Post on 03-Jun-2018
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PROJECT EVALUATION ANDIMPLEMENTATION
COURSE CODE: 401
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L1: INTRODUCTION
1. What is a Project?2. Characteristics of a Project3. Classification of Projects
a. Taxonomy of projects
b. Variety of Projects4. Sources of Project Ideas5. Project Selection Stages
a. Project Identification
b. Project Appraisalc. Project Selection making a choice- Preliminary Considerations- Project Rating Index
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Project
The PMI defines a project as: a temporary endeavour
undertaken to create a unique product, service orresult
A project is a complex, non-routine, one-time effortlimited by time, budget, resources and performancespecifications designed to meet the customer needs.
A project is a one shot, time tested, goal directed,major undertaking requiring the commitment of
varied skills and resources. A project is for setting up a plant and when the plant
becomes operational, the project is treated ascompleted.
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Characteristics of a Project Mission / Set of Objectives A fixed beginning and a termination point Team work
Life cycle Uniqueness Customer specific Greater the complexity of the project, greater the
extent of sub contract work and A well defined project has lesser risk &uncertainty
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RememberThe objectives of projects and operations are fundamentally different.
The purpose of a project is to attain its objectives and then terminate.Conversely, the objective of an ongoing operation is to sustain the business.
Projects are different because the project concludes when its specificobjectives have been attained, while operations adopt a new set ofobjectives and the work continues.
Projects are undertaken at all levels of the organization and they caninvolve a single person or many thousands. Their duration ranges from afew weeks to several years. Projects can involve one or manyorganizational units, such as joint ventures and partnerships.
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Taxonomy of Projects
1. National & International Projects2. Industrial & Non industrial Projects3. Level of Technology based Projects4. Based upon Size
5. Based upon Ownership: Pvt., Public, Joint6. According to Purpose B M R E D,
Rehabilitation of Sick Units, MaintenanceProjects, Technology Up gradation Projects,
Merger & Acquisition Projects, Innovation &Invention Projects, Consultancy Projects and 7. Function Based Projects Construction ,
Fabrication, Textile, Chemical, Soft wareProjects, Dairy Projects etc.
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VARIETY OF PROJECTS
Projects at personal level Projects in local neighbourhood
Organisational projects National projects and Global projects
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PERSONAL PROJECTS
Preparing for an examination Writing a book
Getting dressed Wedding in the house A birthday function
A family vacation etc.
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PROJECTS IN LOCALNEIGHBOURHOOD
A school function
Cleanliness drive Construction of clubs Tree plantation exercise
Establishment of a park Welcoming a dignitary to the colony etc.
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ORGANISATIONAL
PROJECTS Construction of building, highway
Planning & launching a new product A turnaround in a refinery A training for managers in the
organization Conducting a marketing survey Completing a financial audit Disposal of dead stock etc.
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NATIONAL PROJECTS
Launching a new satellite
Literacy campaign
Poverty removal drive
Organizing general elections
Preparation of annual budget etc.
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GLOBAL PROJECTS
Organising peace missions (UN)
Space exploration
Conducting World Trade
Environment protection
Combating terrorism etc.
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Sources of Project Ideas
1. Analysis of existing industries basedupon perform anc e, inp uts , ou tpu ts ,imp or t s and expo r t s
2. Five year plans3. Government policies4. Financial institutions5. Survey reports6. Consultancy organizations contd.
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Sources of Project Ideas contd .
7. Trade fairs8. Embassies9. Sick units10.New technologies developed by CSIR,
NPL11.News papers, magazines, trade
journals an d 12.Needs of unsatisfied customers
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PROJECT SELECTION - stages
Project Identification
Project Appraisal
Project Selection making a choice
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1. PROJECT IDENTIFICATION - stage
Receptive to new ideas
Vision of future growth
Long term objectives SWOT analysis and
Preliminary project analysis
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PROJECT IDENTIFICATION
ObjectivesInternal
SWOT BrainstormingExternal
Project possibilitiesCriteria ScreeningProject proposals
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2. PROJECT APPRAISAL - stage
Market Appraisal Technical Appraisal
Financial Appraisal Economic Appraisal and Ecological Appraisal
Remember: A Feasibility Report considersall these issues prior to project adoption.
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MARKET APPRAISAL
Aggregate future demand Market share
Current and future competition Location and accessibility of consumers Technological scenario /Obsolescence
Possible pricing options
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TECHNICAL APPRAISAL
Engineering aspects Locations
Size Production process
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FINANCIAL APPRAISAL
Cash flows over time Profitability
Break even point Net present value Internal rate of return
Payback period and Risk Analysis
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ECONOMIC APPRAISAL
Benefits and costs (in shadow prices) Distribution of income in society
Level of savings & investment in society Self sufficiency and employment
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ECOLOGICAL APPRAISAL
Environmental damage
Air Water Noise
Other Restoration measures and cost
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3. Project Selection PreliminaryConsiderations
Criteria to be used in selecting projects: Profile matching with entrepreneur To fit in with national objectives
Profitability Availability of inputs Market size, growth potential, competitors Risk factors: technological changes,
competition, government regulations,vulnerability to business cycles Comparative Score of alternative Projects i.e.
Project Rating Index.
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Project Rating Index (PRI) A preliminary evaluation may be translated into a project
rating index. Steps involved in determining PRI-
Identify factors relevant for project ratingAssign weights to these factorsRate the project proposal on a scale of 1 to 5 foreach of the factorMultiply the factor rating with the factor weight toget the factor score.Add all the factor scores to get the value of thePRIChoose the project alternative with highest PRI
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Determination of a Project rating index
FactorFactorWeight
VG(5)
G(4)
A(3)
P(2)
VP(1)
FactorScore
Input Availability 0.25 0.75Technical Know how 0.10 0.40Reasonableness ofcost 0.05 0.20
Adequacy ofMarkets 0.15 0.75
ComplimentaryRelationship withOther Products
0.05 0.20
Stability 0.10 0.40Dependence onfirm's strength
0.20 1.00
Consistency withGovt. Priorities 0.10 0.30
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Choice of a Project based upon PRI
FactorFactor Score
PI PII PIII
Input Availability 0.75 1.00 0.75Technical Know how 0.40 0.30 0.40
Reasonableness of cost 0.20 0.25 0.40
Adequacy of Markets 0.75 0.60 0.60ComplimentaryRelationship with OtherProducts
0.20 0.40 0.10
Stability 0.40 0.20 0.30Dependence on firm'sstrength
1.00 1.50 1.00
Consistency withGovt. Priorities
0.30 0.10 0.20
Project PRI
PI 4.00
PII 4.35
PIII 3.70
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Request for Proposal (RFP)
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Assignment No. 1
Prepare a Request for Proposal for aproject of your choice.
Discuss the : Attributes of a Project Manager Skills Required for a Successful Project
Manager
Duties of a Project Manager of a large project Scope of Project Management
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PROJECT SELECTIONCRITERIA
Investment Rate of return Risk Likely profit Payback
Similarity to existingbusiness
Expected life
Flexibility Environmental impact Competition
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