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Fundamentals of Project Management
Notes considering specific risks. Using the payout period as a cash budgeting tool aside, its only virtue
is simplicity, a dubious virtue at best.
Self Assessment
State whether the following statements are True or False:
6. The Project Management Institute (PMI) was founded in 1989.
7. Project Management Team must be physically competent.
8. Senior members of the project team must be politically sensitive.
9. The payback period for a project is the initial fixed investment in the project divided by
the estimated annual cash inflows from the project.
10. Payback type models ignore cash flows beyond the payback period.
11. The external rate of return model can result in multiple solutions.
1.8 Phases of Project Management
Dividing a project into phases makes it possible to lead it in the best possible direction. Through
this organisation into phases, the total work load of a project is divided into smaller Components,
thus making it easier to monitor. The following paragraphs describe a phasing model that has
been useful in practice. It includes six phases:
1. Initiation phase
2. Definition phase
3. Design phase
4. Development phase
5. Implementation phase
6. Follow-up phase
Figure 1.1: Project management in six phases, with the
central theme of each phase
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