PROJECT MANAGEMENT

BBACO-601 | BBA Semester 6 | MAKAUT, West Bengal

MASTER EXAM NOTES – 2024

✦ All 5 Modules Covered ✦ Long Question Answers ✦ Top 50 Short Questions ✦

Exam-Ready | Easy to Remember | Full Syllabus

MODU
LE TOPIC HOURS WEIGHT

I Introduction to Project Management 8L ■■■■

II Planning & Scheduling (PERT/CPM) 10L ■■■■■

III Appraisal & Financing 6L ■■■■

IV Implementation, Control & Closure 8L ■■■■■

V Contemporary Issues & Case Studies 8L ■■■

■ Focus most on Modules II & IV — they carry max hours and are most frequently asked in exams.
 MODULE I: INTRODUCTION TO PROJECT MANAGEMENT 8 Hours

1. CONCEPT AND CHARACTERISTICS OF PROJECTS

Definition of a Project: A project is a temporary endeavor undertaken to create a unique product, service, or
result. It has a definite beginning and end, and is carried out to meet specific goals within constraints of time,
cost, and quality.

Key Characteristics of a Project:

Temporary Has a defined start and end date — not ongoing operations.

Unique Every project produces a distinct outcome — no two projects are identical.

Goal-Oriented Undertaken to achieve specific objectives or deliverables.

Resource-Constrained Requires people, money, materials, and time within limits.

Cross-functional Involves people from different departments working together.

Progressive Elaboration Developed step-by-step as more details become available.

Risk and Uncertainty Involves unknowns that must be managed throughout.

Interdependency Tasks are linked; delay in one affects others.

Project vs. Operations (KEY DIFFERENCE for exam):

Aspect Project Operations

Duration Temporary Ongoing/Permanent

Output Unique product/result Repetitive, standard output

Goal Achieve specific objectives Sustain business functions

Team Temporary, cross-functional Permanent, functional

Budget Fixed for project lifecycle Recurring annual budget

2. PROJECT LIFE CYCLE PHASES

All projects pass through four standard phases — remember with acronym: 'IPEC'
1. Initiation: Project idea is conceived. Feasibility studied. Project Charter created. Stakeholders
identified. GO/NO-GO decision made.
2. Planning: Detailed plans made — scope, schedule, budget, risk plan. WBS created. PERT/CPM charts
developed. Resource allocation done.
3. Execution: Actual work begins. Team performs tasks. Project Manager monitors progress. Deliverables
produced. Quality checked.
4. Closure: Project formally closed. Final deliverables handed over. Documentation done. Post-project
review & lessons learned recorded.
■ IMPORTANT: Monitoring & Control runs THROUGHOUT all phases — not a separate phase!

3. IMPORTANCE AND SCOPE OF PROJECT MANAGEMENT

• Ensures projects are completed on time, within budget, and to required quality (Iron Triangle).
 • Provides structured methodology to handle complexity.
• Improves resource utilization — avoids waste.
• Enables risk identification and mitigation proactively.
• Facilitates clear communication among stakeholders.
• Drives competitive advantage by delivering results faster.
• Supports organizational learning through documented lessons learned.

4. PROJECT IDENTIFICATION AND FORMULATION

Project Identification: The process of generating and screening project ideas based on market needs, resource
availability, and organizational goals.
Project Formulation: Converting an identified idea into a detailed investment proposal, including objectives,
scope, cost estimates, and benefits.

Steps in Project Formulation:

• 1. Identification of the project opportunity
• 2. Pre-feasibility study (quick check)
• 3. Detailed feasibility study
• 4. Preparation of the project report (DPR – Detailed Project Report)
• 5. Appraisal and sanction

5. PROJECT FEASIBILITY ANALYSIS

Feasibility is studied across 4 key dimensions — remember: 'MTFE'

Market Feasibility Is there sufficient demand for the project output? Who are the customers? What
is the competition? Market size, growth rate, pricing analysis.

Technical Feasibility Can the project be technically executed? Are required technology, equipment,
and skilled manpower available? Is the production process viable?

Financial Feasibility Will the project be profitable? Analysis of capital investment, revenue projections,
NPV, IRR, payback period. Can funding be arranged?

Environmental Feasibility Does the project comply with environmental laws? What is the ecological impact?
Is an Environmental Impact Assessment (EIA) required?

6. SOCIAL COST-BENEFIT ANALYSIS (SCBA)

Definition: SCBA evaluates a project from society's perspective — not just financial profit. It measures social
costs and social benefits including externalities that market prices don't capture.

• Social Benefits: Employment generation, infrastructure development, reduced imports, improved public
health, education access.
• Social Costs: Pollution, displacement of communities, depletion of natural resources, loss of biodiversity.
• Shadow Pricing: Market prices adjusted to reflect true social value (e.g., labor valued at opportunity cost, not
market wage).
• Used by: Government agencies, World Bank, ADB for evaluating public sector projects.
• Key Metric: EIRR (Economic Internal Rate of Return) — used instead of financial IRR.

7. ROLE OF PROJECT MANAGER

Role Description

Planning Define scope, schedule, budget, and resource plan.

Organizing Build the project team; assign roles and responsibilities.

Leading Motivate team, resolve conflicts, communicate effectively.

Controlling Monitor progress vs. plan; take corrective action.

Coordinating Integrate work across departments and external parties.

Risk Manager Identify, analyze, and respond to project risks.

Communicator Key link between team, stakeholders, and top management.

8. PROJECT ORGANIZATION STRUCTURES

Structure Description Best For

Functional PM has little authority; team members report to Small, internal projects
functional managers. PM acts as coordinator
only.

Projectized PM has full authority. Dedicated team. Team Large, complex projects
members report only to PM.

Matrix Dual reporting — team reports to both PM and Medium organizations

functional manager. Balanced authority.

– Weak PM has limited authority. Functional manager Functional focus

dominates.

– Strong PM has more authority than functional Project focus

manager.

– Balanced Equal authority shared between PM and Balanced needs

functional manager.
 MODULE II: PROJECT PLANNING & SCHEDULING (PERT/CPM) 10 Hours

1. WORK BREAKDOWN STRUCTURE (WBS)

Definition: WBS is a hierarchical decomposition of the total project scope into smaller, manageable work
packages. It organizes and defines the total work of the project.

Key Points:
• WBS decomposes project into Work Packages — the lowest level of WBS.
• Each level represents increasingly detailed definition of project work.
• WBS is deliverable-oriented, not activity-oriented.
• Used as basis for scheduling, budgeting, and responsibility assignment.
• WBS Dictionary: Document that describes each work package in detail.
• Helps prevent Scope Creep by clearly defining what is IN the project.
■ Rule of 100%: WBS must capture 100% of work. Child elements must sum to 100% of parent element.

2. GANTT CHARTS
Definition: A Gantt chart is a horizontal bar chart that shows project activities against time. Bars represent the
duration of each task.

• Advantages: Simple to understand, shows task duration visually, easy to update, shows progress.
• Limitations: Does not show task dependencies clearly, not suitable for complex projects with many
interdependencies.
• Developed by Henry Gantt in the 1910s.
• Modern tools: MS Project, Primavera, Smartsheet, Asana.

3. NETWORK ANALYSIS: PERT and CPM

■ IMPORTANT: PERT/CPM is the MOST IMPORTANT topic for exams — expect at least one long
question!

Aspect PERT CPM

Full Form Program Evaluation & Review Critical Path Method

Technique

Developed by US Navy (1958) for Polaris missile DuPont & Remington Rand
(1957)

Activity Type Probabilistic (uncertain durations) Deterministic (known

durations)

Time Estimates 3 estimates: Optimistic, Most Likely, Single time estimate per
Pessimistic activity

Focus Time (schedule management) Time-Cost trade-off

Best for R&D;, new product development Construction, engineering

projects

Network Event-oriented network Activity-oriented network

PERT Time Estimates & Calculations:

 Expected Time (te) = (to + 4tm + tp) / 6

Variance (σ²) = [(tp - to) / 6]²

Standard Deviation (σ) = (tp - to) / 6

Where: to = Optimistic time | tm = Most Likely time | tp = Pessimistic time

Critical Path Method (CPM) — Key Concepts:

Term Explanation

Critical Path The longest path through the network. Determines the minimum project duration. Any
delay on the critical path DELAYS the whole project.

Float / Slack Amount of time an activity can be delayed without delaying the project. Critical path
activities have ZERO float.

Early Start (ES) Earliest possible time an activity can start (Forward Pass calculation).

Late Start (LS) Latest time an activity can start without delaying project (Backward Pass calculation).

Early Finish (EF) EF = ES + Duration

Late Finish (LF) LF = LS + Duration

Total Float (TF) TF = LS – ES = LF – EF

Free Float (FF) Amount of float an activity can use without delaying the Early Start of the NEXT
activity.

Forward Pass and Backward Pass:

• Forward Pass (Left → Right): Calculate Early Start and Early Finish. Start from node 1, move forward. ES of
first activity = 0. EF = ES + Duration. ES of next activity = maximum EF of all predecessors.
• Backward Pass (Right → Left): Calculate Late Finish and Late Start. Start from last node. LF of last activity
= EF of last activity (project duration). LS = LF – Duration. LF of predecessor = minimum LS of all successors.

4. TIME-COST TRADE-OFF AND CRASHING

Crashing: The process of reducing project duration by allocating additional resources (increasing cost) to critical
path activities. We crash to meet a deadline.

Cost Slope = (Crash Cost – Normal Cost) / (Normal Time – Crash Time)
Crash activities with the lowest cost slope first (most economical way to reduce duration).

• Step 1: Identify the critical path.

• Step 2: Calculate cost slope for all critical activities.
• Step 3: Crash the activity with the lowest cost slope first.
• Step 4: Check if any new critical paths emerge after crashing.
• Step 5: Continue crashing until desired project duration is achieved or no more crashing is possible.

5. RESOURCE OPTIMIZATION — ALLOCATION AND LEVELING

Technique Definition Key Point

Resource Allocation Assigning available resources to Works within resource

activities to meet project objectives. constraints; may affect
schedule.
Resource Leveling Adjusting the project schedule to May extend project
resolve resource conflicts and duration. Keeps resource
overallocation. usage smooth.

Resource Smoothing Adjusting resource usage within the Does NOT extend project
float of activities without extending deadline. Uses available
project deadline. float.
 MODULE III: PROJECT APPRAISAL AND FINANCING 6 Hours

1. PROJECT SELECTION CRITERIA — FINANCIAL TECHNIQUES

These are used to evaluate whether a project is financially viable. Know ALL formulas!
■ ROI (Return on Investment)
Formula: ROI = (Net Profit / Total Investment) × 100
Decision Rule: Simple to calculate. Does NOT consider time value of money. Higher ROI = better project.

■ Payback Period (PBP)

Formula: PBP = Initial Investment / Annual Cash Inflow
Decision Rule: Time to recover initial investment. Shorter is better. Ignores cash flows after payback. Does not
consider time value of money.

■ Net Present Value (NPV)

Formula: NPV = Σ [CFt / (1+r)^t] – Initial Investment
Decision Rule: Best method. If NPV > 0, accept. If NPV < 0, reject. Considers time value of money. Uses discount
rate (cost of capital).

■ Internal Rate of Return (IRR)

Formula: IRR = rate at which NPV = 0
Decision Rule: If IRR > Cost of Capital → Accept. Higher IRR = better. Used to compare projects.

■ Profitability Index (PI)

Formula: PI = NPV of Future Cash Flows / Initial Investment
Decision Rule: If PI > 1 → Accept. If PI < 1 → Reject. Useful when capital is limited. Ranks projects.

Comparison of Appraisal Methods:

Method Time Value? Decision Rule Limitation

ROI No Higher = Better Ignores TVM, cash flows

Payback No Shorter = Better Ignores post-payback flows

NPV Yes > 0 = Accept Requires accurate discount

rate

IRR Yes > Cost of Capital Multiple IRR problem

PI Yes > 1 = Accept Relative measure only

2. INVESTMENT RISK AND SENSITIVITY ANALYSIS

Sensitivity Analysis: Tests how sensitive the project outcome (NPV/IRR) is to changes in key variables like sales
volume, price, cost. Called 'What-if analysis'. Identifies which variable most affects project viability.

• Scenario Analysis: Evaluates project under different scenarios — best case, worst case, base case.
• Break-Even Analysis: Finds the output level at which total revenue = total cost (no profit, no loss).
• Monte Carlo Simulation: Computer-based simulation of thousands of scenarios using probability
distributions.
 • Risk-Adjusted Discount Rate: Adding a risk premium to the discount rate for riskier projects.

3. SOURCES OF PROJECT FINANCING

Source Key Features

Equity Owner's capital and retained earnings. No repayment obligation but dilutes
ownership. Highest risk for investors.

Debt / Loans Bank loans, debentures. Interest is tax-deductible. Must be repaid. Cheaper than
equity (tax shield benefit).

Venture Capital Funding from VC firms for high-growth, high-risk startups. VCs take equity stake.
Active mentorship provided.

Institutional Support Development Finance Institutions (DFIs): SIDBI, NABARD, IDBI, NHB. Provide
long-term project loans at concessional rates.

Government Grants Subsidies and grants from central/state governments. No repayment needed. Tied to
specific sectors (MSME, agriculture, renewables).

Angel Investors High-net-worth individuals who invest in early-stage companies in exchange for
equity or convertible debt.

Bonds / Debentures Long-term debt instruments issued to public. Fixed interest payments. Listed on stock
exchange.

4. COST OF CAPITAL AND CAPITAL BUDGETING

Cost of Capital: The minimum required rate of return that a project must earn to satisfy all providers of funds. It is
used as the discount rate in NPV calculation.
WACC = (We × Ke) + (Wd × Kd × (1-t)) + (Wp × Kp)
Where: We = Weight of equity | Ke = Cost of equity | Wd = Weight of debt | Kd = Cost of debt | t = Tax rate

Capital Budgeting: Long-term investment decisions for acquiring fixed assets. Uses NPV, IRR, Payback, and PI
as evaluation tools.
 MODULE IV: PROJECT IMPLEMENTATION, CONTROL & CLOSURE 8 Hours

1. PROJECT EXECUTION AND MONITORING MECHANISMS

Project Execution: The phase where the project management plan is put into action. The project team performs
the work defined in the plan to produce deliverables.

Key Monitoring Tools:

■ Earned Value Management (EVM): EVM integrates scope, schedule, and cost to assess project performance.
Key Metrics: PV (Planned Value), EV (Earned Value), AC (Actual Cost)

■ Schedule Variance (SV): SV = EV – PV. If SV > 0 → Ahead of schedule. If SV < 0 → Behind schedule.

■ Cost Variance (CV): CV = EV – AC. If CV > 0 → Under budget. If CV < 0 → Over budget.

■ SPI (Schedule Performance Index): SPI = EV / PV. SPI > 1 = Ahead. SPI < 1 = Behind.

■ CPI (Cost Performance Index): CPI = EV / AC. CPI > 1 = Under budget. CPI < 1 = Over budget.

■ S-Curve: Graph of cumulative planned vs actual cost over time. Visual monitoring tool.

■ Milestone Tracking: Comparing actual milestone achievement dates vs planned dates.

2. PROJECT MANAGEMENT CHALLENGES

Scope Creep
Uncontrolled expansion of project scope without proper authorization. Most common project failure cause.
Prevention: strict change control, clear scope documentation.

Managing Stakeholder Expectations

Stakeholders have different interests. PM must: identify all stakeholders, understand their needs, communicate
regularly, manage conflicts proactively.

Building and Managing Project Teams

Challenges: remote teams, cultural differences, skill gaps. PM must: define roles clearly, build trust, resolve
conflicts, recognize performance.

3. PROJECT RISK MANAGEMENT

Risk: An uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives.

Risk Management Process (4 Steps):

Step 1: Risk Identification
Identify all possible risks using brainstorming, checklists, SWOT analysis, expert judgment. Document in Risk
Register.

Step 2: Risk Analysis

Qualitative: Assess probability (High/Medium/Low) and impact. Use Probability-Impact Matrix. Quantitative:
Assign numerical values. EMV = Probability × Impact.

Step 3: Risk Response Planning

4 Strategies for Negative Risks (Threats): Avoid (eliminate), Transfer (insurance, outsource), Mitigate (reduce
probability/impact), Accept (do nothing). 4 Strategies for Positive Risks (Opportunities): Exploit, Share, Enhance,
Accept.

Step 4: Risk Monitoring & Control

Track identified risks, identify new risks. Update Risk Register throughout project. Conduct regular risk reviews.

4. PROJECT QUALITY MANAGEMENT

Quality Planning: Define quality standards applicable to the project and how they will be satisfied.
• Quality Assurance (QA): Auditing quality requirements and results from quality control measurements to
ensure project uses correct standards and processes.
• Quality Control (QC): Monitoring and recording results of quality activities to assess performance and
recommend changes.
• Tools: Control Charts, Pareto Charts, Cause-and-Effect (Ishikawa/Fishbone) Diagrams, Flowcharts,
Checklists, Histograms, Scatter Diagrams.

■ Deming's PDCA Cycle: Plan → Do → Check → Act. The basis of continuous quality improvement.

5. PROJECT CLOSURE
Closure Step Description

Formal Acceptance Client formally accepts all deliverables. Sign-off obtained.

Administrative Closure All project documents archived. Contracts closed. Resources released.

Final Report Summary of project performance — cost, schedule, scope, quality results.

Lessons Learned Document what went well and what didn't. Critical for future projects.

Post-Project Review Formal evaluation of project outcomes vs objectives.

Project Audit Independent assessment of project performance and processes.

6. PROJECT MIS AND COMMUNICATION

Project MIS (Management Information System): A system that collects, processes, stores, and disseminates
information needed for project decision-making.
• Communication Plan: Documents who needs what information, when, and in what format.
• Formula: Communication Channels = n(n-1)/2, where n = number of stakeholders.
• Types: Formal written, Formal verbal, Informal written, Informal verbal.

7. PROJECT AUDIT
Audit Type Purpose

Project Health Check Quick review at a point in time. Assesses if project is on track.

Benefit Realization Audit Checks if expected benefits are actually being delivered.

Process Audit Reviews project management processes and adherence to standards.

Performance Audit Evaluates efficiency and effectiveness of project activities.

Post-Completion Audit Final review after project closure. Lessons learned documented.
 MODULE V: CONTEMPORARY ISSUES & APPLICATIONS 8 Hours

1. AGILE, WATERFALL, AND LEAN PROJECT MANAGEMENT

Aspect Waterfall Agile Lean

Approach Sequential, linear Iterative, incremental Eliminate waste

Flexibility Low – changes costly High – welcomes change Medium

Planning Complete upfront Just-in-time Value stream

mapping

Delivery End of project Frequent sprints (2-4 Continuous flow

wks)

Documentation Heavy Minimal ('working Moderate

software')

Team Specialized roles Cross-functional, Cross-functional

self-organized

Best for Construction, Software, product Manufacturing,

manufacturing development services

Risk Discovered late Managed early through Identified via value

sprints stream

Agile Key Concepts:

• Scrum: Most popular Agile framework. Roles: Product Owner, Scrum Master, Development Team. Events:
Sprint, Sprint Planning, Daily Scrum, Sprint Review, Sprint Retrospective.
• Kanban: Visual workflow management. Work items moved across board (To Do → In Progress → Done).
Limits Work-in-Progress (WIP).
• User Stories: Short descriptions of features from user perspective: 'As a [user], I want [feature] so that
[benefit].'
• Product Backlog: Prioritized list of all work to be done on the project.
• Velocity: Amount of work a team completes in a sprint. Used for future sprint planning.

2. PROJECT MANAGEMENT IN SERVICE AND PUBLIC SECTOR

• Service Sector Challenges: Intangibility of output, difficulty in measuring quality, high customer interaction,
people-intensive.
• Public Sector: Projects must align with public interest, government policy, budget allocations. Subject to RTI,
CAG audit, parliamentary oversight.
• Examples: Smart City projects, highway construction (NHAI), metro rail, rural electrification (DDUGJY), Jal
Jeevan Mission.

3. SUSTAINABLE AND GREEN PROJECT MANAGEMENT

Definition: Integrating environmental, social, and economic sustainability principles into project management
practices.
• Environmental: Carbon footprint reduction, use of renewable energy, waste minimization, lifecycle
assessment.
• Social: Fair labor practices, community engagement, health & safety.
 • Economic: Long-term value creation, not just short-term profit.
• ESG Framework: Environmental, Social, Governance — increasingly required by investors and regulators.
• Green PM Tools: Life Cycle Assessment (LCA), Carbon Accounting, ISO 14001 Environmental Management.

4. PROJECT MANAGEMENT SOFTWARE TOOLS

Tool Key Features/Use Case

MS Project Industry standard. Gantt charts, resource management, critical path analysis.

Primavera P6 Used for large construction/engineering projects. Advanced scheduling.

JIRA Widely used for Agile software development. Issue tracking, sprint management.

Asana Cloud-based task management. Simple, visual boards.

Trello Kanban-style boards. Very simple and visual. Good for small teams.

Smartsheet Spreadsheet-like PM tool. Good for non-technical project managers.

[Link] Flexible, visual project management platform.

 IMPORTANT LONG QUESTIONS & ANSWERS
These are the highest-probability long questions for your exam. Each answer is structured for maximum marks.

Q1. What is a Project? Explain the characteristics and life cycle phases of a project. (10 marks)
Answer Framework (write these in sequence):
• Definition: A project is a temporary endeavor undertaken to create a unique product, service, or result. It has
a definite start and end, constrained by time, cost, quality, and scope. [PMI definition]

Characteristics (write 6-8 with explanation):

• Temporary – has defined start and end
• Unique output – no two projects identical
• Goal-oriented – specific objectives
• Resource-constrained – limited time, money, people
• Cross-functional teams
• Progressive elaboration
• Uncertainty and risk
• Interdependency of activities

Project Life Cycle (explain all 4 phases with content):

• 1. Initiation: Project charter, stakeholder identification, feasibility study, go/no-go decision.
• 2. Planning: WBS, PERT/CPM, budget, resource plan, risk plan, communication plan.
• 3. Execution: Team performs work, deliverables produced, quality managed, communication maintained.
• 4. Closure: Formal acceptance, documentation, lessons learned, team released, celebration!
■ Tip: Always mention that Monitoring & Control runs through ALL phases, not just one. This shows advanced
understanding.

Q2. Explain PERT and CPM. What are the differences between them? Describe Forward Pass and
Backward Pass with an example. (10 marks)
Answer Framework:
• PERT Definition: Probabilistic technique developed by US Navy for Polaris missile. Uses 3 time estimates.
• CPM Definition: Deterministic technique developed by DuPont. Single time estimate. Focuses on cost-time
trade-off.
• Key Formulas to write: te = (to + 4tm + tp)/6 | σ² = [(tp-to)/6]²

Draw this table in exam:

PERT CPM

Probabilistic (uncertain time) Deterministic (known time)

3 time estimates 1 time estimate

US Navy, 1958 DuPont, 1957

R&D; projects Construction projects

Event-oriented Activity-oriented

Time focus Cost-Time focus

Forward Pass Example:

Activities: A(3), B(4), C(2), D(5), E(3). Sequence: A→B→D→E (Critical), A→C→E.
 • ES(A) = 0, EF(A) = 0+3 = 3
• ES(B) = 3, EF(B) = 3+4 = 7
• ES(C) = 3, EF(C) = 3+2 = 5
• ES(D) = 7, EF(D) = 7+5 = 12
• ES(E) = max(12, 5) = 12, EF(E) = 12+3 = 15
■ Critical Path = A→B→D→E = 15 days

Q3. Explain NPV, IRR, and Payback Period as project appraisal techniques. When would you prefer
one over another? (10 marks)
Answer Framework:
• NPV: Sum of present values of all future cash flows minus initial investment. Positive NPV = value created =
Accept. Uses discount rate (cost of capital). Best method – accounts for time value, risk, and absolute wealth
creation.
NPV = Σ CFt/(1+r)^t – C0
• IRR: The discount rate at which NPV = 0. Accept if IRR > Cost of Capital. Problem: multiple IRRs possible for
unconventional cash flows.
• Payback Period: Time to recover initial investment. Simple but ignores TVM and post-payback flows. Good
for liquidity assessment.

When to prefer which?

• Use NPV when choosing between mutually exclusive projects (gives absolute value).
• Use IRR when comparing projects of different sizes (gives % return, easy to compare with cost of capital).
• Use Payback when liquidity is the primary concern or for quick screening.
• Use PI when capital is rationed (limited budget across multiple projects).

Q4. What is Risk Management in Projects? Explain the risk management process with strategies for
responding to risk. (10 marks)
Answer Framework:
• Risk Definition: PMI defines risk as 'an uncertain event or condition that, if it occurs, has a positive or
negative effect on one or more project objectives.'

Risk Management Process (explain each step):

• 1. Risk Identification: Brainstorming, Delphi technique, checklists, SWOT analysis, expert judgment. Output:
Risk Register.
• 2. Qualitative Risk Analysis: Probability-Impact Matrix. Rate each risk (High/Medium/Low). Prioritize risks.
• 3. Quantitative Risk Analysis: EMV = Probability × Impact. Decision tree analysis. Monte Carlo simulation.
• 4. Risk Response Planning: Strategy selection for each significant risk.
• 5. Risk Monitoring: Track risks throughout project. Identify new risks. Update Risk Register.

Risk Response Strategies:

Strategy Description

Avoid (Threat) Change plan to eliminate risk entirely

Transfer (Threat) Shift impact to third party (insurance, outsourcing)

Mitigate (Threat) Reduce probability or impact of risk

Accept (Threat) Acknowledge risk; no action (Active: contingency plan)

Exploit (Opportunity) Ensure the opportunity definitely occurs

Share (Opportunity) Partner with another party to capture benefit

 Strategy Description

Enhance (Opportunity) Increase probability or impact of opportunity

Q5. Explain the concept of Project Closure. What are the key steps involved? What is a Project Audit
and what are its types? (10 marks)
Answer Framework:
• Project Closure Definition: The formal process of completing and settling all project activities, transferring
deliverables, releasing resources, and documenting outcomes.

Key Steps in Project Closure:

• Obtain formal client acceptance of all deliverables
• Conduct final project performance review
• Document lessons learned — what went well, what didn't
• Archive all project documents for future reference
• Release project team members and other resources
• Close vendor contracts and financial accounts
• Celebrate team success and acknowledge contributions
• Conduct post-project audit

Project Audit:
An independent, systematic review of the project's performance, processes, and outcomes.
• Health Check Audits Done during project — is project on track?
• Process Audits Are PM processes and standards being followed?
• Financial Audits Are funds being used appropriately?
• Post-Completion Audits Final audit after closure — were objectives met?

Q6. Compare Waterfall, Agile, and Lean project management methodologies. When should each be
used? (8-10 marks)
Answer Framework:
• Waterfall: Sequential, phase-by-phase approach. Requirements defined upfront. Each phase complete
before next begins. Documentation-heavy. Changes are expensive and difficult. Best for construction,
manufacturing, government projects with stable requirements.
• Agile: Iterative and incremental. Work done in short sprints (2-4 weeks). Welcomes changing requirements.
Customer involved throughout. Delivers working product frequently. Best for software development, product
innovation, dynamic environments.
• Lean: Focuses on eliminating waste (Muda). Maximizes customer value with minimum resources. Uses Value
Stream Mapping to identify waste. Key principles: Define value, map value stream, create flow, establish pull,
seek perfection. Best for manufacturing, service processes, operational improvement.
Use Waterfall when: requirements are clear and stable, deliverable well-defined, regulatory compliance needed.
Use Agile when: requirements evolve, speed to market matters, customer feedback is critical.
Use Lean when: existing processes need improvement, waste reduction is the goal.

Q7. What is Social Cost-Benefit Analysis (SCBA)? How does it differ from financial appraisal? Explain
with examples. (8 marks)
Answer Framework:
• Definition: SCBA evaluates a project from society's perspective. It measures all costs and benefits —
including those not captured by market prices — to assess net social welfare.

Differences from Financial Appraisal:

Financial Appraisal Social Cost-Benefit Analysis

Perspective: Investor/firm Perspective: Society as a whole

Uses market prices Uses shadow prices (social opportunity cost)

Profit-focused Welfare-focused

Private costs and revenues only Includes externalities (pollution, employment)

Metric: NPV, IRR Metric: EIRR (Economic IRR), Net Social Benefit

Examples of Social Benefits:

• Construction of a highway: social benefit = time saved by travelers, reduced accidents, regional economic
development.
• Setting up a factory: social benefit = employment generation, skill development, tax revenue.

Examples of Social Costs:

• Factory causing air pollution → health costs borne by community.
• Dam construction → displacement of tribal communities.

Q8. Explain Work Breakdown Structure (WBS). How is it developed? What is its significance in
project planning? (8 marks)
Answer Framework:
• Definition: WBS is a hierarchical decomposition of the project's total scope of work into smaller, manageable
work packages. It defines what needs to be done (deliverable-oriented).

WBS Development Process:

• 1. Define the major project deliverables (Level 1 = Project name, Level 2 = Major deliverables)
• 2. Decompose each deliverable into sub-deliverables
• 3. Continue decomposing until work packages are reached (manageable size: 8/80 rule — not less than 8
hours, not more than 80 hours)
• 4. Assign unique WBS codes to each element
• 5. Create WBS Dictionary for each work package

Significance of WBS:
• Foundation for project schedule, budget, and responsibility assignment
• Prevents scope creep — defines exactly what is included
• Enables accurate cost estimation
• Facilitates team accountability
• Provides basis for project control
 TOP 50 SHORT QUESTIONS & ANSWERS
High probability short questions covering all 5 modules. Each answer is concise for 2-3 marks questions.

MODULE I — INTRODUCTION (Q1–Q12)

Q1. Define a Project.
Ans: A project is a temporary endeavor with a defined beginning and end, undertaken to create a unique product,
service, or result within constraints of scope, time, cost, and quality.

Q2. What are the constraints of a project? (The Iron Triangle)

Ans: The three primary constraints are: Time (schedule), Cost (budget), and Scope (quality). These are interdependent
— changing one affects the others. Also known as the 'Triple Constraint' or 'Iron Triangle.'

Q3. What is a Project Life Cycle?

Ans: The series of phases a project passes through from its start to its completion. The four standard phases are:
Initiation → Planning → Execution → Closure. Monitoring & Control runs throughout all phases.

Q4. Differentiate Project from Operations.

Ans: Projects are TEMPORARY and produce UNIQUE outputs. Operations are ONGOING and produce REPETITIVE,
standardized outputs. Example: Building a factory (project) vs. running the factory daily (operations).

Q5. What is a Project Charter?

Ans: A document that formally authorizes a project. It names the project manager, defines high-level objectives, scope,
timeline, and budget, and identifies key stakeholders. It is the project's 'birth certificate.'

Q6. What is meant by 'Scope Creep'?

Ans: Scope creep is the uncontrolled expansion of project scope without proper authorization, budget adjustment, or
schedule change. It is the most common cause of project failure. Prevented by strict change control processes.

Q7. What is a feasibility study? Name its types.

Ans: A feasibility study assesses whether a project is viable before committing resources. Types: Market Feasibility,
Technical Feasibility, Financial Feasibility, Environmental Feasibility, and Legal/Regulatory Feasibility.

Q8. What is Social Cost-Benefit Analysis?

Ans: SCBA evaluates a project from society's perspective — measuring all social costs (pollution, displacement) and
social benefits (employment, infrastructure) — using shadow prices rather than market prices.

Q9. Name four types of project organization structures.

Ans: 1. Functional Structure – PM is coordinator, low authority. 2. Projectized Structure – PM has full authority. 3.
Matrix Structure (Weak, Balanced, Strong) – dual reporting. 4. Composite Structure – mix of above.

Q10. What is the role of a Project Manager?

Ans: A PM plans, organizes, leads, controls, and coordinates the project. Key responsibilities: scope management,
schedule management, budget control, team leadership, stakeholder communication, and risk management.

Q11. What is Project Formulation?

Ans: Converting an identified project idea into a detailed investment proposal. It includes defining objectives, scope,
technical plan, resource requirements, cost estimates, and expected benefits. Output is the Detailed Project Report
(DPR).

Q12. What are the Benefits of Project Management?

Ans: On-time and on-budget delivery; better resource utilization; early risk identification; improved quality; clear
accountability; enhanced stakeholder satisfaction; organizational learning through lessons learned.

MODULE II — PLANNING & SCHEDULING (Q13–Q24)

Q13. What is WBS?
Ans: Work Breakdown Structure is a hierarchical decomposition of the total project scope into smaller, manageable
work packages. It is deliverable-oriented. The lowest level is a 'work package.' It follows the Rule of 100%: child
elements must equal 100% of their parent element.

Q14. What is a Gantt Chart?

Ans: A horizontal bar chart showing project activities against time. Bars represent duration of each activity. Simple and
visual, but does NOT show activity dependencies clearly. Developed by Henry Gantt (1910s).

Q15. Differentiate PERT from CPM.

Ans: PERT (Program Evaluation & Review Technique): probabilistic, 3 time estimates, used for R&D; projects
(uncertainty). CPM (Critical Path Method): deterministic, 1 time estimate, used for construction projects, focuses on
cost-time trade-off.

Q16. What is the Critical Path?

Ans: The longest path through a project network from start to finish. It determines the minimum project duration.
Activities on the critical path have ZERO float. Any delay on the critical path delays the entire project.

Q17. State the PERT formula for Expected Time.

Ans: Expected Time (te) = (to + 4tm + tp) / 6, where to = optimistic time, tm = most likely time, tp = pessimistic time.
Variance σ² = [(tp – to)/6]².

Q18. What is Float (Slack) in network analysis?

Ans: Float (or Slack) is the amount of time an activity can be delayed without delaying the project completion date.
Total Float (TF) = LS – ES = LF – EF. Activities on the critical path have TF = 0.

Q19. What is Forward Pass in CPM?

Ans: A calculation technique moving LEFT to RIGHT through the network to determine Early Start (ES) and Early
Finish (EF) of each activity. ES of first activity = 0. EF = ES + Duration. ES of next activity = maximum EF of
predecessors.

Q20. What is Backward Pass in CPM?

Ans: A calculation technique moving RIGHT to LEFT through the network to determine Late Finish (LF) and Late Start
(LS). LF of last activity = Project Duration. LS = LF – Duration. LF of predecessor = minimum LS of successors.

Q21. What is Project Crashing?

Ans: Crashing is the technique of reducing project duration by adding extra resources to critical path activities. It
increases direct cost. The most economical way is to crash activities with the LOWEST cost slope first. Cost Slope =
(Crash Cost – Normal Cost)/(Normal Time – Crash Time).

Q22. What is the difference between Resource Leveling and Resource Smoothing?
Ans: Resource Leveling resolves over-allocation by adjusting the schedule — may EXTEND project duration.
Resource Smoothing adjusts resource usage within available FLOAT — does NOT extend project duration.

Q23. What is a Project Network Diagram?

Ans: A graphical representation showing the sequence, dependencies, and interrelationships of project activities. Used
in PERT and CPM analysis. Types: Activity-on-Node (AON) and Activity-on-Arrow (AOA).

Q24. What is the 8/80 Rule in WBS?

Ans: A guideline for work package size: no work package should be less than 8 hours (too small, too many packages)
or more than 80 hours of work (too large, difficult to manage and monitor).

MODULE III — APPRAISAL & FINANCING (Q25–Q33)

Q25. What is NPV and how is it interpreted?
Ans: Net Present Value = Sum of present values of all future cash inflows – Initial Investment. NPV > 0: Project creates
value → Accept. NPV < 0: Project destroys value → Reject. NPV = 0: Project is break-even. It is the best capital
budgeting method as it considers time value of money.
Q26. Define IRR.
Ans: IRR is the discount rate at which NPV of a project equals zero. Decision rule: If IRR > Cost of Capital (hurdle rate)
→ Accept the project. If IRR < Cost of Capital → Reject. Higher IRR = better project.

Q27. What is Payback Period?

Ans: The time required to recover the initial investment from net cash inflows. Formula: PBP = Initial Investment /
Annual Cash Inflow (for equal cash flows). Decision: Shorter payback is better. Limitation: Does NOT consider time
value of money or cash flows after payback.

Q28. What is Profitability Index (PI)?

Ans: PI = Present Value of Future Cash Flows / Initial Investment. If PI > 1 → Accept. If PI < 1 → Reject. Also called
Benefit-Cost Ratio. Useful for ranking projects when capital is limited (capital rationing situations).

Q29. What is Sensitivity Analysis?

Ans: Sensitivity analysis (or 'What-if analysis') tests how changes in key variables (sales volume, price, cost of capital)
affect project viability (NPV/IRR). It identifies the most critical variable the project's success depends on.

Q30. What is Venture Capital?

Ans: Venture capital is funding provided by specialized investment firms (VC firms) to early-stage, high-growth
potential companies in exchange for equity ownership. VCs also provide mentorship and strategic guidance. High risk,
high return.

Q31. What is WACC?

Ans: Weighted Average Cost of Capital = weighted average of costs of equity, debt, and preference shares. Formula:
WACC = (We×Ke) + (Wd×Kd×(1-t)) + (Wp×Kp). Used as the discount rate in NPV calculations. Represents the
minimum return a project must earn.

Q32. Name four sources of project financing.

Ans: 1. Equity (owner's capital/shares) – no repayment obligation. 2. Debt (bank loans, debentures) – interest is
tax-deductible. 3. Venture Capital – equity for high-growth startups. 4. Government Grants/Subsidies – for priority
sectors. Also: angel investors, bonds, institutional loans (SIDBI, NABARD).

Q33. What is Capital Budgeting?

Ans: Capital budgeting is the process of evaluating and selecting long-term investment decisions involving fixed
assets. It uses techniques like NPV, IRR, Payback Period, and PI to decide which projects to undertake. It determines
how to optimally allocate limited capital.

MODULE IV — IMPLEMENTATION, CONTROL & CLOSURE (Q34–Q44)

Q34. What is Earned Value Management (EVM)?
Ans: EVM integrates scope, schedule, and cost to measure project performance objectively. Key metrics: PV (Planned
Value) = budgeted cost of scheduled work; EV (Earned Value) = budgeted cost of work actually completed; AC (Actual
Cost) = actual cost spent so far.

Q35. Define SV and CV in EVM.

Ans: Schedule Variance (SV) = EV – PV. Positive SV = ahead of schedule; Negative SV = behind schedule. Cost
Variance (CV) = EV – AC. Positive CV = under budget; Negative CV = over budget.

Q36. What are SPI and CPI?

Ans: SPI (Schedule Performance Index) = EV/PV. SPI > 1 means ahead of schedule. CPI (Cost Performance Index) =
EV/AC. CPI > 1 means under budget. These indices help forecast future project performance.

Q37. What is Stakeholder Management?

Ans: The process of identifying all individuals and groups affected by the project, analyzing their interests and
influence, and developing strategies to engage them appropriately. Key: Identify, Plan, Manage, Monitor stakeholder
engagement throughout the project.

Q38. What is Project Risk?

 Ans: An uncertain event or condition that, if it occurs, has a positive or negative effect on project objectives. Risk has
two components: Probability (likelihood of occurrence) and Impact (severity of consequences). Expected Monetary
Value (EMV) = Probability × Impact.

Q39. Name the 4 risk response strategies for threats.

Ans: 1. Avoid – change plan to eliminate risk. 2. Transfer – shift impact to third party (insurance, outsourcing). 3.
Mitigate – reduce probability or impact. 4. Accept – acknowledge risk; prepare contingency plan if needed.

Q40. What is Project Quality Management?

Ans: Ensures the project meets its stated requirements. Three processes: 1. Quality Planning (what standards apply).
2. Quality Assurance (QA) – process audit, ensuring correct processes used. 3. Quality Control (QC) – inspecting
deliverables for defects.

Q41. What is Project MIS?

Ans: Project Management Information System – a structured system to collect, process, store, and disseminate project
data for decision-making. Includes status reports, schedule updates, cost reports, risk logs, and change management
records.

Q42. What is a Project Audit?

Ans: An independent, systematic examination of a project's performance, processes, documentation, and outcomes.
Types: Health Check, Process Audit, Financial Audit, Benefit Realization Audit, and Post-Completion Audit.

Q43. What are 'Lessons Learned'?

Ans: Documentation of knowledge gained from project experience — what went well, what went wrong, and how to
improve. Captured during project closure. Used to improve performance of future projects. Essential part of
organizational learning.

Q44. What is Post-Project Review?

Ans: A formal meeting/process after project closure to evaluate whether the project met its objectives (scope, time,
cost, quality), assess stakeholder satisfaction, document lessons learned, and recommend process improvements for
future projects.

MODULE V — CONTEMPORARY ISSUES (Q45–Q50)

Q45. What is Agile Project Management?
Ans: Agile is an iterative, incremental approach to project management. Work is done in short cycles called sprints (2-4
weeks). Key values (Agile Manifesto): Individuals and interactions, Working software, Customer collaboration,
Responding to change. Frameworks: Scrum, Kanban, XP.

Q46. Distinguish between Waterfall and Agile.

Ans: Waterfall: Sequential, plan everything upfront, changes are costly, one final delivery at end, suits stable
requirements. Agile: Iterative, welcomes change, frequent small deliveries, customer involved throughout, suits
dynamic requirements.

Q47. What is Scrum?

Ans: Scrum is the most popular Agile framework. Key roles: Product Owner (defines backlog), Scrum Master
(facilitates process), Development Team (does work). Events: Sprint (2-4 week cycle), Daily Scrum (15-min standup),
Sprint Review, Sprint Retrospective. Artifact: Product Backlog, Sprint Backlog, Increment.

Q48. What is Green/Sustainable Project Management?

Ans: Integrating environmental, social, and economic sustainability principles into project management. Goals: reduce
carbon footprint, minimize resource waste, ensure fair labor practices, create long-term stakeholder value. Tools: Life
Cycle Assessment (LCA), ISO 14001, ESG reporting.

Q49. What is Lean Project Management?

Ans: Lean focuses on eliminating WASTE (Muda) and maximizing VALUE for the customer. 5 Lean Principles: Define
value, Map value stream, Create flow, Establish pull, Seek perfection. 7 Types of Waste (TIMWOOD): Transport,
Inventory, Motion, Waiting, Overproduction, Overprocessing, Defects.
Q50. Name any four Project Management Software Tools.
Ans: 1. MS Project – industry standard for scheduling and resource management. 2. Primavera P6 – used for large
engineering/construction projects. 3. JIRA – Agile software project management. 4. Asana/Trello – simpler,
cloud-based tools for task management. 5. Smartsheet – spreadsheet-style PM tool.
 QUICK REVISION CHEAT SHEET — LAST NIGHT
BEFORE EXAM

ALL KEY FORMULAS TO MEMORIZE:

■ PERT Expected Time: te = (to + 4tm + tp) / 6

■ PERT Variance: σ² = [(tp – to) / 6]²

■ Total Float: TF = LS – ES = LF – EF

■ Cost Slope (Crashing): Cost Slope = (Crash Cost – Normal Cost) / (Normal Time – Crash Time)

■ NPV: NPV = Σ CFt/(1+r)^t – C0

■ Payback Period: PBP = Initial Investment / Annual Cash Inflow

■ Profitability Index: PI = PV of Future Cash Flows / Initial Investment

■ WACC: WACC = (We×Ke) + (Wd×Kd×(1-t)) + (Wp×Kp)

■ EVM – Schedule Variance: SV = EV – PV (Positive = Ahead, Negative = Behind)

■ EVM – Cost Variance: CV = EV – AC (Positive = Under Budget, Negative = Over Budget)

■ SPI: SPI = EV / PV (> 1 = Ahead, < 1 = Behind)

■ CPI: CPI = EV / AC (> 1 = Under budget, < 1 = Over budget)

■ Communication Channels: n(n-1)/2 where n = number of stakeholders

■ EMV: EMV = Probability × Impact

■ ROI: ROI = (Net Profit / Total Investment) × 100

KEY TERMS TO REMEMBER:

WBS Work Breakdown Structure – hierarchical decomposition of project scope into work
packages.

PERT Program Evaluation & Review Technique – probabilistic scheduling (3 time estimates).

CPM Critical Path Method – deterministic scheduling; finds critical path (longest path = zero
float).

NPV Net Present Value – best project appraisal method; accepts projects where NPV > 0.

IRR Internal Rate of Return – rate at which NPV = 0; accept if IRR > cost of capital.

SCBA Social Cost-Benefit Analysis – evaluates projects from society's perspective using
shadow prices.

EVM Earned Value Management – integrates scope, schedule, cost for project performance
measurement.

Scope Creep Uncontrolled expansion of project scope – most common cause of project failure.
Risk Register Document listing all identified risks, their probability, impact, owner, and response plan.

Stakeholder Anyone who can affect or is affected by the project (internal: team, PM; external: client,
govt).

Project Charter Formal document that authorizes the project; the project's 'birth certificate.'

DPR Detailed Project Report – comprehensive document for project sanction and financing.

Agile/Scrum Iterative PM framework with sprints; roles: Product Owner, Scrum Master, Dev Team.

Crashing Reducing project duration by adding resources to critical path activities at increased
cost.

WACC Weighted Average Cost of Capital – minimum return rate; used as NPV discount rate.

Quality Control Inspecting deliverables for defects. Different from QA (which is process-focused).

Lessons Learned Knowledge documented from project experience for improvement of future projects.

Project Audit Independent systematic review of project performance and processes.

LAST-MINUTE MEMORY AIDS:

■ MTFE: Feasibility Types: Market, Technical, Financial, Environmental

■ IPEC: Project Life Cycle: Initiation, Planning, Execution, Closure

■ ATOM: Risk Responses (Threats): Avoid, Transfer, mitigate (M), accOm... wait — Avoid, Transfer, Mitigate,
Accept

■ ESEA: Risk Responses (Opportunities): Exploit, Share, Enhance, Accept

■ TVM: Time Value of Money — NPV, IRR, PI all account for TVM; Payback and ROI do NOT

■ Iron Triangle: Time + Cost + Scope — change one, the others are affected

■ Zero Float: Critical Path activities have ZERO total float — any delay = project delay

■ NPV Rule: NPV > 0 = Accept | NPV < 0 = Reject | Higher NPV = Better project

■ Backward Pass: LF of last activity = Project Duration (NOT zero). Work RIGHT to LEFT.

■ Crash Order: Always crash critical path activity with LOWEST cost slope first!

■ IMPORTANT: ALL THE BEST FOR YOUR EXAM! You've got this — trust your preparation and think
clearly!

BBACO-601 Project Management | MAKAUT West Bengal | BBA Sem 6 | 2024 | Master Exam Notes