Page 83 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Fundamentals of Project Management

Notes But sophisticated executives know that behind these precise calculations are data which are not
that precise. At best, the rate-of-return information they are provided with is based on an
average of different opinions with varying reliability and different ranges of probability. When
the expected returns on two investments are close, executives are likely to be influenced by
intangibles—a precarious pursuit at best. Even when the figures for two investments are quite
far apart, and the choice seems clear, there lurk memories of the Edsel and other ill-fated
ventures.
Self Assessment

Fill in the blanks:
11. The ....................... of this approach is fairly simple. Firms that have risky and consequently
high cost debt will also have risky and consequently high cost equity.

12. At the outset we assumed, inter alia, that the adoption of new investment proposals will
not change either the risk complexion or the capital ....................... of the firm.
13. If interest rates in the ....................... rise, the cost of debt to firms increases and vice versa.

14. The ....................... risk premium reflects the perceived risk of equity stocks and investor
aversion to risk.
15. Often firms use book value weights in the existing capital structure to calculate the
....................... .
16. The cost of capital for a ....................... is calculated on the basis of the specific sources of
finance used for it.

Case Study Development of Aakash Tablet

rojects are different from processes in many ways. Projects are carried out in an
uncertain environment and project managers have to manage many external and
Pinternal factors that are ignored while managing a process.
Caselet 1 highlights the need to adopt a project management approach to cater to the
diverse needs of customers.
Caselet 2 focuses on the need to manage the interests of various stakeholders to implement
a project successfully. This case also introduces the readers to various project roles and the
reporting relationships that exist in a project organization.
Issues

1. The difference between a process and a project.
2. The need for management projects in a way that is different from managing processes.
3. The influence of a project’s stakeholders on the success of the project.
“The Aakash is a ray of hope that India can leverage technology to get more of its 220 million students
enough tools to escape poverty and poor teaching, but it’s also a challenge to the West.”
– Thomas L. Friedman, November 2011

Contd...

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