PROJECT

MANAGEMENT
 SOCIAL COST BENEFIT
ANALYSIS
• Cost benefit analysis is a process of deciding whether to go with a business
decision or not on the basis of the net benefits from it. We first assess the benefits
or rewards from a business decision. Then we deduct the costs that we will incur
in order to implement that decision or idea. If the result is positive, we can go
ahead with the plan. In case of a negative result, we should leave the idea and
look for other alternatives.
• Social cost benefit analysis: There are some projects whose commercial
profitability is not significant but from social benefit point of view these projects
are very important.
 SOCIAL COST BENEFIT
ANALYSIS
• The most common investments that have social benefits are infrastructure projects like
building roads, dams, railways tracks, bridges, electricity generation, etc. Social cost-
benefit analysis in project management is a tool to assess the viability of such projects.
Apart from taking into account the financial costs that we incur in a project, we also
consider the social impact of the project on the people, environment, and society as a
whole. Such impacts include pollution effect, safety, and security, the effect on the lives of
people, etc. We assess the benefits from a project by attaching a price to the social effects
that they cause. We deduct the social costs from the social benefits derived from a project
to arrive at the net social benefits to the society.
 TYPES OF COSTS AND
BENEFITS
• Every project has two types of cost and
benefits.
TYPES

BENEFITS
COSTS

DIRECT INDIRECT DIRECT INDIRECT

DIRECT COST INDIRECT COST ECONOMIC COST

DIRECT INDIRECT ECONOMIC

BENEFIT BENEFIT BENEFIT

SOCIAL COST
COMMERCIAL
BENEFIT
BENEFIT
ANALYSIS
 OBJECTIVES OF SOCIAL COST BENEFIT
ANALYSIS
• Contribute to GDP
• Contribution of project to improve the standard of living of most poor section of
society
• Justification of the use of scarce resources
• Contribution of the project to protect the environmental conditions
 BENEFITS OF
SCBA
• Enables a complete comparison of several project options
• SCBA recognizes financial consequences as well as non-financial consequences
• Helps governments to pursue innovative initiatives that benefit all, not just a selected
few
• It aids in the entire development of an economy by assisting in decision-making that
increases job, investment, savings, and consumption, increasing a country's
economic activity.
 STAGES OF SOCIAL COST BENEFIT
ANALYSIS OF A PROJECT
1. Determine the financial profitability of the project based on the market prices.
2. Using shadow prices for the resources to arrive at the net benefit of the project
at
economic process.
3. Adjustment of the net benefit for the projects impact on savings and investment.
4. Adjustment of the net benefit for the projects impact on income distribution.
5. Adjustment of the net benefit for the goods produced whose social values differ
from
their economic values.
 SHADOW
PRICING
• The shadow price is an estimate for something that we cannot buy or sell in the open
market such as infrastructure projects by the governments. For example, in the case of the
construction of a bridge, we cannot put a definite price tag on the bridge because we don’t
buy or sell it in the open market. Instead, we will put a shadow price on it in order to
assess the benefits of its construction.
• This price will help the managers to understand the benefits and cost of the project.
Sometimes this price may prove inaccurate and unreliable. There is no absolute data to
back it up, it is based on assumptions and it may even be subjective in nature.
 BENEFITS OF SHADOW
PRICING

1. It is a useful tool that is used to know the advantages associated with the cost of extra use
of a resource
2. It comes in handy when you have to convert resources into social costs
3. Can convert assumed impacts into social benefits
4. It is a device that is used for the optimal allocation of resources
5. Shadow pricing avoids underpricing
6. The best part is that it takes into account the economic opportunity cost
 LIMITATIONS
1. In the case of intangible items, shadow pricing is simply guesswork without
any substantial proof to back the claim
2. It is considered as a range of probabilities
3. It is a limited perception as it applies to particular situations
4. It has certain biases attached to it that are based on sample and response
5. The chance of the wrong estimate is high as it is subjective
6. It is a concept that is based on assumptions
7. It lacks universality
 APPROACHES OF
SCBA
1. UNIDO’s Approach
• UNIDO stands for United Nations Industrial Development Organization. In this approach, we first assess the financial
profitability of a project by measuring it at market prices. Usually, the Net Present Value (NPV) of the project is found out. We
value the inputs or costs and the output or benefits from the project at market price. However, in the case of projects with
social benefits, we will have to determine the net benefits of the project by making use of shadow prices of both inputs and
outputs.
• We then calculate the impact of the project on the savings and investment of different income groups. We will adjust this
impact to the net present value. The next step is to calculate and adjust the impact of the project on the income distribution. We
will calculate a value of the effect that a project creates on the distribution of income between the poor and the rich, and between
different regions.
• There is a possibility that the economic benefits from a project will be more than its social benefits. The result can be vice-
versa too. Managers will make use of an adjustment factor to make up for the difference. Then they will calculate the
correct NPV of the project.
APPROACHES OF
SCBA
2. L & M Approach
• This approach propagates the use of shadow prices in order to find out the true value of a
project to society. “Savings” is the prime yardstick in this approach. We can convert them into
investments anytime in the future.
• This approach makes use of international prices. It is so because of the present era of
globalization and international trade. We calculate the shadow prices of wages, the goods we
trade, and the non-traded goods too. We then find out the “Accounting rate of return” and
use it for discounting social profits. The resulting projects that are mutually compatible with
positive present social value are worthy of being undertaken.
 SCHEDULING

Scheduling in project management is the listing of activities, deliverables, and milestones

within a project. A schedule also usually includes a planned start and finish date, duration,
and resources assigned to each activity. Effective project scheduling is a critical component
of successful time management.
 THERE ARE THREE MAIN TYPES OF
SCHEDULES
1. Master project schedule: A master schedule tends to be a simplified list of tasks with a
timeline or project calendar.
2. Milestone schedule or summary schedule: This type of schedule tracks major
milestones and key deliverables, but not every task required to complete the project.
3. A detailed project schedule: This is the most thorough project schedule, as it identifies
and tracks every project activity. If you have a complex, large, or lengthy project, it’s
important to have a detailed project schedule to help track everything.
 BENEFITS OF PROJECT
SCHEDULING
• Assists with tracking, reporting, and communicating progress
• Ensures everyone is on the same page with tasks, dependencies, and
deadlines
• Highlights issues and concerns, such as a lack of resources
• Identifies task relationships
• Monitors progress and identify issues early
KEY STEPS TO CREATING A PROJECT
SCHEDULE
1. Get input from stakeholders
2. Reference past projects
3. Keep risk in mind
4. Consider any non-work time
5. Define the critical path on your project
6. Record scheduling assumptions
7. Include project milestones
 GRAPHIC REPRESENTATION OF PROJECT
ACTIVITIES
The biggest advantage of using project management charts is that they allow you to analyze
and extract useful project information without undergoing a lot of hassle. These charts
arrange data systematically and make it easier for you to evaluate project data.
KEY BENEFITS OF PROJECT MANAGEMENT
CHARTS
• Eliminate the need for moving back and forth to collect project data and thus, saves a
lot of time
• Help you to stay updated about what’s happening with the project
• Promote collaboration among team members
• Allow you to have better clarity and understanding of the project
• Project tracking becomes simple and effective
• Assist in making better changes to project plan and cope up with unexpected issues
 1.GANTT CHART
A Gantt chart is basically a variation of the bar chart and is quite easy to
interpret. The vertical axis of a Gantt chart represents the tasks of the
project while the horizontal axis represents the time duration.
 2. PERT CHART
• A PERT chart represents the activities and milestones of a project in the
form of a network diagram. Interestingly, the PERT and CPM methods
have many similarities and both these methods are sometimes used
simultaneously to manage projects.
3. WORK BREAKDOWN STRUCTURE
(WBS)
 4. FLOWCHART
• A flowchart is a graphical representation of the project workflow. It includes all the
activities and processes that happen between the start and the end of the project.
Boxes and figures of different shapes along with arrows are used to illustrate the
sequence of events and the way they are connected.
 5. CAUSE-EFFECT CHART
• One of the key responsibilities of project managers in almost all organizations is problem solving. As soon as a problem or issue
arises during the project development, managers have to figure out the causes of the problem and take corrective actions to
eliminate it.

• The cause-effect chart allows managers to highlight all the potential causes that give rise to a particular problem. In
general, the chart contains information about various causes and their effects that can lead to problems in a project.
 6. PARETO CHART
• A Pareto chart is the combination of a bar graph and a line graph. By using this chart, you can
highlight some specific factors of your project. Typically, Pareto charts are used for the
identification of problems and complications in a project. It helps you to identify the most
common reasons for the occurrence of a problem and thus you can take appropriate actions to
eradicate the problem.
 7. BAR CHART

• Bar charts are very common in project management all due to the fact that they are simple,
versatile, and easy to interpret. In project management, these charts are used for visualizing a
wide variety of project data ranging from the billable ( charged from client for employees who
are attending them) & non-billable (non money making activities) work hours to the number of
completed & pending tasks.
 8. PIE CHART

• Pie charts are also very simple and quite popular in project management. Just like bar charts, they
are flexible and can represent different types of project data. These charts are circular in shape
and act as an ideal tool for data segmentation.
 9. BURN-UP
CHART
• A burn-up chart makes it easier for you to monitor project progress and also provides
information about the pending work. Usually, the vertical axis of the chart depicts
the number of tasks or amount of work, whereas the horizontal axis represents the
time duration that may be in hours, days, or weeks.
 10. CONTROL
CHART
• A control chart is more like a graph having an upper control limit, a lower control limit, and a centerline or
average process output. The process behavior is considered fine as longs as the graph line remains in between
the upper control limit and the lower control limit. If the graph line touches or crosses the market control limits,
it means that the process behavior has become undesirable.
 MS- PROJECT 2000
• Project 2000 is a high-powered project management tool that you can use to control
and track any kind of project once it has been planned. With Project 2000, you can see
every detail of your project simultaneously so you can follow its progress.
 FEATURES OF MS- PROJECT 2000 DATABASE

A database is a collection of information that is organized into a

list.
• Stores Information
• Finds Information
• Analyses Information
• Manages Information
• Shares Information
 MS-PROJECT 2000 BENEFITS
• It has a similar interface to other MS products.
• It’s been around for a long time, and its features have developed
over time
• It has financial management tools that help project managers
with estimating budgets.
• It has templates to help users get started, which saves time.
 DRAWBACKS OF MS-PROJECT 2000

• It’s difficult to learn and use. There’s a lot of time and effort, and even intensive
training, that must first be invested in the software before project managers and
their teams are comfortable using the software. This adds time to the project
during the implementation stage.
• It’s expensive.
• It’s not shareable. As mentioned earlier, files are saved as MPP, a proprietary
format, so that if you’re not using MS Project, you can’t read those files.
 CONTROL OF
PROJECTS
• Project controls are processes for gathering and analyzing project data to
keep costs and schedules on track. The functions of project controls
include initiating, planning, monitoring and controlling, communicating,
and closing out project costs and schedule. Ultimately, project controls are
iterative processes for measuring project status, forecasting likely
outcomes based on those measurements and then improving project
performance if those projected outcomes are unacceptable.
 CONTROL OF
PROJECTS
Activities under the umbrella of project controls may include:
• Aligning projects with organization goals and objectives
• Developing a work-breakdown structure (WBS)
• Collaborating on initial project schedules
• Developing a risk management plan
• Project budgeting and forecasting
• Monitoring project costs
• Feedback and reporting
• Optimizing project strategies to enable better outcomes in the future
 THE PROJECT CONTROL PROCESS
MAINLY FOCUSES ON
• Measuring planned performance vs actual performance.
• Ongoing assessment of the project’s performance to identify any preventive or
corrective
actions needed.
• Keeping accurate, timely information based on the project’s output and
associated documentation.
• Providing information that supports status updates, forecasting and measuring
progress.
• Delivering forecasts that update current costs and project schedule.
• Monitoring the implementation of any approved changes or schedule
amendments.
 CONTROL
SYSTEMS
• The success of a project depends on employing the correct project management control
system. It is important that the project managers design a robust project plan which can
be done through efficient control methodologies. The project managers are also
responsible for developing an appropriate project control system which is an essential
part of project management effort. According to a survey, following good project
management control practices reduces project failures by fifteen percent. The survey also
revealed that the project performance can be enhanced if dedicated project controls
systems are employed by an organization.
 COMPONENTS OF CONTROL
SYSTEMS
• Planning and Scheduling
• Risk Management (includes identification & assessment)
• Cost estimating and management
• Scope and Change Management
• Earned Value Management ( technique for integrating time, costs and scope)
• Document Control
• Supplier Performance
• Maintaining the project baseline
• Reporting
 CONTROL OF
CONSTRAINTS
• When you’re managing a project, some variables can change. Others
can’t. The Triple Constraint gives you a firm sense of what can and can’t
be adjusted throughout the course of the project.
• With any project, there are limitations and risks that need to be
addressed to ensure the project’s ultimate success. The three primary
constraints that project managers should be familiar with are time,
scope, and cost.
 THE TRIPLE CONSTRAINTS OF PROJECT
MANAGEMENT

1. Time constraint: The time constraint refers to the project’s schedule for completion,
including the deadlines for each phase of the project, as well as the date for rollout of
the final deliverable.
2. Scope constraint: The scope of a project defines its specific goals, deliverables,
features, and functions, in addition to the tasks required to complete the project.
3. Cost constraint: The cost of the project, often dubbed the project’s budget, comprises
all of the financial resources needed to complete the project on time, in its
predetermined scope. Keep in mind that cost does not just mean money for materials —
it encompasses costs for labor, vendors, quality control, and other factors, as well.
 TIME CONSTRAINT
When it comes to time constraints, proper scheduling is essential. The following
steps should be taken for effective time management:
1. Planning
2. Scheduling
3. Monitoring
4. Control
A Gantt chart can help to visualize the project timeline and whether they are tracking to
the proper constraints.
 SCOPE CONSTRAINTS
To keep the scope in check, you can:
• Provide clear documentation of the full project scope at the beginning of the project,
including all requirements.
• Set up a process for managing any changes, so if someone proposes a change, there is
a controlled system in place for how that change will be reviewed, approved or
rejected, and implemented if applicable.
• Communicate the scope clearly and frequently with stakeholders.
 COST CONSTRAINT
A project’s budget includes both fixed and variable costs, including
materials, permits, labor, and the financial impact of team members working
on the project. A few of the ways to estimate the cost of a project include:
• Historical data: Looking at what similar projects cost in the recent past
• Resources: Estimating the rate of cost for goods and labor.
• Parametric: Comparing historical data with updated, relevant variables
• Vendor bid: Averaging the total charge of several solid vendor bids