ESE 2017

UPSCENGINEERINGSERVICESEXAMINATION

Preliminary Examination

Paper

General Studies and

Engineering Aptitude

7
Basics of Project Management
Comprehensive Theory with Practice Questions
As per new syllabus of ESE 2017

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ESE-2017 : Preliminary Examination

Paper-I : General Studies and Engineering Aptitude

Basics of Project Management

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Preface
The compilation of this book Basics of Project
Management was motivated by the desire to provide a
concise book which can benefit students to understand
the concepts of Project Management topics.
This textbook Basics of Project Management provides
all the requirements of the students, i.e. comprehensive
coverage of theory, fundamental concepts and objective
type questions articulated in a lucid language. The
concise presentation will help the readers grasp the theory of this subject with clarity and apply
them with ease to solve objective questions quickly. This book not only covers the syllabus of ESE
but also addresses the need of many other competitive examinations. Topics like Basic Concepts
and Project Life Cycle, Initiation Process : Project Formulation and Appraisal, Project Organisation,
Planning Process : Project Planning and Scheduling, Execution Process: Project Monitoring and
Control, Closing Process: Project Evaluation and Termination, Tender and Contract are given full
emphasis, keeping in mind of our research on their importance in competitive examinations.
We have put in our sincere efforts to present detailed theory and MCQs without compromising the
accuracy of answers. For the interest of the readers, some notes, do you know and interesting facts
are given in the comprehensive manner. At the end of each chapter, sets of practice question are
given with their keys, that will allow the readers to evaluate their understanding of the topics and
sharper their question solving skills.
Our team has made their best efforts to remove all possible errors of any kind. Nonetheless, we would
highly appreciate and acknowledge if you find and share with us any printing and conceptual errors.
It is impossible to thank all the individuals who helped us, but we would like to sincerely thank all
the authors, editors and reviewers for putting in their efforts to publish this book.
With Best Wishes
B. Singh
CMD, MADE EASY

General Studies and

Engineering Aptitude

Contents

Basics of Project Management

Chapter 1

Chapter 3

Basic Concepts and Project Life Cycle..... 1

Project Organisation.............................. 49

1.1 What is Project?.................................................................. 1

1.1.1 Characteristics and Features of a Project.... 1

1.1.2 Classification of Projects (Taxonomy of

Projects).................................................................. 2

3.1 Introduction.......................................................................49

3.1.1 Attributes/ Qualities of a Good Project

Manager................................................................49

1.2 What is Management?..................................................... 3

1.3 What is Project Management?...................................... 3

3.1.2 Role of the Project Manager..........................50

3.2 Type of Project Organisations.....................................51

3.2.1 Functional Organisation/Traditional/

1.3.1 Characteristics of Project Management...... 3

1.3.2 Different Types of Management.................... 4

3.2.2 Product Organisation.......................................52

1.4 Project Life Cycle................................................................ 4

3.2.3 Matrix Organisation..........................................53

3.2.4 The Strong, Weak or Balanced Matrix........55

Classical Organisation......................................51

1.4.1 Project Life Cycle (4 Phases)............................. 4

1.4.2 Level of Effort (Intensity of Activities).......... 6

1.4.3 Level of Influence Vs. Cost of Changes

Objective Brain Teasers................................................57

3.3 Project Organisation Structure...................................56

(Front-End Importance)..................................... 7

1.4.4 Product Life Cycle (10 Phases)........................ 7

1.5 Project Management Process........................................ 9

Objective Brain Teasers................................................11

Chapter 4
Planning Process :
Project Planning and Scheduling.......... 59

4.1 Planning..............................................................................59

4.2 Scheduling ........................................................................59

Initiation Process :
Project Formulation and Appraisal....... 14

4.3 Implementation and Control.......................................59

4.4 Work Break Down Structure.........................................59

4.5 Techniques Used for scheduling................................61

Chapter 2

2.1 Project Formulation and Development...................14

2.1.1 Pre-Investment Phase......................................14

4.5.1 Bar Charts.............................................................61

2.2 Project Appraisals............................................................16

4.5.2 Mile-Stone Charts..............................................61

2.2.1 Technical Analysis/Technical Appraisal.....16

4.5.3 Line of Balance (LOB) Techniques................62

2.2.2 Market and Demand Analysis.......................17

4.5.4 Network Method of Scheduling...................62

2.2.3 Financial Analysis/Financial Feasibility......23

2.2.4 Economic Analysis (Economic Feasibility).... 29

4.6.1 Elements of a Network....................................63

2.2.5 Social Cost Benefit Analysis (SCBA).............29

4.6.2 Rules of a Network............................................66

4.6 Network Diagram.............................................................62

2.5 Formulation of Detailed Project Reports (DPR)....34

2.6 Project Risk Analysis........................................................36

Objective Brain Teasers................................................43

4.7 Network Scheduling Techniques...............................67

4.7.1 Programme Evaluation and Review
Technique (PERT)...............................................67

 4.7.2 Critical Path Method (CPM)............................70

6.1.2 Evaluation Methods....................................... 110

4.7.3 Comparison between PERT and CPM .......73

4.7.4 CPM Systems.......................................................73

Objective Brain Teasers............................................. 113

6.2 Networking Updating of Network Diagram........ 112

Objective Brain Teasers................................................78

Chapter 7

Chapter 5

Tender and Contract............................. 114

Execution Process:
Project Monitoring and Control............ 89

7.2 Project Tender................................................................ 115

7.3 Project Cost Estimate................................................... 118

5.1 Project Control System...................................................89

5.1.1 Tools Used for Project Control......................89

5.1.2 Earned Value Analysis (EVA)...........................90

5.1.3 Critical Ratio........................................................92

5.1.4 Line of Balance (LOB).......................................92

5.1.5 Graphical Evaluation and Review Technique

(GERT)....................................................................93

5.1.6 Network Simulation..........................................95

5.1.7 Outsourcing Method........................................96

5.1.8 Review Meetings...............................................96

5.2 Tips for Efficient Implementation of Projects........96

5.3 Project Information System..........................................97

5.4 Resource Allocation........................................................97

5.4.1 Resource Leveling.............................................98

5.4.2 Resource Smoothening................................ 100

7.1.1 Type of Contracts............................................ 114

7.3.1 Objectives of Cost Estimate........................ 118

7.3.2 Methods of Cost Estimate........................... 118

7.3.3 Project Cost Components............................ 119

7.3.4 Cost Funnel....................................................... 119

5.5 Project Cost Control..................................................... 101

7.1 Project Contract............................................................. 114

7.4 Types of Cost Estimates.............................................. 120

7.4.1 Conceptual Cost Estimate........................... 120

7.4.2 Semidetailed Cost Estimate........................ 121

7.4.3 Detailed Cost Estimate................................. 121

7.5 Project Sickness............................................................. 122

7.6 MiscellaneousTopics................................................... 124

7.6.1 What is Cost Overrun?.................................. 124

7.6.2 What is Credit Rating?................................... 124

7.6.3 What is Capital Cost?..................................... 125

5.5.1 Time-Cost Trade-off....................................... 101

7.6.4

What is Operating and Maintenance Cost?....125

5.5.2 Cost Model Analysis....................................... 101

7.6.5

What is Enterprise Resource Planning (ERP)?......126

Objective Brain Teasers............................................. 107

7.6.6 What is ABC Analysis?................................... 127

7.6.7

Chapter 6

(Wilson Harris Model for Inventory Control)..127

Closing Process:
Project Evaluation and Termination... 110

7.6.8 What is Technical Consultancy

Organisations (TCOs)?................................... 131

6.1 Project Evaluation......................................................... 110

What is Economic Ordering Quantity (EOQ)?........

7.7 Value Analysis and Value Engineering................... 131

Objective Brain Teasers............................................. 135

6.1.1 Project Evaluation Objectives.................... 110

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