Project Management

Introduction
What is a Project?

A project is a unique process consisting of a

set of co-ordinated and controlled activities
with start and finish dates, undertaken to
achieve an objective conforming to specific
requirements including the constraints of
time, cost and resources.
The International Organisation for Standards (ISO)
 Elements of a project
Non-routine/ non-repetitive
Economic activities
Requires investment (allocation of scarce
resources)
A development effort
For future benefit
It has a sense of uniqueness
Requires a unique organization (as opposed to
functional/institutional organization)
 A project is a set of activities that are related to
one another; and all the activities must be completed
in order to complete the project.
Material resources and manpower resources are the
two basic things required for the completion of a
project.
Thus a project management is a specialized
management technique to plan and control the
available resources under a strong single point of
responsibility for the successful completion of the
project.
There are different types of
projects
Construction project
Manufacturing project
Agricultural project
 What is a Program?

The PMI describes a program as: A group of

related projects managed in a coordinated
way to obtain benefits and control not
available from managing them individually.
Programs may include elements of related
work outside the scope of the discrete
projects in a program (e.g. ongoing operations
such as maintenance or research). Programs
are a means of achieving organisational
objectives and realising benefits, often in the
context of a strategic plan.
 What is a Portfolio?

The PMI describes a portfolio as: The

effective, centralized management (including
identifying, prioritizing, authorizing and
controlling) of a collection of projects or
programs and other work that are grouped
together to meet strategic business
objectives. The projects or programs of the
portfolio may not necessarily be
interdependent or directly related.
 Project and Production

Idea Concrete entity

Design Factory
Plan Building
Highway
Prototype
Products
Services
Project Production
Automobile factory Produce
Build a house automobiles
Construct a Operate household
hospital Treat patients
Conceive new Manufacture
product Manufacture
Develop prototype multiples
Organizations can further be classified as
either project- or nonproject-driven.

In a project-driven organization, such as

construction or aerospace, all work is
characterized through projects, with each
project as a separate cost center having its
own profit-and-loss statement. The total
profit to the corporation is simply the
summation of the profits on all projects. In a
project-driven organization, everything
centers around the projects.
In the nonproject-driven organization, such
as low-technology manufacturing, profit and
loss are measured on vertical or functional
lines. In this type of organization, projects
exist merely to support the product lines or
functional lines. Priority resources are
assigned to the revenue-producing functional
line activities rather than the projects.
 Project management
Managing projects is a matter of keeping scope,
schedule, and resources in balance.
Generally project management means planning,
organizing, and tracking a projects tasks to
accomplish the project objectives.
Scope is the range of tasks required to accomplish
project goals.
A schedule indicates the time and sequence of each
task, as well as the total project duration. Resources
are the people and/or equipment that perform or
facilitate project tasks.
 Project management, on the other hand, involves five
process groups as identified in
the PMBOK Guide, namely:

Project initiation
Selection of the best project given
resource limits
Recognizing the benefits of the project
Preparation of the documents to sanction
the project
Assigning of the project manager
 Project planning
Definition of the work requirements
Definition of the quality and quantity of
work
Definition of the resources needed
Scheduling the activities
Evaluation of the various risks
 Project execution
Negotiating for the project team members
Directing and managing the work
Working with the team members to help
them improve
 Project monitoring and control
Tracking progress
Comparing actual outcome to predicted
outcome
Analysing variances and impacts
Making adjustments
 Project closure
Verifying that all of the work has been
accomplished
Contractual closure of the contract
Financial closure of the charge numbers
Administrative closure of the papework
 Successful project management can then be defined
as having achieved the project objectives:
Within time
Within cost
At the desired performance/technology level
While utilizing the assigned resources effectively and
efficiently
Accepted by the customer
 Why Projects?
In any economic development governments or institutions
act as per or in reaction to given environmental
conditions.
Projects play vital roles as Policy Instruments or
strategic moves in favor of setting.
Technological innovation
Broadening the physical resource base
Institutional/capacity building
Improved stature of disadvantaged groups
Improved post-harvest handling and distribution,etc.
 A project is generally deemed successful if
it meets predetermined targets set by the
client, performs the job it was intended to
do, or solves an identified problem within
predetermined time, cost, and quality
constraints.
To meet these targets the project manager
uses project management systems to
effectively plan and control the project.
 History of Project Management
The history of project management is often
associated with the construction of Egyptian
Pyramids and Great Wall of China.
They were certainly large and complex
structures, built to high standards, which
have stood the test of time and must have
required an enormous workforce, but with no
documented evidence the management
technique used can only be based on
assumption.
 Modern day project management is
associated with Henry Gantt's development
of the bar chart (early 1900s) and the
techniques developed during the military and
aerospace projects of the 1950s and 1960s
in America and Britain.
Although Henry Gantt may be acknowledged
as the father of planning and control
techniques, it is widely accepted that the
1950's are the genesis of modern day
project management.
 Rapidly changing technology, fierce
competitive markets and a powerful
environmental lobby have all encouraged
companies to change their management
systems - in this sink or swim, adopt or die
market, the role of project management and
management-by-projects was found to offer
a real solution
 The Project Cycle
It is convenient to think or project the work
as taking place in several distinct stages.
This chain of stages is commonly referred to
as the "project cycle".
The term denotes that the stages are
closely linked to one another and follow a
logical progression, with the later stages
helping to provide the basis for renewal of
the cycle throughout subsequent project
work.
"The sequence of phases through which the
project will evolve. It is absolutely fundamental
to the management of projects . . . It will
significantly affect how the project is
structured. The basic life cycle follows a
common generic sequence: Opportunity, Design
& Development, Production, Hand-over, and
Post-Project Evaluation. The exact wording
varies between industries and organizations.
There should be evaluation and approval points
between phases often termed 'gates'."
 Different terms can be used to describe the
various stages of the project cycle.
The World Bank model Project life cycle

Identification

Preparation
Evaluation

Implementation Appraisal/
financing
Archibald's Project Life Span
Stuckenbrucks government system life span
Cavendish and Martin's contract project life span
Wideman's corporate business, facility/product and
project life spans compared
Webster's comparison of project and product life spans
Kerzner's R&D product life cycle
Youker's World Bank investment project life span
Wideman's construction bar chart related to the generic project life
span
Public Works Canada's facility life span
Allen's generic project life span
PMI Standard Committee's sample generic project life span
Kapur's information system project life span
Morris project life span
Abitibi's front-end loading of project development
Conventional waterfall model of software development
Boehm's spiral model of software development
Royce's life span view of the spiral model
Mochal's view of software development projects
Cooper, Edgbert & Kleinschmidt's Stage-Gate process
Fish's "Vee" model of the project life span
 Identification
The first phase of the cycle is concerned
with identifying project ideas that appear to
represent a high priority use of the
countrys resources to achieve an important
development objective.
Such project ideas should assure that
technical and institutional solutions at costs
commensurate with the expected benefits-
will be found and suitable policies adopted.
 Preparation
Once a project idea has passed the
identification test it must be advanced to
the point at which a firm decision can be
made whether to the point at which a firm
decision can be made whether or not to
proceed with it.
This requires a progressive refinement of
the design of the project in all its
dimensions technical, economical, financial,
social institutional and son on.
 Appraisal
Before approving a loan external agencies
normally require a formal process of
appraisal to assess the overall soundness of
the project and its readiness for
implementation for an internally generated
and financed investment.
An explicit appraisal is necessary or at least
a desirable, part of the decision making
process before funds are committed.
 Implementation

The implementation stage covers the actual

development or Construction of the
project, up on the point at which it becomes
fully operational.
It includes monitoring of all aspects of the
work or activity as it proceeds and
supervision by over sight agencies within
the country or by external lenders.
 Evaluation

The post evaluation of a completed projects

to determine whether the objectives have
been achieved as planned or not; and to draw
lessons from experience with the project
that can be applied to similar project in the
future.
 Merits of project approach

The project approach has proved a potent

instrument for rationalizing and improving
the investment process.
Its principal advantage lies in providing a
logical framework and sequence within which
data can be compiled and analyzed;
investment priorities established, project
alternatives considered, and sector policy
issues addressed.
 It imposes a discipline on planners and
decision makers, and ensures that relevant
problems and issues are taken into account
and are subjected to a systematic analysis
before decisions are reached and
implemented.
Correctly applied, it can greatly increase the
development impact of a country's scarce
investment resources.
 Demerits of project approach

The project approach also has its limitations.

One is that, it is dependent on quantitative
inputs of data and can be no more reliable
than the data.
It also depends on estimates and forecasts,
which are subject to human error. Value
judgments must be made, but the project
approach should at least force them to be
made explicitly.
 Risks can be assessed, but not avoided, and
projects must be designed and implemented
against a constantly shifting background of
political, social and economic changes.
In the final analysis, the effectiveness of
the project approach depends on the skill
and judgment of those who use it.
 Project Success Factors
The success of a project depends on factors
and prevailing circumstances both within and
outside of the organization.
Usually project financers (project sponsors,
lenders or host governments) look at the
consideration, that are particularly
important for success.
The following are some of the success
factors that are given higher priority
 i) Financially sound, feasible and
affordable project
First, the project must be financially and
economically sound.
Secondly, it must be feasible from a
practical stand point.
Thirdly, the costs of the service of the fees
charged must be affordable for users.
Sponsors and host governments must be
convinced at the start that the project will
be successful throughout its lifetime.
 ii) The country risks must be
manageable

Political instability, including the risk of

expropriation and changes of laws, may
frighten off potential private investors.
The legal and economic framework in some
countries may not be sufficiently developed
to support a construction program.
 Any foreign investment, even the most
practical and financially viable project,
requires a stable political and economic
environment.
Finance on reasonable terms may be
unavailable in countries with a very weak
credit standing and investment may not be
attractive to sponsors and lenders if the
country risks are considered to be too high.
 iii) Strong government support

Strong government support is essential for

any project.
The private sectors interest in financing
such a project will be considerably
strengthened if the host government has
announced and has demonstrated practically
that it wishes to promote public-private
partnerships.
 iv) The project must rank high on
the host governments list
Some governments may not have enough
resources to pursue more than a short list of
projects, and sponsors and lenders are not
likely to seriously pursue projects that are
not on that list.
Sponsors and lenders must be assured that
the project under consideration has a high
priority in the host governments project
planning.
 v) The legal framework must be
stable
An appropriate and stable legal framework that
clearly sets forth which government agencies
are authorized to develop projects and the laws
and regulations is widely recognized as essential
for a successful policy.
This will apply to sponsors and lenders in areas
like foreign investment, corporate law, security
legislation, taxation and intellectual property
rights.
 vi) Efficient administrative
framework
Bureaucratic procedures like seeking
approval from many different ministries and
local authorities are often cited as a serious
obstacle to projects.
The red tapes are very time-consuming and
create uncertainties for foreign sponsors.
 vii) Fair and transparent bidding
procedure
Sponsors look at the clarity and the
orderliness of bidding procedures as an
indicator for the success of the proposed
project.
The bid evaluation criteria must be clearly
defined and the bids must be evaluated in a
public and proper manner.
 Private sponsors cannot be expected to
invest time and resources in developing bids
if the process for awarding a project is not
reasonably orderly, fair and transparent so
that the chances for success are
predictable.
 viii) Structured transactions
In the past, the long time and high cost of
moving from the announcement of a project
to its conclusion has been a major drawback
and has kept a number of projects from
going forward.
Sponsors are not enthusiastic to propose
projects if the host government has a
history of carrying on long and expensive
negotiations that never reach a conclusion.
 ix) Experienced and reliable
sponsors

The technical ability, experience and

financial strength of the private sponsors is
of utmost importance and must be clearly
known.
 x) Financial strength of sponsors

Attracting sufficient equity is one of the

key challenges for all projects.
Governments and lenders will require the
private sponsors to have a large enough
financial interest in the project to make it
difficult for them to abandon or neglect the
project.
 xi) Experienced and resourceful
construction contractors
The lenders will insist that the prime
contractor, preferably selected on
competitive basis, has the technical and
managerial competence, staffing and
financial strength to fulfill its contractual
responsibilities.
 xii) Adequate financial structure

Lenders require that the project will pay off

the loans as they become due and that
adequate security is provided in case of
default.
The ultimate success or failure of a project
revolves around the sponsors ability to
arrange financing.
 xiii) The currency, foreign
exchange and inflation issues
Currency convertibility, foreign exchange
and inflation risks can be large stumbling
blocks to the success of projects.
The sponsors and the lenders will have to be
comfortable regarding repayment of the
principal and interest on any foreign
exchange financing, project revenues to be
converted to the currency of the loans and
protection against losses from exchange rate
fluctuation and inflation
 xiv) Co-ordinated contractual
framework

All the contractual agreements should be

clear to all parties.
The drafting of a contract for a project is a
challenging task with many obstacles along
the way.
 In all stages and at all contractual levels it is
essential to avoid surprise terms in the
contracts.
If a party feels that the contract terms are
unfair there is a danger that it will walk away
from the project or at least be
uncooperative.
 Fundamentals

Every project has one specific purpose; it

starts at one specific moment and ends up
when its objectives are fulfilled
 Objectives of project
A project should be completed with in minimum
of elapsed time.
It should use available manpower and other
resources as sparingly as possible, with out
delay.
It should be completed, with minimum capital
investment, with out delay.
To achieve the above objectives, Project
management involves the following three
phases.
 1) Project Planning

In this phase, plan is made and strategies

are set taking into consideration the
company's policies, procedures and rules.
The steps in the planning process are
Define: the objective of a project in definite
words
Establish: goals and intermediate stages to
attain the final target
Develop: forecasting methods and means of
achieving goals, i.e, activities
Evaluate: organization's resources-financial,
managerial and operational- to carry out
activities and to determine what is
feasible and what is not.
Determine: alternatives - individual course of
action that will allow to accomplish
goals.
Test: for consistency with company's policy.
Choose: an alternative which is not only
consistent with its goals and concepts,
but also one that can be accomplished
with the evaluated resources.
Decide: on a plan.
 Project Scheduling

Scheduling is the allocation of resources.

The resources in conceptual sense are time
and energy; but in practical sense they
encompass time, space, equipment and effort
applied to material.
 The steps in scheduling are
Calculate: detailed control information.
Assign: timing to events and activities.
Give: consideration to the resources. The
manager is generally concerned with those
resources whose availability is limited and
thereby imposes a constraint on the
project.
Allocate: the resources.
 3) Project Controlling

Project control is the formal mechanism

established to check deviations from the
basic plan, to determine the precise effect
of these deviations on the plan, and to replan
and reschedule to compensate for the
deviation. Controlling is accomplished in the
following well recognized steps:
 The steps in controlling are
Establish: standards or targets. These targets are
generally expressed in terms of time.
Measure: performance against the standards set down
in the first step.
Identify: the deviation from the standards.
Suggest and Select: correcting measures. This will
involve problem identifying, decision making,
organizing the leadership and improving
leadership skill of the decision maker.
 Generally, we have several alternatives; and
it is essential to evaluate them all before we
can choose the best one. This can be
successfully done through operation
research. The term "operation research"
usually refers to a set of mathematical
techniques through which a variety of
organizational problems can be analyzed and
solved.
 Before we discuss some methods of
operations research, let us, first, consider
work breakdown structure, project
organization, Bar chart or Milestone chart,
and Network scheduling, that are some of
the tools of project management.