Project Management

Project planning

• Stimulating the flow of ideas

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SWOT Analysis
SWOT analysis is a strategic planning technique used to help an organization to identify
strengths, weaknesses, opportunities, and threats related to business competition or
project planning

The four components of SWOT analysis

• Strengths.
• Weaknesses.
• Opportunities.
• Threats

A SWOT analysis helps find the best match between environmental trends (opportunities
and threats) and internal capabilities.

Strength is a resource or capacity the organisation can use effectively to achieve its objectives.

A weakness is a limitation, fault, or defect in the organisation that will keep it from achieving
its objectives.

An opportunity is any favourable situation in the organisation's environment. It is usually a trend

or change of some kind or an overlooked need that increases demand for a product or service and
permits the firm to enhance its position by supplying it.

A threat is any unfavourable situation in the organisation's environment that is potentially

damaging to its strategy. The threat may be a barrier, a constraint, or anything external that
might cause problems, damage or injury.

✓ Clear Articulation of Objectives

✓ Fostering a conductive climate
• Corporate Appraisal

A corporate appraisal is examining the operations of an entire company from different angles. It
is a measurement of the readiness of that corporation's internal culture to deal with external
environments and change.

The purpose of a corporate appraisal is to assess the strengths and weaknesses of the company.
This is similar to a SWOT analysis, which analyzes the strengths, weaknesses, opportunities,
and threats
 • How to Conduct a Corporate Appraisal

The basis for conducting a corporate appraisal is to identify the strengths and weaknesses that
can influence the company's ability to achieve its goals.

Depending upon the company's strengths, it may be able to exploit its opportunities
successfully. A corporate appraisal is concerned with the company's current state of mind and
how its culture can change for its survival

A corporate strength is a strong point for the company, something that it does well, or something
that is unique. A strength can be a skill, competency, a certain resource, or a competitive
capability that gives the company an advantage. Regarding your family business, one corporate
strength is that it has developed a new type of plastic that is rigid yet durable enough to protect
cell phones

A corporate weakness is a constraint or obstacle which can block the company's desired
direction, or hinder the company in gaining a competitive advantage. A weakness can be any
number of things. It could be a resource that the company does not have, or a condition that
would put it in a disadvantageous position.

• Tools for identifying investment opportunities

1. Porters five forces Model

Michael E. Porter, a Harvard professor known as a leader in competitive and strategic

management, created a well-known model for determining the profitability of an industry.
Porter's model can be applied to any segment of the economy to search for profitability
and attractiveness.
1.Threat of new entry

If the nature of an industry is that firms can easily enter into the industry without facing any
entry barrier then it possesses threat of new entrant which reduce the attractiveness of that
industry. Threat of new entry depends on;

▪ Time and cost requirement

▪ Specialized knowledge requirement
▪ Economies of scale
▪ Cost advantages
▪ Technology protection
▪ Other entry Barriers

Threat of new entrants can be reduced through entry barriers. Entry barriers are high when:

– Need substantial resources to enter

– Economies of scale are enjoyed by the industry
– Existing firms control distribution channel
– Switching costs are high
– Rigid govt. policy

2.Power of supplier

This force addresses how easily suppliers can drive up the cost of inputs. It is affected by

▪ the number of suppliers of key inputs of a good or service,

▪ how unique these inputs are, and
▪ how much it would cost a company to switch from one supplier to another
3. Power of buyer

This specifically deals with the ability that customers have to drive prices down. It is affected by

▪ how many buyers or customers a company has,

▪ Size of each customer
▪ Differences than competitors
▪ how significant each customer is, and
▪ how much it would cost a company to find new customers or markets
4. Threat of substitute
▪Threat of substitute

Substitute goods or services that can be used in place of a company's products or services pose
a threat. Intensity of threat depends on;

▪ Performance of the substitutes

▪ Switching cost (Cost of change)
3.Competitive rivalry

This force refers to the number of competitors and their ability to undercut a company. The
larger the number of competitors, along with the number of equivalent products and
services they offer, the lesser the power of a company

• Life Cycle Approach

Each product has four stages of life cycle:

• Pioneering
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stage
Investment may have a low return and negative NPV.
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It create the options for participating in the growth stage.
• Rapid
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growth stage
Significant expansion in sales and profit
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Investment in this stage earn a high return and generate positive NPV
• Maturity
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and stabilization stage
Investment earn average return and be NPV –neutral
• Decline
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stage:
Investment earn meagre return and produce negative NPV

4.Sources of positive net present value

• Economies of scale

Economies of scale means that an increase in the scale of production, marketing, or distribution
results in a decline in the cost per unit. It happens because at large production volume the fixed
cost is divided on more units. When substantial economies of scale are present, the existing firms
are likely to be large in size

• Product differentiation

A firm can create an entry barrier by successfully differentiating its products from those of
its rivals. The basis for differentiation may be one or more of the followings:

✓ Effective advertising and superior marketing

✓ Exceptional service
✓ Innovative product feature
✓ High quality and dependability
• Cost Advantag

If a firm can enjoy cost advantage vis-a-vis its competitors, it can be reasonably assured
of earning superior returns. Cost advantage may stem from one or more of the following

✓ Accumulated experience and comparative edge on the learning curve

 ✓ Monopolistic access to low cost materials
✓ A favorable location
✓ More effective cost control and cost reduction
• Marketing reach

A penetrating marketing reach is an important source of competitive advantage. Marketing reach

refers the wideness of a company’s distribution networks. Wide marketing reach creates the
potentiality of more customers to serve.

• Technological edge

Technological superiority enables a firm to enjoy excellent returns. Firms like Apple and Intel
earned superior returns over extended periods of time due to, their superior technological
innovation, the technological edge they had over their rivals.

• Government policy

A government policy which shelters a firm from the onslaught of competition enables it to
earn superior returns. Government policies that create entry harriers, partial or absolute,
include the following:

✓ Restrictive licensing
✓ Import restrictions
✓ High tariff walls
✓ Environmental controls s
✓ Special tax reliefs
Preliminary Screening
• Compatibility with promote
• Constancy with governmental priorities
• Availability of inputs
• Adequacy of market
• Reasonableness of cost
• Acceptability of risk level
Compatibility with the Promoter

The idea must be compatible with the interest. personality, and resources of the
entrepreneur. According to Murphy, a real opportunity has three characteristics

• It fits the personality of the entrepreneur- it squares with his abilities, training, and
proclivities
• It is accessible to him
• It offers him the prospect of rapid growth and high return on invested capital.
 Consistency with Govt. Priorities

The project idea must be feasible given the national goals and governmental regulatory
framework. Project manager consider whether the project consistent with national goals and
priorities , project’s effect on environment, procedure of getting the license for the project etc.

Availability of inputs
The resources and inputs required for the project must be reasonably assured.
Project manager consider :
• Capital requirements of the project
• Technical knowledge and facilities
• Availability of Raw materials etc.

Adequacy of market
Factors to be considered:
• Total Present domestic market
• Copetitors and their market Shares
• Export Market
• Sales and Distribution system
• Barriers to the entry of new units

Reasonableness of Cost
• Consider following cost structure:
• Cost of materials
• Cost of labor
• Factory Overhead
• Administrative cost

Experience curve

Project Analysis

Steps in a sample survey

• Define the target Population

• Select the sample scheme and sample size
• Develop the questionnaire
• Recruit and train the field investigator
• Obtain information as per the questionnaire from the sample of respondents
• Scrutinize the information gathered
• Analyse and interpret the information
Characterization of the market

• Effective demand in the past and present

• Breakdown of demand
• Price
• Methods of distribution and sales promotion
• Consumers
• Supply and competition
• Government policy

Methods of demand forecasting

• Qualitative Methods: Jury of executive method And Delphi method

• Time series projection Methods: trend projection, moving average
• Causal Methods: Chain ratio, consumption level, end use, econometric etc.

Financial Estimates and projections

• To judge a project from the financial angle, we need the following information:
• Cost of project
• Means of financing
• Estimates of sales and production
• Cost of production
• Working capital requirements and its financing
• Estimates of working results
• Break-even-points
• Projected cash flow statements
• Projected balance sheet

Means of finance available for financing a project

• Share Capital
• Term loans
• Debenture loans
• Deferred credit
• Incentive sources
• Miscellaneous sources

Major components of cost of production

• Material Cost
• Utilities Cost
• Labour cost
• Factory overhead cost
 Scheduling
:
Book Project management : Jack R meredith
Scheduling

Scheduling in project management is the listing of activities,

deliverables, and milestones within a project. A schedule also usually
includes the planned start and finish date, duration, and resources
assigned to each activity. Effective project scheduling is a critical
component of successful time management.

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Scheduling
Processes for building a schedule:
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Plan schedule management.
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Define project activities.
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Sequence activities.
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Estimate resources.
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Estimate durations.
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Develop the project schedule.

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Schedule
A schedule is the conversion of a project action plan into an operating
timetable.
It serves as the basis for monitoring and controlling project activity
and, taken together with the plan and budget,
Schedule is the major tool for the management of projects.

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Types of schedules
There are three main types of schedules:
1.Master project schedule. A master schedule tends to be a
simplified list of tasks with a timeline or project calendar.
2.Milestone schedule or summary schedule. This type of schedule
tracks major milestones and key deliverables, but not every task
required to complete the project.
3.A detailed project schedule. This is the most thorough project
schedule, as it identifies and tracks every project activity. If you have
a complex, large, or lengthy project, it’s important to have a detailed
project schedule to help track everything.
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Benefits of project scheduling in
project management
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Project scheduling provides the following benefits:
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Assists with tracking, reporting on, and communicating progress.
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Ensures everyone is on the same page as far as tasks, dependencies, and
deadlines.
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Helps highlight issues and concerns, such as a lack of resources.
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Helps identify task relationships.
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Can be used to monitor progress and identify issues early.

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Network Techniques

The project network is a visual flow diagram of the sequence,

interrelationships, and dependencies of all the activities that
must be accomplished to complete the project.

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Network Techniques

The combination of all activities and events that define a project.

The network is the framework for the project information system that
will be used by the project managers to make decisions concerning
project time, cost, and performance.
The most common approach to project scheduling is the use of
network techniques such as PERT and CPM.

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Benefits of network
a network is a powerful tool for planning and controlling a project,
and has the following :
• It is a consistent framework for planning, scheduling, monitoring, and
controlling the project.
• It illustrates the interdependence of all tasks, work packages, and
work elements.
• It denotes the times when specific individuals and resources must be
available for work on a given task.
• It aids in ensuring that the proper communications take place
between departments and functions.
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Benefits of network…..
• It determines an expected project completion date.
• It identifies so-called critical activities that, if delayed, will delay the
project completion time.
• It also identifies activities with slack that can be delayed for specified
periods without penalty, or from which resources may be temporarily
borrowed without harm.
• It determines the dates on which tasks may be started—or must be
started if the project is to stay on schedule.

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Benefits of network ……
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It also illustrates which tasks may be run, or must be run, in parallel to
achieve the predetermined project completion date.
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It relieves some interpersonal conflict by clearly showing task
dependencies.
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It may, depending on the information used, allow an estimate of the
probability of project completion by various dates, or the date
corresponding to a particular a priori probability.

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Network Scheduling Techniques: PERT and CPM

The Program Evaluation and Review Technique (PERT) was

developed by the U.S. Navy to facilitate the planning and scheduling
of the Polaris missile/submarine project in 1958.
The Critical Path Method was developed by DuPont in the US to solve
the scheduling problem in industrial settings.

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Network Scheduling Techniques: PERT and CPM

PERT has primarily been used for R&D projects,

which it was developed, though its use is more common on the
“development” side of R&D than it is on the “research” side.

CPM was designed for construction projects and the construction

industry.

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Differences between PERT and CPM

PERT was strictly oriented to the time element of projects and used
probabilistic activity time estimates to aid in determining the
probability that a project could be completed by some given date.

CPM, on the other hand, used deterministic activity time estimates

and was designed to control both the time and cost aspects of a
project, in particular, time/costtrade-offs.

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Terminology
• Activity - A specific task or set of tasks that are required by the
project, use up resources, and take time to complete
• Event - The result of completing one or more activities
• Network - The combination of all activities and events that define a
project
• Drawn left-to-right
• Connections represent predecessors

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Terminology Continued
• Path - A series of connected activities
• Critical - An activity, event, or path which, if delayed, will delay
the completion of the project
• Critical Path - The path through the project where, if any activity is
delayed, the project is delayed
• There is always a critical path
• There can be more than one critical path

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Terminology Continued
• Sequential Activities - One activity must be completed before the
next one can begin
• Parallel Activities - The activities can take place at the same
time
• Immediate Predecessor - That activity that must be completed just
before a particular activity can begin

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Basic Rules to Follow in Developing
Project Networks
The following eight rules apply in general when developing a project
network:
1. Networks flow typically from left to right.
2. An activity cannot begin until all preceding connected activities
have been completed.
3. Arrows on networks indicate precedence and flow. Arrows can cross
over each other.
4. Each activity should have a unique identification number.

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Basic Rules to Follow in Developing
Project Networks…..
5. An activity identification number must be larger than that of any
activities that precede it.
6. Looping is not allowed (in other words, recycling through a set of
activities cannot take place).
7. Conditional statements are not allowed (that is, this type of
statement should not appear: If successful, do something; if not, do
nothing).

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Basic Rules to Follow in Developing
Project Networks….

8. Experience suggests that when there are multiple starts, a common

start node can be used to indicate a clear project beginning on the
network. Similarly, a single project end node can be used to indicate a
clear ending

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Activity-on-Node (AON) Fundamentals
two methods have been used to develop project networks: Activity
on-node (AON) and Activity-on-arrow (AOA).
Where the activities are shown as arrows on the network, it is called
an AOA (activity-on-arrow) network.
Where the activities are shown as nodes, we will call it an AON
(activity-on-node) network.

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There are three basic relationships that must be established for activities
included in a project network. The relationships can be found by
answering the following three questions for each activity:
• 1. Which activities must be completed immediately before this
activity? These activities are called predecessor activities.
• 2. Which activities must immediately follow this activity?
These activities are called successor activities.
• 3. Which activities can occur while this activity is taking place? This
is known as a concurrent or parallel relationship

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Sequential Activities

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AON and AOA Format

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Constructing the Network
• Begin with START activity
• Add activities without precedences as nodes
• There will always be one
• May be more
• Add activities that have those activities as precedences
• Continue

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Sample of Network Construction

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Sample of Network Construction

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 An Important Aside on Estimating Activity
Times
• It is vital to good project management to be meticulously honest in
estimating the time required to complete each of the various tasks
included in the project
• No false deadlines
• Evaluate alternative ways of completing work.

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Solving the Network

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The AON Network from the previous table

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 Calculating Activity Times

TE = (a + 4m + b)
6
2 = (b − a) 2
6

= 2

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The Results

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 Parkinson’s Law
• Work expands to fill the allotted time

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Critical Path and Time

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Critical Path and Time Continued

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Slack

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Slack Values

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