Project Management

By Dr. P.K. Gupta

What is a Project? 

An activity for satisfaction of need or desires A flow of resources (energy) to achieve a specific objective A conversion process(I-O)  

PMI Definition
A project is a one-shot, time limited, goal directed, major undertaking,

requiring the commitment of varied skills and resources.

Project Defined
a project is a one-time effort, nonrepetitive in nature, undertaken in fulfilment of a specific objective, expected to be completed within a specified schedule and requiring the commitment resources of varied skills and

Special Characteristics of Projects 

Definite Objective Uniqueness(unfamiliarity, one-time effort) Commitment of varied skills and resources A life cycle (specified schedule)   

Projects & Strategy
Projects are resource consuming sets of activities through which strategies are implemented and goals are pursued. Project deploy as well as contribute to the Organizational Strategy

Why to worry about capital expenditures (projects)? 
   

Irreversibility of investment Huge Outlays Long-term effects Uncertain cost and revenues Cause and effect relationship with the and organizational strategies mission, objectives

Projects and Business Models 

A clear business model is must for the success of a project. Business model is a business concept put into practice. The competition is not between the products or companies but between the business models Therefore, in a competitive environment , Business Concept innovation is essential to imagine dramatically different business concepts or new ways of differentiating existing business concepts. 

 

Why do projects fail? 

Dissonance between the organizational strategy and project goals Lack of vision to view projects as being strategic Poor resource coordination in project implementation  

Why do projects fail?

Projects fail because of the failure of the underlying assumptions

Identifying White-elephant Projects 

White-elephant projects usually have some glamorous appeal, which passes for real worth, thus blinding those involved as to their inherent unsoundness. Often they are overambitious schemes which are too grandiose for the situation, projects which are too large for the market to they can realistically hope to serve, projects which are too fancy in their housing, their equipment, or their organisation.  

Fortunately, the seriously unsound projects are not usually disguised.

Characteristics which make them fail (visible in informative stage)
y Unnecessarily risky y Weak /Unreliable financing y Rash / Inexperienced Management y Inadequate size y Uncertain market y Requiring consumers be induced to make a great change in their buying habits or tastes y Lack prospective cost-advantages

The Characteristics of Sound Projects
y They have a market , either home or abroad y They have a prospective advantage in production costs compared to foreign or domestic competitors y Because of above, they have a prospect of high commercial profitability to attract private lenders or investors.(and therefore financing problem is solved)

PROJECT DEVELOPMENT CYCLE
Pre-investment Phase 

Identification of Investment Opportunities Pre-feasibility Study Feasibility Study Decision-making   

Project Development Cycle(Contd....)
Implementation Phase 

Project Engineering Negotiations and Contracting Construction Training Plant Commissioning    

Project Development Cycle(Contd...)
Operational Phase 

Performance Review Covers the longest part of the life of the project Provides basis for further capital budgeting decisions  

Generating Project Ideas 
       

Study Imports and exports Study Available Skills Make Industry Studies Apply Technology Examine Inter-industry Relationships Evaluate Development Plans Review Old Projects Observe Experience Elsewhere Use Industry Lists

Project Rating Index
Factor Weight Rating
(Numerical Scale)

Factor Score

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