NMIMS

PROJECT MANAGEMENT
APPLICABLE FOR JUNE 2022 EXAMINATIONS

1. SKAB projects, a real estate builders and construction company, is planning

to construct a gated community apartment in Hyderabad. As a project
manager, describe your role in different phases of its life cycle.

Answer:

A project consists of a set of activities performed either sequentially by adhering to

planned objectives. Project objectives will be unique and non-repetitive in nature.
Thus, a project gets distinguished from routine and continuous production processes
by virtue of its characteristics of uniqueness. In fact, organisations often pursue
various ventures, having programmes and projects as their sub-sets. Perhaps the
success of any project depends critically upon the effort, care and skill applied in its
initial planning. The project life cycle (PLC) describes the start and the end of the
project and the various stages in it. It begins with concept of idea, incubation, and
feasibility studies and further on towards initiation, planning, execution and closeout.
Irrespective of the type and complexity of project being undertaken, its life cycle
stages remain same only content and duration of the stage being different.

Details given in the question

It is mentioned in the question that SKAB projects, a real estate builders and
construction company, is planning to construct a gated community apartment in
Hyderabad. In this project, there would be different stages involved and; in each
stage, project manager would have certain role to play. I have mentioned more about
this in below paragraphs.

Project life cycle stages

1. Initiation: It is the first stage of the project where the concept and objectives of
the project are identified. At this stage, the organisation identifies the requirement of
a particular project and its nature. Completion of this stage leads a project manager
to step towards the other stages.

At first stage, main activities would be related to project initiation and as the project is
gated housing community apartment, project manager needs to work with the
management to finalize the land. While evaluating the land, there are various factors
which should be considered such as near to market, banks, hospitals and similar
other facilities needed by the residents. Apart from this, project manager needs to
plan about land acquisition and other approvals.

2. Planning: It is the second stage of a project where the project manager designs
the project schedule and the required resources to accomplish the objectives of the
project. Planning involves preparing the budget, identifying, procuring, and managing
the required resources, etc.

At the second stage, Project manager needs to design the project schedule and plan
about all the required resources as well so that objectives of the project are
achieved, design of the apartment, water and electricity connections etc are also be
to be planned. Project manager should design the overall project schedule as it
takes lot of time to construct gated community in a big city. Here, you need lot of
planning, measurement of all the resources required for the construction such as
manpower, materials etc. Project manager should work with his team members and
plan about the construction plan, before that, all necessary approvals should be
taken by the company.

3. Execution: It is the third stage where the project manager starts performing
according to the plan laid down in the previous stage. Execution involves putting all
the efforts into action to close the project within the given time. The success or
failure of a project depends on how well it is executed. For proper execution of a
project, you require a proficient workforce, quality materials, financial support, and an
effective team.
Now, when the planning is done, it is time for the project manager to start the work
as per the plan. It is the duty of project manager to divide the work with all the team
members and monitor the work on regular basis and make necessary changes as
and when required. SKAB may decide to get the work done from normal labourers or
outsource the work to other contractors and sub-contractors in order to focus on the
core work. The construction phase of a real estate project development is the most
resource-intensive phase involving the purchase of raw materials as well as the
involvement of a large amount of labour workforce. Project manager should monitor
all the activities going on in this phase for the smooth workflow.

4. Controlling: It is the fourth stage where the project manager gauges the progress
or drawbacks of a project. In case of any deviation or loopholes, the corrective
measures are required to be taken by the project manager. Progress, on the other
hand, encourages a project
manager to go for continual improvement in the project for providing better output to
customers/clients.

Once the project reaches at controlling stage, duties of the project manager are
increased to certain extent as it needs to evaluate all the work going on in the project
and if there are any shortcomings that needs to be taken care of. In a construction
project, there could be many issues like construction as per design, as per
approvals, co-ordinating with all the parties associated with the project etc.

5. Closing: It is the fifth and final stage involved in a project life cycle. When the set
goals of a project are achieved within the given time, the project is said to be closed.
On completion of a project, the project manager and other resources are released for
the next project.

If everything goes as planned and project is completed as desired, it is time to close

down the project. In our case, when the housing community is constructed as per the
plan and occupancy certificate is received, it is time to close the project and move
further. The life cycle of a particular project is composed of different phases, around
which the project management scheme is organized. There are different types of
project life cycle depending on the organization involved as well as the phases.
2. SKAB projects, a real estate builders and construction company, is planning
to construct a gated community apartment in Hyderabad. The company
identified that they do not have competence in managing and maintaining the
project progress in all respects of the projects simultaneously. So, the
company decides to contract out some of the parts to a third party to maintain
the progress and quality of the project. As a project manager, what type of
contract you will suggest to the company and why? (You may consider
hypothetical data for cost-benefit analysis of each contract type)

Answer:

Project management is defined in different ways by different sources. The Project

Management Institute (PMI), for example, defines project management as the
application of knowledge, skills, tools, and techniques to project activities to meet the
project requirements. Project management is accomplished through the appropriate
application and integration of the 47 logically grouped project management
processes, which are categorized into five Process Groups namely initiating,
planning, executing, monitoring and controlling, and closing.

According to ISO 10006, “Project management is a unique process consisting of a

set of coordinated and controlled activities with start and finish dates, undertaken to
achieve an objective conforming to specific requirements, including constraints of
time, cost, and resources.”

Present day developmental projects are very complex and involve specialised
services. The expertise required for all these assignments will not be available in-
house in every organisation. Hiring the services of specialist consultants is a cost
effective and efficient method, since these specialised services would be for limited
period without any obligations of permanent employment. Consultants are
professionals with required skill, who can be employed on project basis. Consulting
services refers to services of a professional nature provided by consultants using
their skills to study, design, organise and manage projects. Any organisation with the
responsibility of project implementation may not have the skills required for various
specialised services required for the project. Hence it will be cost effective to hire the
services of specialised consultants as and when required since the consultants
would be employed for limited period without any obligation of permanent
employment.

Project Contracts:

Project contracts refer to various legally enforceable agreements among different

parties to a project. Parties involved in a project are legally bound to carry out their
responsibilities, specified in their respective contracts. For example, an O&M
contract mentions the minimum acceptable standard of performance by the O&M
contractor. Similarly, there is an EPC contract for the EPC contractor and loan
agreement for project financers. When in-house expertise or number of personnel
required cannot be found in-house, it may be necessary to subcontract work. For
example, consider piping layout drawings. A consulting company produces only the
piping general arrangement drawing in-house, and subcontracts the work of
preparing isometrics and piping bill of materials to an outside agency. An outside
consultant can also be
Hired to work within the premises of the organisation on contract for a predetermined
time period. In such cases, more time and effort is expended to ensure proper
communication with such outsourced personnel, in turn ensuring quality and timely
outputs from them.

Types of contracts and ideal one in given case

Fixed-Price contracts: The fixed price contract, which is also called the lump-sum
contract, is an agreement to provide a well-defined product to the buyer at a fixed
total price. This type of contract may involve incentives from the buyers to the sellers
for exceeding project objectives by the seller, such as delivering end-products to the
buyer before the deadline. For example, a contract between a buyer and a seller
says that `10,000 is payable to the seller if the seller completes his/her part of the
contract as scheduled. Further, the contract has a condition that 5% of the
contracted price is provided as incentive to the seller, if he/she completes the work
before the scheduled time, the buyer has to pay a total price of (10,000 + 5%
of10,000) `10,500.However, this type of contract may involve risk for both the buyer
and the seller, in case the product is not well-defined. The buyer may receive a low
quality product and the seller may have to spend additional money to deliver the
required product.

Cost reimbursable contracts: The cost reimbursable contract requires the buyer to
pay the seller for the direct and indirect expenses incurred in the product. In addition,
a profit margin is attached to the cost. This margin is the difference between the
sales amount and the actual cost of the product. Three types of contracts exist within
the cost reimbursable contract, Cost Plus Incentive Fee (CPIF), Cost Plus Fixed Fee
(CPFF) and Cost Plus Percentage of Cost (CPPC).

Unit price contract: The unit price contract, also known as the time and material
contract, requires the buyer to pay the seller a preset amount per unit of services
provided. The total cost under this contract is determined as a function of the number
of unit of work provided by the seller. For example, a buyer agrees to pay `100 per
unit of steel-plate, provided by the seller. Therefore, if the seller provides 100 units of
steel-plates, the buyer has to pay (`100×100 units) `10,000 to the seller. There is no
discount from the seller or any incentive from the buyer. Such contracts may be
useful in case of large projects, where small amounts of work can be outsourced to
meet the schedule of projects.

It is mentioned in the question that SKAB projects, a real estate builders and
construction company, is planning to construct a gated community apartment in
Hyderabad. The company identified that they do not have competence in managing
and maintaining the project progress in all respects of the projects simultaneously.
So, the company decides to contract out some of the parts to a third party to
maintain the progress and quality of the project. In this scenario, I would suggest to
go for unit price contract. Under this contract, some activities of a project can be
outsourced and firm can work on other activities. In the current business
environment, outsourcing has become very famous which is useful when any firm
wants to concentrate on their core operations and get the other activities done from
any third party.
3. Consider the SKAB project’s gated community apartment construction.
a. Show the deliverables of the gated community apartment on a work
breakdown structure (WBS).
b. Create a Gantt chart to represent the project progress and duration
considering the resource person for each deliverable as “person 1”, “person
2”, etc.

Answer:

A) Work breakdown structure:

Work breakdown structure (WBS) is a fundamental component of project

management process that helps in defining and organising the total scope of a
project using hierarchical tree structure. According to Project Management Body of
Knowledge (PMBoK), „WBS is a deliverable-oriented hierarchical decomposition of
the work to be executed by the project team to accomplish the project objectives and
create the required deliverables‟. The hierarchy structure approach of WBS helps
the project team to know the requirements of total project more accurately and
specifically. WBS can also be used to assign responsibilities and allocate resources
to the project. It helps the team to monitor and control the project.WBS is the critical
input to various project management processes and deliverables like activity
definitions, project schedule network diagrams, project and program schedules,
performance reports, risk analysis and response, control tools or project
organisation. WBS has several levels in its hierarchy structure. These can be further
used as an input to the scheduling process that supports elaboration of tasks,
activities, resources and milestones which can be cost estimated, monitored, and
controlled.

A project with a large number of activities may result in inaccurate planning,

estimation and scheduling of resources. WBS being a hierarchical and graphical tool
helps in efficient planning and allocation of resources. Generally, it is represented by
a tree shaped structure, but can also be demonstrated in a tabular form.
The objectives of implementing WBS are:
 Divide major project deliverables into smaller and more specific components.
 Develop a framework that ensures accurate calculation of the actual costs of
deliverables.
 Ensure accurate measurement and control of performance.
 Provide information on important and risky work efforts.
 Map the requirements, plans and outcomes of the project.
 Provide clarity to managers and task leaders regarding ownership.

Subsequent to preparing WBS, the team plans the project schedule and budget. This
comprises of the tasks identified in the work breakdown structure and allocating
resources or at least resource positions, if the actual resource names have not been
identified yet. The step that follows is deciding on the project organisation structure
and documenting the proposed project organisation structure as a part of the project
planning process. Now, the team must identify whether it will be a matrix or
hierarchical reporting structure. At last, the manager must put the formal project plan
through a formal review process by his project team, possibly senior management if
it’s a visible enough project, and definitely the customer. Now, he must get a formal
approval sign-off from the customer and store the document with all other project
materials.

Work-breakdown structure
B) Gantt Chart
Gantt chart is one of the most widely used techniques for project scheduling. It
provides a graphical representation of the duration of all individual project activities in
a bar chart. Gantt chart had been initially used as a scheduling tool in ship building
projects. However, over a period of time, it has been increasingly used in various
other projects. In a Gantt chart, the progresses of all the planned and scheduled
activities of a project are depicted graphically. It should be noted that various time-
related charts such as PERT is based on the foundation provided by a Gantt chart. A
Gantt chart can be used as an alternative to CPM and PERT methods for scheduling
a project. Similar to the CPM and PERT networks, Gantt chart shows the logical
relationship among the individual activities.

A Gantt chart is a useful tool for planning, scheduling, and managing a project. It
also helps in monitoring and controlling the progress of the projectat any point of
time. The following are the two main uses of a Gantt chart:
Scheduling: Involves establishing the order of occurrence of the individual activities
in a project. A Gantt chart shows the preceding and succeeding relationship between
different individual activities in the project. It also shows the expected completion
time of the project.

Monitoring: Signifies tracking the progress of the project at any given point of time.
A Gantt chart immediately shows the percentage of activities completed in a project
and the status of each individual activity. It helps indentifying the delays in a project
and its performance as per the scheduled time. If the project gets delayed, the
project manager can take required course of action to compensate the delay.
Therefore, the Gantt chart of the project provides a tool for monitoring the progress
of the project.

However, a Gantt chart is not very useful in case of a large project. It provides
relatively less information per area of display. It may be useful for smaller projects,
but in real life most of the projects are too complex to be presented in a Gantt chart.
A Gantt chart consists of two axes, vertical axis and horizontal axis. Vertical axis
represents all the activities in the project while the time scale is represented by the
horizontal axis. The time scale is expressed either in absolute time or in relative time,
depending upon the initial event of the project. Months and weeks are two most
commonly used units of time. In a Gantt chart, beginning and ending of activities are
represented by the rows of bars.

Gantt chart