COST OF
ESTIMATING PROJECT : COMPONENTS OF COST OF PROJECT
PROJECT
MANAGEMENT
•
PROJECT COST ESTIMATION
a)
CONCEPT OF PROJECT AND PROJECT MANAGEMENT
b)
PROJECT LIFE CYCLE
c)
ROLE OF PROJECT MANAGER
d)
PROJECT PLANNING
e)
WORK BREAKDOWN STRUCTURE
f)
PROJECT APPRAISAL
g)
TECHNICAL APPRAISAL
·
DR SHASHI AGGARWAL
·
PROJECT
· MEANING OF WORK BREAKDOWN STRUCTURE
1.
WORK BREAK DOWN STRUCTURE IS A TECHNIQUE WHICH
BREAKDOWN A WORK INTO ITS COMPONENTS AND
AT THE SAME TIME ESTABLISHES THE CONNECTION BETWEEN THE COMPONENTS ON THE LINES
OF FAMILY TREE
2.
BUT IT IS NOT MERELY A FAMILY TREE FOR THE
HARDWARE INVOLVED IN THE PROJECT
3.
PROVIDES THE FOUNDATION AROUND WHICH MANY
PEOPLE WILL GROUP TOGETHER IN THE FORM OF ORGANIZATION AND WITH THE HELP OF
SOFTWARE BUILD UP TOTAL EDIFICE
4. WORK BREAKDOWN STRUCTURE ENABLES THE INTEGRATION OF PEOPLE,HARDWARE,SOFTWARE INTO TOTAL PROJECT WORK SYSTEM
·
PROJECT PLANNING
•
DR
SHASHI AGGARWAL
•
PROJECT PLANNING
•
PLANNING IS THINKING DEEPLY THROUGH A PROBLEM,EXAMINING ALL THE LOGICAL
PATHS AND WRITING DOWN ALL THE TIMES IN THEIR LOGICAL AND TIME ORDER
•
PLANNING IN ANY PROJECT SECTOR SHOULD JUSTIFY THE FOLLOWING :
1.
PLANNING WOULD HELP TO OPTIMIZE THE USE OF SCARCE RESOURCES
2. OPTIMIZATION AND BETTER UTILIZATION OF THE EXISTING RESOURCES
3.
WITH IN THE BUDGETARY PROVISIONS OF FINANCING
• PROJECT PLANNING
ž Project Management
ž By Dr. Shashi Aggarwal
ž The Project Manager
ž
A project manager
is a professional in the field of project mgmt. He has the responsibility of
planning. Procurement and execution of a project.
ž Project managers are the first point of contact for any issues or discrepancies arising from with in the heads of various departments in an organization before the problem escalates to higher authorities. As the single point of responsibility he integrates and coordinates all the contributions and guide them to successfully complete the project.
DR SHASHI AGGARWAL
ASSTT PROFESSOR
USBS TALWANDI SABO
PROJECT
MEANING OF PROJECT
PROJECT IS A SPECIFIC ACTIVITY ON WHICH MONEY
IS SPENT IS THE EXPECTATION OF RETURN
SPECIFIC STARTING POINT.A SPECIFIC END POINT
AND IT IS INTENDED TO ACHIEVE A SPECIFIC OBJECTIVE
PROJECT HAS A SPECIFIC GEOGRAPHICAL LOCATION
AND WOULD SERVE A GROUP OF POPULATION
SPECIFIC AUTHORITY TO IMPLEMENT IT
·
PROJECT LIFE CYCLE
·
PROJECT MANAGEMENT
·
DR SHASHI AGGARWAL
ž THE PROJECT LIFE CYCLE PHASES
1.
The objective of project manager and project
team : to carry out the project for the purpose of meeting the project’s
objectives
2. Every project has a beginning, a middle period during which activities move the project toward completion
1.
Based on the type of activity
2.
Based on the location of the project’
3.
Based on project completion time
4.
Based on ownership
5.
Based on size
6.
Based on need
•
Based on type of activity
·
Industrial
·
Non industrial projects
·
Based on the location of the project
1.
National projects :set up with in the national boundaries of country
2.
International projects : set up in other countries. May be set up by the
government/private sector
·
Major forms of international projects
a)
Setting up of fully owned subsidiaries abroad
b)
Setting up of joint venture abroad
c)
Setting up of projects abroad by way of mergers and acquisitions
·
Based on project completion time
a)
Normal project
b)
Crash Project
c)
Disaster Project
•Disaster Project
1.
Anything needed to gain time is allowed in these projects
2.
Engineering is limited to make them work
3.
Vendors who can supply yesterday are selected ( no cost issue)
4.
Quality short of failure is accepted
5.
No competitive bidding
6.
Capital cost will go up
7.
Project time will drastically reduced
Based on
ownership
1.
Private sector : the ownership is completely in the hands of project promoters
and investors
2.
Public sector : owned by the states.
3.
Joint sector projects : ownership is shared by the government and private
entrepreneur
·
Based on size
1.
Small projects
2.
Medium sized projects
3.
Large projects
·
Small size
·
MSME will now be called micro unit if they have investment upto one crore
and turnover of less than 5 crore
·
Small unit : investment limit has been raised from 5 crore to rs 10 crore
with a turnover less than 50 crores.applies to all MSME including the services
· Enterprise with investment up to rs 20 crore with a turnover less than rs 100
crore will now be called medium units
·
Based on need
·
New project
1.
Identifies a new product for which there is demand from the customers and supply is limited
2.
A new project idea is conceived and implemented to meet customer needs
3.
Here the gap is identified and filling the gap
·
Balancing project
1.
Many production units that are linked with one another
2.
The flow of material through different production units shall be such that
output of one production unit exactly matches the input requirements for the
subsequent production unit.
3.
Efficiency of the production line will be maximum and no under utilization of
production capacity.
•
example
·
Unbalanced projects
1.
Cutting units capacity : 50 units
2.
Folding unit capacity = 40 units
3.
Welding unit = 50
4.
Paining unit =50
·
Effect of unbalanced projects
1. Under utilization of production capacity
2.
Low return
3.
Competitor may offer at cheaper price
·
Expansion project
1.
Increasing the plant capacity for current product range
2.
As the growth : plans and
implementing a project for enhancing the plant capacity
3.
Establishing additional plant capacity
4.
By acquisition of another organization in same line of capacity
5.
Where there is definite upward trend in the demand for the product and only
after the management of the organization
·
Modernization projects
1.
Technological innovation is a continuous process
2.
When a new technology is evolved and becomes commercially operative,the
existing technology becomes obsolete,
3.
Two aspects : the production process would have become obsolete in view of
the latest technology innovation
4.
Most advanced features would have been incorporated in the plant and
machinery with the result the existing old plant and machinery might have
become obsolete
•
Modernization when ignored will result in either of the following situations
:
1.
Producing inferior products
2.
Cost will be higher
·
Replacement of project
·
Diversification of project
•
Diversification is generally of two types :
1.
Related diversification
2.
Unrelated diversification
Diversification is just like new project but benefited from the existing set up
Need to do diversification : to explore market
potential
·
Related diversification
1.
Making closely related diversification to product line
2.
Like manufacturer making wrist watches add time pieces and alarm clock
·
Unrelated diversification
1.
When a company proposed product range are different from the existing one
2.
Like Godrej : office furniture,edible oils,locks,agro foods etc
·
Backward integration
1.
Any manufacturing organization procure raw materials
2.
The raw materials under go a series of operations resulting into
transformation to the form of finished product
·
Example
•
Raw material needed from crude raw
material to value added material
1.
The availability of rm is irregular
2.
Storing will cause huge cost
3.
Long lead time for procurement
4.
High profit margin enjoyed by the supplier
·
Forward integration project
·
Adding additional manufacturing processing facilities at the end of
production line
