PROJECT AND SOURCING MANAGEMENT

Unit-1
Sourcing management: introduction to sourcing
Sourcing management is the process of identifying, selecting, and managing suppliers to ensure that an
organization receives the goods and services it needs to operate effectively. Sourcing is the first step in the
procurement process, which involves obtaining goods and services from external sources.
Sourcing involves identifying potential suppliers, evaluating their capabilities and qualifications, negotiating
contracts, and managing ongoing relationships to ensure that suppliers meet their commitments and provide
high-quality products and services at a reasonable cost.
Effective sourcing requires a thorough understanding of the organization's needs and the market for the
goods and services being sourced. It also requires strong communication and negotiation skills to build and
maintain productive relationships with suppliers.
The sourcing process can be complex, and it often involves balancing competing priorities, such as cost,
quality, and delivery time. However, effective sourcing is critical to the success of any organization, as it can
help reduce costs, improve product quality, and enhance the organization's overall performance.

Sourcing v/s procurement

Sourcing and procurement are two related but distinct concepts in the supply chain management process.
Sourcing refers to the process of identifying and selecting suppliers for the goods and services an
organization needs to operate effectively. It involves identifying potential suppliers, evaluating their
capabilities, negotiating contracts, and managing ongoing relationships.
Procurement, on the other hand, is the entire process of acquiring goods and services from external
sources. It encompasses everything from identifying suppliers to making payments and managing
relationships with suppliers over time.
In other words, sourcing is a subset of procurement, as it focuses specifically on the supplier selection
process. Procurement, on the other hand, is a broader concept that includes sourcing as well as other
activities such as contract negotiation, purchase order management, and supplier performance evaluation.
Both sourcing and procurement are important components of supply chain management, and effective
management of these processes can help organizations reduce costs, improve quality, and enhance overall
performance.

Purchasing: purchasing cycle

The purchasing cycle, also known as the procurement cycle, is a series of steps that an organization follows
to acquire goods and services from external sources. The purchasing cycle typically consists of the following
stages:
1. Identify the need: The first step in the purchasing cycle is to identify the need for a particular product or
service. This can be done through an internal request from a department or through market research.
2. Conduct a supplier search: Once the need has been identified, the organization needs to identify
potential suppliers. This can be done through market research, referrals, or by issuing a Request for Proposal
(RFP) or Request for Quotation (RFQ).
3. Evaluate suppliers: Once potential suppliers have been identified, the organization needs to evaluate
them based on criteria such as price, quality, delivery time, and reliability.
4. Negotiate contracts: After selecting a supplier, the organization needs to negotiate a contract that outlines
the terms and conditions of the purchase, including price, delivery time, payment terms, and any other
relevant details.
5. Place the order: Once the contract has been negotiated and agreed upon, the organization can place the
order with the supplier.
6. Receive the goods or services: The supplier delivers the goods or services to the organization, and the
organization inspects them to ensure that they meet the agreed-upon specifications.
7. Process payment: Once the goods or services have been received and accepted, the organization
processes payment to the supplier according to the agreed-upon terms.
8. Evaluate supplier performance: After the purchase is complete, the organization evaluates the supplier's
performance to determine if they met the agreed-upon standards and if they should be considered for future
purchases.
Effective management of the purchasing cycle is critical to the success of any organization, as it helps
ensure that the organization receives the goods and services it needs to operate effectively at a reasonable
cost.

8 R’s of purchasing
The 8 R's of purchasing are a set of guiding principles that organizations can use to ensure they make
effective purchasing decisions. The 8 R's are:
1. Right Quantity: This refers to purchasing the appropriate quantity of goods or services that are needed to
meet the organization's requirements, while avoiding excess inventory or shortages.
2. Right Quality: This refers to purchasing goods or services that meet the organization's quality standards,
ensuring they are fit for purpose and meet customer requirements.
3. Right Time: This refers to purchasing goods or services at the right time, ensuring that they are available
when needed to support the organization's operations.
4. Right Source: This refers to selecting the right supplier or source of goods and services, based on factors
such as quality, reliability, price, and delivery time.
5. Right Price: This refers to purchasing goods and services at the right price, ensuring that the organization
receives value for money.
6. Right Documentation: This refers to ensuring that all purchase orders, contracts, and other
documentation related to the purchase are accurate, complete, and up-to-date.
7. Right Relationship: This refers to building and maintaining positive relationships with suppliers,
ensuring open communication, and collaborating to achieve shared goals.
8. Right Ethics: This refers to ensuring that all purchasing activities are conducted ethically and in
compliance with legal and regulatory requirements, and that suppliers are held to the same standards.
By following the 8 R's, organizations can make effective purchasing decisions that support their business
goals and objectives, while also ensuring they are responsible, ethical, and sustainable.

Role of a purchasing manager

The role of a purchasing manager is to oversee the procurement process for an organization, ensuring that
goods and services are acquired at the right price, quantity, quality, and time. The purchasing manager is
responsible for managing supplier relationships, negotiating contracts, and ensuring that the organization
receives value for money.
Some of the specific responsibilities of a purchasing manager may include:
1. Developing and implementing purchasing strategies: The purchasing manager is responsible for
developing and implementing purchasing strategies that align with the organization's goals and objectives,
while also maximizing efficiency and minimizing costs.
2. Identifying and selecting suppliers: The purchasing manager is responsible for identifying potential
suppliers, evaluating their capabilities, and selecting the best supplier for the organization's needs.
3. Negotiating contracts: The purchasing manager negotiates contracts with suppliers to ensure that the
organization receives the best possible terms and conditions, including price, delivery time, payment terms,
and quality standards.
4. Managing supplier relationships: The purchasing manager is responsible for managing ongoing
relationships with suppliers, ensuring that they meet their commitments and providing feedback to improve
performance.
5. Ensuring compliance with policies and regulations: The purchasing manager must ensure that all
purchasing activities comply with internal policies and external regulations, such as environmental and
social responsibility requirements.
6. Managing inventory: The purchasing manager is responsible for managing inventory levels to ensure
that the organization has the right amount of goods on hand to meet demand, while minimizing waste and
storage costs.
7. Monitoring market trends: The purchasing manager must stay up-to-date on market trends and
changes in the supply chain, to ensure that the organization is well-positioned to take advantage of new
opportunities and manage risks.
Overall, the role of a purchasing manager is critical to the success of any organization, as effective
procurement practices can help reduce costs, improve quality, and enhance overall performance.

Risks associated with purchasing process and its Mitigation,

There are several risks associated with the purchasing process, including:
1. Supply chain disruption: This can occur due to natural disasters, political instability, or other unforeseen
events that disrupt the flow of goods and services.
2. Supplier failure: This can occur if a supplier goes out of business or fails to meet their contractual
obligations, leading to delayed or incomplete deliveries.
3. Quality issues: This can occur if purchased goods or services do not meet the organization's quality
standards, leading to increased costs and decreased customer satisfaction.
4. Price fluctuations: This can occur if market conditions change, leading to increases in the cost of goods
and services.
5. Fraud and corruption: This can occur if purchasing processes are not adequately monitored, leading to
unethical or fraudulent behavior by suppliers or purchasing personnel.
To mitigate these risks, organizations can take several steps, including:
1. Developing a risk management plan: Organizations should develop a plan to identify and manage risks
associated with the purchasing process, including supply chain disruption, supplier failure, quality issues,
price fluctuations, and fraud and corruption.
2. Conducting due diligence: Before selecting a supplier, organizations should conduct due diligence to
evaluate their financial stability, quality standards, and reputation.
3. Developing a supplier management program: Organizations should establish a supplier management
program to ensure that suppliers meet quality standards, deliver on time, and comply with ethical and legal
requirements.
4. Implementing internal controls: Organizations should implement internal controls to monitor
purchasing processes and detect any instances of fraud or corruption.
5. Diversifying the supply chain: Organizations should consider diversifying their supply chain to reduce
their dependence on any single supplier or region, which can help mitigate the risk of supply chain
disruption.
By taking these steps, organizations can reduce the risks associated with the purchasing process and ensure
that they acquire goods and services in a way that is cost-effective, efficient, and ethical.

Concept and application of make or buy Decision.

The make or buy decision is a concept used in business and production management to determine whether to
produce goods or services in-house (make) or purchase them from an external supplier (buy).
This decision is often made based on a cost-benefit analysis that compares the costs and benefits of
producing the goods or services in-house versus purchasing them from a supplier.
The advantages of in-house production include greater control over the production process, higher quality
control, and potentially lower costs if the production volume is high enough. On the other hand, outsourcing
production to a supplier can be more cost-effective if the supplier has economies of scale or specialized
expertise.
The make or buy decision is applicable in many different industries and situations, including manufacturing,
software development, and marketing. For example, a company that produces computer software might
choose to outsource some of the programming work to a third-party developer, while retaining other aspects
of the development process in-house.
When making a make or buy decision, it is important to consider not only the costs but also other factors
such as the quality of the goods or services, lead time, availability of suppliers, and the company's long-term
strategy and goals.
Overall, the make or buy decision is a critical factor in the success of a business and requires careful
consideration to ensure that the decision is aligned with the organization's objectives and resources.

Unit-2
Evaluating suppliers’ efficiency: vendor rating, selection and development:
Evaluating supplier efficiency is an important aspect of the purchasing process, as it helps to ensure that
suppliers meet the organization's requirements and standards for quality, cost, delivery, and service. There
are several methods that organizations can use to evaluate suppliers, including vendor rating, selection, and
development.
1. Vendor rating: Vendor rating is a process that involves evaluating suppliers based on specific
performance criteria, such as quality, delivery, cost, and service. This can be done through surveys, audits, or
other forms of feedback. The goal of vendor rating is to identify areas for improvement and ensure that
suppliers meet the organization's expectations.
2. Vendor selection: Vendor selection is a process that involves selecting suppliers based on specific
criteria, such as price, quality, delivery, and service. This can be done through a formal bidding process, or
through other methods such as referrals or industry databases. The goal of vendor selection is to identify the
best supplier for the organization's needs, based on a combination of factors such as price, quality, and
service.
3. Vendor development: Vendor development is a process that involves working with suppliers to improve
their performance and capabilities. This can include providing training or support, sharing best practices, or
providing feedback on performance. The goal of vendor development is to help suppliers improve their
performance and become more effective partners for the organization.
To implement these methods effectively, organizations should establish clear criteria for evaluating
suppliers, including specific performance metrics and targets. They should also establish clear
communication channels with suppliers, to ensure that feedback and performance data are shared regularly.
Overall, evaluating supplier efficiency is a critical aspect of the purchasing process, and requires ongoing
monitoring and feedback to ensure that suppliers meet the organization's expectations and requirements. By
using vendor rating, selection, and development methods, organizations can establish effective relationships
with suppliers and ensure that they receive high-quality goods and services at a reasonable cost.

Need for measuring supplier performance

Measuring supplier performance is essential for any organization that wants to ensure that it is receiving
high-quality goods and services from its suppliers. The need for measuring supplier performance can be
summarized as follows:
1. Quality assurance: Measuring supplier performance helps to ensure that the goods and services received
from suppliers meet the organization's quality standards. By monitoring supplier performance, the
organization can identify any quality issues and work with the supplier to resolve them.
2. Cost savings: Measuring supplier performance helps to identify opportunities for cost savings, such as
identifying suppliers that offer lower prices or negotiating better terms with existing suppliers.
3. Risk management: Measuring supplier performance helps to identify potential risks, such as supply
chain disruptions, quality issues, or supplier failure. By monitoring supplier performance, the organization
can proactively manage these risks and ensure continuity of supply.
4. Continuous improvement: Measuring supplier performance provides valuable feedback to suppliers,
which can help them to improve their performance and become more effective partners for the organization.
5. Competitive advantage: Measuring supplier performance helps the organization to identify suppliers that
provide exceptional value and quality, which can help to differentiate the organization from its competitors.
Overall, measuring supplier performance is an essential component of the purchasing process, as it helps to
ensure that the organization receives high-quality goods and services at a reasonable cost, while managing
risks and ensuring continuity of supply. By monitoring supplier performance and providing feedback,
organizations can establish effective relationships with suppliers and achieve long-term success.

Categorization of suppliers
Suppliers can be categorized in several ways, depending on the criteria used. Some common ways to
categorize suppliers include:
1. Strategic vs. Non-strategic suppliers: Strategic suppliers are those that provide critical goods or services
that are essential to the organization's operations or competitive position. Non-strategic suppliers, on the
other hand, provide goods or services that are less critical to the organization's operations.
2. Single vs. Multiple source suppliers: Single source suppliers are those that are the sole provider of a
particular good or service to the organization, while multiple source suppliers are those that compete with
each other to provide the same good or service.
3. Domestic vs. International suppliers: Domestic suppliers are located within the same country as the
organization, while international suppliers are located in other countries.
4. Large vs. Small suppliers: Large suppliers are those that have significant resources and capabilities,
while small suppliers have more limited resources and capabilities.
5. Preferred vs. Non-preferred suppliers: Preferred suppliers are those that have been selected by the
organization based on specific criteria, such as price, quality, or delivery time. Non-preferred suppliers are
those that have not been selected by the organization or have not met the organization's criteria.
Categorizing suppliers can help organizations to better manage their relationships with suppliers, by
identifying the most critical suppliers and focusing resources on managing those relationships effectively. It
can also help organizations to identify potential risks and opportunities associated with different categories
of suppliers.
Supplier evaluation methods/ vendor evaluation method
There are several methods that organizations can use to evaluate suppliers or vendors. Here are some of the
most common supplier evaluation methods:
1. Vendor rating: Vendor rating is a method that involves evaluating suppliers based on specific
performance criteria, such as quality, delivery, cost, and service. This can be done through surveys, audits, or
other forms of feedback.
2. Vendor selection: Vendor selection is a method that involves selecting suppliers based on specific
criteria, such as price, quality, delivery, and service. This can be done through a formal bidding process, or
through other methods such as referrals or industry databases.
3. Vendor certification: Vendor certification is a method that involves assessing suppliers against a set of
standards or requirements, such as ISO 9001, to ensure that they meet the organization's quality and
performance standards.
4. Supplier self-assessment: Supplier self-assessment is a method that involves asking suppliers to assess
their own performance against specific criteria, such as quality, delivery, and service.
5. Site visits and audits: Site visits and audits are methods that involve physically visiting a supplier's
facility to assess their capabilities, processes, and quality control systems.
6. Performance scorecards: Performance scorecards are tools that organizations can use to track supplier
performance against specific metrics, such as delivery time, quality, and cost.
7. Joint improvement programs: Joint improvement programs are collaborative efforts between the
organization and the supplier to identify areas for improvement and implement solutions together.
The choice of supplier evaluation method will depend on the organization's goals, the nature of the supplier
relationship, and the resources available for evaluation. It is important for organizations to regularly evaluate
suppliers to ensure that they are meeting the organization's standards for quality, cost, delivery, and service.

Supplier selection process

The supplier selection process typically involves the following steps:
1. Identify the need: The first step in the supplier selection process is to identify the need for goods or
services. This may involve defining the requirements, specifications, and quality standards for the goods or
services.
2. Identify potential suppliers: Once the need has been defined, the next step is to identify potential
suppliers that can meet the organization's requirements. This may involve conducting research, using
industry databases, or seeking referrals.
3. Evaluate potential suppliers: The next step is to evaluate potential suppliers based on specific criteria,
such as price, quality, delivery time, and service. This may involve using one or more of the supplier
evaluation methods discussed earlier.
4. Request for proposal (RFP): Once a shortlist of potential suppliers has been identified, the organization
may send a request for proposal (RFP) to each supplier, outlining the organization's requirements and
requesting a proposal that addresses these requirements.
5. Negotiate with suppliers: After receiving proposals from suppliers, the organization may negotiate with
suppliers to determine the best terms for the goods or services being purchased. This may involve
negotiating price, delivery time, quality standards, and other terms and conditions.
6. Select the supplier: Once negotiations are complete, the organization can select the supplier that best
meets its requirements based on factors such as price, quality, delivery time, and service.
7. Contract and implement: Once a supplier has been selected, the organization can enter into a contract
with the supplier and implement processes to manage the supplier relationship effectively. This may involve
setting performance metrics, monitoring supplier performance, and establishing processes for resolving any
issues that may arise.
By following a structured supplier selection process, organizations can ensure that they are selecting the best
suppliers to meet their needs, while minimizing risks and ensuring continuity of supply.

Vendor rating process

The vendor rating process is a method for evaluating suppliers based on specific performance criteria. The
goal of the vendor rating process is to identify areas where a supplier can improve, as well as to recognize
areas where a supplier is performing well. Here are the steps involved in the vendor rating process:
1. Define performance criteria: The first step in the vendor rating process is to define the performance
criteria that will be used to evaluate the supplier. These criteria may include factors such as quality, delivery
time, cost, and service.
2. Collect data: The next step is to collect data on the supplier's performance against each of the defined
criteria. This may involve using surveys, audits, or other forms of feedback to gather information from both
internal stakeholders and external customers.
3. Rate the supplier: Once data has been collected, the supplier can be rated against each of the defined
criteria. This may involve assigning a score or rating based on the supplier's performance.
4. Identify areas for improvement: Based on the supplier's rating, areas for improvement can be identified.
These may include specific actions that the supplier can take to improve their performance in areas such as
quality, delivery time, cost, and service.
5. Communicate feedback: The next step is to communicate the results of the vendor rating process to the
supplier. This may involve providing feedback on the supplier's performance, as well as outlining any areas
for improvement.
6. Monitor performance: Once the vendor rating process has been completed, the supplier's performance
should be monitored over time to ensure that they are making progress in addressing any identified areas for
improvement.
By following a structured vendor rating process, organizations can ensure that they are effectively evaluating
their suppliers based on performance criteria, while also identifying opportunities for improvement and
maintaining a strong supplier relationship.

Factor affecting the selection of optimal supplier or vendor rating

There are several factors that can affect the selection of the optimal supplier or vendor rating, including:
1. Quality: The quality of the goods or services provided by the supplier is a critical factor in selecting the
optimal supplier. The supplier's quality standards should meet or exceed the organization's requirements.
2. Price: The cost of the goods or services provided by the supplier is another important factor. The
supplier's pricing should be competitive, and should provide the organization with good value for money.
3. Delivery time: The supplier's delivery time should meet the organization's requirements, and should be
consistent and reliable.
4. Service: The level of service provided by the supplier is also important. The supplier should be
responsive to the organization's needs, and should be willing to work collaboratively to resolve any issues
that may arise.
5. Financial stability: The supplier's financial stability is also a critical factor in supplier selection. The
supplier should be financially stable and have a strong track record of financial performance.
6. Capacity: The supplier's capacity to meet the organization's requirements is another important
consideration. The supplier should have the capacity to meet the organization's demand, and should be able
to scale up or down as needed.
7. Location: The supplier's location can also be an important factor. If the supplier is located far from the
organization, this can increase delivery times and transportation costs.
8. Reputation: The supplier's reputation in the market is also important. The supplier should have a strong
track record of performance, and should be viewed as a reliable and trustworthy partner.
By considering these factors when selecting the optimal supplier, organizations can ensure that they are
making informed decisions that will enable them to effectively manage their supplier relationships and
achieve their business goals.
Advantages of vendor/supplier rating
There are several advantages of implementing a vendor/supplier rating system, including:
1. Improved supplier performance: By evaluating and rating suppliers, organizations can identify areas
where suppliers can improve their performance. This can lead to better quality, delivery, and service, which
can improve overall organizational performance.
2. Better supplier selection: Vendor/supplier rating can help organizations make more informed decisions
when selecting suppliers. By rating suppliers based on their performance, organizations can select suppliers
that are most likely to meet their needs and requirements.
3. Cost savings: By selecting suppliers that offer better value for money, organizations can reduce their
costs and improve their bottom line.
4. Better collaboration: Vendor/supplier rating can help build stronger relationships between organizations
and their suppliers. By identifying areas for improvement, organizations can work collaboratively with their
suppliers to improve performance and achieve mutual goals.
5. Risk mitigation: By evaluating suppliers based on their financial stability, capacity, and reputation,
organizations can reduce the risk of supply chain disruptions and other risks associated with supplier
relationships.
6. Continuous improvement: By monitoring supplier performance over time, organizations can identify
trends and make ongoing improvements to their supplier management processes.
Overall, vendor/supplier rating can help organizations achieve greater efficiency, reduce costs, and improve
the quality and reliability of their supply chain.

Identifying and evaluating the international suppliers

Identifying and evaluating international suppliers requires careful research and analysis to ensure that the
organization selects the right supplier for their needs. Here are some steps that can be taken:
1. Determine the organization's needs: The organization should have a clear understanding of what they
need from an international supplier. This includes identifying the goods or services they require, quality
standards, delivery timeframes, and pricing considerations
2. Conduct market research: Research potential suppliers in the target market by reviewing industry
publications, online supplier directories, and attending trade shows and exhibitions.
3. Assess supplier capability: Once potential suppliers have been identified, assess their capability to meet
the organization's needs. This can include reviewing their experience, infrastructure, quality management
systems, financial stability, and capacity to meet demand.
4. Evaluate supplier reputation: Evaluate the supplier's reputation in the market by reviewing customer
feedback and ratings, and by conducting background checks to ensure compliance with ethical and legal
standards.
5. Conduct a site visit: Consider visiting the supplier's facility to assess their operations, quality control
processes, and capacity to meet demand. This can also help build a relationship with the supplier and
establish clear expectations.
6. Negotiate terms: Negotiate pricing and other terms with the supplier, including delivery timeframes,
quality standards, and payment terms.
7. Monitor supplier performance: Monitor supplier performance on an ongoing basis to ensure that they
continue to meet the organization's needs and expectations. This includes conducting regular quality checks,
tracking delivery times, and addressing any issues that arise.
By following these steps, organizations can identify and evaluate international suppliers to ensure that they
select the right supplier for their needs. It's important to take the time to conduct thorough research and
analysis to minimize risk and ensure that the supplier can provide high-quality goods or services at a
competitive price.

Unit-3
Price determination and negotiation:
Price determination and negotiation are critical aspects of the purchasing process. Here are some steps to
consider when determining and negotiating prices with suppliers:
1. Research: Conduct market research to determine the current prices for the goods or services you require.
This can include reviewing industry publications, online supplier directories, and attending trade shows and
exhibitions.
2. Determine your needs: Identify your specific needs for the goods or services, including quality, quantity,
delivery timeframes, and any other relevant factors that may impact pricing.
3. Establish a target price: Based on your research and needs, establish a target price that you are willing to
pay for the goods or services
4. Prepare for negotiations: Prepare for negotiations by identifying potential areas of compromise and
determining your bargaining position. It's important to have a clear understanding of your organization's
goals and priorities, as well as the supplier's perspective.
5. Conduct negotiations: Negotiate with the supplier to reach an agreement on pricing and other terms.
This may involve exploring different pricing models, such as volume discounts or long-term contracts.
6. Finalize the agreement: Once an agreement has been reached, finalize the terms of the agreement and
obtain a written contract that outlines the terms and conditions of the purchase.
It's important to approach price determination and negotiation with a collaborative mindset, seeking to
establish a mutually beneficial agreement with the supplier. Effective negotiation requires clear
communication, active listening, and a willingness to compromise when necessary. By following these steps,
organizations can effectively determine and negotiate prices with their suppliers to achieve their purchasing
goals.

Objectives of pricing
The objectives of pricing can vary depending on the organization's goals and market conditions, but some
common objectives include:
1. Revenue maximization: The primary objective of pricing is often to maximize revenue. This involves
setting prices that will generate the highest possible sales volume and revenue for the organization.
2. Profit maximization: Another objective of pricing is to maximize profits. This involves setting prices
that will generate the highest possible profit margin for the organization.
3. Market share growth: Pricing can also be used to grow market share by setting lower prices than
competitors. This can attract price-sensitive customers and increase the organization's market share.
4. Competitive parity: In some cases, pricing objectives may focus on achieving competitive parity with
other organizations in the market. This involves setting prices that are similar to competitors to avoid losing
market share.
5. Customer value: Pricing can also be used to communicate customer value and differentiate the
organization's products or services from competitors. This involves setting prices that reflect the perceived
value of the product or service in the eyes of the customer.
6. Cost recovery: Another objective of pricing is to recover the costs associated with producing and
delivering the product or service. This involves setting prices that cover all the direct and indirect costs
associated with production and delivery.
It's important to note that these pricing objectives are not mutually exclusive, and an organization may have
multiple pricing objectives that they are trying to achieve simultaneously. Effective pricing requires a
thorough understanding of the market, the competitive landscape, and the needs and preferences of the target
customer segment.

Factor influencing pricing

There are several factors that can influence pricing, including:
1. Cost of production: The cost of producing the product or service is a key factor in determining the price.
The organization needs to ensure that the price is sufficient to cover the costs of production, including
materials, labor, and overhead costs.
2. Market demand: The level of demand for the product or service can influence pricing. In high-demand
markets, organizations may be able to charge a premium price, while in low-demand markets, they may need
to reduce prices to attract customers.
3. Competition: The level of competition in the market can also impact pricing. If there are many
competitors offering similar products or services, organizations may need to adjust their prices to remain
competitive.
4. Brand reputation: The reputation of the organization's brand can also influence pricing. Organizations
with strong brand recognition and a reputation for quality may be able to charge higher prices than
competitors.
5. Target customer segment: The needs and preferences of the target customer segment can also impact
pricing. Price sensitivity, buying behavior, and purchasing power are important factors to consider when
determining the appropriate price.
6. External factors: External factors such as economic conditions, exchange rates, and government
regulations can also influence pricing. For example, inflation or changes in exchange rates can impact the
cost of production, which may in turn impact pricing.
7. Product lifecycle: The stage of the product lifecycle can also impact pricing. In the introduction and
growth stages, organizations may need to set lower prices to attract customers, while in the maturity and
decline stages, they may need to reduce prices to remain competitive.
Effective pricing requires careful consideration of these and other factors, as well as a thorough
understanding of the market and the needs of the target customer segment.

Types of pricing strategies

There are several types of pricing strategies that organizations can use, including:
1. Cost-plus pricing: This involves adding a markup to the cost of production to arrive at a price. The
markup is typically a percentage of the cost of production and is designed to cover overhead costs and
generate a profit.
2. Penetration pricing: This involves setting a low price to enter a new market or attract new customers.
The goal is to generate high sales volume and market share, with the expectation that prices will be raised
later.
3. Skimming pricing: This involves setting a high price for a new or innovative product to capitalize on
early adopters or customers who are willing to pay a premium. The price is typically lowered over time as
competitors enter the market.
4. Value-based pricing: This involves setting prices based on the perceived value of the product or service
in the eyes of the customer. The goal is to align prices with customer expectations and willingness to pay.
5. Psychological pricing: This involves setting prices that are designed to appeal to customers on a
psychological level. For example, setting a price that ends in 99 cents is often used to make the price appear
lower than it actually is
6. Dynamic pricing: This involves adjusting prices based on market conditions, such as changes in demand
or supply. This can be done in real-time or through the use of algorithms that analyze market data.
7. Bundle pricing: This involves offering multiple products or services together at a discounted price. The
goal is to encourage customers to purchase more items and increase overall revenue.
8. Promotional pricing: This involves setting temporary prices to promote sales or clear out inventory. This
can include discounts, coupons, and other promotional offers.
Effective pricing strategies require careful consideration of the market, the competition, and the needs of the
target customer segment. Organizations may use a combination of pricing strategies to achieve their goals
and maximize revenue.

Negotiation in sourcing:
Negotiation is an essential part of the sourcing process, as it enables organizations to achieve the best
possible terms and conditions from their suppliers. Negotiation in sourcing involves a dialogue between the
buyer and supplier aimed at reaching a mutually beneficial agreement on price, delivery times, quality, and
other terms and conditions.
Here are some key tips for successful negotiation in sourcing:
1. Preparation: Effective negotiation requires preparation. Before entering into negotiations, it's important
to have a clear understanding of your organization's goals and objectives, as well as the market conditions
and the supplier's strengths and weaknesses.
2. Establishing rapport: Building a positive relationship with the supplier is important for successful
negotiations. Establishing rapport and trust with the supplier can help to create a more collaborative and
productive negotiating environment.
3. Active listening: Active listening is an important skill in negotiation. By listening carefully to the
supplier's needs and concerns, buyers can better understand the supplier's perspective and work towards a
mutually beneficial solution.
4. Flexibility: Successful negotiation often requires flexibility on both sides. Buyers and suppliers should be
open to considering alternative solutions or compromise on certain issues to reach an agreement.
5. Effective communication: Effective communication is key to successful negotiation. Buyers should be
clear and concise in their communication and be prepared to explain their positions and rationale behind
their requests.
6. Maintaining professionalism: Maintaining a professional demeanor during negotiations is important.
Buyers should avoid making personal attacks or engaging in confrontational behavior that could damage the
relationship with the supplier.
7. Documenting the agreement: Once an agreement has been reached, it's important to document the terms
and conditions in a written contract. This can help to avoid misunderstandings and provide a clear record of
the agreement.
Effective negotiation in sourcing can help organizations to achieve significant cost savings, improve supplier
relationships, and ensure the best possible outcomes from their sourcing initiatives.

Meaning of negotiation
Negotiation is a process of communication and discussion between two or more parties aimed at reaching a
mutually acceptable agreement. It involves the exchange of information, ideas, and proposals between
parties in order to find a solution that meets the needs and interests of all parties involved.
Negotiation can occur in a variety of settings, including business, politics, and personal relationships. The
process typically involves a give-and-take approach where both parties make concessions in order to reach
an agreement that is acceptable to all parties.
Effective negotiation requires good communication skills, active listening, and the ability to understand the
other party's perspective. It also involves the willingness to compromise, as well as a clear understanding of
one's own interests and objectives.
Negotiation can be a complex process, and there are many different techniques and strategies that can be
used to achieve the best possible outcome. Ultimately, successful negotiation requires a collaborative
approach where both parties work together to find a mutually beneficial solution.

Examples of negotiation
Here are some examples of negotiation in different contexts:
1. Business negotiations: Negotiation is a common practice in business, where it is used to discuss and
reach an agreement on the terms of a deal or contract. For example, a company may negotiate with a
supplier to obtain better pricing or payment terms.
2. Employment negotiations: Negotiation can also occur during the hiring process, where a job candidate
may negotiate their salary or other employment terms with a prospective employer.
3. Diplomatic negotiations: Negotiation is often used in international diplomacy to resolve conflicts and
reach agreements between countries. For example, negotiators may work to reach a peace agreement
between warring nations.
4. Personal negotiations: Negotiation can also occur in personal relationships, such as when couples
negotiate household chores or parenting responsibilities.
5. Legal negotiations: Negotiation can be used in legal settings to settle disputes or reach a settlement
agreement in a lawsuit.
In all of these examples, negotiation involves a process of communication and discussion aimed at reaching
a mutually acceptable agreement.

Types of negotiation
There are several types of negotiation, each with its own unique characteristics and objectives. Here are
some common types of negotiation:
1. Distributive negotiation: This type of negotiation involves a fixed amount of resources or value that
must be divided between the parties. It is often characterized as a win-lose situation, where one party gains
at the expense of the other. Examples include negotiating the price of a car or the terms of a contract.
2. Integrative negotiation: This type of negotiation is focused on creating value for both parties by finding
ways to expand the pie of available resources. It is often characterized as a win-win situation, where both
parties benefit from the agreement. Examples include negotiating a joint venture or a long-term partnership.
3. Cross-cultural negotiation: This type of negotiation involves parties from different cultures and
backgrounds, which can lead to different assumptions, values, and communication styles. Effective cross-
cultural negotiation requires sensitivity to cultural differences and an understanding of how they can impact
the negotiation process.
4. Multi-party negotiation: This type of negotiation involves three or more parties, each with their own
interests and objectives. It can be more complex and challenging than two-party negotiations, as the parties
must work to find a mutually acceptable solution that meets the needs of all parties involved
5. Team negotiation: This type of negotiation involves a group of individuals negotiating on behalf of a
larger organization or team. Effective team negotiation requires coordination and collaboration among team
members to present a united front and achieve their collective goals.
Each type of negotiation requires different strategies, tactics, and skills to achieve the desired outcome.

The process of negotiation

The negotiation process typically involves the following steps:
1. Preparation: Before entering into a negotiation, it is important to do your homework and gather as much
information as possible about the other party, their interests and objectives, as well as your own. This
includes setting clear goals and priorities, understanding your strengths and weaknesses, and identifying
potential areas of compromise.
2. Opening: The opening stage of a negotiation involves setting the tone and establishing rapport with the
other party. This can involve small talk, exchanging pleasantries, and making a positive first impression.
3. Bargaining: The bargaining stage is where the parties exchange offers and counteroffers in an attempt to
reach a mutually acceptable agreement. This involves making concessions and compromises in order to find
common ground and move closer to a deal.
4. Closing: The closing stage of a negotiation involves finalizing the terms of the agreement and securing a
commitment from both parties. This may involve signing a contract, shaking hands, or exchanging other
symbols of agreement.
5. Implementation: Once the negotiation is complete, it is important to follow through on the terms of the
agreement and ensure that both parties are fulfilling their obligations. This may involve ongoing
communication and monitoring to ensure that the agreement is working as intended.
Effective negotiation requires strong communication skills, active listening, and the ability to understand and
empathize with the other party's perspective. It also involves the willingness to compromise and find
creative solutions that meet the needs of both parties.

Skills for successful negotiating and obstacles to negotiation

Skills for successful negotiating:
1. Effective communication: The ability to communicate clearly, concisely, and persuasively is critical to
successful negotiation. This includes active listening, asking open-ended questions, and using language that
is both clear and concise.
2. Preparation: Effective negotiation requires thorough preparation, including researching the other party,
setting clear objectives and priorities, and anticipating potential objections or obstacles.
3. Creativity: Successful negotiators are able to think creatively and find win-win solutions that meet the
needs of both parties.
4. Patience and persistence: Negotiation can be a slow and sometimes frustrating process, so it's important
to have patience and be persistent in pursuing your goals.
5. Emotional intelligence: The ability to understand and manage your own emotions, as well as those of the
other party, is critical to successful negotiation.
Obstacles to negotiations:
1. Resistance to change: People may be resistant to change or to the idea of making concessions, which can
make negotiation difficult.
2. Lack of trust: If there is a lack of trust between the parties, it can be difficult to build rapport and reach a
mutually beneficial agreement.
3. Cultural differences: Cultural differences in communication style, values, and beliefs can pose a
challenge to successful negotiation.
4. Power imbalances: Negotiations can be difficult if there is a significant power imbalance between the
parties, such as when one party has more leverage or resources.
5. Emotional reactions: Negotiation can be an emotional process, and strong emotions can sometimes lead
to impasse or breakdown in the negotiation process.

Unit-4
Introduction of project:
A project can be defined as a temporary endeavor undertaken to create a unique product, service, or result. It
is a specific set of activities designed to achieve a particular goal with defined beginning and end dates.
Projects are often undertaken to meet a specific need or solve a problem within an organization or
community.
Projects can be of various sizes and complexities, ranging from small tasks such as organizing an event to
large-scale initiatives such as building a new airport. Regardless of the size and complexity, every project
must have a clearly defined objective, a plan, a timeline, and a set of resources to achieve the desired
outcome.
Project management is the process of planning, organizing, and executing a project from start to finish. It
involves identifying the project requirements, breaking them down into manageable tasks, assigning
resources, monitoring progress, and making necessary adjustments to ensure the project is completed within
the allotted time, budget, and scope.
Effective project management requires a combination of technical skills, leadership skills, and
communication skills. A project manager must be able to work with various stakeholders, including team
members, clients, vendors, and other project sponsors, to ensure that the project objectives are met.

Characteristics of project
Projects have several key characteristics that differentiate them from ongoing operations and activities.
Some of the most important characteristics of a project include:
1. Unique deliverable: A project is designed to deliver a specific, one-time result or product that is different
from anything else that has been done before.
2. Temporary: A project has a defined start and end date, which sets it apart from ongoing operations that
continue indefinitely.
3. Defined scope: The goals and objectives of a project are well-defined and specific, which helps to keep
the project focused and on track.
4. Complex: Projects are often complex, involving multiple tasks and stakeholders, and require a high level
of planning and coordination.
5. Interdisciplinary: Projects often involve people from different departments or disciplines working
together, which can create unique challenges.
6. Risk: Projects are inherently risky, as there are many unknown factors that can impact the outcome.
Effective risk management is critical to project success.
7. Resource-intensive: Projects require a significant amount of resources, including time, money, and
personnel, which must be carefully managed to ensure project success.
8. Outcome-oriented: Projects are focused on delivering a specific outcome or result, which is typically
measured against predetermined success criteria.

Types of project
Projects can be categorized into various types based on their characteristics, goals, and scope. Some of the
most common types of projects include:
1. Construction Projects: These are projects that involve building or constructing something, such as a
building, a road, or a bridge.
2. Information Technology (IT) Projects: These projects involve the development and implementation of
technology solutions, such as software development or network infrastructure deployment.
3. Research Projects: These projects are focused on conducting research and analyzing data to gain new
insights, knowledge, or discoveries.
4. Organizational Projects: These projects are focused on improving organizational processes and
procedures, such as restructuring or process improvement initiatives.
5. Marketing Projects: These projects are focused on developing and executing marketing campaigns to
promote a product or service.
6. Event Projects: These are projects that are focused on planning and executing an event, such as a
concert, conference, or festival.
7. Government Projects: These projects are typically initiated and funded by government agencies and are
focused on providing public services or infrastructure.
8. Non-Profit Projects: These are projects that are focused on providing social or humanitarian services to
communities or individuals.
9. Engineering Projects: These projects involve the design and development of products, systems, or
processes, such as new machinery or manufacturing processes.
10. Product Development Projects: These projects are focused on developing and launching a new product
or service.

Project life cycle

The project life cycle refers to the stages that a project goes through from its initiation to its closure. The
specific phases and terminology of the life cycle can vary depending on the project management
methodology used, but generally, there are five main phases in a project life cycle:
1. Initiation: In this phase, the project is defined and its feasibility is evaluated. Project goals and objectives
are identified, and initial planning is done to determine the scope, budget, and timeline of the project.
2. Planning: In this phase, the project plan is developed in detail, and a project management plan is created.
This includes identifying project tasks, estimating their duration and resource requirements, creating a
project schedule, and defining the roles and responsibilities of project team members.
3. Execution: In this phase, the actual work of the project is done. Project team members are assigned tasks,
and the project plan is put into action. Project managers must monitor the project closely during this phase to
ensure that it stays on track and that any problems are addressed in a timely manner.
4. Monitoring and Control: In this phase, the project manager must monitor the project's progress and
performance, comparing actual progress to the project plan. Any variances or deviations from the plan must
be identified and addressed, and corrective action taken as necessary.
5. Closure: In this final phase, the project is formally closed out. This includes completing any outstanding
tasks, obtaining final acceptance from the project sponsor, and documenting the project's results and lessons
learned. The project manager will also perform a final review to assess the project's overall success and
identify areas for improvement in future projects.

Concepts of deliverables
In project management, deliverables are the measurable, tangible, and verifiable outcomes, results, or
products that must be produced and delivered to achieve the project objectives and meet the stakeholders'
expectations. Deliverables are the essential building blocks of a project, and they define the project's scope
and quality requirements. Deliverables can be anything from a physical product, a report, a software
application, a service, or a milestone.
Deliverables are created at every phase of the project life cycle, starting from the initiation phase to the
closing phase. The deliverables produced in each phase of the project life cycle are reviewed and approved
by the project sponsor or stakeholders to ensure that they meet the quality standards and are aligned with the
project objectives.

The project management process

The project management process is a framework that outlines the steps and activities involved in managing a
project from start to finish. The following are the typical phases/stages of the project management process:
1. Initiation: This is the first phase of the project management process, where the project's feasibility and
viability are assessed. The project's scope, objectives, stakeholders, and risks are identified, and a project
charter is developed to formally authorize the project.
2. Planning: This phase involves the creation of a detailed project plan that outlines the project's scope,
schedule, budget, quality, and resources. The project manager also identifies and evaluates project risks and
develops a risk management plan to mitigate them.
3. Execution: In this phase, the project plan is implemented, and the project team executes the project tasks
according to the schedule and budget. The project manager closely monitors the project progress and
manages any issues or changes that arise.
4. Monitoring and Control: This phase involves tracking the project's progress, monitoring the project's
performance, and making any necessary changes to ensure that the project is on track to meet its objectives.
The project manager also conducts regular status meetings, evaluates project risks, and updates the project
plan accordingly.
5. Closure: This is the final phase of the project management process, where the project is completed, and
the project deliverables are handed over to the client. The project manager conducts a final project review to
evaluate the project's success, document the lessons learned, and identify areas for improvement for future
projects. The project is formally closed, and all project documentation is archived for future reference.
Overall, the project management process provides a structured approach to manage projects efficiently and
effectively, ensuring that projects are delivered on time, within budget, and to the satisfaction of
stakeholders.

Roles of project team and project leader

The project team and project leader play crucial roles in the success of a project.
The project team is responsible for executing the project plan and achieving the project objectives. The
team members may come from different functional areas and have different skills and expertise that are
required to complete the project successfully. They are responsible for completing the assigned tasks within
the given time frame, budget, and quality standards. The team members work together to achieve the
common goal of the project and ensure that the project meets the expectations of the stakeholders.
The project leader is responsible for leading the project team and ensuring that the project is completed
successfully. The project leader should have a clear understanding of the project objectives, scope, timeline,
and budget. They should also possess excellent communication, leadership, and problem-solving skills to
guide the team members throughout the project life cycle. The project leader is responsible for developing
the project plan, allocating resources, monitoring the project progress, and making necessary adjustments to
ensure that the project is on track. They also serve as the primary point of contact for the stakeholders and
are responsible for managing their expectations.

Fundamental components of project cost

The fundamental components of project cost include:
1. Direct Costs: These are the costs that are directly related to the project, such as labor costs, materials,
equipment, and subcontractor costs.
2. Indirect Costs: These are the costs that are not directly related to the project but are required for the
project's success, such as rent, utilities, and insurance.
3. Overhead Costs: These are the ongoing costs that are required to keep the organization running, such as
salaries, rent, and utilities. Overhead costs are typically allocated to the project based on a predetermined
formula.
4. Contingency Costs: These are the costs that are set aside for unforeseen events or risks that may occur
during the project, such as delays, scope changes, and quality issues.
5. Reserves: These are the funds set aside to cover any unexpected costs that may arise during the project,
such as inflation or cost overruns.
6. Opportunity Costs: These are the costs associated with the opportunity that is foregone by choosing a
particular project. For example, if the organization chooses to invest in one project, it may miss out on other
potential opportunities.
7. Sunk Costs: These are the costs that have already been incurred and cannot be recovered, such as the cost
of research and development.
It is essential to consider all of these components when estimating the project cost to ensure that the project
is financially feasible and can be completed within the available resources.

Types of cost (direct, indirect, recurring, non- recurring, fixed, variable)

1. Direct cost: These are costs that are directly associated with the production or delivery of a product or
service. Examples include the cost of raw materials, labor, and production equipment.
2. Indirect cost: These are costs that are not directly associated with the production or delivery of a product
or service, but are necessary for the operation of a business. Examples include rent, utilities, and office
supplies.
3. Recurring cost: These are costs that occur regularly over a period of time. Examples include salaries,
rent, and utility bills.
4. Non-recurring cost: These are costs that occur only once or sporadically, usually for a specific project or
event. Examples include research and development costs, advertising expenses, and legal fees.
5. Fixed cost: These are costs that do not change, regardless of the level of production or sales. Examples
include rent, salaries, and insurance premiums.
6. Variable cost: These are costs that change depending on the level of production or sales. Examples
include the cost of raw materials and labor.

Project financing and budgeting sources of finance

Project financing refers to the way in which a project is funded, covering all costs from inception to
completion. On the other hand, budgeting refers to the process of allocating and managing financial
resources for a project. Some common sources of finance for projects include:
1. Equity Financing: This involves raising funds by selling ownership stakes in the project to investors. It is
a popular option for start-ups or high-risk projects.
2. Debt Financing: This involves borrowing funds from financial institutions or investors, which must be
repaid over a specified period with interest. This option is commonly used for projects with a predictable
cash flow.
3. Grants and Donations: Some projects may qualify for grants or donations from governments,
philanthropic organizations, or individuals.
4. Self-Financing: This involves funding the project using the organization's internal resources such as
retained earnings, reserves, or surpluses.
5. Leasing: This involves renting or leasing assets for the project rather than buying them outright, reducing
the initial capital outlay required.
6. Public-Private Partnership (PPP): This is a contractual arrangement between a government entity and a
private sector organization to share the risks and rewards of a project, typically for large infrastructure
projects.
The choice of financing option will depend on factors such as the size and complexity of the project, the
expected rate of return, the level of risk, and the availability of financing options.

Top down budgeting

Top-down budgeting is a budgeting approach in which the budget is created based on the previous period's
budget or the estimated budget of the entire organization, and then allocated to various departments or
projects. This approach is often used by organizations that have a centralized decision-making structure,
where the upper management decides the budget and then assigns it to various departments.
In top-down budgeting, the budget is usually created by senior management or the finance department, and
then divided among the departments based on their needs and requirements. This approach can be effective
in providing a broad overview of the organization's budget and ensuring that all departments are aligned
with the organization's goals and objectives.
However, the top-down budgeting approach may not be as effective in accurately predicting the budget
requirements of individual departments or projects. This is because the budget is created based on
assumptions and estimates, and may not take into account the specific needs and requirements of each
department or project.
To overcome these limitations, organizations may use a combination of top-down and bottom-up budgeting
approaches, where the budget is created at the top-level and then refined and adjusted based on input from
individual departments or projects. This approach is known as a hybrid or collaborative budgeting approach.

Bottom up budgeting
Bottom-up budgeting is a budgeting method that starts with estimating the costs of individual activities and
tasks needed to complete a project. These individual cost estimates are then aggregated to determine the
overall budget for the project. This method involves input from various members of the project team, who
are responsible for estimating the costs of the tasks they are assigned.
Bottom-up budgeting is also known as participatory budgeting because it involves the participation of the
project team members, who have detailed knowledge of the tasks and activities that need to be completed to
achieve the project goals. This method is useful for projects with a high degree of complexity, where
accurate cost estimates are essential for successful completion.
Bottom-up budgeting has several advantages over top-down budgeting. It allows for a more accurate and
detailed budget estimate, as it takes into account the costs of individual activities and tasks. It also promotes
team participation and collaboration, which can lead to better project outcomes. However, bottom-up
budgeting can be time-consuming and resource-intensive, as it requires input from various team members
and stakeholders.

Activity based costing

Activity-based costing (ABC) is a cost accounting method that focuses on identifying and assigning the
costs of specific activities and processes to the products or services they affect. It is based on the concept
that products and services require certain activities to be performed in order to be produced or delivered, and
that the cost of these activities can be accurately allocated to the products or services they are related to.
ABC involves breaking down the entire production process into discrete activities and analyzing the costs
associated with each one. This approach provides a more detailed and accurate picture of the cost structure
of a product or service than traditional cost accounting methods, which tend to allocate costs based on broad
averages or assumptions.
The steps involved in activity-based costing include identifying the various activities involved in producing
or delivering a product or service, determining the cost drivers for each activity, assigning costs to each
activity based on its consumption of resources, and finally, allocating those costs to the products or services
that benefit from each activity.
The benefits of activity-based costing include more accurate product costing, improved cost control and
budgeting, and better decision-making based on a more detailed and accurate understanding of costs and
profitability. However, it can be time-consuming and resource-intensive to implement, and may require
significant changes to an organization's accounting and reporting systems.

Unit-5
Project scheduling, network analysis & control
Project scheduling, network analysis, and control are all important aspects of project management that help
ensure that a project is completed on time and within budget.
Project Scheduling:
Project scheduling involves creating a detailed timeline of all the tasks that need to be completed in order to
achieve the project goals. This includes identifying the resources needed for each task, estimating the
duration of each task, and determining the order in which tasks need to be completed.
One common tool for project scheduling is the Gantt chart, which provides a visual representation of the
project timeline, including task dependencies and resource allocation.
Network Analysis:
Network analysis involves mapping out the relationships between the various tasks in a project and
identifying the critical path - the sequence of tasks that must be completed on time in order for the project to
be completed by the deadline. This helps project managers identify potential bottlenecks and allocate
resources more effectively.
One common tool for network analysis is the PERT chart, which represents the project as a network of tasks
and dependencies, and calculates the expected duration of the project based on optimistic, pessimistic, and
most likely estimates.
Control:
Project control involves monitoring and adjusting the project schedule and resources as needed to ensure
that the project stays on track. This includes tracking progress, identifying deviations from the plan, and
taking corrective action when necessary.
One common tool for project control is earned value management (EVM), which compares the planned
value of the project to the actual value of the project, and provides insight into cost and schedule
performance.
Overall, project scheduling, network analysis, and control are all critical components of effective project
management, and help ensure that projects are completed on time, within budget, and to the satisfaction of
all stakeholders.

Steps in project scheduling and network design

The steps involved in project scheduling and network design are:
1. Define project scope: The first step is to clearly define the project scope, including the goals, objectives,
and deliverables. This will help determine the tasks that need to be completed and the resources that will be
required.
2. Identify tasks: Identify all the tasks that need to be completed in order to achieve the project goals. This
involves breaking down the project into smaller, more manageable components.
3. Determine task dependencies: Determine the dependencies between the tasks, which will help establish
the order in which they need to be completed.
4. Estimate task durations: Estimate the amount of time each task will take to complete, taking into
account any potential delays or obstacles.
5. Allocate resources: Determine the resources required for each task, including personnel, equipment, and
materials.
6. Develop the project schedule: Using the information gathered in the previous steps, develop a detailed
project schedule that includes start and end dates for each task, as well as any milestones or deadlines.
7. Identify the critical path: Identify the critical path, which is the sequence of tasks that must be
completed on time in order for the project to be completed by the deadline.
8. Conduct network analysis: Conduct a network analysis to identify potential bottlenecks and determine
the most efficient way to complete the project.
9. Monitor and control the project: Once the project schedule and network design have been developed, it
is important to monitor progress and adjust the plan as needed to ensure that the project stays on track and is
completed on time and within budget.
Overall, effective project scheduling and network design require careful planning, attention to detail, and a
thorough understanding of the project scope, resources, and goals. By following these steps, project
managers can ensure that their projects are completed successfully and to the satisfaction of all stakeholders.

Gantt chart
A Gantt chart is a popular tool used in project management to visually represent a project schedule. It
displays all the tasks of a project in a timeline format, with the horizontal axis representing the project
timeline and the vertical axis representing the tasks. Each task is represented by a horizontal bar that shows
the start and end date of the task.
The benefits of using a Gantt chart include:
1. Clear visualization of the project schedule: A Gantt chart provides a clear and concise visual
representation of the project schedule, allowing stakeholders to easily understand the timeline of the project.
2. Identification of potential scheduling conflicts: By using a Gantt chart, project managers can easily
identify potential scheduling conflicts, such as tasks that are overlapping or tasks that are taking longer than
expected.
3. Improved communication: A Gantt chart can be easily shared with team members and stakeholders,
providing a common language for discussing the project schedule and progress.
4. Increased accountability: By using a Gantt chart, team members can see the timeline of the project and
understand their responsibilities and deadlines, increasing accountability and ensuring that tasks are
completed on time.
Overall, a Gantt chart is a useful tool for project managers to manage and monitor the progress of a project,
as well as to communicate with team members and stakeholders.

Work breakdown structure (WBS)

A Work Breakdown Structure (WBS) is a hierarchical decomposition of a project into smaller, more
manageable components. It is a tool used in project management to help break down a project into smaller,
more manageable tasks.
The WBS divides the project into smaller, more manageable pieces called work packages. Each work
package represents a specific task or deliverable within the project. These work packages are then broken
down further into smaller, more specific tasks.
The benefits of using a WBS include:
1. Improved project planning: By breaking down a project into smaller, more manageable tasks, a WBS
helps project managers plan and organize the project more effectively.
2. Improved communication: A WBS provides a clear and concise way to communicate the project scope
and requirements to team members and stakeholders.
3. Improved time and cost estimation: A WBS provides a detailed breakdown of the project, making it
easier to estimate the time and cost required to complete each task.
4. Improved project monitoring and control: A WBS helps project managers monitor and control the
progress of the project, ensuring that it stays on track and within budget.
Overall, a WBS is a useful tool for project managers to plan and manage projects effectively. It helps break
down the project into smaller, more manageable tasks, making it easier to plan, estimate, and monitor the
project.

Identifying and application of the nodes and activities

In project scheduling and network analysis, nodes and activities are important concepts that are used to
represent the tasks and activities involved in a project.
A node is a point in the project where one or more activities begin or end. It is represented as a circle in a
network diagram. Nodes are used to identify the start and end points of each activity, and to show the logical
relationships between activities.
An activity is a task or work package that needs to be completed within a project. It is represented by a line
or arrow in a network diagram, with its start and end points indicated by nodes. Each activity is associated
with a duration, which is the amount of time required to complete the activity.
In network analysis, nodes and activities are used to create a visual representation of the project schedule,
which is called a network diagram or a project network. The network diagram shows the logical
relationships between activities, including dependencies, critical paths, and milestones.
The application of nodes and activities in project scheduling and network analysis includes:
1. Identifying the tasks and work packages involved in a project.
2. Defining the logical relationships between tasks and work packages.
3. Creating a visual representation of the project schedule using a network diagram.
4. Determining the critical path of the project, which is the longest path of activities that must be completed
on time in order to complete the project on schedule.
Overall, the use of nodes and activities is an important aspect of project scheduling and network analysis, as
it helps project managers to identify the tasks and activities involved in a project, define their logical
relationships, and create a visual representation of the project schedule.

Activity of Arrow (AoA) and Activity on Node (AoN)

Activity on Arrow (AOA) and Activity on Node (AON) are two methods for representing the tasks and
activities involved in a project in a network diagram.
Activity on Arrow (AOA) is also known as the Arrow Diagramming Method (ADM). In AOA, activities
are represented by arrows, and nodes are represented by circles or rectangles. The arrows represent the
activities, and the nodes represent the start and end points of each activity. The length of the arrow
represents the duration of the activity. AOA is useful when the focus is on the activities themselves, rather
than on the relationships between them.
Activity on Node (AON) is also known as the Precedence Diagramming Method (PDM). In AON,
activities are represented by nodes, and the relationships between them are represented by arrows. The nodes
represent the start and end points of each activity, and the arrows represent the dependencies or logical
relationships between activities. AON is useful when the focus is on the relationships between activities,
rather than on the activities themselves.
Both AOA and AON are useful for representing the tasks and activities involved in a project in a network
diagram. AOA is typically used for smaller projects or projects with a simple structure, while AON is used
for larger, more complex projects. The choice between AOA and AON depends on the specific needs and
requirements of the project, and the preferences of the project manager.

Application of PERT and CPM

PERT (Program Evaluation and Review Technique) and CPM (Critical Path Method) are both project
management tools that help in planning, scheduling, and controlling complex projects.
PERT is a probabilistic method that uses three estimates for each activity - optimistic, most likely, and
pessimistic - to calculate the expected duration of the activity. PERT is used in projects that have a high
degree of uncertainty, such as research and development projects. PERT also uses a network diagram to
show the sequence of activities and their dependencies. The critical path in PERT is the path with the longest
duration, and it indicates the minimum amount of time required to complete the project.
CPM is a deterministic method that uses a single estimate for each activity to calculate the expected
duration of the activity. CPM is used in projects that have a low degree of uncertainty, such as construction
projects. CPM also uses a network diagram to show the sequence of activities and their dependencies. The
critical path in CPM is the path with the least amount of slack, and it indicates the minimum amount of time
required to complete the project.
The application of PERT and CPM involves the following steps:
1. Identify the activities involved in the project and their dependencies.
2. Estimate the duration of each activity.
3. Determine the critical path, which is the longest path in PERT or the least amount of slack in CPM.
4. Develop a network diagram that shows the sequence of activities and their dependencies.
5. Use the critical path to determine the minimum amount of time required to complete the project.
6. Use the network diagram to identify the activities that are on the critical path and that need to be closely
monitored.
7. Update the project schedule as progress is made and new information becomes available.
In summary, PERT and CPM are powerful project management tools that can be used to plan, schedule, and
control complex projects. They both use network diagrams to show the sequence of activities and their
dependencies, and they both identify the critical path, which indicates the minimum amount of time required
to complete the project.
Planning, monitoring and controlling cycle
The planning, monitoring, and controlling cycle is an important process in project management. It involves a
series of steps that help project managers to plan, execute, monitor, and control their projects effectively.
The following are the key steps involved in the planning, monitoring, and controlling cycle:
1. Planning: In this stage, the project manager defines the project scope, objectives, and deliverables. They
develop a project plan that includes a project schedule, budget, and resource allocation. They also identify
potential risks and develop a risk management plan.
2. Execution: In this stage, the project manager implements the project plan by assigning tasks to team
members, monitoring progress, and communicating with stakeholders.
3. Monitoring: In this stage, the project manager monitors project performance against the plan, identifies
variances, and takes corrective action to bring the project back on track. They also track risks and adjust the
risk management plan as needed.
4. Controlling: In this stage, the project manager takes corrective action to address any issues that arise
during the project. They also manage project changes by assessing the impact of changes on the project plan,
schedule, and budget.
5. Closing: In this stage, the project manager completes the project, conducts a project review to identify
lessons learned, and archives project documentation.
The planning, monitoring, and controlling cycle is a continuous process, and the project manager may need
to revisit each stage multiple times throughout the project. By following this cycle, project managers can
ensure that their projects are delivered on time, within budget, and to the desired quality standards.

Tracking through Gantt chart

A Gantt chart is a visual representation of a project schedule that shows the start and end dates of each task,
as well as the dependencies between tasks. It is an effective tool for tracking progress during a project.
To track progress through a Gantt chart, the project manager must update the chart regularly to reflect the
actual start and end dates of each task. This can be done manually, by updating the chart with the latest
information on task completion dates, or through project management software that automatically updates
the chart based on task status.
As the project progresses, the Gantt chart can be used to monitor the critical path, which is the sequence of
tasks that must be completed on time in order to meet the project deadline. The project manager can use this
information to identify potential delays or bottlenecks in the project schedule, and take corrective action to
keep the project on track.
By tracking progress through a Gantt chart, the project manager can also communicate project status to
stakeholders in a clear and concise way. The chart provides a visual representation of the project schedule
that is easy to understand, and can be used to identify areas where additional resources or support may be
needed to keep the project on track.

Earned Value Analysis (EVA): planned value(PV), earned value(EV), cost

variance(CV), schedule variance(SV)
Earned Value Analysis (EVA) is a project management technique that integrates cost, schedule, and scope
elements of a project to help project managers measure project performance and progress. It uses three key
variables: Planned Value (PV), Earned Value (EV), and Actual Cost (AC) to determine the status of a project
at any given time.
- Planned Value (PV): This is the authorized budget assigned to the work scheduled to be completed on a
specific activity or work package within a certain time frame. It is also known as the budgeted cost of work
scheduled (BCWS).
- Earned Value (EV): This is the value of work that has been completed at any given point in time. It is also
known as the budgeted cost of work performed (BCWP).
- Actual Cost (AC): This is the actual cost incurred in completing a task or activity.
Using these variables, the following EVA measures can be calculated:
- Cost Variance (CV): This is the difference between the Earned Value (EV) and Actual Cost (AC). It
measures whether the actual cost of work performed is more or less than the planned cost. If the CV is
positive, it means that the project is under budget, while a negative CV indicates that the project is over
budget.
CV = EV - AC
- Schedule Variance (SV): This is the difference between the Earned Value (EV) and the Planned Value
(PV). It measures whether the project is ahead of or behind schedule. If the SV is positive, it means that the
project is ahead of schedule, while a negative SV indicates that the project is behind schedule.
SV = EV - PV
EVA provides project managers with valuable information about the status of the project, the cost and
schedule performance, and helps them to identify potential problems early on, enabling them to take
corrective action before it’s too late.

Schedule performance index (SPI)

The Schedule Performance Index (SPI) is a project management tool used to measure the schedule
efficiency of a project. It is a ratio of the Earned Value (EV) to the Planned Value (PV) and indicates the
amount of work that has been accomplished relative to the planned work.
SPI = EV / PV
A value of 1.0 indicates that the project is on schedule, while a value less than 1.0 indicates that the project
is behind schedule. If the SPI is greater than 1.0, it means that the project is ahead of schedule.
For example, if the planned value of a project is $100,000 and the earned value is $80,000, the Schedule
Performance Index would be:
SPI = $80,000 / $100,000 = 0.8
This means that the project is currently 20% behind schedule. The project team can use this information to
take corrective action, such as increasing the rate of work or reallocating resources to ensure that the project
is completed on time.

Project termination: types of terminations, project termination process.

Project termination is the process of ending a project before its planned completion date. There are various
reasons why a project may need to be terminated, such as changes in business priorities, budget constraints,
or the project objectives are no longer relevant.
There are different types of project termination:
1. Natural Termination: This type of termination happens when the project is completed successfully and
achieves its goals.
2. Premature Termination: This type of termination happens when a project is terminated before
completion due to unforeseen circumstances such as lack of funds, change in management, etc.
3. Perpetual Termination: This type of termination happens when a project is put on hold indefinitely, and
the resources allocated to it are redirected elsewhere.
The process of project termination involves the following steps:
1. Identification of the reasons for termination: The reasons for the termination of the project should be
clearly identified, and the project team should be informed.
2. Development of a termination plan: A plan should be developed that outlines the steps to be taken to
terminate the project, including the reallocation of resources and the disposal of assets.
3. Communication with stakeholders: The stakeholders should be informed about the decision to
terminate the project and the reasons behind it.
4. Review of the project: A review of the project should be conducted to determine the accomplishments,
failures, and lessons learned.
5. Closure of the project: The project should be closed down systematically, including the disposal of
assets and documentation.
6. Follow-up activities: A follow-up should be conducted to determine if any issues have arisen as a result
of the termination and if any further action is required.
It is important to note that project termination can be a challenging and emotional process for the project
team and stakeholders. Therefore, it is essential to handle the process with sensitivity and ensure that all
parties are informed and involved in the decision-making process.