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Question

Fixing the zero date is important step in establishing a project-

The correct answer is

Priliminary steps

Understanding the Zero Date in Project Establishment

Establishing a project involves several crucial phases, starting from initiation and planning through execution, monitoring, control, and closure. One of the fundamental elements that needs to be defined early in the project planning process is the project start date. This start date is often referred to as the "zero date" because all subsequent project activities and timelines are scheduled relative to this point.

Fixing the Zero Date: A Preliminary Step in Project Planning

Fixing the zero date is considered a crucial preliminary step in establishing a project for several reasons:

  • Foundation for Scheduling: The zero date serves as the anchor point for the entire project schedule. All task durations, dependencies, and deadlines are calculated based on this initial date. Without a defined start, creating a realistic timeline is impossible.
  • Resource Allocation: Knowing the start date allows project managers to plan when resources (people, equipment, budget) will be needed. Resource allocation is a key part of early planning.
  • Setting Expectations: The zero date sets expectations for stakeholders, team members, and clients regarding when the project will officially begin.
  • Basis for Baselines: The initial project schedule, built upon the zero date, forms part of the project baseline against which progress will be measured.

These activities clearly fall under the initial or preliminary phases of project planning and definition.

Why Other Options Are Less Suitable

  • Secondary steps: Secondary steps usually follow the initial fundamental decisions. Setting the start date is too foundational to be considered secondary.
  • Definition steps: While defining the project scope, goals, and deliverables happens early, fixing the zero date is specifically part of defining the project timeline and schedule, which is a direct consequence of the overall project definition but a distinct, crucial step within preliminary planning. 'Preliminary steps' is a broader category that includes setting the zero date as a foundational activity.
  • Last steps: The start date must be determined before the project can begin or before detailed scheduling can occur. Therefore, it cannot possibly be among the last steps of project establishment.

Based on the function and timing within the project lifecycle, fixing the zero date is unequivocally a preliminary step.

Revision Table: Project Establishment Steps

Phase Typical Activities Zero Date Role
Initiation Define project goal, feasibility study, project charter Often identified or estimated
Planning (Preliminary) Develop project management plan, define scope, fix zero date, create WBS, schedule development, resource planning Crucial step: Date is fixed, schedule built upon it
Execution Perform project work, manage communications, manage resources Project activities start from this date
Monitoring & Control Track progress against baseline, manage changes, risk monitoring Progress measured against the schedule derived from the zero date
Closure Finalize activities, close contracts, post-mortem review Project ends relative to the start date

Additional Information: Importance of Accurate Zero Date

Setting an accurate and realistic zero date is vital. An incorrect or delayed start date can cascade through the entire project schedule, affecting deadlines, resource availability, and potentially project costs and quality. Factors to consider when fixing the zero date include:

  • Availability of key resources (team members, equipment, funding).
  • Completion of necessary prerequisites (approvals, previous phase outputs).
  • External constraints (vendor timelines, regulatory requirements).
  • Organizational readiness.

Careful consideration during the preliminary planning phase ensures the project starts on solid ground.

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Important Questions from Capital Budgeting

  1. A firm is currently earning Rs. 50,000 and its one share has a present market value of Rs. 175. It has 5,000 shares outstanding. The earnings of the firm is expected to remain stable and it has a payout ratio of 100%. The cost of equity is:

  2. With project cost of ₹300 lacs, profits after depreciation (straight line method) and tax for its lifetime of 5 years are estimated at ₹10 lacs, ₹10 lacs, ₹30 lacs, ₹40 lacs and ₹50 lacs respectively. The cost of capital is 12% and discount factors @ 12%, for the first five years are 0.89, 0.80, 0.71, 0.64 and 0.57 respectively. The Net present value of project is :

  3. Match List I with List II

    LIST I

    (Investment Decision rule)

    LIST II

    (Feature)

    A.NPVI.Insufficiently consistent
    B.PaybackII.Highly Inflexible
    C.Cash ReturnsIII.Balance between flexibility and consistency
    D.Accounting ReturnsIV.Relatively consistent

    Choose the correct answer from the options given below:

  4. Which of the following are assumption of Net Operating Income Approach of Capital Structure?

    (A) There is no Corporate Tax

    (B) Cost of debt remain constant at all level

    (C) The Business risk remain constant every level of debt and equity mix

    (D) The cost of Debt is less than cost of equity

    (E) Overall cost of Capital remain constant

    Choose the correct answer from the options given below:

  5. Assume B is social benefits, C is social costs, r is the social discount rate, t is the time and T is the life of the investment project. The Net Present Value (NPV) of a project is
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