Project Management

By

Dr. P.K. Gupta

What is a Project?

 An activity for satisfaction of need or

desires

 A flow of resources (energy) to achieve

a specific objective

 A conversion process(I-O)
PMI Definition

A project is a one-shot, time limited,

goal directed, major undertaking,
requiring the commitment of varied
skills and resources.
Project Defined

a project is a one-time effort, non-

repetitive in nature, undertaken in
fulfilment of a specific objective, expected
to be completed within a specified
schedule and requiring the commitment
of varied skills and resources
Special Characteristics of Projects

 Definite Objective

 Uniqueness(unfamiliarity, one-time effort)

 Commitment of varied skills and resources

 A life cycle (specified schedule)

Projects & Strategy

Projects are resource consuming sets of activities

through which strategies are implemented and goals
are pursued.

Project deploy as well

as contribute to the
Organizational
Strategy
Why to worry about capital expenditures
(projects)?
 Irreversibility of investment
 Huge Outlays
 Long-term effects
 Uncertain cost and revenues
 Cause and effect relationship with the
organizational mission, objectives and
strategies
Projects and Business Models
 A clear business model is must for the success of a
project.
 Business model is a business concept put into practice.
 The competition is not between the products or
companies but between the business models
 Therefore, in a competitive environment , Business
Concept innovation is essential to imagine dramatically
different business concepts or new ways of
differentiating existing business concepts.
Why do projects fail?
 Dissonance between the organizational
strategy and project goals
 Lack of vision to view projects as being
strategic
 Poor resource coordination in project
implementation
Why do projects fail?

Projects fail because of the failure of the

underlying assumptions
Identifying White-elephant Projects
 White-elephant projects usually have some glamorous
appeal, which passes for real worth, thus blinding those
involved as to their inherent unsoundness.
 Often they are overambitious schemes which are too
grandiose for the situation, projects which are too large for
the market to they can realistically hope to serve, projects
which are too fancy in their housing, their equipment, or
their organisation.
 Fortunately, the seriously unsound projects are not usually
disguised.
Characteristics which make them fail
(visible in informative stage)
 Unnecessarily risky
 Weak /Unreliable financing
 Rash / Inexperienced Management
 Inadequate size
 Uncertain market
 Requiring consumers be induced to make a
great change in their buying habits or tastes
 Lack prospective cost-advantages
The Characteristics of Sound Projects

 They have a market , either home or abroad

 They have a prospective advantage in production

costs compared to foreign or domestic competitors

 Because of above, they have a prospect of high

commercial profitability to attract private lenders or
investors.(and therefore financing problem is solved)
PROJECT DEVELOPMENT CYCLE

Pre-investment Phase

 Identification of Investment Opportunities

 Pre-feasibility Study

 Feasibility Study

 Decision-making
Project Development Cycle(Contd....)

Implementation Phase
 Project Engineering

 Negotiations and Contracting

 Construction

 Training

 Plant Commissioning
Project Development Cycle(Contd...)

Operational Phase

 Performance Review

 Covers the longest part of the life of the project

 Provides basis for further capital budgeting decisions

Generating Project Ideas
 Study Imports and exports
 Study Available Skills
 Make Industry Studies
 Apply Technology
 Examine Inter-industry Relationships
 Evaluate Development Plans
 Review Old Projects
 Observe Experience Elsewhere
 Use Industry Lists
Project Rating Index
Factor Weight Rating Factor
(Numerical Scale) Score

Rating Index
Decision Rule :
If Calculated Index > Pre-determined Value :Accept
Else : Reject