Chapter One: Overview of the Concept of project and project management

1.1 What is a project, program and portfolio?

1.2 Concept of project, program and portfolio management
1.3 Relationship between project, program and portfolio
1.4 Types and classifications of projects
1.5 Comparison between project and operation management
1.1 What is a project, program and portfolio?
What is a project?
 A project is a
 One-time,
 Multitask job
 With a definite starting point,
 Definite ending point,
 A clearly defined scope of work,
 A budget, and
 Usually a temporary team.

 A project is a problem scheduled for solution. - J. M. Juran

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Cont’d...

A project is defined as ‘A unique set of co-ordinated

activities, with definite starting and finishing points,
undertaken by an individual or organization to meet
specific objectives within defined schedule, cost and
performance parameters.’

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Cont’d...
 It is “A temporary endeavour undertaken to create a
unique product or service” (Project Management
Institute, 2004, p. 5).

 Projects are temporary in nature and have definitive

start dates and definitive end dates.

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Cont’d...
A project is defined as a sequence of unique, complex,
and connected activities having one goal or purpose
and that must be completed by a specific time, within
budget, and according to specification.

A project is a proposal consisting of collection of

activities performed to achieve a specific purpose so as
to get benefits that exceed costs.

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Cont’d...

 The project is completed when its goals and objectives are accomplished to the
satisfaction of the stakeholders.

 Sometimes projects end when it’s determined that the goals and objectives cannot be
when the product, service, or result of the
accomplished or
project is no longer needed and the project is
cancelled.

 Projects exist to bring about a product, service, or result that didn’t exist before.

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 Features of a project
1. Specific and Unique:
• Every project is unique in that it requires doing something
different than was done previously.
• Each project is unique in the sense that the activities of a project
are non routine.
• A project is a one-time activity, never to be exactly repeated
again. They do not involve repetitive processes.
• Projects involve doing something that has not been done before in
the same environment: having different location, different
design, different circumstances and situations and so on.
No two projects, even projects with the same general objectives, are
ever identical in planning or implementation.
 Cont…
2. Temporary
 A project has a definite beginning and definite end(finite
duration).
 Temporary does not necessarily mean the duration of the project
is short.
• It refers to the project’s engagement, it can be Can be a
3month project or 25 years project or …
 Temporary does not typically apply to the product, or service
created by the project;
•Most projects are undertaken to create a lasting outcome.
Projects are temporary activities as an ad hoc organization of
personnel, material, and facilities is assembled to accomplish a goal,
usually within a scheduled time frame.
3. Progressive Elaboration

 Continuously improving the plan as more information

becomes available as the project progresses.

 The characteristics of the product/service of the

project are determined incrementally and continually
refined and worked out in detail as the project
progresses or un-folds.

 Planning and documentation are iterative and ongoing

activities.
 Cont…

4. Requires Resources

 Project have resource limits, such as a limited amount

of budget, human, equipment and materials that are
dedicated to the project.

5. Risk
 Projects involve an element of risk i.e. Projects entail a
level of uncertainty regarding cost, schedule or
performance outcome and therefore carry project
risk.
1.2 Concept of project, program and portfolio management
Project Management

• Project Management is the skills, tools and management

processes required to undertake a project successfully”.

• Project management is a set of principles, practices, and

techniques applied to lead project teams and control project
schedule, cost, and performance risks to result in delighted
customers.

• It is a temporary endeavor that involves management functions

to achieve certain pre defined objectives.
• Project management involves a series of management
techniques and processes required to monitor and
control time, cost, quality and scope of projects.

• Project management is the discipline of planning,

organizing, securing, and controlling resources to
bring about the successful completion of specific
project goals.

• All the management functions are required to

effectively and efficiently manage resources required
to complete the project. These are :
Project planning involves:
 Looking ahead and charting out future course of
operation for projects
 Formulation of Objectives, policies, procedure,
rules, schedules and budgets
 In the planning stage, managers establish
organizational goals and create a course of
action to achieve them.
 During the planning phase, management makes
strategic decisions to set a direction for the
organization
Project organizing involves
 Bringing resources together and tying them together in
the pursuit of common objectives.
 Enumeration and identification of activities,
classification of activities, fitting individuals into
functions and assignment of authority for action.
 A project manager's organizational skills can help to
ensure a company or departmental unit runs
smoothly.
 Knowing which employees or teams are best suited for
specific tasks.
 Organization isn't just about delegating tasks efficiently
and making sure employees have what they need to
accomplish their tasks
Project directing involves
 Guiding, overseeing and leading people
 Motivation, leadership, decision making.
 Directing/Leading consists of motivating employees
and influencing their behavior to achieve
organizational objectives.

 Though managers may direct team members by

giving orders and directing to their team, managers
who are successful leaders usually connect with
their employees by using interpersonal skills to
encourage, inspire and motivate team members
to perform to the best of their abilities. 
Project Controlling
 Laying standards, comparing actual performance against
standards and correcting deviation-achieve objectives
according to plans.

 To ensure all of the above functions are working toward the

success of a company, managers should consistently monitor
employee performance, quality of work, and the efficiency and
reliability of completed projects.
 Controlling is the process of evaluating the execution of the
plan and making adjustments to ensure that the organizational
goal is achieved.
Project Objectives

There are three basic and common objectives

of any project:
The project must meet the prescribed quality
requirements,

The project must be accomplished within the

budgeted cost,

The project must be completed on time.

 Cont…

Performance/quality:

 The end result of the project must be fit for the purpose for
which it was intended. It should fulfill the requirements
based on the specification.

 The project owner and all the other stakeholders must be

satisfied.

 Development projects for consumer goods must produce

articles that satisfy the market requirements and conform
to all relevant legislation.
 Cont…

Budget:

 The project must be completed without exceeding the

authorized expenditure.

 Financial resources are not always inexhaustible and a

project might have to be abandoned altogether if funds
run out before completion, in which case the money
and effort already invested become forfeit and must
be written off.
 Cont…

Time of Completion:

 Actual progress has to match or beat planned progress.

 All significant stages of the project must take place no

later than their specified dates, to result in total
completion on or before the planned finish date.

 Consistentlyfailing to keep delivery promises can not

enhance the contractor’s market reputation and disrupt
the company’s following projects.
 Cont…

 The project scope is the definition of what the project

is supposed to accomplish and the budget (of time
and money) that has been created to achieve these
objectives.

 Any change to the scope of the project has a matching

change in budget, either time or resources. If the
project scope is to build G+3 building with a budget of
Birr 10,000,000 the project manager is expected to do
that. However, if the scope is changed to G+4, the
project manager must obtain an appropriate change in
budgeted resources. If the budget is not adjusted, the
project manager will avoid the change in scope.
 Cont…

 A key point to note in relation to project goals is that

they should be stated in a way that facilitates
measurement of achievements.
 The general rule is that project goals should be SMART –
an acronym for:
 Specific :
well defined and clear to anyone that has a basic knowledge of the project,
 Measurable :
How do we know how far away completion is and when it has been achieved,
 Action-oriented:
Indicate what should be done to achieve the objective,
 Cont…

 Reliable/achievable :
Do we have the resources (human, financial,
material, information, time) to make the goal
happen? Is the objective achievable with the
available resources and timeframe.
 Time-based :
It should identify a definite target date for
completion and/or frequencies for specific
action steps that are important for achieving
the goal on/within a specific time period.
 Program management is the process of managing
a group of ongoing, interdependent, related
projects in a coordinated way to achieve
strategic objectives.
1.3. Portfolio Vs. Program Vs. Project

Portfolio
 A collection of subsidiary portfolios, programs, projects, and
operations managed as a group to achieve strategic objectives.
Or
• Portfolios are collections of work (projects, programs, or sub-
portfolios) and are a way to plan and manage the projects from an
organization perspective. The projects may or may not be
related.

 Investment Process:
1. Security analysis (Risk and Return)
2. Portfolio selection

“Do not put all your eggs in one basket”

 Cont…

Program
 A group of related projects, subsidiary programs, and
program activities managed in a coordinated manner to
obtain benefits not available from managing them
individually.

• Programs are larger initiatives that are broken up into a set

of smaller projects and subprograms and then coordinated
centrally. The projects in a program are related to each other.

• Each project within a program has a project manager. The

major differences lie in scale and time span.
 1.4. Types of Projects
 Projects are classified according to the specific character of the
project.

 The principal identifying characteristic of a project is its

novelty.

 It is a step into the unknown, fraught with risk and uncertainty.

 No two projects are ever exactly alike: even a repeated

project will differ from its predecessor in one or more
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commercial, administrative or physical aspects.

 Projects can be classified based on several criteria.
1. Ownership
a) Private sector- mostly projects undertaken by business enterprises.
b) Public sector- projects undertaken by national and local government
body.
c) NGO’s – development projects undertaken by non-government and not
for profit organizations.
2. Based on the forces behind
a) Demand driven/need driven- based on identified unsatisfied demand
project can be created or on unsatisfied basic needs like food, water, and
shelter..
b) Donor driven- the force behind the financing organization.
c) Political driven
3. Based on the Nature of the projects
a. civil engineering, construction, petrochemical, mining
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b. Manufacturing
0

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Cont’d...

1. Civil engineering, construction, petrochemical, mining :

 These projects incur special risks and problems of
organization.
 They may require massive capital investment, and they
deserve (but do not always get) rigorous management of
progress, finance and quality.
 Operations are often hazardous so that health and safety aspects
demand special attention, particularly in heavy work such as
construction, tunnelling and mining.
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Cont’d...

Manufacturing:

 Manufacturing projects result in the production of a piece of

mechanical or electronic equipment, a machine, ship, aircraft, land
vehicle, or some other product or item of specially designed
hardware.

 The finished product might be purpose-built for a single customer

but internal research and development projects for products to be
sold in all market sectors also fall into this manufacturing
category.
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Management Projects: IT projects and projects
associated with management change
 This class of project proves the point that every company,
whatever its size, can expect to need project management
expertise at least once in its lifetime.
 These are the projects that arise
 when companies relocate their headquarters,
 develop and introduce a new computer system,
 launch a marketing campaign,
 prepare for a trade exhibition,
 produce a feasibility or other study report,
 restructure the organization,
 generally engage in any operation that involves the management and coordination of activities to
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produce an end result that is not identifiable principally as an item of hardware or construction.
Projects for pure scientific research
 Pure scientific research projects (not to be confused with research and development
projects) are truly a special case.
 They occasionally result in dramatically profitable discoveries.
 On the other hand, they can consume vast amounts of money over many years, yet
yield no practical or economic result.
 Research projects carry the highest risk because they attempt to extend the
boundaries of current human knowledge.
 The project objectives are usually difficult or impossible to define and there may be
no awareness of the possible outcome.
 Therefore, pure research projects are not usually amenable to the project management
methods that can be applied to industrial, manufacturing or management projects.

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 1.5. PROJECT VS. OPERATION
Discussion activity
People get confused between Projects and Operations
because they share some characteristics, such as:
 Both are performed by people.
 Both are planned, executed and controlled.
 Both have resource limitations.

Construction of a house is a project

but
manufacturing a product is a not project. Why?
 Cont…

 Operations are an ongoing execution of

activities and they follow an organization’s
procedures to produce the same result or a
repetitive service. Operations are permanent in
nature.
 Ordinary daily work typically requires doing the
same or similar work over and over,
 while a project is done only once; a new product
or service exists when the project is completed.
 Projects should not be confused with everyday
work.
A project is not routine, repetitive work!
 Comparison Projects/ Operations/
criteria (for Project Work Functional work
Differences)
Type of work/product Unique The same
Work/Product
Time Definite beginning and No definitive
ending beginning and ending
Occurrence Temporary in nature Ongoing, repetitive

Budgets For specific projects On-going operational

budgets

Focus Completing the Accomplishing

project effective work