Four phases of project life cycle:

àIdentify a need

àDevelop a proposed solution

àPerform the project

àTerminate the project

2
  
is identification of a need , problem , or
opportunity and can result in the customer¶s requesting
proposals from individuals ,a project team, or
organizations to address the identified need or solve the
problem.

À The need and requirements are usually written up by

customer in a document called a Request for Proposal

À Through RFP, the customer ask individuals or contractors

to submit proposals on how they might solve the problem
,along with the associated cost and schedule.
3
The 

  
of the project life cycle is the development
of a proposed solution to the need or problem.

O This phase results in the submission of a proposal to the

customer by one or more individuals or
organizations(contractors) who would like to have the
customer pay them to implement the proposed solution.

O Contractor effort is dominant.

O Contractors interested in responding to the RFP may spend

several weeks developing approaches to solving the
problems, estimating the types and amounts of resources
that would be needed as well as the time it would take to
design and implement the proposed solution.

x
The    
of the project life cycle is the implementation
of the proposed solution.

O aegins after the customer decides which of the proposed

solutions will best fulfill the need and an agreement is
reached between the customer and the individual or
contractor who submitted the proposal.

O This phase refers to as the performing of the project

involves doing the detailed planning and implementing the
plan to accomplish the project objective.

¦
The   
is terminating the project.
O hen a project is completed certain close-out activities
need to be performed, such as confirming that all
deliverables have been provided to and accepted by the
customer.
O It evaluates the performance of the projects in order to
learn what could be improved if the similar project were to
be carried out in future.
O Include obtaining feedback from customer to determine
the level of the customer satisfaction.

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›
ST PS IN MAR› T AND

D MAND ANAL
SIS AND TH IR

INT R
R--R LATIONSHIPS.

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O Secondary information though useful, often does not
provide a comprehensive basis for market and
demand analysis.

O Market survey may be a census survey or a sample

survey .

 Census survey: ntire population is covered.

(population means totality of all units under
consideration in a specific order) .
D
O Census survey are employed principally for
intermediate goods and investment goods when such
goods are used by small number of firms.
O It is prohibitively costly and may also be infeasible.
O Due to above limitations of the census survey ,the
market survey in practice ,is typically a 


.
O In such a survey a sample of population is contacted
or observed and relevant information is gathered .
-




O Define the target population.
O Select the sampling scheme and sample size
O Develop the questionnaire
O Recruit and train the field investigators.
O Obtain information as per the questionnaire from the
sample of respondents
O Scrutinize the information gathered .
O Analyze and interpret the information

--
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O Heterogeneity of the country

O Multiplicity of language

O Design of questionnaire

-
Characterization of the market.
aased on the information gathered from secondary sources and
market survey, the market for the product/services may be
described in terms of:
 ffective demand in the past and present.
 areakdown of demand.
 Price
 Method of distribution and sales promotion
 Consumers
 Supply and competition
 Government policy
-3
Demand forecasting
An attempt made to estimate future demand .

Method of demand forecasting:

À   



· jury of executive method
· Delphi method
À 2


 


 


· Trend projection method
· xponential smoothing method
· Moving average method
À J 


· Chain ratio method
· Consumption level method
· nd use method
· Leading indicator method
· conometric method

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O  ualitative Methods
These methods rely essentially on the judgment of
experts to translate qualitative information into
quantitative estimates

Used to generate forecasts if historical data are not

available (e.g., introduction of new product)

The important qualitative methods are:

å üury of xecutive Method

å Delphi Method

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OF  CUTIV OPINION M THOD

Involves soliciting the opinions of a group of managers on expected

future sales and combining them into a sales estimate.

O Main advantages
xpeditious method for developing a demand forecast.

Permits a variety of factors like economic climate ,competitive

environment, consumer preferences, technological developments to
be included in the subjective estimates provided by the experts.

Has immense appeal to managers who tend to prefer their judgment

to mechanistic forecasting procedures.
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üUR
OF  CUTIV OPINION M THOD

O Main drawbacks
 aiases underlying subjective estimates cannot be unearth
easily.
 The reliability of this of technique is questionable.

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 D LPHI M THOD


 
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Intelligible to users.
Seems to be more accurate and less expensive
than the traditional face to face group meetings
O G 
Slow process
xperts are not accountable for their responses
Little evidence that reliable long-term forecasts
can be generated with Delphi or other methods
TIM S RI S PROü CTION M THODS

O These methods generate forecasts on the basis

of an analysis of the historical time series.
O The important time series projection methods
are:
Trend Projection Method
xponential Smoothing Method
Moving Average Method

-
O Trend Analysis ± Time Series Model

O It is used when the variable being studied exhibits a steady

trend over a period of time . Same rate of change is
assumed to hold good in future as well. Projections is then
made on this trend.

O Model can be used for short term and long term forecasting.

xample : Series
2002 2003 2004 2005 2006 2007 2008

48 55 64 78 92 108 125
Therefore, 48  FVIF (g%,6 years) = 125 or FVIF(g%,6
years) = 125/48 = 2.60;

17 % = 2.565, 18 % = 2.700

ay interpolating % o

17 % + 1 % x (2.6000 ± 2.565 ) / (2.700 -2.565) = 17.26 %

Therefore sales projection for2009 o

125 ( 1 + .1726) = 147 ;

Sales projection for 2010 = 125(1+.1726)^2 = 172

3
 PON NTIAL SMOOTHING M THOD

O Ft ĺ Forecast demand for period µt¶

O Ft - 1 ĺ Forecast demand for period µt-1'
O Dt -1 ĺ Actual demand for period µt-1¶
O Į ĺ Smoothing co ± efficient, a value of 0.1 to
0.3 for stable demand, 0.4 to 0.6 for slightly un-
stable demand and 0.7 to 0.9 is chosen when
demand is highly unstable
Ft = Į . Dt - 1 . + (1 ± Į). Ft - 1 OR
Ft = Ft ± 1 + Į (Dt -1 - Ft - 1)
x
Moving average model
O Simple Moving average ± is a predetermined number of past
periods used as the forecast for the next period. The average of
the past periods is intended to even out ( or smoothen) the
random changes . Moving averages are ideally suited when the
average value remains the same with random variations over
time.

O eighted Moving average- Here weights are attached to the

most recent data. This is used when it is felt that most recent of
the block of periods chosen have a higher likelihood of being
repeated than the earlier .
¦
Year Data(st) Forecast(Ft) forecast for t+1
In the above example we set n = 4

1 28.0
2 29.0
3 28.5
4 31.0

5 34.2 29.1 F5 = (28.0+29.0+28.5+31.0)/4 = 29.1

6 32.7 30.7 F6 = (29.0+28.5+31.0+34.2)/4 = 30.7
7 33.5 31.6 F7 = (28.5+31.0+34.2+32.7)/4 = 31.6
8 31.8 32.9 F8 = 32.9
F9 = 33.1

9 31.9 33.1 F10 = (32.7+33.5+31.8+31.9)/4 = 32.5

10 34.3 32.5 F11 = 32.9
11 35.2 32.9 F12 = 33.3
12 36.0 33.3
CASUAL M THODS
Casual methods seek to develop forecasts on the basis of
cause-effects relationships specified in an explicit,
quantitative manner.
Chain Ratio Method
Consumption Level Method
nd Use Method
Leading Indicator Method
conometric Method

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CHAIN RATIO M THOD
O Market Potential for heated coats in the U.S.:
Population (U) = 280,000,000
Proportion of U that are age over 16 (A) = 75%
Proportion of A that are men (M) = 50%
Proportion of M that have incomes over $65k (I) = 50%
Proportion of I that live in cold states (C) = 50%
Proportion of C that ski regularly (S) = 10%
Proportion of S that are fashion conscious (F) = 30%
Proportion of F that are early adopters ( ) = 10%
Average number of ski coats purchased per year (
) = .5 coats
Average price per coat (P) = $ 200
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CHAIN RATIO M THOD

Market Potential for heated coats in the U.S.:

Market Sales Potential =

UxAxMxI xCxS xF x x

= 280 Million x 0.75 x 0.50 x 0.50 x 0.50 x

0.10 x 0.30 x 0.10 x200

= $7.88 Million

D
CONSUMPTION L V L M THOD
O This method is used for those products that are
directly consumed. This method measures the
consumption level on the basis of elasticity
coefficients. The important ones are :

3
CONSUMPTION L V L M THOD
O 

   This reflects the responsiveness of demand to
variations in income. It is calculated as:
O 1 = [ 2 -  1/ I2- I1] * [I1+I2/  2 + 1]
O here
1 = Income elasticity of demand
 1 = quantity demanded in the base year
 2 = quantity demanded in the following year
I1 = income level in the base year
I2 = income level in the following year

3-
O u
   This reflects the
responsiveness of demand to variations in price.
It is calculated as:

P = [ 2 -  1/ P2- P1] * [P1+P2/  2 + 1]

here
P = Price elasticity of demand
 1 =quantity demanded in the base year
 2 = quantity demanded in the following year
P1 = price level in the base year
P2 = price level in the following year

3
 ND US M THOD

O This method forecasts the demand based on the

consumption coefficient of the various uses of the
product.

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L ADING INDICATOR M THOD
This method uses the changes in the leading indicators to
predict the changes in the lagging indicators.

Two basic steps:

1. Identify the appropriate leading indicator(s)

2. stablish the relationship between the leading

indicator(s) and the variable to forecast.

3x
 CONOM TRIC M THOD
An advanced forecasting tool, it is a mathematical
expression of economic relationships derived from
economic theory.
Single quation Model
Dt = a0 + a1 Pt + a2 Nt
here
Dt = demand for a certain product in year t.
Pt = price of the product in year t.
Nt = income in year t.
a0, a1, a2 are constants.

3¦
O Simultaneous equation method

GNPt = Gt + It + Ct

It = a0 + a1 GNPt

Ct = b0 + b1 GNPt

O here

GNPt = gross national product for year t.

Gt = Governmental purchase for year t.

It = Gross investment for year t.

Ct= Consumption for year t.

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 Market planning
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O Current marketing situation.
· Market situation

· Competitive situation

· Distribution situation

· Macro environment

O Opportunity and issue analysis

· SOT analysis is conducted

O Objectives
· Clear cut, specific achievable
O Marketing strategy
· Target system

· Positioning

· Product line

· Price

· Distribution

· Sales force

· Sales promotion

· Advertising.

O Action programme.
 RRORS IN FOR CASTING
O Forecasting rror is the difference b /w Forecasted
demand & Actual Demand
O MAD is an average of the absolute value of the
Forecast rrors.
™ | (Ft ± Dt) |
MAD = ²²²²²
n

aIAS is a measure of Forecast rror

which shows tendency, V

consistently
over or below the Forecast. It is a sum of forecast
errors divided by no. of periods.
™ (Ft ± Dt)
aIAS =
n

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