UNIT-1

INTRODUCTION
 Concept of a Project
 Projects have a major role to play in the economic development
of a country.
 Since the introduction of planning in a economy, It has been
investing large amount of money in projects related to industry,
minerals, power, transportation, irrigation, education etc. with a
view to improve the socio-economic conditions of the people.
 These projects are designed with the aim of efficient
management, earning adequate return to provide for future
development with their own resources.
 But experience shows that there are several shortcomings in the
ultimate success of achieving the objectives of the proposed
project.
 The term project has a wider meaning since different
scholars have defined in different ways.
 A set of proposals for investment of resources into a
clearly defined set of actions that are expected to
produce future benefits that exceeds costs.
 A one time set of activities involving the use of human,
material and financial resources to achieve a given
result in a specific period of time.
 A combination of human and non – human resources
pooled together in a temporary organization to
achieve a specific purpose.
 A set of activities, which aim at achieving specific
objectives within a stipulated period of time and
budget.
 Characteristics of Project
 Objectives:
 A project has a set of objectives or a mission.
 Once the objectives are achieved the project is
treated as completed.
 Life span:
 A project has a specific time frame, or finite life span.
 Uniqueness:
 Every project is unique and no two projects are
similar.
 Setting up a cement plant and construction of a
highway are two different projects having unique
features.
 Customer specific nature:
 A project is always customer specific.
 It is the customer who decides upon the product to be
produced or services to be offered and hence it is the
responsibility of any organization to go for
projects/services that are suited to customer needs.
 Optimality:
 A project is always aimed at optimum utilization of
resources for the overall development of the economy.
 Unity in diversity:
 A project is a complex set of thousands of varieties.
 The varieties are in terms of technology, equipment and
materials, machinery and people, work, culture and
others.
 Sub-contracting:
 A high level of work in a project is done through
contractors.
 The more the complexity of the project, the more will be
the extent of contracting.
 Risk and uncertainty:
 Risk and uncertainty go hand in hand with project.
 A risk-free, it only means that the element is not apparently
visible on the surface and it will be hidden underneath.
 Complexity:
 A project is a complex set of activities relating to diverse
areas.
 A project requires a budget to plan for cost and resource
allocations.
Project Management and Process
 Project management is:
 an organized venture for managing projects,
 Involves scientific application of modern tools and
techniques in planning, financing, implementing,
monitoring, controlling and
 coordinating unique activities or task produce
desirable outputs in accordance with the
determined objectives with in the constraints of
time and cost.
 The project management process means
planning the work and then working the plan, that
is, process of first establishing a plan and then
implementing that plan to accomplish the project
objective.
 Project Management Environment
 The project management environment consists of the numerous
stockholders and players that have an impact or are affected by
the project.
 For projects to be effective, project managers must have a
thorough understanding of the project management
environment.
 Project managers should consider the following, among others:
 Stockholders (all interested parties belong to that particular project),
 Client/sponsor’s requirement,
 Market requirements,
 Competitors,
 New technology,
 Rules and regulations,
 Polices, etc.
Role of Project Managers
 A project manager integrates and coordinates all
the contributions, and guides them to successfully
complete the project.
 Responsibilities of the Project Manager
 The project manager has primary responsibility
for providing leadership in planning, organizing,
and controlling the work effort to accomplish the
project objective.
 In other words, the project manager provides the
leadership to the project team to accomplish the
project objective.
 Planning:
 The project manager clearly defines the project
objectives and reaches agreement with the
customer on this objective.
 Organizing:
 Organizing involves securing the appropriate
resources such as capital, material and human
resources to perform the work.
 The project manager also assign responsibility and
delegates authority to specific individuals or
subcontractors for the various tasks.
 Controlling:
 Project team members monitor the progress of
their assigned tasks and regularly provide data on
progress, schedule, and costs.
 If actual progress falls behind planned progress or
unexpected events occur, the project manager
takes immediate action.
 Skills of the Project Manager
 The project manager is a key ingredient in the success of a
project.
 In addition to the responsibilities, the manager should
possess a set of skills that will both inspire the project
team to succeed and win the confidence of the customer.
 Effective project managers have:
 strong leadership ability,
 ability to develop people,
 excellent communication skills,
 good interpersonal skills,
 ability to handle stress,
 problem – solving skills, and
 time management skills.
 Project Life Cycle
 The project begins, continues, ends and begins
again.
 This process is continuous and is referred to as “The
Project Development Cycle”.
 The Project Development Cycle is a continuous
process made up of separate and complementary
stages (phases) each with its own characteristics
and each setting a ground for the next one.
 As the stages lead into each other, the cycle is said
to be circular because it is assumed that one stage
precedes and leads to the other and as such the last
stage leads to the first stage in a continuous fashion.
 There are various models that deal with the
project life cycle but there is no much difference
in concept among the different approaches- they
only differ in presentation.
 Therefore, the following are considered to be
important stages of the project life cycle.
Project identification
Project formulation/preparation
Project appraisal
Project implementation and monitoring
Project evaluation
 United Nations Industrial Development
Organization (UNIDO) Project Life Cycle
• UNIDO has divided project cycles into phases and stages as follows.

• 1. Pre - investment phase: Identification of investment

opportunity (opportunity study), Preliminary selection stage (pre-
feasibility study/Analysis of Project Alternatives), Project
formulation stage (feasibility study) and Evaluation and decision
stage (evaluation report/project appraisal and investment decision)
• 2. Investment phase: Negotiation and contracting stage; Project
design stage, Construction stage; Preproduction marketing stage;
Training stage; Start up stage
• 3. Operational phase: Long-term views (expansion, innovation);
Short-term views (Replacement and Rehabilitation).
 The Baum Cycle (adapted by the World Bank in
1970)
• The Baum Cycle has five stages. The breakdown of the
phases in the project cycle is artificial. In reality the
process is continuous and interactive. The phases are:
• I. Identification
• II. Preparation (feasibility study)- ex-ante evaluation
• III. Appraisal
• IV. Implementation
• V. Evaluation – added after a certain period (1978). It
involves ex-post evaluation.
 New Project Cycle (World Bank 1994)
•  Emphasis on the issue of participation
•  Particularly relevant to projects where beneficiary
participation is critical.
•  It has four phases
• - Listening- listen the stakeholders.
• - Piloting- trying it in small scale.
• - Demonstrating- demonstrating the pilot
• - Mainstreaming- duplicating the pilot.
•  Listening - Piloting- Demonstrating –
Mainstreaming
 Traditional Project Management Life Cycle
• There are five phases to the TPM life cycle, each of which contains five steps:
• 1. Scope the project.
• ■ State the problem/opportunity.
• ■ Establish the project goal.
• ■ Define the project objectives.
• ■ Identify the success criteria.
• ■ List assumptions, risks, and obstacles.
• 2. Develop the project plan.
• ■ Identify project activities.
• ■ Estimate activity duration.
• ■ Determine resource requirements.
• ■ Construct/analyze the project network.
• ■ Prepare the project proposal
 Continue…traditional
• 3. Launch the plan.
• ■ Recruit and organize the project team.
• ■ Establish team operating rules.
• ■ Level project resources.
• ■ Schedule work packages.
• ■ Document work packages.
• 4. Monitor/control project progress.
• ■ Establish progress reporting system.
• ■ Install change control tools/process.
• ■ Define problem-escalation process.
• ■ Monitor project progress versus plan.
• ■ Revise project plans.
• 5. Close out the project.
• ■ Obtain client acceptance.
• ■ Install project deliverables.
• ■ Complete project documentation.
• ■ Complete post-implementation audit.
• ■ Issue final project report
 Project identification
 Project identification is the basic phase of the
project development cycle.
 It begins with the conceiving of ideas or intentions
to set up a project.
 This phase involves collecting, processing and
analyzing data on problem/needs of the
areas/community/organization.
 The data/ information generated during this stage
provides a basis for the next or second stage of
the project cycle.
 Project formulation/preparation
 It involves analyzing the information from the
identification stage in details to formulate a
project document.
 The market & demand, technological, financial,
social, ecological data are analysed and the results
documented and handing over the project
document to the proposed financing agency.
 Project appraisal
 After the project has been presented to the financing
agency, arrangements are made by the financing
agency to have the project appraised.
 This is the assessment or in depth analysis or
examination of all the aspects of the project namely
market & demand, technical, financial, commercial,
community participation, socio-economic benefits,
organization and management, environmental
impact, political risks, project sustainability and
replicability.
 In the process of appraisal, the appraisal team is to
establish whether the project is possible (feasible) or
worthwhile (viable).
 Project implementation and monitoring
 Project implementation is the stage when the project
proposal is transformed into the actual project or reality.
 It is in short, putting into practice the plans that had
earlier on been appraised following the already laid down
time table or work plan.
 Project monitoring is carried out during the
implementation stage of the project cycle.
 It is a continuous assessment or review and surveillance
by the project management at every level of the hierarchy
of the implementation of the project to check on the
progress of the project by ensuring that input and
material deliveries, work schedules, targeted outputs and
other required actions are proceeding according to plan.
 Project evaluation
 This is a process of determining systematically and
objectively the relevance, efficiency, effectiveness
and impact of the project in light of its objectives.
 The question to be asked is, “Has the project
achieved its objectives?”
 Evaluation is a more comprehensive review,
assessment and critical analysis not only of the
project results, but also the initial assumptions
underlying the project elements including the
relevance of the problem statement.