1 Introduction To Project Management

Summary

1. Introduction to Project Management
Introduction
Realization of these objectives requires systematic planning and careful implementation

To this effect, application of knowledge, skill, tools and techniques in the project environment,
refers to project management. Project management in recent years has proliferated, reaching
new heights of sophistication. It has emerged as a distinct area of management practices to
meet the challenges of new economic environment, globalization process, rapid technological
advancement, and quality concerns of the stakeholders

Project Definition
Project in general refers to a new endeavor with specific objective and varies so widely that it is
very difficult to precisely define it. Some of the commonly quoted definitions are as follows

Project is a temporary endeavor undertaken to create a unique product or service or result

(AMERICAN National Standard ANSI/PMI99-001-2004)
Project is a unique process, consist of a set of coordinated and controlled activities with
start and finish dates, undertaken to achieve an objective confirming to specific requirements,
including the constraints of time cost and resource

(ISO10006)
Examples of project include Developing a watershed, Creating irrigation facility,
Developing new variety of a crop, Developing new breed of an animal, Developing agro-
processing centre, Construction of farm building, sting of a concentrated feed plant etc. It may
be noted that each of these projects differ in composition, type, scope, size and time

Project Characteristics
Despite above diversities, projects share the following common characteristics

Unique in nature

Have definite objectives (goals) to achieve

Requires set of resources

Have a specific time frame for completion with a definite start and finish

Involves risk and uncertainty

Requires cross-functional teams and interdisciplinary approach

Project Performance Dimensions
Three major dimensions that define the project performance are scope, time, and resource

These parameters are interrelated and interactive. The relationship generally represented as an
equilateral triangle. The relationship is shown in figure 1

Time Cost
Scope
Figure 1. Project performance dimensions
It is evident that any change in any one of dimensions would affect the other. For example,
if the scope is enlarged, project would require more time for completion and the cost would also
go up. If time is reduced the scope and cost would also be required to be reduced. Similarly any
change in cost would be reflected in scope and time. Successful completion of the project would
require accomplishment of specified goals within scheduled time and budget. In recent years a
forth dimension, stakeholder satisfaction, is added to the project. However, the other school of
management argues that this dimension is an inherent part of the scope of the project that
defines the specifications to which the project is required to be implemented. Thus the
performance of a project is measured by the degree to which these three parameters (scope,
time and cost) are achieved

Mathematically
Performance = f(Scope, Cost, Time)
In management literature, this equilateral triangle is also referred as the “Quality
triangle” of the project

Project Life Cycle
Every project, from conception to completion, passes through various phases of a life
cycle synonym to life cycle of living beings. There is no universal consensus on the number of
phases in a project cycle. An understanding of the life cycle is important to successful completion
of the project as it facilitates to understand the logical sequence of events in the continuum of
progress from start to finish. Typical project consists of four phases- Conceptualization, Planning,
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Execution and Termination. Each phase is marked by one or more deliverables such as Concept
note, Feasibility report, Implementation Plan, HRD plan, Resource allocation plan, Evaluation
report etc

Conceptualization Phase
Conception phase, starting with the seed of an idea, it covers identification of the
product / service, Pre-feasibility, Feasibility studies and Appraisal and Approval. The project idea
is conceptualized with initial considerations of all possible alternatives for achieving the project
objectives. As the idea becomes established a proposal is developed setting out rationale,
method, estimated costs, benefits and other details for appraisal of the stakeholders. After
reaching a broad consensus on the proposal the feasibility dimensions are analyzed in detail

Planning Phase
In this phase the project structure is planned based on project appraisal and approvals

Detailed plans for activity, finance, and resources are developed and integrated to the quality
parameters. In the process major tasks need to be performed in this phase are
• Identification of activities and their sequencing
• Time frame for execution
• Estimation and budgeting
• Staffing
A Detailed Project Report (DPR) specifying various aspects of the project is finalized to
facilitate execution in this phase

Execution Phase
This phase of the project witnesses the concentrated activity where the plans are put
into operation. Each activity is monitored, controlled and coordinated to achieve project
objectives. Important activities in this phase are
• Communicating with stakeholders
• Reviewing progress
• Monitoring cost and time
• Controlling quality
• Managing changes
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Termination Phase
This phase marks the completion of the project wherein the agreed deliverables are
installed and project is put in to operation with arrangements for follow-up and evaluation

Life Cycle path
The life cycle of a project from start to completion follows either a “S” shaped path or a
“J “ shaped path (Figure 2 and 3). In “S” shape path the progress is slow at the starting and
terminal phase and is fast in the implementation phase. For example, implementation of
watershed project. At the beginning detailed sectoral planning and coordination among various
implementing agencies etc. makes progress slow and similarly towards termination, creating
institutional arrangement for transfer and maintenance of assets to the stakeholders progresses
slowly

Error!
100
Slow finish
Percentage completion
Quick
Momentum
Slow start
Time
Figure 2. Project life path –“S” shape
In “J” type cycle path the progress in beginning is slow and as the time moves on the
progress of the project improves at fast rate. Example, in a developing an energy plantation. In
this the land preparation progresses slowly and as soon as the land and seedling are
transplantation is under taken. This is shown in figure 3

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Error!
100
% Completion
Time
Figure 3. Project life cycle path - “J” Shape
Project Classification
There is no standard classification of the projects. However considering project goals, these
can be classified into two broad groups, industrial and developmental. Each of these groups can
be further classified considering nature of work (repetitive, non-repetitive), completion time (long
term, shot term etc), cost (large, small, etc.), level of risk (high, low, no-risk), mode of operation
( build, build-operate-transfer etc)

Industrial projects also referred as commercial projects, which are undertaken to provide
goods or services for meeting the growing needs of the customers and providing attractive
returns to the investors/stake holders. Following the background, these projects are further
grouped into two categories i.e., demand based and resource / supply based. The demand based
projects are designed to satisfy the customers’ felt as well the latent needs such as complex
fertilizers, agro-processing infrastructure etc. The resource/ supply based projects are those
which take advantage of the available resources like land, water, agricultural produce, raw
material, minerals and even human resource. Projects triggered by successful R&D are also
considered as supply based. Examples of resource based projects include food product units,
metallurgical industries, oil refineries etc. Examples of projects based on human resource (skilled)
availability include projects in IT sector, Clinical Research projects in bio services and others

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Development projects are undertaken to facilitate the promotion and acceleration of overall
economic development. These projects act as catalysts for economic development providing a
cascading effect. Development projects cover sectors like irrigation, agriculture, infrastructure
health and education

The essential differences between Industrial projects and Developmental project
aresumerised in the following table 1

Table 1. Difference between Industrial and Developmental Projects
Dimension Industrial Project Developmental Project
Scale of Project Limited Large
Promoters Entrepreneurs or corporates Government, Public Sectors,
NGOs
Investment --- High
Gestation Period --- High
Profitabilty High, Considered on IRR ( Modest, Considered on ERR
Internal Rate of Return) (Economic Rate of Return)
Finance Stringent debt equity norms Operates on higher debt-
equity norms
Source of fund National stock markets and International organizations
from domestic financial like World Bank,
institutions IMF,ADB,DFID and others
mostly as loan ,yet times
providing for some grants

Interest rates and repayment Market rate and the Very low for borrowed funds
period: repayment period is generally and the repayment period
7 to 10 years extends up to 25 years and
even beyond

Project management
Project management is a distinct area of management that helps in handling projects. It
has three key features to distinguish it from other forms of management and they include: a
project manager, the project team and the project management system. The project
management system comprises organization structure, information processing and decision-
making and the procedures that facilitate integration of horizontal and vertical elements of the
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project organization. The project management system focuses on integrated planning and
control

Benefits of Project Management Approach
The rationale for following project management approach is as follows

• Project management approach will help in handling complex, costly and risky
assignments by providing interdisciplinary approach in handling the assignments

Example: R&D organizations

• Project management approaches help in handling assignments in a specified time
frame with definite start and completion points .Example handling customer
orders by Industries involved in production of capital goods

• Project management approaches provide task orientation to personnel in an
Organization in handling assignments. Example: Organizations in IT sector
handling software development assignments for clients

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2. Project Identification and Formulation
Introduction
A project in the economic sense directly or indirectly adds to the economy of the Nation

However an introspection of the project performance clearly indicates that the situation is far
from satisfactory. Most of the major and critical projects in public sector that too in crucial
sectors like irrigation, agriculture, and infrastructure are plagued by tremendous time and cost
overruns. Even in the private sector the performance is not all that satisfactory as is evident
from the growing sickness in industry and rapid increase in non-performing assets (NPAS) of
Banks and Financial Institutions. The reasons for time and cost over runs are several and they
can be broadly classified under-technical, financial, procedural and managerial. Most of these
problems mainly stem from inadequate project formulation and haphazard implementation

Project Identification
Project identification is an important step in project formulation. These are conceived
with the objective of meeting the market demand, exploiting natural resources or creating
wealth. The project ideas for developmental projects come mainly from the national planning
process, where as industrial projects usually stem from identification of commercial prospects
and profit potential

As projects are a means to achieving certain objectives, there may be several alternative
projects that will meat these objectives. It is important to indicate all the other alternatives
considered with justification in favour of the specific project proposed for consideration

Sectoral studies, opportunity studies, support studies, project identification essentially
focuses on screening the number of project ideas that come up based on information and data
available and based on expert opinions and to come up with a limited number of project options
which are promising

Project Formulation
Project Formulation Concept
“Project Formulation” is the processes of presenting a project idea in a
form in which it can be subjected to comparative appraisals for the purpose of
determining in definitive terms the priority that should be attached to a project
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under sever resource constraints. Project Formulation involves the following
steps (Figure 1)

PROJECT FORMULATION
↓
OPPORTUNITY STUDIES/Support Studies
↓
IDENTIFICATION OF PRODUCT/SERVICE
↓
PREFEASIBILITY STUDY
↓
FEASIBILITY STUDY
(TECHNO ECONOMIC FEASIBILITY)
↓
PROJECT APPRAISAL
↓
DETAILED PROJECT REPORT
Figure 1. Project Formulation –Schematic view
Opportunity Studies
An opportunity study identifies investment opportunities and is normally undertaken at
macro level by agencies involved in economic planning and development. In general opportunity
studies there are three types of study – Area Study, sectoral and Sub-sectoral Studies and
Resource Based Studies. Opportunity Studies and Support studies provide sound basis for project
identification

Pre feasibility Studies / Opportunity Studies
A pre-feasibility study should be viewed as an intermediate stage between a project
opportunity study and a detailed feasibility study, the difference being primarily the extent of
details of the information obtained. It is the process of gathering facts and opinions pertaining to
the project. This information is then vetted for the purpose of tentatively determining whether
the project idea is worth pursuing furthering. Pre feasibility study lays stress on assessing
market potential, magnitude of investment, , technical feasibility, financial analysis, risk analysis
etc. The breadth and depth of pre feasibility depend upon the time available and the confidence
of the decision maker. Pre feasibility studies help in preparing a project profile for presentation
to various stakeholders including funding agencies to solicit their support to the project. It also
throws light on aspects of the project that are critical in nature and necessitate further
investigation through functional support studies

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Support studies are carried out before commissioning pre feasibility or a feasibility study
of projects requiring large-scale investments. These studies also form an integral part of the
feasibility studies. They cover one or more critical aspects of project in detail. The contents of the
Support Study vary depending on the nature of the study and the project contemplated. Since it
relates to a vital aspect of the project the conclusions should be clear enough to give a direction
to the subsequent stage of project preparation

Feasibility Study
Feasibility Study forms the backbone of Project Formulation and presents
a balanced picture incorporating all aspects of possible concern. The study
investigates practicalities, ways of achieving objectives, strategy options,
methodology, and predict likely outcome, risk and the consequences of each
course of action. It becomes the foundation on which project definition and
rationale will be based so that the quality is reflected in subsequent project
activity. A well conducted study provides a sound base for decisions,
clarifications of objectives, logical planning, minimal risk, and a successful cost
effective project. Assessing feasibility of a proposal requires understanding of the
STEEP factors. These are as under Social, Technological, Ecological, Economic,
and Political

A feasibility study is not an end in itself but only a means to arrive at an investment
decision. The preparation of a feasibility study report is often made difficulty by the number of
alternatives (regarding the choice of technology, plant capacity, location, financing etc.) and
assumptions on which the decisions are made. The project feasibility studies focus on
- Economic and Market Analysis
- Technical Analysis
- Market Analysis
- Financial Analysis
- Economic Benefits
- Project Risk and Uncertainty
- Management Aspects
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Economic and Market Analysis
In the recent years the market analysis has undergone a paradigm shift. The demand
forecast and projection of demand supply gap for products / services can no longer be based on
extrapolation of past trends using statistical tools and techniques. One has to look at multiple
parameters that influence the market. Demand projections are to be made keeping in view all
possible developments. Review of the projects executed over the years suggests that many
projects have failed not because of technological and financial problems but mainly because of
the fact that the projects ignored customer requirements and market forces

In market analysis a number of factors need to be considered covering – product
specifications, pricing, channels of distribution, trade practices, threat of substitutes, domestic
and international competition, opportunities for exports etc. It should aim at providing analysis of
future market scenario so that the decision on project investment can be taken in an objective
manner keeping in view the market risk and uncertainty

Technical Analysis
Technical analysis is based on the description of the product and specifications and also
the requirements of quality standards. The analysis encompasses available alternative
technologies, selection of the most appropriate technology in terms of optimum combination of
project components, implications of the acquisition of technology, and contractual aspects of
licensing. Special attention is given to technical dimensions such as in project selection. The
technology chosen should also keep in view the requirements of raw materials and other inputs
in terms of quality and should ensure that the cost of production would be competitive. In brief
the technical analysis included the following aspects

Technology - Availability
- Alternatives
- Latest / state-of-art
- Other implications
Plant capacity - Market demand
- Technological parameters
Inputs - Raw materials
- Components
- Power
- Water
- Fuel
- Others
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Availability skilled man power
\Location
Logistics
Environmental consideration – pollution, etc.,
Requirement buildings/ foundation
Other relevant details
Environmental Impact Studies:
All most all projects have some impact on environment. Current concern of
environmental quality requires the environmental clearance for all projects. Therefore environ
impact analysis needs to be undertaken before commencement of feasibility study

Objectives of Environmental Impact Studies:
• To identify and describe the environmental resources/values (ER/Vs) or the
environmental attributes (EA) which will be affected by the project (in a quantified
manner as far as possible)

• To describe, measure and assess the environmental effects that the proposed project will
have on the ER/Vs

• To describe the alternatives to the proposed project which could accomplish the same
results but with a different set of environmental effects
The environmental impact studies would facilitate providing necessary remedial measures
in terms of the equipments and facilities to be provided in the project to comply with the
environmental regulation specifications

Financial Analysis
The Financial Analysis, examines the viability of the project from financial or commercial
considerations and indicates the return on the investments. Some of the commonly used
techniques for financial analysis are as follows

• Pay-back period

• Return on Investment (ROI)
• Net Present Value (NPV)
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Project management is a distinct area of management that helps in handling projects. It has three key features to distinguish it from other forms of management and they include: a project …

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Frequently Asked Questions

What is the initiating process in project management?

• To define the purpose and the expectations of the project.
• To define the project scope to ensure that the project covers all the required aspects and full addresses them.
• To define clear milestones and timeline for the project to ensure a smooth flow of events throughout the project.

More items...

How can i learn project management?

• If at first you don't succeed, plan, plan, and plan again. ...
• Focus on communication. ...
• Find the right project management tools. ...
• Establish firm goals or objectives. ...
• Set yourself up for success with small wins. ...
• Understand (and embrace) the concept of MVP.

What are the basics of project management?

Project management is defined as the process of steering a project from the start through its lifecycle. The main objective of project management is to complete a project within the established goals of time, budget, and quality. Projects have life cycles since they aren’t intended to last forever.

Should i go into project management?

• You’ll always be able to point to your tangible value. In project management, it all comes down to the numbers and your effective communication. ...
• You’ll understand how to foster team engagement and build relationships. ...
• You’ll never gain a better understanding of problem-solving elsewhere. ...