Project Management

What is a project?
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A project is any task within an organization that does not fit neatly into ¶business-as-usual·. A project is a means of moving from a problem to a solution via a series of planned activities. A project has a definite beginning and end. Projects consist of several activities.

More Description
Series of actions to achieve a result
‡Single occurrence a unique, non-repetitive assignment ‡Time limitations with a pre-defined date of delivery ‡Clear purpose specified from one or more goals (well defined, measurable and realistic), ‡Unpredictable structure it consists of a number of complex activities with mutual interdependencies ‡Own organization e.g. Not in the original line of work ‡Procurer internal or external acquirer that has expectations on the result

Definition of project
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According to James P. Lewis, ´A project is one time job that has defined starting and ending dates, a clearly specified objective, or scope of work to be performed, a predefined budget, and usually a temporary organization that is dismantled once the project is completedµ

Parameters of project (previous parameters) cost Quality Time Scope .

New parameters of project Cost Customer Expectation Quality Scope Time .

Characteristics of Project ` ` ` ` ` ` ` ` Objectives Life Span Single entity Team Work Life Cycle Uniqueness Change Successive Principle .

Cont« ` ` ` ` ` ` Customer specific Unity in diversity High level of sub contracting Risk and uncertainty Optimality Control Mechanism .

In some cases project teams may consist of people from different organizations. The project team will be responsible for delivery of the project end product to some sponsor within or outside the organization. Project teams are likely to lie outside the normal organization hierarchies. ` ` ` . The activities of this team may be co-ordinated by a project manager.Features of projects ` Carried out by a team of people. Consist of people from different backgrounds and different parts of the organization.

Who is involved? ` Projects usually involve a team who are managed by a project manager or project leader who may be appointed for the duration of the project. .

.MANAGEMENT ` Management is working with or through other people to accomplish objectives of both the organization and its members.

What is Managed? ‡ Project management refers to the administration of the project. . its supervision and organization. It means analyzing the objectives of the project. defining the tasks needed to achieve these objectives and controlling the execution.

.  organizing.Project Management ` It is the discipline of  planning. and  managing resources for successful completion of o specific project goals and objectives.

. time.In other words ` ` ` ` ` It is the discipline of managing all the different resources and aspects of the project in such a way that the resources will deliver all the output that is required to complete the project within the defined scope. and cost constraints.

implementation.What is included ` ` ` Project management includes developing a project plan implementing the project plan along with careful controls to ensure that the project is being managed according to the plan. evaluation and closing. project planning. . Project management usually follows five major phases ² feasibility study.

The aim of a project plan is to go through. . specifying how the goals will be accomplished. document and agree upon important issues that define the work in the project. and relating budgets and time for completion. what resources are needed.What is a project plan? It includes defining project goals.

goal oriented and temporary nature of the project. ` ` . heads the project organization and operates independent of the normal chain of command.Characteristics of Project Management ` A single person. The project manager is the focal point for bringing together all efforts toward a single project objective. Because each project requires a variety of skills and resources. the actual work might be performed by people from different functional areas or by outside contractors. the project manager. This organization reflects the cross functional.

The project manager is responsible for integrating and overseeing the start and completion of activities ` . The project manager negotiates directly with functional managers for support.Cont« ` The project manager is responsible for integrating people from different functional disciplines working on the project.

functional units must maintain an ongoing pool of resources to support organizational goals. conflict may exist between the project and functional managers over the time and talent to be allotted to a project.Cont« ` The project focuses on delivering a particular product or service at a certain time and cost and to the satisfaction of technical requirements. outcomes. and rewards are shared among members of the project team and supporting functional units ` . Decision making. As a result. In contrast. accountability.

the functional units from which it is formed are permanent. procurement. When a project ends. the project organization is disbanded and people return to their functional or are reassigned to new projects. Project management sets into motion numerous other support functions such as personnel evaluation. ` .Cont« ` Though the project organization is temporary. and information systems. accounting.

Need of Project management ` ` ` ` ` Magnitude of the effort Unfamiliarity Changing environment Interrelatedness Reputation of the organization .

Scope of Project Management ` ` ` ` Nature of the problem for which the project is designed Specification. In fact the scope or coverage of any project will depend in the hands of the project manager who handles unique problems with available resources . limitation of the problem for which the project is designed Range of accuracy and quality needed in solving the problems by the project Benchmarks of acceptability of project results in its range.

` ` . ensuring that "technical´ versus "cost" trade-offs determine the specific areas where optimization is necessary. urgently requiring the active involvement of all functional areas involved.Responsibilities of the Project Manager ` To plan thoroughly all aspects of the project. in order to obtain and maintain a realistic plan that satisfies their commitment for performance. Strong positive leadership must be exercised in order to keep the many disparate elements moving in the same direction in a co-operative manner. To lead the people and organizations assigned to the project at any given point in time. To control the basic technical definition of the project.

Cont« ` To control the organization of manpower needed by the project. ` ` . these being the overall standard by which performance of the project manager is evaluated. To monitor performance. exercising judgment and leadership in determining the causes of problems and facilitating solutions. costs and efficiency of all elements of the project and the project as a whole. To complete the project on schedule and within costs.

and other stakeholders. .Common problem in projects Information and communication Lack of communication and structure is often a problem in projects Difficulty in involving the project members. the customer.

Why do projects go wrong? ` ` Project goals are not clearly defined There can be constraints on the completion of projects arising from the different objectives of: ` ` ` ` Short time scale Resource availability Quality factors Human factors .

Starting a new venture ` ` ` ` Generation of idea Initial Screening Idea Promising Feasibility Analysis ` ` ` ` ` Market Analysis Technical Analysis Financial Analysis Economic and environment analysis Political analysis .

Cont« ` ` ` Prepare the funding proposal Planning Implementation .

Project Finance ` ` ` ` ` raising of funds to finance a separate capital investment proposal lenders mainly rely on the estimated CASH FLOW from the project to service their loans. .

Cash flows from the project related assets alone are considered for assessing the repaying capacity. ` ` . End use of borrowed funds is not strictly monitored by the lenders. Creditors ensure proper utilization of funds and creation of assets as envisaged in the project proposal.Difference between conventional financing and project financing Conventional financing ` Project Financing ` Cash flow from different assets and businesses are combined and analyzed to assess the repaying capacity.

Project financiers are keen to watch the performance of the enterprise and suggest/ take remedial measures as and when required to ensure that the project repays the debt out of its cash generations.Cont« Conventional financing ` Project Financing ` Creditors are not interested in monitoring the performance of the enterprise and they are interested only in their money getting repaid in one way or the other. . They sometimes appoint their nominee in the Board of Directors of their clients in order to monitor the operating performance of companies.

Sources of finance ` ` ` ` ` ` ` ` Equity shares Preference shares Debentures Retained profits Commercial banks Financial institutions Internal accruals Public deposit ` Capital investment subsidy ` ` Area subsidy Product subsidy ` ` ` ` ` Lease financing Unsecured loans Bridge finance Deferred credits Term loans .

Equity Shares Merits ` ` ` ` ` Demerits ` ` ` ` Permanent source of capital No fixed rate of dividend Suitable to raise loan No charge on assets Enjoy voting right Risk of no returns Chances of over capitalization Loose the opportunity of trading on equity Higher dividend more market value and more speculation .

Preference Shares Merits ` ` ` Demerits ` ` Gives safety of investment Fixed rate of return Have restricted voting rights Investors are less interested Right of equity shareholders over the assets are diluted .

Debentures Merits ` ` ` ` ` ` Demerits ` ` ` Appeal to conservative investors Regular return Do not weaken control of shareholders Economical source Trading on equity Tax relief Burden of interest Charge on assets Increased risk shareholders for .

Retained profits Merits ` ` ` ` ` ` ` ` Demerits ` ` ` Economical Financial strength Multiple purpose No fixed obligation No security Stabilizing rate of dividend on equity shares Capital formation Shock absorption Misutilisation of funds Over capitalization Dissatisfaction of shareholders .

Commercial banks Merits ` ` ` ` ` ` Demerits ` ` ` ` ` Economical for short term loan Flexibility Concessional rates to small units Consultancy Easy repayment No interference Short period Lengthy procedure Need for security Uncertain Interest burden .

Financial institutions Merits ` ` Demerits ` ` ` ` ` ` Provide long term and medium term finance Provide loan by purchasing shares and debentures Underwriting Grant loan in foreign currency Provide guarantee Complex procedure Restrictions on burrowers Interference in management .

Internal Accrual Merits ` ` ` Demerits ` Readily available No issue cost No dilution of control Amount may be limited .

Public Deposits Merits ` ` ` ` ` ` Demerits ` ` ` ` ` Cheaper source Low floating cost Trading on equity No dilution of control of shareholders No security Flexibility in raising and refunding Unreliability Misuse of funds Fixed obligation Limited to medium term Unsuitable .

Process of Project Management ` ` ` ` Clarifying the nature of the project Defining goals and objectives Feasibility studies Detailed organization of the project: ` ` Project definition Planning and scheduling ` Project implementation and control .

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