Team Building in Projects

• Coming together is a
beginning,
• Keeping together is
progress,
• Working together is
SUCCESS“.
Henry Ford
Customer & Project Management

• Never tell a
Customer,
• “That’s not my job!”.
Sharing of Resources in Projects

"A candle loses

nothing by
Lighting another
candle“.
 Attitude and Success in Projects
• “Attitude, to me, is more important than facts.
It’s more important than past, than education,
than money, than circumstances, than failures,
than success, than what other people think or
say or do.
• It is more important than appearance,
giftedness, or skill. It will make or break
company or home.”

Charles Swindoll
Bad Attitude of Employee in
Project Management
• Don’t waste your time
trying to change
employees, Who have
bad attitudes.
 Circumstances & Projects
•“Peoples are always blaming
their circumstances for what they
are. I don’t believe in
circumstances. People who get
on in this world are people who
get up & look for circumstances
they want, & if they can’t find
them, make them”.
George Bernard Shaw
• Numeric Models for Evaluation of
Projects:
1. Payback Period
2. Return on investment
3. Net Present Value (NPV)
4. Internal Rate of Return (IRR)
5. Break Even Analysis
6. Benefit to Cost Ratio
Q-Sort Model
 Payback Period (PBP)

• “Number of Years Required for

Project” - Repay “Initial Fixed
Investment”.
Assumption:

a) CASH INFLOWS- Persist Long Enough to

payback.
b) Ignores any CASH INFLOW beyond PBP.

Less Risk for Firm

Faster Investment Recovered
Serves as inadequate Proxy for Risk
 Average Rate of Return
Mistaken Reciprocal of PBP

• Ratio of “Average Annual Profit” to “Initial/Age Investment”

in Projects.

BENEFITS:
• Simple.
• Neither consider “Time - Value of Money”.
• Unless Interest “Extremely Low”.
• “Rate of Inflation” is nil.
 Discounted Cash Flow
Also Present Value Method, determines NPV of
all Cash Flows by discounting them by required
Rate of Return (hurdle rate, cutoff rate, & similar
terms) as follows:
 Discounted Cash Flow
Where
Ft = Net Cash Flow in period t,
k = Required rate of return,
A0 = initial cash investment (because this is
outflow, it will be negative).
To include Impact of Inflation (or deflation),
where Pt is Predicted Rate of Inflation during
Period t, we have:
 Discounted Cash Flow
•Early Life of Project, Net CF Negative
•Major outflow being initial investment in Project, A0.
•If Project successful, CF will become Positive.
•Project is acceptable if sum of NPV of all Estimated
CF over life of Project is Positive.
•Using our $ 100,000 investment with net cash inflow of $
25,000 per year for period of eight years, required rate of
return of 15 percent, & inflation rate of 3 percent per year,
we have:

Because PV of inflows is greater than PV of outflow — that

is, NPV is positive — Project acceptable.
 Profitability Index
•Also called B/C Ratio.
•NPV of Future Expected CF/Initial Cash
Investment.
•If Ratio >1.0, Project may be Accepted and
vice versa.
 Internal Rate of Return
• IRR -“Discount Rate”- Equates PV of two
sets of flows.
 IRR
•If At is expected cash outflow in period t &
Rt is expected cash inflow for period t.
•IRR is value of k that satisfies following
equation (A0 will be positive in this
formulation of Problem):
A1 A2 An
A0 + + +...+
(1  k ) (1  K ) 2
(1  K ) n

R1 R2 Rn
= + +...+
(1  K ) (1  K ) 2
(1  K ) n
 Cost Break - Even Analysis
•Should not be confused with BC Analysis.

Example: Company makes product which sells for Rs. 15.

Variable cost per unit is Rs. 5, covers Labor & Material,
Leaving Rs. 10 per unit as contribution toward fixed costs.
Fixed Costs Total Rs. 75000 per annum, this covers all
overhead costs.
Required: BE Point: When Contribution = Fixed Costs.

BEP = Fixed Costs__ = Rs. 75000

Contribution/Unit Rs. 10

= 7500 units
Project Proposal
 Project Proposals

• “Set of Documents Submitted for Evaluation.

• Categories:
– Invited
– Un-invited
1. Invited:
– "Info for Bid"
– RFPs
 Un-Invited Proposals
• Supplier invited to submit proposal after
discussing project informally.
– Style of proposals
– Information to cover
 Business Plans
• Detailed document how your business
is set up:
– Business Structure.
– Products & Services.
– Market Research & Marketing Strategy.
– Budget & 5 years Financial Projections.
– Start ups & existing businesses requirements.
• Proposal Contain information:
– Enable audience To decide: Whether to Approve
Project or hire you to do work, or both.

• For Successful Proposals:

– Put yourself in Place of audience — Think
what sorts of information Personnel are
needed to feel confident about the project.
 Types of Proposals
• Internal Proposal (IP)
• External Proposal (EP)
• Writing the External Proposal:
– Myth: Proposal writing Limited to government
contractors.
 Issues During Preparing Proposals

1. Which Project to bid on?

2. Organization & Staffing - Proposal
Preparation Process?
3. Bid Prices?
4. Efforts on Proposal Preparation for Bids?
5. Bidding strategy? Is it ethical?
• Most contracts Awarded on Basis
of Proposal submitted in Response
to inquiry issued by owner.
– Commonly Engineering
– Procurement
– Construction
 Proposal of intensive Project
•Headed by Proposal Manager –
Proposal-Project Manager (PPM).
 Characteristics of Proposal Project

1. Hi priority, short-duration
efforts.
2. Completed to Schedule
Requirements .
 Characteristics of Proposal Project
3. Owner specify:
1. Format of Proposals.
2. Preference location.
3. You may suggest alternate cost-effecting project.
4. Specs Preferred payment /Alternates suggested.
5. Construction Labor Arrangement.
6. Presentation of Requested information.
 Characteristics of Proposal
6. Proposal writing is a project.
7. Required Team of Representatives.
8. Cost against Corporate Overhead.
9. Tightly Budgeted.
10. Closely Monitored by Senior
Management.
Preparation for Future Proposals