DRIVE-SUMMER 2014

PROGRAM-MBADS (SEM 3/SEM 5) MBAFLEX/ MBA (SEM 3) PGDPMN (SEM 1)

SUBJECT CODE & NAME-PM0011 PROJECT PLANNING AND SCHEDULING
BK ID-B1937
CREDIT AND MARKS-4 CREDITS AND 60 MARKS
Q1. Write short note on:

Controlling PMO (Project Management Office )

Bottom-up approach for estimating project planning
Consequences of project delays Partnering

(Controlling PMO (Project Management Office ) Bottom-up approach for estimating project planning
Consequences of project delays Partnering) 10 (2.5 marks each)
Answer.
Controlling PMO (Project Management Office )
Controlling PMO is a type of PMO, which acts as a central governance office for the entire processes of project
management. Controlling PMO is beneficial for those organisations, which aim at controlling their documentation,
processes, and other project related activities. Controlling PMO demands an organisation to comply with governance,
and to adopt certain methodologies, forms, and templates.
A controlling PMO usually performs the following activities:

Identification of best practices

Standardisation of the project
Enhancing the competency of project manager
Project metrics benchmarking
Training and internal consulting

Bottom-up approach for estimating project planning

Bottom-up approach: Indicates an approach that is based on WBS. Bottom-up approach is also termed as definite
estimate or micro estimate. In this approach, various sub-work packages associated with a project are identified.
Thereafter, each sub-work package is estimated and aggregated to form a higher level of WBS. For example, suppose
a group of people wants to use the bottom-up approach for estimating and developing a new product. In such a case,
the people in the group will make a list of the activities that are supposed to be performed to develop the required
product. Then, they will group these activities into various categories. Thereafter, these categories will be further
grouped into higher level categories. For instance, the people in the group may decide to put factors such as colour of

the product, size of the product, etc., under the category of product design. Later, they might realise that product
design may come under the category of product development. In this way, the group would classify the entire project
activities into various categories. After grouping the project activities into various categories, the group will make
estimation of each of these categories. This will facilitate estimation of the entire project.

Consequences of project delays Partnering

Delays can be disastrous for any project, irrespective of the industry it is related with. Lets understand how delays
result in unwanted and detrimental effects, with the help of an example related with our day to day life.
Suppose you have an appointment with a doctor and you are waiting to see him at his nursing home, when his
assistant comes and tells you that the doctor has gone to attend an emergency case and would be a little delayed. You
had an important meeting, which you cancelled and decided to wait for the doctor. After waiting for three hours for
the doctor, you learn that the doctor has gone to a hospital that is around 2 hours away from his nursing home and he
is currently in the middle of an operation. The assistant also informs you that the doctor would not be available at the
nursing home for the next several hours. This makes you reschedule your appointment with the doctor. Delays affect
the scheduled dates and allocated resources by adding more time and cost to the originally planned activities of a
project.
Q2. Explain various stages of project scope management.
(Briefly describe each stage of scope management) 10 ( 2 marks each)
Answer.
Stage of scope management
The scope management of a project comprises five stages as shown in Figure below:

Figure: Stages of Scope Management

Now, let us briefly discuss these steps:

Project initiation: Indicates a stage when a business need arises. For instance, a business need may arise when a
client or a customer asks an organisation to design a website for him/her. In project initiation stage, an organisation
tries to develop an acceptable solution by evaluating the needs and requirements. In this stage, the organisation
appoints a project manager for ensuring smooth operation of the project.
Scope planning: Indicates a stage where a Work Breakdown Structure (WBS) is developed by the organisation. A
WBS can be considered as a structure, which helps an organisation to represent complex tasks and activities in a
simple and easily understandable manner.
Scope definition: Refers to the third stage of scope management. By the time this stage is reached, an organisation is
supposed to have completed various tasks such as appointment of the project manager, formation of a project team,
ensuring the feasibility of the project, formation of the WBS, and outlining the budget and schedule of the project.
The main output of these activities is a scope baseline which will be used throughout the project. After conducting
the aforesaid activities, the next task of the organisation is to use the information gathered from the above three stages
to develop a product that meets the needs and requirements of the client.
Scope verification: Implies the third stage of scope management. This stage is interlinked with the previous two
stages i.e. scope planning and scope definition stage. This stage involves reviewing the initial project work
by the customer and verifying whether the work performed is acceptable or not. Scope verification is very crucial for
the successful completion of a project. It helps in recognising any deviation from the intended goal, and also provides
an opportunity to the client to verify whether the project is progressing in the desired direction or not.
Scope change control: Indicates the final stage of the scope management, in which, an organisation tries to restrict
any unapproved changes in the scope of the project. In other words, at this stage, an organisation tries to ensure that
only those changes, which are approved by the client, are made in the project. Any authorised change in the scope of a
project is denoted by the term scope creep.

Q3. Write short notes on:

Scope change Porter model used by organisations to identify investment opportunities Tools for Project
Scheduling Operating Feasibility
(Scope change Porter model used by organisations to identify investment opportunities Tools for Project
Scheduling Operating Feasibility) 10 (2.5 marks each)
Answer.

Scope change Porter model

This model was introduced by Michael Porter and is one of the most popular tools used by organisations to identify
investment opportunities. In this model, Porter advocated that the attractiveness and profit potential of an industry is
determined by five forces. These five forces are depicted in Figure below:

Let us now briefly discuss these forces.

Threat of new entrants: The attractiveness of an industry is affected by the entry of new organisations in the market.
When a new organisation enters a market, it increases its production capacity, reduces the prices of its products and
services, and lowers the profitability of other organisations. The threat of new entrants to an industry is directly
dependent on the entry and exit barriers to that industry. An industry is considered attractive if it has a high entry
barrier and a low exit barrier.
Bargaining power of buyers: Bargaining power is the bargaining capacity of buyers in terms of demand for lower
cost, demand for superior quality of products and services, etc. from the organisations operating in the industry. Such
bargaining from buyers can increase rivalry between organisations and hamper the profitability of organisations.
Bargaining power of suppliers: Similar to buyers, suppliers can also influence the operation of an industry, because
they can increase prices, reduce the range of free services, reduce the quality of products, etc. Such behaviour of
suppliers can increase the level of competition in the industry, which, in turn, can adversely affect the profitability of
organisations. Suppliers are said to have a high bargaining power if they possess the following characteristics:

High switching cost of buyers

Lack of adequate substitutes
Domination of a few suppliers in the entire market

Threat of substitutes: This is the pressure that an organisation faces on account of availability of substitutes for its
product in the market. Presence of substitute products in the market may limit the profitability of an organisation.
Rivalry among existing firms: It emphasises the competition among various organisations in the market.
Organisations usually compete among themselves on the basis of price, quality, services, warranties, etc. Intense
rivalry between organisations can adversely affect the profitability of both the organisations. An industry with a strong
rivalry possesses the following characteristics:

Large number of competitors

Sluggish growth of industries
High fixed cost
High exit barriers

Q4. Explain the various tools of project planning.

(Briefly mention the role of project planning tools in an organisation, Explain various tools that are used in
project Planning) 2, 8( 2 marks for each tool)
Answer.
Role of project planning tools in an organisation
Project planning and scheduling ensures that project activities are performed in a smooth and logical manner, which,
in turn, helps in accomplishing the desired project objective. Project planning involves developing a project plan that
states the objectives and scope of the project, and resources required to complete it. The project plan also includes the
estimation of cost involved in the project and allocation of tasks and duties. In other words, it is a route map to
execute project activities from initiation to completion of a project. The project plan helps the organisation to
determine what needs to be done, when it needs to done, how it is to be done, and by whom it needs to be done.

Various tools of project planning

Some important tools used by organisations for project planning are shown in Figure below:

Figure: Project Planning Tools

Let us understand these tools in details:
Force-field analysis: A tool of project planning, developed by Kurt Lewin, a renowned psychologist, this tool is
concerned with analysing the positive and negative forces associated with a particular project. In other words, forcefield analysis assists in identifying and evaluating various pros and cons of a project. For example, suppose an
organisation decides to use force-field analysis to analyse whether to upgrade its factory with new manufacturing
machinery or not. In such a case, the positive forces that support the upgrade of machinery can be high volume of
outputs, low maintenance costs, changing need of customers, etc.
Cash flow forecast: A tool that assists in estimating the cash inflow (revenue) and cash outflow (expenses) of a
project over a period of time. Cash flow forecast is one of the most important tools of project planning as it helps in
managing expenses and controlling unnecessary expenses of a project. With the help of cash flow forecast, a project
manager can evaluate the effect of time on costs and revenue of a project; and thus, can ascertain the financial
profitability and liquidity of a project over a period of time.
Plus-minus-interesting: A tool which is used by a project manager to identify the positive and negative impact of
selected course of action on the project goal, helping him/her in deciding whether to undertakea particular course of
action or not. For example, if the positive outcome overweighs the negative ones, a project manager can go ahead
with the implementation of said course of action, and vice-versa.
Cost/Benefit analysis: A tool used by a project manager to make a comparison between the cost associated with the
execution of a project and the benefits expected from it. In cost-benefit analysis, a project manager compares the
benefit and cost of the project by converting them in monetary terms and adjusted by the time value of money. Such a
comparison helps a project manager to identify the profitability involved with the implementation of a particular
project.
.
Q5. Explain the meaning of CPM. Mention various steps involved in CPM.

(Write the meaning of CPM, Explain various steps associated with CPM)2, 8( 2 marks for each step)
Answer.
Meaning of CPM
Critical Path Method (CPM) is one of the most widely used models of project scheduling. This model was developed
by Morgan R. Walker of Du-Pont in 1957 to solve maintenance problems in chemical factories. The model was also
used in the Manhattan project. Nowadays, CPM is used in almost all kinds of projects, including construction,
software development, research, product development, engineering, plant operation, and maintenance.

Steps associated with CPM

Let us now discuss the steps involved in CPM in detail.
1. Forward pass calculation
Forward pass calculation involves finding out the Earliest Start (ES) and Earliest Finish (EF) time of each activity. ES
signifies the earliest time when an activity can be scheduled whereas EF indicates the earliest time in which an
activity can be completed. The method is called forward pass because the calculation is started from the first nod and
ends at the terminal nod of the project network. The first event of the project is assigned a value of 0 (zero) and each
of the activities starting from the first node is assumed to start at time 0. The EF time of each activity is calculated by
adding the time duration of the activity to its ES time.
2. Backward pass calculation
Backward pass calculation is the opposite of the forward pass calculation. This method is used to find out the Latest
Start (LS) and the Latest Finish (LF) time of an activity. LS refer to the latest time at which an activity can be started.
On the other hand, LF refers to the latest time an activity must finish. In this method, the terminal or last event of the
network is assigned the latest time and the LS and LF of each activity of the project is calculated by rolling backward.
This is the reason the method is called backward pass calculation. The terminal event is assigned the largest value of
the EF time of the activities merging at the terminal event.
3. Determination of the critical path
After calculating the earliest and latest start and finish time of each activity in the network, one can calculate the
minimum time required for completing the project. A path in the network refers to a continuous series of activities that
starts from the initial node, travels through the network, and ends at the terminal node. There can be multiple paths in
a network.
4. Calculation of floats

Floats refer to the flexibility of scheduling an activity. In other words, float is the free time available for an activity
which can be utilised without delaying the project. In the backward pass and forward pass calculations, it was
observed that a critical activity in the network has the same ES and LS time.

Q6. What do you understand by cost of quality? Elaborate on various types of quality costs associated with a
project.
(Write the meaning of cost of quality, Explain various types of quality costs associated with a project, Write a
note on Total quality costs) 2, 6, 2
Answer.
Meaning of cost of quality
Cost of quality indicates the sum of conformance cost and non-conformance cost. Conformance means delivering
products that meet the quality requirement of the customer; whereas, non-conformance indicate the products that are
rejected for not complying with the quality norms of the customer.
In other words, cost of quality can be referred to as the sum total of all costs incurred in ensuring conformance of the
product to the quality requirements, assessing the product, and doing any re-work required to ensure such
conformance.

Various types of quality costs associated with a project

It should be noted that there are various types of quality costs associated with a project. These are mentioned below:
Prevention costs: This includes the cost of all activities that are specifically designed to prevent poor quality in
products or services. Some examples of such costs are as follows:

New product review

Quality planning
Supplier capability surveys
Evaluation of process capability
Quality improvement team meetings
Quality improvement projects
Quality education and training

Appraisal costs: In order to ensure that the products or services of a project meet the desired quality standards and
performance requirements, organisation often conduct activities such as measuring, evaluating or auditing the
products or services of the project. The costs that are associated with such activities are termed as appraisal costs. The
following are some of the examples of such costs:

Incoming material inspection / testing

In-process and final inspection / testing

Product, process or service audits
Calibration of measuring and test equipment
Associated supplies and materials

Failure costs: Failure costs are those costs that are incurred due to nonconformance of products or services of a
project. Failure costs can be divided into internal and external costs.
Internal failure costs: These are the costs that occur prior to delivery or shipment of product or service to the
customer. Examples of such costs are:

Scrap
Rework
Re-inspection
Re-testing
Material review Downgrading

External failure costs: These are costs incurred after the delivery of the product to the customer. Examples of such
costs are:

Processing customer complaints

Customer returns
Warranty claims
Product recalls

Total quality costs: Total quality cost refers to the cost that is incurred after adding the above mentioned costs. Total
quality costs indicate the difference between actual cost incurred in developing/producing a product or service and the
cost that would have incurred in developing/producing a product/service, had there been no possibility of substandard
service, product failure or manufacturing defects.