Project Management and Control-1

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SKU: AMSEQ-221 Category:

Assignment – A

Question 1. Describe briefly the aspects of a business environment that needs to be monitored as well as the dimensions along which a firm may appraise its strengths and weaknesses for identifying investment opportunities.

Question 2. The sales of a certain product during a 14 year period have been as follows:

Period Sales (Rs) Period Sales (Rs)
1 2,000
2 2,200
3 2,100
4 2,300
5 2,500
6 3,200
7 3,600
8 4,000
9 3,900
10 4,000
11 4,200
12 4,300
13 4,900
14 5,300

 

Find out the least square regression line for the data given.For the data given above assume that forecast for the period 1 was Rs 2,100. if the constant (?) is equal to 0.3 , derive the forecast for the periods 2 to 14.

Question 3. What is Project Implementation Schedule? How it is important ? What information is required for preparing the project implementation schedule?

Question 4. What are replacement decisions? Explain three components of the cash flow stream of a replacement decision.

Question 5. A company is considering an investment proposal to install new milling controls at a cost of Rs 50,000. The facility has a life expectancy of 5 years and no salvage value. The tax rate is 35 percent. Assume that the firm uses straight line depreciation method and the same is followed for tax purposes. The estimated cash flows before depreciation and tax (CFBDT) from the investment proposal are as follows:

Year CFBDT
1 Rs 10,000
2 Rs 11,000
3 Rs 12,500
4 Rs 13,500
5 Rs 21,000

 

a. Compute any three of the following
(i) Payback period
(ii) Accounting Rate of Return
(iii) IRR
(iv) NPV at 10 % discount rate.
(v) Salvage value at the end of year 3 if plant ceases operations.

Assignment – B

Question 1. (a) What are key issues considered by financial institutions while appraising a project for term financing?
(b) Discuss the key considerations in determining the debt-equity ratio of the firm.

Question 2. What is Performance review and control in respect of the projects? What are advantages of conducting it? What problems are encountered in performance review and how can they beovercome?

Question 3. A project has the following time schedule:

Activity Time in weeks
1-2 4
1-3 1
2-4 1
3-4 1
3-5 6
4-9 5
5-6 4
5-7 8
6-8 1
7-8 2
8-9 1
8-10 8
9-10 7

 

Construct PERT network and compute
•TE (Tail Event) and TL (Head Event) for each event.
•Float for each activity.
•Critical path and its duration.

Case Study

Dilemma of Project Manager

1. You are appointed to take up the task of metro project by Government of India. You are asked to complete the task within the period of seven years but you express your doubts on that stating various reasons and difficulties. The concerned secretary tells you to go through the project implementation history of Delhi metro project and prepare a complete report with regards to:

(a) Preparing the preliminary activities to be taken up before a large infrastructure project can be started.
(b) Understanding the significance of the role of a project manager in project execution.
(c) Understand the importance of the right work culture in successful project management.
(d) Recognize the importance of managing the various stakeholders in a project.
(e) Understand the difficulties involved in the execution of large infrastructure projects in developing countries, and how these can be overcome.
(f) Importance of financial management tools.

 

2. You have collected the requisite information through published and unpublished sources and compiled as given below:
With a 6.5 km section of Line 3 becoming operational in April 2006, Phase I of the Delhi Metro3 project was nearing completion. Of the total length of 65.16 km of the first phase, 62 km had been completed and opened for service. This phase was set to cost Rs. 98 billion. As of early 2006, around 450,000 passengers were traveling by the Delhi Metro every day invariably and the strength will go up very fast. The Delhi Metro was meant to solve Delhi’s traffic problems, which had become almost unmanageable. The first steps to build a metro system in the city were taken in the early 1990s. In 1995, the Government of India (GOI) and the Government of the National Capital Territory of Delhi (GNCTD) formed the Delhi Metro Rail Corporation Ltd (DMRC) under the Companies Act to construct the Delhi Metro.
Conceived as a social sector project, a significant portion of the project cost was funded through a soft loan provided by the Japanese government through Japan Bank International Corporation (JBIC). The rest was contributed by GOI and GNCTD through equity. E. Sreedharan was appointed managing director (MD) of the DMRC and project manager for Phase I of the project in November 1997. Work on Line 1 of Phase I started in October 1998. DMRC formed consortiums to advise it on the project and to provide it with the latest technology. It also saw to it that the foreign companies worked with the Indian companies to ensure that the latter assimilated their expertise and technological know-how. The DMRC faced any number of technical and systemic challenges during the construction of the metro. However, thanks to thorough planning, an effective project design, and a ‘we-mean business’ culture, it was able to overcome all these hurdles. The organizational culture was based on punctuality, honesty, and a strict adherence to deadlines. The DMRC successfully managed the various stakeholders in the project like the general public, government bodies, etc., and also ensured that the project was environmentally safe. With Phase I of the Delhi Metro project nearing completion, the GoI decided to extend the metro network and work on Phase II of the Delhi Metro project was set to commence in September 2006.
In the process of implementing the project, the DMRC had gained a lot of technological expertise, which would be used by other cities in India and abroad to build metro systems similar to the Delhi Metro.
In order to implement the Delhi Metro project, the GoI and the GNCTD set up a 50:50 joint venture company called the Delhi Metro Rail Corporation Ltd. (DMRC). The company was incorporated under the Companies Act in May 1995. The DMRC was to complete Phase I of the project within 10 years, i.e., by the end of 2005.
With the funding for the project being finalized, the next step was to constitute a project team ESreedharan was appointed as project manager and managing director of the DMRC in November 1997. A technocrat, he had had a long stint in the Indian Railways (IR) and had retired in 1990. During his service with IR, he had earned a reputation for completing major projects on time and within the budget constraint. In India, major infrastructure projects are often stalled because of a lack of funds, political interference, lack of professionalism and accountability, property disputes, corruption, etc. Therefore, even before the commencement of the project, the DMRC attempted to put in place effective systems to ensure the smooth progress of the project. Funding was not an issue in the case of the Delhi Metro project because it was settled even before the project commenced.
In order to steer clear of political interference, the DMRC sought autonomy on all major matters and the GOI promised to give it this autonomy. Construction work on the project commenced from October 1, 1998. The entire project was divided into three lines. Further, these lines were divided into sections. Phase I commenced with the Shahdara-Tis Hazari section of Line 1, covering a distance of about eight kilometers. The work involved utility diversions, barricading, and actual civil construction. A major part of this section was on elevated tracks. All tracks in the elevated corridor were laid on concrete (ballast less). The tracks were supported on single piers.
Effective project management involved not only completing the project on schedule and within the budget, but also managing the project’s stakeholders. The stakeholders included the governments, the contractors, the funding agencies, and the general public. Despite assurances that the DMRC would enjoy autonomy, it faced political pressure not only in its recruitment processes, promotions, and contract awarding but also in land acquisition. The successful completion of the project effectively silenced the critics who had been skeptical about the ability of an Indian public sector organization to complete any project, let alone one as complex and costly as the Delhi Metro, on time and within the budget.

Questions
1. Prepare a detailed report with reference to the points secretary asked you in paragraph 1 above.
2. List out similarities between the two projects and dissimilarities.
3. List out the activities required immediately. You can imagine data and figures wherever necessary.

Assignment – C

1. Risks will be identified during which risk management process (es)?
(a) Quantitative risk analysis and risk identification
(b) Risk identification and risk monitoring and control
(c) Qualitative risk analysis and risk monitoring and control
(d) None of the above.

2. Who is ultimately responsible for quality management on the project?
(a) Project engineer
(b) Project manager
(c) Quality manager
(d) Team member

3. A project manager has just been assigned to a new project and has been given the preliminary project scope statement and the project charter. The first thing the project manager must do is–
(a) Create a project scope statement.
(b) Confirm that all the stakeholders have had input into the scope.
(c) Analyze project risk.
(d) Begin work on a project management plan.

4. You are taking over a project during the planning process group and discover that six individuals have signed the project charter. Which of the following should most concern you?
(a) Who will be a member of the change control board
(b) Spending more time on configuration management
(c) Getting a single project sponsor
(d) Determining the reporting structure
(e) Both (a) and (b)

5. A project manager is employed by a construction company and is responsible for the furnishing of the completed building. One of the first things that the project manager for this project should do is to write a–
(a) Work breakdown structure.
(b) Budget baseline.
(c) Project charter.
(d) Project plan.

6. All of the following are characteristics of a project except–
(a) Temporary
(b) Definite beginning and end
(c) Interrelated activities
(d) Repeats itself every month

7. The equivalent of cost reimbursable contracts is frequently termed as–
(a) Back charge contracts.
(b) Fixed price contracts.
(c) Progress payment contracts.
(d) Cost plus contracts.

8. A buyer extends a formal invitation that contains a scope of work that seeks a response that will describe the methodology and results that will be provided to the buyer. This is called–
(a) Invitation to bid.
(b) Request for information.
(c) Request for proposal.
(d) Request for bid.

9. A project manager must have some work done by an outside contractor. This work has a great deal of risk associated with it, and it has become very difficult to find a contractor willing to take on the job. Which of the following types of contract would offer the greatest incentive to the contractor?
(a) Cost plus percentage of cost as an award fee
(b) Cost plus fixed fee
(c) Cost plus incentive fee
(d) Firm fixed price.

10. The project management process groups are–
(a) Initiating, planning, expediting, and control.
(b) Plan, organize, develop, and control.
(c) Plan, do, observe, commit.
(d) Initiating, planning, executing, controlling, and closeout.

11. In which project management process group is the detailed project budget created?
(a) Initiating
(b) Before the project management process
(c) Planning
(d) Executing

12. Contract closure is different from administrative closure in that contract closure–
(a) Occurs before administrative closure.
(b) Is the only one to involve the customer?
(c) Includes the return of property.
(d) May be done more than once for each contract.

13. During the full life cycle of the project, a plot of the project’s expected expenditures will usually follow a characteristic and shape. This indicates that–
(a) There is a cyclic nature to all projects.
(b) Problems will always occur in the execution phase.
(c) There are high expenditures during closeout.
(d) The bulk of the project budget will be spent in the execution phase.

14. What conflict resolution technique is a project manager using when he says, “I cannot deal with this issue now!”–
(a) Problem solving
(b) Forcing
(c) Withdrawal
(d) Compromising

15. A group of related projects that are managed in a coordinated way that usually include an element of ongoing activity is called a–
(a) Major project.
(b) Project office.
(c) Program.
(d) Group of projects.

16. To control the schedule, a project manager is reanalyzing the project to predict project duration. She does this by analyzing the sequence of activities with the least amount of scheduling flexibility. What technique is she using?
(a) Critical path method
(b) Flowchart
(c) Precedence diagramming
(d) Work breakdown structure
(e) Both (a) and (b).

17. A project manager has just been assigned to a project. The document that recognizes the existence of the project is called–
(a) The statement of work.
(b) The project assignment.
(c) The project charter.
(d) The product description.

18. A manager that manages a group of related projects is called a–
(a) Project manager.
(b) Project expediter.
(c) Program coordinator.
(d) Program manager.

19. If project A has a net present value (NPV) of Rs 30,000 and project B has an NPV of Rs 50,000, what is the opportunity cost if project B is selected?
(a) Rs 23,000
(b) Rs 30,000
(c) Rs 20,000
(d) Rs 50,000

20. A project manager is using weighted average duration estimates to perform schedule network analysis. Which type of mathematical analysis is being used?
(a) Critical path method
(b) PERT
(c) Monte Carlo
(d) Resource leveling

21 An activity has an early start (ES) of day 3, a late start (LS) of day 13, an early finish (EF) of day g, and a late finish (LF) of day ig. The activity–
(a) Is on the critical path.
(b) Has a lag.
(c) Is progressing well.
(d) Is not on the critical path.

22. Which phase of the project is likely to have the greatest amount of its funding spent?
(a) Initiating
(b) Executing
(c) Planning
(d) Closeout

23. Which of the following represents the estimated value of the work actually accomplished?
(a) Earned value (EV)
(b) Planned value (PV)
(c) Actual cost (AC’,
(d) Cost variance (CV)

24. A project manager is managing a project. The original scope baseline of the project was budgeted at Rs 100,000. Since works on the project started there have been seventeen authorized and approved changes to the project. The changes have a value of Rs 17,000 and the cost of investigating them prior to their approval was Rs 2,500. What is the current budget (in Rs) for the project?
(a) 100,000
(b) 114,500
(c) 117,000
(d) 119,500
(e) None of the above

25. You are managing a project in a just in time environment. This will require more attention, because the amount of inventory in such an environment is generally–
(a) 45 percent.
(b) 10 percent.
(c) 12 percent.
(d) 0 percent.

26. A task was scheduled to use two persons, full time, and take two weeks to complete. Instead, the project manager was only able to assign one person to this task. At the end of two weeks, the person assigned to the task was 75% complete. What is the cost performance index?
(a) 0.75
(b) 1.50
(c) 0.25
(d) 1.15

27. Which of the following is considered to be a simulation technique?
(a) PERT analysis
(b) GERT analysis
(c) Monte Carlo analysis
(d) Critical path method

28. Project A has an internal rate of return (IRR) of 21 percent. Project B has an IRR of 7 percent. Project C has an IRR of 31 percent. Project D has an IRR of ig percent. Which of these would be the BEST project?
(a) Project A
(b) Project B
(c) Project C
(d) Project D

29. The program evaluation and review technique (PERT) method of scheduling differs from the critical path method (CPM) because the PERT method–
(a) Uses weighted averages of activity durations to calculate project duration.
(b) Uses dummy activities to represent logic ties.
(c) Uses free float instead of total float in the schedule calculations.
(d) Uses bar charts instead of logic diagrams to portray the schedule.

30. In attempting to complete the project faster, the project manager looks at the cost associated with crashing each activity. The best approach to crashing would also include looking at the–
(a) Risk impact of crashing each activity.
(b) Customer’s opinion of which activities to crash.
(c) Boss’s opinion of which activities to crash and in which order.
(d) Project life cycle phase in which the activity is due to occur.

31. The project is not completed until–
(a) The project scope is completed, administrative closure is completed and payment is received.
(b) Formal acceptance is received, and any other requirements for project closure as stated in the contract are met.
(c) The customer is satisfied and final payment is received.
(d) Lessons learned are completed.

32. During project executing, a team member comes to the project manager because he is not sure of what work he needs to accomplish on the project. Which of the following documents contain detailed descriptions of work packages?
(a) Work breakdown structure (WBS) dictionary
(b) Activity list
(c) Preliminary project scope statement
(d) Project scope management plan

33. You are asked to prepare a budget for completing a project that was started last year and then shelved for six months. All the following would be included in the budget except?
(a) Fixed costs
(b) Sunk costs
(c) Direct costs
(d) Variable costs

34. During the project life cycle, in which part of the life cycle will risk be the lowest?
(a) Initiation
(b) Planning
(c) Execution
(d) Closeout

35. A project manager managing any project should perform risk analysis at what stage of the project–
(a) Just before any major meeting with the client.
(b) On a regular basis throughout the project.
(c) Only when justified by the awareness of new risks becoming a possibility.
(d) When preparing the project plan.
(e) None of the above

36. You are the project manager for a high visibility project. The margin on this project is low, and it is extremely important that the cost estimates for the work on the project be accurate. While reviewing the cost estimates for this project you notice that one of the cost estimates for an element in the WBS is 10% higher than two previous projects for very similar work. What should you do?
(a) Accept the estimate because you trust all of the people on your project team, and they are responsible for estimates.
(b) Reduce the estimate and add the additional budget to the management reserve.
(c) Ask the person responsible for the estimate to explain the difference and bring supporting information to you.
(d) Reduce the estimate and add the additional budget to the contingency reserve.

37. The project life cycle differs from the product life cycle in that the project life cycle–
(a) Does not incorporate a methodology.
(b) Is different for each industry.
(c) Can spawn many projects.
(d) Describes project management activities.

38. A manager and the head of engineering discuss a change to a major work package. After the meeting, the manager contacts you and tells you to complete the paperwork to make the change. This is an example of–
(a) Management attention to scope management.
(b) Management planning.
(c) A project expediter position.
(d) A change control system.

39. All of the following are ingredients of management of project execution except?
(a) Identifying changes
(b) Using a work breakdown structure
(c) Implementing corrective actions
(d) Setting up a project control system

40. A project manager does not have much time to spend planning before the mandatory start date arrives. He therefore wants to move through planning as effectively as possible. Which of the following would you recommend?
(a) Make sure you have a completed preliminary project scope statement and then start the WBS.
(b) Create an activity list before creating a network diagram.
(c) Document all the known risks before you document the high-level assumptions.
(d) Finalize the quality management plan before you determine quality metrics.