Project Management Notes

Module 1

1. Meaning of Project Management, Capital Investment.

2. Importance of Capital Investment and Difficulties.
3. Types of Capital Investment : Physical, Monetary, Intangible, Strategic and Tactic.
4. Phases of Capital Budgeting : Explain the process – Planning, Analysis, Selection, Financing ,
implementation and Review.
Planning – Articulate the broad strategy
Analysis- Detailed analysis of marketing, technical, financial, economic and ecological
aspects.
Selection – Project Worthwhile ? Two categories – Discounting and Non discounting criteria.
Financing – Sources of finance
Implementation – Project and engineering designs, negotiation and contracting,
construction, training and commissioning.
Review- Compare the actual performance with the projected.

5. Key considerations influencing the capital structure – FRICT( Flexibility, Risk, Income, Control
and Taxes)
6. Levels of Decision Making – Operating, Administrative and Strategic
7. Facets of Project Analysis – Market analysis, Technical, Financial, Economic and Ecological .
8. Formulation of Strategies – Environmental and Internal
9. Common Weaknesses in Capital Budgeting :
 Poor Alignment between Strategy and Capital Budgeting
 Deficiencies in Analytical Techniques – The base case is poorly identified, Risk is
treated inadequately, Options are not properly evaluated, Lack of uniformity in
assumptions, side effects are ignored.
 No linkage between Compensation and Financial Measures.
 Reverse Financial Engineering.
 Weak Integration between capital budgeting and expense budgeting
 Inadequate Post – audits.

Module 2
Identifying a promising project ideas to establish a successful venture which requires
imagination, sensitivity to environmental changes and realistic assessment of what a
firm can do.
1. Generation of Ideas – SWOT Analysis, Clear articulation of objectives, and fostering a
condusive environment.
2. Monitoring the Environment – Important aspects – Economic sector, Government sector,
Technological sector, Socio – demographic sector, Competition sector, Supplier sector.
3. Corporate Appraisal - Identifying investment opportunities which can be profitably
exploited.
 Marketing and Distribution
 Production and Operations
 Research and Development
  Corporate resources and Personnel
 Finance and Accounting.
4. Scouting for Project Ideas
 Analyse the performance of the existing industries
 Examine the inputs and outputs of various industries
 Review imports and exports
 Study plan outlays and governmental guide lines
 Consider the suggestions of financial institutions and developmental agencies
 Investigate local materials and resources
 Analyse economic and social trends
 Study new technological developments
 cLue from consumption abroad
 review sick units
 Identify unfulfilled psychological needs
 Attend trade fairs
 Stimulate the creativity for generating project ideas
 Hope for the chance factor
5. Preliminary Screening – Remove the project ideas which is not promising.
Aspects to be considered:
 Compatability with the promoter
 Consistency with government priorities
 Availability of government inputs
 Adequacy of the market
 Reasonableness of the cost
 Acceptability of risk level
6. Sources of Positive NPV
 Six main entry barriers- Economies of scale
 Product differentiation
 Cost advantage
 Marketing reach
 Technological edge
 Government Policy.
7. Qualities of a Successful Entrepreneur
 Willingness to make Sacrifice
 Leadership
 Decisiveness
 Confidence in the project
 Marketing orientation
 Strong ego.

Module 3
1. Market and Demand Analysis – Information generated will be relevant in
forecasting the overall market demand and assess the share of the market that
the project will capture.
2. Collection of Secondary Information :
Sources :
  Census of India
 National sample survey
 Plan reports
 Statistical abstract of the Indian Union
 India Year Book
 Statistical Year Book
 Economic Survey
 Guidelines to Industry
 Annual survey of Industry
 Stock exchange directory
 Publications of advertising agencies.
3. How do you conduct Market survey?
4. What are the steps in sample survey?
5. What are the problems faced by the researcher in conducting the survey?
6. Characteristics of the market – How the product / Market described.
7. Demand Forecasting – Methods
 Qualitative Methods – Jury of executive method, Delphi Method
 Time Series Projection Method – Trend projection method, Exponential
smoothing method, Moving average method.
 Causal methods- Chain ratio method, Consumption level method, End
use method, Base diffusion model, Leading Indicator method,
Econometric method.
8. Technical Analysis – Ensure project is technically feasible. and the Available
technology
9. Choice of technology :
 Plant Capacity
 Principal inputs
 Investment outlay and production costs
 Use by other units
 Product mix
 Latest developments
 Ease of absorption.
10. Appropriateness of Technology
11. Technical arrangements – Technical Know how
12. Material Inputs and Utilities – Raw Material, Processed Industrial Materials and
components, Auxilary materials and factory supplies.
13. Product Mix – Choice of product mix is guided by market requirements
14. Plant Capacity – Volume of units that can be manufactured during a given
period.
15. Factors bearing on the capacity decision – Technological requirement, Input
constraints, Investment costs, market conditions,Resources of the firm,
Government Policy
16. Location and site :
 Proximity to raw materials and markets
 Availability of Infrastructure
 Labour situation
 Government Policies
  Other factors
 Site selection
17. Machineries and equipments – Constraints
18. Structures and civil works
 Site preparation and development
 Buildings and Structures
 Outdoor works
19. Environmental Aspects – Gaseous emissions,liquid and solid discharges, noise,
heat and vibrations.
20. Work Schedule – Problems likely to arise , Establish the phasing of investments

21. PEST analysis -

 Used to analyze the issues that affect an industry ( Political, Economical, Social and
Technological).
 Affect the organization – Demand and Supply and its Costs.
 Effective strategic instrument for realizing market growth, decline and potential of
the business.
 Political – Change in the policies, fluctuations in the currencies.
 Economic – Availability of capital and demand for the product.
 Socio- Cultural - Tastes, custom, culture.
 Technology – Competitive advantage.

Module 4
Problems already worked out
1. Identify the different sources of finance
2. Draw out the importance of SEBI guidelines, Tax implications in Project finance
3. List out the tax incentives available to set up a project.

Module 5

Crashing:
• PERT
• CPM

Rules for drawing network:

1. Each activity should start and end with an event.

2. The activity is represented by an arrow

3. Events are represented by circles and nods

10. Successors are activities which occur immediately after predecessor

11. Predecessor are activities which occur immediately before

12. For an activity to start all its predecessor must get over

13. For drawing net work the following information should be provided

a. Activity

b. Predecessor relationship

c. Predecessor relationship indicate which activity must get over before the start of another activity

Crashing:

Reducing time of completion of the project by reducing time of completion of critical activities at

additional expenses .
Problems on Crashing

Forms of Line and Staff