Any project aimed at delivering a product or a service has to go through phases in a planned manner in order to meet the requirements. It is very important to measure the performance of the current status of the project at anytime against its planned version. This helps to tackle any unexpected deviation in time, efforts and cost. It is possible to work according to the project plan only by careful and close monitoring of the project progress. It requires establishing control factors to keep the project on the track of progress. The results of any stage in a project, depends on the inputs to that stage. It is therefore necessary to control all the inputs and the corresponding outputs from a stage. This is achieved through devising proper controls for every stage. A project manager may use certain standard tools to keep the project on track. The project manager Continue reading
Project Management
Steps in Project Risk Management Process
Project risk management as simple as it may seem and less regarded by many is a key component for a better project plan, time management, cost estimation and project scheduling. Project risk management is a term that encompasses and involves all processes concerned with identification, analyzing and response to project risk. It also consists of maximizing the results of likely positive events and minimization of the impacts of negative events. An effective project execution is also achieved through inclusion of risk management at all stages of the project starting from the planning, to implementation and finally execution. Experts have stated that a proper and strong project risk management process can reduce project problems by as much as 75 – 90%, combining it with concrete project management plans, defining a proper scope, managing change and communication, a good project risk management helps in reducing and eliminating surprises and unexpected project risks. Continue reading
Basic Principles for Measuring Project Cash Flows
Estimating cash flows — the investment outlays and the cash inflows after the project is commissioned — is the most important, but also the most difficult step in capital budgeting. Estimating cash flows process involves many people and numerous variables. A project which involves cash outflows followed by cash inflows comprises of three basic components. They are, Initial investment: Initial investment is the after-tax cash outlay on capital expenditure and net working capital when the project is set up. Operating cash inflows: The operating cash inflows are the after-tax cash inflows resulting from the operations of the project during its economic life. Terminal cash inflow: The terminal cash inflow is the after-tax cash flow resulting from the liquidation of the project at the end of its economic life. For developing the stream of financial costs and benefits, the following principles must be kept in mind: 1. Principle of Incremental Cash Continue reading
Concept of Feasibility Study in Project Management
A feasibility study is an important tool for decision-making in project management. Accurate and adequate information about the project like technology, location, production capacity, demand, and impact on existing operations, cost and benefits to the company, time span for execution, resources needed should be included in the report. Alternatives if any should also be suggested. Feasibility Study in Project Management can be defined as: “A tool for transforming the initial project- A tool for transforming the initial project-idea into a idea into a specific hypothesis of intervention, through the identification, the specification and the comparison of two or more alternatives directed to achieve the defined objectives, by producing a set of information helping the Project manager to take the final decision” Market research or demand analysis, technical viability studies, financial or commercial feasibility studies are other wise known as functional or support studies to aid the decision-making. A preliminary feasibility Continue reading
Organizational Project Management Maturity Model (OPM3)
The Project Management Institute (PMI) published a standard called Organizational Project Management Maturity Model (OPM3) under the stewardship. For Organizations, the main purpose of the OPM3 standard is to presents an approach to explain an organizational project management and to assess the maturity of the project against a broad-based set of Organizational project management best practices. Organizational Project Management (OPM) is used to achieve or complete the goals of the Organization by means of projects. Organizational project management is the utilization of skills, techniques, knowledge, and tools to project and organizational activities. In Organizational Project Management Maturity Model (OPM3), the term “Organization” is not limited to an agency, company or society but it applies to a group which is aiming to use their material in the OPM3 standard. It illustrates business strategies and gives regulations and high-level perspective of resources which straightly influence financial consequences of organizations if it is Continue reading
Typical Project Financing Models
Besides Build Operate Transfer (BOT) and Build Own Operate Transfer (BOOT) models, some typical project financing models are there. They are: Build Own Operate (BOO) Model: In BOO, the concessionaire constructs the facility and then operates it on behalf of the public agency. The initial operating period {over which the capital cost will be recovered} is defined. Legal title to the facility remains in the private sector, and there is no obligation for the public sector to purchase the facility or take title. The private sector partner owns the project outright and retains the operating revenue risk and all of the surplus operating revenue in perpetuity. As an alternative to transfer, a further operating contract {at a lower cost} may be negotiated. Design Build Finance Operate (DBFO) Model: Under this approach, the responsibilities fro designing, building, financing and operating are bundled together and transferred to private sector partners. They are Continue reading