PROJECT ANALYSIS AND EVALUATION

ACFN 613 CREDIT=3

M.SC., ACCOUNTING AND FINANCE
SECOD YEAR FIRST SEMESTER
CHAPTER-TWO
CONCEPTS AND PRINCIPLES OF PROJECT
MANAGEMENT

PROF.DR.CHINNIAH ANBALAGAN
PROFESSOR OF ACCOUNITNG AND FINANCE
COLLEGE OF BUSINESS AND ECONOMICS
SAMARA UNIVERSITY, AFAR, ETHIOPIA EAST AFRICA
MAIL ID: DR,CHINLAKSHANBU@GMAIL.COM
 Project Parameters Definition

• Project parameters define the scope, budget,

schedule, and quality of the project.
• There is an interrelationship among these
parameters.
• If you choose to increase the scope, you
must also increase the schedule or budget.
• If you reduce the budget, you must increase
the schedule, reduce the quality, and/or
reduce the scope of the project.
 Basic Concepts Of A Project

• A project in project management is a

temporary and unique endeavor that aims
to achieve specific objectives within a
defined timeframe, budget, and scope.
• It involves planning, executing, and
controlling resources to deliver a desired
outcome that meets stakeholder
expectations
 Four Concepts Of Management

• Originally identified by Henri Fayol as five

elements, there are now four commonly
accepted functions of management that
encompass these necessary skills:
• Planning,
• Organizing,
• Leading, and
• Controlling.
 Five Essential Elements of Project Management

Utilization of information, expertise, methods, and

processes is a requirement for project
management. The following are the top five
Elements of Project management
• 1. Project Scope Management
• 2. Project Time Management
• 3. Project Cost Management
• 4. Project Quality Management
• 5. Project Risk Management
 Stage of Change Model

7 step change model

– Case for Change.
– Engage Stakeholders.
– Create Shared Vision & Strategy.
– Communicate Vision & Strategy.
– Remove Barriers.
– Implement Strategy.
– Sustain.
Project Parameters
 The 7S model

• The 7S model is a framework that helps you

analyze the alignment and performance of
your project across seven key elements:
• Strategy,
• Structure,
• Systems,
• Skills,
• Staff,
• Style, and
• Shared values.
 Strengths And Weaknesses Of Project Using The 7s Model

• How do you assess the strengths and

weaknesses of your project using the 7S
model?
• 1. Step 1: Define your project goals and vision
• 2. Step 2: Collect data on the seven elements
• 3. Step 3: Analyze the data and identify gaps
• 4. Step
4: Develop and implement action plans
McKinsey 7-S Model
 The Scope Triangle

• The scope of the project triangle

• It is understood that the area of the triangle
represents the scope of a project which is
fixed and known for a fixed cost and time.
• In fact the scope can be a function of cost,
time and performance, requiring a trade off
among the factors.
• In practice, however, trading between
constraints is not always possible.
Project Management Triangle
 Project management triangle

Why it matters?

• It helps to see how changing one project

constraint will affect other
constraints. It can help mitigate risks.
• It can clarify priorities in a project.
Managing the Project Management Triangle

 Communicate with stakeholders

 Establish risk management processes
 Create change management processes
 Choose a methodology based on
constraints
 Important of Project Management Triangle
• The project management triangle helps project
managers manage risks and change easier,
pinpoint and manage project priorities well and
offer clear communication to clients.
• In the end, with these factors well managed, the
project is more likely to produce a quality final
deliverable. Below is a deeper look at these
benefits and how they work in real time.
• Manage Change Easier
• Priority Clarification
• Easier Client Communication
• Reduce Risk
Strategies to Manage the Project Management Triangle
• Here are five possible ways to manage your project management
triangle:
• 1. Choose at Minimum One Flexible Constraint
• 2. Clarify Nice-to-Haves
• 3. Create a Risk Management Plan
• 4. Create a Change Management Plan
– Change management roles
– Limitations
– Change-request time frame parameters
– The change in the communication process
– Change management tools
• 5. Match a Management Methodology to Your Priority Constraint(s)
– Waterfall, Agile and Lean
 Difference Between Project Management and Program Management

Difference Between Project Management and

Program Management
• Program management uses the same principles
and techniques as project management, but as its
name suggests, it consists of managing programs
instead of projects.
• Programs are a group of related projects that are
executed simultaneously to make the most out of
an organization’s available resources which
presents unique challenges for project
management professionals
 Difference Between Project Management
and Project Portfolio Management
Difference Between Project Management and
Project Portfolio Management
• The main difference between project
management and project portfolio management
is that the latter focuses on prioritizing projects
based on the business objectives and strategic
goals of an organization.
• Now, let’s review the history of project
management and explain its importance for
organizations in any industry.
 Principles of Project Management

• 1. Define a Project Organization Structure

– The project organization structure
• 2. Set Clear Project Goals & Objectives
– The project planning phase
• 3. Create a Communication Plan
– A primary communication plan
• 4. Define Roles & Responsibilities
– manage the scope of work
• 5. Create a Risk Management Plan
– Using a risk register template
• 6. Set a Project Performance Baseline
– need project performance
• 7. Create a Change Management Plan
– team starts the project execution phase, create a
change management plan
• 8. Focus on Value Delivery- meet their project requirements
Project life cycle

Project Mgt 20
 Project life Cycle
One of the important features of a project is its life cycle.
It is convenient to think of project task as taking place in
several distinct stages.
These stages are commonly referred to as the project life
cycle.
Project life cycle encompass the whole process of project
analysis..
The project life cycle is the stages of activities, through
which projects run, and which constitute a definite sequence.
They are closely linked to each other and follow a logical
procession.
Thus, the distinctions among the various stages of the
project cycle are often blurred in practice
 Project life Cycle
One of the important features of a project is its life cycle.
It is convenient to think of project task as taking place in
several distinct stages.
These stages are commonly referred to as the project life
cycle.
Project life cycle encompass the whole process of project
analysis..
The project life cycle is the stages of activities, through
which projects run, and which constitute a definite sequence.
They are closely linked to each other and follow a logical
procession.
Thus, the distinctions among the various stages of the
project cycle are often blurred in practice
 Con’t
A project cycle is the step-by-step process by which a project is
identified, formulated, implemented, evaluated, and completed
(World Bank, 2008).
Project life cycle refers to the various stages through which a
project passes from its time of inception up to its completion.
The stages/phases of project cycle constitute a specific sequence
that is cyclical in nature.
Most, if not all, projects go through a life cycle which varies with
the size and complexity of the project.
 Project cycle Models

Many project cycle models differ in their perspective

emphasis and level of detail.
The Four common models are:
1. The Baum (world Bank) project cycle model
2. United Nation Industrial Development Organization
(UNIDO)project life cycle
3. Integrated Project Planning and Management Cycle
(IPPMC)
4. Development Project Studies Authority (DEPSA) Life cycle
 1. The Baum (world Bank) Project Cycle Model
The world bank suggested the stages in
the project activities (Baum, 1982) as
follows:
1. Project identification
2. Project preparation
3. Project appraisal
4. Project implementation
5. Project evaluation
 2. The UNIDO Project Life Cycle Model
The following phases are the project life cycles
according to UNIDO: United Nation Industrial
DEVELOPMENT Organization
1. Pre-investment phase
I) Opportunity studies (project identification)
II) pre-selection(pre-feasibility study)
III) preparation (feasibility)
Iv) Appraisal
2. Investment Phase
3. Evaluation and Operating phase
 3. Integrated Project Planning and Management Cycle

IPPMC – (Goodman, 1988) which is divided

into four phases:
1. Phase-1: consisting of planning,
appraisal and design;
2. Phase-2: consisting of selection, approval
and activation;
3. Phase-3: consisting of operation, control
and handover; and
4. Phase-4: consisting of evaluation and
refinement.
 4. Development Project Studies Authority (DEPSA) Life Cycle

The project cycle comprises three major phases:

1. Pre – investment
2. Investment
3. Operation
• According to the Guidelines to project planning in
Ethiopia (1990), the project model more used in
Ethiopia is related to Development Project Studies
Authority (DEPSA) Life cycle model.
• Although, the aforementioned models use different
terminologies and divide the project life cycle into
different number of phases, the very essence of
project life cycle is remains the same.
 Project Cycle
World bank project life cycle model:

1. Project Identification

2. Project Preparation

3. Project Appraisal

4. Project Implementation

5. Project Monitoring and Evaluation

Project Identification
• The first stage in the cycle is to find potential
projects.
• Some of the sources of projects are:

i. Resource based
ii. Market based
iii. Need-based

iv. Well – informed technical specialists and local

leaders are also common sources of projects
 Ideas for new projects also may come from
proposals to extend existing programs.
 In general, most projects start as an elementary
idea.
 Con’t

• Identification is the first step in the project

cycle
• Opportunity sensing is essential for new as
well as existing entrepreneurs; once existing
entrepreneurs reach the comfort stage in their
project, new business opportunities need to be
identified for enterprise sustenance, growth
 Con’t

• In the present era of liberalization and

globalization, competition is increasingly
intensifying.
• Growth opportunities abound for expansion,
diversification or modernization, and for this
entrepreneur needs to scan the emerging
environment before finalizing the most optimal
opportunity that maximizes gains from limited
 Project preparation
• Also called project feasibility Study

• The feasibility study generally gives full details of

a project proposal.
• The proposal is as well known as project
identification brief, which contains the objective(s)
of the project, identification of the constraints and
means of overcoming the constraints
 Con’t

Once projects have been identified, there begins a process of

progressively more detailed preparation and analysis of
project plans.
 At this stage the project is being seriously considered as a
definite investment action.
Project preparation (project formulation) covers the
establishment of:
 technical,

 economic and

 financial feasibility.
 Con’t

Decisions have to be made on:

the scope of the project,

location and site,
soil and hydrological requirements,
project size (farm or factory size) etc
Complete technical specifications of distinct proposals
accompanied by full details of financial and economic costs
and benefits are the outcome of the project preparation stage.
The project now exists as a set of tangible proposals.
 Con’t

The feasibility study gives direction in which all technical,

institutional, economic and financial conditions necessary to
achieve the objectives of the project are highlighted.
At the conclusion of the feasibility study, a project report
would be prepared
The report will serve as a work plan or a guideline to
implement the project, provide the basis for appraisal/review
and a baseline data for subsequent monitoring and impact
evaluation
 Con’t

• Pre-feasibility studies
• Concrete proposal
• Detailed designs
• Objectives
 Market conditions
Technical conditions
Financial conditions
Economic conditions
Environmental conditions, etc
• Project report/final design and work plan
 Project Appraisal
• Appraisal involves carefully reviewing all aspects
of the project regarding to the project objectives.
• The proposal is subjected to sensitivity analysis at
this stage.
• Some explicit appraisal is a necessary part of the
decision-making process before funds are
committed.
• It may be advisable to let a separate group of
 Con’t

Project Appraisal Encompasses

Detailed review of the feasibility
Relevance of the project objectives
Technical Appraisal
Financial Appraisal
Economic Feasibility (Appraisal)
Social Appraisal
Environmental Appraisal
Institutional Appraisal
 Appraisal Methodology
Technical appraisal
 Location
Choice of technology
Scale/layout
Equipment
Financial appraisal
Investment/cash flow
Risk
 Con’t

Economic appraisal
Net benefits efficient use of resources
Market prices used
Issues of opportunity cost
Issues of cost-benefit
Institutional appraisal
Project organization/structure
Human resources requirements/skills
Information/communication system
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 Project Monitoring and Evaluation
The final phase of the project cycle is the Project Evaluation.
While projects may be subject to on-going
monitoring/evaluation, there is need for a more comprehensive
evaluation.
The essence of evaluation is that it often provides an
opportunity to learn from experience. Such lessons are built into
the design and preparation of future projects.
Project evaluation is a systematic and objective assessment of
an ongoing or completed project.
Project Evaluation is a step-by-step process of collecting,
recording and organizing information about project results,
including short-term outputs (immediate results of activities, or
project deliverables), and immediate and longer-term project
outcomes (changes in behavior, practice or policy resulting from
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 THANKS
END OF THE CHAPTER TWO