Project ManageMent (SoB 628)

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 Project

 A Project is a combination of human and non-human resources put

together in a temporary organization to achieve a specified purpose.

 Project is a system involving co-coordination of a number of

interrelated activities to achieve a specific objective.

• Newman define that "a project typically has a distinct mission that it is
designed to achieve and a clear termination point, the achievement of
the mission".

• Gillinger defines project “as the whole complex of activities involved in

using resources to gain benefits.”

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 Contd.

Institute of Project Management “A project is a temporary Endeavour undertaken

to create a unique product or service.”

Meredith and Camuel “A project is a specific, finite task to be accomplished,

whether it is large or small scale and whether it is long or short run is not
particularly relevant.”

(ISO10006) “Project is a unique process, consist of a set of coordinated and

controlled activities with start and finish dates, undertaken to achieve an objective
confirming to specific requirements, including the constraints of time cost and
resource”.

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 Types / Classification of Project
1) Quantifiable and Non-Quantifiable Project:
Projects concerned with industrial development, power generation,
mineral development are categorised under ‘quantifiable projects.‟ Non-
quantifiable projects involving health education and defence as an
examples .

2) Sectoral Projects: A project may fall in anyone of the following sectors:

(i)Agriculture and Allied Sector
(ii)Irrigation and Power Sector
(iii)Industry and Mining Sector
(iv)Transport and Communication Sector
(v)Social Services Sector
(vi)Miscellaneous Sector
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 Contd.

3) Techno-Economic Projects:

(i) Factor Intensity-Oriented Classification: If large investment is made in

plant and machinery, the projects will be termed as 'capital intensive'.
Projects involving large number of human resources will be termed as
'labor intensive'.

(ii) Causation-Oriented Classification: The very existence of demand for

certain goods or services makes the project demand-based and the
availability of certain raw materials, skills or other inputs makes the
project raw material-based.
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 Contd.

(iii)Magnitude-Oriented Classification: Based on the size of investment

involved in the projects, the projects are classified into large scale,
medium - scale or small scale projects.

4) Nature of Projects:

(i) Expansion of existing units.

(ii) Establishing a new unit.

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 Project Cycle
Project cycle has five stages – identification, formulation, appraisal,
implementation and monitoring and evaluation.

(i) Identification: Identification could be from several sources: progressive farmers,

entrepreneurs, technical experts, local leaders, bankers, mass media, extension
agencies and national policies and plans.

(ii) Formulation: Preparation of feasibility study is the first step in analysis. Advanced
techniques of project planning like Programme Evaluation and Review Techniques
(PERT) and Critical path Method (CPM) are used in capital intensive and complex
project and those with longer gestation period (the period between starting of
implementation of the project and income generation).
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 Contd.

(iii)Appraisal: After preparation, every project is appraised by an independent agency. This

includes analysis and scrutiny of each and every aspect, details and assumptions made in the
project. Generally banks have to undertake the appraisal of project before financing. The
appraisal is also assigned to specialized agencies in case of complex project. The appraisal is
conducted from several aspects like technical, financial, commercial, managerial, economic,
distributive and environmental. Even within financial appraisal, there are various types of
analysis.
(iv) Implementation: Implementation basically means translating the proposal into a
ground level project. The phases of the implementation are:
a) Pre development phase: This involves getting registration, licenses and loan disbursement,
b) Development phase: Construction of structures and starting up of production, and
c) Operational phase : Starts with production and concludes when the economic life of the
project comes to an end.
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 Contd.

(V)Monitoring and Evaluation: The final phase in project cycle is the monitoring and
evaluation. Evaluation keeps track of the project, usually done by collecting certain
performance indicators about the project to check whether the project is performing
according to the plan, identifying problem areas and finding possible solutions. There
are two types of monitoring which banks undertake:

a) Desk monitoring based on collected data and

b) Field monitoring, based on actual field visit.

Evaluation is conducted for the purpose of learning lessons of success and failure from
the project. There are several organizations (like NABARD or training establishments)
which conduct such evaluation studies and publish them for wider circulation.
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 Project Identification
• Project identification is the first step of a new venture. A right direction may enable an
entrepreneur to scale new height. Otherwise, he has to undergo a number of hurdles
in his way. It is therefore, very crucial to entrepreneurs to identify project.

• Project identification is concerned with collection, compilation and analysis of

economic data for the eventual purpose of locating possible opportunities for
investment.

STEP 1 : SEARCH OF NEW IDEA / GENERATION OF IDEAS / SEARCH OF BUSINESS

OPPORTUNITY:
• The search for promising project idea is the first step towards establishing a
successful venture. Identification of such opportunities requires imagination,
sensitivity to environmental changes and realistic assessment of what the firm can do.
Entrepreneur takes the help many tools to generate new ideas like:
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 Contd.

(i) SWOT Analysis:

SWOT is an acronym for Strength, Weaknesses, Opportunities and Threats. On analyzing

these factors one can come up with new ideas on:

 Cost Reduction

 Productivity improvement

 Increase in capacity utilization

 Improvement in contribution margin

 Expansion into promising fields

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 Contd.
Internal Strengths Weaknesses
factors  Political support.  Project is very complex.
 Funding available.  Likely to be costly(huge investment).
 Market experience.  Lack of experience.
 Strong leadership.  Lack of trained personnel.
 Any foreign collaboration.  Inability to forecast market trends.
 Industrial contacts.

External Opportunities Threats

factors  Project may improve local economy.  Environmental constraints.
Competitor weakness .  Time delays.
Government & other incentives.  New Technology( make the previous
Project will boost company's public product outdated).
image.  National and global economic conditions.
New technology (create new market).  Stiff competition in market.
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(ii)Brainstorming:
It is probably the most well known and widely used for creative idea generation. It is an
unstructured process for generating all possible ideas within a limited time frame
through the spontaneous contributions of participants. The participants can be the
entrepreneur's family members, friends, business partners, hired experts etc.
(iii) Other constrains:
 Analyze the performance of Existing Industries
 Examine the inputs and outputs of various Industries
 Review Imports and Exports
 Study Plan Outlays and Government Guidelines
 Look at the suggestions of Financial Institutions and Developmental Agencies
 Investigate Local Materials and Resources
 Analyze Economic and Social Trends
 Explore the Possibility of Reviving Sick Units
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 Contd.
STEP 2 : SELECTION OF BUSINESS OPPORTUNITY/ SHORT LISTING IDEAS /PRELIMINARY
SCREENING:

• The entrepreneur might have searched a number of business opportunities and there
is a need to select the best one idea which can be carried on to achieve the objective of
entrepreneur. Below mention points helps the entrepreneur to select the best idea:
1. Compatibility with the Promoter
The idea must be compatible with the interest, personality, and resources of the
entrepreneur. According to Murphy, a real opportunity has three characteristics:
i) It fits the personality of the entrepreneur (abilities, training etc.)
ii) It is accessible to him
iii) It offers him the rapid growth and high returns

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 Contd.
2. Consistency with Governmental Priorities:
i) Is the project consistent with national goals and priorities?
ii) Are there any environmental effect contrary to governmental regulation?
iii) Can the foreign requirements of the project be easily accommodated?
iv) Will there be any difficulty in obtaining the licenses for the project?
3. Availability of Inputs:
i) Are the capital requirements of the project within manageable limits?
ii) Can the technical know-how required for the project can be obtained?
iii) Are the raw materials required for the project available domestically at
reasonable cost?
iv) Is the power supply for the project reasonably obtainable from external
sources?

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 Contd.
4. Adequacy of the market
i) Total present domestic market
ii) Competitors and their market shares
iii) Export market
iv) Quality-price profile of the product vis-à-vis competitive product
v) Sales and distribution system
vi) Projected increase in consumption
vii) Patent protection
5. Acceptability of Risk Level
i) Vulnerability to business cycles
ii) Technological Changes
iii) Competition from substitutes
iv) Competition from Imports
v) Governmental control over price
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 Contd.
6. Socio-Demographic Sector
i) Population trends
ii) Income distribution
iii) Educational Framework
iv) Attitudes toward consumption and investment

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STEP : 3 ASSESSMENT OF VIABILITY / PROJECT APPRAISAL / FEASIBILITY STUDY

Feasibility study is to initially identify the following aspects:

• i. Technical soundness of the project.

• ii. Administrative feasibility of the project.

• iii. The economic and financial viability of the project proposal.

• iv. Considerations of customs and traditions of project benefactors, issues of

compatibility.

The results of a feasibility study influences decisions to commit or not commit scarce
resources to a given project .

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 KEY ISSUES IN PROJECT ANALYSIS:

Potential Market

Market Analysis
Market Share

Technical Viability
Technical Analysis
Sensible Choices

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 Risk
Financial Analysis
Return

Benefit and Cost in

Shadow pricing
Economic Analysis
Other Impact

Environmental
Damage
Ecological Analysis
Restoration
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Measures 21
 Project Performance Dimensions
• Three major dimensions that define the project performance are scope, time, and
resource. These parameters are interrelated and interactive. The relationship
generally represented as an equilateral triangle. The relationship is shown in fig. 1

Fig.1 Project performance

dimensions

• It is evident that any change in any one of dimensions would affect the other.

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 Contd.
For example:-
 if the scope is enlarged, project would require more time for completion and the cost would
also go up.

 If time is reduced the scope and cost would also be required to be reduced. Similarly any
change in cost would be reflected in scope and time.

 Successful completion of the project would require accomplishment of specified goals within
scheduled time and budget.

 In recent years a forth dimension, stakeholder satisfaction, is added to the project. However,
the other school of management argues that this dimension is an inherent part of the scope of
the project that defines the specifications to which the project is required to be implemented.
Thus the performance of a project is measured by the degree to which these three parameters
(scope, time and cost) are achieved.
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 Contd.
Mathematically

 Performance = f(Scope, Cost, Time)

 In management literature, this equilateral triangle is also referred as the

“Quality triangle” of the project.

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 Project Life Cycle
• The sequence of the groups of activities through which the project passes from
‘conception to completion’ is known as its life cycle.

• Every project is unique and is composed of a number of activities. These activities are
inter-related and dependent on each other.

• There is a systematic and logical sequence of performing these activities. The

sequence follows the order in which these activities are to be carried out.

• The duration in which these activities are to be performed is known as its life span.
Hence, the entire sequence of activities to be performed from the beginning to the end
of a project is called ‘Project Life Cycle’ (PLC).

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 Project management
• Project management is a distinct area of management that helps in handling projects.
It has three key features to distinguish it from other forms of management and they
include:
 Project manager,
 Project team
 Project management system.

• The project management system comprises organization structure, information

processing and decision making and the procedures that facilitate integration of
horizontal and vertical elements of the project organization.

• The project management system focuses on integrated planning and control.

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 Contd.
Benefits of Project Management Approach
The rationale for following project management approach is as follows.

• Project management approach will help in handling complex, costly and risky
assignments by providing interdisciplinary approach in handling the assignments.
Example: R&D organizations.

• Project management approaches help in handling assignments in a specified time

frame with definite start and completion points .Example handling customer orders
by Industries involved in production of capital goods.

• Project management approaches provide task orientation to personnel in an

Organization in handling assignments. Example: Organizations in IT sector
handling software development assignments for clients.

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 Project Management Elements
• Project management typically involves a variety of different elements, which may
vary depending on the specific project and its goals. Some of the most common
elements of project management include:

1.Project Initiation: This is the first step of a project, where you identify the
purpose, goals, and objectives of the project, and determine whether it is
feasible to undertake.

2.Project Planning: Once you have identified the goals and objectives of the
project, you will need to develop a plan for how you will achieve them. This
involves defining project scope, timelines, resources, risks, and stakeholder
involvement.

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 Contd.

3.Project Execution: This is the phase where you begin to implement the
project plan. You will be managing resources, tracking progress, and ensuring
that the project is moving forward according to plan.

4.Project Monitoring and Control: During the execution phase, you will need to
monitor progress and performance, identify any issues or problems, and take
corrective action as needed to keep the project on track.

5.Project Closure: Once the project has been completed, you will need to close it
out properly. This may include documenting the project results, holding a
project review, and transitioning the project deliverables to the appropriate
stakeholders.

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 Contd.

6. Communication: Communication is a critical element of project management,

as it helps to keep stakeholders informed and engaged throughout the project
lifecycle.

7. Risk Management: This involves identifying, assessing, and managing risks

that may impact the project's success.

8. Quality Management: This involves ensuring that the project deliverables

meet the required quality standards.

9. Resource Management: This involves managing the resources (e.g., personnel,

equipment, materials) needed to complete the project.

10.Stakeholder Management: This involves identifying and engaging with

stakeholders, and managing their expectations and needs throughout the
project.
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 Significance of Project Management

1. Improved Efficiency and Effectiveness: Project management helps to

improve the efficiency and effectiveness of project delivery by providing a
structured approach to planning, organizing, and controlling project activities.

2. Increased Stakeholder Satisfaction: Proper project management ensures

that project stakeholders are kept informed, engaged, and involved throughout
the project lifecycle, which helps to increase satisfaction and build trust.

3. Better Resource Utilization: Project management helps to optimize the use of

resources, including personnel, equipment, and materials, which can lead to
cost savings and improved project outcomes.

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 Contd.

4. Risk Management: Project management provides a framework for identifying,

assessing, and managing risks, which helps to minimize project disruptions and
ensure successful project outcomes.

5. Alignment with Business Goals: Project management helps to align project

objectives with overall business goals and strategy, ensuring that projects are
contributing to the success of the organization.

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 Emerging Issues in Project Management
1. Agile Project Management: With the increasing demand for flexibility and
adaptability in project delivery, there is a growing trend towards agile project
management methodologies that emphasize collaboration, continuous improvement,
and rapid response to change.

2. Sustainability: As organizations become more conscious of their environmental

impact, there is a growing need to incorporate sustainability considerations into
project planning and execution.

3. Virtual Project Management: With the rise of remote work and virtual teams, there
is a need for project management approaches that can effectively manage projects in
a distributed and decentralized environment.

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 Contd.

4. Project Portfolio Management: As organizations undertake multiple projects

simultaneously, there is a need for effective project portfolio management to ensure
that resources are allocated optimally and that projects are aligned with business
goals.

5. Digital Transformation: With the increasing digitization of business processes,

there is a growing need for project management approaches that can effectively
manage digital transformation projects, which often involve complex technical
challenges and require a high degree of collaboration and coordination.

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Identification of investment opportunities and their feasibility

• In project management the process of identifying potential projects or investment

opportunities and assessing their feasibility, viability, and profitability.

• This process involves evaluating the potential risks and benefits associated with
each investment opportunity, as well as the resources required to execute the
project.

• The identification of investment opportunities typically involves conducting market

research, analyzing industry trends, and assessing the competitive landscape to
identify potential projects that align with the organization's goals and objectives.

• Once potential investment opportunities are identified, a feasibility study is typically

conducted to determine the viability and profitability of the project.

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 Feasibility Study
• The feasibility study involves analyzing the financial, technical, operational, and
market factors that could impact the success of the project.
• The feasibility study typically includes the following components:
1. Market Analysis: This involves evaluating the demand for the proposed product
or service and the potential competition in the market.
2. Technical Analysis: This involves evaluating the technical feasibility of the
project, including the availability of resources and the technical skills required to
execute the project.
3. Financial Analysis: This involves evaluating the financial viability of the project,
including the projected costs, revenue, and potential return on investment.
4. Operational Analysis: This involves evaluating the operational feasibility of the
project, including the resources required to execute the project and the potential
risks and challenges that could arise.
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