PROJECT MANAGEMENT NOTES

CONCEPT OF PROJECT MANAGEMENT Historical perspective on Project Management In theory, we should be able to learn from how humans have managed projects since the start of civilization. This should be an enlightening area for study, but is one that appears to have yielded little of practical use for project managers today. For one, the constraints are hardly the same today as they were. One very successful civilization- the Roman Empire- did not have the same resource constraints that project managers face today. As one historian pointed out, if they wanted any more resources to complete their projects, they simply had to go and conquer the region that had those resources and take them. Recently, the nature of project management has changed. It has ceased to be dominated by the construction industry, where much of the case material under this heading is based, and is now applicable in all organisations. Project management is now an advanced and specialized branch of management in its own right. As a result, the nature of project management had to change. It is no longer simply an extension of a technical specialism (e.g. , engineering or marketing), but requires a full structure to take a project from strategy to action. In addition, the hard systems approach, which treated the project as a mechanical activity, has been shown to be flawed. Project Management is the art of managing all the aspects of a project from inception to closure using a scientific and structured methodology. The term project may be used to define any endeavour that is temporary in nature and with a beginning or an end. The project must create something unique whether it is a product, service or result and must be progressively elaborated. As the definition implies, not every task can be considered a project. It would be worthwhile to keep this definition in mind when categorizing projects and studying their role in the success of the organization. With the above definition of the project, one gets a clear idea on what a project is. MEANING AND DEFINITION OF PROJECT MANAGEMENT Project management is the application of knowledge, skills and techniques to execute projects effectively and efficiently. Its a strategic competency for organizations, enabling them to tie project results to business goals and thus, better compete in their markets. It has always been practiced informally, but began to emerge as a distinct profession in the mid-20th century. Project management processes fall into five groups: Initiating

Planning Executing Monitoring and Controlling Closing Project management knowledge draws on nine areas: Integration Cost Human resources Scope Quality Communications Time Procurement Risk management

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All management is concerned with these, of course. But project management brings a unique focus shaped by the goals, resources and schedule of each project. The value of that focus is proved by the rapid, worldwide growth of project management: as a recognized and strategic organizational competence as a subject for training and education as a career path Program Management is defined as a department that centralizes the management of projects. What this means is that the PMO or the Project Management Office is a repository of all the projects that are being executed in an organization. Program Management serves the CIO (Chief Information Officer) by providing him or her with regular status updates regarding the progress of all the projects in the company. Project management is very important in production of goods and services. Idea generation to final production of product or service, each step can be categorized as individual projects. Any project requires a project manager, who leads the project to its logical conclusion. Project manager is responsible for appointing team members with different background but essential in completion of the project. Project Management Defined Change in IT organizations today is inevitable. IT project management is the means by which IT changes and developments are made in a controlled and focused manner. Specifically, IT Project management is a set of principles, practices and techniques applied to lead IT project teams and control IT project schedule, cost, scope and quality of deliverables. Project management revolves around three key organizational elements: 1. Business projects must be aligned with and support the organizations strategic goals and objectives. 2. People projects revolve around people. This includes the project manager, stakeholders, and the project team. 3. Tools and Technology projects rely on the resources at hand to plan, control, schedule, and track project progress. It is the role of the project manager to manage and optimize these three elements throughout the project management process. Project Management Constraints A project, no matter the size or magnitude, must be completed under three constraints. Often referred to as the Triple Constraints of Project Management or The Project Management Triangle, these constraints are as follows: Scopeproject size, goals and deliverables. Timetime frame available to complete the project. Cost (or Budget) amount (in dollars) budgeted for the project. DEFINITION OF A PROJECT Project includes: - Any non repetitive activity; - A low-volume, high-variety activity; - A temporary endeavour undertaken to create a unique product or service; - Any activity with a start and a finish; - A unique set of co-ordinated activities, with definite starting and finishing points, undertaken by an individual or organisation to meet specific performance objectives within defined schedule, cost and performance parameters. A project is temporary in that it has a defined beginning and end in time, and therefore defined scope and resources. And a project is unique in that it is not a routine operation, but a specific set of operations designed to accomplish a singular goal. So a project team often includes people who dont usually work together sometimes from different organizations and across multiple geographies. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

SALIENT FEATURES OF A PROJECT

Projects have a purpose: Projects have clearly-defined aims and set out to produce clearly-defined results. Their purpose is to solve a "problem, and this involves analysing needs beforehand. Suggesting one or more solutions, a project aims at lasting social change.

Projects are realistic: Their aims must be achievable, and this means taking account both of requirements and of the financial and human resources available. Projects are limited in time and space: They have a beginning and an end and are implemented in (a) specific place(s) and context. Projects are complex: Projects call on various planning and implementation skills and involve various partners and players. Projects are collective: Projects are the product of collective endeavours. They involve teamwork and various partners and cater for the needs of others. Projects are unique: Projects stem from new ideas. They provide a specific response to a need (problem) in a specific context. They are innovative. Projects are an adventure: Every project is different and ground-breaking; they always involve some uncertainty and risk. Projects can be assessed: Projects are planned and broken down into measurable aims, which must be open to evaluation. OBJECTIVES AND IMPORTANCE OF PROJECT MANAGEMENT Cost-Effectiveness Project management provides a roadmap for the journey of success. It is the greatest resource that allows the manager to understand the available resources and the methods to use them with the demands. Thus, with a plan in hand, it is easy to utilize the resources in the optimum possible way. Project management, prior to launching a project, identifies the irrelevant costs, reduces wastage of resources and thus ensures cost-effectiveness in the longer run. Better Productivity Trustworthy quality of products is a way of retaining the existing clientele and adding to the same. Project management keeps the quality of products in constant check, thus ensuring better productivity in terms of quality and quantity. This not only helps the company in earning goodwill for a lifetime, but also promises customer satisfaction. Several project management plans use tools such as six sigma to improve its processes and eliminate the defects, to enhance their productivity. Minimization of Risks Every business is faced with risks of loses due to various reasons. However, with a strategy in place, gauging the risks is easier and making diversions from the same is easier as well. This maintains stable work in progress. By planning and analyzing, a project manager can mitigate risks and be a part of fair business competition. Project management helps in identification of loopholes and potential threats. Once these are singled out, the management can then take decisions to change strategies to erase risks that can negatively affect the productivity and business interests at large. Accomplishing Predetermined Goals Every organization sketches its goals and objectives, which is the basis of earning profits and making a way towards growth. Project management is the key tool for achieving predetermined targets in a Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

structured way. It decides the strategies that will be used to reach the goal in the fastest way. It is a structured way of getting to your objectives. Project management goes through fives stages which are; initiation, planning and design, executing, monitoring and controlling, closing and project control systems. After the allocation of the task, the project manager is responsible for drawing out a project management plan in the aforementioned order. He must also hire a team for delegation of work and to supervise the work thereafter. Project management is a branch of management which uses various management tools such as budgeting, allocating and optimization to fulfill a defined goal for a shorter period of time. The importance of project management in organizations is seen through quality of products, customer satisfaction, employee satisfaction, efficiency in business, mitigation of risks involved and a successful business in totality. The positive nature of all these factors of an organization explains why project management is important. Management of any kind always helps in painting a clear picture of what is available, what is required and what is the way to get there, and a true leader will always know it. As Stephen Covey rightly said, Management is efficiency in climbing the ladder of success; leadership determines whether the ladder is leaning against the right wall. APPRAISAL OF PROJECT Appraisal can be referred to as ex-ante, on-going and ex-post. In the Planning and Development Division, projects are examined from the technical, institutional/organizational/ managerial, social, commercial, financial and economic points of view. These aspects are as follows:

Technical Analysis Institutional/ Managerial/ Organisational Analysis Social Analysis

Commercial Analysis

Financial Analysis

Economic Analysis

Technical Analysis The analysis for determining the technical viability of the development project is based on the technical data and information given in the PC-I form as well as the earlier experience of carrying out similar projects. The technical tests and yard-sticks to be used to determine the technical viability differ from project to project and from sector to sector. In cases where high level technology is involved and the country has little or no experience, foreign consultants are also employed to prepare the feasibility studies. The technical analysis concerns the project's input (supplies) and output (production) of real goods and services. For example, in an agricultural project, technical analysis will determine the potential yields in the project area, the co-efficients of production, potential cropping patterns, and the possibilities for multiple cropping. The technical analysis will Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

also examine the marketing and storage facilities required for the successful operation of the project. The aspects like soil/ground water or collection of hydrological data may also be examined. Knowledge about farmers in the project area, their current farming practices, and their social values to ensure realistic choices about technology is also examined. Institutional/Organizational/Managerial Analysis A whole range of issues in project preparation revolves around the overlapping institutional, organizational and managerial aspects of the project, which clearly have an important effect on project implementation. The proposal should be examined to see that the project is manageable and a relationship has been developed amongst the project, region and the country. The proposal may contain the replies of the probable questions: (a) are the authority and responsibility properly linked? (b)does the organizational set-up encourage delegation of authority? (c)does the proposed organization take proper account of the customs and organizational procedures common in the country or, alternatively, does it introduce enough change in organizational structure to break the traditional organization forms? (d) What about training arrangements? etc. Social Analysis Social analysis is undertaken to examine the aspects like employment opportunities and income distribution. The project analyst would also examine the effects of a project on particular groups/regions. Commercial Analysis The commercial aspects of a project include the arrangements for marketing the output produced by the project and the arrangement for the supply of inputs needed to build and operate the project. On the output side, careful analysis of the proposed market for the project's production is essential to ensure that there will be an effective demand at a remunerative price. It needs to be ensured that adequate input supplies are available for the efficient operation of the project. Financial Analysis Financial analysis involves assessment of financial impact, judgment of efficient resource use, assessment of incentives, provision of a sound financing plan, coordination of financial contribution and assessment of financial management competence. The main objective of financial analysis is to determine the requirements of funds/timing and the expected returns on investment from the points of view of the various parties involved in the financing of the project. Under this analysis, judgment is framed about the project's financial efficiency, incentives, credit-worthiness and liquidity. In financial analysis, cost and benefits are calculated using current market prices. Interest payments on borrowed capital and repayment of loans are not included. Taxes in the form of excise duties, customs duties, sales taxes are considered cost, while subsidies and loan receipts are considered benefits and are fully accounted for in the analysis. Economic Analysis Analysis from the economic aspect assesses the desirability of an investment proposal in terms of its effect on the economy. The question to be addressed here is whether the investment proposal contributes to the developmental objective of the country and whether this contribution is likely to be large enough to justify the use of scarce resources such as capital, skilled labour, managerial talents etc., that would be needed to implement and operate the project. In economic analysis, input and output prices are adjusted to reflect true social or economic values. These adjusted prices are often termed as shadow or accounting prices. The taxes and duties are treated as transfer payments and are excluded from the capital and operating cost. The two main Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

steps in economic analysis are: (a) the "pricing of project inputs and outputs" and (b) the "identification of project costs and benefits".

Appraisal Methods/Techniques When costs and benefits have been identified, priced, and valued, the analyst is ready to determine which among various projects one is to accept and which to reject. There is no one best technique for estimating project worth (although some are better than others, and some are especially deficient). The techniques of project appraisal can be discussed under two heads viz (i) Undiscounted and (ii) Discounted. Undiscounted techniques include (a) Pay back period, (b) Value-added, (c) Capital-Output Ratio, (d) Proceeds per unit of outlay, and (e) Average annual proceeds per unit of outlay. These techniques are discussed in the following paragraphs. (a) Pay Back Period The pay back period refers to the length of time required to recover the capital cost of the project. In other words, it is the length of time from the beginning of the project until the net value of the incremental production stream reaches the total amount of capital investment (Net value of incremental production = value of incremental production less O&M, production cost). According to this criterion, the shorter the period for recovery the more profitable is the project. This criterion has two important weaknesses viz (a) it fails to consider earnings after the pay back period and (b) it does not adequately take into consideration the timing of proceeds. The payback period can be calculated in two different situation: When annual inflows are equal When the cash inflows being generated by a proposal are equal per time period i.e., the cash inflows are in a form of annuity, the pay back period can be computed by dividing the cash outflows by the amount of annuity For example: A proposal require a cash outflow of Rs100000 and is expected to generate cash inflow of Rs.20000 p.a. for 6 years. In this case, the payback period is 5 yrs i.e. Rs 100000/Rs 20000. When the annual inflows are unequal In case the cash inflows from the proposal are not in annuity form then the cumulative cash inflows are used to compute the payback period. For example, suppose cash outflow is Rs.18500 and annual cash flows are given as follows: Year 1 2 3 4 Annual CF Rs 8000 Rs 6000 Rs 4000 Rs 2000 Cumulative CF Rs8000 14000 18000 20000

Now payback period can be calculated as: = 3 years + (500/ 2000) = 3.25 years or 3 years 3 months Decision rule: the payback period calculated for the proposal is to be compared with some predetermined target period. If the payback period is more than the target period, then the proposal should be rejected, otherwise it may be accepted. (b) Value-Added It is the amount of economic value generated by the activity carried out within each production unit in the Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

economy. In any production unit, value-added is measured by the difference between the value of the output of the firm and the value of all inputs purchased from outside the firm. The capital and labour attached to each firm are considered internal inputs. Thus, value-added is the value that has been added by the labour and capital of the enterprise to the economy. Gross value-added includes payment for taxes, interest, rent, profits, reserves for depreciation. Deducting depreciation gives the net value-added. The sum of all the net valueadded is referred to as net domestic product. So the more the value added by the project, the more it will be justified economically. Net value added= gross value added- depreciation Gross value added= labour+ capital (taxes+ interest+ rent+ profits) (c) Capital-Output Ratio The capital-output ratio is defined as the average value-added produced per unit of capital expenditure. Projects with low capital-output ratio are favoured (d) Proceeds Per Unit of Outlay It is calculated by dividing total net value of incremental production by the total amount of investment. So the higher the proceeds per unit of the outlay, the higher the economic viability of the project. This criterion does not take into consideration the time value of money. (e) Average Annual Proceeds Per Unit Outlay To calculate this measure, the total of the net value of incremental production is first divided by the number of years during which it will be realised and then this average of annual proceeds is divided by the total capital cost. So if average annual proceeds per unit of outlay are high, the project will be economically justified for implementation. Average Annual Proceeds Per Unit Outlay= [Net value of incremental production/No. of years] total capital cost Discounting Techniques Discounting techniques take into account the time-value of money. Discounting is essentially a technique by which one can "reduce" the future benefit and cost streams to their present worth. The technique of discounting permits us to determine whether to accept or reject the projects for implementation that have obviously shaped time-stream that is, patterns of when costs and benefits fall during the life of the project, when they differ from one another and are of different durations. The most common means of doing this is to subtract year by year the costs from the benefits to arrive at the incremental net benefit-stream, the so-called cash flow and then to discount that. Then we may consider the differences between these present worth and determine what discount rate would be necessary to make the net present worth equal to zero (IRR), derive a ratio of present worth of benefit and cost streams (BCR) and internal rate of return. This process of finding the present worth of a future value is called discounting. For financial analysis, the discount or cut-off rate is usually the marginal cost of money to the farm or firm for which the analysis is being done. This often will be the rate at which the enterprise is able to borrow money. This is the rate that will result in utilization of all capital in the economy if all possible investments are undertaken that yield that much or more return. It would be the return on the last or marginal investment made that uses up the last of the available capital. If set perfectly, the rate would reflect the choice made by the Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

society as a whole between present and future returns, and, hence the amount of total income the society is willing to save. But no one knows what the exact opportunity cost of capital really is. In most developing countries, it is assumed to be somewhere between 8 and 15 percent in real terms. For industry we take it as 20% and for other sectors as 12% in Pakistan. A second discount rate that might be chosen for economic analysis is the borrowing rate the nation must pay to finance the project. But, in this way, selection of projects will be influenced by the financial terms available and will not be based solely on the relative contribution of projects to national income. It is best to break the link between choosing projects and financing them. Net Present Worth (NPW) It is simply the present worth of the incremental net benefit or incremental cash flow. It is the difference between discounted benefits and discounted costs of a project. NPW criterion suggests to us to accept all independent projects with a zero or greater net present worth when discounted at opportunity cost. No ranking of acceptable, alternative independent project is possible with the present worth criterion because it is an absolute and not relative measure. A small, highly attractive project may have a smaller net present worth than a larger marginally acceptable project. If both have positive NPW then both projects should be undertaken. It is because of lack of funds we cannot undertake both; the complication is that the opportunity cost of capital has been estimated to be too low. Then the correct response is to raise the estimate of opportunity cost until we have only the selection of projects with NPW that are zero or positive and for which, in fact, there will be just sufficient investment funds. NPV= Excess of PV of Inflows over PV of Outflows = PV of Cash Inflows- PV of Outflows For example: A machine A cost Rs 100000 payable immediately. Machine B costs Rs 120000 half payable immediately and half payable in one years time. The cash receipt expected are as follows:

Year (at end) Machine A Machine B 1 Rs 20000 2 60000 Rs 60000 3 40000 60000 4 30000 80000 5 20000 At 7% opportunity cost, which machine should be selected on the basis of NPV? Solution: Year 0 1 2 3 4 5 NPV Cash flows -100000 20000 60000 40000 30000 20000 Machine A PVF (7%, n) 1.000 .935 .873 .816 .763 .713 PV( Rs) -100000 18700 52380 32640 22890 14260 40870 Cash flows -60000 -60000 60000 60000 80000 Machine B PVF (7%, n) 1.000 .935 .873 .816 .763 PV( Rs) -60000 -56100 52380 48960 61040 46280

Machine B is having higher NPV and may be selected.

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Benefit-Cost Ratio (BCR) This ratio is obtained when the present worth of the benefit-stream is divided by the present worth of the coststream. Note that the absolute value of BCR will vary depending on the interest rate chosen. The higher the interest rate, the smaller the resultant benefit-cost ratio and, if a higher enough rate is chosen, the benefit-cost ratio will be driven down to less than 1. The BCR criterion suggests to us to accept all independent projects with a benefit-cost ratio of 1 or greater, when the cost and benefit streams are discounted at the opportunity cost of capital. The benefit-cost ratio discriminates against projects with relatively high gross returns and operating costs, even though these may be shown to have a greater wealth-generating capacity than that of alternatives with a higher benefit-cost ratio. Benefit = Total revenue before deductions The BCR = Benefit/Cost where > 1 is good Table 1. Impact of two programs of tuberculin screening of kindergartners and high school entrants in Santa Clara County, California, with baseline assumptions Cases prevented (discounted cases prevented) 11.1 (3.9) 37.2 (16.1) 48.3 (20.0) 7.9 (2.7) 28.9 (11.3) 38.6 (11.3) Net annual cost (net benefits)($) 125,628 70,276 195,904 1,119 (13,211) (12,092) Benefitcost ratio 0.31 0.76 0.58 0.97 1.08 1.06

Strategy

Group

Program cost($)

Benefits($)

Screen-all

Kindergartners High school entrants Both

183,868 287,452 471,320 42,218 155,925 198,143

58,201 217,176 275,377 41,099 169,136 210,235

Targeted screening

Kindergartners High school entrants Both

Internal Rate of Return (IRR) It is the discount rate that makes the NPW of the incremental net benefit-stream or incremental cash flow equal to zero. It is the maximum interest that a project could pay for the resources used if the project is to recover its investment and operating costs and still break even. It is the rate of return on capital outstanding per period while it is invested in the project. IRR criterion suggests to us to accept all independent projects having an internal rate of return equal to or greater than the opportunity cost of capital. In case of mutually exclusive projects, IRR can lead to an erroneous investment choice. This danger can be avoided either by using NPW criterion or by discounting the differences in the cash flow of alternative projects. Note that an internal rate of return of a series of values such as cash flow can exist only when at least one value is negative. Although IRR of different projects will vary, a project cannot with confidence be ranked on the basis of IRR. Only in a very general way will the IRR tell us that one project is better than another, in the sense that it contributes more to national income relative to resources used. If the discount rate remains 12%, we cannot know with certainty that the project with 25% return contributes relatively more to national income than the one with 15% return, and we cannot say with confidence that we should implement the project with 25% rate of return first. If we raise the opportunity cost (cut-off rate) to 18%, then the project with 15% economic rate of return drops out of the investment net and judgement in favour of a 25% IRR project will be easy. One cannot simply choose that discount rate which will make the incremental net benefit-stream equal to zero. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

There is no formula for finding the internal rate of return straightaway. We are forced to resort to a systematic procedure of trial and error to find that discount rate which will make the net present worth of incremental net benefit-stream equal to zero. The most difficult aspect of the trial and error procedure is making the initial estimates. If the estimate is too far from the final result, then several trials will have to be made to find two rates close enough together to permit accurate interpolation (interpolation is the process of finding a desired value between two other values). In practice, it is better not to interpolate between intervals greater than about five percent because the wider intervals can easily introduce an interpolation error. The formula of interpolation is given below: Lower IRR = discount rates + the difference {Present worth of incre- } Between two {mental net* benefits- }

Discount rates {stream (cash flow) at } {the lower discount rate } {Sum of the present worth} {of incremental net bene-} {fit-streams (cash flows)} {at the two discount } {rates (signs ignored) }

*Note that IRR can be calculated form any point in time; all points will give the same returns. It may be noted that interpolation between discount rates that bracket the true internal rate of return always somewhat overstates the true return. This is because the technique assumes, as we move from one discount rate to another, that IRR will change following a straight line but the true value of IRR follows a concave curvilinear function. IRR= L + A X ( H-L) A-B Where, L= lower discount rate H= higher discount rate A= NPV at lower discount rate, L B= NPV at higher discount rate, H Example, Year Cash flow 1 40000 2 60000 3 50000 4 50000 5 40000

PVF ( 16%, 5y) .862 .743 .641 .552 .476 Total

PVF ( 15%, 5y) .870 .756 .658 .572 .497

PV (16%) 34480 44580 32050 27600 19040 157750

PV(15%) 34800 45360 32900 28600 19880 161450

At 16%, NPV= Rs 157750- Rs 160000= Rs -2250 Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

At 15%, NPV= Rs 161540- Rs 160000= Rs 1540 IRR= 15% + _______1540__________ X (16- 15) 1540-(-2250) = 12.98% Net Benefit-Investment Ratio (NBIR) = (N/K Ratio) NBIR is simply the present worth of net benefits divided by the present worth of investment. To calculate this measure, simply divide the sum of the present worth after the incremental net benefits-stream has turned positive by the sum of the present worth of the negative incremental net benefits in the early years of the project. The reason for calculating the net benefit-investment ratio in this manner is that we are interested in an investment measure that selects projects on the basis of return to investment during the initial phases of a project. If the net benefit - investment ratio is 1 or greater, when we are discounting at the opportunity cost of capital, choose the project beginning with the largest ratio value and proceed until available investment funds are exhausted. It may be used to rank projects in those instances in which, for one reason or another, sufficient funds are not available to implement all the projects. It, thus, satisfies a frequent request of the decision-makers that projects be ranked in the order in which they should be undertaken. It is suitable for use when there is incomplete knowledge of all the projects. At any given discount rate we cannot, with confidence, use the net present worth, or the internal rate of return, or the benefit-cost ratio as ranking measures; our criterion tells us only to accept all projects which need the selection criterion for those three measures. The net benefitinvestment ratio is the only measure of the ones we have discussed that can be used with confidence to rank directly.

Table 1. Impact of two programs of tuberculin screening of kindergartners and high school entrants in Santa Clara County, California, with baseline assumptions Cases Net annual prevented BenefitProgram cost Benefits($) (discounted cost cost($) (net cases ratio benefits)($) prevented) 183,868 287,452 471,320 42,218 155,925 198,143 58,201 217,176 275,377 41,099 169,136 210,235 11.1 (3.9) 37.2 (16.1) 48.3 (20.0) 7.9 (2.7) 28.9 (11.3) 38.6 (11.3) 125,628 70,276 195,904 1,119 (13,211) (12,092) 0.31 0.76 0.58 0.97 1.08 1.06

Strategy

Group

Screen-all Kindergartners High school entrants Both Targeted screening Kindergartners High school entrants Both

ECONOMIC ANALYSIS OF PROJECTS Objectives of the Economic Analysis Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

Good management consists primarily of making wise decisions; wise decisions in turn involve making a choice between alternatives. Engineering considerations determine the possibility of a project being carried out and point out the alternative ways in which the project could be handled. Economic considerations also largely determine a project's desirability and dictate how it should be carried out. A feasibility study determines either the which or the whether of the proposed project: which way to do it, or whether do it at all. In an engineering sense, feasibility means that the project being considered is technically possible. Economic feasibility, in addition to acknowledging the technical possibility of a project, further implies that it can be justified on an economic basis as well. Economic feasibility measures the overall desirability of the project in financial terms and indicates the superiority of a single approach over others that may be equally feasible in a technical sense. In the study, the project is considered in an engineering sense. The ultimate objective of the economic analysis is to provide a decision-making tool which can be used not only for the pilot project but also for demonstration purposes. Procedure for Economic Analysis Most engineers can recall the "scientific method", which involves five distinct phases: observation, problem definition, formulation of hypothesis, experimentation, and verification. A similar sequence of ten clearly defined steps is involved in carrying out the economic analysis of a project: a.Understand the problem. b. Define the energy integrated system. c. Collect the data d. Interpret the data. e. Devise the alternatives. f. Evaluate the alternatives. g. Identify the best alternative h. Suggest the best alternative to the director of the project and get the feedback information. i. Monitor the results. j. Determine that the energy integrated system could be disseminated, including where, and under what conditions. Cost-Benefit Analysis - to describe and quantify the social advantages and disadvantages of a policy in terms of a common monetary unit Evaluation on the basis of Benefits Benefit refers to the addition to the flow of national output occurring from a project. Real and Nominal Benefits Direct and Indirect Benefits Tangible and Intangible Benefits

Evaluation on the basis of Costs Project Cost Associated costs Real and Nominal Costs Primary or Direct Costs Indirect or Secondary Costs2 Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

Social Cost Benefit Analysis (SCBA) - Economic analysis - A methodology developed for evaluating investment projects from the point of view of the society (or economy) as a whole. - Used primarily for public investment SCBA aids in evaluating individual projects Spells out broad national economic objectives Allocation of resources to various sectors SCBA is concerned with tactical decision making within the framework of broad strategic choices defined by planning at the macro level.

Social Cost Benefits Analysis means to analyze the social cost and total social benefits if we accept any project. We all know that for completing the big project, we need biginvestment. In social cost benefit analysis (SCBA), we see whether return or benefits on this investment are more than its cost from point of view of society in which we are living. In public investment, we analyze and compare government expenditure with total benefits to society through SCBA. It is also good technique of financial evaluation of a project because we leave that project whose benefits to society are less than total cost which will to society because all resources are from society. Problems which can be solved by Social Cost Benefits Analysis 1st Problem: Rationale for SCBA a) Market imperfection : We will not analyze social cost benefit; we can not find market imperfections. After study of market rates following factors come in to our knowledge. i) Rationing factor : It means some of raw material prices are controlled by Govt. So, it may increase our project cost but its social benefit will go to poor community. ii) Regulation for providing minimum wage factor: It also affects social cost and benefits of any project. Because company must have to pay this minimum wages. iii) Foreign Exchange Regulations factor: Sometime, we have to deal at currency rate which is less than actual market rate due to regulation on FOREX. So, we should analyze this point also. b) Externalities : Externalities are non-cash or benefits which an organization suffer or get if it starts the project. For example, if govt. makes road near your project plant, you can get this facility without any payment. On the other side, if any other organization is polluting and spreading diseases, its cost may suffer due to absence of your employee for going to hospitals. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

c) Tax and Subsidies: Tax is payment on the earning of the project and it will reduce our overall benefits. On the other hand, if govt. gives us subsidy for operating any project, it will count for our cost benefit analysis. 2nd Problem: What is net benefit to society from a project? With UNIDO approach, we can evaluate net benefit from any project. Formula is given below

3rd Problem: To Know the Effect of using one more Unit of Resources With shadow price, we know the effect of using one more unit of resources on the social cost and benefits. Shadow pricing is relating to decision of project manager. Before accepting the project, we have to find the price if we have to use extra unit of resources. Suppose, we have to use one more hour of labor, what will we pay and what will its effect on social benefits. UNIDO APPROACH UNIDO: United Nations Industrial Development Organization Approach UNIDO approach is one of the methods of calculating Social cost benefit analysis (SCBA), infact very popular. Normally we calculate financial benefits from a project while evaluating it, but this method calculates economic benefits from the project. Although earlier it was commonly used by government organizations but now it is being used by private players also. In this analysis the monetary prices are replaced by shadow prices. Shadow prices are prices at perfect market conditions, also called as economic prices. Thus the market prices are replaced by the Economic prices and then the benefit or returns are calculated. In addition to this, adjustment is made for Externalities (+ve like road facility, hospital facility etc. or -ve externalities like pollution), savings (a rupee saved is valued more than a rupee consumed), redistribution of income (a rupee distributed to poor is valued more than a rupee distributed to rich) ,taxes are not considered and merits. Then finally the economic rate of return is calculated by the same method as IRR is calculated. UNIDO method involves five stages: 1. Calculation of financial profitability measured at market prices Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

2. Obtaining the net benefit of the project measured in terms of economic (efficiency) prices 3. Adjustment for the impact of the project on savings and investment 4. Adjustment for the impact of the project on income distribution 5. Adjustment for the impact of the project on merit goods and demerit goods Net benefit in terms of Economic (Efficiency) prices: - Also referred to as shadow prices - Market prices represent shadow prices only under conditions of perfect markets prices - So, shadow prices need to be developed and economic benefit need to be measured in terms of these

Shadow Pricing Choice of Numraire The unit of account in which the value of inputs or outputs is expressed o What unit of currency (domestic or foreign)? o Current values or constant values? o With reference to which point present or future? o In terms of consumption or investment? o With reference to which group? UNIDO Numraire: net present consumption in the hands of people at the base level of consumption in the private sector in terms of constant price in domestic accounting unit. Concept of Tradability For tradable goods, the international price is a measure of its opportunity cost to the country o Substitute import for domestic production and vice versa o Substitute export for domestic consumption and vice versa Hence, the international price, also referred to as the border price, represent the real value of the good in terms of economic efficiency. Tax Sources of Shadow Prices UNIDO approach suggests three sources of shadow pricing: Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

i. Increase or decrease the total consumption in the economy ii. Decrease or increase production in the economy iii. Increase or decrease export or import Externalities Characteristics: It is not deliberately created by the project sponsor but is an incidental outcome of legitimate economic activity It is beyond the control of the persons who are affected by it, for better or for worse It is not traded in the market

Examples of beneficial external effects: An oil company drilling in its own fields may generate useful information about oil potential in the neighboring fields The approach roads built by a company may improve the transport system in that area The training program of a firm may upgrade the skills of its workers thereby enhancing their earning power.

Can be measured by indirect means: What the neighboring oil fields would have spent to obtain the information The value of better transport may be estimated in terms of increased activities and benefits derived from these. Benefit from the training program may be estimated in terms of the increased earning power of workers

Examples of harmful external effects: A factory may cause environmental pollution and people living adjacent to it may be exposed to health hazards Airport in a certain area may raise noise level considerably in the neighborhood A highway may cut a farmers holding in two adversely affecting his physical output.

Can be measured by indirect means: Cost of pollution in terms of loss of earnings as a result of damage to health and cost of time spent for coping Cost of noise from difference in rent Effect of highway on consumer willingness to pay for output

Measurement of the Impact on distribution Groups UNIDO approach seeks to identify income gains and losses by the followings: Project Other private business Government Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

 Workers Consumers External Sector ENVIRONMENTAL APPRAISAL OF PROJECTS Feasibility Approach Whether the proposed project will meet the minimum environmental standards (legal)of the country? Going beyond minimum standard Whether it can go beyond minimum standards and achieve environmental certification such as ISO 14,000(general) and LEED certification (building/construction)? Whether the project/company can Demonstrate leadership in the field of environmental protection/augmentation by making it part of its core business?(ecological entrepreneurship). Approach to Environmental Feasibility Reactive approach (majority) EIA carried out with sole purpose of gettingenvironmental clearance. Proactive approach (small minority) EIA as a tool to improve planning process EIA as an opportunity to internalize externalities and gain long term benefits: Improved cost-effectiveness Earn carbon credits Recovery of resources from waste streams Better and safer work environment Less occupational hazards Better image as responsible citizen of the country For finding business's available opportunities and risks, environmental appraisal is needed. Environmental appraisal means to analyze all the factors of business environments. Following are the main stages involved in environment appraisal: 1st Stage : Factors Affecting Environmental Appraisal Following are the main factors affecting environmental appraisal a) Factors relating to environment We can not evaluate equally two organisation in same environment. we have to study every organisation's complexity and flexibility. b) Factors relating to Organisation Age of organisation will affect our environmental appraisal. We also see the organisation's size for doing business and its market type. What are the services and products, it is providing? c) Factors Relating to Strategies Policy makers play important role in appraisal. Age, education and experience of policy maker will affect the environmental appraisal. 2nd Stage : Identification of Environmental Factors Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

In second stage we have to identification of environmental factors on the basis of following issue a) Critical Issues b) High Priority Issues c) Low Priority Issues 3rd Stage : Structuring the Environmental Appraisal This is the third stage of environmental appraisal. In this stage, we create the structure of environmental appraisal. One side of structure will be our strengths and other side will be our weaknesses. By comparing both, we estimate our surviving power in the environment of business. RISK ANALYSIS OF A PROJECT Project risk analysis is concerned with the assessment of the risks and uncertainties that threaten a project. Project risk analysis has a broad range of applications, just as the definition of a project is broad. For the purposes of this guide, we consider a project to be the following: A project is any set of inter-related tasks designed to achieve a certain goal or set of goals, with a limited set of resources, to a particular quality standard and within a particular budget and time frame. There are two main elements that confound our ability to determine whether a proposed project, or a project already underway, will achieve its goals within the set restrictions:

The general uncertainty surrounding the duration and cost of tasks within the planned project. The set of risk events that may occur, which inhibit the smooth progress of the project.

Typically, a project risk analysis consists of analyzing schedule and cost risk, though other aspects like the quality of the final product are sometimes included. There will also often be an analysis of the cash flow of the project, especially at the conception and bidding stages. A cost risk analysis consists of looking at the various costs associated with a project, their uncertainties and any risks or opportunities that may effect these costs. Risks and opportunities are defined as discrete possible events that will increase and decrease the project costs respectively. They are both characterised by estimates of their probability of occurrence and the magnitude of their impact. The distributions of cost are then added up in a risk analysis to determine the uncertainty in the total cost of the project. A schedule risk analysis looks at the time required to complete the various tasks associated with a project, and the interrelationship between these tasks. Risks and opportunities are identified for each task and an analysis is performed to determine the total duration of the project and, usually, the durations until specific milestones within the project are achieved. A schedule risk analysis is generally more complex to perform than a cost risk analysis because the logical connections between the tasks have to be modelled in order to determine the critical path. Cost and duration are linked together A project's cost and duration are, in reality, linked together. Tasks in a project are often quantified by, among other things, the number of person weeks (amount of work) needed to complete them. The duration of the task is then equal to the person weeks/people on the job and the cost equals person weeks * labour rate. Costs and durations are also linked if the model includes a penalty clause for exceeding a deadline. Cost elements and, particularly, schedule durations are also often correlated. Correlation, or dependency, modelling is described in detail here. It is important to be aware that dependencies often exist in a risk analysis model and failure to include them in an analysis will generally underestimate the risk. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

A project risk analysis is often completed after a more rudimentary (deterministic) analysis that uses singlepoint estimates for each task duration and cost. A comparison of the results of this deterministic analysis with those of the risk analysis, where distributions have been used to model uncertainty components, often surprises people. Somehow, one expects that a deterministic analysis based on values one thinks most likely to occur should produce results that equate to the mode of the risk analysis output distribution. In fact, it turns out that a risk analysis model will provide a mode and mean that is nearly always greater than the deterministic model result. Sometimes the risk analysis output distribution will not even include the deterministic result! The main reason for this is that the distributions one assigns to uncertainty components are nearly always right skewed, i.e. they have a longer tail to the right than to the left. This is because there are many more things that can go wrong than go right, and because we are always trying to place emphasis on doing the job as quickly and cheaply as possible. Thus the model distributions nearly always have more probability to the right of the mode than to the left which means that, in the aggregate, for most models one is much more likely to have a scenario that exceeds the deterministic scenario. A schedule risk analysis will diverge even more from its deterministic equivalent than a cost model because any task whose commencement depends on the finish of two or more other tasks begins at the maximum of the samples from the distributions of finish dates of the other tasks, not the maximum of their modes. PROJECT IMPLEMENTATION Implementation is the stage where all the planned activities are put into action. Before the implementation of a project, the implementors (spearheaded by the project committee or executive) should identify their strength and weaknesses (internal forces), opportunities and threats (external forces). The strength and opportunities are positive forces that should be exploited to efficiently implement a project. The weaknesses and threats are hindrances that can hamper project implementation. The implementors should ensure that they devise means of overcoming them. Monitoring is important at this implementation phase to ensure that the project is implemented as per the schedule. This is a continuous process that should be put in place before project implementation starts. As such, the monitoring activities should appear on the work plan and should involve all stake holders. If activities are not going on well, arrangements should be made to identify the problem so that they can be corrected. Monitoring is also important to ensure that activities are implemented as planned. This helps the implementors to measure how well they are achieving their targets. This is based on the understanding that the process through which a project is implemented has a lot of effect on its use, operation and maintenance.

Project Implementation Plan

1. 2. 3. 4. 5. Project Initiation Planning Project Execution Project Control Project Closing

1. Project Initiation

During this phase the project is formally recognized and resources assigned. At the end of Project Initiation phase the following deliverables are developed:
Project Charter: A document that formally recognizes the existence of the project and it refers to business Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

need that project was undertaken to address. Project Manager Identified/Assigned: During this phase a project manager is assigned to the project Contractual Provisions: All factors that limit the project management teams options such as contractual provisions will be identified. 2. Planning

This is the major phase of the project management process. The final output of this phase is the Project Plan. The following core processes will be involved in developing the project plan: Scope Planning: Developing a written scope statement Scope Definition: Sub dividing the major project deliverables into smaller, more manageable components Activity Definition: Identifying the specific activities that must be developed various Activity Sequencing: Identifying and documenting interactive dependencies Activity Duration Estimating: Estimating the number of work periods, which will be needed to complete individual activities Schedule Development: Analyzing activity sequences, activity durations, and resource requirements to create the project schedule Resource Planning: Determining what resources (people, equipment, materials) and what quantities of each should be used to perform project activities. Cost Estimating: Developing an estimate of the costs of the resources needed to complete project activities. Cost Budgeting: Allocating the overall cost estimate to individual work items. The project plan will also include the facilitating processes such as: Quality Planning: Identifying the quality standards that are relevant to the project and determining how to satisfy them. Organizational Planning: Identifying, documenting, and assigning project roles, responsibilities and reporting relationships. Staff Acquisition: Getting the staff needed assigned to and working on the projects. Communications Planning: Determining the information and communication needs of the stakeholders; who need what information, when will they need it, and how will it be given to them. Risk Management Plan: A plan that determines the risks, quantifies the risks and develops enhancements steps to address the risks. Procurement Planning: Determining what to procure and when.
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3. Project Execution

This phase includes executing the core processes and facilities described in the planning phase: Project Plan Execution: Carrying out the project plan by performing the activities included therein. Scope Verification: Formalizing acceptance of the project scope. Quality Assurance: Evaluating overall project performance on a regular basis to provide confidence that the project will satisfy the relevant quality standards. Team Development: Developing individual and group skills to enhance project performance Information Distribution: Making needed information available to project stakeholders in a timely manner Contract Administration: Managing the relationship with the client
4. Project Control During this phase the project performance is measured regularly and variances from the plan identified. This phase includes the following processes: Performance Reporting: Collecting and disseminating performance information. This includes status reporting, progress measurement, and forecasting. Scope Change Control: Controlling changes to project scope Schedule Control: Controlling changes to the project schedule Cost Control: Controlling changes to the project budget Quality Control: Monitoring specific project results to determine if they comply with relevant quality standards and identifying ways to eliminate causes of unsatisfactory performance. Risk Response Control: Responding to changes in risk over the course of the project. 5. Project Closing

This phase consists of verifying and documenting project results to formalize acceptance of the project by the sponsor, client, or customer. It includes collection of project records, ensuring that they reflect final specifications, analyses of project success and effectiveness, and archiving such information for future use. The following documents are developed in this process:
Formal Acceptance: Documentation that the client or sponsor has accepted the project (or phase) Project Archives: A complete set of indexed project records. Lessons Learned: The cause of variances, the reasoning behind the corrective action chosen, and other types of lessons will be documented that become part of the historical database for both this project and other projects of SDF CONSULTING ALLIANCE, INC.. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

REHABILITATION OF SICK UNITS Industries that have gone sick have far-reaching consequences on the economy of the nation. The following are the bad effects of industrial sickness. There is under utillisation of capital assets. Though under utilisation of capital assets is a drain on the capital of any nation, it very much affects the capital formation process of less developed and developing countries. The entrepreneurship level declines. In economics land, labour and capital are referred to as the factors of production. It is only entrepreneurship of project promoters that brings together the factors of production for accomplishing the task of nation building. Increase in industrial sickness discourages entrepreneurship. The investor confidence reaches a lower ebb. Thus, capital is not put to productive use. Industrial sickness results in large scale unemployment and industrial unrest. - Profitability of banks and financial institutions gets affected since they dont get back their funds invested in projects that have gone sick. Nor do they earn interest on their invested funds. Since their funds get blocked in sick units banks/financial institutions could not recycle their funds with the result that even a good project can not be funded by them. Therefore, prevention of sickness and rehabilitating sick projects assume greater importance. DEFINITION OF SICKNESS The sick industrial companies (Special provisions) Act, 1985, as amended in 1993 defines sick industrial company as an industrial company (being a company registered for not less than five years) which has at the end of any financial year accumulated losses equal to or exceeding its entirenetworth. Section 3 (1) (ga) of the amendment act, 1993 defines Net worth as the sum of the paid-up capital and free reserves, while the term free reserves means all reserves credited out of the profits and share premium account, but does not include reserve out of re-valuation of assets, write back of depreciation provisions and reserves created out of amalgamations. Government companies having State or Central Government share holdings of 51% or more are kept outside the purview of the Act. Also small scale industrial units and Ancillary units are kept outside the purview of the Act. BOARD OF INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR) Board of industrial and Financial Reconstruction (BIFR) was established by the Central Government, under section 3 of the Sick Industrial Companies (Special provisions) Act, 1985 and it became fully358 Project Management operational in May, 1987. BIFR deals with issues like revival and rehabilitation on sick companies, winding up of sick companies, institutional finance to sick companies, amalgamation of companies etc. BIFR is a quasi judicial body. The role of BIFR as envisaged in the SICA (Sick Industrial Companies Act) is: (a) Securing the timely detection of sick and potentially sick companies (b) Speedy determination by a group of experts of the various measures to be taken in respect of the sick company (c) Expeditious enforcement of such measures BIFR has a chairman and may have a maximum of 14 members, drawn from various fields including banking, labour, accountancy, economics etc. It functions like a court and has constituted four benches. Reporting to the BIFR The Board of Directors of a sick industrial company is required, by law, to report the sickness to the BIFR within 60 days of finalisation of audited accounts, for the financial year at the end of which the company has become sick. BIFR has prescribed a format for this report. While reporting by a company of its sickness to the BIFR is mandatory as per the provisions of law, any other interested person/party can also report the fact of Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

sickness of a company to the BIFR. Such interested parties may be the financial institution/bank that has lent loan to the company, the RBI, the Central/State Governments. The BIFR has prescribed a different format for the report to be submitted by such interested parties. When a company has been financed by a consortium of banks, it is the Lead Bank that should report to the BIFR about the sickness under advice to other participating banks in the consortium. Enquiry by the BIFR When a case is referred to the BIFR, it is verified by the Registrar of the BIFR as to whether the facts of the case falls within the provisions of the Sick Industrial (Special provisions) Act, 1985. If so, the BIFR accepts the case and notifies a date for hearing the case. For rehabilitating a sick unit, cooperation of various connected agencies is a must. This co-ordination is achieved by the BIFR. The BIFR invites the representatives of the informant sick company, the representatives of concerned financial institutions and commercial banks, representatives of the Central/State Governments, trade union representatives etc., to the hearing and inquiry is made under section 16 of the Act. After the hearing, the BIFR itself may conduct a study or entrust the work to an operating agency appointed by it to determine whether the company is in fact sick. Normally, the lead financial institution (IDBI, ICICI, IFCI, SFC) or the lead public sector bank that has financed the company is nominated as the operating agency. Lead institution is one that has major financial stake in the sick company. The enquiry is to be completed within 60 days. On completion of the enquiry,the BIFR will declare whether the company is sick or not. Revival Package Once a company has been found sick, the BIFR may grant time to the sick company to enable it to make its networth positive and bring the company out of sickness, without any external financial assistance. If it is found infeasible for company to make its networth positive with out any external financial assistance, or if the BIFR decides that the company can not make its networth positiveRehabilitation of Sick Units within a reasonable time, the BIFR will direct the operating agency to prepare a suitable revival package for the restoration of the health of the company. The operating agency prepares a suitable revival package. The revival package may vary from case to case depending on the nature of the problem and may include additional financial assistance, postponement of recovery of loan already lent by banks and financial institutions, change in management, amalgamation, sale of redundant assets, lease of assets or any other suitable measure. The revival package should be submitted to the BIFR within a time limit of 90 days or such extended period as may be granted by the BIFR. On submission of the revival package by the operating agency, the BIFR sends the revival package in a draft form to all the interested parties (i.e., the sick industrial company, the banks/financial institutions who have given financial assistance to the sick company, the operating agency,the transferee company (if there is a recommendation in the revival package for amalgamation) etc.,eliciting their views/suggestions on the revival package. The BIFR will also publish particulars of the draft revival package in newspapers inviting suggestions/objections, if any, from the shareholders of the sick company, creditors and employees of the sick company, transferee company and any other interested party. On receipt of views/suggestions/objections on the draft revival scheme, the BIFR may, if deemed fit, afford an opportunity to the interested parties to be heard. After careful examination of all the aspects, the BIFR will sanction the revival scheme with or without any modifications. The scheme, as sanctioned, will come into force from the specified date and all the concerned parties are required to abide by the provisions of the revival scheme. The BIFR may also order the operating agency to implement the sanctioned revival scheme. When the revival package as finalized by the BIFR contains further financial assistance or reliefs, concessions, sacrifices etc. (for example, sanctioning of additional financial assistance for the purchase of certain balancing equipments, waiving of penal interest/compound interest charged, waiving of interest in part or full, waiver from sales tax etc.) the scheme will be circulated to the concerned agencies for their consent to be received within a period of 60 days. Once the various agencies involved in the revival scheme give their consent to the scheme, it will become binding on the consenting parties to implement the recommendations contained in the revival scheme. However, when any of the involved agency does not give its consent to the scheme, the BIFR has no powers to force the agency to accord its consent. If in the opinion of the BIFR, the Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

revival package can not be successful with out the consent from one or more of the agencies involved, the BIFR has no other option but to recommend for winding up of the company. In fact, the threat of actual winding up of the company is the only weapon in the hands of the BIFR to make the various agencies to extend suitable reliefs and concessions as may be deemed necessary by the BIFR. BIFR itself cannot initiate the winding up proceedings. It can only forward its opinion to the concerned High Court and the High Court will initiate the winding up proceedings. CAUSES OF SICKNESS Prevention is better than cure is the proverb that reflects the need for knowing the likely causes of industrial sickness so that one can plan to avoid the same. Just as human beings fall sick by two ways, viz., either born sick or acquiring sickness during growth, an industry can either run into trouble even during the implementation stage itself or develop sickness during its lifetime. The causes of sickness can be categorized into two viz., internal causes and external causes. - Internal causes are those that are internal to the organization over which the management of the organization has control. Sickness due to internal causes can be avoided if the management is shrewd enough to identify the causes and eliminate them at their initial stage itself. External causes are those that are external to the organization over which the management of the organization has little control. Governments plans and actions, failure of monsoon which affects agriculture and allied industries, emergence of strong competitors etc., are some of the external factors. Though sickness may be caused either by internal or external factors, sometimes, the management may be able to revamp its organization, plan suitable strategies and take on the external factors to reduce their impact. The areas/stages in which these causes may exist and their effects can be studied under the following heads. 1. Project formulation. 2. Project implementation. 3. Production. 4. Marketing. 5. Finance. 6. General and personnel administration. Project formulation: Most of sickness is attributed to ill-conceived projects. A project that may, prima-facie present a rosy picture may have many hidden pitfalls. Irrational, hasty, over-optimistic decisions may result in choosing projects that may have inherent weaknesses. A project that has an inherent weakness is very unlikely to be a successful project. The existence of a few players in the chosen field who are doing well, is not always a sound proof that the project will be a success. The existing players may have their own special advantages due to which they could have overcome the hurdles and pitfalls that are present in the project. A thorough investigation of the project during the identification and formulation stage is the sinequa-non of any project proposal. Think before you actis the proverb that is worth practising. Any amount of time and efforts spent at this stage is worth it as any hasty decision made at this stage will be very costly. External factors play a major role in project formulation stage. The present stage of and the future course of the external environment are to be carefully studied for their influence on the project. Project implementation: Delayed implementation gives a project a difficult start. Unduly long time taken for project implementation results in time-overrun which is invariably followed by costoverrun. Cost-overrun has the ill effect of affecting the financial viability of the project since a project that is viable at a capital cost of say Rs. 100.00 lakhs may prove to be unviable when the cost raises to, say Rs. 150.00 lakhs due to cost-overrun. The problem of cost-overrun will get more compounded if the finance necessary to meet the increased cost can not be arranged in time. Any delay in arranging for the finance needed to meet the cost overrun will only further tend to increase the cost and this may land the project in trouble leading eventually to the death of the project and the project may not take off. The following are some of the problem areas in implementation stage.

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The promoters may not be in a position to bring in funds to the required extent in time. In general, Banks/Financial institutions, of late, insist that the promoters shall bring in their capital contribution to the project upfront before release of loan. Any delay in bringing the stipulated capital by the promoters will delay the drawal of loan, which will lead to delay in implementation. The loan disbursement may be delayed if the promoters are not able to comply with major terms and conditions of the loan agreement. For example, the loan agreement, inter-alia, may stipulate that collateral security to cover, say 25% of the loan amount shall be offered. The value of the property that the promoters offer as collateral security to the bank/financial institution may be short of the requirement. Or, when the value of the property meets the requirement, there may be other impediments like legal hurdles for clear, unencumbered title to the property etc. The cost of different components of project-cost may increase due to price escalation. The cost provided for some of the elements of project-cost might have been underestimated. It is also likely that some elements which are essential might have been left out. These factors lead to cost-overrun which may delay the project implementation. There may be delay in getting power connection, water connection, approval from local bodies, approval from pollution control authorities etc., which may postpone project implementation/ commencement of production. When more than one institution are involved in funding a project, there may be delay in tying up the financial arrangements with the different institutions. This is more so when term loan and working capital loan are provided by two different institutions. The institution that is to lend working capital loan may wish to see that the project comes through successfully and reaches a ready-to-start stage before committing sanction of working capital finance. There is likelihood of the capital investment on the project having been fully made and the project waiting for sanction/release of working capital finance to commence commercial operations. Any delay in release of working capital finance due to procedural formalities involved will harm the project heavily, as the capital investment will be lying idle, without earning any return. Rethinking of the project during the course of implementation, like changes in production process, use of alternate raw material, changes in technology etc., may hold up project implementation. Over spending on travel, entertainment and non-productive assets like guest houses, compound walls, staff quarters etc., may result in cost-overrun, which in turn may delay project implementation. Adverse foreign currency exchange rate fluctuations may affect projects involving imported plant and machinery and may result in cost-overrun. This is an external factor over which the management has no control. However, a prudent management can guard against adverse foreign currency movement by entering into forward contracts etc.,

Production: The major aspects of production that may lead to sickness are Increase in the cost of production. - Decrease in the quantity of production. - Quality of product not meeting the standards/customer expectation. Producing more quantity than can be sold, leading to accumulation of stock. The increase in cost of production may be due to external factors like increase in the cost of raw materials, increase in the cost of consumables, power, etc., or due to internal factors like improper choice of raw material/raw material-source, wrong choice of production process etc. Decrease in quantity of production may be due to defects/under performance of plant and machinery, defects in production process etc., Defects in quality of products may be due to defects in raw material used, or due to unsatisfactory performance of machinery or due to ineffective supervision. Inspite of the raw material, machinery and supervision being good, the advent of new technology may bring in product-obsolescence and the product may loose customer preference. Lack of proper planning of product mix and lack of co-ordination between production and marketing departments may lead to piling up of inventory, which will only add to the cost of the product. Marketing: Marketing occupies an important position in the organization of any business unit. The prime objective of marketing, is the satisfaction of customers needs. Marketing functions include all functions Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

necessary to satisfy the customers. Marketing includes all activities starting with the idea of producing a product to satisfy the needs of the consumers and ending with the satisfaction of the consumer even after the product is sold. Thus, it involves planning and producing to meet the customer needs and also servicing the customers after selling the product. In the present day situation where buyers market has come to stay almost for all products, any organization that does not give due importance to marketing is bound to find its sales turnover taking a downward trend. The problem areas may be summarized as under. Introduction of better substitute products by competitors. - Absence of product innovation and new product development. - Failure to maximize the potential of existing products. - Poor and inadequate distribution system. - Failure to meet the agreed delivery schedules. Absence of correct costing and correct pricing system for the products. Finance: Finance is the lifeblood of business. It links and passes through all areas of a business unit. The problem areas may be summarized as under - The promoters might have chosen a project which is beyond their financial capacity. This often happens due to over ambitious approach of entrepreneurs. A bigger project needs a bigger investment and accordingly a higher promoters contribution in absolute terms. If the promoters are not able to mobilize their contribution, with the sole idea of implementing the project, they often resort to borrowings, invariably at higher interest rates with the hope of clearing the highcost borrowings once the project takes off (a hope that rarely comes through!). - Funding a project with a higher debt component than that it can safety bear is another reason for sickness, since such projects will not be able to service the high interest charges. On the other hand, inadequate long-term debt component will also be detrimental since the project will either not take off due to the promoters inability to raise the required capital or will be funded by high cost short term borrowings which is harmful. - Using shorterm funds for acquiring fixed assets is an area of concern. This will put the liquidity position of the business in strain when the shorterm obligations become due for repayment. - Improper inventory management policy will lead to holding huge stock of finished products, late realization of debts from sundry debtors, lack of proper planning to pay to creditors of raw materials, etc., which will all have telling effects on the operation of a business unit. General and personnel administration: The problem areas are summarized as under: Dispute/difference of opinion among the promoters/directors. - Poor industrial relations leading to labour unrest. Lack of motivation and co-ordination. Lack of manpower planning. Lack of assigning equal importance to all areas of business. It is generally observed that the main promoter takes more interest in the area of his specialisation and ignores other aspects of the business. For example, technocrat entrepreneurs, by their nature are more inclined to improving the technical aspects of the product. The result may be that the product will not be a commercial success though it may have technical excellence. - Projects that solely depend upon the skills of a key promoter may find it difficult to sail through in the event of death or ill-health of the key person. Leading indicators of sickness: Just as diseases are identified by certain symptoms, industrial sickness can be identified by the following symptoms. These symptoms act as leading indicators of sickness, and if immediate remedial actions are not taken, the sickness will grow to the extent that the organization will find its natural death. - Continuous reduction in turnover. - Piling up of inventory. - Continuous reduction of net profit to sales ratio. Short term borrowings at high interest rate. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

Continuous cash losses leading to erosion of tangible net worth. Default in payment of interest on borrowings and default in repayment of term loan instalments. The sundry debtors as well as the sundry creditors keep growing and reaching a disproportionately high level. Approaching the banker for temporary over draft at frequent intervals. High turnover of personnel, especially at senior levels. Change in accounting procedure with to view to window dressing. Delay in finalization of accounts.

PREDICTION OF SICKNESS Though symptoms of sickness can be observed from the leading indicators, such indicators may only suggest that the unit is a potentially sick unit. However, it is not easy to arrive at a definite conclusion about the impending sickness on the basis of the leading indicators of sickness. Considerable research work has been done to identify other measurable parameters that can be used for predicting sickness. The research, in general has been done by two different methods of analysis.They are, - Univariate Analysis And -Multivariate Analysis Univariate Analysis Univariate analysis aims to predict sickness on the basis of a single financial ratio. Though many financial ratios were used by analysts for predicting sickness, there was no consensus as to what the most appropriate ratio is for the prediction of sickness. Such a situation prevailed till William H. Beaver published his study on univariate analysis in the year 1966. Beaver examined the predicative power of 30 different financial ratios by choosing a sample of 79 firms that had become sick and 79 firms that were healthy for the same period of time. The sample was so chosen that for each failed (sick) firm, a healthy firm operating in the same industry and having comparative size was included in the sample set. For both the set of samples of 79 firms each, Beaver examined the behaviour of 30 different financial ratios during the period of 5 years prior to the failure. The main finding of Beaver was that the ratio that is most useful in predicting impending sickness is the ratio of cash flow to total debt, since this ratio showed the minimum error in his prediction. Multivariate Analysis Univariate analysis examines the predictive power of individual financial ratios. The joint effect of more than one financial ratio in predicting sickness is not studied in univariate analysis. Multivariate analysis, on the other hand, aims to predict industrial sickness by studying the combined influence of several financial ratios. Need for revival/rehabilitation programme: A project that has gone sick would have already swallowed huge scarce resources. In order to utilize the assets and infrastructure already created for the project, the project is to be revived from sickness. There is no doubt that the project would have had some weak areas which could have been the cause for the sickness. Inspite of this, rehabilitating the sick project is worth considering since the cost of setting up a new unit might be substantially higher as compared to the cost of rehabilitating a viable sick unit. Of course, having known the factors that were responsible for leading the unit to sickness, they can be properly addressed in the revival package. Revival of a sick unit may be necessitated or justified in view of the under lying socio-economic objectives such as the following: (a) The project may be in a sector that is vital to the economy. Abandoning the project may lead to other socioeconomic ill effects. (b) Many ancillary units may be dependent on the unit that has gone sick. Unless the sick unit is revived, it will have a chain effect of all such dependent ancillary units becoming sick. (c) Banks and financial institutions would have locked up their money in sick ventures. In order to get back the investment of banks and financial institutions, the project is to be revived and made to work again and generate surpluses. Though banks and financial institutions that support a revival programme Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

for the sick unit may be required to fund the project again, they will be prepared to implement revival packages if they are convinced that they will, apart from getting back their present investment with interest, also get back their earlier investments that are locked up. Viability study for rehabilitation proposal: Once bitten, twice shy! - Before attempting to rehabilitate a sick unit, a detailed and thorough viability study is to be undertaken to ensure that the revival programme will really bear fruits. It is not advisable to venture upon any revival programme if there are gray areas that need further study. The viability study shall enquire into the technical, commercial, managerial and financial aspects. Technical Appraisal (a) Study the manufacturing process used by the unit. Ascertain if any new process has since been developed. Explore the necessity of switching over to the latest manufacturing process and study the cost, benefit aspects of such switchover. (b) Study the production capacity of different production sections and checkup if the production capacity of different sections are perfectly balanced. If there is any production section, which has a lower capacity than that required for perfect balancing, the overall capacity of the plant can be significantly increased without huge investments, by adding the required balancing machinery. (c) Explore the possibilities of adding additional/special features to the products that will add competitive edge to the product. Also examine the need for changing the product-mix that is in tune with the market requirement. (d) Find out if any plant/equipment need major repair/overhauling to improve its operating efficiency. (e) If the locational disadvantages outweigh all other factors, the scope for shifting the location to an advantageous place may be examined and the consequent cost-benefit analysis studied. This may be possible if the firm is functioning in a leased premises and owns only the plant and machinery. If the unit is located in own building, the proposal for shifting the plant and machinery to a leased building in an advantages location may also be studied. The building owned by the firm can be leased out to some other firms. The long-term cost benefit analysis will give lead to the acceptability or otherwise of such a proposal. (f) Study the modifications required, if any in the plant layout so that the material handling time can be reduced which may improve the efficiency of operations and improve theoutput. (g) Examine if any of the manufacturing operations that are done in house can be entrusted to outside agencies, which may result in cost reduction. Commercial Appraisal (a) Commercial failure of a project will be mainly due to problems relating to the product itself viz., defects/imperfections in product design which may lead to consumer resistance. Such situations indicate that the products offered by competitors have better features that attract consumers. Hence, the scope for product improvement and the cost involved are to be studied. (b) In spite of consumer acceptance of the product, if the project has gone sick, it is likely that the profit margins might be low. Minor modifications in designing and packing the product with upward revision in price may be accepted by the market which may bring better returns to the company. This aspect may be studied by carrying out test marketing for the improved product. (c) Every product follows a life cycle which passes through four stages viz., - Introduction. - Rapid expansion. - Maturity.and - Decline. Profit margins shrink and signs of sickness appear when the product is in its decline stage. Product innovation can only sustain the product at this stage. The decline once started can not be contained for long inspite of product innovations. Product diversification may prove to be a feasible solution. Hence for rehabilitating a unit whose product has already reached its decline stage, the feasibility of switching over to diversified products making use of the existing production facilities is to be studied. The cost-benefit analysis of additional investments needed for product diversification and additional benefits that may accrue are to be analysed. Management Appraisal: A good project in the hands of an ineffective management turns the project bad. Similarly a good management is capable making a not-so-good project, a success. Hence the first thing under Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

management appraisal is to study whether the sickness is due to reasons beyond the control of the present management or due to ineffective management. If the sickness is due to reasons beyond the control of the management, for any revival package to come out successful, it should be first ascertained if the management is still committed to the project and is serious about reviving the unit. The managements commitment and seriousness may be indicated by, - Its readiness to inject additional funds to revive the unit. - Its readiness to strengthen the existing management by agreeing to induct professionals as directors at various functional areas like technical/finance/marketing/research and development etc. The managerial appraisal shall suggest the required changes in the existing organisational set up of the unit and also shall study the possible reduction in the man power that can be achieved without affecting the organisiational efficiency, the likely compensation payable for retrenchment etc. Financial appraisal: Since appraisal of all other areas have a financial commitment in one form or the other, financial appraisal assumes greater importance. All aspects of financial reconstruction need to be considered and analysed. When a project that has long term debt component in its capital structure becomes sick, it becomes necessary to ease the burden of debt to enable the sick unit to recover from its sickness. This necessitates restructuring of the debts. In general, banks and financial institutions offer the following concessions in their package of rehabilitation assistance. (a) Reduction in interest rate of existing loans. (b) Conversion of short-term loans in to long-term loans. (This gives the unit under revival the much-needed leeway to repay short term borrowings.) (c) Conversion of part of long term loans into equity. (d) Funding of the overdue interest (un-paid interest) and making it repayable in easy instalments. The funded interest component may carry concessional rate of interest or even at times bears no interest. (e) Offering a revised schedule of repayment for the principal components of term loan. (f) Sanction of additional loan to meet the additional capital expenditure. (g) Enhancement of working capital limits and regularising the irregular portion of working capital finance already availed. If any asset is found not useful, the wise choice would be to dispose off the asset and use the amount realised to support the rehabilitation programme. Monitoring of nursing programme: For the growth of a healthy person it is enough if ordinary care is taken, while a sick person who is in convalescent stage needs critical attention. He is prone to getting sick again if proper care is not taken to monitor his health and to administer medicine at the required intervals. A sick unit that is under a nursing programme is similar to a sick person who is in convalescent stage and needs continuous monitoring. A simple and practical monitoring mechanism shall be devised. GANTT CHART/ PERT/ CPM

Gantt Charts (also known as Gantt Diagrams) are useful tools for analyzing and planning more complex projects. They:

Help you to plan out the tasks that need to be completed. Give you a basis for scheduling when these tasks will be carried out. Allow you to plan the allocation of resources needed to complete the project. Help you to work out the critical path for a project where you must complete it by a particular date.

When a project is under way, Gantt Charts help you to monitor whether the project is on schedule. If it is not, it allows you to pinpoint the remedial action necessary to put it back on schedule.
Drawing a Gantt Chart To draw up a Gantt Chart, follow these steps: Step 1 List all Activities in the Plan Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

For each task, show the earliest start date, estimated length of time it will take, and whether it is parallel or sequential. Also show which other stages they depend on. You will end up with a task list like the one in figure 1. This example shows the task list for a custom-written computer project. We will use this same example for both this section and the section on Critical Path Analysis and PERT. This will allow you to compare the results of the two approaches. Figure 1 Gantt Chart Example: Planning a Custom-Written Computer Project Task Earliest Length Type Dependent start on... A. High level Week 0 1 week Sequential analysis B. Selection of Week 1 1 day hardware platform C. Installation Week and 1.2 commissioning of hardware D. Detailed analysis of core modules E. Detailed analysis of supporting modules Sequential A

2 Parallel weeks

Week 1 2 Sequential weeks

Week 3 2 Sequential weeks

F. Week 3 3 Sequential Programming weeks of core modules G. Week 5 3 Sequential Programming weeks of supporting modules H. Quality assurance of core modules I. Quality assurance of supporting modules Week 5 1 week Sequential

Week 8 1 week Sequential

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J. Core module Week 6 1 day training K. Development and QA of accounting reporting L. Development and QA of management reporting M. Development of Management Information System N. Detailed training

Parallel

C,H

Week 5 1 week Parallel

Week 5 1 week Parallel

Week 6 1 week Sequential

Week 9 1 week Sequential I, J, K, M

Step 2 Set up Your Gantt Chart Head up graph paper with the days or weeks through to task completion. Step 3 Plot the Tasks Onto the Graph Paper Next draw up a rough draft of the Gantt Chart. Plot each task on the graph paper, showing it starting on the earliest possible date. Draw it as a bar, with the length of the bar being the length of the task. Above the task bars, mark the time taken to complete them. Schedule them in such a way that sequential actions are carried out in the required sequence. Ensure that dependent activities do not start until the activities they depend on have been completed. This will produce an untidy diagram like the one below:

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Step 4 Presenting the Analysis

The last stage in this process is to prepare a final version of the Gantt Chart. This shows how the sets of sequential activities link together, and identifies the critical path activities. At this stage you also need to check the resourcing of the various activities. While scheduling, ensure that you make best use of the resources you have available, and do not over-commit resource. You can also use color to represent the different resource types that you need to use such as programmers, or analysts. A redrawn version of the example project is shown below:

By drawing this example Gantt Chart, you can see that: If all goes well, the project can be completed in 10 weeks. If you want to complete the task as rapidly as possible, you need: One analyst for the first five weeks. (Note that we had to change the scope of activity F so that we could finish this task in two weeks, rather than three. This was because we wanted to complete the project in 10 weeks, and we couldn't commit resources to activities F and G at the same time. One programmer for five weeks starting week 4.

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One programmer/QA expert for three weeks starting week six. (Note that activities L and M have been moved back a week. This does not affect the critical path, but it does mean that a single programming/QA resource can carry out all three of activities K, L and M.) Analysis, development, and testing of supporting modules are essential activities that must be completed on time. Hardware installation and commissioning is not time-critical as long as it is completed before the Core Module Training starts. While this section describes how to draw a Gantt Chart manually, in practice project managers use software tools like Microsoft Project to create Gantt Charts. Not only do these ease the drawing of Gantt Charts, they also make modification of plans easier and provide facilities for monitoring progress against plans, as well as generating resource histograms. Key Points Gantt charts are useful tools for planning and scheduling projects. They allow you to assess how long a project should take, determine the resources needed, and lay out the order in which tasks need to be carried out. They are useful in managing the dependencies between tasks. When a project is under way, Gantt charts are useful for monitoring its progress. You can immediately see what should have been achieved at a point in time, and can therefore take remedial action to bring the project back on course. This can be essential for the successful and profitable implementation of the project. The PERT chart is sometimes preferred over the Gantt chart because it clearly illustrates task dependencies. On the other hand, the PERT chart can be much more difficult to interpret, especially on complex projects. Both tools are commonly used, and they are often both used for the same project. A PERT chart is a project management tool used to schedule, organize, and coordinate tasks within a project. PERT stands for Program Evaluation Review Technique, a methodology developed by the U.S. Navy in the 1950s to manage the Polaris submarine missile program. A similar methodology, the Critical Path Method (CPM), which was developed for project management in the private sector at about the same time, has become synonymous with PERT, so that the technique is known by any variation on the names: PERT, CPM, or PERT/CPM.

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A PERT chart presents a graphic illustration of a project as a network diagram consisting of numbered nodes (either circles or rectangles) representing events, or milestones in the project linked by labelled vectors (directional lines) representing tasks in the project. The direction of the arrows on the lines indicates the sequence of tasks. In the diagram, for example, the tasks between nodes 1, 2, 4, 8, and 10 must be completed in sequence. These are called dependent or serial tasks. The tasks between nodes 1 and 2, and nodes 1 and 3 are not dependent on the completion of one to start the other and can be undertaken simultaneously. These tasks are called paralle lor concurrent tasks. Tasks that must be completed in sequence but that don't require resources or completion time are considered to have event dependency. These are represented by dotted lines with arrows and are called dummy activities. For example, the dashed arrow linking nodes 6 and 9 indicates that the system files must be converted before the user test can take place, but that the resources and time required to prepare for the user test (writing the user manual and user training) are on another path. Numbers on the opposite sides of the vectors indicate the time allotted for the task. Problems of time and cost overruns in projects A cost overrun occurs when the expenses required to complete a project, or one aspect of a project, exceed the amount budgeted. This can happen for any number of reasons. One common cost overrun occurs when the cost of materials rises significantly between the time you finalize your budget and actually start making purchases. Time overruns occur when projects or tasks within a project is not completed by the time the project plan specifies. This can occur when materials to complete a project are back ordered and work cannot be completed until the materials arrive. Sometimes, labor shortages can cause work to be completed slower than anticipated. Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

Project monitoring, review and reporting Monitoring: monitoring is the continuous process of collecting and analyzing data ( indicators), with a view to identifying any need for corrective actions to ensure Project execution towards attaining its objective. Review: Project review is a specific formal examination of project implementation towards attaining its objective, as part of the project monitoring activities. Reporting: There are following types of reports:- Inception report (inception phase) - Yearly plan of operation (inception phase and implementation phase) - Progress report (implementation phase) - Technical report (implementation phase) - Financial reports (implementation and completion phase) - Completion reports (completion phase) Purposes of Monitoring and Evaluation - Ensuring planned results are achieved - Improving and support management - Generating shared understanding - Generating new knowledge and support learning - Building the capacity of those involved - Motivating stakeholders - Ensuring accountability - Fostering public and political support Key Aspects of Evaluation In developing any monitoring and evaluation system there are five aspects of evaluation to consider as illustrated below. If you can provide information on each of these you will be able to judge the overall performance of a programme or project. Relevance - Was/is the programme or project a good idea given the situation to improve? Was the logic of the intervention logic correct? Why or Why Not? Effectiveness - Have the planned results been achieved? Why or Why Not Efficiency - Have resources been used in the best possible way? Why or Why Not? Impact - To what extent has the programme or project contributed towards its longer term goals? Why or Why Not? Have there been any unanticipated positive or negative consequences of the project? Why did they arise? Sustainability - Will there be continued positive impacts as a result of the programme or project once it has finished? Why or Why Not? Developing an Overall M&E Strategy/Plan To effectively monitor and evaluate any programme or project it is necessary to develop an overall M&E strategy or plan. A common failing for many projects is that the only reference to M&E is the list of indicators and monitoring mechanisms in the logical framework matrix table. This just does not provide enough informaton to guide the actual implementation of a M&E system. The boxes below illustrate the process for developing and the general content for an M&E plan. Steps for Developing an M&E Plan 1. Establish use and scope of M&E system 2. Check project objectives and logic 3. Establish overall evaluation requirements and questions 4. Establish requirements for regular monitoring of implementation and progress towards desired results 5. Test overall M&E strategy with potential users and refine 3 and 4 Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

6. Establish the information and indicators needed for 3 and 4 7. Develop and test regular data gathering / monitoring mechanisms 8. Design open-ended and/pr periodic evaluation activities 9. Design information management system 10. Design a learning and feedback process 11. Decide how to evaluate the evaluation - key evaluation questions - focussing questions for learning lessons - indicators and monitoring mechanisms - open-ended evaluation activities - participation and responsibilities Contents for an Overall Project M&E Plan Purpose and scope Overview of approach (concepts, terminology, methods) General project evaluation activities - eg ... Annual internal reviews external reviews M&E details Goal level (impact) Purpose level Results level Appendices - eg ... Budget Details on indicators, monitoring mechanism, reporting Gnat chart of key M&E activities over project life

Developing and Monitoring Evaluation Questions and Indicators A good M&E plan should clearly articulate the key evaluation questions that need to be asked for each level of the objective hierarchy. To answer these evaluation questions it will be necessary to identify information needs. The necessary information may come from specific quantitative or qualitative indicators, general project records, generally available information or from specially designed evaluative or action research activities. Traditionally a lot of emphasis has been placed on the development of quantitative indicators as the key element in developing an M&E plan. Starting at this point tends to narrow down and straitjacket an M&E system and reduce its usefulness particularly in relation to supporting learning. For good reason it is often very difficult or even impossible to develop sensible quantitative indicators for the goal purpose and outcome levels of a programme or project. Very often when quantitative indicators have been developed for these levels they are either impractical to monitor or provide relatively useless information in terms of overall evaluation of the result. There is no question that indicators and in particular quantitative indicators are an important part of an M&E system and wherever practical they should be used. However, an M&E system will be far more useful if it is designed around the broad evaluation questions rather than narrowly focused indicators. In thinking about evaluation questions and indicators it is important to make the distinction between evaluation and monitoring. It will often be necessary and helpful to have some simple indicators that show regular progress towards a result and which are monitored regularly. Output indicators are - Visualising an M&E Plan - Develop M&E plan with stakeholders - Preparation for mid term - Mid term review - Training in use of reporting system - Annual Review and Planning workshop - PRA with participating communities - Preparation for annual review (performance and lessons learnt) Working Draft Version 1 March 2000 IUCN Global M&E Initiative particularly useful in this regard. This is the ongoing monitoring of progress that is required to manage a programme or project and which should show early warning signs of problems. Evaluation is a more in depth and probing assessment of the whole situation that should explore the reasons for success or failure. This generally occurs less frequently. Different types of Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

information and indicators may be required for regular monitoring vs in depth evaluation. These two different but related aspects should be reflected in the description of an M&E plan for a particular result. To effectively monitor and evaluation progress towards any particular result (objective) in a programme or project the following steps will generally be appropriate: 1. Identify the key evaluation questions for each level and result in the objective hierarchy. 2. For each question identify what information or indicators will be required to answer the question. 3. For each piece of required information or indicator establish: The methods and frequency for gathering the information or monitoring the indicator. The baseline information required for comparison. What preparation and resources are required for the data to be collected, collated and analysed, for example data collection and analysis forms, training of staff, data base design, external expertise. Who is responsible for carrying out each of the above and by when. 4. For each question, or a set of questions, establish what overall analysis is required and how the resulting knowledge will be used and what change processes need to be in place to learn from and respond to the knowledge. 5. Decide on an overall monitoring and evaluation plan for the particular result. For example, how often will an overall evaluation of progress be made and what indicators or information will be used to regularly monitor progress and how often? Open Ended Evaluation Activities A good evaluation system should give adequate attention to what shall be termed here open ended evaluation activities. These are all the aspects of evaluation that complement an indicator based approach. Such open ended activities (examples of which are given below) are necessary for the following reasons: 1. There will often be unintended positive or negative results and impacts from a project that will be missed by an evaluation that just focuses on monitoring predetermined indicators. 2. Monitoring indicators alone often not provide an understanding of why objectives have or have not been met. This requires discussion and analysis with project staff and partners. 3. Monitoring indicators alone will not lead to understanding and learning by programme or project staff and partners. 4. For complex or messy objectives it may not be possible to develop a easily measurable indicator and the achievement of the objective may have to be demonstrated through more anecdotal information. 5. Monitoring indicators provide only limited capacity for evaluation of the success or otherwise of the process of the project. Detailed Result M&E Plan EVALUATIO N QUESTIONS REQUIRED INFORMATIO N AND INDICATORS DATA GATHERING METHODS, FREQUENCIES AND RESPONSIBILITI ES BASELINE INFORMATION REQUIREMENTS STATUS ANDRESPONSIBILITI ES REQUIRED PLANS, TRAINING, DATA MANAGEMENT, EXPERTISE, RESOURCES AND RESPONSIBILITI ES ANALYSIS, REPORTING, FEEDBACK, AND CHANGE PROCESS AND RESPONSIBILITI ES

Examples of Open-Ended Evaluation Activities Annual Review and Planning Processes Shop No. 105, first floor, Vardhman Star Mall, Sector-19, Faridabad. Contact No.9871664440, 9136614465. Email id: gspeducon@gmail.com.

 Monthly and/or Quarterly Review and Planning Processes Open Ended Impact Assessment PRAs External Reviews Peer Reviews Stakeholder Meetings Regular Staff Meetings Analysing and Documenting Lessons Learnt Conference Presentations and Papers Advisory Committee Functions Independent Assessments Staff Performance Reviews Implementing Partner Performance Review

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