S. G. M.

English Medium College of Commerce and Management (SEMCOM)

(A Constituent College of Charutar Vidya Mandal University)
Vallabh Vidyanagar

STUDY NOTES

Class TYBBA/TYBCOM/TYITM (Honors)

Course Project Management - I
Unit No and Topic 01 – Introduction to Project Management
Course Facilitator Dr Ajayraj Vyas
Academic Year 2022 - 2023

Meaning and Concept of Project and Project Management

Everywhere you look, you are surrounded by projects. Whether it’s the construction of a building,
development of a product or service, implementation of a new business process, or even smaller
things such as buying a car or organizing a meeting, etc. Any such effort made to produce tangible
or intangible results can be regarded as a project.

A project is a temporary endeavor to create a specific product, service or result. Installing

software in a client's environment meets this definition because the effort has a defined
beginning and end and will result in the customer's purchase of new products and services to
install the software.

A project is defined as a one-time activity with a series of tasks that produces a specific outcome
to achieve organizational goals. Projects are a set of interdependent tasks that have a common
goal. No matter what the project is, each project is broken down into objectives and what needs
to be done to achieve them, ensuring that the project stays on track and is completed ‘as per
plan’.

There are some things to identify when considering a project, its stakeholders and characteristics
that distinguish a project from other ongoing business activities.

Projects have several characteristics-

 Every project is unique that creates something new – or improves something existing
 A Project is a temporary (limited time) endeavour with a definite beginning and an end
 A Project operates within certain constraints of time, budget, scope, quality, resources and
risks
 A Project is completed when the project’s goals are achieved. A project may be canceled
or discontinued if it is considered to be no longer viable. This happens quite a lot.
Project management is using specific knowledge, skills, tools and techniques to ensure project
activities meet the project goals. Deciding you need to understand more about project
management before this contract gets off the ground, you decide to do a little research on basic
project management concepts, including the skills a project manager should have.
Project Management includes various policies and principles to lead a project from the initial
stage until its completion. It involves processes to identify the requirements, create a plan to
establish clear & achievable objectives, and then execute on that plan until the project goals are
achieved.

Project Management can be defined as “the use of specific knowledge, skills, tools, and
techniques to deliver something of value to people.”

In simple terms, project management means the process of leading a team to hit goals or
complete deliverables within a set timeframe. Project management involves project
documentation, planning, tracking, and communication—all with the goal of delivering work
successfully within the constraints of time, scope, and budget.

Often, a triangle is used to summarize project management, frequently referred to as the "triple
constraint." Time, price and range are the three most significant variables. These shape the
vertices as the main feature of value.

Generally, there are four key elements in the “triple constraint”:

1. projects must be cost-effective.

2. Projects need to be delivered on time.
3. There must be scope for projects.
4. Projects must satisfy the demands of client quality.

Why do we need Project Management?

We need project management to manage projects effectively and drive them to success. Project
Management starts with the decision to start a project upon weighing its need and viability. Once
a project starts, it is crucial to watch the project progress at every step so as to ensure it delivers
what all is required, in the stipulated time, within the allocated budget. Other drivers influencing
the need of project management are −
 Exponential expansion of human knowledge
 Global demand for goods and services
 Global competition
  Team is required to meet the demand with quality and standard.
 Improved control over the project
 Improved performance
 Improved budget and quality

Project Life Cycle

The project management life cycle basically describes the high-level process of delivering a project
and the steps involved to successfully deliver the project. The project management life cycle can
be defined as a structured, timely and methodical process for effectively initiating, planning and
executing a project for a successful outcome – which is to meet the intended objectives of the
stakeholders funding the project.

Each project phase addresses a specific aspect of the process of managing a project from its
conception to completion. Although these phases are described sequentially, in practice many of
these phases may overlap or be applied concurrently during the lifetime of a project.

Phases of the Project Management Lifecycle

A project life cycle provides a high-level view of the project and the phases are tailored to fit a
project’s needs providing a roadmap to accomplish it. The project management life cycle is
divided into 5 phases: project initiation, planning, execution, monitoring & control, and closure.

1. Project Initiation

The goal of the initiation phase is to define the project at a broad level in terms of what needs to
be done and achieved in order for it to be successful. This is where the stakeholders (the people
or business unit who will fund the project), the goals, objectives and deliverables are identified
and the resources and the money needed to do the project are determined at a high level. A high
level determination is made whether the project is “feasible or not” based on these.

Key project management steps involved in the Initiation phase

 Conduct a feasibility study to identify the primary problem the project will solve and
whether the project can deliver a solution to that problem
  Create a business case and define the project at a high level
 Create a Project Charter or project initiation document that outlines the vision, objectives
and goals of the project
 Identify the high-level scope of the project and define the product or service the project
will deliver
 Identify key project stakeholders
 Once the project gets a go-ahead, assemble the project team and establish a project office
A business case, a feasibility study and a Project Charter together fulfil the requirement of the
Initiation phase to determine if the project is to be approved or not. Once the project is
approved, one or more project initiation meetings are held to finalize the project. This is where
the project initiation phase ends and the planning phase begins.

2. Project Planning

This phase begins after the project receives a green light in the Initiation phase.

The Project Planning phase is most critical and requires complete diligence as it lays out the
project’s roadmap. It involves defining the work to be done and figuring out how to accomplish it.
This is especially true for large and/ or complex projects, which are typically executed using
traditional methodologies. Projects that are executed using Agile methods of execution also go
through a planning phase, but the plans may be defined at a high level; with the detailed
execution being left to the team to plan in short iterations or sprints.

The project manager begins setting goals with a project plan. A well-crafted project plan outlines a
detailed project schedule, communication plan to give direction to the team for producing quality
output and handling risks.

During the planning stage, the Project Manager defines the scope of the project and project
management plan that involves the cost, quality, resources and project timeline. The scope is
defined by the project manager with a scope statement and Work Breakdown Structure (WBS)
(the deliverables for the project).

Another crucial activity during this phase is the effort and resource estimation for the project. The
Project Manager, usually working with a team of experts, provides “rough order of magnitude”
(ROM) estimates of all the essential elements of the project, such as effort on various phases and
high level tasks, other non-labor resources and overall budgets based on that. All of these inputs
go into putting together the high-level plan for the project.

Key project management steps involved in the Planning phase:

 Create a Statement of Work document to flesh out the details of project deliverables
 Develop a Work Breakdown Structure
 Create a project plan, assign team members (and other resources) to the various tasks and
build a detailed project timeline
 Identify the Project Team roles and other resources for the project. At this stage, the
Project Manager – working with a project staffing function – will most likely identify
specific people for some of the key roles needed for the success of the project.
 Create a risk mitigation plan to identify potential risks and develop a strategy to minimize
them
  Incorporate an effective change management plan for necessary changes in the project
and to avoid bottlenecks
 Create a communication plan to schedule interactions with relevant stakeholders
3. Project Execution

The execution phase involved actually carrying out the activities that are identified in the project
plan. This is where the rubber hits the road and the project ultimately comes to reality!

This is the stage where planning is turned into action. The project team is built. Specific people
and other resources are assigned to the tasks identified in the project plan. The project work is
carried out in the required sequence in order to complete all of the work in the most efficient
manner possible.

The key outcome of the Execution phase are the various deliverables that are produced in line
with the defined project plan.

The project manager organizes the team members, establishes workflow and constantly monitors
progress, ensuring that work is done as per plan, while maintaining effective collaboration
between the project team and various stakeholders.

Key project management steps involved in the Execution phase:

 Identify and assign the project team Assign the team and other resources to the project
tasks and begin work in the planned manner
 Provide necessary guidance to the team on how tasks should be completed
 Monitor progress of the team
 Communicate with the stakeholders on a regular basis to ensure that the project
deliverables are acceptable
4. Project Monitoring & Control

This phase typically runs in parallel with the Project Execution phase and involves keeping the
project on track and ensuring that objectives and project deliverables are met.

The project manager reports on the performance of the project and makes sure the project is
going according to plan.. This helps track any deviations from the planned budget, timeline and
quality goals of the project.

Any necessary changes to the project goals are implemented after formal evaluation of the
potential impact to the project goals and acceptance/ approval of the impact by the project
stakeholders.

This phase also involves continuously monitoring the project environment for any risks or issues
that are likely to impact the project performance, and taking the necessary steps to prevent or
mitigate them as proactively as possible, to minimize impact to any of the project goals.

Key project management steps involved in the Monitoring and Control phase:

 Tracking the progress of various project tasks

 Measure budget, timeline and quality performance of the project
 Review deliverables and track the effort to see if they meet the defined acceptance criteria
 Conduct user reviews and collect feedback, and take any corrective actions needed
  Track all changes to the project scope (whether from team members or the stakeholders)
and report on their impact to project goals.
 Monitor overall project performance, including all project plan changes, and ensure that all
stakeholders and the project team are on the same page about the project status and its
expected outcomes.
5. Project Closure

Project Closure is the final phase of the project management life cycle, which indicates the end of
the project and the final delivery of the project deliverables.

Project Closure involves completion of the final delivery of a project and its approval by the
stakeholders. Once the project’s closure is formally approved, other aspects of the closure can be
carried out.

The project manager conducts a “post-project review” meeting. or commonly referred to as a

retrospective- to review the lessons from the project, and the challenges that were faced during
the project. It gives an opportunity to comprehend lessons learned to improve productivity in the
future.

Once the above activities are completed, the project team members are released to other
projects.

Key project management steps involved in the closing phase:

 Conduct a “End of Project” Review or Retrospective and to analyze project performance

and a formal analysis of successes and failures
 Document project closure and provide reports to key stakeholders
 Account used/ unused budget and release remaining resources for other projects

Project Governance
What is project governance?

• Project Governance is the set of rules, procedures and policies that determine how
projects are managed and overseen.
• These rules and procedures define how decisions are made during projects. As part of the
oversight process, project governance also determines the metrics by which project
success is measured.
• It contains a framework for making decisions about the project, defines roles,
responsibilities, and liabilities for the accomplishment of the project, and governs the
effectiveness of the project manager.
Project governance keeps projects running smoothly, on budget, with timely deliveries and client
satisfaction. To do this consistently, there needs to be an overall framework that oversees the
project. This is project governance.
What project governance includes

Project governance is the framework for how project decisions are made. It tells you what
activities the organization does, and who’s responsible. Project governance therefore covers all
these aspects:

 Policies
 Regulations
 Functions
 Processes
 Procedures
 Responsibilities

The three pillars of project governance

Project governance essentially describes three things:

1. Structure
The organization’s structure and environment have to support the project. That means senior
management is willing to invest time and energy to establish a vision for project managers to take
forward. The “structure” element of project governance describes not just the immediate project
team, but the company as a whole.
2. People
Investing in effective project managers is key to any project. But first, senior management needs
to understand their current activities. From this, project governance can establish the goals each
PM should achieve. These goals need to be clear, reachable and sustainable.
3. Information
While it’s important to understand people, the process is even more important. Regardless of how
many goals are set or what the vision is, every project will suffer without clear and consistent
information sharing.

Project governance roles

There are several roles within project governance, including:

 Project Owner – this person is front-facing as they represent the business. Therefore,
they’re usually not the project manager since they tend to hold the project manager to
account.
 Key stakeholders – a Project Board made up of key stakeholders. They’re either the people
who fund the project, customers of the final product or suppliers. Limit the number of key
stakeholders to a maximum of six to keep the process efficient.
 Advisory group – where there are many stakeholders, forming a larger advisory group
keeps them within the project without making decision-making cumbersome or inefficient.
This is more of a forum than a Project Board.

Importance of Project Governance for the Success of a Project

Establishing project governance is not a simple task. Significant investment needs to be made
when embarking on a new project. It is often challenging to quantify what the benefits are when it
comes to investing in the creation of the project governance framework.

The following are four key benefits of project governance:

 Single point of accountability;

 Outlines roles, responsibility and relationships among project stakeholders;
 Issue management and resolution; and
 Information dissemination and transparent communication.
Project governance provides a single point of accountability. This mandates clarity and fosters
consistency of decision making for the life cycle of the project By appointing one focal point of
accountability, the individual's primary focus will be on delivering on the project's objectives and
will be not be deterred for the duration of the project. This does not mean that there will be “one
throat to choke,” but one person will be responsible for the direction and focus of the project, and
having multiple individuals accountable will not blur this.

In addition, project governance defines and clearly articulates structured roles, responsibilities
and accountabilities within the project, which also facilitates decision making. This is critical when
the project manager has a deviation in scope, budget, time, resources, or quality, or when a risk
has presented itself. Project governance defines whom these issues impact and how to deal with
the impact.

The governance framework will provide “instructions” on how to deal with issues on the project.
Not only does it define whom the issues impacts, but also it details mechanisms for how to deal
with the issues. It ensures that the appropriate review on the issues is done and who are the key
points of contact for addressing and approving any deviations in the project requirements. Project
governance provides direction and defines decision-making procedures and metrics for validating
impacts to the project. It also enables the project team to deliver on requirements and creates a
forum for issue resolution to occur in a timely manner.

Finally, project governance provides a vehicle for information gathering and reporting to all
stakeholders. This framework ensures that the communication plan is well defined, updated and
executed. It also facilitates consistent, standardized and transparent reporting. This promotes
nibble status updates on productivity as well as communicates and addresses stakeholder
expectations.

Project Manager Roles and Responsibilities

Broadly, a project manager is majorly responsible for creating a team that is able to work
autonomously. They have to take care of every possible parameter, from resources to risks, from
laying the foundation of a project to getting a team to work for a shared goal.

A Project Manager might be in charge of the development or implementation of new software,

the launch of a new product, or even the full-scale overhaul of an organization’s marketing
strategy.
Project Managers are generally responsible for the completion of a company’s most important
projects, and as such, they need to have excellent leadership skills, coordination abilities, and
motivational skills.

In addition to overseeing all aspects of project planning and execution, Project Managers will
often be on hand to resolve issues and solve problems that arise during a project.

The best Project Managers are able to keep up with changing circumstances and find ways to
motivate their team members.

1 Planning everything from execution to delivery

Ideally, a project manager must prepare a strategy to achieve more in less. By more I mean, more
outcomes, more quality, more client satisfaction, while less refers to less resources and less time.
Thus, it is the duty of a project manager to find the quickest and easiest pathway towards
accomplishing whatever it is that the client or the stakeholder wants to get to. For this a project
manager could take up any approach like Agile, waterfall, Prince2, so on and so forth. Preparing
this strategy, or rather, this procedure is detrimental to the functioning of the whole team and the
outcomes of the project.

All in all, this project management roles involves

 breaking the project into tasks,

 Breaking down the tasks and subtasks,
 Setting an appropriate schedule for the development of certain deliverables,
 Defining milestones, and
 Highlighting the project dependencies.
2 directing the team to achieve a common goal

Another one under all the various project manager roles and responsibilities is keeping the team’s
efforts aligned with everything that the organization wants to achieve. This would take serious
effort so that you can develop a plan to support the team in reaching the goals easily. This would
require for you to provide everyone with the required motivation so that people can work with
the best of their abilities. It is the project manager’s duty to organize their team such that they
can showcase their full potential in the form of their work.

A project manager will have to sometimes put on the duties of human resources like:

 Negotiating current employees’ job responsibilities,

 Managing their times and achieving their commitment to the project,
 Bids may be required, and
 Contracts will need to be reviewed and keeping everyone in check to make sure that the
team’s moves along in accordance with the plan.
3 Delegating work effectively

In many situations like a big project, or various tasks involved in a project, it becomes critical to
delegate responsibilities to teams wisely. It is a leadership style that every project manager has to
abide by and be good at it and eventually, it becomes the responsibility of a project manager that
needs to be learned over time. A manager should not misuse this responsibility in putting blames
or degrading the team members. The tasks need to prioritize tasks so prioritized to the team
members so that they become more effective in their abilities. The managers should also
understand the strength and weaknesses of their teams and accordingly delegate the tasks to
them. So, be a good leader who creates an environment that fosters trust through meaningful
delegation.

4 Managing the resource of time

To make a good impression on stakeholders and clients, the project managers need to look for
whether the project has succeeded or failed. A project manager needs to be able to negotiate
achievable deadlines and discuss the same with the team. They need to develop a project that has
the following features:

 Objective
 Process
 Estimating duration
 Schedule development
 Schedule control
5 Managing the deployment deliverables

The project manager responsibilities also include ensuring that the deliverables are delivered on
time and within budget. Their job is concerned with asking questions like:

 What are the changes being made in the organization?

 What is the team doing?
 Why are we doing it?
 Is there a business opportunity or risk?
 How are we going to do it?
 What are the popular project management techniques?
 Who is doing what?
 Where are the records and project documents?
 What are the specifications, schedule, meetings etc?
 When are the things being done?
6 Monitoring progress and track roadblocks

Most of the project manager’s time revolves around monitoring the status of projects. After the
project has been started, a project manager has to see how much is done and if it is being done as
expected. The progress of the project is made during the middle stages of the project through
multiple systems like status reports, meetings and informal updates. This responsibility will
become easier if the project managers select a proper management system.

We know it’s easy to get lost in the weeds. That’s why we’ve come up with a handy-dandy way to
help you keep track of what needs to be done and when.

7 Conducting regular meetings

Scheduling regular meetings are difficult for all project managers, and it doesn’t work well for
every project. However, practices like the Scrum framework suggest that there must be a 15-
minute stand-up every day so that the project manager can establish a status-quo between the
team. You will find that conducting timely meetings, that follow a certain agenda are actually
good for your project and will definitely lead to success. The objective of the meeting should be
met by communicating the rules of the project clearly to the entire team. The project managers
should be ready from the beginning to prepare for meeting the objectives. They can set a meeting
calendar and stick to it until there is an emergency to cancel the plan out.

8 Establishing a shared vision

A project manager should have a vision of where to go and the skills to understand the big picture
related to any project. The vision should be conveyed to the entire team so that they understand
the importance of their role to achieve the end results. The team should understand the workload
and make the possible efforts to convert goals into missions. The manager should set the
appropriate tone for smoother sailing down the road.

9 Managing documentation and reports

Finally, when the project is completed on time and on a budget, the project manager has to
provide appropriate documentation to present the final reports to clients and identify the areas
where there is a need for future development. This is also a major responsibility of a project
manager for project development. It has two main functions:

 To maintain a record of what has been done in the project and who have been involved in
it.
 To ensure that the project satisfies all the project requirements.
10 Coming up with a Plan B

A project manager’s roles and responsibilities lie not just within the planning process of the
project but also within preparing for unforeseen events and unfortunate circumstances. A project
has to be made risk-proof so that all progress is saved when and if the shit hits the fan. This would
mean that the project manager has to be familiar with the basics of risk as well as change
management. They must know how to:

 Arrange for extra resources.

 Manage time in difficult circumstances.
 Have an alternate plan to justify the expectations of the clients.
11 creating a self-governing team

In the era of Agile teams where every department, every team is becoming smarter and leaner
through Agile practices, it is imperative for the project manager to learn new management
methodologies and implement the same for their team. This would help the team become self-
governing and cross-functional which would mean that you will be making the team:

 More adept to taking on challenges and dealing with changes in client requirements.
 More capable of coordinating with clients and juggling responsibilities,
 More comfortable with changing roles and working in more niches than just one.
12 Keeping the team close-knit

Apart from building a team that is filled with passionate people who are self-sufficient, a project
manager also has to make sure that the team works seamlessly as a single unit. Maintaining
harmony in the team and fostering trust within its people is of the utmost importance so that
everyone can achieve more and achieve fast.
For this, a project manager has to ensure that:

 Every member of the team gets regular feedback.

 Everyone understands their individual roles and responsibilities well.
 Everyone communicates well.
 The team has enough resources and tools for effective collaboration.
13 coordinating with the clients

Project manager responsibilities also include coordinating with the clients. For the documentation
of data and allotment of tasks, a project manager must negotiate about the requirements of the
project with the clients and the stakeholders. It will be the project manager’s duty to bring clarity
to the clients about how they should go about the project and everything that the team can do for
them.

Project Organization

 Project organization refers to the style of coordination, communication and management a

team uses throughout a project’s life cycle. Project organization encourages participation
by each team member and embraces diverse talents and skills.
 A project organization is one, in which a project structure is created as a separate unit or
division within a permanent functional structure; drawing specialists and workers from
various functional departments who work under the overall leadership, control and co-
ordination of a project manager to complete projects of a technical and costly nature.

By applying project organization, a project team optimizes resources, provides clear

communication about roles and responsibilities and reduces potential roadblocks. To maintain a
strong project organization, the team needs proper direction and training from colleagues and
supervisors. Each company has its own approach to project organization, depending on how many
employees they have and what the project entails.

Types of project organization

There are many kinds of organizational strategies to implement for project success, including:

Functional

Functional project organization is structured around traditionally functioning departments with

managers who report to an executive. It is the most commonly used project organization. There
are no project managers. Instead, the managers coordinate projects and select team members
from each department to support the project.

Project-oriented

Also known as projected organization, the project-oriented approach has dedicated project
divisions within the company. Each division focuses on a specific project and what is necessary to
complete its tasks. Project division managers make significant decisions regarding goals, schedules
and responsibilities for their team members.
Organic

Organic project organization focuses on a project's natural progression. This type of organization
is flexible with a more relaxed workflow approach. This approach is also known as "laissez-faire,"
meaning the company allows each employee to have a unique approach to work and the ability to
make their own decisions. They work side by side to communicate quickly to resolve unexpected
issues.

Matrix

Matrix project organization focuses on both functional and project-oriented approaches. This
approach means the team considers both the project and team member roles equally. Project
leaders and those higher up in the structure make the decisions.

There are three subtypes of matrix organizational structures:

 Balanced: Both project managers and functional managers have equal (or similar) levels of
authority.
 Strong: Project managers have more authority than functional managers.
 Weak: Functional managers have more authority than project managers.

Multidivision

When a team uses a multidivision project organization, they do not have functional roles. Instead,
several individual groups share the same goal and skills. These groups might work on distinct tasks
but progress toward the overall team objective.

Virtual

Virtual project organization involves team members from across the country or around the world
who work on the same project together. This team does not focus on functional roles but rather
on overall contribution to project objectives. The project manager organizes the team and goals to
keep everyone informed and progressing effectively.

Democratic

Democratic project organization is when a company makes decisions based on the majority's
opinion and feedback. A team uses the democratic approach to enforce structures, rules and
expectations that most employees agree on. As a result, implementing regulations and outlining
goals is easier because of the general consensus among team members.
The following chart depicts a typical project organizational structure:

The chart illustrates the permanent functional structure of the organization, consisting of
production, finance, marketing, engineering and research departments. There are two project
managers for project I and II. Each project manager has a project team consisting of personnel
drawn from various functional departments; and working under the leadership and control of
their project managers.

The chief merits of a project organization:

(i) Concentrated attention on project work:

In a project organization, there is full and concentrated attention of the project manager on
project work; as the project manager has no work other than attending to project management.
He has full powers to co-ordinate and control project activities. In fact, during continuance of the
project, functional managers renounce their authority over their project-team personnel, in favor
of the project manager.

(ii) Advantages of team specialization:

The project team formed for purposes of undertaking project work consists of specialists drawn
from many functional areas. This phenomenon makes available to the project organisation, the
advantages of team specialisation.

(iii) Ability to cope with environmental influences:

Due to the leadership of the project manager coupled with specialized knowledge of project team
members, the project organisation is in a better position to cope with environmental challenges.
In fact, one of the reasons for creating a project structure is to successfully combat environmental
forces.

(iv) Timely completion of the project:

The project organisation ensures a timely completion of projects; without disturbing the normal
functioning of the whole organisation.
The chief limitations of a project-organisation:

(i) Accentuated problems of co-ordination:

In a project organisation, there are increased problems of co-ordination; because of the diverse
viewpoints of team specialists. As a matter of fact, specialists have a tendency to over-emphasize
on their specialized viewpoints vis-a-vis the manner of project designing and implementation.

This tendency of specialists creates a serious headache for the project manager; who, all the time,
may be found busy in reconciling conflicting viewpoints of specialists getting little time for
attention towards project progress.

(ii) Unclearly defined relationship:

Usually, in a project organisation, the relationships between the project manager and functional
specialists are not very clearly defined. This situation may lead to tension between them; resulting
in poor human relations, in the project organisation. Ultimately, the project work efficiency may
be considerably reduced.

(iii) Feeling of insecurity among personnel:

Usually, there is a feeling of uncertainty in the minds of the project team personnel as to where
they will seek shelter; after a particular project (on which they were engaged) is over. This feeling
of uncertainty about assignment creates feeling of insecurity among personnel; and then they
tend to unduly stretch the existing project work-causing delays in timely completion of the
project.

(iv) Duplication of efforts:

A project organisation suffers from the limitation of duplication of efforts, involved in the
completion of project activities. When e.g. in a project organisation more than one or two
projects is/are undertaken; it is quite likely that the same types of activities might be duplicated,
during the completion of various projects. This phenomenon ultimately tells upon the overall
organizational efficiency and profitability.

Project Initiation
The initiation phase is the beginning of the project. In this phase, the idea for the project is
explored and elaborated. The goal of this phase is to examine the feasibility of the project. In
addition, decisions are made concerning who is to carry out the project, which party (or parties)
will be involved and whether the project has an adequate base of support among those who are
involved.

In this phase, the current or prospective project leader writes a proposal, which contains a
description of the above-mentioned matters. Examples of this type of project proposal include
business plans and grant applications. The prospective sponsors of the project evaluate the
proposal and, upon approval, provide the necessary financing. The project officially begins at the
time of approval.

The project initiation process

1. Create a project charter or business case

In this first step, you demonstrate why your project is necessary and what benefit it will bring. You
can do this with either a project charter or a business case. These two documents follow the same
fundamental idea, since they’re both used to outline key project details and pitch your initiative to
stakeholders. The main difference between them is scope—you can use a project charter for
smaller initiatives, and a business case for larger projects that require significant resources. For
example, you might create a project charter for a redesign of your company homepage, and a
business case for a company-wide rebrand.

Regardless of whether you use a project charter or a business case, this is your chance to
demonstrate how your project will add business value and why you need specific resources like
budget, equipment, or team members. Here’s a rough template of what these two documents
typically include:

Project charter

A project charter demonstrates why your project is important, what it will entail, and who will
work on it—all through the following elements:
 Why: The project’s goals and purpose
 What: The scope of the project, including an outline of your project budget
 Who: Key stakeholders, project sponsors, and project team members
Business case

A business case includes all the components of a project charter, along with these additional
elements:
 A comprehensive financial analysis, including an estimate of the return on investment
(ROI) your project will bring
 An analysis of project risks and a risk management plan
 An action plan that includes how decisions will be made (such as a RACI chart),
a communication plan, and next steps you’ll take if your business case is approved
2. Identify key stakeholders and pitch your project

Next up, determine who needs to sign off on your project charter or business case. This includes
key stakeholders who have a say in the outcome of your project—for example, executive leaders,
project sponsors, or cross-functional teams that you’re requesting budget or resources from. If
you’re not sure who your key stakeholders are, ask yourself the following questions:
Who needs to approve my project?
Who will provide resources for my project?
Who can influence my project?
You can also create a project stakeholder analysis to ensure you’re not overlooking any important
players. This methodology involves dividing stakeholders into four main groups: those with high
influence and high interest, high influence and low interest, low influence and high interest, and
low influence and low interest. Anyone in the first bucket (high influence and high interest) is
likely a key stakeholder that should approve your project during the initiation phase.

Aside from key stakeholders, now is also a good time to identify other individuals who may be
impacted by or interested in your project. While these people don’t need to officially approve
your initiative, it might be helpful to give them an early heads-up, especially if this project will
impact their work. They may also be able to provide additional support in the form of insight or
resources.

3. Run a feasibility study

At this point you’ve pitched your project, demonstrating that it adds value and fits with your
company’s overall strategic plan. Now, it’s time to run a feasibility study to confirm your project is
possible with the resources you have at your disposal.
Simply put, a feasibility study evaluates whether your project could be successful. It answers the
following questions:
1. Does my team have the required resources to complete this project?
2. Will there be enough return on investment (ROI) to make this project worth pursuing?
If you can answer yes to both questions, you have a solid rationale to move forward with your
project. If your feasibility study concludes that you don’t have enough budget or resources, you’ve
created a strong case to go back to stakeholders and request more. And if your project’s ROI isn’t
up to snuff, you can use that data to tweak your project plan—or pursue a different opportunity
entirely.
4. Assemble your team and tools

Now that your project is approved and its feasibility proven, you can finally start to assemble your
team, workspace, and tools. Here are some pointers to get you started:

 A good team can go a long way in making your project a success, and it can take time to
find people with the right experiences and skills. It’s a good idea to start this process as
soon as possible once your project is confirmed—especially if you need to hire new
employees or onboard contractors. And depending on your company’s procedures, you
may need to file a request in advance to reassign existing employees to your project.
 Consider how you want to organize your team structure. For example, do you want a
simple hierarchical structure with team members reporting into single team leads—or
does it make more sense to divide your team by geographical region?
 Where you work can influence how you work. If you’re planning to manage your project
remotely, make sure you have the right infrastructure set up to manage a virtual team.
And if your team will work onsite, keep in mind that you may need to request office space
well in advance of your project kick-off meeting.
 Choose the right tools. Consider how your team will work together on daily tasks—for
example, will you use email, Google docs, or more robust project management software?
You may want to consider a tool like Asana, which allows you to centralize team
communication in one place, assign tasks with clear owners and due dates, and easily
organize projects in a way that's tailor-made for your team.
Project Selection
Project selection is the evaluation of project ideas to help decide which project has the highest
priority. It's an important part of project portfolio management (PPM), which is a process used by
project management organizations (PMOs) and project managers to analyze the potential return
on undertaking a project.
Once project managers receive project ideas or proposals, they often go through a process to
assess and select a project that will move forward. Typically, when project managers select a
project, they may consider the following factors:
 Costs
 Resources
 Benefits or ROI
 Time to complete the project
 Risks associated with the project

How to select a project

Here are some steps you can take to select a project:

1. Make sure the project fits the company's strategy

Discuss with all stakeholders whether a project you're considering fits into the company's overall
business strategy. You can work together to identify where a project may meet a single
organizational goal or multiple goals, and whether they are short-term or long-term goals.

2. Understand your company environment

It's important to be you're aware of your organizational environment and understand your
company thoroughly. Consider asking yourself the following questions:
 What are the company's key business drivers?
 What are the company's strengths and weaknesses?
 Does the company have limited resources?
 If the company has resource limitations, where is it lacking?
3. Consider and analyze historical data

When you perform your analysis, consider previous experiences and refer to past information or
historical data as much as possible. Regardless of the outcome of a prior project, there are
environmental and organizational factors that likely influenced the outcome. Find out whether
there are changes to those factors, and discuss them with company executives or project
stakeholders.

4. Decide who will be the project champion

It's important to ensure a project has a designed champion or owner to make sure the project
stays on track and proceeds smoothly and efficiently to completion. The project champion is often
a high-level employee or executive with an interest in the project and excellent communication
skills to work with everyone involved with the project.

Project selection methods

There are several methods you can use to help you decide which project to select. These include:

Cost-benefit analysis

Before you take on a new project, you can perform a cost-benefit analysis to assess all the
potential costs and income that your organization might generate from the project. The result of
the analysis may uncover whether the project is workable or if the company should consider
another project.

Payback period

Another method you can use is the payback period, where you determine the time to recover the
cost of an investment. For instance, if you project you will spend $300,000 to execute a project
and expect it will generate revenue at the rate of $30,000 per year, your payback period would be
10 years.

Discounted cash flow

A discounted cash flow (DCF) analysis allows you to estimate the money your company would
receive from an investment or project, adjusted for the time value of money. The time value of
money presumes that a dollar today is worth more than a dollar tomorrow because you have
invested it. For instance, with a 5% annual interest rate, $1 in a savings account will be worth
$2.12 after a year. Likewise, if you delay a $1 payment for a year, its present value is 95 cents, as
you can't transfer it to your savings account to earn interest.
In order to perform a DCF analysis, it's important for a company to:
 Make estimates about future cash flows
 Make estimates about the ending value of the project
 Determine an appropriate discount rate for the DCF model
Opportunity costs

Opportunity costs refer to alternative benefits the company may realize when choosing one
alternative over another. Putting opportunity costs into consideration allows you to weigh the
benefits from alternative courses of action and not just the current choice or path being
considered in the cost-benefit analysis. By factoring in all options and the potential missed
opportunities, a company's cost-benefit analysis is more in-depth and allows for better decision-
making.

Ranking method

Ranking is a simple approach that ranks the projects on a scale according to their importance. The
benefit of the ranking method is its quick approach that enables you to identify top priorities. It
works effectively when there are limited criteria to assess and it's easy to evaluate the factors
involved. Before you assign rankings, it's important to ask yourself questions such as:
 What's the rate of return for this project?
 What are the qualitative and quantitative benefits to the stakeholders?
 How do efficiencies improve if the company executes this project?
 Does the company have the capability and capacity to execute the project?
Scoring model

The scoring model works when there are several selection criteria to consider and projects being
compared are very different. Instead of choosing one or two criteria, the scoring model considers
one to two groups of factors, such as risk, return on investment (ROI), benefits and strategic
alignment. Besides assigning a rating to each criterion, you give weight to each group. For
example, the risk may have a factor of 0.75, whereas benefits may have 1.5. You then compute
the weighted score to arrive at the final project score.