8.

Project planning and Entrepreneurship

Contents

8.1 Objectives
8.2 Introduction
8.3 Project
8.4 Project Plan
8.5 Business Plan vs. Project Plan
8.6 Developing a project plan
8.7 Sample project plan
8.8 Summary
8.9 Glossary
8.10 References

8.1 Objectives

By the end of this lesson, you will learn:

 What a project and a project plan are
 Differences between project plan and business plan
 How to develop a project plan

8.2 Introduction

In this lesson, we learn about how to prepare a project plan to start an

entrepreneurship. To keep it simple, a project is a group of tasks and a project plan
is a document on how to manage those tasks.
For every new business, there are several tasks related to how to start that business
and how to operate the business. Identifying these tasks and right people to do the
work, estimating the time and cost to complete the tasks, executing and monitoring
the progress and controlling the total process to keep all tasks on right track to
avoid slippages is an art and comes under project management.

You could have a project to develop a business, and developing a business plan
could be one of the steps in the project plan. A business can have a project plan
which could be a project that a business wants to accomplish - say a project to
develop a new product line.

This is illustrated in the following diagram.

Setting up Business Business Operations

Project
Project Project

Project

A new business has two steps involved. First, setting up the business and the
second, continuing with the business operations for which it is setup.

The first step of setting up a business itself can be a project which consists of several
tasks like business plan development, feasibility study, field studies, financial plans,
infrastructure development and regulatory approvals.

In the second step, an entrepreneur should think about the actual production
development or service delivery. This ongoing business activity comprises several
projects to accomplish the business goals. Servicing the individual client,
development of new service, enhancement to an existing product all are part of
ongoing activity of a business and are potential candidates for a project.

So it is very necessary to a new entrepreneur to know about project plan

development and management. Project management is a vast subject. In this
chapter, the necessary and sufficient topics of project management are discussed
to keep it simple for the new entrepreneur.

8.3 Project

A project is a temporary endeavor, which has a start date and an end date. A project
is anything that has a planned set of interrelated tasks to be executed over a fixed
period and within certain cost and other limitations. Developing a web portal,
constructing a bridge, doing a social survey, starting a business and launching a
rocket are all examples of projects. A project can be completed in a very short time
or can continue for years.

A project has sequence of tasks and is planned from beginning to end. It is bounded
by time, resources and required results. It has very well defined outcome and
"deliverables", clear deadline and estimated budget.

A task is a piece of work to be done or undertaken. A project is an individual or

collaborative enterprise that is carefully planned to achieve a particular aim.

Task examples Project examples

Organizing the files is a task Establishing a filing system could be a
small project
Issue an announcement for a course is developing a marketing campaign is a
a task project
Registering in a conference is a task Organizing a conference is a project
Collecting feedback from in an event Establishing a feedback system is a
participants is a task project
We say a task should be something simple that you could do in minutes or hours,
may be a day or two at most. A task should also be for work that is considered
operational or routine.

On the other hand, a project requires significant effort in term of planning and
implementation (days to years) and usually result in something new or a
modification to a major system. A project should also have many people involved
whereas a task is quite often one person.

Project Management Institute, Inc. (PMI) defines project management as "the

application of knowledge, skills, tools and techniques to a broad range of activities
in order to meet the requirements of a particular project." The process of directing
and controlling a project from start to finish may be further divided into 5 basic
phases:

1. Project conception and initiation

An idea for a project will be carefully examined to determine whether or not it

benefits the organization. During this phase, a decision making team will identify if
the project can realistically be completed.

Activities include:

 Recognize the project should be done

 Determine what the project should accomplish
 Define the overall project goal
 Define general expectations of customers, management or other
stakeholders
 Define the general project scope
 Select initial members of the project team

2. Project definition and planning

A project plan, project charter and/or project scope may be put in writing, outlining
the work to be performed. During this phase, a team should prioritize the project,
calculate a budget and schedule, and determine what resources are needed.
Activities include:

 Refining the project scope

 Listing tasks and activities
 Optimally Sequencing activities
 Developing a working schedule and budget for assigning resources
 Getting the plan approved by stakeholders

3. Project launch or execution

Resources' tasks are distributed and teams are informed of responsibilities. Actual
work execution as per the schedule is done during this phase.

Activities include:

 Leading the team

 Meeting with team members
 Communicating with stakeholders
 Fire-fighting to resolve problems
 Securing necessary resources to complete the project plan

4. Project performance and control

Project managers will compare project status and progress to the actual plan, as
resources perform the scheduled work. During this phase, project managers may
need to adjust schedules or do what is necessary to keep the project on track.

Activities include:

 Monitoring deviation from the plan

 Taking corrective action to match actual progress with the plan
 Receiving and evaluating project changes requested
 Rescheduling the project as necessary
 Adapting resource levels as necessary
 Changing the project scope
 Returning to the planning stage
5. Project close

After project tasks are completed and the client has approved the outcome, an
evaluation is necessary to highlight project success and/or learn from project
history.

Activities include:

 Acknowledging achievement and results

 Shutting down the operations and disbanding the team
 Learning from the project experience
 Reviewing the project process and outcomes
 Writing a final project report

What makes a project success:

 Very well planned project plan document
 Practice Efficient Communication
 Manage the Schedule strictly
 Manage Scope Just as Tightly
 Co-Manage with the Customer
 Deliver as Expected
 Find and Retain the Right Resources
 Keep Exec Management Informed and Engaged

8.4 Project plan

A project plan is a formal document designed to guide the control and execution of
a project. It is a guide how to implement a project. A project plan is the key to a
successful project and is the most important document that needs to be created
when starting any business project.

Project planning divides the activities into: Setting objectives, identifying

deliverables, planning the schedule, making supporting plans.
Supporting plans may include those related to: human resources, communication
methods, and risk management.

A project plan is used for the following purposes:

 To document and communicate stakeholder project expectations

 To control schedule and delivery
 To calculate and manage associated risks

A project plan answers the following basic questions regarding the project:

 Why? - What is the task related to the project? Why the project is being
started?
 What? - What are the activities required to successfully complete the
project? What are the main products or deliverables?
 Who? - Who will take part in the project and what are their responsibilities
during the project? How can they be organized?
 When? - What exactly is the project schedule and when can the milestones
be completed?

8.5 Business plan vs. project plan

Before you starting a new business based on an idea, use the following questions
to make decision about a business idea of your choice. Be sure to write out your
answers...to remember your decisions and build on them to develop a business
plan.

1. How can you describe the business...in only one paragraph please?
2. What is your product, or service?
3. Who will buy it?
4. Where should you locate the business?
5. How can you attract customers?
 6. What is your competition?
7. How much should you charge for the products or service?
8. What advice do you need and who can provide it?
9. How will you organize the managers and/or workers of the business?
10.How will you split the profits? Who is responsible for the losses?
11.What should you consider to be able to produce the product and get it to the
customer?
12.How much money is needed to get the business started?
13.How many customers will you have per month and how much will they buy
per month?
14.How much does it cost to make the product or provide the service?
15.What are your operating costs? (Include your own salary)
16.How much money will your business earn each month by selling your product
or service?
17.How much investment will you need to keep the business going until you
make a profit?
18.What is your potential profit per year for Year I, Year II, and Year III?
19.How much money do you need to borrow to start this business?
20.How will you make the business grow in the future?

A business plan outline how a business is organized, sales and marketing strategies,
business goals and a host of other details about a business.

A business plan will usually define where you want your business to be within a
certain period of time (usually five years) and how you plan on getting there. A
business plan is as important for starting a business as blueprints are for building
your house.

When starting a new business, writing a business plan is an important first step to
getting started. A business plan will lay out the direction for the future of your
company and begin to establish standards for success. A complete business plan
should include five-year financial projections. These projections will assist investors
with making decisions about your business and help you to know how much
funding you will need to get things rolling.

A business plan should define how you would like to operate your business. This
includes describing the management team, the marketing strategy, and the
methods in which you will interact with customers. A business plan might project a
strategy that reflects the management style of the founders of the business. The
definition should be clear but flexible.

A project plan on the other side according to the Project Management Body of
Knowledge, is defined as

"...a formal, approved document used to guide both project execution and
project control. The primary uses of the project plan are to document planning
assumptions and decisions, facilitate communication among stakeholders, and
document approved scope, cost, and schedule baselines. A project plan may be
summarized or detailed."

A project plan is a document that outlines a specific project, what must be

accomplished in the project, resources needed, dates and timelines and goals, etc.

8.6 Project plan development

The project plan typically covers topics that include the following main aspects:

 Scope management
 Requirements management
 Schedule management
 Financial management
 Quality management
 Resource management
 Stakeholder management
 Communications management
 Project change management
 Risk management

One of the critical factors for project success is having a well-developed project
plan. The key to a successful project is in the planning. Creating a project plan is the
first thing one should do when undertaking any project.

Often project planning is ignored in favor of getting on with the work. However,
many people fail to realize the value of a project plan for saving time, money and
many problems.

When it comes to planning your very first project, you may not know exactly where
to begin. How do you accurately predict how long tasks will take? How do you
translate stakeholder expectations into concrete deliverables? What if something
goes wrong?

In this section, we learn a 5-step approach to creating the project plan. Follow these
steps to create a foolproof project plan and lead your team with confidence.

Step 1: Project Goals and scope baseline

Talk to the stakeholders to define roles and responsibilities and list their needs and
expectations. Once you have a list of stakeholder needs, prioritize them and set
specific project goals. These should outline the objectives of the project — the
benefits you hope to accomplish.

Using the goals you have defined, create a list of things the project needs to deliver
to meet those goals. Specify when and how to deliver each item. Once you have
established a clear set of goals, they should be recorded in the project plan. Add
the deliverables to the project plan with an estimated delivery date. You will
establish more accurate delivery dates during the scheduling phase.

Tip: You may feel everything is important. If you’re having trouble prioritizing, start
ranking based on urgency as well as importance.
Develop scope baseline:
Once the deliverables are confirmed in the Scope Statement, they need to be
developed into a work breakdown structure (WBS), which is a decomposition of all
the deliverables in the project. This deliverable WBS forms the scope baseline and
has these elements:

 Identifies all the deliverables produced on the project, and therefore,

identifies all the work to be done.
 Takes large deliverables and breaks them into a hierarchy of smaller
deliverables. That is, each deliverable starts at a high level and is broken into
subsequently lower and lower levels of detail.
 The lowest level is called a "work package" and can be numbered to
correspond to activities and tasks.

Identify the deliverables you need to produce in order to meet the project’s goals.
What are the specific products you’re expected to complete? Next, estimate due
dates for each deliverable in your project plan. (You can actually finalize dates
when you sit down to define your project schedule in the next step.)

Tip: Set firm milestones for essential deadlines and deliverables. You’ll be able to
track your progress once work begins and ensure you complete key tasks on time.

Step 2: Develop the schedule and cost baselines. Here are the steps involved in
developing the schedule and cost baselines.
 1. Identify activities and tasks needed to produce each of the work packages,
creating a WBS of tasks.
2. Identify resources for each task, if known.
3. Estimate how long it will take to complete each task.
4. Estimate cost of each task, using an average hourly rate for each resource.
5. Consider resource constraints, or how much time each resource can
realistically devoted to this project.
6. Determine which tasks are dependent on other tasks, and develop critical
path.
7. Develop schedule, which is a calendar of all the tasks and estimates. It shows
by chosen time period (week, month, quarter, or year) which resource is
doing which tasks, how much time they are expected to spend on each task,
and when each task is scheduled to begin and end.
8. Develop the cost baseline, which is a time-phased budget, or cost by time
period.
This process is not a one-time effort. Throughout the project you will most
likely be adding to repeating some or all of these steps.

Step 3: Baseline management plan

These plans include documentation on how variances to the baselines will be
handled throughout the project. Each project baseline will need to be reviewed and
managed. A result of this process may include the need to do additional planning,
with the possibility that the baseline(s) will change. Project management plans
document what the project team will do when variances to the baselines occur,
including what process will be followed, who will be notified, how the changes will
be funded, etc.

Step 4: Communicate
One important aspect of the project plan is the Communications Plan. This
document states such things as:
  Who on the project wants which reports, how often, in what format, and
using what media.
 How issues will be escalated and when.
 Where project information will be stored and who can access it.
This communication should include such things as:

 Review and approval of the project plan.

 Process for changing the contents of the plan.

Step 5: Supporting Plans

This section deals with the plans you should create as part of the planning process.
These can be included directly in the plan.

Human Resource Plan

Identify, by name, the individuals and organizations with a leading role in the
project. For each, describe their roles and responsibilities on the project.

Communications Plan

Create a document showing who is to be kept informed about the project and how
they will receive the information. The most common mechanism is a weekly or
monthly status report, describing how the project is performing, milestones
achieved and the work you've planned for the next period.

Risk Management Plan

Risk management is an important part of project management. Although often

overlooked, it is important to identify as many risks to your project as possible and
be prepared if something bad happens.

Here are some examples of common project risks:

 Time and cost estimate too optimistic

  Customer review and feedback cycle too slow
 Unexpected budget cuts
 Unclear roles and responsibilities
 No stakeholder input obtained
 Not clearly understanding stakeholder needs
 Stakeholders changing requirements after the project has started
 Stakeholders adding new requirements after the project has started
 Poor communication resulting in misunderstandings, quality problems and
rework
 Lack of resource commitment

Tip: Move tasks that involve a high level of risk earlier in your project timeline, if
possible. Or, create a small “buffer” of time around the task to help keep your
project on track even if a problem does occur.

8.7 Sample project plan

Project plan for starting a business to produce Vermicompost

This section is on developing a sample project plan to start a new business to

produce vermicompost. The steps shown here are more or less same for any
business. They are customized here to suit vermicompost plant by adding some
tasks specific to vermicomposting like subsidies, constructing vermi-beds, sheds
etc.

Step 1: Goals and Scope baseline (Tasks to do)

The Work Breakdown Structure (WBS) is given below:

1. Brainstorm ideas and identify product or service

Product identified as Vermicompost
Get Help and Training on vermicomposting
 Choose Your Business Location (Tirupathi)

2. Build business plan (Feasibility study, Financing, Marketing strategy)

A business plan doesn’t have to be encyclopedic and it doesn’t have to have
all the answers. A well-prepared plan – revisited often – will help you steer
your business all along its growth curve. Try to think of your business plan as
a living, breathing project, not a one-time document. Break it down into
mini-plans – one for marketing, one for pricing, one for operations, and so
on.

3. Assess finances
Understand your Financing Options

4. Determine the legal entity

Decide on a Business Structure
Going it alone or forming a partnership? Thinking of incorporating?
What about an LLP? How you structure your business can reduce your
personal liability for business losses and debts. Some choices can give
you tax benefits.
Register Your Business Name

5. Register with government

Register with Tax Authorities
Employment taxes, sales taxes, and income taxes
Get a Tax ID
Apply for Permits and Licenses

6. Build team
Identify and recruit people to help you

7. Work with financial institutions

Find out government subsidies, banks providing loan
8. Develop infra-structure
Construct sheds
Construct vermi-beds

9. Procure raw materials

Seed stock

10. Compost development

11. Marketing

12. First sale

Marketing, sales and some other development related tasks are included to
complete the cycle and to have a feel of the total project. In actual scenario, these
may be handled as a separate project. These tasks may be arranged based on
requirement. For example, if you feel team building is needed before government
registrations as people recruited may help in going around offices for registrations,
you can move task 6 (Build team) before task 5 (Register with Government).

Step 2: Schedule and cost Baselines

The baseline scope, schedule and costs are shown below in the table. A
spreadsheet can be used for this purpose or for more serious projects, software
tools like Microsoft project can be used. Following figures are budgeted and
estimated ones against which actual work, time and costs are continuously
compared during project execution to control any deviations.

Task Task Duration Start End Date Resource Cost

Id. (days) Date (Rs.)
1 Brainstorm 2 Jan 2 Jan 3 Manohar 500
ideas and
 identify product
or service
2 Build business 5 Jan 4 Jan 9 Manohar 2000
plan
3 Assess finances 2 Jan 10 Jan 11 Manohar 500
4 Determine the 1 Jan 12 Jan 12 Manohar 250
legal entity
5 Register with 10 Jan 16 Jan 27 Manohar 5000
government
6 Build team 10 Jan 16 Jan 27 Yogi 5000
7 Work with 20 Jan 16 Feb 8 Prabha 10000
financial
institutions
8 Develop infra- 10 Feb 9 Feb 20 Manohar 90000
structure
9 Procure raw 10 Feb 21 Mar 4 Manohar 30000
materials
10 Compost 40 Mar 5 Apr 21 Manohar 5000
development
11 Marketing 10 Apr 10 Apr 21 Manohar 10000
12 First sale 10 Apr 10 Apr 21 Yogi 10000

Step 3: Baseline Management

Manohar and Yogi will decide on deviations.

Step 4: Communication

Maintain all the contact lists of the banks, government officers, raw material
suppliers and of course, the staff.
Step 5: Supporting plans

Communication plan: Internal review on progress, every Saturday.

Risk Plan: Handling delays due to team member resignation, officer transfer etc.

8.8 Summary

A project is a coordinated and interdependent tasks and a project plan is a

document that explains everything about the implementation of that project. The
disciplined and well defined processes of project management help a new
entrepreneur from starting the business to successfully completing several tasks
during the regular and ongoing operations of a business.

8.9 Glossary

Stakeholder: A stakeholder is anybody directly, or indirectly impacted by the

project.

Resources: In project management terminology, resources are required to carry out

the project tasks. They can be people, equipment, facilities, funding, or anything
else required for the completion of a project activity.

Baselines: Baselines are sometimes called performance measures, because the

performance of the entire project is measured against them. They are the project's
approved starting points and include the scope, schedule, and cost baselines. They
are used to determine whether or not the project is on track, during the execution
of the project.
Project sponsor: Is one who owns and funds the entire project. Sponsors need to
review and approve all aspects of the plan.

Designated business experts: Are ones who will define their requirements for the
end product. They need to help develop the scope baseline and approve the
documents relating to scope. They will be quite interested in the timeline as well.

Project Quality: Project quality consists of ensuring that the end product not only
meets the customer specifications, but is one that the sponsor and key business
experts actually want to use. The emphasis on project quality is on preventing
errors, rather than inspecting the product at the end of the project and then
eliminating errors. Project quality also recognizes that quality is a management
responsibility and needs to be performed throughout the project.
Project Risks: A risk is an event that may or may not happen, but could have a
significant effect on the outcome of a project, if it were to occur. For example, there
may be a 50% chance of a significant change in sponsorship in the next few months.
Analyzing risks includes making a determination of both the probability that a
specific event may occur and if it does, assessing its impact. The quantification of
both the probability and impact will lead to determining which are the highest risks
that need attention. Risk management includes not just assessing the risk, but
developing risk management plans to understand and communicate how the team
will respond to the high-risk events.

8.10 References

1. A Guide to the Project Management Body of Knowledge ( PMBOK® Guide )—

Fifth Edition, Project Management institute
2. https://en.wikipedia.org/wiki/Project_management
3. https://www.pmi.org/about/learn-about-pmi/what-is-project-management
4. https://www.apm.org.uk/WhatIsPM
 5. https://www.projecttimes.com/articles/10-steps-to-creating-a-project-
plan.html
6. http://www.mca.gov.in/MinistryV2/RegisterNewComp.html
7. http://www.incometaxindia.gov.in/pages/deadline.aspx
8. http://msme.gov.in/mob/home.aspx#

- Dr. M. Yogeswara Rao

Guidelines to resource persons

1. Emphasize on the necessity of learning project management for a successful
business
2. Make groups and assign a new project plan development task to each group
3. Show the plan development using tools like Microsoft project