Page 115 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Fundamentals of Project Management

Notes not considered and merits. Then finally the economic rate of return is calculated by the same
method as IRR is calculated.

Self Assessment

State whether the following statements are True or False:
6. Calculation of financial loss measured at market prices.

7. Obtaining the net benefit of the project measured in terms of economic (efficiency) prices.
8. Market prices represent shadow prices only under conditions of perfect markets.
9. UNIDO approach is one of the methods of calculating Social cost benefit analysis.

6.3 Methods followed by Financial Institutions

In the retail-banking sector, there is a constant threat from new financial institutions entering
into the local market. The financial institutions already represented in India also constantly
strive to attain competitive advantage over one another. As a result, financial institutions need
to be able to implement innovative solutions with the minimum of delay to counteract these
pressures. In consultation with the Project Managers at South Africa’s leading financial
institutions, these being ABSA Bank, First National Bank Metropolitan Delivery, Standard Bank
and First National Bank Rural. It was found that the investment monetarily, was substantial, the
total expenditure of these financial institutions being in excess of ` 500 million annually. It is
therefore important that an effective strategy as regards building project management is in
place. The strategy employed must be effective in terms of functionality and cost. This research
will study how the financial institutions are conducting their building project management
function, it will evaluate the relative effectiveness of that strategy. Through studying how the
different financial institutions are undertaking their building project management function,
this study will try to make meaningful recommendations to assist the financial institutions in
the implementation of their building project management function.

Financial institutions face challenges relative to preserving the safety and soundness of the
institution and its ability to manage earnings and capital. New technologies require increased
diligence by financial intuitions. The FBI, in its 2001 report “Financial Institution Fraud and
Failure Report,” says Financial Institution Fraud (FIF) is a Tier 1 priority in its strategic plan and
identifies bank failures, identify theft, check fraud, counterfeit negotiable instruments, check
kiting, mortgage and loan fraud as its major areas of investigation and an increasing importance
in its investigations related to emerging technologies and computer related banking. The FBI
reports that throughout the 1980’s and early 1990’s most of the fraud was a result of abuse by
insiders. Today, the dominant schemes result from outsiders. “The pervasiveness of check
fraud and counterfeit negotiable instrument schemes, technological advances, as well as the
availability of personal information through information networks, has fueled the growth in
external fraud.”

In addition to direct acts of fraud and abuse, financial institutions often become the instruments
of money launders and illegal charitable contributions to terrorist.
The International Monetary Fund estimates that money laundering could be anywhere from
2-5% of the world’s gross domestic product and has been called “the world’s second largest
underground economy.” Both US and international organizations have placed a burden on
financial institutions to detect and deter money laundering and the financing of terrorists. In the
U.S., this is accomplished by using software to implement requirements of Section 314 of the
Patriot Act and the Office of Foreign Assets Control (OFAC), Compliance Programs Division.

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