PROJECT MANAGEMENT

BBA 302
UNIT 2: TECHNICAL
ANALYSIS

Contents to be covered:
Factors in Technical Analysis
Factors affecting selection of location
Technology selection (Sources)
INTRODUCTION
 Critical study of the location of plant – situation, size,
plant capacity, availability of raw material and technical
skills, infrastructure transportation, power, fuel,
warehousing, water supply etc…
 2 main purpose of technical analysis:-
 To ensure technical feasibility of all inputs to set up the
project
 To facilitate most optimal formulation of the project
ISSUES RELATING TO TECHNICAL
ASPECTS OF PROJECT
 Manufacturing process/technology
 Technical arrangements

 Product mix

 Plant capacity

 Plant location and site

 Material inputs and utilities

 Machineries and equipments

 Structure and civil work

 Environmental aspects

 Project implementation schedule

1. MANUFACTURING PROCESS/TECHNOLOGY
 Set of options which transforms inputs into outputs
 Also involves flow of materials and information

 The choice of process/technology affects the plant

capacity, plant layout, equipments and design of work
system
 Example: mass production – assembly line

customized goods – labour intensive

 common basic process:
 Conversion: Crude oil to gas
 Fabrication: Steel sheet into car fender
 Assembly : engine cylinder, piston and rings may be
assembled to dorm an engine
CONT….
 The choice of technology selection is influenced by
variety of factors:-
 Plant capacity

 Raw material

 Investment outlay (effect of technology on investment

outlay-production cost)
 Product mix

 Successful use by other units

 Latest developments

 Easy adoption
 2. TECHNICAL ARRANGEMENTS
 Acquisition of appropriate technical knowhow needed for the proposed
manufacturing process
 Technical knowhow:-
 Price of technology (one time or periodic fee)
 Period of collaboration agreement
 Type of support to be provided by the collaborators (design the project,
selection and procurement of equipments, installation and creation of
plant, operation and maintenance, training of project personnel)
 Plant capacity, product quality and consumption of raw material
 Benefit of R&D work
 Sharing management control and level of equity participation
 Termination of agreement
 Assistance required for export
 Restriction (if any imposed by collaborators)
 Handling of the agreement (in case of change of ownership)
 3. PRODUCT MIX
 Set of all products and items
 For example: Godrej…Nirma Limited

 Dimension of product mix permit the company to

expand its business in 4 ways:-
 Add new product lines
 Lengthen each product line (total no. of items in the mix)
 More product variants
 Pursue more product line
 4. PLANT CAPACITY
 Volume of units that can be produced…rate of productive
capability of a plant (80%...90%)
 Plant capacity may be:-
 The feasible normal capacity: capacity attainable under
normal working condition
 The nominal maximum capacity: technical attainable and
often considered as installed capacity
 Capacity decision:-
 Technological requirement
 Input constraints
 Market condition
 Available resources
 Investment cost
 Government policy
 5. PLANT LOCATION AND SITE
 Strategic, long term and non repetitive in nature
 Location of plant affected by variety of factors:-

1. Supply of raw material

2. Nearness to market
3. Transport facility
4. Supply of labour
5. Power
6. Supply of capital
7. Facilities (ITC Chaupal)
8. Natural factors (water, climate etc..)
9. Political factors
10. Government subsidies and Facilities
11. Historical and Religious factors
12. Initial start and Goodwill
CONT….
 Site selection:-
 Power transmission line from main grid
 Railway siding from nearest rail road
 Feader road connecting with the main road
 Transport of water
 Disposal of waste
 6. MATERIAL INPUTS AND UTILITIES
 Material inputs and utilities may be analyzed:-
 Raw material
 Agricultural products
 Mineral products
 Livestock and forest product
 Marine products
 Manufactured industrial materials and components
 Properties of industrial processed material
 Total requirement
 Domestic and foreign source of supply
 Dependencies on supplier
 Past and future trend of prices
 Auxiliary materials (chemical, additives, consumables, paints, oil etc..)
 Utilities (power, fuel, steam, water etc..)
 Qty
 Sources of supply
 Availability
 Likely shortages
 7. MACHINERIES AND EQUIPMENTS
 Involves large amount of money and for a longer duration
 Types of equipments required:-
 Electrical equipments
 Instruments
 Mechanical equipments
 Process equipments
 Controlling equipments
 Internal transport equipments
 Others

 Purchasing of plant and machinery

 Constraints in selecting plant and machinery (import
policy, availability of power setup etc..)
 8. STRUCTURES AND CIVIL WORK
 Site preparation
 Leveling and grading of site
 Demolition and removal of existing structure
 Relocation of existing pipeline, cables etc…
 Arranging water
 Making communication arrangements (phone, internet)
 Making arrangements of waste
 Building and structures
 Factory building
 Ancillary building required (store, warehouse etc..)
 Administrative office
 Employee welfare building (restroom, canteen etc…)
 Employee residential quarters
 Civil works
 Supply and distribution of water, power, communication, gas etc…
 Treatment of wastage
 Transport and traffic signals
 Outdoor lighting
 Boundary walls, barriers, gates, doors, security posts etc…
 SOURCES OF TECHNOLOGY
 R&D Organizations
 Employees

 Technology Companies

 Technical Conference and Workshops

 Customers

 Competitors

 Outsourcing

 Technical consultants

 Technology Sector
UNIT 2: MARKET AND
DEMAND ANALYSIS

Contents to be covered:
Conduct of Market Survey
Characterization of Market
Market planning
 INTRODUCTION
 Know-what is customer’s need? How much is the
demand? to estimate the potential size of market for the
proposed product to capture market share
 Market and demand analysis influences long term
planning of facilities, capacity, location and layout
 Market survey can reveal demand and supply position…
price trends…identify the product/industry in demand
 Professional experts advise…before launching a product
is very important
 STEPS IN MARKET AND DEMAND
ANALYSIS
1. Situation analysis – identifying and evaluating uncontrollable
external influences : economic, social conditions, customers,
competitors. First step is market analysis-competitive analysis-
market measurement
2. Specification of objectives – in the form of questions…
relevant for forecasting the overall market and demand
 Who are the buyers?
 What is total demand of the product?
 What is the pattern of sales?
 What price will the customers be willing to pay from the improved
product?
 How can potential customers be convinced about superiority of the
product?
 What price and warranty will attract customers?
 What channel of distributions are suitable?
CONT….
3. Collection of Market Information – primary data collection
through observation or through direct communication with
respondents (personal interview)…secondary information can
be collected from various sources like:
 Publication of central, state and local government
 Publication of international bodies
 Books, Magazines and newspapers
 Reports and publication of various associations
 Reports prepared by research scholars. Economists
 Public records and statistics
CONT….
4. Conduct of Market Survey – refers to all methods of obtaining
information from respondents. Conducted in quantitative and
qualitative studies. Market surveys may be a census survey or sample
survey.
 In census survey, the entire population is covered and in sample
survey, a sample of population is contacted.
 Steps in sample survey:
 To define target population
 To select proper sampling scheme
 To select proper sample size
 To construct the questionnaire
 To recruit and train the investigators
 To obtain information
 To scrutinize the collected information
 To analyze the information
 Problems:- different languages, designing questionnaire, heterogeneity
of the population
CONT….
5. Characterization of the Market – market can be decided
on various basis:
 Total effective demand
 Demand in different segment of market (nature of product,
consumer groups, geographic location of consumers,
demographic characteristics, psychographic variables)
 Price (FOB, CIF, Avg wholesale price, Avg retail price)
 Sales promotion and Distribution Methods (advertisement,
discounts, gifts…)
 Consumers (demographic, sociological, attitudinal)
 Sources of supply and degree of competition (location of
suppliers, production capacity of suppliers, capacity utilization
level of suppliers, cost structure)
 Government policy (import and export trade control, export
incentives, import duties, sales tax, industrial licensing …)
 DEMAND FORECASTING
 Predicting the future demand of the products or services.
Why? Many reasons:
 Indecision making-capacity planning, capital budgeting
 To provide adequate staff for production and operation
 To develop admin plan and policies
 To minimize losses associated with uncontrollable events
 To offset the actions of competitors firms
METHODS OF DEMAND FORECASTING
 Qualitative methods
 Customer survey
 Executive opinion
 Sales force composite
 Delphi method
 Historical analogy

 Quantitative methods
 Time series analysis
 Trend projection method
 Exponential smoothing method

 Moving average method

 Causal analysis
 Chain ratio method
 Consumption level method

 End use method

 Leading indicator method

 UNIT 2: NETWORK
TECHNIQUES

Contents to be covered:
Network analysis
PERT
CPM
Probability of completing Project within given time
 MEANING
 Diagram-all the activities are shown sequentially from
beginning to the end
 Which activity must be performed first and which is later
and how much time will be taken by each of them –
known as Network Analysis
 Two procedures are widely used in this techniques:-
 PERT
 CPM
 PERT
PROJECT EVALUATION AND REVIEW TECHNIQUE

 First used in USA in 1958 (Polaris Missile Management

and Utilization) in Navy
 After identifying all the activities, they are put in a
logical order and each activity is indicated with an
‘arrow’ and the origin of the activity and last point is
addressed as ‘event’. After identifying activities,
estimated time is determined. Three types of estimates:
(i) Optimistic; (ii) Pessimistic; (iii) most possible
estimate
 On the basis of these estimates, the time taken in
completion of the project is known.
 In PERT, events are depicted by ‘circles’
 CPM
CRITICAL PATH METHOD
 Maximum consideration is given on critical path
 To identify the obstacles ….maximum time is taken I the
completion of project
 Critical activities – coming in its way