5 Project Closure

11/10/19
Project Closure & Post

Project Evaluation
Basics of Project Management
When does a Project end?
A project ends when its objectives are met, objectives are not met,
client cancels or the need of the project does not exist.
Raghavender Srirampur - Made Easy Education Pvt Ltd. 2
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Project Close – Data flow Diagram

Project
Management
Plan
Final Product/
Result or Service
SCOPE Project Closure Customer
Organizational
Process Assets. Organizational Process
(OPA) Updates
Confirm Work Is Done As Per The Requirements
Complete Procurement Closure
Gain Formal Acceptance

Project Closure
(8 Steps)
Complete Final Performance Reporting
Index And Archive Records
Update Lessons Learned
Handoff Completed Product
Release Resources
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Post Project Evaluation

• Also known as the Post Audit or Post Completion Audit.
• Is carried out to asses the Actual Project Cost and the Actual
Completion Time of the project.
• It also makes an assessment of the Actual Cost Benefit Factors and

the extent to which the project objectives were met.
Post Project Evaluation - Objectives

• Creating a suitable framework that will help in estimating the the
correct project cost and time for future projects.
• Establishing a correct Time-Cost relationship.
• Creating appropriate standards of work.
• Identifying potential problem areas, so that they can be avoided in

the future..
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Post Audit - Phases

• Carried out in two phases:
1. Immediately after after project completion, whose objectives are:
a) Studying the difference between actual project cost/time and estimated project
cost/time.
b) Identifying areas which have contributed to variances in project cost/time.
c) Identifying reasons behind these variances and classifying them as avoidable and
unavoidable.
d) Analyzing steps that could have been taken to avoid the avoidable variances.
e) In-depth analysis of the factors that caused unavoidable variances and examining
the possibility of removing them in the future.
Post Audit - Phases

2. After a lapse of 2 to 3 years whose objectives would be:
1. For studying whether product goals and objectives are achieved.
2. For knowing whether the project produces products of acceptable quality.
3. For knowing whether the estimated output is achieved.
4. To know whether the product is accepted by the market.
5. To know whether the supply is commensurate with the estimated demand.
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Post Audit - Types

• Technical Evaluation: Evaluation of quality and quantity of production,
operational costs, consumption of utilities like power, water, evaluation of the
quality of the output etc. A comparison is done between what is presented in
the DPR/Feasibility report and the actual figures.
• Financial Evaluation: Is done to verify whether the actual project costs,
operating costs, cashflows are as per the estimates and projections made.
• Economic Evaluation: Assessing whether the project delivered the projected
social and economic benefits to the society that were detailed in SCBA of the
feasibility report.
Project Tenders &Contracts
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Tenders
• Tender is an offer in writing by the tenderer to execute some specified work
or to supply some specified good at certain rates within a fixed time under
the conditions specified in the agreement.
• The various aspects of the tendering process are:

Issue of Comparative Selection of
Opening of Letter of Signing of
NIT/RFP Tender Statement the lowest
Tenders Intent the contract
Document Preparation Bidder
Refund of
the EMD of
Unsuccessful
Bidders
• Tender Documents: Usually consist of general instructions, details of works and complete set of
drawings associated with it, specifications of machinery, draft contract agreement, details of the
arbitration authority, time schedule etc.
• Earnest Money Deposit: It is an amount to be deposited by all the tenderers along with their
tender form, the EMD remitted by all the unsuccessful tenderers is returned. The EMD of the
successful tenderer is retained as a measure of caution. The EMD is generally 1% to 3% of the
tender value.
• Security Deposit: Is the amount to be deposited by the successful tenderer after the contract is
finalized. It is usually 15% of the total value of contract.
• Successful Tenderer: Is group or an organization who has quoted the lowest in all the tenders
received and also satisfies the financial and technical criteria. The past performance of the
tenderer is also considered.
• Letter of Intent (LOI): Is a letter to the successful tenderer intimating about their offer being
accepted.
• Deed of Contract: It is a legal contract between the organization and the successful tenderer. It
also contains clauses on liquidation damages and penalty on performance of the guaranteed
parameters in the contract.
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A Contract and its Characteristics

• The Indian contract Act, 1872 defines a contract as, “an agreement
enforceable by law”.
• A contract is basically an agreement but not all agreements are
contracts, only those agreements that are enforceable by law are
contracts.
• For an agreement to be enforceable by law it must possess the
following characteristics:
• There must be a valid offer and an acceptance of that offer. (A Tender notice
is an offer and the submitted tender documents are an acceptance to that
offer.
A Contract and its Characteristics

• There must be an intention to create a legal relationship on the part of the
parties to the contract.
• The terms of the contract must be certain and leave no room for ambiguity.
• The terms of contract must be practical and achievable.
• A contract must fulfill all legal formalities, its object must be lawful and must
not have been declared void by an law in force in the country.
• The consent of both the parties must be free and genuine.
• Both parties to the contract must be competent.
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Types of Contract
• Turnkey Contracts:
• In a turnkey contract the entire responsibility of the project execution is entrusted to
the contractor. The owner comes into picture only when the project is completed.
• These are generally high technology contracts, where the know-how is not available
with the promoter.
• Non-Turnkey Contracts:
• These type of contracts are preferred small sized projects where the know-how for
the project is available with the promoter and he also has a competent team for
project execution.
• In this type of contracts, the entire project is divided into suitable packages, the
packages that need to be given to contractors are identified.
• The responsibility of over all supervision and performance lies with the promoter.
Non Turnkey Contracts

• The various types of Non Turnkey contracts are:
• Piece Work Contract: In this method, the contractor agrees to execute a specific work
for a specified rate without reference to the magnitude of of work or time taken for
the completion.
• Lumpsum Contracts: Used for all the major Non Turnkey contracts. The contractor
agrees to execute the work within a stipulated time, in accordance with the drawings,
design and detailed specifications provided by the promoter for an agreed sum. Upon
completion of the work, payment is made to the contractor on the strength of the
work completion certificate issued by the engineer in charge.
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Non Turnkey Contracts

• Cost + Percentage Contracts: Under this method of the contract, instead of a
lumpsum, the project promoter pays the contractor a certain percentage
above the total cost of the project that includes the costs of materials and
human resources.
• Labor Contract: In this system, the promoter arranges for all the supply of
material while the contractor arranges the human resource.

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11/10/19

Project Closure & Post

When does a Project end?

Raghavender Srirampur - Made Easy Education Pvt Ltd. 2

Project Close – Data flow Diagram

Confirm Work Is Done As Per The Requirements

Complete Procurement Closure

Gain Formal Acceptance

Complete Final Performance Reporting

Index And Archive Records

Update Lessons Learned

Handoff Completed Product

Post Project Evaluation

• It also makes an assessment of the Actual Cost Benefit Factors and

Post Project Evaluation - Objectives

• Establishing a correct Time-Cost relationship.

• Creating appropriate standards of work.

• Identifying potential problem areas, so that they can be avoided in

Post Audit - Phases

Post Audit - Phases

Post Audit - Types

Project Tenders &Contracts

• The various aspects of the tendering process are:

A Contract and its Characteristics

A Contract and its Characteristics

Non Turnkey Contracts

Non Turnkey Contracts

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