INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

Master Program in Business Administration (MBA)

Specialization: - Project Management

Note :- Solve any 5 Questions

All Question carry equal marks

INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

Q 1 ) Read the case below and answer the question (s) given at the end.

Electran Manufacturing Ltd, is a diversified manufacturer in two primary fields:

electronic applications and transportation equipment. In the transportation
equipment field. Electran products are in the forefront of technological applications,
especially in terms of electrical circuitry and component packages. Electran
management takes great pride in its technological leadership and has decided to
support a substantial research and development (R&D) effort. Currently 74 persons
are employed full-time in the R&D division, and at any one time at least twice that
many more are involved to some degree in R&D projects. These employees are
assigned primarily to engineering, finance marketing and production.

Electran organizes its R&D effort by functional area within the division. Engineers,
scientists, and technical and grouped separately. Additionally, within each of these
technical specialties, employees are grouped and housed together. Electrical
engineers, mechanical engineers, and merallurgical engineers, for example, are
each grouped and located together. Projects rotate from group to group depending
upon what work needs to be accomplished. There is a department head of the
engineering, science and technical support areas and three additional project
managers have individual project responsibility. There is considerable pressure on
project managers, but they have limited control over staff within the R&D division
and even less control over the approximately 150 employees who assist the R&D
division on an occasional basis. The R&D division manager has recently read a brief
article about matrix organization. He wonders if matrix organization might be
helpful in relieving some of the burden from his project managers and in increasing
division productivity.

One of the three project managers is trying to grasp the basis of PERT. He has
assembled the following data for a project soon to be started. He wants to establish
a PERT, diagram for the project, and determine the earliest completion data from
project start using expected times, and find the minimum cost plan. This project
manager does not know whether he has enough data to proceed; even if he does
have enough data, he does not know how to analysis them and apply the results.

Activity Required Processors Expected Time (in Cost of Expedite (in

days) $ day)
A–B –– 2 100
A–C –– 4 80
A–D –– 5 70
INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

B–E A–B,A–C 3 100

E–F B–E 6 150
F–H E–F 2 50
D–H A–D 11 100
H–I F–H,D–H 1 100

Case questions: (Assume date, if not available, with appropriate reasons)

1. Establish a PERT diagram and determine the earliest completion time.

2. The project manager has budget $200 for expending should he want to use it.

Q 2 ) A small project is having seven activities (A to G). The relevant data about these activities
is given below:

Activity Dependence Normal Crash Normal Cost Crash Cost

Duration Duration (Rs.) (Rs.)
(Days) (Days)
A ––– 7 5 500 900
B A 4 2 400 600
C A 5 5 500 500
D A 6 4 800 1000
E B,C 7 4 700 1000
F C,D 5 2 800 1400
G E,F 6 4 800 1600

(I) Draw the project network. Find out the duration of each path in the network.

(II) Mark the critical path in the network and find out its length.

(III) What is the percentage increase in cost to complete the project in 21 days.
INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

Q 3 ) In a transmission line project, the normal estimate and the 'crash' estimate
are as given below:

Activity Normal Estimate ‘Crash’ Estimate

Time (Weeks) Direct cost Time (weeks) Direct cost for
for the the activity
activity (Rs. (Rs. lakhs)
lakhs)
(1,2) 12 1 9 2.5
(2,3) 4 ––- 3 0.4
(2,4) 20 ––– 20 –––
(3,5) 20 5 14 6.5
(3,6) 8 ––– 4 0.2
(3,7) 8 ––– 4 0.2
(4,7) 8 0.5 4 1.0
(6,7) 8 0.4 5 1.0
(7,8) 12 3 9 4.0
(8,9) 4 0.1 1 0.5

Indirect costs: Rs. 35,000 per week

(i) Draw the project network. Find out the critical path and its duration.

(ii) Calculate the cost slope of various activities.

(iii) Crash the project to 43 weeks and calculate the total cost.

Q 4 ) What are the objectives of project management information system? (b) The
time and cost estimates of different activities of a project and their precedence
relationship are ' given below:

Activity Preceding activity Time (weeks) Cost (Rs.)

Normal Crash Normal Crash
A –– 6 4 10,000 14,000
INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

B –– 4 3 5,000 8,000
C A 3 2 4,000 5,000
D B 8 3 1,000 6,000
E B 14 6 9,000 13,000
F C,D 8 4 7,000 8,000

Overhead costs amount to Rs. 1,000 per week. It is stipulated that the contractor
will have to pay a penalty of Rs. 2,000 per week for completing the project beyond
16 weeks

(i) Show the critical path in the network Diagram.

(ii) Find out the cost slope for every activity using normal and crash date for time
and cost.

(iii) Crash the project to 16 weeks, Estimate the total cost of crashing.

Q 5 ) A project comprising of eight tasks (A to H) has the following characteristics:

Tasks Predecessor Time duration (weeks)

Optimistic Most Likely Pessimistic
A None 2 4 12
B None 10 12 26
C A 8 9 10
D A 10 15 20
E A 7 7.5 11
F B,C 9 9 9
G D 3 3.5 7
H E,F,G 5 5 5

(a) Calculate the time duration of each activity and the variance.
INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

(b) Draw the network diagram, determine the critical path and mark in the
network. What is the total project duration?

(c) What is the probability of achieving the project within the deadline of 30 weeks?

Q 6 ) If a project requires the expenditure of Rs.1,00,000 new and will yield

RS.2,00,000 in six years, how will the manager evaluate whether or not this is
viable? (Assume 10% discount rate) Discuss.

Q 7 ) The U.K National Lottery was set up with the intention of providing a fund
raising tool for culture and arts. The government put out an open innitation to
tender for the contract to run the £5 billion - a - year business. With costs allowed,
it would be worth in the region of £ 700 million in profit per annum to the winning
bidder. The bidders were a consortia of companies. The project was too big and
required a wide range of skills for one company. The idea was for people to be able
to select their own lottery numbers, enter them at £1 a time in a range of retail
stores, and for the winning number to be drawn on prime time TV once a week. The
winner could receive between £1 and £10 million. The bids were submitted in
February and on Wednesday 25th May 1994, the contestants were informed of the
outcome. The came out consortium would be awarded the contract. The main
players in the consortium were:

Racal - to provide electronics expertise.

G. Tech - an American Lottery organises.
De la Rue - to provide printing and security.
ICL - to provide computing expertise.

Cadbury Schweppes - consumer marketing Saatchi and Saatchi - an advertising

agency.
The bids were speculative and there was no guaranteed returns for the consortia.
They had spent £5 million on the bid and this level of commitment is what had
swing the decision in their favour. They had played as if they had expected to win;
and had a system in place that could be fully operational only after six months after
the contracts were awarded. This had taken three years to prepare and would be
almost impossible to justify under connectional accounting practices yet by sharing
their risks and by presenting the best project plan, the profits for all concerned
INDIAN SCHOOL OF MANAGEMENT AND STUDIES

Sub: Project Management Max Marks: 100

would be considerable.

How could expenditure on such a project be justified?

Q 8 ) Why is a Project Management Information System of immense importance in

a project ? Discuss the objectives of Project Management Information System. In
designing a Project Management Information System what parameters are to be
spelt out clearly ?

Q 9 ) What are the important phases of a project life cycle? Discuss each phase
briefly with key issues involved in it.

Q 10 ) (a) What do you mean by Technical Analysis?

(b) Explain briefly Project Management Information System.
(c) What do you mean by Network analysis?
(d) What is Project Evaluation?
(e) What is a Project Report?
(f) What is computerisation?

Q 11 ) . If a project requires the expenditure of Rs.1,00,000 new and will yield

RS.2,00,000 in six years, how will the manager evaluate whether or not this is
viable? (Assume 10% discount rate) Discuss.