School of Management and Commerce

Question Bank - Unit no.: 2

Program: MBA
Course Name: Project Management Techniques
Course Code: 21MBA401
Sem/Year: 4th Semester
Level A. Easy Questions (2 marks each)
S. No. Questions CO*
Q1 Define Project Formulation? CO2

Project formulation is the systematic development of a project idea into a

well-defined plan. It involves defining the project's objectives, scope,
feasibility, and resources needed for successful execution.
Q2 What do you understand by term ‘Project Identification’? CO2

Project identification is the initial stage of project management where

potential project ideas are recognized and brought forward. This involves
identifying problems, opportunities, and needs that a project could address

Q3 What is DPR? CO2

DPR stands for Detailed Project Report. It's a comprehensive document

prepared during project formulation that outlines the project's technical,
financial, economic, and social aspects.
Q4 What is risk analysis? CO2

Risk analysis is the process of identifying, assessing, and prioritizing

potential risks that could negatively impact a project. It helps project
managers develop strategies to mitigate or avoid these risks.

Q5 Define cost of restoration? CO2

The cost of restoration refers to the financial resources required to return a

site or environment to its original or desired condition after it has been
disturbed or damaged.
Q6 What is the role of project formulation in project planning? CO2

Project formulation acts as the foundation for effective project planning. It

clarifies the project's direction, identifies potential challenges, and provides
a basis for developing a detailed plan with achievable goals, timelines, and
resource allocation.
Q7 What are the main components of a project identification? CO2

Key components of project identification include:

 Problem or opportunity definition: Clearly identifying the

issue the project aims to address or the opportunity it seeks to
capitalize on.
 Feasibility assessment: Evaluating the project's viability in
terms of technical, financial, economic, and social factors.
 Stakeholder analysis: Identifying individuals and groups who
may be impacted by or interested in the project.

Q8 What is SMART in project management? CO2

SMART is an acronym for Specific, Measurable, Achievable, Relevant, and

Time-bound. It's a framework used to create clear, concise, and achievable
project goal

Q9 Identify some challenges that project managers may face during the CO2
execution of a project.

 Scope creep: Uncontrolled growth in project scope, leading to

increased costs and delays.
 Resource constraints: Limited availability of resources like
budget, personnel, or equipment.
 Communication breakdowns: Ineffective communication
among stakeholders, leading to misunderstandings and
delays.
 Risk occurrence: Unexpected events or challenges
impacting project progress.

Q10 What is cost-benefit analysis? CO2

Cost-benefit analysis is a technique used to evaluate the potential costs

and benefits of a project. It helps determine whether the projected benefits
outweigh the associated costs, informing investment decisions.
Q11 What is the key purpose of a quality management plan in project planning? CO2
a) Allocating project budget
b) Identifying project stakeholders
c) Ensuring project deliverables meet quality standards
d) Documenting project progress

(c) Ensuring project deliverables meet quality standards

Q12 What is the primary purpose of project formulation? CO2
a. Project execution
b. Project initiation
c. Project planning
d. Project closure

(b) Project initiation

Q13 Which step is typically included in the project formulation process? CO2
a. Project monitoring
b. Risk assessment
c. Project evaluation
d. Project execution

b) Risk assessment

Q14 What does a feasibility study in project formulation primarily assess? a. CO2
Stakeholder satisfaction
b. Project schedule
c. Project viability
d. Budget compliance

c) Project viability
Q15 How does project identification contribute to goal setting? a. CO2
It establishes project timelines
b. It identifies potential risks
c. It aligns projects with organizational objectives
d. It determines project budgets

c) It aligns projects with organizational objectives

Q16 What is an advantage of integrating risk assessment into project CO2
identification?
a. Increases project complexity
b. Delays project initiation
c. Informs decision-making and project selection
d. Reduces stakeholder engagement

c) Informs decision-making and project selection

Q17 What is the primary focus of ecological impact assessment during project CO2
appraisal?
a. Financial returns
b. Technological advancements
c. Ecological considerations
d. Stakeholder interests

(c) Ecological considerations

Q18 How does social impact assessment contribute to project appraisal? a. CO2
By evaluating financial risks
b. By assessing the project's impact on the community and society
c. By determining project schedules
d. By analyzing technological feasibility

(b) By assessing the project's impact on the community and society

Q19 How does stakeholder involvement contribute to project formulation? a. CO2
It speeds up the project
b. It ensures alignment with organizational goals
c. It eliminates project risks
d. It reduces project costs

b) It ensures alignment with organizational goals

Q20 What is a key criterion for project identification? a. CO2
High project cost
b. Alignment with organizational goals
c. Quick project completion
d. Limited stakeholder involvement

(b) Alignment with organizational goals

Level B. Intermediate Questions (5 marks each)

Q21 Explain project appraisal and highlight its significance in project CO2
management.

Project appraisal is a systematic and critical evaluation of a proposed

project before committing resources to its execution. It involves a
thorough assessment of various aspects, including:

 Technical feasibility: Can the project be delivered using

available technologies and expertise?
 Financial viability: Will the project generate enough returns
to justify the investment?
  Economic impact: Will the project bring positive economic
benefits to the stakeholders and society?
 Social impact: How will the project affect the surrounding
communities and their social well-being?
 Environmental impact: What are the potential environmental
consequences of the project, and how can they be mitigated?

Significance in Project Management:

 Improved decision-making: Project appraisal provides

valuable insights to inform decisions about project selection,
prioritization, and resource allocation.
 Reduced risks: By identifying potential pitfalls and challenges
early on, project appraisal helps mitigate risks and improve the
chances of project success.
 Increased stakeholder buy-in: When stakeholders
understand the potential benefits and risks of a project through
a transparent appraisal process, it fosters greater buy-in and
support.
 Enhanced project effectiveness: A thorough appraisal helps
ensure that resources are directed towards projects with the
highest potential for positive impact, contributing to efficient
resource utilization and achieving desired outcomes.

Q22 What are the key criteria considered during the identification of a project? CO2

Several key criteria are considered when identifying potential

projects:

 Alignment with organizational goals: Does the project

contribute to the organization's strategic objectives and
mission?
 Need and opportunity: Does the project address a genuine
need or present a promising opportunity?
 Feasibility: Is the project technically, financially, and
economically viable?
 Stakeholder interest: Who will be affected by the project, and
do they support it?
 Risks and uncertainties: What are the potential risks and
challenges associated with the project?
Q23 How does the social impact assessment contribute to project appraisal? CO2

Social impact assessment (SIA) plays a crucial role in project

appraisal by:

 Identifying potential impacts: SIA assesses how the project

might impact communities in terms of employment, education,
health, cultural heritage, and other social factors.
 Mitigating negative impacts: By identifying potential
negative social impacts early on, project managers can
develop strategies to mitigate or avoid them, promoting
responsible and ethical development.
 Enhancing positive impacts: SIA can also help identify
opportunities to maximize the project's positive social impacts,
such as creating jobs, improving access to services, and
empowering local communities.
 Improving stakeholder engagement: By incorporating SIA
into the project appraisal process, stakeholders are informed
about potential impacts and have an opportunity to voice their
concerns, fostering transparency and trust.

Q24 Discuss the significance of environmental impact assessment in project CO2

appraisal.

Environmental impact assessment (EIA) is a crucial element of

project appraisal that:

 Identifies potential environmental consequences: EIA

assesses the project's potential impacts on air, water, land,
biodiversity, and other environmental components.
 Promotes sustainable development: By identifying and
addressing potential environmental issues, EIA promotes
sustainable development practices and minimizes negative
impacts on the environment.
 Complies with regulations: Many countries have
environmental regulations that require EIAs for specific types
of projects.
  Reduces risks and costs: Identifying environmental risks
early on helps avoid costly problems and delays during project
execution.
 Enhances public trust: A transparent EIA process
demonstrates the project's commitment to environmental
responsibility and can increase public trust and acceptance.

Q25 How can project appraisal contribute to effective decision-making in the CO2
project initiation phase?

Project appraisal provides valuable information that contributes to

informed and effective decision-making in the project initiation phase:

 Selection of the right projects: By evaluating various project

proposals, decision-makers can choose projects with the
highest potential for success and positive impact.
 Prioritization of projects: Appraisal helps prioritize projects
based on their alignment with strategic goals, feasibility, and
potential benefits.
 Resource allocation: Based on the appraisal findings,
resources can be allocated efficiently to projects with the
greatest need and potential return on investment.
 Mitigation of risks: Identifying potential risks early on allows
for the development of risk mitigation strategies, increasing
the likelihood of project success.
 Stakeholder alignment: A transparent appraisal process
fosters stakeholder buy-in by providing a clear understanding
of the project's potential benefits and risks.

By providing critical insights into various aspects of a project, project

appraisal plays a vital role in ensuring effective decision-making
during the project initiation phase, laying the foundation for
successful project execution.

Q26 Define Project Identification and explain its importance in the project CO2
management process.
 Project identification is the initial stage of project management
where potential project ideas are recognized, brought forward, and
evaluated. It involves:

 Identifying problems, opportunities, and needs: This could

involve brainstorming, market research, or analyzing existing
data.
 Screening potential project ideas: This involves assessing
the initial viability of ideas based on factors like alignment with
strategic goals, technical feasibility, and potential benefits.
 Prioritizing promising projects: Based on the screening,
promising ideas are prioritized for further evaluation and
development.

Importance in Project Management:

 Foundation for successful projects: Project identification

lays the groundwork for successful projects by ensuring
resources are directed towards addressing genuine needs and
capitalizing on valuable opportunities.
 Aligns with strategic goals: It ensures projects contribute to
the organization's overall objectives and mission.
 Reduces risk of project failure: By identifying potential
challenges and selecting feasible projects early on, the risk of
project failure is minimized.
 Provides direction for further planning: The initial scoping
and evaluation done during identification pave the way for
detailed planning in subsequent stages.

Q27 Discuss the term "feasibility study" in the context of project formulation. CO2

A feasibility study is a comprehensive analysis conducted during

project formulation to assess the viability of a project idea from
various perspectives:

 Technical feasibility: Can the project be delivered using

available technologies and expertise?
 Financial feasibility: Will the project generate enough
revenue or cost savings to justify the investment?
 Economic feasibility: Will the project benefit the
stakeholders and society in the broader economic context?
  Market feasibility: Is there a demand for the project's outputs
in the target market?
 Schedule feasibility: Can the project be completed within the
desired timeframe?
 Environmental feasibility: Will the project have a negative
impact on the environment, and can it be mitigated?
 Social feasibility: Will the project have a positive impact on
the local community and society?

The feasibility study plays a crucial role in informing decision-making

during project formulation. By providing a clear picture of the project's
potential benefits, challenges, and risks, it helps stakeholders make
informed decisions about whether to proceed with the project and
how to best develop it.

Q28 Explain the significance of a well-defined project scope during project CO2
identification.

A well-defined project scope establishes the boundaries of a project

during project identification. It outlines the project's:

 Objectives: What the project aims to achieve.

 Deliverables: The tangible outputs of the project.
 Activities: The necessary tasks to complete the project.
 Exclusions: What is not included in the project's scope.

Significance:

 Clarity and focus: A defined scope provides clarity and focus

during project identification, ensuring everyone involved has a
clear understanding of the project's purpose and limitations.
 Feasibility assessment: Defining the scope helps assess the
project's feasibility in terms of resources, time, and budget.
 Prioritization and selection: Well-defined scope facilitates
comparison and prioritization of project ideas during the
selection process.
 Foundation for planning: A clear scope serves as the
foundation for detailed planning in subsequent stages, guiding
resource allocation, scheduling, and risk management.
Q29 Explain the relationship between project identification and goal setting. CO2

roject identification and goal setting are intricately linked:

1. Project Identification Informs Goal Setting:

 By identifying problems, opportunities, and needs, project

identification provides the foundation for setting SMART
goals:
o Specific: Clearly define the desired outcome of the
project.
o Measurable: Establish metrics to track progress and
assess success.
o Achievable: Set realistic goals considering available
resources and constraints.
o Relevant: Ensure the project directly addresses the
identified problem or opportunity and aligns with
organizational objectives.
o Time-bound: Define a timeframe for achieving the
project goals.

2. Goal Setting Guides Project Identification:

 Organizational goals and objectives serve as guiding

principles for identifying projects that directly contribute to
achieving those goals.
 This ensures resources and efforts are focused on strategic
priorities rather than pursuing random endeavors.

3. Alignment with Strategic Goals:

 Both project identification and goal setting play crucial roles in

ensuring:
o Alignment of projects with the organization's
mission and vision.
o Efficient resource allocation by focusing on projects
with the highest potential for achieving strategic
objectives.
o Increased success rates by directing efforts towards
clear and measurable goals derived from identified
needs and opportunities.
 In essence, project identification provides the raw materials
(problems, opportunities, needs) from which SMART goals are
formed. These goals, in turn, serve as guiding lights for selecting
and developing projects that contribute effectively to the
organization's strategic objectives.

Q30 What do you understand by market surveys? How it is important for the CO2
demand forecasting and market planning?

Market surveys are systematic data collection and analysis

processes used to gather information about target markets,
customers, and competitors. This information can be collected
through various methods like questionnaires, interviews, focus
groups, and online surveys.

Importance for Demand Forecasting and Market Planning:

 Understanding customer needs and preferences: Market

surveys help identify customer needs, preferences, and
buying behavior, allowing for more accurate demand
forecasting.
 Assessing market potential: Surveys help assess the overall
market size and potential for a product or service, informing
market planning and resource allocation.
 Identifying competition: Surveys can reveal information
about existing competitors, their offerings, and market share,
enabling you to develop competitive strategies.
 Evaluating product or service concepts: Testing different
concepts

Level C. Difficult Questions (10 marks each)

Q31 Discuss how project appraisal fits into the overall project lifecycle. CO2
Examine the relationship between project appraisal and project initiation,
planning, and execution.
 Project appraisal acts as a critical bridge between the planning
and execution stages within the project lifecycle:

Relationship with Project Initiation:

 Precedes initiation: Project appraisal is

conducted before formally initiating the project.
 Informs decision-making: It provides valuable information
for making informed decisions about project selection,
prioritization, and resource allocation.
 Identifies potential risks and challenges, allowing
for mitigation strategies to be developed during project
initiation.

Relationship with Project Planning:

 Provides foundation for planning: The insights gained from

project appraisal form the foundation for detailed
planning in subsequent stages.
 Informs project scope, schedule, and budget: It helps
refine project scope, schedule, and budget by identifying
potential constraints and resource needs.
 Guides risk management: The identified risks from appraisal
inform the development of a risk management plan during
project planning.

Relationship with Project Execution:

 Provides a baseline for monitoring: Project appraisal

establishes a baseline against which project
performance can be monitored and evaluated during
execution.
 Identifies potential deviations: By comparing actual
progress with the appraisal findings, deviations and
challenges can be identified and addressed proactively.
 Informs adjustments: If necessary, the appraisal findings
can inform adjustments to the project scope, schedule, or
budget during execution to maintain project success.

Q32 Discuss the importance of marketing appraisal in project appraisal. Explore CO2
different types of marketing issues that can impact project viability and
success.
 Marketing appraisal is vital in project appraisal as it assesses the
market-related aspects of a project, impacting its viability and
success:

Importance:

 Market demand: It assesses the demand for the project's

outputs in the target market. Is there a need for the product or
service the project aims to deliver?
 Competition: It analyzes the competitive landscape,
identifying existing competitors, their offerings, and market
share. How will the project differentiate itself?
 Marketing strategy: It evaluates the feasibility of the
proposed marketing strategy, considering factors like pricing,
promotion, and distribution channels.

Marketing Issues Impacting Project Viability:

 Low market demand: If there is insufficient demand for the

project's outputs, the project might not be financially viable.
 Strong competition: If the project faces intense competition
from established players, it might struggle to gain market
share.
 Ineffective marketing strategies: A poorly planned
marketing strategy can lead to low awareness, weak brand
image, and ultimately, project failure.
 Unrealistic pricing: Pricing that is significantly higher or lower
than competitors and customer expectations can hinder
project success.
 Inability to reach target audience: Difficulty reaching the
intended audience through appropriate channels can limit
project impact.

By thoroughly appraising marketing aspects, project stakeholders

can make informed decisions about project feasibility and develop
effective marketing strategies to ensure success.

Q33 Discuss the concept of environmental scanning in the context of project CO2
formulation. Explain how environmental factors influence the identification
 and formulation of projects.

Environmental scanning is a systematic process of gathering and

analyzing information about the external environment surrounding a
project. This information includes:

 Economic factors: Economic trends, growth rates, and

potential risks
 Political factors: Government policies, regulations, and
political stability
 Social factors: Demographic changes, cultural trends, and
social values
 Technological factors: Emerging technologies, technological
advancements, and their potential impact

Influence on Project Formulation:

 Identifying opportunities and threats: Environmental

scanning helps identify opportunities arising from external
factors and threats that could hinder the project.
 Informing project selection: By understanding the external
environment, project managers can select projects that
are well-aligned with emerging trends and mitigate
potential risks.
 Shaping project scope: The findings from environmental
scanning can influence the scope of the project by ensuring
it addresses relevant needs and challenges present in the
external environment.
 Formulating strategies: Understanding the external
environment helps in developing strategies to capitalize on
opportunities and mitigate potential threats during project
formulation.

By conducting thorough environmental scanning, project

managers can formulate projects that are more adaptable,
sustainable, and successful in the face of ever-changing
external conditions.

Q34 What is project appraisal? Explain the different types and limitations of CO2
project appraisal.

Project appraisal is a systematic and critical evaluation of a

proposed project before committing resources to its execution. It
aims to assess the project's viability, feasibility, and potential
impact across various dimensions.

Types of Project Appraisal:

 Technical appraisal: Evaluates the technical feasibility of the

project, considering available technologies, expertise, and
potential technical challenges.
 Financial appraisal: Assesses the project's financial
viability, including projected costs, revenues, profitability, and
potential financial risks.
 Economic appraisal: Analyzes the broader economic impact
of the project, considering its impact on
employment, economic growth, and resource allocation.
 Social appraisal: Evaluates the project's impact on
society, including potential effects on
communities, culture, and social well-being.
 Environmental appraisal: Assesses the potential
environmental consequences of the project and proposes
mitigation strategies to minimize negative impacts.

Limitations of Project Appraisal:

 Future uncertainty: Project appraisal relies on estimates and

predictions, and the future is inherently uncertain. Unexpected
events or changes in the environment can impact the project's
success.
 Data limitations: The accuracy of project appraisal is
dependent on the quality and availability of data. Incomplete
or inaccurate data can lead to flawed conclusions.
 Subjectivity: Project appraisal involves subjective judgments
and interpretations. Different stakeholders may have different
perspectives and priorities, leading to potential biases.
 Cost and time: Conducting a comprehensive project
appraisal can be time-consuming and resource-
intensive, especially for complex projects.

Despite these limitations, project appraisal remains a valuable

 tool for making informed decisions about project selection, resource
allocation, and risk management. By acknowledging these
limitations, project managers can strive to mitigate them and utilize
the insights from appraisal effectively.

Q35 Examine the key steps involved in the project formulation process. Discuss CO2
how each step contributes to the overall success of a project.

Project formulation is a crucial stage that lays the foundation for

successful project execution. Key steps involved in this process
include:

1. Identifying the problem or opportunity:

 Contribution to success: This step clarifies the reason for

the project, ensuring it addresses a genuine need or
capitalizes on a valuable opportunity.

2. Defining project objectives and scope:

 Contribution to success: Setting clear objectives and

scope provides a roadmap for the project, guiding resource
allocation, decision-making, and ensuring stakeholder
alignment.

3. Conducting feasibility studies:

 Contribution to success: Feasibility studies assess the

project's viability from various perspectives (technical,
financial, economic, etc.), allowing for identification and
mitigation of potential risks and increasing the chances of
project success.

4. Developing a project plan:

 Contribution to success: A well-defined project plan outlines

the project's activities, schedule, budget, and resource
requirements, facilitating efficient implementation and
monitoring of progress.
 5. Identifying stakeholders and securing their buy-in:

 Contribution to success: Engaging relevant stakeholders

throughout the formulation process ensures transparency,
fosters collaboration, and increases the likelihood of
project success.

6. Obtaining project approval:

 Contribution to success: Securing approval from decision-

makers unlocks resources and provides the formal green
light to proceed with project execution.

Each step in the formulation process directly contributes to the

project's success by ensuring clarity, planning, risk awareness,
and stakeholder alignment, laying the groundwork for efficient
execution and ultimately, achieving desired project outcomes.

Q36 What is market and cost estimation? Explain the process of market and cost CO2
estimation?

Market and Cost Estimation: Powering

Project Decisions
Market and cost estimation are two crucial and interconnected
processes that play a vital role in project appraisal and planning.
They provide critical insights for informed decision-making about
project viability and resource allocation.

Market Estimation:

 Definition: Estimating the demand and potential

revenue for the project's outputs (products or services) in the
target market.

Process of Market Estimation:

1. Market Research:
 o Conduct thorough market research to understand:
 Customer needs and preferences: What
problems are your target customers facing?
What solutions are they seeking?
 Market size and potential: How large is the
target market? Is it growing or shrinking?
 Competitor analysis: Who are your
competitors? What products or services do they
offer? What are their strengths and
weaknesses?
2. Demand Forecasting:
o Utilize various techniques to estimate the
potential sales volume of the project's outputs:
 Historical sales data: If applicable, analyze
past sales data of similar products or services to
identify trends and project future demand.
 Market research surveys: Conduct surveys to
gauge customer interest in the proposed product
or service.
 Market analogy: Analyze sales data for similar
products or services in analogous markets.
 Expert opinion: Consult with industry experts
for their insights on market potential.
3. Pricing Strategy:
o Determine the most appropriate pricing strategy for
the project's outputs, considering:
 Production costs: Ensure the price covers all
costs associated with developing, producing,
and delivering the product or service.
 Customer willingness to pay: Research what
customers are willing to pay for similar products
or services.
 Competitive landscape: Analyze competitor
pricing strategies.
 Profit margin: Maintain a healthy profit margin
to ensure the project's financial viability.

Cost Estimation:

 Definition: Estimating the total cost of the project, including

all resources required for its execution.

Process of Cost Estimation:

 1. Activity Breakdown Structure (ABS):
o Break down the project into smaller, more
manageable activities. This could involve breaking
down the project into phases, deliverables, or work
packages.
o Having a detailed ABS helps ensure all necessary
tasks and resource requirements are considered during
the estimation process.
2. Costing Each Activity:
o Estimate the cost of each activity within the ABS. This
might involve:
 Direct costs: Costs directly associated with the
activity, such as labor costs (salaries, wages,
benefits), material costs, equipment rental costs,
and software licenses.
 Indirect costs: Costs that are not directly
attributable to a single activity but are necessary
for the overall project, such as overhead costs
(utilities, rent) and administrative costs.
3. Summing Up Individual Costs:
o Once the cost of each activity is estimated, sum all the
individual activity costs to arrive at the total project
cost.
o It's important to include a buffer in the total cost
estimate to account for potential unforeseen expenses.

By effectively conducting market and cost estimation, project

managers gain valuable insights that contribute to:

 Project selection: Making informed decisions about which

projects to pursue based on their potential market demand
and financial viability.
 Resource allocation: Efficiently allocating resources
(personnel, budget, equipment) based on project
requirements.
 Risk management: Identifying potential cost overruns and
market risks early on, allowing for proactive mitigation
strategies.
 Project budgeting: Setting realistic and achievable project
budgets based on estimated costs and revenue potential.

Market and cost estimation are essential tools for project

success, providing a clear picture of the project's financial
 feasibility and market potential.

** Note: Students to be instructed to draw well labeled diagrams wherever necessary,

to support their answers (especially in level B and C questions)