Introduction to Project Management PM-010

8/3/2019 Introduction to Project Management PM-010

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Qs 01:- Describe the three strategy levels in detail.

Ans01 :-

Strategies can be formulated on three different levels. Johnson

and Scholes define strategy as Strategy is the direction and scopeof an organization over the long term: which achieves advantage for

the organization through its configuration of resources within a

challenging environment, to meet the needs of markets and to fulfill

stakeholder expectations.

Strategy at Different Levels of a Business:

Strategies exist at several levels in any organization -

ranging from the overall business (or group of businesses) through

to individuals working in it

Strategy Levels:

Strategy exists at three hierarchical levels in an

organization ranging from the overall business (or group of

businesses) through to individuals working in it.

1. Corporate Strategy :It is concerned with the overall purpose and

scope of the business to meet stakeholder expectations. This is acrucial level since it is heavily influenced by investors in the

business and acts to guide strategic decision-making throughout the

business. Corporate strategy is often stated explicitly in a "mission

statement". It consists of the kinds of initiatives the company uses

to establish business positions in different industries, the

approaches corporate executives pursue to boost the combined

performance of the set of businesses the company has diversified

into, and the means of capturing cross-business synergies and

turning them into competitive advantage. Senior corporate

executives normally have lead responsibility for devising corporate

strategy and for choosing among whatever recommended actions

bubble up from the organization below.

2. Business Unit Strategy :This strategy is concerned more with how

a business competes successfully in a particular market. It concerns

strategic decisions about choice of products, meeting needs of


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customers, gaining advantage over competitors, exploiting or

creating new opportunities etc. Business strategy concerns the

actions and the approaches crafted to produce successful

performance in one specific line of business. The key focus here iscrafting responses to changing market circumstances and initiating

actions to strengthen market position, build competitive advantage,

and develop strong competitive capabilities. Orchestrating the

development of business-level strategy is the responsibility of the

manager in charge of the business.

3. Operational Strategy : It is concerned with how each part of the

business is organised to deliver the corporate and business-unit

level strategic direction. Operational strategy therefore focuses on

issues of resources, processes, people etc. Operating strategies

concerns the relatively narrow strategic initiatives and approaches

for managing key operating units(plants, distribution centres, geographic

units) and for specific operating activities with strategic significance

(advertising campaigns, the management of specific brands, supply

chain-related activities, and Website sales and

operations).Operating strategies add further detail and

completeness to functional-area strategies and to the overall

business strategy. Lead responsibility for operating strategies is

usually delegated to frontline managers, subject to review and

approval by higher-ranking managers.

Qs 02 :

a) Describe the various roles undertaken by a Project Manager.

b) List and explain in brief the qualities of a Project Manager.

Ans02 :-

a) Various roles undertaken by a Project Manager :


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The role of the Project Manager is to plan, execute

and finalize projects according to strict deadlines and within budget.

This includes acquiring and coordinating the efforts of team

members and third-party contractors or consultants in order todeliver projects according to plan. The role & responsibilities of a

Project Manager is little complex and needs to be explained

elaborately in clear terms for each project. Below are few important

roles & responsibilities of a Project Manager:

The Project Manager is the person responsible for managing

the project.

The Project Manager is the person responsible for

accomplishing the project objectives within the constraints of

the project. He is responsible for the outcome (success or

failure) of the project.

The Project Manager is involved with the planning, controlling

and monitoring, and also managing and directing the assigned

project resources to best meet project objectives. The Project Manager Controls and monitors triple

constraintsproject scope, time and cost (quality also)in

managing competing project requirements.

The Project Manager examines the organizational culture and

determines whether project management is recognized as a

valid role with accountability and authority for managing the

project. The Project Manager collects metrics data (such as baseline,

actual values for costs, schedule, work in progress, and work

completed) & reports on project progress and other project

specific information to stakeholders.

The Project Manager is responsible for identifying, monitoring,

and responding to risk.


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The Project Manager is responsible to the project stakeholders

for delivering a projects objectives within scope, schedule,

cost, and quality.

The reporting structure of a Project Manager will changedepending on organizational structure. He may reports to a

Functional Manager or to a Program Manager.

In a bit exaggerating terms, Project Manager is the God

of his project and he is the one who decides the success of the

project.

b) Qualities of a Project Manager :

You do not lead by hitting people over the head

thats assault, not leadership. How apt these words by Dwight D

Eisenhower are, leadership is not about bullying people, it is about

getting people to respect you with your leadership skills and

qualities. People should want to be lead by the project manager. So

what are the leadership qualities that a project manager shouldhave? Should he be skilled or compassionate? Or maybe he needs

to be a good communicator or a visionary? There is not right answer

and there is no wrong answer. Even as I make this statement, here

is a list of some leadership qualities for a project manager.

1. Vision:

Every project manager should have a vision, avision of what he wants the project to be like, a vision of how

to get things done and a vision of the near future of the

project. And he needs to be able to convey this vision to his

team members. Only when there is vision is there going to be

real involvement on the part of the project manager and thus

involvement on part of the team members. This is when the

team members and project manager start feeling like a part of

the organization and not just the project.


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2. Communication skill:

Most would say communication is the most

important skill of a project manager and some would beg to

differ. But communication is an integral part of the leadershipqualities. Without communication the project manager cannot

lead. Communication not only allows for great leadership but

also for openness and relativity. Persuasion and negotiation

are all a part of communication and the project managers

qualities.

3. Honesty:

Call it honesty, integrity or loyalty, the projectmanager needs to have it all. The actions of the project

manager set an example for the rest of the team members.

The project manager is ultimately responsible for setting

standards, ethically and otherwise for the rest of the team.

The project manager needs to practice before preaching and

to lead by example.

4. Passion:

A project manager without passion is one that is

simple put, lacking dedication. The project manager has to be

passionate about the project; he should have enthusiasm and

the right attitude. Only then will people follow him and respect

his decisions, because they need to feel he is doing it for the

project. There needs to be commitment and optimism

involved.5. Compassion:

Do not mistake empathy or compassion for

sympathy. These two words are independent of each other.

Empathy means to understand. A good project manager needs

to understand or empathize with the fact that there is a life

outside the work place and that people are not machines

without emotions.6. Skill and knowledge:


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There needs to be some skill and knowledge that

the project manager needs to have. To put it simply, the

project manager should know what he is doing and should be

able to guide the rest of the team.7. Delegation:

The project manager should be able to handle

delegation with ease. He should be able to recognize skills and

expertise of his team members and assign or delegate tasks

according to those. Also this shows that the project manager

trusts the team in doing tasks. Trust inspires confidence.

8. Composed:

We do not live in a perfect world. There are times

when things do not go as expected in such a case the project

needs to maintain his cool and be composed irrespective of

the amount pressure he is under. This shows good leadership

and strength in character.

9. Team building:

The project manager should also be a teambuilder. He should be able to hold and pull the team together

to work under different conditions. The team starts as a group

of strangers and needs to be made into a core group of

people.

10. Problem solver:

An efficient project manager should be capable of

solving any and all problems, either with the team or theproject itself.

Qs 03 :-

a) Describe the major types of stakeholders in a project.

b) Describe the major type of Organizational structure in Detail.

Ans03 :-


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a) Major types of stakeholders in a project:

According to PMIs guide to PMBoK, project stakeholders

are individuals and organizations actively involved in the project, or

whose interests may be positively or negatively affected as a resultof project execution or project completion.

According to Stanford Research Institute5 stakeholders

are those groups without whose support the organization would

cease to exist. The major stakeholders of a project are:

Project Manager

Customer Performing Organization

Project Team Members

Sponsor

Society

Below figure depicts a diagrammatic representation of

the major stakeholders of a project.

Project Manager: Project manager is the interface between the

customer and other internal stakeholders. The project manager

holds the responsibility for the successful implementation of theproject and is an important stakeholder.


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Customer::Customers are the internal or external group of

individuals who directly affect the project. The aim of the project is

to create a product, service or facility based on customerrequirements and to deliver it to the customer. Hence, the project

team must consider all requirements of the customer while creating

the deliverable. The customer can be any one of the following:

Internal customer:

They are individuals within the parent organisation. For

example, the IT department is assigned to provide a softwarepackage for the accounts department. The accounts

department is the internal customer.

Intermediate customer:

They are external to the company but not the final user of the

product e.g. distributors and wholesalers.

External customer:

They are individuals or organisations that pay for and use thefinal product.

Performing Organization: The performing organization is the

enterprise whose employees are most directly involved in

performing the work of the project. Therefore, the project

contributes towards achieving the corporate goals of the performing

organization. In addition, there are several other stakeholders likeproject owner, fund providers, suppliers or contractors, government

agencies and media outlets and the society. Stakeholder roles and

responsibilities may overlap. For example, when an engineering firm

finances a plant it is in the designing or construction field, the role

of the engineering firm changes from performing organization to

sponsor for the projects undertaken by the designing or construction

company. The naming or grouping of stakeholders is primarily an


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aid to identify individuals or organizations who view themselves as

stakeholders.

Project Team Members:

Team members working in their individualareas of expertise play a crucial role in the success of the project.

They work directly with or under the project manager depending on

the organization structure adopted for the project. The project

manager, therefore, uses team building skills to ensure that the

team members work as a team.

Sponsor:

The sponsor is an individual or a group within or externalto the parent organization who arranges the financial resources in

cash or in kind for the project. The sponsor may be a senior

executive of an organization or a junior manager with formal

authority who is responsible for the project thus, acting as a link

between the project and the performing organization.

b) Major type of Organizational structure in Detail:

Organizational structure has a significant impact on the

functioning of a project manager. To enable successful completion

of a project, it is important that the resources required for project

implementation flow freely from the organization to the project.

There are three types of organizational structures:

1. Functional organization:It is a hierarchical structure. It

defines a clear Superior-Subordinate relationship, i.e., the line of

control is clear. Each department carries out work in its area of

specialization and employees in each department work with its

respective expertise within the department's line of control. In a

manufacturing organization, the different departments are

production, finance, marketing, quality control, engineering,

administration, personnel ands so on. If a new product is to be


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developed, the engineering department handles only the design

development phase of the product. If answers to questions

concerning manufacturing, marketing or quality control are found,

the query is passed on to the respective department through formalcommunication channels.

2. Project-based organizations:These are designed to provide

near total authority to the project manager. The project manager

directs work and sets priorities to employees assigned to the project

manager for the project. Functional departments exist in this

organization, but the groups working in these departments report

directly to the project manager in the execution of various projects.

3. Matrix-based organizations:It is the combination of the

features of functional and project-based organizational structures. In

this type of organizational structure, project managers and

functional managers have equal authority, which implies that the

functional staff member reports to both project manager and their

functional manager. This constitutes a dual reporting system for

each functional staff member.

Qs 04 :- List and describe in brief the various qualities of the project

management process.

Ans04 :-

Overview of Project Management Processes:

PMBoK organizes Project management processes into

five groups, defined as the Project Management Process Groups,

each group comprising one or more processes. Project

management of a single project essentially comprises a number of

interlinked processes. The underlying concept for the interaction


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among the processes is the Plan-Do-Check-Act (PDCA) cycle is

referred in the American Society for Quality (ASQ) handbook.

Traditionally, project management includes a number of

elements: four to five process groups, and a control system.Regardless of the methodology or terminology used, the same basic

project management processes will be used.

Major process groups generally include:

Initiation

Planning or development

Production or execution

Monitoring and controlling

Closing


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Initiation:The initiation processes determine the nature and scope ofthe project. If this stage is not performed well, it is unlikely that the

project will be successful in meeting the business needs. The key

project controls needed here are an understanding of the businessenvironment and making sure that all necessary controls are

incorporated into the project. Any deficiencies should be reported

and a recommendation should be made to fix them.

Planning and design:After the initiation stage, the project is plannedto an appropriate level of detail. The main purpose is to plan time,

cost and resources adequately to estimate the work needed and to

effectively manage risk during project execution. As with theInitiation process group, a failure to adequately plan greatly reduces

the project's chances of successfully accomplishing its goals.

Executing:Executing consists of the processes used to complete thework defined in the project management plan to accomplish the

project's requirements. Execution process involves coordinating

people and resources, as well as integrating and performing the

activities of the project in accordance with the project managementplan. The deliverables are produced as outputs from the processes

performed as defined in the project management plan.

Monitoring and controlling:Monitoring and controlling consists ofthose processes performed to observe project execution so that

potential problems can be identified in a timely manner and

corrective action can be taken, when necessary, to control the

execution of the project. The key benefit is that project performanceis observed and measured regularly to identify variances from the

project management plan.

Closing:Closing includes the formal acceptance of the project and theending thereof. Administrative activities include the archiving of the

files and documenting lessons learned.

Qs 05 :- Write a short note on the following:


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a) SWOT Analysis as a Strategic Planning tool.

b) Net Present Value (NPV) as a Project selection criterion.

Ans05 :-a) SWOT Analysis as a Strategic Planning tool:

S.W.O.T. is an abbreviation for Strengths-Weaknesses-

Opportunities-Threats.

One of the most fundamental tools for strategic market

planning is the use of SWOT analysis template to evaluate potential

business success. This simple tool, developed at Stanford University

in the late 1960's, is an extremely powerful ingredient in the recipefor business success.

Used by most Fortune 500 companies in strategic

planning, the SWOT matrix involves a frank evaluation of a business'

Strengths, Weaknesses, Opportunities and Threats:

STRENGTHS:Attributes of the organization those are HELPFUL to

achieving the objective. These are the company's corecompetencies, and include proprietary technology, skills, resources,

market position, patents, and others.

a) WEAKNESSES:Attributes of the organization those are HARMFUL to

achieving the objective. Weaknesses are conditions within the

company that can lead to poor performance, and can include

obsolete equipment, no clear strategy, heavy debt burden, poor

product or market image, long product development cycle, weak

management, and others.

b) OPPORTUNITIES:External conditions those are HELPFUL to

achieving the objective. Opportunities are outside conditions or

circumstances that the company could turn to its advantage, and

could include a specialty niche skill or technology that suddenly

realizes a growth in broad market interest.

c) THREATS:

External conditions those are HARMFUL to achieving theobjective. Threats are current or future conditions in the outside


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environment that may harm the company, and might include

population shifts, changes in purchasing, serious competitive

barriers, changes in governmental or environmental regulations,

and others.SWOT analysis provides an efficient way to evaluate the

range of factors that influence your operation, and can give you

valuable guidance in making decisions about what to do next. It also

provides a highly productive way to get your key personnel involved

in the management decision-making process.

The exercise of going through the SWOT analysis matrix

can be a great opportunity to do management team building. If you

have a large team, break into 4 teams for each of the quadrants and

each team can prepare and report its findings. Make sure to include

not only your market planners, but also finance, operations, product

development and others.

SWOT Analysis is one of the effective analytical tools to

evaluate a situation. The situation may be strategic related or

capabilities related. SWOT Analysis is often used along with

Strategic planning and it forms one of the key critical success

factors in a Strategic Planning Process.

There are many ways how a SWOT analysis is used. This

TQM article aimed to share how SWOT analysis can be used as an

essential tool to Strategic Planning Process as I practiced in my

workshop conducted over the years.

While detail Analysis is performed, it can become a

complex process because it entails several data analysis involves

external factors such as Political, Economic, Societal and

Technological in short called P.E.S.T. Besides, it also examines

internal factors such as operational capabilities as compared to the

competitors.


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b) Net Present Value (NPV) as a Project selection criterion :

In finance, the net present value (NPV) or net present

worth (NPW) of a time series of cash flows, both incoming and

outgoing, is defined as the sum of the present values (PVs) of theindividual cash flows. In the case when all future cash flows are

incoming (such as coupons and principal of a bond) and the only

outflow of cash is the purchase price, the NPV is simply the PV of

future cash flows minus the purchase price (which is its own PV). NPV

is a central tool in discounted cash flow (DCF) analysis, and is a

standard method for using the time value of money to appraise long-

term projects. Used for capital budgeting, and widely throughouteconomics, finance, and accounting, it measures the excess or

shortfall of cash flows, in present value terms, once financing charges

are met.

The NPV of a sequence of cash flows takes as input the

cash flows and a discount rate or discount curve and outputs a price;

the converse process in DCF analysis - taking a sequence of cash flows

and a price as input and inferring as output a discount rate (the

discount rate which would yield the given price as NPV) - is called the

yield, and is more widely used in bond trading.

Each cash inflow/outflow is discounted back to its

present value (PV). Then they are summed. Therefore NPV is the sum

of all terms,

Where

t - The time of the cash flow

i - The discount rate (the rate of return that could be earned on an

investment in the financial markets with similar risk.)


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Rt - the net cash flow (the amount of cash, inflow minus outflow) at

time t. For educational purposes, R0 is commonly placed to the left

of the sum to emphasize its role as (minus) the investment.

The result of this formula if multiplied with the AnnualNet cash in-flows and reduced by Initial Cash outlay will be the

present value but in case where the cash flows are not equal in

amount then the previous formula will be used to determine the

present value of each cash flow separately. Any cash flow within 12

months will not be discounted for NPV purpose.

Net Present Value (NPV) as Project Selection Criterion:NPV is the present value of the future revenues after

deducting future costs. This is a very popular and valid method for

selecting a project from the financial viewpoint. Some factors that

companies use to enhance NPV are:

Government policy. For example, special tax benefits and

exemptions for an industry or a location. Economies of scale: In manufacturing, unit cost is substantially

reduced by adopting high production volume. For example,

petroleum refining, steel production, and mining.

Product differentiation: This is achieved by innovative product

features, high quality products, customised service and so on.

Technology superiority: DRL outperformed its competitors in

the drug-manufacturing industry because of their technologybased on research and development.

Qs 06 :-Describe in brief the Human resource management process in a

project.

Ans06 :-Project Human Resource Management:


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Project Human Resource Management is a subset of

Project Management that includes various processes that are

essential and are required for making the most effective use of the

people involved with the project.Human Resource Management includes various

processes that are vital to make the most effective use of the

people involved with a project. The main process involved with the

HR Management process includes:

Acquiring the project team.

Developing the project team.

Managing the project team.

Acquiring a Project Team:The members who belong to different

groups and functions and are allocated to the activities of the same

project, form a project team. A team can be divided into sub-teams

if required. Generally, the project teams are only used for a defined

period of time. However, they are disbanded when the project iscomplete. Sometimes, due to the nature of the specific formation

and disbandment, project teams are usually agile in organisations.

Acquiring a project team is the process of acquiring the

specific people needed to accomplish all phases of the given

project. Ultimately the team members will bring all the specific

qualifications and capabilities to the project team. However, the

project management team has control over the selection process.Selection of team mates involves certain concerns which need to be

evaluated.

A number of factors are considered while deciding the

team members. These factors include a series of environmental

factors (such as work experience, availability, and cost), derivation

of clear and concise project organisation charts, and formulation of

a thorough staffing management plan. Once the team is properlystaffed, the next steps (or outputs) of the process involve staffing


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out assignments to the team, determining availability of resources,

and updating the staffing management plan.

Important factors that are considered during the process of

acquiring the team are: The project manager should efficiently discuss and induct

others who are in a position to supply the required Human

Resources in a project.

Failure to obtain the essential Human Resources for the

project will affect project agenda, budgets, consumer

satisfaction and quality. It declines the probability of success

and eventually results in project cancellation.

Developing a Project Team:Developing a project team is a process

of enhancing interaction among the team members and also the

project manager. The process refers to increasing competencies of

individuals and building up team spirit, which finally leads to a

quality project.

To achieve project success, there should be goodcommunication among the team members. Project managers should

administer the development of the project team. The project

manager should create the relevant environment for teamwork,

provide new goals for the team to compete and achieve. Project

managers should encourage feedback from the team. The project

manager should provide effective review and good support to the

team staff.

Open communication between the project manager and

team reduces conflicts. The management should also support the

project managers. The project stakeholders should provide the

required support to the development of the project team.

Projects are done in diversified environments. The

project team may experience variance in language, industry and

culture while at work. The project team should be dedicated to the


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project and the team members should work together, without losing

their individuality. The goals for developing a project team are:

To develop technical knowledge about the project, this leads

to quality output and meeting delivery schedules with reducedcost.

To enhance trust among team members, thus reducing

conflicts.

To develop cohesiveness in the project.

To allow sharing knowledge among team members.

The five stages of team development are,

I.Forming:Forming involves knowing every team member

individually. The team members are inclined to work independently.

They find out about each other and know whos who.

II.Storming:Storming involves the actual Project Management

process. This stage promises action. There is a struggle for project

team control, and momentum builds as members have to lead the

project team. During this phase, the team members figure out the

hierarchy of the team and the informal roles of team members.

III.Norming:Norming is working together, socialising, and providing

constructive criticism. The team develops a strong commitment to

the teams goal and work to achieve it.

IV. Performing:Performing means smooth movement of project

development by a well-organised project team. The team members

blend into their roles and focus on completing the project work as a

team.

V.Adjourning:Adjourning implies completion of the project so that

the team is ready for a new one.

Managing a Project Team:Managing a project team is the process

of delegating responsibilities and tasks, monitoring team

performance, providing feedback, solving issues, and coordinating


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changes to enhance overall project performance. Managing the

team is one of the most critical aspects of project management. The

project manager should encourage building competencies among

the team members and reward them accordingly.Key aspects of managing a project team are:

Assigning work and observing the commitment level in each

team member.

Building co-operative working relationship and ensuring

effective communication among all members of the project

team.

Monitoring team spirit. Providing effective performance review and appraisal to

inspire the project team.

Qs 01 :- List and explain in brief the inputs to the following processes.

a) Acquiring a project team

b) Communication plan

Ans01 :-

a) Inputs to the Acquiring a project team :

The members who belong to different groups and functions

and are allocated to the activities of the same project, form a project team. A

team can be divided into sub-teams if required. Generally, the project teams are

only used for a defined period of time. However, they are disbanded when the


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project is complete. Sometimes, due to the nature of the specific formation and

disbandment, project teams are usually agile in organizations.

Acquiring a project team is the process of acquiring the

specific people needed to accomplish all phases of the given project. Ultimately

the team members will bring all the specific qualifications and capabilities to the

project team. However, the project management team has control over the

selection process. Selection of team mates involves certain concerns which need

to be evaluated.

Important factors that are considered during the process of

acquiring the team are:

The project manager should efficiently discuss and induct others who are

in a position to supply the required Human Resources in a project.

Failure to obtain the essential Human Resources for the project will affect

project agenda, budgets, consumer satisfaction and quality. It declines the

probability of success and eventually results in project cancellation.

The inputs for acquiring a project team are:

Enterprise environmental factors: Team members are available frominternal and external sources. When selecting the team members, it is

important to evaluate the following factors:

Availability

Ability

Experience

Interests

Costs

Assets of organizational process:Assets of organizational process coversreviewing the documented policies, procedures and guidelines governing staff

assignments.

Roles and responsibilities:The roles and responsibilities document shouldbe assessed to determine a team members roles, responsibilities, skills,

levels of authority, and competencies.

Project organization charts:

The project organization chart is aninput/output device that serves a valuable role for the Project Management


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team and team leader in the process of keeping a thorough and careful

organizational record of the projects processes.

Staffing management plan: The staffing management plan with theproject schedule is reviewed to ascertain when team members are needed.

b) Inputs to the Communication plan :

Planning communication is the process of ascertaining the

information and communication needs of the project stakeholders.

Communication plan helps to communicate the right information, to

the right people at the right time. It is a schedule of communication events used

to make sure that the project stakeholders are kept properly informed. The

various factors such as the time, effort and resources that are required to

perform these planned communication activities are the part of the Project

Management. The communication goals, strategies and stakeholders are

described in the communication plan.

The best time for planning communication is at the start up phase

of the project life cycle. It ensures that the plan includes the tasks needed tocommunicate effectively throughout the project cycle. The key features

influencing the communication plan includes Project Management team structure,

scope of the project and feedback from the stakeholders.

There are two ways of planning communication:

Constant communication: Constant or regular communication involves

communicating to the project team, managers and project stakeholders on aregular basis. These types of communication include regular status reports,

project team meetings and monthly status updates about the project. The

constant communication also includes the regular stakeholder report updates

Event driven communication:The event driven or one-time communication

includes sessions discussing critical issues, stakeholder meetings, training

schedules and wrap up sessions.

The advantages of planning communication are:

It facilitates team development.


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It makes it easier to update stakeholders.

It saves creation of additional project documentations.

The inputs for planning communication are:

Stakeholder register:Stakeholder records consist of stakeholder

identification, assessment and classification documents.

Stakeholder management strategy: Stakeholder management strategydescribes the method to gain support and reduce dissatisfaction from the

stakeholders throughout the entire project life cycle.

Enterprise environmental factors: All environmental factors such asorganizational culture, industry standards are considered as inputs for the

planning communication process.

Organizational process aspects: All organizational process assets are

applied while planning communications. The lessons learned and documented

information is important as it gives an idea about the issues resolved.

Qs 02 :- Write short notes on the following idea generation technique:a) Mind mapping

b) Delphi technique

c) Brainstorming

d) Nominal Group technique

Ans02 :-

a) Mind mapping:

Generation of ideas takes place in any hierarchical level of a firm. A

project idea is conceived from a search for promising project ideas. Certain broad


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considerations and guidelines are applied to help generate of project ideas. Some

group creativity techniques to generate a large number of ideas to solve problem

are discussed below.

Another way to look at the human levels of thinking is the mind mapping

concept. Mind mapping exercise is aimed at increasing mental energy to utilize

creative thinking skills, enabling the mind to track out ideas which normally lie in

obscurity on the edge of thinking.

Following example is taken from the software Buzans iMind Map which

was chosen for the brainstorming session aimed at planning for the future of

young and developing minds. The software replicates the organic shape, form and

use of colors and images to convey a thought or idea a graphic technique for

stimulating creativity and unleashing the truth, often untapped potential of the

mind. This was used in June 2008 at Petra, Jordan, where 30 Nobel Prize winners

(scientists, entrepreneurs, academics, and humanitarians) participated in the

conference focused on the theme Reaching for New Economic, Scientific and

Educational horizons. Two of the many conclusions of the brainstorming session

were - elimination of child poverty worldwide is essential to move forward with

educational development; new and innovative learning tools are the foundation

for a positive future for the next generation.

b) Delphi technique:Generation of ideas takes place in any hierarchical level of a firm. A

project idea is conceived from a search for promising project ideas. Certain broad

considerations and guidelines are applied to help generate of project ideas. Some

group creativity techniques to generate a large number of ideas to solve problem

are discussed below.

The Delphi Technique was originally conceived as a way to obtain the

opinion of experts without necessarily bringing them together face to face. In

recent times, however, it has taken on an all new meaning and purpose.

The Delphi Technique is based on the Hegelian Principle of achieving

Oneness of Mind through a three step process of thesis, antithesis, and

synthesis. In thesis and antithesis, all present their opinion or views on a given

subject, establishing views and opposing views. In synthesis, opposites are

brought together to form the new thesis. All participants are then to accept

ownership of the new thesis and support it, changing their own views to align

with the new thesis. Through a continual process of evolution, Oneness of Mind

will supposedly occur.
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This is a systematic, interactive, forecasting method that relies on a panel

whose members are carefully selected independent experts. It is based on the

principle that forecasts from an unstructured group of individuals are

comparatively inaccurate than forecasts from a structure group of experts. The

experts answer prepared questionnaires in two or more rounds. After each round,

a facilitator provides an overall summary of the experts forecasts from the

previous round as well as the reasons they provided for their judgments. The

participants revise their earlier answers by knowing the responses of other

members of the group. The process stops after a predetermined stop-criterion

like number of rounds or achievement of consensus. Usually, participants

maintain secrecy even after completion of the final report. The facilitator, who is

the coordinator of the Delphi method, sends out the questionnaire, collects and

analyses responses, and identifies common and conflicting viewpoints.

c) Brainstorming:

This method aims to give people freedom of mind and action to create and

reveal new ideas. All spontaneous ideas from a group are gathered to find a

solution for a specific problem. The rules followed during brainstorming are as

follows:

No criticism of ideas Go for large quantity of ideas

Build on each others ideas

Encourage wild ideas

Brainstorming consists of a facilitator who composes the brainstorming

panel and an idea collector to record the suggested ideas. Sometimes the

facilitator is also the idea collector. Some of the leading questions that a

facilitator asks during the session are Can we combine these ideas? and Howabout looking from another perspective? The idea collector also numbers each

idea for future reference. When a participant exhausts all ideas, the creativity and

experience of another participant is brought out. This often makes group

brainstorming sessions enjoyable experiences. This also facilitates in bringing

team members together. Individual brainstorming is effective in generating many

ideas, but not at developing the ideas.

Brainstorming is used to generate ideas, for others to evaluate and select.

The strategy is more effective when the brainstorming group evaluates and

selects a solution to the problem proposed. In either case, the organization offers


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incentives so that participants maintain their brainstorming efforts.

Brainstorming is a lateral thinking process. It is employed particularly

when new ways of thinking are called for and when there is a need to break out

of old established patterns of thinking. Some instances where brainstorming is

used are when there is a need to look at new opportunities, when there is a need

to improve the service offered, or when existing approaches are just not giving

the right results.

d) Nominal Group technique:

Nominal group technique (NGT) is a structured method for group

brainstorming that encourages contributions from everyone. This technique

encourages all participants to have an equal say in the session. Participants are

asked to write their ideas anonymously. The moderator collects the ideas and

each idea is voted on by the group. The process of voting can be simply by show

of hands. The top ranked ideas are sent back to the group or subgroups for

further brainstorming. Each subgroup comes back to the whole group for ranking

the listed ideas. Sometimes the group revaluates the ideas that were previously

dropped. This method requires a trained facilitator.

The benefit of the technique is that the group shares and discusses all

issues before evaluation, with each group member participating equally in

evaluation. The evaluation works with each participant "nominating" his or herpriority issues, and then ranking them on a scale of, say, 1 to 10.

Nominal Group Technique is just one group process for achieving

consensus. Another group consensus technique is the Delphi Method, which is

used among groups of experts to make complex decisions, usually without face-

to-face meetings.

When to use Nominal Group Technique:

When some group members are much more vocal than others.

When some group members think better in silence.

When there is concern about some members not participating.

When the group does not easily generate quantities of ideas.

When all or some group members are new to the team.

When the issue is controversial or there is heated conflict.

Qs 03 :- Describe in brief the various sources of project financing.


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Ans03 :-

Sources of Project Financing:

The term project finance is used loosely by academics, bankers and

journalists to describe a range of financing arrangements. Often bandied about in

trade journals and industry conferences as a new financing technique, project

finance is actually a centuries-old financing method that predates corporate

finance. However with the explosive growth in privately financed infrastructure

projects in the developing world, the technique is enjoying renewed attention.

The purposes of this note are to contrast project finance with traditional corporate

financing techniques; to highlight the advantages and disadvantages of project

finance and ; to propose that a single structure underlies every project finance

transaction; to explain the myriad of risks involved in these transactions; and, to

raise questions for future research.

Project Financing is a unique financing technique that has been used on

many high-profile corporate projects, including Euro Disneyland and the Euro

Tunnel. Employing a carefully engineered financing mix, it has long been used to

fund large-scale natural resource projects, from pipelines and refineries to

electric-generating facilities and hydroelectric projects. Increasingly, project

financing is emerging as the preferred alternative to conventional methods of

financing infrastructure and other large-scale projects worldwide.

Project Financing discipline includes understanding the rationale for projectfinancing, how to prepare the financial plan, assess the risks, design the financing

mix, and raise the funds. In addition, one must understand the cogent analyses

of why some project financing plans have succeeded while others have failed. A

knowledge-base is required regarding the design of contractual arrangements to

support project financing; issues for the host government legislative provisions,

public/private infrastructure partnerships, public/private financing structures;

credit requirements of lenders, and how to determine the project's borrowing

capacity; how to prepare cash flow projections and use them to measure

expected rates of return; tax and accounting considerations; and analytical

techniques to validate the project's feasibility.

Sources of Finance:

Just as financial instruments range from debt to equity and hybrids such as mezzanine

finance, project finance can raise capital from a range of sources. Raising finance depends upon

the nature and the structure of the project. Lender and investor interest will vary depending on

the goals and risks related to the financing. In assembling project financing, all available


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financing sources should be evaluated. Following are some sources of capital used in project

financing

Equity:Equity is often raised in the stock markets and from specialized funds. Equity is

generally more expensive than debt financing. Equity can be raised in the domestic capital

markets as well as in the international capital markets. Delhi Metro Rail Corporation is form

by the joint venture of Government of India (GOI) and Government of National Capital

Territory of Delhi (GNCTD).Both GOI and GNCTD holds 50-50% equity. This 50% each of

GOI and GNCTD equity holds only 30% of the project cost.

Developmental loan:A developmental loan is debt financing provided during a projects

developmental period to a sponsor with insufficient resources. Developmental lenders, who

fund the project sponsor at very risky stage of the project, desire some equity rewards for

the risk taken, hence, it is not unusual for developmental lender to secure rights to provide

permanent financing for the project as part of the development financing agreement.

Subordinated loan:Subordinated loans, also called mezzanine financing or quasi-

equity, are senior to equity capital but junior to senior debt and secured debt. Subordinated

debt usually has the advantage of being fixed rate, long. term, unsecured and may be

considered as equity by senior lenders for purposes of calculating debt to equity ratio. They

are usually used to cover over-runs during the construction stage.

Senior debt:Commercial banks and institutional lenders are an obvious choice

for financing needs of a project. Senior debt of project finance usually constitutes the largest

portion of the financing. These loans usually format least 50% of the capital needs. The

prime reason is that it is cheaper than equity financing. They fall into two categories secured

and unsecured loans. Secured loans are loans where the assets securing the loan have

value as collateral. Such assets are marketable and can readily be converted into cash.

Unsecured loans basically depend on the borrowers general creditworthiness, as opposed to

perfected security arrangement. Nearly 60% of total estimated cost of Delhi metro project is

finance by JBIC (Japan Bank of International Cooperation).Recently operational planning for

Phase III is going on. JBIC appraisal team has given clearance for their next tranche for the

Phase III.

Syndicated loan:A syndicated loan is a loan that is provided to the borrower by two

or more banks and is governed by a single loan agreement. The loan is arranged and

structured by a lead arranger and is managed by an agent bank. The best part about a

syndicated loan is that the funding can be gathered from the international lending

market, which means such a lending can be used for projects which need enormous

amounts of capital.


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World Bank group financing sources:Multilateral institutions such as the World Bank

provide finds to infrastructure development projects worldwide. The scope and extent

of involvement of such institutions in financing project is very limited. World banks provide

funding through its (a) loan program; (b) guarantee program and (c) indirect support forprojects.

Bonds:In recent years the use of the bond markets as a vehicle for obtaining debt funds

has increased. Bond financing is similar to commercial loan structure, except that the

lenders are investors purchasing the borrowers bonds in a private placement or through the

public debt market.

Investment funds:Investment funds mobilize private sector funds for investment in

infrastructure projects. E.g. asset funds or income funds, investment management

companies, venture capital provider and money market funds.

Institutional lenders:These include life insurance companies, pension plans, profit-

sharing plans and charitable foundations. These entities can be a substantial source of

funding.

Host government:The host government can also be a direct or indirect source of

financing. This is more evident in the emerging markets where the governments are usually

eager to fund and support infrastructure projects. They provide indirect support

through tax incentives. GOI and GNCTD have financed approximately 30% of

project incurred cost.

Qs 04 :- Explain the important concepts in Research design?

Ans04 :-

The research designer understandably cannot hold all his decisions in his

head. Even if he could, he would have difficulty in understanding how these are

inter-related. Therefore, he records his decisions on paper or record disc by using

relevant symbols or concepts. Such a symbolic construction may be called the

research design or model. A research design is a logical and systematic plan

prepared for directing a research study. It specifies the objectives of the study,

the methodology and techniques to be adopted for achieving the objectives. Itconstitutes the blue print for the plan is the overall scheme or program of


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research. A research design is the program that guides the investigator in the

process of collecting, analysing and interpreting observations. It provides a

systematic plan of procedure for the researcher to follow elltiz, Jahoda and

Destsch and Cook describe, A research design is the arrangement of conditions

for collection and analysis of data in a manner that aims to combine relevance to

the research purpose with economy in procedure.

Components of Research Design:

It is important to be familiar with the important concepts relating to

research design. They are:

1. Dependent and Independent variables:A magnitude that varies is known as a variable. The concept may assume

different quantitative values, like height, weight, income, etc. Qualitative

variables are not quantifiable in the strictest sense of objectivity. However,

the qualitative phenomena may also be quantified in terms of the presence or

absence of the attribute considered. Phenomena that assume different values

quantitatively even in decimal points are known as continuous variables.

But, all variables need not be continuous. Values that can be expressed only

in integer values are called non-continuous variables. In statistical term,

they are also known as discrete variable. For example, age is a continuous

variable; whereas the number of children is a non-continuous variable. Whenchanges in one variable depends upon the changes in one or more other

variables, it is known as a dependent or endogenous variable, and the

variables that cause the changes in the dependent variable are known as the

independent or explanatory or exogenous variables. For example, if demand

depends upon price, then demand is a dependent variable, while price is the

independent variable.

And if, more variables determine demand, like income and prices of

substitute commodity, then demand also depends upon them in addition tothe own price. Then, demand is a dependent variable which is determined by

the independent variables like own price, income and price of substitute.

2. Extraneous variable:

The independent variables which are not directly related to the purpose of

the study but affect the dependent variable are known as extraneous

variables. For instance, assume that a researcher wants to test the

hypothesis that there is relationship between childrens school performance

and their self-concepts, in which case the latter is an independent variable


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and the former, the dependent variable. In this context, intelligence may also

influence the school performance. However, since it is not directly related to

the purpose of the study undertaken by the researcher, it would be known as

an extraneous variable. The influence caused by the extraneous variable on

the dependent variable is technically called as an experimental errors

Therefore, a research study should always be framed in such a manner that

the dependent variable completely influences the change in the independent

variable and any other extraneous variable or variables.

3. Control:

One of the most important features of a good research design is to

minimize the effect of extraneous variable. Technically, the term control is

used when a researcher designs the study in such a manner that it minimizes

the effects of extraneous independent variables. The term control is used in

experimental research to reflect the restrain in experimental conditions.

4. Confounded relationship: The relationship between dependent and independent variables is said to

be confounded by an extraneous variable, when the dependent variable is not

free from its effects.

Research hypothesis:When a prediction or a hypothesized relationship is testedby adopting scientific methods, it is known as research hypothesis. The research

hypothesis is a predictive statement which relates a dependent variable and an

independent variable. Generally, a research hypothesis must consist of at least

one dependent variable and one independent variable. Whereas, the relationships

that are assumed but not be tested are predictive statements that are not to be

objectively verified are not classified as research hypothesis.

Experimental and control groups:When a group is exposed to usual conditionsin an experimental hypothesis-testing research, it is known as control group. On

the other hand, when the group is exposed to certain new or special condition, it

is known as an experimental group. In the afore-mentioned example, the Group

A can be called a control group and the Group B an experimental one. If both the

groups A and B are exposed to some special feature, then both the groups may

be called as experimental groups. A research design may include only the

experimental group or the both experimental and control groups together.


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Treatments:Treatments are referred to the different conditions to which the

experimental and control groups are subject to. In the example considered, the

two treatments are the parents with regular earnings and those with no regular

earnings. Likewise, if a research study attempts to examine through an

experiment regarding the comparative impacts of three different types of

fertilizers on the yield of rice crop, then the three types of fertilizers would be

treated as the three treatments.

Experiment:An experiment refers to the process of verifying the truth of a

statistical hypothesis relating to a given research problem. For instance,

experiment may be conducted to examine the yield of a certain new variety of

rice crop developed. Further, Experiments may be categorized into two types

namely, absolute experiment and comparative experiment. If a researcher wishes

to determine the impact of a chemical fertilizer on the yield of a particular variety

of rice crop, then it is known as absolute experiment. Meanwhile, if the

researcher wishes to determine the impact of chemical fertilizer as compared to

the impact of bio-fertilizer, then the experiment is known as a comparative

experiment.

Experiment unit:Experimental units refer to the predetermined plots,

characteristics or the blocks, to which the different treatments are applied. It is

worth mentioning here that such experimental units must be selected with great

caution.

Qs 05: Explain the following:

a) Project Vs. Program Vs. Portfolio

b) Project work and Traditional functional work

Ans05 :-

a) Project Vs. Program Vs. Portfolio:

Project Program Portfolio

A temporary endeavor

undertaken to create a

unique product, service,

or result.

A group of related projects

managed in a coordinated

way to obtain benefits and

control not available frommanaging them individually.

A collection of projects or

programs and other work that are

grouped together to facilitate

effective management of thatwork to meet strategic business


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objectives.

Hopefully we all know

what a project is.

PMBOK defines a project

as a temporaryendeavour undertaken

to create a unique

product, service or

result. In my terms, a

project has a specific

start and end date with

a clearly defined

deliverable produced.Project management is

the application of

knowledge, skill, tools,

techniques and

processes to effectively

manage a team towards

this final deliverable.

In real life this means

the management of a

specific project (e.g.

implementing a new

accounting system).

This project will start on

a specific date and end

according to our project

plan with the delivery of

your new accounting

system.

This is where the confusion

seems to start. A program is

a group of related projects

managed together to obtainspecific benefits and controls

that would likely not occur if

these projects were managed

individually. While project

management focuses on

delivering the specific

objectives of the project

program management isfocused on achieving the

strategic objectives and

benefits of the integrated

program.

The implementation of an

Enterprise Resource Planning

(ERP) system is often

performed as a program. The

ERP system will include

several specific individual

projects (i.e. Finance,

Purchasing, Materials

Management, etc.). Each of

these specific projects should

be run by a project manager

using a formal project

management approach. The

overall grouping of these

related projects will be run by

a Program Manager.

The Program Manager will be

responsible for the rolling up

of information from each of

the projects and ensuring the

overall program is driving

A portfolio is a collection of

projects or programs grouped

together to facilitate effective

management of efforts to meetstrategic business objectives.

These projects or programs are

not necessarily interdependent or

directly related. Portfolio

management is the centralized

management of multiple projects,

programs and possibly portfolios.

This typically includes identifying,prioritizing and authorizing

projects and programs to achieve

specific strategic business

objectives.

The group of projects and

programs within a specific

business division could be an

example of a portfolio. This might

include the implementation of a

Customer Relationship

Management (CRM) program;

Sales Data Warehouse program;

Commission Tracking project; And

a project to launch a new product

within the Sales & Marketing

Division. In this case the Portfolio

Manager is managing this broad

range of somewhat unrelated

programs and projects towards a

specific set of strategic divisional

business objectives.

The Portfolio Manager will become

very involved in the frontend

activities of identifying,


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towards achieving the

business objectives. This

requires each of the project

managers to manage their

individual projects in a

fashion that easily integrates

into the overall program plan

(easily said more

challenging in actual

practice).

The Program Manager is also

responsible for tracking and

analysing across the entire

program. This involves

considering risk management

strategies not only for each

individual project but also

analysing the collective risk

across the program. The

same goes for quality

management, schedulemanagement, cost

management,

communications, etc.

prioritizing and initiating projects

and programs. All of these

activities will be within the

context of achieving the strategic

business objectives. The

Portfolio Manager will also track

these projects/programs to

ensure they continue to deliver

towards the expected strategic

outcome in terms of quality, cost,

schedule and scope. They will also

be responsible for analysing and

tracking project management

elements across the entire

portfolio looking for ways to

leverage economies of scale,

reduce risk and improve the

probability of successfully

delivering expected business

results.

b) Project work and Traditional functional work:

Project work and traditional functional work differ in many ways. It is

important to understand these differences.

Functional work is routine on-going work. Each day machine operators, car

salesmen, secretaries, accountants, financial analysts and quality inspectors

perform functional work that is routine, notwithstanding some variations from day

to day. The functional worker gets training from a manager assigned to the

specific function, and the manager supervises and manages the worker according

to standards of productivity and quality set for the particular function.

In contrast to functional work, project work is a temporary endeavor

undertaken to create a unique, non-routine product or service. A project manager

manages a specific project with people and other resources assigned to him only


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for project management support on the specific project, and not on an ongoing

basis. The project manager is responsible for the approved objectives of a project

such as budget, schedule and specifications. Project terms are typically not

organized in the same hierarchical structure as that of functional group.

Qs 06 :- Describe the following quality control tools:

a) Ishikawa diagram

b) Flow chart

c) Pareto chart

d) Scatter diagram

Ans06 :-

a) Ishikawa diagram:

Ishikawa diagrams (also called fishbone diagrams, cause-and-effect

diagrams or Fishikawa) are causal diagrams that show the causes of a certain

event -- created by Kaoru Ishikawa (1990). Common uses of the Ishikawa

diagram are product design and quality defect prevention, to identify potential

factors causing an overall effect. Each cause or reason for imperfection is a

source of variation. Causes are usually grouped into major categories to identify

these sources of variation. The categories typically include:

People: Anyone involved with the process

Methods: How the process is performed and the specific requirements for

doing it, such as policies, procedures, rules, regulations and laws

Machines: Any equipment, computers, tools etc. required to accomplish

the job

Materials: Raw materials, parts, pens, paper, etc. used to produce the

final product

Measurements: Data generated from the process that are used to evaluate

its quality

Environment: The conditions, such as location, time, temperature, and

culture in which the process operates

Ishikawa diagrams were first used in the 1940s, and are considered

one of the seven basic tools of quality control. It is known as a fishbone diagram

because of its shape, similar to the side view of a fish skeleton.

The Ishikawa Diagram resembles a fishbone (hence the alternative

name "Fishbone Diagram") - it has a box (the 'fish head') that contains the

statement of the problem at one end of the diagram. From this box originates


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the main branch (the 'fish spine') of the diagram. Sticking out of this main

branch are major branches that categorize the causes according to their nature.

Mazda Motors famously used an Ishikawa diagram in the

development of the Miata sports car, where the required result was "Jinba Ittai"

or "Horse and Rider as One". The main causes included such aspects as "touch"

and "braking" with the lesser causes including highly granular factors such as

"50/50 weight distribution" and "able to rest elbow on top of driver's door". Every

factor identified in the diagram was included in the final design.

b) Flow chart:

A flowchart is a diagrammatic representation that illustrates the

sequence of operations to be performed to get the solution of a problem.

Flowcharts are generally drawn in the early stages of formulating computer

solutions. Flowcharts facilitate communication between programmers and

business people. These flowcharts play a vital role in the programming of a


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problem and are quite helpful in understanding the logic of complicated and

lengthy problems. Once the flowchart is drawn, it becomes easy to write the

program in any high level language. Often we see how flowcharts are helpful in

explaining the program to others. Hence, it is correct to say that a flowchart is a

must for the better documentation of a complex program.

Flowcharts are usually drawn using some standard symbols;

however, some special symbols can also be developed when required

The following are some guidelines in flowcharting:

In drawing a proper flowchart, all necessary requirements should be listed

out in logical order.

The flowchart should be clear, neat and easy to follow. There should not

be any room for ambiguity in understanding the flowchart.

The usual direction of the flow of a procedure or system is from left to

right or top to bottom.

Only one flow line should come out from a process symbol.


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c) Pareto chart:

The Pareto Chart is named after Vilfredo Pareto, a 19th century

economist who postulated that a large share of wealth is owned by a small

percentage of the population. This basic principle translates well into quality

problems. A Pareto Chart is a series of bars whose heights reflect the frequency

or impact of problems. The bars are arranged in descending order of height from

left to right. This means the categories represented by the tall bars on the left are

relatively more significant than those on the right. This bar chart is used to

separate the vital few from the trivial many. These charts are based on the

Pareto Principle which states that 80 per cent of the problems come from 20 per

cent of the causes. Pareto charts are extremely useful because they can be used

to identify those factors that have the greatest cumulative effect on the system,

and thus screen out the less significant factors in an analysis. Ideally, this allows

the user to focus attention on a few important factors in a process.


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A Simple Example:

A Pareto chart can be used to quickly identify what business

issues need attention. By using hard data instead of intuition, there can be no

question about what problems are influencing the outcome most. In the example

below, XYZ Clothing Store was seeing a steady decline in business. Before the

manager did a customer survey, he assumed the decline was due to customer

dissatisfaction with the clothing line he was selling and he blamed his supply

chain for his problems. After charting the frequency of the answers in his

customer survey, however, it was very clear that the real reasons for the decline

of his business had nothing to do with his supply chain. By collecting data and

displaying it in a Pareto chart, the manager could see which variables were

having the most influence. In this example, parking difficulties, rude sales people

and poor lighting were hurting his business most. Following the Pareto Principle,

those are the areas where he should focus his attention to build his business back

up.


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Understanding the Pareto Principle (The 80/20 Rule):

Originally, the Pareto Principle referred to the observation that 80%

of Italys wealth belonged to only 20% of the population.

More generally, the Pareto Principle is the observation (not law)

thatmost things in life are not distributed evenly. It can mean all of the following

things:

20% of the input creates 80% of the result
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20% of the workers produce 80% of the result

20% of the customers create 80% of the revenue

20% of the bugs cause 80% of the crashes

20% of the features cause 80% of the usage

The Pareto Principle is an observation, not a law of nature.

d) Scatter diagram:

A scatter diagram is a tool for analysing relationships between two

variables. One variable is plotted on the horizontal axis and the other is plotted

on the vertical axis. The pattern of their intersecting points can graphically show

relationship patterns. Most often a scatter diagram is used to prove or disprove

cause-and-effect relationships. While the diagram shows relationships, it does not

by itself prove that one variable causes the other. In addition to showing possible

cause and-effect relationships, a scatter diagram can show that two variables are

from a common cause that is unknown or that one variable can be used as a

surrogate for the other.

Scatter diagram is used to examine theories about cause-and-

effect relationships and to search for root causes of an identified problem. It can

also be used to design a control system to ensure that gains from quality

improvement efforts are maintained.


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In the above example, the points are plotted by assigning values of

the independent variable X to the horizontal axis and values of the dependent

variable Y to the vertical axis. The pattern made by the points plotted on the

scatter diagram usually suggests the basic nature and strength of the relationship

between two variables. The scatter diagram also shows that, subjects with large

waist circumferences also have larger amounts of deep abdominal AT. These

impressions suggest that the relationship between the two variables may be

described by a straight line crossing the Y-axis below the origin and making

approximately a 45-degree angle with the X-axis.

Introduction to Project Management PM-010

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