team collaboration

tool developed by Basecamp, LLC. It is designed to help teams
organize and manage their projects, communicate with team
members, and track progress.

 Smartsheet is a cloud-based project management and collaboration

tool that is designed to help teams manage their work, automate
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Project Management processes, and improve productivity. It is used by businesses of all
sizes across a range of industries, including construction, healthcare,
and technology.

 Wrike is a cloud-based project management and collaboration tool

that is designed to help teams manage their work, collaborate with
team members, and track progress. It is used by businesses of all sizes
across a range of industries, including marketing, creative, and
technology.

 Monday.com is a cloud-based project management and team

collaboration software that helps teams plan, organize, and track work
in a visually appealing and intuitive way. It is designed for teams of
all sizes and industries to help them manage their projects, tasks, and
workflows efficiently.

 Zoho is a cloud-based software suite that offers a range of business

applications, including project management, CRM, finance, and HR.
It is designed to help businesses of all sizes manage their operations
and improve productivity.

 MeisterTask is a cloud-based project management and collaboration

tool that is designed to help teams manage their work, collaborate
with team members, and track progress. It is used by businesses of all
sizes across a range of industries, including marketing, creative, and
technology.

7.6 QUESTIONS
OBJECTIVE QUESTIONS
1. _________charts are a visual representation of project timelines and
dependencies.
2. ________ tool uses a visual approach to task management, using a
system of digital "boards" to represent projects, and "cards" to
represent tasks within those projects.
3. JIRA is primarily used for______________
4. ___________ is particularly popular among small businesses and
freelancers
5. __________ offers a variety of views, including Kanban boards,
Gantt charts, and calendars, to help users manage their work more
efficiently.

2. True or False
1. Smartsheet allows users to automate repetitive tasks and processes.
2. Monday.com has a colorful user interface.

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3. Asana does not provide customizable dashboards. Computer Applications &
Softwares
4. Trello sends notifications when tasks are assigned, updated, or
completed.
5. Basecamp uses a system of digital "issues" to represent tasks, bugs, or
other items that need to be tracked and managed.

SUBJECTIVE QUESTIONS
1. List the features of project management softwares.
2. Write a note on Microsoft project.
3. Write a note on Asana.
4. What are the key features of Trello?
5. Write a note on Monday.com.
6. What are the key features of Zoho?
7. Write a note on Meistertask.
8. List the factors to be considered before choosing project management
softwares.

ANSWER FOR OBJECTIVE QUESTIONS

1. Fill in the Blanks
1. Gantt chart
2. Trello
3. Issue tracking and project management
4. Basecamp
5. Wrike

2. True or False
1. True
2. True
3. False
4.True
5. False

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Project Management
7.7 REFERENCES
 Projectmanager.com
 Project Planning estimation and assessment by Prasanna Chandra
 Indeed.com
 Projectengineer.com

*****

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