Chapter 1 Classification depends on the economic area in which the project operates.

conomic area in which the project operates. Purpose To produce goods and earn To improve social and economic welfare
profit
PROJECT MANAGEMENT : Examples: Agricultural – irrigation; Industrial – factory; Infrastructure – road; Service – Focus Manufacturing and Development of people and society
tourism. production
MEANING , BASIC CONCEPTS AND IMPORTANCE Nature Commercial/Business- Welfare-oriented
5. Based on Urgency oriented
Examples Factory setup, automobile Schools, hospitals, water supply
Projects are grouped according to time sensitivity and emergency needs. plant
Ownership Mostly private or joint sector Mostly government or NGOs
Examples: Normal – business expansion; Urgent – emergency hospital; Priority – defense Outcome Tangible products and Social benefits and improvement in living
projects. revenue standards
What do you mean by a project? What are the main classification of Main Profit generation & Social growth, education, health, etc.
Projects? 6. Based on Objectives Objective employment

A project is a planned set of interrelated tasks carried out to achieve a defined objective Projects are classified according to their main purpose or goal.
within a specific time, cost, and quality.
Examples: Profit – new business; Welfare – education scheme; Research – R&D; Expansion What do you mean by Project Life Cycle ( PLC ) ? Explain the
Features of a Project – new production line.
stages or phases of PLC?
• Has a specific objective 7. Based on Need
• Temporary in nature (has a beginning and end) Project Life Cycle (PLC) refers to the complete process of a project from its beginning to its
• Requires planning and coordination end, including all the stages it passes through.
Projects are categorised based on the type of human or social need they satisfy.
• Requires resources (man, money, materials, machinery)
• Involves risk and uncertainty It is a step-by-step systematic approach to successfully plan, execute, and complete a project.
Examples: Basic – housing; Development – education; Luxury – theme park.
• Usually non-routine work
8. Based on Functions Phases / Stages of Project Life Cycle
Classification of Projects
Projects are grouped by the main activities performed in them. The PLC consists of the following main stages:
1. Based on Investment
Examples: Construction – bridges; Manufacturing – goods; Service – banking; Research – 1. Project Identification
Projects are grouped according to the amount of capital invested. laboratory work. 2. Project Formulation
3. Project Appraisal
Examples: Low – small shop; Medium – hotel; High – metro rail. 9. Based on Risk Involved
4. Project Selection
Projects are classified according to the level of uncertainty and possibility of loss.
5. Project Implementation
2. Based on Output 6. Project Follow-up & Monitoring
Examples: Low – stable demand; Medium – moderate uncertainty; High – innovation 7. Project Evaluation
Projects are classified based on whether they produce tangible or intangible results.
projects.
Examples: Tangible – building; Intangible – software development. Note: explanation given below.

3. Based on Ownership

Projects are categorised by the owner or controlling authority. Difference Between Industrial Projects & PROJECT MANAGEMENT
Developmental Projects
Examples: Public – government hospital; Private – IT company; Joint – PPP airport; Co- Project management is the systematic process of planning, organising, executing, and
operative – dairy union. controlling resources (such as time, money, manpower, and materials) to achieve specific
goals within a defined timeframe.
4. Based on Sector Basis Industrial Projects Developmental Projects

Key Features of Project Management 6. Project Follow-up & Monitoring Scientific research and experiments may lead to new products or services.

1. Goal-Oriented – aims to achieve a specific objective. • Continuous supervision of the project. 5. Social Problems / Needs
2. Time-Bound – each project has a start and end date. • Track progress with plans.
3. Resource Management – involves managing funds, people, materials, etc. • Identify deviations and take corrective actions. Projects are developed to solve issues like education, healthcare, poverty, etc.
4. Planning & Control – proper scheduling and monitoring of progress. • Ensures project remains on schedule and within budget.
5. Risk Management – identifying and handling possible problems. 6. Competitors’ Strategies
7. Project Evaluation
Observing rival products and strategies can generate new ideas.
• Done during and after completion.
• Assess performance, results, and effectiveness. 7. Entrepreneur’s Own Experience
Phases of Project Management • “Lessons learned” are recorded.
• Helps improve future projects. Past experience, skills, and knowledge give practical project ideas.
1. Project Identification
8. Success Stories of Others
• Identify the project idea or opportunity.
• Analyse needs, problems, and possibilities. A project idea may be inspired by the achievements or successful ventures of other
• Primary goal: to recognise a feasible project. entrepreneurs.
Chapter 2
2. Project Formulation 9. Natural Resources Availability
IDENTIFICATION AND FORMULATION OF A PROJECT
• Develop the project in detail. Local resources like minerals, agriculture, and water sources inspire projects.
• Define objectives, scope, resources, cost, schedule.
• Prepare project proposal / feasibility study. 10. Trade Fairs and Exhibitions
• Convert idea into a practical plan.
Meaning of Project Identification These events display new products and technologies and provide valuable business ideas and
3. Project Appraisal contacts.
Project Identification is the first stage of the Project Management , where a project idea is
• Evaluate the project before starting. discovered, recognised, and defined. 11. Brainstorming
• Technical, financial, economic, social, and environmental analysis.
• Risks and returns are assessed. It involves finding a need or opportunity and deciding whether it can be developed into a
suitable project. A group discussion method where many new ideas are generated collectively for possible
• Decision: Is the project worth investing in?
project selection.
4. Project Selection Sources of Project Ideas
• Choose the best project among alternatives. 1. Market Demand
• Consider viability, cost-benefit, risks, and expected outcomes.
• Management or authorities approve the final project.
Customer needs, trends, or market gaps inspire new project ideas.
Meaning of Project Formulation
5. Project Implementation 2. Technological Changes
Project Formulation is the process of developing the project idea into a detailed plan.
• Actual execution begins.
New technologies create opportunities for innovation (e.g., AI, automation).
• Resources are allocated and work is started. It involves collecting information, analysing feasibility, estimating costs, preparing
• Includes: schedules, and designing the project in a structured manner.
o Scheduling
3. Government Policies & Schemes
o Budgeting
o Resource allocation Incentives, subsidies, and development programs encourage new projects. Stages / Elements of Project Formulation
o Quality control
• Team management and coordination are very important. A 4. Research & Development (R&D) 1. Pre-Feasibility Study

• A preliminary examination of the project idea. Project appraisal is the systematic evaluation of a proposed project to determine whether it is 6. Product Mix
• Helps decide whether to proceed with detailed studies or drop the idea. viable, profitable, and worth investing in. It is done before final approval of the project.
• Selection of various products to be produced under the project.
2. Support Studies Types of Project Appraisal
7. Procurement of Plant & Machinery
• Collection of additional information required for the project. Type Purpose
Technical Appraisal To check availability of technology, machinery, location, • Involves selection, purchase and installation of suitable machinery.
3. Feasibility Study manpower.
Financial Appraisal To analyse costs, funding, profitability, cash flow, ROI. 8. Plant Layout
• Detailed evaluation of whether the project is practicable. Economic Appraisal To measure benefits to society and national economy.
• Covers technical, financial, economic,, and commercial feasibility. Market / Commercial To study demand, supply, competition, pricing, sales • Refers to the physical arrangement of machinery, departments and workflow.
Appraisal potential.
Types of Feasibility: Types of Plant Layout
Managerial Appraisal To evaluate management capability and organisational
structure.
a) Technical Feasibility : Checks whether the project can be implemented with Environmental Appraisal To check ecological impact and legal compliance. • Product Layout (Line Layout) : Machines are arranged according to the sequence of
available technology, machinery, raw materials, manpower, and skills. Social Cost Benefit Analysis The profitability analysis of projects based on their net operations required to produce a specific product. Material flows in one continuous
b) Financial Feasibility : Examines the cost of the project, availability of finance, (SCBA) socio-economic benefits. line.
expected profits, cash flows, and return on investment. • Process Layout (Functional Layout) :Machines are grouped based on their functions
c) Economic Feasibility : Studies the overall economic benefits of the project to society • Combined Layout : A mix of product and process layout.
— such as employment, income generation, and economic development. • Stationary Layout (Fixed Position Layout) : The product remains in one place, and
d) Commercial Feasibility (Market Feasibility) : Analyses the demand, supply, workers, materials and machinery are brought to it. Eg , construction of bridges
A. Technical Appraisal
competition, pricing, and market potential to check whether the product or service
will succeed in the market. 9. Location of the Project
Technical appraisal is the examination of all technical aspects of a project to ensure that the
project is technologically feasible, practical, and efficiently designed. It checks whether the
4. Detailed Project Analysis and Preparation of DPR • Selection of a suitable geographical area for the project.
required technology, resources, location, raw materials, machinery, manpower, and
infrastructure are available and suitable.
• A DPR (Detailed Project Report) is prepared with complete project information.
10. Selection of Site
• Includes cost estimation, project design, implementation schedule, resource Aspects of Technical Appraisal • Refers to choosing the specific land/plot within the selected location.
requirements, and expected returns.
1. Manufacturing Process / Technology

• Evaluates the type of technology and method of production used.

B. Financial Appraisal
2. Scale of Operations
Meaning
• Determines the size and capacity of production (small, medium, or large-scale).
Financial Appraisal is the process of evaluating whether a project is financially viable and
profitable.
3. Raw Materials
Chapter 3
It examines costs, expected returns, sources of finance, cash flows, and financial risks to
• Checks availability, cost, quality and stability of supply of raw materials. decide whether the investment is worth undertaking.
PROJECT APPRAISAL 4. Technical Know-how

• Refers to the expertise, knowledge, skills, and experience required to run the project.
C. Economic Appraisal
Meaning 5. Foreign Collaborations
Meaning
• Involves technical tie-ups with foreign companies for advanced technology.
Economic Appraisal is the evaluation of a project to determine its overall benefits to the 2. L-M Approach PROJECT FINANCING
economy and society.

It checks whether the project will promote economic development, create employment,
improve income levels, and contribute to national welfare.
Meaning:
Project financing refers to the method of raising funds required for establishing a new project,
D. Market / Commercial Appraisal expansion, modernisation or diversification of business.

Meaning Chapter 4 It involves arranging long-term funds from different sources to meet the capital expenditure
of a project.
Market (Commercial) Appraisal is the assessment of the market feasibility of a project. FINANCIAL APPRAISAL OF A PROJECT
It evaluates whether the product or service will be accepted in the market and can achieve
profitable sales.
Sources of Project Financing
Financial Appraisal refers to a process of evaluating the viability of a proposed project by
assessing the value of net cash flows that result from its implementation. It is a detailed Sources are broadly classified into:
evaluation of a project.
E. Management Appraisal
• Equity Shares
Management Appraisal is the evaluation of the competence, experience, and
Investment Decisions ( Capital Budgeting )
capability of the promoters and the management team responsible for implementing Equity shares represent the ownership capital of a company. Equity shareholders are the real
Investment decisions is the process of selecting an opportunity for long term allocation of the owners and have voting rights. Dividend is not compulsory and depends on profits. There is
and operating the project.
resources of an organisation with the objective of generating profits. no fixed repayment of capital, making it suitable for long-term and risky projects.
F. Environmental Appraisal
• Preference Shares
Environmental Appraisal is the evaluation of a project to assess its impact on the
environment. Project Appraisal Techniques (Capital Preference shares carry a fixed rate of dividend and have priority over equity shares in
payment of dividend and repayment of capital. They generally do not have voting rights.
It includes the study of: Budgeting Techniques) They provide stable finance without diluting control significantly.

• Air, water and noise pollution • Debentures

• Waste generation and disposal
• Use of natural resources , etc. ( Refer from PDF )**** page no. 40 – 48 Debentures are long-term debt instruments issued by a company. They carry a fixed rate of
interest which must be paid irrespective of profit. They are usually secured against company
G. Social Cost Benefit Analysis (SCBA) assets and are repayable after a specified period.

Social Cost–Benefit Analysis (SCBA) is a method of project appraisal that evaluates a project • Bonds
by comparing its total social costs with its total social benefits to society as a whole.
Bonds are similar to debentures and may be issued by companies or government. They carry
It goes beyond private profit and considers the overall impact on the economy, society, fixed interest and are repayable after a fixed period. Bonds can be secured or unsecured
and environment. depending on the terms of issue.

Approaches of SCBA • Retained Earnings

The important approaches of SCBA are- Retained earnings are profits kept in the business instead of being distributed as dividend. It
Chapter 5 is an internal source of finance and does not involve any cost of raising funds. It strengthens
1. UNIDO Approach the financial position of the company.

• Term Loans Venture capital is finance provided to new, innovative and high-risk ventures. Venture
Project Scheduling
capitalists invest in startups expecting high returns in the future. It supports entrepreneurship
Term loans are long-term loans obtained from banks or financial institutions. They are and technological development.
Project Scheduling is the process of deciding the sequence of activities, their starting and
repayable in instalments over a fixed period and carry interest. These loans are usually
finishing time, and the total duration required to complete a project.
secured against fixed assets. • Government Subsidies
In simple words, project scheduling means fixing the time table of project activities.
• Deferred Credits Government subsidies are financial assistance provided by the government to promote
specific industries or regions. They reduce the overall cost of the project and encourage
It helps in timely completion, proper coordination, and effective control of the project.
Deferred credit is a method of acquiring assets like machinery by making payment in investment.
instalments. The supplier allows the buyer to pay later, reducing immediate financial burden.
It is also called the deferred payment system.

• Public Deposits Project Scheduling Techniques

Public deposits are funds raised directly from the public for a fixed period at a specified rate Chapter 6 [Link] Charts
of interest. They are generally short or medium term and are governed by company law
provisions. (a) Gantt Chart
PROJECT PLANNING AND SCHEDULING
• Unsecured Loans A Gantt chart is a graphical representation of project activities in the form of horizontal bars.

Unsecured loans are loans obtained without offering any security. They are granted based on Features:
the creditworthiness and reputation of the borrower. Interest rate is usually higher due to
higher risk. Project Planning • Activities are shown on the vertical axis.
• Time is shown on the horizontal axis.
• Lease Financing Project planning is the systematic process of defining a project’s goals and determining the • Length of the bar shows duration of activity.
steps, resources, time, cost, and methods required to achieve those goals successfully. • Shows start and finish dates clearly.
Lease financing is an arrangement where a company uses an asset without purchasing it. The
lessee pays periodic lease rentals to the lessor. Ownership of the asset remains with the In simple words, project planning means deciding in advance what to do, how to do it, when (b) Milestone Chart
lessor. to do it, and who will do it.
A milestone chart highlights important events or key stages in a project.
• Bridge Loans It is an essential stage of project management because it acts as a blueprint for the entire
project. Features:
Bridge loans are short-term loans provided to meet temporary financial requirements until
long-term finance is arranged. They help in maintaining continuity of the project work. Objectives of Project Planning • Shows only major events (milestones).
• Does not show detailed activities.
• Loan Syndication 1. To clearly define project goals. • Focuses on important completion points.
2. To determine the scope of the project.
Loan syndication is a method where a group of banks jointly provide a large loan to a 3. To estimate time required for completion.
borrower. One bank acts as the lead manager and coordinates the process. It is used for 4. To prepare project budget and cost estimates.
financing large projects. 5. To allocate resources efficiently. [Link]
6. To identify and manage risks.
• Consortium Lending 7. To ensure proper coordination and control. In network diagrams, activities and events are arranged in a planned sequence of their
8. To complete the project within time and budget. accomplishment.
Consortium lending involves multiple banks jointly lending to a single borrower under a
common agreement. The risk is shared among the participating banks. It is common in large There are two types of notations used in network diagrams:
industrial financing.
1. Activity-on-Arrow (AOA)
• Venture Capital 2. Activity-on-Node (AON)

In AOA notation, the arrow represents the activity (work to be done) and the circle (node)
represents an event.

In AON notation, a box (node) represents the activity itself, and arrows show the sequence or
PERT ( Program Evaluation Review Technique )
dependency between activities.
PERT (Program Evaluation and Review Technique) is a project management technique used
when activity time is uncertain.
The main Network Techniques are : i) CPM and ii) PERT
It uses three time estimates to calculate the expected time.
CPM ( Critical Path Method )
Three Time Estimates in PERT
CPM (Critical Path Method) is a project management technique used to plan, schedule and
control complex projects. 1. Optimistic Time (O) – Minimum possible time.
2. Most Likely Time (M) – Normal expected time.
It identifies the longest path in a project network, called the critical path, which determines 3. Pessimistic Time (P) – Maximum possible time.
the minimum time required to complete the project.
Expected Time Formula
Key Concepts
TE = O + 4M + P / 6
1. Activity – A task that consumes time and resources.
2. Event (Node) – Starting or finishing point of an activity. Steps in PERT
3. Network Diagram – Graphical representation of project activities.
4. Critical Path – Longest path in the network with zero float (slack). 1. Identify activities and sequence.
5. Float/Slack – Extra time available without delaying the project. 2. Draw network diagram.
3. Estimate O, M, P for each activity.
Steps in CPM 4. Calculate Expected Time (TE).
5. Determine critical path.
1. List all activities required to complete the project. 6. Calculate probability of completing project within given time.
2. Determine the sequence (precedence relationship).
3. Draw the network diagram. Advantages of PERT
4. Estimate time for each activity (single time estimate).
5. Calculate: • Suitable for research and development projects.
o Earliest Start (ES) • Handles uncertainty. GERT – Graphical Evaluation and Review Technique
o Earliest Finish (EF) • Helps in risk analysis.
o Latest Start (LS) GERT (Graphical Evaluation and Review Technique) is an advanced network analysis
o Latest Finish (LF) technique used in project management.
Limitations
6. Identify the critical path (activities with zero slack).
• Time estimates may be subjective. It is similar to CPM and PERT, but it allows:
Advantages of CPM • More complex than CPM.
• Probabilistic activities (chance of occurrence)
• Identifies most important activities. • Loops (repetition of activities)
• Helps in time control and monitoring. • Conditional branching (decision paths)
• Useful in construction and production projects.
• Assists in cost control (time–cost trade off or crashing). Where GERT is Used

Limitations Difference Between CPM and PERT • Research and development projects
• Engineering design projects
• Assumes activity time is certain. • Defence and aerospace projects
• Not suitable for research or uncertain projects. • Projects with high uncertainty and trial-and-error processes
Advantages A Project Execution Plan (PEP) is a detailed document that explains how a project will be A Gantt chart shows project activities along a timeline. It helps in scheduling, monitoring
carried out, monitored, and controlled during the implementation stage. progress, and ensuring timely completion of tasks.
• Handles complex and uncertain projects.
• Allows flexibility in network structure. In simple words, PEP is a roadmap for executing the project successfully. 3. Network Techniques (CPM and PERT)
• Useful when activities may repeat.
These techniques help in identifying the sequence of activities and determining the critical
Limitations path. They assist in time management and risk handling.
Sub-Plans of Project Execution Plan (PEP)
• Very complex to understand and apply. 4. Organisation Charts
• Requires advanced mathematical knowledge. 1. Contracting Plan
• Not commonly used in small projects. Organisation charts define the structure of the project team, roles, authority, and reporting
The contracting plan explains how contracts with suppliers, contractors, and vendors will be relationships. They ensure clear responsibility and coordination.
handled. It specifies the type of contracts, tendering procedures, selection of contractors, and
contract administration. Its main aim is to ensure proper procurement and smooth execution 5. Resource Allocation Techniques
of contractual work.
These techniques help in assigning manpower, materials, machines, and money efficiently to
2. Work Packaging Plan avoid shortages or wastage.

The work packaging plan divides the entire project into smaller, manageable work packages. 6. Budgeting and Cost Control Techniques
It assigns responsibilities, defines tasks clearly, and ensures proper scheduling and
coordination of different project activities. This helps in systematic and efficient execution. Tools like cost estimation, budgeting, and variance analysis help in controlling project
expenses and keeping the project within budget.
Chapter 7 3. Organisation Plan
7. Monitoring and Reporting Systems
PROJECT IMPLEMENTATION AND CONTROL The organisation plan describes the project’s organisational structure. It defines roles,
responsibilities, authority relationships, and communication channels among team members. Regular progress reports, performance reviews, and control systems help track project
Its purpose is to ensure effective coordination and clear accountability. performance and take corrective actions when necessary.

4. Systems and Procedures Plan 8. Risk Management Techniques

Project Implementation
The systems and procedures plan outlines the methods and procedures to be followed during Risk identification, risk analysis, and contingency planning help in handling uncertainties
Project Implementation is the stage where the planned project is actually executed or put into project execution. It includes reporting systems, monitoring and control mechanisms, during project execution.
action. documentation methods, and quality control procedures. It ensures uniformity, discipline, and
proper control throughout the project.
In simple words, project implementation means carrying out the project plan to achieve the
desired objectives. Project Manager
Objectives of Project Implementation Tools and Techniques for Project Execution Plan (PEP) Who is a Project Manager?
• To complete the project within time. The following tools and techniques are used to prepare and implement an effective Project
A Project Manager is a person who is responsible for planning, organising, directing, and
• To complete the project within budget. Execution Plan:
controlling all activities of a project to achieve its objectives within the specified time, cost,
• To achieve desired quality standards. and quality standards.
• To ensure efficient utilisation of resources. 1. Work Breakdown Structure (WBS)
In simple words, a project manager is the person who leads the project from beginning to
WBS divides the entire project into smaller, manageable tasks or work packages. It helps in completion.
proper planning, responsibility allocation, and execution control.
Project Execution Plan (PEP) 2. Gantt Chart (Bar Chart)
Duties and Responsibilities of a Project Manager

1. Project Planning 1. Establish Standards

o Preparing project plans, schedules, and budgets. o Fix standards for time, cost, quality, and performance.
2. Organising Resources o Based on project plan and budget.
o Arranging manpower, materials, machines, and funds. 2. Measure Actual Performance
3. Team Leadership o Collect data on actual cost, time taken, and work completed.
o Assigning tasks and guiding team members. o Use progress reports and site inspections.
4. Coordination 3. Compare Actual with Planned
o Ensuring smooth communication among departments. o Identify deviations (variance) between planned and actual performance.
5. Time Management o Example: Budgeted cost ₹10 lakhs, actual ₹12 lakhs → ₹2 lakhs variance.
o Completing the project within the scheduled time. 4. Analyse the Causes of Deviation
6. Cost Control o Find reasons for delay or cost overrun.
o Ensuring the project is completed within budget. o Example: material price increase, labour shortage, poor planning.
7. Quality Control 5. Take Corrective Action
o Maintaining required quality standards. o Revise schedule, control costs, improve supervision.
8. Risk Management o Prevent further deviations.
o Identifying and handling project risks. 6. Follow-up
9. Monitoring and Control o Ensure corrective measures are working effectively.
o Tracking progress and taking corrective actions.

Factors Affecting Effective Cost Control

Qualities of a Good Project Manager
1. Proper Planning and Budgeting
1. Leadership Skills – Ability to guide and motivate the team. o Clear cost estimates help control expenses.
2. Communication Skills – Clear and effective communication. 2. Accurate Cost Estimation
3. Decision-Making Ability – Quick and sound judgment. o Wrong estimates lead to cost overruns.
4. Problem-Solving Skills – Ability to handle challenges effectively. 3. Efficient Monitoring System
5. Time Management – Proper scheduling and prioritising work. o Regular reporting and review of expenses.
6. Technical Knowledge – Understanding of project-related work. 4. Skilled Project Manager
7. Organising Ability – Efficient use of resources. o Experience helps in managing costs effectively.
8. Risk Handling Ability – Ability to manage uncertainties. 5. Price Fluctuations
9. Integrity and Responsibility – Honest and accountable. o Changes in material and labour prices.
10. Adaptability – Ability to adjust to changes. 6. Scope Changes
o Frequent changes increase project cost.
7. Time Delays
o Delay increases labour and overhead cost.
8. Resource Management
Project Control o Proper use of labour, materials, and machinery.
9. Technology Used
Meaning o Modern technology improves efficiency and reduces waste.
10. Government Policies & Taxes
Project control is the process of monitoring project activities, comparing actual performance
with planned performance, and taking corrective action to ensure that the project is completed
within time, cost, and quality standards.

Steps in the Process of Project Control