ADVANCE OPERATION MANAGEMENT (PROJECT MANAGEMENT)

 Basic of project management

 Project management techniques
 Project evolution and influences
 Project management Knowledge areas
 Risk management
 Procurement management
 Global issue and communication models
 Stakeholder management
 Project selection and scheduling
 Project quality management
 Resource planning
 Leadership style and self-assessment

Project

Manager have to handle various projects during their careers’ software consultant may need to implement a
database management project, a construction engineering may have to handle the construction project of a
building, a scientist in the research and development department of an organization may be given a research
project and simply, for an entrepreneur, starting a new business or a manufacturing unit is a project, A
project requires manpower, money, material, machine etc.

Example of project

 Commissioning a new industrial unit

 Construction of a house
 Setting up of an office
 Developing a technology
 Launching a new product in the market
 Managing any event in college
Planning a project requires identification of various activities involved in the project and the sequence in
which these activities have to be performed. A well planned project leads to completion in the schedule
time, thus avoiding unnecessary delays and extra costs.

A project is a group of unique, interrelated activities that are planned and executed in a certain sequence to
create a unique product or service within a specific time frame, budget and the client specifications.

or
A project is a set of activities which are networked in an order and aimed towards achieving the goal of a
project. Upon the completion of all the activities the goal of the project would have been achieved. A project
is undertaken to achieve a purpose.

or

A project is a temporary and one time exercise which vary in duration. It is undertaken to address a specific
need in an organization, which may be to create a product or service or to change a business process. This is
in direct contrast to how an organization generally works on a permanent basis to produce their goods or
service.

or

A project may be defined as a series of related jobs usually directed towards some major output and
requiring a significant period of time to perform.

or

A project is a set of activities which are networked in an order and aimed towards achieving the goal of a
project. Upon the completion of all the activities the goal of the project would have been achieved.

A project may be related to

 Education
 Construction
 Event
 Finance
 Human recourses
 Software
 Research

Management

Management is the techniques of understanding the problem, needs and controlling the use of resources such
as cost, time, management and materials. Management is an optimum use of all the recourses used in the
project.

Management of all activities related to particular project like Time Management, Marketing Management,
Operation Management, Human Resource Management, Finance Management etc.

Project Management
Project Management is planning, organizing, monitoring and controlling of all aspects of a project and
motivation of all involved to achieve project objective of safety and within a defined time, cost and
performance.

or

It is the art of planning, directing controlling recourses like people, equipment, material to meet the cost,
time,, manpower, hardware and software resources involved in a project.

Objective of Project

Major’s objective - Performance or Quality of project as per customer requirement

- Containment of expenditure within budge

- Timely implementation and completion of project.

Other objective of Project – proper safety of people, machine, material and other recourses

- Enhance public image

- Minimizing accident or breakdown
- Minimize wastage in the project
- Maximum utilization of all recourses
- High level of automation

Characteristic of project / features of project

 Unique activities (every project have different activities)

 Sequence of activity (all activities of project should have proper routing and then scheduling)
 Interrelated activities (some activity may be independent or some activity may be dependant0
 Well defined, established and unique objective (every project may have different project)
 Specified time (every project may have different duration of project)
 Allocated budget (every project may have different budget)
 Each project has its own project life cycle reflected by growth, maturity and decline.
 Overlapping of activities
 Sharing of resources
 Non – continuous life span with a beginning and an end.
 Involvement of several departments and professionals
 A project has a number of sources but one end or sink.
 Project is dynamic in nature and changes in original plan are a normal feature in a project.
  Team spirit is required to achieve objective of project as different individual from varied discipline
are involved in the project.
 Every project has its own risk and uncertainty associated with it.

Classification of project / type / kind of project

 Based on profit (Industrial and non-industrial)

 Bases on technology involvement (conventional, non-conventional, new, high, low technology)
 Based on size and scale (large, medium, small)
 Bases on ownership and control (public sector, private sector, joint sector)
 Base on Infrastructure (road, railways, flyover, hospitals, institute, airport)
 Base on scope and significance (national and international)
 Based on degree of change (inventive, discovery, innovative, adaption)
 Based on speed (normal, crash, disaster)
 Base on beneficiary (industrial, ancillary, consumers)
 Base on purposes (new project, mergers, diversification, modernization, replacement, up gradation )

Project life cycle/ Process of Project management/ functions of project management/ phases of project
management life cycle

Project life cycle refer to a logical sequence of activities that are performed to achieve project goal of
objective. It can also be termed as project cycle. The life cycle of every major project include seven steps
like

 Identification – It refer to selection of one most feasible project idea out of several alternative.
 Preparation – It refer to developing the identified and selected ideas.
 Appraisal – Perform systematic and comprehensive evaluation of every aspect of the select ideas to
prepare the final project plan. Project appraisal deals with market appraisal, technical appraisal,
financial appraisal, economic appraisal, managerial appraisal, environmental appraisal.
 Planning and organizing – It refer to designing the course of actions required to achieve the
objectives of the project like organization structure, manpower, schedule and budget, licensing and
government clearance, infrastructure of project, finance, site preparation, selecting vendors
 Presentation – Involve creative a detail plan to send it to appropriate entities
 Implementation – It refer to a stage in which the approved project plan is executed. Major bulk of
work (80 – 85%) project is done in this phase like preparation of equipment and machinery, civil
construction, placing orders for recourses, commissioning of plant.
 Monitoring – It involve assessing and monitoring the progress of the project at every stage to
identifying the loopholes and take corrective action if required.
  Closing – It refer to the formal closure of project. It involve handling over of the facilities built to the
customer ( project accounts are closed, outstanding payment is made, dues are collected, manual and
catalogued are handed over, The employee and other resources are released to be used for other
activities)
 Evaluation – Calls for the re assessment of the efficiency and performance of the project after the
completion of project.

Importance of project management / Need of project management

Project management is necessary because

 A project requires huge investment which should not go waste.

 Project objective may not be achieved (customer satisfaction, time and quality)
 A loss in any project would have direct or indirect impact on the society.
 Prevent failure in projects
 Scope of the project activity may undergo a change
 Technology used may change during the course of project execution.
 It takes more time, more money, and more resources that may be waste if there is no proper
planning.
 Consequence of negativity in project related problem could be very serious.
 Change in economic may affect a project.
 Shortening of project life cycle
 Global competition
 Knowledge explosion
 Corporate Downsizing
 Increased customer focus (customer satisfaction will be increased)

Type of projects

A project depends on many factors like

 Budget of project
 Time of project
 Risk related to project
 Technology used in project
 Quality or performance of project
 Recourses management
 Stakeholder management
 Profitability of project
Role and responsibility of Project Manager

 The project manager must determine the purpose, goal and constraints of the project.
 The project manager must establish basic project management controls.
 Project planning puts together are the details of how to meet the project goals, given the constraints.
 Managing the time by planning and meeting schedule.
 Manage quality so that the project result is satisfactory
 Manage cost to see that project is performed at the minimum possible cost within the budge,
 Managing communication to see that appropriate parties are informed and have sufficient
information to keep the project coordinated.
 Mange the human resource involved in a project effectively.
 Mange the project scope of to define the goals and the work o be done in sufficient detail to facility
understanding and correct performance by participants.
 To take corrective action.

Main cause of project failure

There is various cause of failure of project failure which are given below

 Inadequate project formulation

 Poor planning for implementation
 Lack of proper contract planning and management
 Lack of project management during execution
 Lack stakeholder management.

Problem with project/ Constraint in project / Major challenge in project

 quality of project
 duration of project
 coordination among various activities
 overlapping of activities
 customer satisfaction of project
 budget of project
 managing conflicts among various stakeholders

All parties (stakeholders) involved in project

The stakeholder means all the people who are directly or indirectly associated with the project like
 Supplier
 Customer
 Financial institute
 Vendors
 Shareholders
 Media partner
 Consultant associated with project
 Employee working with project

It is the responsibility of a project manager to manage all stakeholder associated with the project like
 Win win situation of all stakeholders
 Minimize conflicts among member
 No communication gaps with stakeholders
 Act as mentor / guide stakeholders
 Develop long term relationship with stakeholder
 Try to solve their problem / issue of stakeholder

Project Management body of knowledge (PMBOK)

 Production and Operation management
 Financial management
 Human resources management
 Marketing management
 Legal aspect of business
 Technology involved in project
 Risk involved in the project
 Stakeholder management
 Customer expectation from the project

Difficulties in Project planning

 Poorly defined goal (goal in not clear, not focus)

 Unrealistic deadlines (very high target )
 Scope creep (objective of project may changed with time)
 Insufficient team skill (labor are not given training)
 Improper communication (week coordination among team member)
 Geographically dispersed team (high distance between all stakeholder)
 Improper risk management (degree of risk is different in each project)
 Not using project management software (avoiding technology to increased productivity)
 Issue within a team (more conflicts among team member)
  Ambiguous Contingency plans (what –if scenarios situation should be considered)
 Resource Deprivation ( resources may not be sufficient)
 Lack of stakeholder engagement (stakeholder can destroy a project because of attitude)

Project Identification

The first steps towards establishing a venture is the search for project ideas that are unique and appear
worthwhile for implementing. The ideas should be sound and workable so that it may exploited.
Identification of business opportunities requires imagination, sensitivity to environmental changes and
realistic assessment of what the firm can do. The world of business offers lots of opportunities but
everybody cannot identify a business opportunity.

Project identification is concerned with the collection, complication and analysis of economic data for the
eventual purpose of locating possible opportunity for investment and with the development of the
characteristic of such opportunities

Searching for idea which is profitable. There should be perfect balanced between demand and skill of
project.

Source of new project ideas

Identifying a new worthwhile project is a complex problem. It involves careful study from many different
angles. Following are some of the sources from which new project ideas may emerges.

 Performance of existing industries

 Availability of raw materials
 Availability of skilled lab our
 Import / export statistics
 Price trend
 Data from various sources
 Research laboratories
 Consumption abroad
 Identified unfilled psychological need
 Plan outlays and government guidelines
 Analysis of economic and social trend
 Possibility of reveling sick units
 Observing markets
 Prospective consumers
 Development in other nations
  Study of project profiles
 Government organization
 Trade fairs and exhibition
 Customer
 Competitor
 Investors and scientist
 Marketing personal or employee
 Distribution and middlemen
 Suppliers

Steps in project identification

Identification process is concerned with conscious identification of a viable product idea that logically
addresses an opportunity. An opportunity is defined as the identification of a gap in need and the
likelihood that if a product was developed to fill the need it would also be wanted. The essential steps for
project identification related to studying the following

 Avaibility raw material

 Available technology and skills
 Position of substitute available in the market
 Information with regard to impact of commodities which can be indigenously manufactured
 Inter industry relationship
 Performance of existing industry in which specific product related project is being planned
 Availability of development plans
 Position of old project if any.

Criteria for project selection

 Probability of successes (check probability of project)

 Availability of data (source of data)
 Savings potential (learning from project)
 Apt time (completing project on time)
 Availability of resources ( lab our, machine, technology)
 Customer impact (satisfaction of customer)
 Business priority (check importance of project)
 Size of the project
 Risk involved in the project
 Duration of the project
  Objective of the project

Selection of project ideas

An entrepreneur has to screen all the generated project ideas on the basis of well defined criteria so as to
select the best ideas. While selecting the project ideas, the following points need to be considered.

 The ideas should match the recourses, knowledge, skills and capabilities of the entrepreneur
 It should require such capital, technical knowhow, power, raw material and other inputs which the
entrepreneur can mobilize.
 The cost structure of project must ensure a reasonable return on the investment
 The project should be compatible with the government policies, environmental regulation, state of
the economy, technological changes and other factors in the external environment
 There must be sufficient demand for the proposed product or service.

Capital budgeting/Investment criteria of project selection

Capital Budgeting is an important technique of management which is widely used for the evaluation of
various capital investment proposals and for choosing the appropriate source of finance and for
implementation of chosen investment proposal.

Investment decision related to long term assets are called capital budgeting. It involves planning and control
of capital expenditure. The term capital expenditure means the expenditure which is intended to benefit
future period’s i.e. in more than one year as opposed to revenue expenditure, the benefit of which is
supposed to be exhausted within the year concerned.

Need for capital budgeting

 Maintaining firm competitive position

 Planning for future needs of the firm
 Cost control
 Organization effectiveness

Objective of Capital Budgeting

 Maximization of shareholders wealth

 Maximization of profit
 Maximization of earnings per share
 Maximization of return on equity

Techniques of Capital Budgeting

1-Payback period (PB)

The payback period is defined as the number of years required for the proposal cumulative cash inflows to
be equal to its cash outflow. In other word, the payback period is the length of time required to recover the
initial cost of the project. The payback period therefore can be looked upon as the length of time required for
a proposal to break even on its net investment. The project should be selected in which payback period is
very less.

2-Accounting Rate of Return (ARR)

According to this method, the capital investment proposals are judge on the basis of their relative
profitability. For this purpose, capital employed and relative income is determined according to commonly
accepted accounting principle and practice over the entire economic life of the project and then the average
yield is calculated. Such a rate is termed is the accounting rate of return. The ARR is also known as Return
on Investment (ROI).It is the ratio of average after tax profit to average investment. The project should be
selected in which there is high accounting rate of return.

ARR = Average annual profit after tax / Average initial investment * 100 or average inflow / original
investment / 2 *100

3-Net Present Value (NPV) –The cash inflow in different year are discounted (reduced ) to their present
value by applying the appropriate discount factor or rate and the gross or total present value of cash flows of
different years are ascertained. The total present value of cash inflow are compared with present value of
cash outflow (cost of project) and the net present value or the excess present value of the project and the
difference between total present value of cash inflow and present value of cash outflow is ascertained. The
project should be selected which have positive NPV and should be rejected when NPV is negative.

NPV = Present value of cash inflow – Present value of cash outflow

4-Profability Index (PI) Method –Profitability index refers to the ratio of discounted benefit over the
discounted costs. It is an evaluation of profitability of an agreement of an investment can be compared with
the profitability of other similar elements which are under consideration. The probability index is also
referred to as benefit – cost ratio, cost benefit ratio or even capital rationing. The project should be selected
if NPV is greater than 1 and should be rejected when NPV is less than one.

PI = PV of cash inflow / initial cash outflow

5-Interanal rate of return (IRR) method

The second discounted cash flow or time adjusted method for appraising capital investment decision is the
internal rate of return method. This techniques is also known as yield on investment, marginal efficiency of
capital, marginal productivity of capital, rate of return and the time adjusted rate of return and so on. The
internal rate of return is usually the rate of return that a project earns. It is defined as the discount rate which
equals the aggregate present value of the net cash inflow with the aggregate present value of cash outflow of
a project. In other word, it is that rate which gives the project NPV of zero.

IRR = lower rate + positive NPV / positive NPV –negative NPV * Higher rate – lower rate

Numerical
Future Value = Present Value (1+rate)n and Present Value = Future Value/(1+rate)n
1. The expected cash flow of a project are as follows:
Year 0 1 2 3 4 5
cash flow 100000 20000 30000 40000 50000 30000
The cost of capital is 12%. Calculate the following using (i) PB (ii) NPV (iii) PI (iv) ARR (v) IRR
Solution – (i) PB 20000+30000+40000+ 10000 / 50000 = 3.20 years
(ii) NPV = 17860+23910+28480+31800+17010 – 100000 = 19060
(iii) PI = 119060 / 100000 = 1.19
(iv) ARR = 20000+30000+40000+50000+30000 / 5 / 100000 /2 * 100 = 68%
(v) IRR NPV at 18% = 16940+21540+24360+25800+13110 – 100000 =1750
NPV at 19% = 16800+21180+23720+24950+12570 – 100000= -780
IRR = 18 + 1750 / 1750 – (-780) * (19 -18) = 18.69
2. The expected cash flow of a project are as follows:
Year 0 1 2 3 4
cash flow 10000 1000 1000 2000 10000
The cost of capital is 14%. Calculate the following using (i) PB (ii) NPV (iii) PI (iv) ARR (v) IRR
(Ans – (i) 2.85 (ii) NVP (iii) PI (iv) ARR (v) 10.22% )
3.The expected cash flow of a project are as follows:
Year 0 1 2 3 4 5
cash flow 50000 10000 10692 12769 13462 20385
The cost of capital is 10%. Calculate the following using (i) PB (ii) NPV (iii) PI (iv) ARR (v) IRR
(Ans (i) 4.32 (ii) -4648 (iii) 0.90 (iv) 34.6% (v) ARR
4.The expected cash flow of a project are as follows:
Year 0 1 2 3 4 5
cash flow 56225 3375 5375 7375 9375 11,374
Total
=36,875
(i) ARR =average income / average investment * 100 = 7375 / 28112*100 = 26% (here 36875/5
=7375 and 56225 /2 =28112)
(ii) PB = 3375+5375+7375+9375+11,375 = 3 year and 6364/20620 month
(iii) NPV =present value of all cash inflow – outflow
(iv) IRR rate at which NPV =0
(v) PI =present value of all inflow / outflow

5.The expected cash flow of a project are as follows:

Year 0 1 2 3 4
 cash flow 10000 6500 3000 3000 1000
The cost of capital is 14%. Calculate the following using (i) PB (ii) NPV (iii) PI (iv) ARR (v) IRR
(PB =2.17,NVP = 10968-10000=968,IRR=18%)

Quality

Generally, it can be said that a product is of satisfactory quality, if it satisfies the customer. The customer
will buy product a product or service, only if it meets his or her minimum needs. Thus customer satisfaction
is the main criteria for determining whether a product possesses the required quality or not. Therefore
customer wants are first assessed by marketing people and then quality decision is taken on the basis of such
information. In order to define quality, therefore, we have to think of it in term of some use. The term
quality can be defined as the sum totals of feature of a product which influences its ability to satisfy a given
demand. It is also known as “fitness for use”. It is decided by customer. It is also considered as the sum total
of the attributes or properties that describe a product. A product quality should control at every stage of
transformation like input (material, machine), transformation (process) and output.

Benefits of Quality (responsibility for quality in project)

 Customer satisfaction will increased

 Profit will increased
 Sales will increases
 Goodwill and image of company will increased
 Resources will be fully utilised
 Company will be able to survive in the market
 It will help company to grow in other market.
 It will easy to face competition in the market.
 Scrap and wastage will be reduced
 There will be reduction in complements.
 A mirror for a manufacturer.

Design Quality

The design of a product or service must incorporate that feature and attributes that would satisfy the
customer need. While designing product or service, there are various characteristic should be considered.
The characteristics for product or service may be different.

Component of Product quality Component of Service quality

 Performance (function) reliability(trustworthy)

 Features (various nature) responsiveness(discipline)
  Reliability (life of product) competence(perfection)
 Serviceability (ease in service) access(convenient)
 Appearance (looks) courtesy (behaviour)
 Safety (less breakdown) communication(understanding)
 Durability (operation life) accuracy (correctness )
 goodwill.

Project Evaluation
Project evaluation is a systematic process of recording and analyzing project performance and output and
controlling them with pre determine standards .It is the process of analyzing and comparing the end result of
the project with pre-determined result. Project evaluation aim to identify the weakness of a project and
improve them. Project evaluation is a systematic process of recording and analyzing project performance
and output and comparing them with pre-determined standard
Objective of project evaluation
 Identifying the progress of the project
 Completing the project within allocated time and recourses
 Responding to the demand of customer
 Justifying the employment of team member to achieve goal of the project
 Compare the actual performance with planned one
 Locating the resource of the organization effectively.

Purpose of project evaluation

 Efficiency of the project
 Profitability
 Customer satisfaction
 Future potential
 competency

Benefit of project evaluation

 Recognize and solve problem at the initial stage of the project
 Establish relationship between time, cost and performance
 Improve the key performance area of the project
 Identify the opportunity for future growth of the project
 Applies the performance of the project team
 Increased the rate of successes of the project
 Improve the quality of the project management process
 Create healthy working environment to active better result.

Technical analysis
 Type of technology
 Cost of technology
 Benefits of technology
  Avaibility of technology
 Risk in technology
 Source of technology

Economic Analysis
 National income
 Inflation
 Stock market
 Employment
 Infrastructure
 Banking sector
 Per capita income

Financial Analysis
 Sources of fund
 Use of fund
 Cost of project
 Probability of project
 Financial risk

Social Analysis
 Benefits of project
 Cost of project
 Impact of project
 Nature of pollution

Institutional Analysis
 Organization structure
 Value system
 Organization policy
 Skills available in organization

Network Analysis
A network diagram is a model that uses small circles (nodes) connected by lines or branches to represent
precedence relationship. Networks are frequently used to show the precedence relationship among the
activities. CPM & PERT are network technique for analysing a system in term of activities and events that
must be completed in a specific sequence in order to achieve a goal.

Objective of Network Analysis / Importance of networking analysis

  Helpful in planning- network analysis is powerful tool for planning, scheduling & controlling.
 Inter-relationship of various activities – it creates inter-relationship and inter-dependence of various
activities of project or a programme.
 Cost control- in certain cases we can measure cost of delay in the completion of the project.
 Minimization of maintenance time- it helps the management to minimize the total maintenance time.
 Reduction of time- time can also be reduced using networking analysis.
 Control on ideal resources.
 Avoiding delays, interruption- it develop discipline and systematic approach in planning scheduling
etc.
Term used in Networking Analysis

 Activity: an effort that is required to complete a part of a project. It is denoted by 

 Processor activity: an activity that must occur before another activity.
 Successor activity: an activity that must occur after another activity.
 Dummy activity: an activity that ensure no time but shows precedence between events.
 Activity duration: in CPM, the best estimate of the time to complete an activity. In PERT, the
expected time or average time to complete activity.
 Optimistic time (to): the time for completing an activity if all goes well, used in PERT.
 Pessimistic time (tp):the time for completing an activity if everything goes wrong used in PERT.
 Most likely time (tm): the time for completing an activity that is the consensus best estimates used,
in PERT.
 Expected time (te): the average time for completing an activity.
 Earliest Start time (EST): the earliest that an activity can start, from the beginning of the project.
 Earliest Finish time (EFT):the earliest that an activity can finish, from the beginning of the project
(EFT = EST +time)
 Latest Start time (LST): the latest that an activity can start, from the beginning of the project,
without causing a delay in the completion of the project. (LST = LFT- time).
 Latest Finish time (LFT): the latest that an activity can finish, from the beginning of the project,
without causing a delay in the completion of the project.
 Slack: the amount of time that an activity or group of activity can slip without causing a delay in the
completion of the project. It is also known as “float”.
 Critical activity: an activity that has no room for schedule slippage, if I slip the entire project
completion will slip. An activity with zero slack.
 Critical path: the chain of critical activity for the project. The longest path through the network.
 Event: a beginning, completion point or milestone accomplishment within the project. An activity
begins and ends with an event. It is denoted by circle 
 Total float: it is for activity is time difference between the maximum time available to perform the
activity and duration. (TF= EFT-LFT)
 Free float: It is that time by which an activity can be rescheduled without affecting the succeeding
activity (FF= TF- head slack).
 Independent time: the time by which an activity can be rescheduled with affecting both preceding
and succeeding activities is known as independent activity. (IF=FF – tail slack).

Program Evaluation and Review Technique (PERT)

A networking approach to planning, monitoring, controlling and evaluation of complex projects.
Critical Path (CPM)
A quantitative technique which is used for planning and coordinating large projects.

Difference between PERT and CPM

PERT CPM
1) It is basically a probabilistic network. It is basically deterministic network
2) It is build-up of event-oriented diagram It is build-up of activities oriented diagram
3) Used for R & D project Used for repetitive work
4) PERT requires three time estimates for each The activity time estimates are deterministic and
activity may be determined by fairly based on previous
experience.
5) It makes use of dummy activities to It doesn’t make use of dummy activities
represent the proper sequencing of the
activities
6) It has nothing to do with cost of project It deals with cost of a project schedules and their
minimisation
7) It doesn’t deal with concept of crashing It deals with concept of crashing
8) Time is average No averaging of time is involved
9) The origin is military (navel) The origin id industrial
10) It lays emphasis on reduction of the It laid emphasis on the reduction in completion
executive time of project without too much time with the least increases in project cost. It is
cost implication. It is time based cost based.

Limitation of PERT
 The basic difference comes in the way of time estimates for the completion of activities because
activities are of non – repetitive.
 This technique does not consider recourses required at various stages of the project.
 Use of these techniques for active control of a project requires frequent updating and receiving the
PERT calculations and this proves quite a costly affairs.

Limitation of CPM
 CPM fails to incorporate statistical analysis in determining the time estimates
 It operates on the assumption that there is a precise known time that each activity in the project will
take but this may not be true in actual life.
 It is difficult to use CPM as a controlling device for the simple reason that one must repeat the entire
evaluation for the reason that one must repeat the entire evaluation of the project each time when
changes are introduced into the network. It may be remembered that CPM was initially developed as
a static planning as a static planning model and not as a dynamic controlling devices.

Crashing of Network
Crashing is employed to reduce the project completion time by spending extra resource cost. However,
beyond point a cost increase more quickly when time is reduced. Similarly, beyond point B, the time
increase whiles the cost decrease. Since for technical reasons, time may not be reduced in definitely point.
Therefore we call this limit crash point. There is also a most cost efficient duration called normal point.
Thus extending the activity duration beyond normal point may increase costs. It is clear that, one must be
interested in the critical region of the curve contained between point A and B to establish a trade off between
time and cost, the direct cost of completing an activity per unit time is completed as follows:

Cost slope = crash cost – normal cost / normal time – crash time.
Numerical of networking analysis
Total float – The amount of time by which completion of an activity could be delayed. It can be calculated
as LST –EST
Free float – The time by which the completion of an activity can be delayed beyond the earliest finish time.
It can be calculated as Total float – Head slack
Independent float – The amount of time by which the start of an activity can be delayed. It can be calculated
as Free float – Tail slack
Independent float < Free float < Total float
Slack vs Float – The basic difference between slack and float times is that slack is used for events only
whereas float is applied for activities.

Type A (Event and One Time is given)

Draw Network diagram, Find Critical Path. Find EST, EFT, LFE, LST, Total Float, Free Float and
Independent Float from the following.
Event: 1-2 1-3 2-5 2-3 2-4 3-4 4-6 5-6
Time: 2 3 4 3 5 2 1 3
Solution. Critical Path is 1-2-5-6 = 2+4+3 = 9

Event Time EST EFT LFT LST TF FF IF

1-2 2 0 2 2 0 0 0-0=0 0-0=0
1-3 3 0 4 6 3 3 3-1=2 2-0=2
2-5 4 2 6 6 2 0 0-0=0 0-0=0
2-3 3 2 5 6 3 1 1-1=0 0-0=0
2-4 5 2 7 8 3 1 1-1=0 0-0=0
3-4 2 5 7 8 6 1 1-1=0 0-1=-1
4-6 1 7 8 9 8 1 1-0=1 1-1=0
5-6 3 6 9 9 6 0 0-0=0 0-0=0
EFT =EST + Time
LST =LFT –Time
Total Float = LST – EST
Free Float = Total Float – Head slack
Independent Float = Free Float – Tail slack

Type B (Activity and one Time is given)

Network diagram, Critical Path. Find EST, EFT, LFE, LST, Total Float, Free Float and Independent Float.
Activity : A B C D E F G H I J
Processor activity : - - A A B,C B,C F F D,G E,H,I
Time : 15 15 3 5 12 8 1 14 3 14
Solution. Critical Path is 1-2-3-4-6-7 = 15+3+8+14+14 =54

Activity Time EST EFT LFT LST TF FF IF

A(1-2) 15 0 15 15 0 0 0-0=0 0-0=0
B(1-3) 15 0 15 18 3 3 3-0=3 3-0=3
C(2-3) 3 15 18 18 15 0 0-0=0 0-0=0
D(2-5) 5 15 20 37 32 17 17-10=7 7-0=7
E(3-6) 12 18 30 40 28 10 10-0=10 10-0=10
F(3-4) 8 18 26 26 18 0 0-0=0 0-0=0
G(4-5) 1 26 27 37 36 10 10-10=0 0-0=0
H(4-6) 14 26 40 40 36 0 0-0=0 0-0=0
I(5-6) 3 27 30 40 37 10 10-0=10 10-10=0
J(6-7) 14 40 54 54 40 0 0-0=0 0-0=0

Type C. (Event and Three Time is given)

Network diagram, Critical Path. Find EST, EFT, LFE, LST, Total Float, Free Float and Independent Float.
Find the probability that the project is completed in 31 days
Event: 1-2 1-6 2-3 2-4 3-5 4-5 5-8 6-7 7-8
a : 3 2 6 2 5 3 3 1 4
m : 6 5 12 5 11 6 4 9 19
b : 15 14 30 8 17 15 7 27 28

Event a m b Averag Variance EST EFT LFT LST TT FF

e
1-2 3 6 15 7 4 0 7 15 8 1 1-8=-8
1-6 2 5 14 6 4 0 6 6 0 0 0-0=0
2-3 6 12 30 14 16 7 21 29 15 8 8-8=0
2-4 2 5 8 5 1 7 12 33 28 21 21-11=10
3-5 5 11 7 11 4 21 32 40 29 8 8-8=0
4-5 3 6 15 7 4 12 19 40 33 21 21-8=13
5-8 1 4 7 4 1 32 36 44 40 8 8-0=8
6-7 3 9 27 11 16 6 17 17 6 0 0-0=0
7-8 4 19 28 27 16 17 44 44 17 0 0-0=0

Average = a+4m+b / 6
Variance = square of b-a / 6
The critical path is 1-6-7-8 and the project length is given by 6+11+27 = 44 day
Variance = 4+16+16 = 36
Standard Deviation = 6
The probability of completing the project within 31 days is given by Z = 31 – 44 / 6 = 2.16 = 0.48 (using
table)
Hence required probability is 0.50 – 0.48 = 0.0114 or 1.14%.

Type D (Activity and Three Times are given)

Network diagram, Critical Path. Find EST, EFT, LFE, LST, Total Float, Free Float and Independent Float
Find the probability that the project is completed in 30 days
Activity :A B C D E F G H
Predecessor Activity :- - A A A B,C D E,F,G
a : 2 10 8 10 7 9 3 5
m : 4 12 9 15 7.5 9 3.5 5
b : 12 26 10 20 11 9 7 5

Event predecesso a m b Average Variance EST EFT LFT LST TT FF IF

r
A(1-2) - 2 4 12 5 25/9 0 5 5 0 0
B(1-3) - 10 12 26 10 64/9 0 14 15 15 15
C(2-3) A 8 9 10 9 1/9 5 14 15 15 10
D(2-4) A 10 15 20 15 25/9 5 20 20 20 15
E(2-5) A 7 7.5 11 8 4/9 5 13 24 24 19
F(3-5) B,C 9 9 9 9 0 14 23 24 24 10
G(4-5) D 3 3.5 7 4 4/9 20 24 24 24 4
H(5-6) E,F,G 5 5 5 5 0 24 29 29 29 5
Critical path is 1-2-4-5-6 = 5+15+4+5=29 weeks
Variance = 25/9+25/9+4/9+0 = 6
Probability of completing project in 30 days is Z =30 – 29 / square root of 6 = 0.41 = 0.15 (using table)
Hence the required probability is 0.50+0.15 =0.65

Others problems for practices

1. Draw network diagram, Critical path, total float, free float and independent float.
Job: 1-2 1-3 2-4 3-4 3-5 4-9 5-6 5-7 6-8 7-8 8-10 9-10
Time: 4 1 1 1 6 5 4 8 1 2 5 7
(Ans = 1-3-5-78-10 =22)
2. Job 1-2 1-4 1-7 2-3 3-6 4-5 4-8 5-6 6-9 7-8 8-9
Time: 3 2 1 3 2 4 6 5 4 4 5
(Ans = critical path is 1-4-5-6-9 =15)

3. Draw network diagram, Critical path, total float, free float and independent float.
Activity: A B C D E F G H I J K L
Predecessor Activity: - A A B B C C F D G,H E I
Time: 10 9 7 6 12 6 8 8 4 14 5 7
(Critical path is A-C-F-H-J = 42)

4. Draw network diagram, Critical path, total float, free float and independent float.
Activity: A B C D E F G H I J K
Predecessor Activity: - A B C B E D,F E H G,I J
Time: 13 8 10 9 11 10 8 6 7 14 18
(Critical path is A-B-E-F-G-J-K = 82)

5. Draw network diagram, Critical path, total float, free float and independent float. Find the probability that
project is complete in 31 days
Job: 1–2 1–6 2–3 2–4 3–5 4–5 5–8 6–7 7-8
a: 3 2 6 2 5 3 1 3 4
m: 6 5 12 5 11 6 4 9 19
b: 15 14 30 8 17 15 7 27 28

6. Draw network diagram, Critical path, total float, free float and independent float. Find the probability that
project is complete in 60 days
Job: 1-2 1-3 2-3 2-4 3-4 4-5
a: 3 8 1 2 8 14
m 4 12 2 3 10 22
b: 54 16 3 5 12 25
(Critical path 1-2-3-4-5 = 76.5 and probability is 60 – 76.5 / square root of 19.92 = 3.69 = 0.011
7 Network diagram, Critical Path. Find EST, EFT, LFE, LST, Total Float, Free Float and Independent Float
Find the probability that the project is completed in 11 days.
Activity :A B C D E F G
Predecessor Activity :- - A A B C D,E
a : 2 2 1 4 4 3 1
m : 3 3 2 6 5 4 1
b : 10 4 3 14 12 5 7
(Critical path is 13 days and probability is 11-13 / 2.3 = .30 and required probability is 0.5 – 0.3 =19%

8. Network diagram, Critical Path. Find EST, EFT, LFE, LST, Total Float, Free Float and Independent Float
Find the probability that the project is completed in 35 days.
Activity :A B C D E F G H I J
Predecessor Activity :- - - A A A B,C C D E,F
a : 4 1 2 1 1 1 1 4 2 6
m : 4 2 5 4 2 5 2 4 2 7
b : 10 9 14 7 3 9 9 4 8 8
(Critical path is C-D-G-J =16 days and probability is 35-16 / 2.4)

Formation of a Project Team

A project team is a group of individuals working together to achieve a common goal. Generally, it is formed
and directed by a project manager for a certain period of time. The success of a project depends on the
efficiency of the project team. The project manager should consider certain characteristic of a project team.
Some of the important characteristic of a project team are as follows.
 Goal oriented
 Technical competent
 Problem solving attitude
 Cooperative
 Self esteem

Project team pitfalls / Problems of a project team

Generally, the members of a project team belong to different background and share a common goal. The
improper coordination between the team and the project manager creative conflicts between the
management and the team, which in term, in turn, hampers the performance of the project. Problems of
project team
 Cultural difference (language, value, liking, preference ,disliking, belief system)
 Matrix team problems (career priorities ,temporary assignment, supervisory issues)
  Intra-team conflict (effective project planning, proper allocation of task, effective communication)
 High politics among tam members
 Different test & preference, language, objective, experience, age, skills, interest, personality, attitude.
 High communication gap among team members.
 High number of stake holders, so more dependence on others.

Project team development / team building process / stages in deploying high performance project
team
The different stages of the project team
 Forming stage (orientation – grouping of activities)
 Storming stage(dissatisfaction – conflicts among members)
 Norming stage(resolution – conflict resolution through negotiation)
 Performing stage (production – implementation, team commitment to work)

 Adjourning stage(disassociation – close out phase of project team)

Quality of a Project Manager

 Shared vision
 Integrity
 Empathy
 Competency
 Capability to delegate tasks
 Patience
 Team building
 Leadership skills

Project performance management

Ideally, a project will be considered totally successful if it gets completed on time, within budget and
performs exactly to the designer specifications.
Factors influencing successes of the project
 Clearly defined goals
 Support of top management
 Competent project manager
 Competent team member
 Sufficient project resources
 Client involvement in defining need and requirement
 Adequate communication channel
 Involvement of all parties in project review and correction
 Consulting with users and keeping them informed
 Technology being implemented, has been reviewed and work well
 Client understand the usefulness of the project
 Control measure to keep project on track
  Daily trouble shooting and resolution of problems

Factors responsible for the failure of the project

 Inadequate skills reflected in approach
 Unsupportive top management
 Project manager unable to cope up with the demand of the project
 Inadequate communication in the project
 Failure to involve the user
 Inadequate project planning
 Insufficient project definition
 Improper estimation of time and resources
 Incorrect scheduling and handling of resources
 Enormous changes during the last implementation phase
 Inadequate control
 Project termination poorly planned

Project Monitoring
Project monitoring refers to the process of evaluating the progress of project activities. It is a continuous
process of determine the actual status of a project in relation to the estimated time and cost. The main
objective of monitoring is to improve the performance of project by assessing the potential risk involved in
the project and identify the main cause of error in the project.
The project manager monitors project activities to
 Assess the risks involved in a project
 Identify the main cause of delay in the completion of the project
 Recognize the factors that affect the progress of the project
 Measure the actual performance of the project

Project monitoring controlling cycle (PMC)

PMC is an interactive process that establishes a relationship among the activities involved in the planning,
monitoring and controlling of a project. The PMC cycle enable the project manager to identify the deviation
in the performance of the project.
 Planning the project (future of action)
 Executing the project (action)
 Monitoring cycle (checking progress)
 Controlling cycle(finding any deviation)
 Closing cycle(completing the project)

Objective of project monitoring

 To assess the risk involved in a project
 Identify the main cause of delay in the completion of the project
 Recognize the factors that affect the progress of the project
 Measure the actual performance of the project

Earned Value Management (EVM)

Earned value analysis can be incorporate in a project with the help of Earned Value Management (EVM)
system. The EVM system identifies discrepancies in the project by comparing the actual performance and
set standard.EVA is widely used methods of determining the progress of the project. It is also known as
performance management. Management by objective. Budgeted cost of work performed and cost schedule
control system. It helps the project manager to check project performance at early stage of the project life
cycle and control them.
Earned Value Analysis is a method for measuring project performance. It compares the amount of work that
was planned with what was actually accomplished to determine if cost and schedule performance is as
planned.
Or
A EVS is a methodology used to measure and communicate the real physical progress of a project taking
into account the work complete, the time taken and costs incurred to complete that work.
Project Evaluation
Project evaluation is a systematic process of recording and analyzing project performance and output and
controlling them with pre determine standards .It is the process of analyzing and comparing the end result of
the project with pre-determined result. Project evaluation aim to identify the weakness of a project and
improve them. Project evaluation is a systematic process of recording and analyzing project performance
and output and comparing them with pre-determined standard
Objective of project evaluation
 Identifying the progress of the project
 Completing the project within allocated time and recourses
 Responding to the demand of customer
 Justifying the employment of team member to achieve goal of the project
 Compare the actual performance with planned one
 Locating the resource of the organization effectively.

Purpose of project evaluation

 Efficiency of the project
 Profitability
 Customer satisfaction
 Future potential
 competency

Benefit of project evaluation

 Recognize and solve problem at the initial stage of the project
 Establish relationship between time, cost and performance
 Improve the key performance area of the project
 Identify the opportunity for future growth of the project
 Applies the performance of the project team
 Increased the rate of successes of the project
 Improve the quality of the project management process
 Create healthy working environment to active better result.

Project controlling
Controlling involves the measurement of actual performance; comparing it with the planned performance
and correcting deviation to ensure attainment of predetermine project objectives. Thus controlling ensuring
that actual performance conforms to planned performance as closely as possible. There is a close inter
relationship between planning and control function. Planning serves as basis of control. The plan act as the
standard for evaluating actual. Planning can achieve nothing without control of actual observation. The
control can be related to like finance control, budgetary control, quality control, marketing control, human
recourse control, information technology control etc. Project control serves two major functions
 It ensure regular monitoring of performance
 It motivate project employee to strive for achieving project objectives.
 Project controlling aim at reducing the gap between the actual performance of a project and the
expected performance activities such as planning, organizing and controlling

Purposes of controlling
 Creating better quality
 Coping with changes
 Creating faster cycles
 Adding value
 Facilitating delegation and teamwork

Type of control
(i) Feed forward - It is preventive control that attempt to identified and prevent deviation in the
slandered before their occurrence
(ii) Concurrent control – It is performed when a project activity is in progress. It regulate ongoing
activities and ensure that they must follow the organizational standards
(iii) Feedback control – It focus on the output after project is completed. It is applied to check
whether the actual information is per the set standard.

Tools for control

 Financial control(financial statement, financial audit, ratio analysis
 Budgetary control(revenue and control)
 Quality control (inspection, quality assurance, tqm)
 Marketing control (marketing research, test marketing, marketing statistics)
 Human resource control
 Information technology control
 Adverse effect on other project
 Problem of protecting intellectual prorioteties.

Project Appraisal /Feasibility study

Project appraisal is carried out by the financing agencies to ensure the viability of the project. The various
factors to be considered by the institution for project appraisal.

 Technical sector (source, cost, impact ,rate of change of technology)

 Financial and accounting (cost of capital, tax, profitability)
  Commercial(profitability)
 Economical (state of economy, growth, trade cycle, balance of payment, cyclical fluctuation)
 Managerial (skill, experience, qualification)
 Legal(licensee from required institute)
 Social demographic sector (education level, income distribution, population, employment)
 Ecological(nature environment, humidity, winter, summer)
 Organization(type, specialization )
 Investment alternative evaluation
 Marketing and distribution (market share, growth, risk, completion)
 Production and operation (material, machine, manpower, capacity, quality, wastage)
 Research and development (research capability, cost )
 Corporate recourse and personnel (competence, experience)
 Government sector (taxation policy, industrial policy, financing norms, import /export policy)
 Competition sector (entry barriers, number of firms, marketing policies)
 Sectors (availability, profibility, cost)

Project Risk analysis

Risk can be defined as the chance that the actual outcome from an investment differs from the expected
outcome. Within the context of project, risk is commonly associated with an uncertain event or condition
that if it occurs has a positive or a negative effect on a project objective.

Risk management is the discipline of identifying monitoring and limiting risk. Risk can come accident,
natural cause and disaster as well as deliberate attracts from an adversely. In business risk management
contains organized activity to manage uncertainty and threats.

Why is risk management important?

 Increased certainty and fewer surprise

 Better service delivery
 More effective management of change
 More efficient use of resources’
 Better management at all level through improved decision making
 Innovation
 Improved working environment
 Patients or staff safety

Risk Management Plan

  Risk identification
 Risk quantification
 Risk monitoring and control
 Risk mitigation

Risk Management cycle

 Identify the risk

 Evaluate the risk
 Identify suitable responses to risk
 Select
 Plan and resources
 Monitor and report

Risk Response

 Avoid the risk

 Transfer the risk
 Mitigate the risk
 Accept the risk

Type or Sources of Risk

(a) Project specific risk – It is the first sources’ of risk in which an individual project may have higher or
lower cash flow than expected,either because the firm misestimated the cash flow for that project or
because of factor specific to that project. When firm take a large large number of similar projects, it
can be argued the much of the risk should be diversified way in the normal course of business.
(b) Competitive risk – It is the second source of risk, herby the earnings and cash flow on a project are
affected (positively or negatively) by the action of competitor. While a good project analysis will
build in the expected reaction of competitor into estimates of profit margin and growth, the actual
action taken by competitor may differ from this expectation. In must case this component of risk will
affect more than one project, making it more difficult to diversify away in the normal course of
business by the firms
(c) Industry specific risk – It is the third source of risk – those factor that impact the earnings and cash
flow of a specific industry. These are three source of industry – specific risk, which are as follows
(i) Technological risk
(ii) Legal risk
(iii) Commodity risk
 (d) International risk – It is the fourth risk. firm faces this risk when it generate revenue or has costs
outside its domestic market. In such case ,the earnings and cash flow will be affected by unexpected
exchange rate movement or by political development
(e) Market risk – it is the final sources’ of risk. Macroeconomic factor that effect essentially all
companies and all project to varying degree.

Techniques of Risk Analysis

There are various techniques to handle risk which are stated below

(a) Sensitivity analysis – It is a technique that measure the change in the profitability of a project caused
by the change in the profitability of a project caused by changes in the factors that affect the cash
inflow of the project. If a small change in one factors leads to a major changes in the profitability of
the proposed investment, the project is considered more sensitive to that factors. In other word, the
project is more risky, other thing being equal, a project that is less sensitive is preferalable of any
measure of profitability 9NPV,BEP or any other measure ) to change in critical factors. Sensitivity
analysis provides the management the much needed information as to which are the critical factors
that is prone to effect the profitability of the project.
(b) Scenario analysis – In sensitivity analysis, typically one variable is vested at a time. If variable are
interested as they are most likely to be, it will be helpful to look at some scenario, each scenario
representing a consistent combination of variables.
(c) Monte Carlo simulation analysis – Monte –Carlo method of simulation is a technique in which
statistical distribution functions are created by using a series of random numbers. This method of
simulation is generally used to solve problems which cannot be adequately represented by
mathematical models or where solution of the model is not possible by analytical method. This
method of simulation yields a solution that converges to the optimal or correct solution as the
number of simulated traits leads to infinity.
(d) Decision tree analysis – decision tree approaches is a graphical technique that can be used for
analyzing the pros and cons of alternative decision and choosing the best possible courses of action.
In real situation decision are taken condition of uncertinity.In project project management this is
more so in view of the multiplicity of factors involved. A decision tree is a diagrammatic
representation of the logical relationship and the possible outcomes of different decisions

Social cost-benefit analysis

Evaluating a project from a society (economic) point of view is called SCBA. It means impact of any project
on society as a whole

Benefits to society
  Generate employment
 Increased feeder service
 Living standard of people
 Developmement of infrastructure
 Resources’ utilization

Cost to society
 Air pollution
 Noise pollution
 Land pollution
 Water pollution
 Deforestation

Group
A group is an aggregate of person with close inter relationship or a group is any number of people who
interact with one another are psychologically aware of one another and perceive themselves to be a group.
Two or more interacting and interdependent individuals who come together to achieve particular objectives.
Group Dynamics
The term dynamics implies changes taking place within the group as a result in any part of the group.
Reason for formation of group
 Desire to socialize with each other
 Common interest
 Sense of identity
 Sense of security
 Sources of information
 Monotones jobs
 Communication device

Group development
 Forming – work group is born and group members try to comprehend
 Storming – once the formal group is created, internal subgroup arises.
 Norming – during this stage dormant disagreement and power issues are worked out.
 Performing – this stage is reached when collaboration among the group members is at highest

Type of group
Formal group –formal group are deliberately created to accomplish some common goals.
Informal group – within the conflicts of the formal organization structure there exist informal group of
people. Such group arises spontaneously through interaction among people who are in frequent contest with
one another.
 What is a Team?
Formal group made up of interdependent individuals, responsible for attaining a goal.
Type of Team
(i) Functional team – A type of work team that is composed of a manager and his or her
subordinates from a particular functional areas
(ii) Self directed or self – managed team – A type of work team that operates without a manager and
is responsible for a complete work process or segment that deliver a product or service to an
extent or internal customer.
(iii) Cross –functional team – A type of work team in which a hybrid grouping of individual who are
expert in various specialist (or functional) work together on various organizational tasks.

Why Use Team?

 Create Sprite de corp.
 Allow management to think strategically
 Speed decision
 Facilities workforce diversity
 Increase performance

Characteristic of Team
 Less conflicts in team
 More group cohesiveness
 Company objective is more important than personal objective
 Participating decision making
 Respect for each other
 Less politics or manipulation in group.
 Clear goal
 Mutual trust
 Good communication
 Internal and external support
 Appropriate leadership
 Small number of people
 Complimentary skill
 Common purposes and performance goal

Importance of team
 Enhanced performance
 Employee benefit
 Reduced cost
 Organization enhancement

Managing Team
 Planning
  Organizing
 Leading
 Controlling

Leadership
The ability to influence a group towards the achievement of goal or those who are able to influence others
and who posses’ managerial authority.
Manager vs Leadership
Manager Leader
Have authority may or may not have authority
Appointed by company may or may not appointed
Should have leadership quality may not have official authority

Significance of leadership
 Setting goals
 Motivating employees
 Building moral
 Creating confidence
 Maintaining discipline
 Developing team work
 Facilitate change
 Representing the group

Quality of a leadership
 Physical qualities – sound health, vitality, endurance, physical and energy and enthusiasm
 Intellectual qualilities – high intelligence, sound judgment, ability to teach, scientific approach,
decisiveness, self understanding
 Moral qualities – integrality, fair play, moral courage, will power, sense of purposes,
achievement drive, objectivity
 Social qualities – ability to inspire, tact, persuasiveness, self-confidence, empathy, initiative,
knowledge of human nature, human relations, attitude

Function of a leader
(i) Setting and achieving organizational goals
(a) Goal setter
(b) Planner
(c) Executive

(ii) Planning operation of the organization

(a) Expert
(b) External group reprehensive
(c) Surrogate for individual responsibility
 (d) Controller of internal relationship within the organization
(e) Administration of reward and punishment
(f) Arbitrator and mediator

(iii) Symbolic figure for the group

(a) Exemplar
(b) Symbol of the group
(c) Ideologist
(d) Father figure
(e) Scapegoat

Approaches of leadership
(i) Trait approach
Theory that sought personality, social, physical or intellectual traits that differentiated leader from
non leader or theories isolating characteristic that differentiate leader from non leader.
Six traits the differentiate leader from non leader like
 Desired to lead
 Drive
 Honesty and integrity
 Self confidence
 Intelligence
 Job relevant knowledge

(ii) Autocratic Democratic continuum

Tannenbaum and Schmidt proposed a continuum of leadership behavior with respect to decision
making, ranging from boss – centered (autocratic) to subordinates – centered (democratic).

 Manager makes decision and announce it

 Manager sells decision
 Manager present ideas and invite question
 Manager present tentive decision subject to change
 Manager present problem gets suggestion and make decision
 Manager defines limits, ask group to make decision
 Manager permits subordinates to function within limit defined by superior

(iii) Ohio state studies

Roser sought to identify independent dimension of leader behavior. Beginning with over a
thousand dimensions, they eventually narrowed down the list into two categories that
substantially account for most of the leadership behavior described by employees. They
called these two dimension initiating structure and consideration.

(a) Initiating structure – The extent to which a leader is likely to define and structure his or
her role and role of subordinates in the search for goal attainment.
 (b) Consideration – The extent to which a leader is likely is likely to have job relationship,
characterized by mutually trust, repeat for subordinates ideas and regards for their
feelings.

(iv) University of Michigan studies

The Michigan group also comes up with two dimension of leadership behavior that they
labeled employee oriented and production oriented.
(a) Employed oriented leader – one who emphasis interpersonal relation.

(b) Production oriented leader – one who emphasis technical or task aspect of the job.

(v) Managerial Grid (Blake and Mouton)

A two dimensional portrayal of leadership based on concern for people and for production.
A 9 by 9 matrix outline outline 81 different leadership styles. Blake and mountain proposed
a managerial grid based on the style of “concern for people” and “concern for production”.
Although there are 81 positions on the grid, the five key position identified by Black and
Mountain.
(a) 1.1 (improvershid) – the leader exerts a minimum of efforts to accomplish the work
(b) 9.1(Task) – the leader concentrate on task efficiency but show little concern for
development and morale of subordinated.
(c) 1.9 (country club) – the leader focus on being supportive and considerate of subordinates
to the exclusion of concern for task efficiency.
(d) 5.5(middle of the road) – the leader maintain adequate task efficiency and satisfactory
morale.
(e) 9.9 (team) – the leader facilitate task efficiency and high morale by coordinating and
integrating work related activities.

(vi) Likert system of management

Likert and his associated of the University of Machigan conducted an extensive survey of management
styles and developed a continuum of four system of management which are given as
System 1 – Exploitative autocrats
The manager under this system make all work related decision and order their subordinates to carry out the
decision. The manager also define slandered and method of performance.
System 2 – Benevolent Autocrat
System 2 manager are also autocrats but they are not exploitative. They adopt a paternalistic approach
towards the subordinates. They allow some freedom to subordinates to carry out their tasks within the
prescribed limits.
System 3 – Consultative
Manager under this system set goals and issue order after discussing them with the subordinates. They take
major decision themselves and allow subordinates to make the routine decisions. Subordinates are free to
discuss the work related matters with the manager.
System 4 – democrative
Under this system, goal are set and work – related decision are taken by the subordinates manager are
friendly and supportive in their attitude towards the subordinates. Subordinates are permitted self appraisal
on the basis of mutually set goals.
(vii) Leadership Style

On the basis of how leader use their, leadership style can be classified into three broad categories
(a) Autocratic or Authootarian leadership
An autocratic leader exercise complete control over the subordinates. He centralized power in
himself and takes all decision without consulting the subordinates. He dominated and drives his
group through coercion and command. He loves power and never delegates authority. The leader
given order and expect the subordinates to follow them unquestioning. He uses rewards and hold and
threats of penalties to direct the subordinates. He does not delegate authority.

(a) Democratic or Participatory leadership

A consultative or democratic leader takes decision in consultation and participation with the
subordinates. He decentralized authority and allows the subordinates to share his power. The leader
does what the group wants and follows the majority opinion. He keeps the followers informed about
matters affecting them. A democratic leader provides freedom of thinking and expression. He listens
to the suggestion, grievance and opinions of the subordinates.

(c) Lassies –fair leadership

Free –rein leadership involves complete delegation of authority so that subordinates take decision.
The
Free –rein leader avoids power and relinquishes the leadership. He serves only as a contact to bring
the information and resources needed by the subordinates.