ASSIGNMENT DRIVE WINTER 2013

PROGRAM MBADS/ MBAFLEX/ MBAHCSN3/ MBAN2/ PGDBAN2 SEMESTER II SUBJECT CODE & NAME MB 0049 - PROJECT MANAGEMENT BK ID B1632 CREDIT & MARKS 4 CREDITS , 60 MARKS Q.No Criteria Marks Total Marks Q- 1 Write short notes on Answer:Project break-even point :Break- even point is a financial term to describe the business or project where the sales revenue is equal to total expenses. It easy to calculate it if the expenses incurred are fixed . i.e. expenses do not change as revenue changes. The expenses are divided in to fixed and variable expenses. The presence of variable expenses makes it difficult to calculate the break-even point. This is because of the variable cost will increase as the number of units sold increases. The answer can be determined by working out the total gross profit of unit sold to be equal to the total fixed expenses. Need for project planning:The purpose of project planning is to identify various areas of the project work and the influence factors, and subsequently define the boundaries of the project performance .in addition , scope of the project also needs to be explicitly mentioned in the list project objectives .further it serves as a guide through its well defined direction to perform the planning is to basic to all human activities and required common is designated. It is a trap laid down to capture the future. it helps in bridging the gap between where you are to where you want to be. Ina way complexity of the process aids in identifying the implication of such a plan and whether it relates to immediate future or a long term perspective.

Project type organization:in a project type organizational structure, the employees work for different projects in a team like structure. examples are construction companies, where different teams wprk on different projects. Teams are put together for a project. Each project is headed by a projects leader .each team will have employees to suit its demands and complete the project successfully. Only employees with requisite specialized skills are considered for project teams. These members of project team will join back their parent compny once the project gets finished. Rules for network construction:Every activity must have a preceding and succeeding event. An activity is numerical represented by the pair of preceding and succeeding event. In the dinner project, for instance activity send invitation is designated as 1-2. 1.each event must have a distinct number . the number specified to an event can be chosen in any way, provided this condition is fulfilled. In practice, yet event are numbered in the manner that the number at the head of arrow is greater than that that at its tail. There not must be any loops in the project network.

3. The preceding and succeeding events are not same for more than one Q- 2 Describe and compare the project appraisal methods NPV and IRR with example? Which one is better method in estimating returns on investment in a particular project? Description and comparison of NPV and IRR Analysis and inference of which is a better Method Answer Net present value:This method is one of the discounted cash flow techniques and it recognises the time value of money. Net present value (NPV) of cash flow = [present value of all future cash inflows over the life of the project.]- [ present value of cash out flow ] The present value of future cash inflows is arrived at by discounting the fitire cash inflows at an interest rate equal to the cost of capital. NPV = CF1 + CF2 + CF3 + .................+.CFn (1+r)1 (1+r)2 (1+r)3 (1+r)n

Where CF1,CF2 ........are the future cash inflows occurring at the end of first year, second year. N= life of the project in year r= discount rate ( cost of capital) CF0 = present cash outflow If, NPV=0 , it indicated that the present cash outflow and the present value of future cah inflow are equal. NPV< 1 , it indicates that the present value of future cash inflow is less than the present cash out flow. NPV> 1 it indicates that the present value of future cash inflow is more than the present cash out Internal rate of return (IRR):The internal rate of return of a projects is the discount that makes the net present value equal to zero . In the other word, internal rate of return is that rate of discount which would equalte the present value of cash out flows to the present value of cash flow. In the calculation of net present value of the project ,the discount rate is assumed and the net present value is calculated by discounting future cash inflows at the assumed discount rate . in the calculation of internal rate of return from the project , net present value is set equal to zero and the corresponding discount rate is determinate, the discount rate at which the net present value is zero is the internal rate of return.

Q- 3 Microsoft Project AMS The company AMS is a global business and IT consulting firm to the government, financial services, and communications industries. AMS applies both proprietary and partner technologies and provides solutions through business consulting, system integration, and outsourcing. Founded in 1970, AMS is headquartered in Fairfax, Virginia, and has offices worldwide. The company has approximately 6300 employees. The challenge

Several years ago, AMS developed an internal project management system called Project in a Box. Based on Lotus Notes, the homegrown system was becoming inefficient and costly to operate, particularly because it was designed as a standalone, non-collaborative product. When a new consulting project was set up, a new instance of the database was created, leading to a chaotic system with literally hundreds of separate databases. Without any kind of centralised information sharing, it was difficult to use information from one project on another project. The system also prevented AMSs managers from viewing companywide metrics, such as project completion rates and whether projects were being completed on time and on budget. AMSs executives needed a system to allow them to have a portfolio view of the health of the companys projects in progress. A collaborative project management system would allow AMS managers to: Measure project performance and Earned Value Metrics (EVM) allowing for improvements in on-time and on-budget delivery to customers Standardise processes Understand the impact of task dependencies within complex projects Share information across different product lines The strategy Many AMS project managers were already using Microsoft Project as a desktop application, developing project plans and Work Breakdown Structures (WBS) on their individual PCs. However, these individual installations were not networked together and did not feed critical project performance information to executives. Therefore, in October 2002, when AMS began the vendor selection process for a company-wide project management solution, Microsoft Project was the natural choice, both because many internal users were already experienced with the applications scheduling and planning functionality and because Microsoft offered the best price point. In March 2003, AMS chose Microsoft as its project management software vendor and began a pilot programme. In June 2003, AMS selected the public sector product engineering group as the first department to begin the pilot programme. AMS divided this initial pilot programme into four distinct phases: Phase 1: In early July, AMS installed Microsoft Project for and trained 1520 project managers working on a common product line. Phase 2: In late August, AMS expanded the installation to 170 people in another product line within the same group. Phase 3: In late September, AMS rolled out Projects decision support capabilities to ten executives, allowing them to mine data for reporting purposes. Phase 4: If the pilot is successful, AMS will expand the Project programme to 4,000 users company wide in a staged rollout. Key benefit areas With the pilot programme well under way, AMS is already seeing benefits from Microsoft Project. The system has helped AMS to meet its goal of creating a more collaborative project management system that allows managers to view metrics and create schedules with a view of resources across projects and across the entire organisation. The collaborative nature of Microsoft Project Server allows team members, team leaders, and project managers to complete EVM reporting more quickly, leading to more available time for billable hours. The quantifiable benefits from the Microsoft Project deployment include: Productivity gains from automated weekly reporting process. Consultants and developers now spend less time each week creating weekly status and performance reports, leading directly to more time available for billable hours. Productivity gains from automated EVM analysis. Team leaders and project managers now spend less time processing and analysing status and performance reports from team members, allowing them to also have more time available for billable hours. The Microsoft Project deployment also allows AMS project managers to get a better sense of project status metrics in real time. This leads to fewer project budget and cost overruns, because project managers can quickly make adjustments to keep projects profitable.

Key cost areas The largest cost area for AMSs deployment of Microsoft Project was the software license cost, making up 63% of the total cost of the project. Other cost areas over the 3-year period included consulting, training, ongoing maintenance, and personnel costs associated with the everyday use of the system. Lessons learnt Overall, AMSs Microsoft Project implementation went smoothly. AMSs managers attribute the projects success to their careful planning and staged pilot programme approach. AMSs managers recommend that companies considering similar implementations should not underestimate the change management necessary to make Microsoft Project work effectively. Project managers, especially those without PMI certifications, will often need to undergo training on how to build effective WBSs, how to plan and schedule complex projects, and how to adjust WBSs to changing project conditions. A successful Microsoft Project implementation also requires a high level of communication between team members and project managers. This is especially important with regard to communicating the inputs, steps, expected output, and dependencies of complex business processes. AMSs managers also recommended that companies carefully look at their internal processes for building WBSs, especially the ones for complex projects that require more than 500 tasks. Some of AMSs projects contained upwards of 2500 tasks, which was well above Microsoft Projects practical limit of 500 tasks for a single project. Calculating the ROI Nucleus Research analysed the costs of software, personnel, consulting, and training over a 3-year period to quantify AMSs investment in Microsoft Project. Direct and indirect benefits were also quantified over a 3-year period. Direct benefits quantified included productivity gains for both team members and team leaders when creating EVM reports. Because AMS was an early adopter and because it agreed to participate in trade shows and in marketing ventures, the company received consulting services from Microsoft at no cost, though AMS did use internal consultants for a portion of the implementation. Companies currently considering Microsoft Project for similar enterprise implementations must take consulting costs into account when evaluating potential ROI. Benefits not quantified because of the early stage of AMSs Project deployment included reduced project budget and schedule overruns. However, Nucleus recommends that companies considering Microsoft Project evaluate this potential benefit. Source: http://nucleusresearch.com/library/microsoft-roi/d134.pdf What difficulties were encountered by AMS while dealing with information transfer problem in the company? What strategy is used by AMS for dealing with this problem? Listing of difficulties encountered Evidence of the strategy used Analysis of the strategy conclusion 3 2 3 2 10 4 Form the above case how did the solution help the managers, project teams and the company. Benef its of the solution to managers , project team and company Conclusion 9 (3 marks each)

Q-5 What are the key steps involved in purchase cycle? Definition of purchase cycle Listing of the steps involved in the purchase cycle Summarisation of each step Answer:Purchase cycle is the standard process that corporations and individuals progress through when purchasing a product or service. it is also known as the buying cycle or purchase cycle. Following are the key steps involved in the purchase cycle. 1. Indent goods 2. Shortlist suppliers 3. Invite receive and choose bid 4. Preparation and placement of purchase order 5. Follow- up 6. Receipt, inspection and storage of goods 7. Maintenance record 1. Indent goods :-this involves the identifying the needs, preparing specification of goods, and filling up indents and obtain signature of competent authority. Based on the project network, the project engineers identify the need. 2. Shortlist supplier :-the buyers first task is to identify the suitable source of supply.the list potential supplier can be prepared with the help of several sources including the suppliers catalogue, trade register, internet, trade journals, historical records, of purchase section , etc .based on the historical records or other consideration like indigenous or imported, local or global , etc the suppliers shortlisted 3. Invite receive and choose bid :Two steps involved in the bid A ;- competitive bid The bid or tender is invited from a required number off supplier. The bid received in prescribed condition are accepted and held in safe custody. The bid are opened and made public at the stated time and place in the presence of the bidders who are present. The information received from bidders is tabulated on a comparative statement which allows comparison of quoted prises, validity periods, and other critical factors B. Negotiated bids :For anew and complex products ,prior manufacturing experience may not be available with the supplier and the prise quoted may not be realistic. Under the situation , the bid and award method may not be suitable and the buyer may be prefer to go for negotiable bid. 4. Preparation and placement of purchase order It is divided in two parts A .- specific conditions to the purchased goods :The specific condition include purchase order no. Name and address of the supplier, delivery address of the goods, description of goods, product specification, quantity, contract prize ,delivery date delivery condition other features and authorising signature . These items are typed on the front side of the purchase order form B:- General commercial condition of purchase :Normally companies standardise the commercial conditions of purchase and print them on the reverse side of the purchase order form ,generally conditions include prices, Quantity and description , indemnity, lose or damage rejection, force majeure clause, termination, arbitration ,applicable low. 5. Follow up ;-

Follow up is preventive measure that seeks to foresee thee problem and prempt late delivery. follow- up includes internal follow up with departments like store, finance inspection and project groups and external follow up with suppliers. 6. Receipt, inspection and storage of goods : On the receipt of shipment , the incoming material section receives the challan and excise documents and ensure that material is as per the sellers packing slip and against the project purchase order. The quantity and the general condition of material is checked. After inspection , the IM section raises the goods receipt note for right material ,the project material is stored in a specific location within closed an controlled areas. 7. Maintenance record :Record of each stage from indenting to receipt and closing of orders are maintained for the purpose of monitoring and control. Records are also helpful to identifying the vendors for new items at a later date. resolving any dispute with the suppliers, bringing changes in the product specification.

Q- 6 Discuss the concept of quality and project quality management. Definition of quality Overview of project quality management Summarization of project quality management process Answer:Quality is defined as Quality is conformance to requirement or specification .Quality refers to ability of a process or product to satisfy both stated and implied goals as defined by the stakeholders. Quality means the product and process should be designed in such a way that it can achieve the maximum customer satisfaction. It includes some processes to ensure that the project is going as per the planning and will achieve the desired goals for which it was undertaken, project quality management begins by defining the quality standards to be used for the project. This definition willll come from the stakeholders, beneficiaries, and often from the overall standards for the organization. Careful identification of the quality standards will help to ensure asuccessful project soutcome that will be accepted by the stakeholders. In addition to quality standards for teh end result of the project, there may also be organisational quality standards that must be met for the actual management of the project, such as certain types of reporting or project tracking methods. It describes the processes required to ensure that the project will satisfy the needs for which for which it was undertaken. The knowledge area of project quality management includes the organisational processes that determine the quality policies, objectives, and responsibilities.it consists of quality planning, quality assurance and quality control.

Input

Quality planning Quality policy Scope statement Product description

Quality assurance Quality management plan Results of quality control

Quality control Work results Quality management plan Operational

Standards and regulations Benefit/cost analysis Benchmarking Flow-charting Design of experiments

Tools and techniques

Maeasurements Operational definitions Quality planning tools and techniques Quality audits

definitions Checklists Inspectin Controlcharts Pareto diagrams Statistical Sampling Flow-charting Trend analysis

Output

Quality management plan Operational definations Checklists Input to other processes

Quality improvement

Quality improvement Acceptance decisions Rework Completed checklists Process adjustments