Solution Set

Solution Set
ME2343_0_22-23
V Sem ME Open Elective II: PEM
Que. Solution Marks
No.
Que. Objectives of Project Identification 05
1.A) • identify project ideas that are consistent with partner and EC development
priorities;
• assess the relevance and likely feasibility of these project ideas;
• under the ‘Programme approach’, prepare a Financing Proposal, or an
Identification Fiche for individual projects; and
• • prepare a financing decision for a Programme of projects, or determine the scope of

further work required during the formulation stage for individual projects
Que. Illustrate sources for generation of project ideas. 04
1.B) The project ideas can be generated from various internal and external sources.
These are :-
• Knowledge of market, products, and services.
• Knowledge of potential customer choice.
• Emerging trends in demand for particular product.
• Scope for producing substitute product.
• Market survey & research.
• Going through Professional magazines.
• Making visits to trade and exhibitions.
• Government guidelines & policy.
• Ideas given by the experienced person.
• Ideas by own experience.
• SWOT analysis.
Que. 05
The choice of location and site follows an assessment of demand, size,
2.A)
and input requirement. Though often used synonymously, the terms
'location' and 'site' should be distinguished. Location refers to a fairly
broad area like a city, an industrial zone, or a coastal area; site refers to
a specific piece of land where the project would be set up. The choice
of location is influenced by a variety of considerations: proximity to raw
materials and markets, availability of infrastructure, governmental
policies, and other factors.
(i) Proximity to raw materials and markets— An important

consideration for location is the proximity to sources of raw materials
and nearness to the market for final products. In terms of a basic
locational model, the optimal location is one where the total cost (raw
material transportation cost plus production cost plus distribution cost
for final product) is minimized. This generally implies that: (i) a
resource-based project like a cement plant or a steel mill should be
located close the source of basic material (for example, limestone in
the case of a cement plant and iron-ore in the case of a steel plant);
(ii) a project based on imported material may be located near a port;
and (iii) a project manufacturing a perishable product should be close
to the center of consumption.
(ii) Availability of infrastructure— Availability of power,

transportation, water, and communications should be carefully
assessed before a location decision is made.
Adequate supply of power is a very important condition for

location— insufficient power can be a major constraint, particularly
in the case of an electricity-intensive project like an aluminium plant.
In evaluating power supply the following should be looked into: the
quantum of power available, the stability of power supply, the
structure of power tariff, and the investment required by the project
for a tie-up in the network of the power supplying agency.
For transporting the inputs of the project and distributing the outputs
of the project, adequate transport connections whether by rail, road,
sea, inland water, or air are required. The availability, reliability and
cost of transportation for various alternative locations should be
assessed.
Given the plant capacity and the type of technology, the water
requirement for the project can be assessed. Once the required
quantity is estimated, the amount to be drawn from the public utility
system and the amount to be provided by the project from surface or
sub-surface sources may be determined. For doing this the following
factors may be examined: relative costs, relative dependabilities, and
relative qualities.
Governmental policies— Governmental policies have a bearing on

location. In the case of public sector projects, location is directly
decided by the government. It may be based on a wider policy for
regional dispersion of industries.
Other factors— Several other factors have to be assessed before reaching

a location decision: ease in coping with environmental pollution, labor
situation, climatic conditions, and general living conditions
Que. Appraise the reasons for poor value. 04

2.B)
The various reasons for poor value are-
(iii) Lack of information.

(iv) Decisions based on wrong beliefs.
(v) Habitual thinking.
(vi) Negative attitudes.
(vii) Reluctance to seek advice.
(viii) Shortage of time.
(ix) Changing technology.
(x) Lack of a yardstick for measuring value
(xi) Old specifications
(xii) Poor human relations.
Que. In estimating the working capital requirement and planning for its financing, 04
3.A) thefollowing points represents working capital requirement: The working capital
requirement consists of the following:
(i) raw materials and components (indigenous as well as imported),
(ii) stocks of goods-in-process (alsoreferred to as work-in-process),
(iii) stocks of finished goods, (iv) debtors,
(v) operating expenses and (vi) consumable stores.
Que. 04
3.B)
Que. 08
4.
Que. A Project Report is a document which provides details on the overall picture of the 04
5.A) proposed business. The project report gives an account of the project proposal to
ascertain the prospects of the proposed plan/activity.
The project report contains detailed information about Land and buildings required,
Manufacturing Capacity per annum, Manufacturing Process, Machinery & equipment
along with their prices and specifications, Requirements of raw materials,
Requirements of Power .
Que. Corporations often need to raise external funding or capital in order to expand 04
5.B) their businesses into new markets or locations. It also allows them to invest
in research & development (R&D) or to fend off the competition. And, while
companies do aim to use the profits from ongoing business operations to fund
such projects, it is often more favorable to seek external lenders or investors to do
so.
• Companies need to raise capital in order to invest in new projects and

grow.
• Retained earnings, debt capital, and equity capital are three ways
companies can raise capital.
• Using retained earnings means companies don't owe anything but
shareholders may expect an increase in profits.
• Companies raise debt capital by borrowing from lenders and by issuing
corporate debt in the form of bonds.
• Equity capital, which comes from external investors, costs nothing but has
no tax benefits.
Que. Program Evaluation and Review Technique (PERT) is a method used to examine the 04
6.A) tasks in a schedule and determine a Critical Path Method variation (CPM). It analyzes
the time required to complete each task and its associated dependencies to
determine the minimum time to complete a project.
PERT describes basic network technique which includes planning, monitoring and
control of projects. PERT finds applications in planning and control of complex set of
tasks, functions and relationships. It is a very important technique in the field of
project Management.
PERT method implementation steps-
• List the activities and milestones. The first step is to determine the tasks
required to complete the project.
• Determine the sequence of activities.
• Build a network diagram.
• Estimate the activity durations.
Determine the critical path.
Que. Project revival is saving a project from loss and restoring it to usefulness. Project 04
6.B) failure can happen to anybody—and to any project. A Standish CHAOS Chronicles
report states that only 52% of completed projects meet their proposed functionality.
The same study, based on more than 13,000 projects, reports that successful projects
made up ―just over a third or 34 % of all projects.—meaning, the other two-thirds are
failing. Another report on 9,236 information technology (IT) projects showed
that project success rates have settled at a startling 28 %.
The Concept of “Rapid” Assessment and Recovery
Establish initial project team contact.
Is realistic and can be executed to achieve the charter's objectives
Will allow for an assessment in as short a time as possible
Will ensure that accurate findings are produced
Will minimize project team distraction
Project Monitoring Process
• Initiation: In this phase, the outline of the project and the steps and process
it may involve is made.
• Planning: In this phase, the scope and details of the process that must be
performed in the execution are made.
• Executing: It involves completing all the activities defined in the planning
part.
• Closing: This phase includes the completion of the project plan and
informing the stakeholders
• Control and Monitoring: This phase involves ensuring that the project is
on the right track and that all the tasks are completed in the defined
manner.

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• • prepare a financing decision for a Programme of projects, or determine the scope of

(i) Proximity to raw materials and markets— An important

(ii) Availability of infrastructure— Availability of power,

Adequate supply of power is a very important condition for

Governmental policies— Governmental policies have a bearing on

Other factors— Several other factors have to be assessed before reaching

Que. Appraise the reasons for poor value. 04

(iii) Lack of information.

• Companies need to raise capital in order to invest in new projects and

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