BSSS-Institute of Advanced Studies

Study/Reading Material
CourseName: Project Management
Course Code: CP 206 Batch: 2022-24

CEOs:
1. To impart knowledge about the basics of the project management functions in
anorganization.
2. To develop the ability to decipher the stages of project management.
3. To develop the skills to apply the tools and techniques of project management to
solveorganizational issues and challenges.
4. To build the ability to assess the relationship among the different aspects of project
management and match to the organization needs.

COs:
1. Recognize and enumerate the facts and basics concepts of project management.
2. Demonstrate the comprehension related to phases of project management.
3. Implement the concepts of project management in the business operations.
4. Differentiate the key financial and non-financial aspects in project management.
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COURSE CONTENTS:
Unit – 2: Project Implementation – Basic concepts of Budgeting and cost estimation,
Scheduling, Project Network Construction
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A. Project Planning and Formulation –

Project Formulation involves the testing the conceptualized idea and understanding the
feasibility to convert it into a project with certain derived benefits. Project formulation involves
– Opportunity studies, pre-feasibility studies, feasibility studies (SWOT & PESTEL analysis),
Financial viability (NPV, IRR, Discounted Cash Flow, ROI)

Meaning of project proposal - Project Planning starts with the project formulation through
“Project Proposal”. Project proposals are documents that define the project, including things
such as start and end dates, objectives and goals. The proposal declares the stakeholders and
benefits with the execution of the project. The project proposal should be well-written
document to convince the stakeholders to support and consent for its implementation.

How to write a project proposal - For drafting a project proposal, one should have a good
understanding of the project objectives, scope, benefits and expectation of prospective project
sponsor, before drafting it. It is necessary to conduct preliminary research to have
comprehensive understanding to write a detailed and compelling document. Draft project
proposal must have the below six sections:
Section 1: Executive summary
Section 2: Project background
Section 3. Solutions and approach
Section 4. Financial information
Section 5. Additional documents
Section 6. Conclusion

Section 1: Executive summary - Write an introductory section, called the executive summary,
to summarize the project. Just like the introduction of an essay, this section should aim to catch
the recipient's attention and encourage them to read on. The executive summary should include
details about:

• The problem identified to be solved through this project

• How the project solves the identified problem
• Project's intended impact/outcomes

The length of the executive summary will depend on the project's scope and complexity. One
paragraph will be sufficient for many projects, but one may need a longer executive summary
if the project is more complex. Executive summary must be concise to keep it engaging and
convincing.

Section 2: Project background - Write a section that provides a background to the project and
the problem it seeks to address. This section should include:

• A history of the problem as it relates to your business

• A concise summary of the project's requirements
• Some details about the project

Write relevant details about the project in this section, focusing on how and why this problem
(topic) is identified to undertake the project. This section should be relatively brief at one to
three paragraphs in most cases.

Section 3. Solutions and approach - Write a section that outlines the project in greater detail.
This section should explain the proposed solution(s) to the problem and how the same will be
executed. It should include:

• Project goals and vision

• Project deliverables
• Expected timeline
• Sponsorship and Project Team members

More detailed solutions and approach sections may also include details of any risks anticipated
and how might be addressed, how and who will report to stakeholders during the project and
what criteria will judge the project success. This section will usually be the largest part of the
project proposal.

Section 4. Financial information - Write a section that provides an itemized budget for the
project and the predicted financial impact of the completed project. Utmost care should be
taken to ensure prudent and accurate calculations, as this lays the base for financial assistance
for project. Accurate calculations give investors and clients the best idea of how much the
project will cost and whether it can fit into their own budgets.

Section 5. Additional documents - Gather any relevant documents for the final section of the
proposal. These documents might include:

• A list of the contact details of everyone with authorization power for the project
• Maps of the area where the project will be based or will service
• Company financial statements and annual reports
• Any brochures or promotional materials for the project
• Relevant studies or reports
• Letters in support of the project
• A glossary of terms used in the project proposal

Section 6. Conclusion - Complete the project proposal by creating a summary of the of the
points that have been already discussed. Include the most important information needed to
enhance the chances of receiving approval.

Types of project proposals - Different project proposals have different goals and therefore
distinct requirements. These are the most common types of project proposals you are likely to
write.

• Solicited - Sent to respond to a Request for Proposal. You must conduct thorough research
and write very persuasively, as your project proposal will be in competition with others.
You may also need to adhere to a strict format outlined in the Request for Proposal.
• Unsolicited - Sent without an RFP. While you are not in competition with others, you must
still be very persuasive to convince your recipient to act, as they did not ask for your
proposal.
• Informal - Sent in response to an informal client request. As there is no Request for
Proposal, your proposal can follow your preferred format.
• Renewal - Sent to an existing client to encourage them to renew your services. Emphasize
past results and predict future benefits to persuade a client to act.
• Continuation - Sent to remind an investor that the project is underway and to provide
progress updates. This proposal should focus on communicating information rather than
persuading.
• Supplemental - Sent to remind an investor that the project is underway and ask for
additional resources. It should be persuasive to encourage the investor to give more.

The first three proposals are typically the longest, as they deal with new projects. As the final
three project proposals focus on established projects and relationships, they can typically be
shorter.

B. Generation of Project Ideas – Idea generation is the first step of any project. It involves
with the collection of information in the form of data, facts, figures and related literature to
compile a report or meaning essay to examine the economic benefit that may be derived if
the opportunity is materialized. According to Peter Drucker there are 3 types of
opportunities viz., complementary, additive and breakthrough.
 a. Complementary opportunities – Such opportunities or business idea is for the
introduction of a new feature to the existing product or service to bring market
enhancement or change in the structure of buying patterns. It involves high element of
market risk. It is generally associated with technology industries. For example, shifting
of spectrum from 2G to 4G and upgradation to 5G.

b. Additive opportunities – Such opportunities or idea that aims to utilize the existing
resources in an optimum manner without disturbing original product make/service
structure or any changes in the business pattern, thus avoid wastage of resources and
involves least element of risk. For example, providing 5G services at the cost of 4G.

c. Breakthrough opportunities – Such ideas call for major fundamental changes in the
product/service and business structure. It involves highest risk element. For example,
conversion of labour-intensive industry into fully automatic machine-oriented unit or
vice-versa, substituting a chemical component of the product with an environment-
friendly herb, etc.

C. Creativity for idea generation – Creativity is a skill in an individual or a group of

individuals to develop something original. It involves gathering data, facts, figures and
related literature or valid information to support a thought or a problem. It works to identify
all possible alternatives to evaluate the validity of the idea or to solve the identified problem
with rational approach. Creativity allows the person(s) to think and rethink of the best
alternative to achieve the desired goals with logical reasoning.

a. Individual thinking techniques –

i. Attribute listing – The most preferred character(s)/feature(s) are attached to any

product/service are listed in order of the preference ranking attached and based
on this ranking list the product/service deliverable is designed.
ii. Black Box – It a majorly a software testing tool which allow the input to provide
some pre-define outputs without any knowledge of internal codes or any
implementation details.
iii. Checklist – It is a compact list of prospective questions, the response to which
provides the direction to an individual to find a rational solution to the identified
problem or idea.

b. Group thinking techniques –

i. Brainstorming – it is a process which allows the team members to pool-in their

ideas in order to solve the business problem(s). It provides with insights at the
time of data collection and planning. It is good source of generating numerous
ideas to reach a specific solution to the problem.
ii. Delphi technique - This is a methodical approach to gathering ideas and
opinions from a large number of experts. A large number of experts are invited
to generate individual opinions or solutions to a given issue using this technique.
 The coordinator compiles the information shared by experts and distributes it to
individuals for the next round of opinion or solution sharing. This process of
gathering and deliberating on opinions/solutions will continue until the
consensus on a single solution is reached.
iii. Nominal group technique - This is a structured technique that is administered
by a coordinator who invites individuals to independently prepare their
ideas/opinions and then asks each individual to present the idea before the others
for rating/ranking the thought process without criticism. For future reference,
the coordinator records all of the ideas generated during this process, along with
justifications for each idea and ranking.

D. Criteria for project idea selection – The project is selected based on certain criteria, such
as –

a. Investment size or funds needed

b. Location
c. Technology
d. Marketing
e. Equipment needs

E. Scanning business environment – As business environment is dynamic in nature is it

necessary to understand the forces that shall have positive and negative impact of the
success of any idea/project. In general, business environment is classified into two
categories – Internal and External. In order to assess the external environment, various
models applied for business environment scanning such as –BCG matrix, GE matrix,
Porter’s 5 force model, and PESTEL analysis. For the purpose of such scanning the
business environment can be divided into broad 6 categories viz.,

a. Political sector (governmental sector) – Industrial policy (liberalization, privatization

and globalization), taxation structure, Govt. projects & programmes, Govt. subsidies,
concession(s) and incentive(s), Foreign trade policy matters, financing rules &
regulations or lending institutions, financing terms and conditions, etc.
b. Economic sector – Domestic and Foreign economic conditions, composite economic
growth rate, growth rate of various economic sectors, seasonal and cyclic fluctuations,
BOP situations and Trade deficit or surplus, fiscal and monetary policy.
c. Social sector (socio-demographic sector) – Population size, demographic information
pertaining to age, education status, gender status, employability levels, income status,
buying attitude, pattern and behaviour, Technological inventions and upgradations,
access or ownership of technical know-how, acceptability of new technology in the
industry and country.
d. Competition sector – No. of competitors, the market share of top 4-5 players, degree of
product/service homogeneity or differentiation, types and levels of entry barriers,
availability of substitutes (in regards to price, features, quality and performance),
market trends, practices and policies.
 e. Supplier Sector – Suppliers dependency for availability of raw material and sub-
assemblies, at competitive price, availability and cost of all the factors of production
viz., men, material, money and entrepreneur.

F. Corporate Appraisal - As discussed above, environment scanning is an essential step of

idea selection, however, it is extremely important to assess the strength and weakness of
the business, to understand its internal environment, so as to convert the opportunities and
overcome the threats. In order to assess the internal environment of the corporate, methods
such as - SWOT analysis, TOWS analysis and McKinsey 7’s model are applied. For the
purpose of internal environment scanning the corporate appraisal is carried out in following
areas –

a. Marketing & Distribution – It scans the market-demand, market-share, product-line,

distribution channels & networks and the associated costs, after-sales services,
advertisement & brand loyalty.
b. Production & Operation – Workability of plant/machinery and other fixed assets
needed in the operations, their capacity and overall factory conditions, requirement of
any vertical integration, any associate location advantage, need for technically
advanced machines, etc.
c. Research & Development – Ability of a business to perform R&D independently, need
for research lab, equipment, model-designing (proto-type) and testing facilities, level
of coordination between R&D and operations dept.
d. Corporate Resource & Personnel – Corporate brand image, conflict with govt. and/or
regulatory authorities, record of industrial relations, competent and committed human
resource
e. Finance & Accounting – Examination of leverage ratios, financing capacities,
estimation of cost of capital, estimated liquidity and cash inflows/outflows, trust/repute
with shareholders and creditors, established accounting control systems and taxation
structures.

G. Key issues in Project Analysis –

Market Analysis – a. Potential Market b. Market share

Technical Analysis - a. Technical feasibility b. Rational selection

Financial Analysis - a. Return b. Risk

Economic Analysis – a. Benefit-cost ratio b. Other impact assessment

Ecological Analysis – a. Environment Damage b. Restoration measures

H. Screening of Project Ideas – After the ideas has been generated and evaluated based on
 internal and external business environment, the next step is to screen the ideas based on
their potentials to generate revenue or match the desired objectives. It is in this phase that
the ideas are either ACCEPTED or REJECTED.

a. Accepted level of risk – Risk assessment methods are applied to estimate the risk
associate with a project. These tools include – Simulation technique, Risk adjusted
discount rate, Sensitivity analysis, Variation (Variance), Standard Deviation, Co-
efficient of variation, Certainty equivalence, Probability technique, Decision-tree, etc.
Highly risky project with low returns is rejected.
b. Reasonable project costs - It is necessary estimate the cost of capital (weighted) to
estimate the associated revenue (profits) from undertaking the project. It is essential to
forecast the implementation cost to match to the acceptable % of profits to be generated
by the project.
c. Compatible with promoter/sponsor – It is necessary that the idea should be acceptable
to the sponsors of the project, thus all the associate risk, cost and returns should be
disclosed to the promoters. In case of any disagreements, efforts should be made to
resolve the same, else in case of no consensus, the conflicted idea should be rejected.
d. Consistent with govt. norm, rules and regulations – The project should meet all the
requirement of govt. rules, norms and regulations.
e. Ensure resource availability - It is necessary that a project idea should be evaluated
based on the resource requirements and its adequate availability, as the lack of resources
is one of major reasons for a project to fail post its implementation.
f. Analysis of Market demand – An analysis of market demand is an essential requirement
of idea screening. It requires an in-depth understanding of market demand in reference
to present and future demand status, potential market share, competitors’ analysis, their
rivalry strategies, their captured market share and possible entry barriers imposed for
new entrants.

I. PROJECT RATING INDEX – It is technical method for screening the idea. Under
this method a list of associated factors or characteristics are identified to be rated. Each
factor or characteristic is assigned a “weight”. The project is measured on the basis of the
value derived from these factors (characteristics) multiplied with the assigned weights. The
method is applied to evaluate and select among the large number of project ideas. A certain
target index rate (base) is pre-define to ACCEPT or REJECT the idea, if the idea lies above
or below the base rate.

Specimen: Project Rating Index

Factor(s) Factor Rating Scale Factor
Weight 5 4 3 2 1 Score
Technical knowledge 0.25 √ 0.75
Market Demand 0.15 √ 0.45
Availability of resources 0.10 √ 0.40
Consistency with Govt. norms 0.20 √ 0.80
Reasonability of Costs 0.30 √ 0.60
 RATING INDEX 3.0

In the above table is the assumed base index rate is 3.5, the idea will be rejected as the rating
index is 3.0.

J. MARKET and DEMAND ANALYSIS – Market analysis in project idea screening

involves a project manager to conduct market survey based on some pre-defined goals,
collect data through primary and/or secondary sources of data collection, and based on the
available information scan the market environment to test the project idea feasibility.
Marketing analysis includes demand estimation and forecasting, estimation of elasticity of
demand and income, market competition scenario, substitute availability and price of
complementary and substitute goods/services. Market analysis helps in understanding the
buying behaviour and demand pattern of customers (also known as SITUATIONAL
ANALYSIS).

Situational analysis helps in understanding the customer preferences, their purchasing

capacities, provides scope for business to plan competitive strategies, etc. After the data
has been collected it is necessary to apply research tools like Chi-square test or correlation
or regression, ANNOVA, etc. to categorize the market based on demand, price, customer
preference, mode of distribution, sales promotion, competition, supply chain, etc. The
survey provides a base for market planning and demand forecasting. Demand forecasting
is based on statistical tools such as trend analysis, chain ratio technique, income elasticity
of demand, price elasticity of demand, econometric technique, etc. Market planning
involving addressing the challenges and strategizing for the 7P’s (price, place, promotion,
product, people, process and physical evidence) of marketing for effective market
penetration.

Situational Analysis
& its Objectives

Market Survey Collection of

data

MARKET CATEGORIZATION &

DESCRIPTION

Market Planning Demand Forecasting

K. TECHNICAL ANALYSIS – The technical analysis deals with the engineering scope of
the project. It involves the proper planning and estimation of required technology, location
preference, production size, types of plant/machinery/equipment to be installed (owned or
to be lease) to meet capacity needs based on production size, arrangement of adequate
availability of coal, gas and power for industrial machinery, testing of industrial set-up &
processes, provision for employee’s technical trainer, access to technical know-how
(owned or leased).
L. FINANCIAL ANALYSIS – Financial analysis is performed to ascertain the financial
feasibility of any project proposal. The tools of financial viability of a project includes –

a. Estimation of initial investment amount and present values of future cash inflows.
b. Sources of long-term financing,
c. Capital Budgeting techniques,
d. Estimation of Weighted Average Cost of Capital,
e. Break-even point
f. Cash flow statement & Fund Flow statement
g. Estimation of risk

H. FEASIBILITY STUDY – The above analysis of all the 6 sectors constitutes the detailed
feasibility study of a project. A project proposal is processed to the next stage of detailed
planning and drafting of project proposal only after the feasibility study is conducted and the
idea has been approved for further processing. The flow chart of feasibility study is given as
below –
 Generation of Idea
P
R
I
M Initial Screening
A
R
Y
Does the idea look promising?
A
N NO
YES
A
L Terminate
Y Move for Feasibility Analysis
S
I
S
Conduct Market Analysis Conduct Technical Analysis

Conduct Financial Analysis

E
V
A
Conduct Economic & Environmental
L Analysis
U
A
T Is the project worth undertaking?
I
O YES NO

N Terminate
Preparing for funding
WORK BREAKDOWN STRUCTURE – A work-breakdown structure (WBS) is a formal

way of presenting a visual hierarchy of either a deliverable-oriented project or a phased-

oriented project. A WBS is a structure or a framework defining the scope and sequence of

activities to be performed in a project allowing transparent communication during project

execution and implementation. A WBS serves as a blue-print or a map which assists the

project team through any type of complicated projects. Projects may comprise of several

phases and/or sub-projects, that can be further categorized into smaller task or

deliverables, etc. As one of important steps in project scheduling the WBS makes, each

project team member understand their roles, responsibilities and expected end deliverable

after each event, within the allotted time period, from beginning to the end of the project.

TOOLS FOR PROJECT MONITORING AND CONTROL - PERT & CPM

Project is a combination of pre-defined activities with well-defined timelines to start and

complete. It makes it all more necessary to check that project activities are executed and

performed as planned & in-line with the estimated schedule. For the purpose of project
monitoring and controlling the two essential tools applied viz., Program (Project)

Management and Review Technique (PERT) and Critical Path Method (CPM) follow a

common method of preparing the network diagram to calculate the critical path and

therefore in most of the cases both the methods are used in combination in monitoring

the project.

Time estimation – For project planning, implementation and execution it is necessary to

define the timelines for the activities to be conducted for the successful completion of the

project. For a well-designed network diagram, timelines are identified under 3 categories

viz., Optimistic time (t0), Most likely time (tm) and Pessimistic time (tp).

Optimistic time (t0) – It means the time period in which the activity will be completed

without any obstacle/constraints/complications/hurdles.

Most likely time (tm) - It means the time period in which the activity will be most likely

completed.

Pessimistic time (tp) - It means the time period in which the activity will be completed,

if even any unusual obstacle/constraints/complications/hurdles, arise.

Average Time = (t0 + 4tm +tp)/6

DETERMINATION OF CRITICAL PATH

For the purpose of calculating the critical path of a project, the following steps are

undertaken –

a. Calculation of “Earliest Occurrence Time (EOT)” of every event – An event will

occur only when all possible preceding activities are completed. The EOT estimates

the time by which an event will be completed at-the-earliest or the minimum

required time. To calculate EOT, one must begin counting from the beginning of first

activity and move forward towards the end of the activity completing the final

occurrence of the event. This process is called as “forward-pass” and is based on the
 assumption that there is NO TIME LAG between the finishing time of an activity and

starting time of another activity. Based on this calculation the Earliest Start Time (EST)

and the Earliest Finish Time (EFT) is estimated.

b. Calculation of “Latest Occurrence Time (LOT)” of every event – In general, a

project is expected to complete at earliest possible time. Thus, after calculation of

EOT, it is necessary to calculate LOT which is the latest occurrence time for any event.

It is calculated by working in the reverse order of event occurrence and therefore, is

also known as “backward-pass”.

c. Calculation of Slack of every event – It is the difference between LOT & EOT of

every event.

d. Estimation of Critical Path – The critical path is begins with start activity and ends

with last activity of the project, marking events with ZERO slack. It is the longest

path with the minimum time required to complete the project.

For example –

Time Estimation
Average =
S. Activity
Most (to + 4tm +tp)
No. Description Optimistic Pessimistic
likely /6
time (to) time (tp)
time (tm)
1 A-B 9 12 21 13
2 A-C 6 12 18 12
3 B-D 1 1.5 5 2
4 C-D 4 8.5 10 8
5 B-E 10 14 24 15
6 D-E 1 2 3 2
NETWORK DIAGRAM –

B 15
13

2 E
A

2
12

8 D
C

Calculation of EOT

Calculation of EOT & LOT

Calculation of Activity Slack

Activity
S. No. LOT EOT Slack
Description
5 E 28 28 0
4 D 26 20 6
3 C 18 12 6
2 B 13 13 0
1 A 0 0 0

Estimation of Critical Path – Connecting activities without any slack to form a

CRITICAL PATH.
DIFFERENCE BETWEEN PERT & CPM

Despite the commonalities among the two methods there are certain peculiar dissimilarities which
makes each of these methods unique in their application. The differences are as below -

1. PERT is a statistical tool applied in large-scale projects, whereas CPM is a network-

analysis technique which is applied for routine projects with complex activities.

2. CPM is used for projects that are of recurring nature where all activities are pre-defined,
well-coordinated and performed in controlled environment. and PERT is majorly applied
for project with uncertain activities and non-repetitive activities.

3. CPM is based on time-cost “best estimation”. PERT is applicable for project where time is
crucial or limiting factor. PERT stresses upon time estimation to complete set of activities
in a project.

4. PERT is applicable majorly for projects undertaken for research and development
activities, whereas CPM is applied in construction and its related project.

5. PERT is based on probability model while CPM is based on deterministic model

6. PERT applies time estimation under 3 categories viz., optimistic time (t0), most likely time
(tm), pessimistic time (tp). CPM works on single time-frame.

7. PERT is applied in project which requires high degree of accuracy and precision in
estimation of time to start and complete the project activities. CPM is applied to calculate
the most appropriate or reasonable time to complete the project activities.

8. CPM identifies the activities under the critical and non-critical category to evaluate the
project completion timelines, however, PERT does not have any such categorization of
activities.

9. The concept of “crashing” is applied in CPM to shorten the activity timeline with any
additional cost to reduce the overall project completion duration. Crashing is not applied in
PERT.

PROJECT CRASHING

A “project crashing” is state of an activity where the timeline of completing the activity can be
reduced by speeding-up the processes by deploying more resources. Although project crashing
means additional cost to the overall cost estimation but the primarily it is applied to reduce the
overall duration of project.

Project crashing helps in followings –

1. Identifying critical path(s),

2. Identifying activities that can be completed by deploying more money and resources to reduce
 time to either cover-up the delays or avoid them in future,

3. Reviewing the critical path (earlier identified) and check to further identify if any activity could
be shortened by adding more resources.

4. It is also interchangeably called as “fast-tracking” the project. This happens when certain
activities are conducted parallelly (although these were to run separately). Such fast-tracking
should only be done after thorough analysis of the feasibility and the risk associated with such
parallel operations.
Project crashing leads to rise in project cost and therefore, is applied only in case of emergency.
Sometimes, during project execution and implementation it is realized that the project duration is
unrealistic to be achieved, in such a situation project crashing helps in achieving the desired results for
achieving the deadlines. Project crashing is usually applied in managing any crisis situation which may
arise due to change in time, scope and cost of any project during any phase of project life cycle.
Reference Links (Articles):
i. Meredith, Jack R., Mantel, Samuel J., Project Management: A Managerial Approach, Wiley India
Publication
ii. Paneerselvam, R., Senthikumar, P., Project Management, PHI Learning Pvt. Ltd.
iii. Clifford F. Gray, Erik W. Larson, Project Management: The Managerial Process, Tata McGraw
Hill Publishing company.
iv. Gopalkrishnan P., Ramamoorthy VE, Textbook of Project Management, McMillan Publication.
Reference Books:
i. Chandra Prasanna, Projects, 9th Edition, McGraw Hills Education, Delhi.
ii. Desai Vasant, Project Management, Himalaya Publishing House.
Video & Other links:
a. e-Books
i. https://opentextbc.ca/projectmanagement/
ii. https://www.projectmanager.com/blog
iii. https://blog.planview.com/work-collaboration/
iv. https://www.projectmanagement.com/pages/379455/ProjectsAtWork
v. https://pmstudent.com/
b. Websites:
i. https://www.youtube.com/watch?v=BOU1YP5NZVA
ii. https://www.youtube.com/watch?v=E2TloG0LR8I
iii. https://www.youtube.com/watch?v=C0ffw8jgy6o
iv. https://www.youtube.com/watch?v=9G_LwG8ozpo&list=RDCMUCMZfp1_wquyegVY9
SoER0Nw&start_radio=1&rv=9G_LwG8ozpo&t=83
Sample Questions
1. Differentiate between PERT & CPM?
2. What is the meaning and characteristics of Work Breakdown Structure (WBS)? Explain the various
tools applied of preparing project WBS.
3. Examine the various types of organizational structure in any project.
4. Prepare a network diagram and estimate construction cost using the following information for a
building construction activity-

Description of Activities Duration (in weeks) Cost per week (INR)

A = Land digging 9 1,00,000
B = Lay Foundation 6 1,50,000
C = Brick Work 5 2,00,000
D = Install electric fittings 2 15,000
E = Install plumbing fittings 3 25,000
F = Install sliding doors & windows 3 20,000
G = Plastering of wall 5 75,000
H = Interior decorations 3 40,000
I = Exterior decorations 4 50,000
Additional information –
a. Activity B is preceded by activity A.
b. Activity B should be succeeded by Activity – C, D, E, F, and G.
c. Activity H succeeds Activity – C, D, E, F, and G.
d. G is preceded by I.

5. Calculate Weighted Average Cost of Capital from the information below–

a. Book value as weights
b. Market value as weights
Market Value
Sources of Capital Book Value (INR) Cost of Capital
(INR)
Equity Share Capital 12,00,000 20,00,000 12%
Retained Earnings 4,00,000 - 8%
Debentures 5,00,000 6,00,000 9%
Pref. Share Capital 4,00,000 5,00,000 8.5%
6. Prepare a network diagram from the following information –
Estimated time
Activity Numerical Description Optimistic Most Likely Pessimistic
(to) (tm) (tp)
1-2 9 12 21
1-3 6 12 18
2-4 1 1.5 5
3-4 4 8.5 10
2-5 10 14 24
4-5 1 2 3