Introduction to Project Management Unit 1

Unit 1 Project Management – Overview

Structure
1.1 Introduction
Objectives
1.2 History and present status of project management
1.3 Definition of a Project
1.4 Characteristics of a Project
1.5 Project parameters
1.6 Definition of Project management
1.7 Project management context
1.8 Overview of project management processes
1.9 Summary
1.10 Terminal questions
1.11 Answers to SAQs and TQs

1.1 Introduction
The concept of Project management as a discipline for detailed study is of
recent origin. While mankind has been implementing projects ever since the
dawn of civilization, modern projects are complex, varied, many being of
enormous size and with high technology orientation. Today, we cannot
visualize a project which does not use established project management
techniques. Project management is, however, both a „science‟ and an „art‟. It
requires not just scientific / mathematical tools, but demands a variety and a
high degree of soft skills like leadership and communication.
We therefore introduce the subject of project management with a brief view
of its historical development and how project management requires adoption
of general management principles as well, as specific principles related to
projects – a project being essentially a one-time activity as opposed to
operations. The characteristics of a project, the parameters which define a
project and the principles / good practices of project management which
have evolved into a Project Management Body of Knowledge are discussed.

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Objectives:
After studying this Unit 1, you will be able to:
i) understand the general chronology of the development of Project
management techniques
ii) describe the similarities and differences between Projects and
Operations
iii) state the specific characteristics of a project
iv) understand the parameters which define a Project and interrelationship
between these parameters
v) describe the context in which the project manager and his team
operate
vi) give an overview of the processes deployed in the project
management function

1.2 History and present status of Project management

Project management has been around since the beginning of civilization.
Mankind has launched projects of sizes varying from small projects to
massive projects since the time man learnt to use primitive tools for his
survival. Examples of projects in the history of civilization abound
The Great Wall of China was conceived as a project to meet the objective of
a defensive fortification for the kingdoms in ancient China. It involved the
manual efforts of millions of men over a thousand years. It included the work
of carrying out designs of the fortification such as passes, beacon towers
and walls. It involved sourcing of materials in an optimum manner by
exploiting local material resources available such as earth, stone and wood.
Noah managed a project when he had the ark constructed and gathered two
of every animal on earth, including the necessary food and water. The
pyramids of Egypt, townships like Pompeii and the Indus valley, the grand
temples, churches, mosques and many other structures of the world stand
today because of projects and several project managers, who managed
their implementation. The crusades which were launched involved arming
and feeding tens of thousands of soldiers. Project management enabled
leaders to plan such bold and massive projects. They did it using their
authority, mental faculties and leadership abilities without the project
management tools available to us today.

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Project management came to be recognized as a formal management

concept only in the 1950's and 1960's when operations research used
methods and specialized tools to manage expensive, high profile projects
such as Polaris and Apollo. NASA and the US Department of Defense set
up project management standards that they expected contractors to follow.
Some authors have preferred to summarize the recent history of project
management in the four chronological periods as under. Prior to these
periods, projects were managed on an ad-hoc basis using mostly informal
techniques and tools (e.g. Gantt charts).
Prior to 1958:
In the USA and Europe, evolution of technology shortened the time period of
project completion. Two technology areas which contributed to this
development were:
Automobiles were made and put on the roads, which increased resource
allocation and mobility. Telecommunication increased the speed of
communication. Job specification was widely used, which later became the
basis of developing the Work Breakdown Structure. Henry Gantt developed
the idea of „Gantt charts‟ which gained popularity as a schedule
management tool. Some major projects in USA in this period are:
Pacific railroad – 1850s
Hoover dam – early 1930s
Manhattan project – R & project for producing the atomic bomb (1942 – 45)
triggered by World War-II
1958 – 1979:
Application of management science became the vogue in project
management. Some significant technology developments in this period
were:
Automatic plain paper copier by Xerox Corporation in 1959
Project management tools like PERT and CPM in 1958
Development of computer technology from Main frame to minicomputer in
the 1970s, which made computers affordable to medium size companies.
Material Resource Planning (MRP) was adopted by manufacturing
companies.

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Some major projects in this period were:

Polaris missile project
Apollo mission of landing man on the moon
DuPont built major chemical production plants across the USA
1980 to 1994:
Introduction of the Personal Computer (PC) enabled the information
management sector to develop in a revolutionary manner. The PCs were a
low cost investment to companies and individuals. Companies could utilize
this development to manage and control complex project schedules. Project
management software at affordable prices made project management
techniques easily accessible to companies.
Some major projects in this period were:
English Channel project (1989 – 91) which was an international project
implemented as Joint venture between two governments, involving many
financial institutions, use of Standard metrics and coordination of
communication differences. Space shuttle challenger project (1983 – 86) –
The disastrous end of this project was the trigger for focusing attention on
risk management, group dynamics and quality management. XV Calgary
Olympics of 1988 successfully applied project management practices to
event management.
1995 to Present:
In this period, the explosion of internet has occurred enabling instant
accessibility of any kind of information to anyone willing to invest a modest
amount for this facility. This has made possible the virtual project office.
Business practices have dramatically changed with the facility to browse,
purchase, track products and services instantly. Enterprise Resource
Planning and e-procurement are widely adopted by several companies. This
implies that we are now in a period where velocity is the key word for
survival or growth of companies.
Although many large private and public limited companies and companies in
the public sector are now adopting scientific project management
techniques in India, this profession is still evolving in our country.
Management of projects on scientific basis has Govt. of India approval, as
seen from our Planning Commission‟s stipulation that a sanction for any
project costing over Rs.20 crores, should be accompanied by a scientific
project network and other analysis.

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In this context, it is noteworthy that good practices in project management

developed and being updated every few years by the Project Management
Institute (PMI), U.S.A is also gaining acceptance in India, as seen by
companies encouraging their selected employees to obtain the PMP
certification (Project management Professional) launched by PMI. PMI is a
professional organization for people who manage projects. A major objective
of PMI is to advance project management as a profession. Individuals
seeking PMP certification must have work experience (5000 hours approx.)
and pass an online exam which is based on the Project Management Body
of Knowledge (PMBOK), a publication of PMI. Detailed information on PMI
can be obtained from their website [Link].
The importance of project management is evident as all organizations, small
or large, are involved in implementing new undertakings which maim at
 Development of a new product or service
 A manufacturing enterprise wanting to establish a new production line
 A public relations promotion campaign
 A major building project or infrastructure project

1.3 Definition of a Project

Several definitions of a project are available, some of which are:
 PMBOK defines project as "a temporary endeavor undertaken to
produce a unique product, service or result."
 The British standard BS6079 defines a project as "a unique set of
coordinated activities, with definite starting and finishing points,
undertaken by an individual or organization to meet specific objectives
within defined schedule, cost and performance parameters.
 A general definition is given by [Link], a quality guru who defines
project as a "problem scheduled for solution".
The definition of a project may vary with respect to the combination of words
used. The commonalities and the differences between „Projects‟ and
„Operations‟ can be understood as under.
Organizations perform work to achieve a set of objectives. Generally work
can be categorized as either projects or operations. They share the
following characteristics:

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 Performed by people
 Constrained by limited resources
 Planned, executed and controlled.
Projects and Operations differ primarily in that operations are ongoing and
repetitive, while projects are temporary and unique. Also, the objectives of
projects and operations are fundamentally different. The purpose of a
project is to attain its objective and then terminate it i.e.. a project concludes
when its specific objectives have been attained. Conversely, the objective of
an ongoing operation is to sustain the business.
The following are examples of project initiatives:-
1. Setting up a production facility
2. Constructing national highways.
3. Constructing a dam.
4. A software company developing a software application.
5. Implementing a management information system.
6. A mini steel plant considering building a new arc furnace.
7. Relocating a production facility.
In contrast, the following activities are not projects:
 Operating a manufacturing facility
 Supervising a work group
 Running a retail business
These are ongoing activities
In summary a project is a one-time, non-routine, multi-task job with a definite
starting point, a definite ending point, a clearly defined scope of work, a
budget and usually a temporary team.
It is important to note the presence of the word team, because managing a
one-person project will not fall in the category of project management. While
it is true that a one person job can be called a project, you are not practicing
true project management unless you are coordinating the work of other
people.
Self Assessment Questions I
Answer the following questions
1. State the definition of a project as per PMBoK
2. State 3 common characteristics between „projects‟ and „operations‟
3. Give 3 examples each of „projects‟ and „operations‟.
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1.4 Characteristics of a project

Project work and traditional functional work differ in significant ways, and it
is important to understand these differences.
Functional work is routine ongoing work. Each day machine operators, car
salesmen, secretaries, accountants, financial analysts, quality inspectors
perform functional work that is routine, notwithstanding some variations from
day to day. The functional worker gets training from a manager assigned to
the specific function, and the manager supervises and manages the worker
according to standards of productivity and quality set for the particular
function.
Functional work is typically structured as a hierarchical organization with
traditional formal lines of authority as shown in figure 1-1.

Figure 1-1: Functional Work Organization

In contrast to functional work, project work is a temporary endeavor

undertaken to create a unique, non routine product or service. A project
manager manages a specific project with people and other resources
assigned to him only for project management support on the specific project,
and not on an ongoing basis. The project manager is responsible for the
approved objectives of a project – such as budget, schedule and
specifications. Project teams are typically not organized in the same

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hierarchical structure as that of functional groups. They are organized in one

of the various ways which will be described in unit 6 under „Organization
structure‟.
A comparison of project and functional work is as under (fig. 1-2)

Fig. 1-2: Comparison of Project & Functional work

(Source: Fig. 1-3 of Project Management Step-by-Step by Larry Richman)

The traditional functional approach is not adequate in a project environment

and does not promote work meeting the time, budget and quality targets
fixed. The project approach promotes the innovation, experimentation and
entrepreneurship, which is needed in business today.

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Thus it is to be noted that a project has the following characteristics:-

1. A project has an owner
The project is initiated by the owner – an individual, public/private sector
company, a joint sector company.
2. Fixed set of objectives those are unique
Every project has a set of activities that are unique, leading to an objective
or a set of objectives, which are unique. It means that it will be the only time
that the same set of activities is carried out for the same objective or
objectives of the project. Even for another similar project, there will be
something different in many activities, or even if an activity is repeated, the
variables influencing it change every time. For example, for coal fired power
plants of 500 MW to be constructed, each plant will need to be designed
and constructed for different site conditions, coal specifications, plant
layouts, design parameters, waste disposal plans, infrastructure facilities
available for carrying out the project, customers requirements and other
variables.
Once the project is implemented, the project is closed. However, it must be
recognized that while project closure implies that the project is turned over
to operations at this juncture, cognizance of the Operations & Maintenance /
Integrated logistics support phase of operation needs to be taken during
project management. To elaborate, planning inputs from this phase needs to
be absorbed into the project. Also in many projects, management will have
some responsibility extended into the early period of startup and operations.
3. Goal Oriented
Projects are taken up by organizations to attain a specific goal e.g. near total
automation of a manually operated manufacturing plant, relocating a plant to
a new location, computerizing the accounts department, studying the
demand for a new product that a company plans to launch in the market. In
other words, a project has a desired outcome at the end.
4. Specified time of completion (life span)
Every project has a specified start date and completion date. This time span
is referred to as time of completion, which should be in line with the project
owner's requirement.

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5. Specified budget
A project needs to be implemented within its budgeted cost which is
determined prior to start of project implementation. The budget is prepared
for a pre-specified scope of work, performance requirements and time of
completion. A continuous monitoring of project costs incurred during the
implementation of the project is essential in order to track cost variances.
While cost variances occur commonly in projects (usually cost overruns),
and additional funds as required can be mobilized by careful cost
monitoring, it is also not uncommon to see projects that are unduly delayed
or even abandoned on account of excessive cost overruns.
6. Performance parameters
There are two kinds of performance requirements that could collectively be
called specifications. One is the functional requirement which tells what the
deliverable that is being delivered is supposed to do. The other is the
technical requirement which describes the features and the quality
requirements of the deliverables.
7. Logical sequence of activities
In order to achieve the project completion in the specified time period, there
is a logical sequence of activities that need to be worked out by detailed
planning, depending on the technical requirements and the interdependency
of each of the activities.
8. Coordination between different areas of work expertise
A commercial building complex would require continuous coordination
between architectural design, structural design, interior design, electrical
facilities design, air conditioning system design, landscaping, construction
works, liaison with statutory approval authorities, project funding agencies,
electricity supply/water supply departments, sewerage department of
government etc.
9. Resources
A project consumes significant amount of resources-time, money and
manpower.

10. Project team is temporary

As a project has definite start date and definite end date, the project team is
essentially temporary. Even within a company engaged only in project

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contract execution, some or many of the personnel in the project team will
differ from project to project. For the project owner's company, the agencies
deployed by the owner company for carrying out various functions of the
project will vary from project to project.
11. Large projects involve a substantial degree of subcontracting
Since project work comprises works in different areas of expertise, it is
necessary to engage specialized subcontractors for different work-
packages. For a coal fired power plant, the major work packages would
comprise boiler, turbine, generator, coal handling system, cooling water
system, ash disposal system, exhaust chimneys, switchyards and various
construction works for civil, structural, piping, cabling, instrumentation etc.
12. Risk
Risk is defined as the possibility of an outcome being different from the
expected outcome. Every activity of a project is subject to some risk e.g.
damage to machinery, stoppage of financial flows, accidents to personnel.
Hence risk analysis and management is one of the processes of project
management.
Self Assessment Questions II
1. Enumerate 10 characteristics of a project.
2. Fill in the blanks:
 The cost within which a project is to be completed is called -------
 Detailed scheduling of a project involves working out a -------
sequence of activities.
 Three resources required for implementing a project are ------, ------
and ------.
 Risk can be defined as the possibility of the actual ------ being
different from the expected ------.

1.5 Project Parameters

The primary purpose of a project is to deliver a product and/or service to a
customer (the customer can be internal to the company or an external
Client) as per the specified time, cost, detailed scope and performance
requirements as contracted with the customer.

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Accordingly we note here that a project is characterized by four constraints.

S (Scope) Magnitude or size of the project
P (Performance) Functional requirements & Technical
requirements
(Quality requirements are included in these)
C (Cost) Total cost incurred by owner for the project.
T (Time) Time specified to complete the project
The relationship between these four constraints is
C = f (P, T, S)
This implies that Cost is a function of Performance, Time and Scope.
Graphically it can be represented as a triangle in which P, C and T are the
sides and S is the area (fig. 1-3). If we know the area and the two sides, we
can compute the length of the remaining side.

Fig. 1-3: Triangles showing the relationship between P, C, T, & S

Source: Project planning Scheduling and Control – James P. Lewis Chapter 1,
Fig. 1.2

This translates into a very practical rule of project management – the

sponsor can assign values to any three variables but the project manager
must determine the remaining one.
It is common for the client to ask for too much to be delivered with regard to
scope and quality within the time and cost specified by the client himself i.e.
all four parameters end up as being specified by the client. Here the project
manager needs to be proactive in striking a balance between these
constraints by making the client aware of the limitations pertaining to time,
budget, technicalities etc. In striking this balance, he needs to plan the
deployment of resources in sufficient detail.

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While the parameters S, P, C and T are dealt with in detail in subsequent

units, an overview of these can be made as under:
Scope:
Briefly, scope refers to the end product or the deliverables required from the
project. The scope document should describe all the activities that are to be
performed and the resources that will be consumed. For the scope to be
documented in sufficient detail, a Detailed Project Report is often prepared
(DPR).
Performance:
We discussed that there are two kinds of performance requirements –
functional requirements and technical requirement (quality requirements
being included in these).
Defining performance requirements of a project is a major part of project
definition. This defining needs to be done correctly and adequately in order
to prevent project failures.
Time:
The time of completion for a project is generally specified by the client. The
cost of a project is inversely related to the time specified i.e. the cost of a
project increases as the time available for its completion decreases. It is
therefore important that the resources required to complete the project in the
specified time are accurately assessed upfront to determine the project cost,
as every resource has a cost associated with it.
Cost:
The total project cost is the sum total of the costs of all the resources
required to complete the activities mentioned in the scope of the project.
Resources:
We discussed earlier that the most important step to arrive at the
relationship between the four constraints is to make an accurate
assessment of the resources required, and the costs thereof. At this stage,
we shall broadly classify the resources required under four categories.
 Manpower
 Materials
 Tools and Plants
 Infrastructure

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Manpower refers to all the man hours required from various personnel
working directly or indirectly on the project.
Materials refer to all materials that become part of the project. In the case of
a building this will include cement, steel, aggregates, doors & windows,
mechanical electrical/instrumentation equipment and materials, finishing
materials like tiles water proofing, ironmongery, consumables utilized in the
construction etc etc. – in summary all materials that become part of the
building structure.
Tools and Plants are those items that are deployed to aid the construction of
the project like lifting equipment (cranes etc.), concreting equipment,
welding machines, dozers, transport vehicles and all machineries deployed
as construction aids. They do not become part of the project, they are
utilized for the implementation of the project, and they are transferred to
other projects after such utilization for the ongoing project. The owner may
own some of these tools and plants in which case he will need to apportion
an internally predetermined hiring cost of the same to the project. For the
tools and plants deployed for the project and not owned by the owner, hiring
costs charged by the external agencies shall be apportioned to the project.
Infrastructure refers to temporary arrangements that need to be provided for
project implementation and dismantled at the end of the project. Examples
are labor camps, electric power and water supply systems built for the
construction of the project, dedicated telecommunication facilities during
construction at project sites etc.
Each one of the abovementioned resources has a cost associated with it
and the sum total of these costs will form a part of the project cost.
It should however be noted that several additional cost elements contribute
to the total project cost like financing costs, insurance costs, overheads etc.

1.6 Definition of project management

PMBOK defines project management as “the application of knowledge,
skills, tools and techniques to project activities to meet project
requirements”. Project management is accomplished through the application
of and integration of the project management processes of initiating,
planning, executing, monitoring and controlling, and closing. The project
manager is the person responsible for accomplishing the project objectives.

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Managing a project includes:

 Identifying requirements
 Establishing clear and achievable objectives
 Balancing the competing demands for performance, scope, time and
cost.
Project management is both an art and a science. The "Art" aspect of
project management relates to the fact that projects are really about getting
things done by people. Hence it requires a keen knowledge of human
behavior and the ability to skillfully apply appropriate interpersonal skills.
The "Science" aspect comprises a set of principles, methods and
techniques that people use to effectively plan and control project work.
These principles and techniques help the project manager and the project
team to complete projects on schedule within budgeted cost and in full
accordance with project specifications. At the same time, they help achieve
the other goals of the organization, such as productivity, quality and cost
effectiveness. Hence the objective of project management is to optimize
project cost, time and performance (includes quality).
Today large and small organizations recognize that project management,
with its structured approach to planning and controlling of projects, is a
necessary core competency for success. Like general management,
project management also involves all aspects of planning, organizing,
implementing and controlling .However, it has its own techniques like work
breakdown structure, critical path analysis, PERT (Program evaluation &
review technique), which will be discussed in later units.
In many strategic projects the function of project management will involve
disciplines like:
Finance
Preparation of financial statements which will form part of the project
proposal, as well as the basis for managing the costs of the project.
Personnel
Identification of skill requirements of personnel who will form the project
team, selecting the personnel, and maintaining a good working environment.
Operations
Managing the activities /operations that are repetitive in nature.

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Supply Chain Management (procurement management)

Sourcing of materials, equipment/machinery/services by identifying eligible
suppliers of each and negotiating with them for procuring the same, and
managing the logistics for smooth project implementation.
R&D
New product development & quality assurance.
Marketing
Marketing the project idea to sponsor (sponsor can be internal or external to
the company).
Self Assessment Questions III
Answer the following questions
1. State the 4 parameters of a project.
2. Under what four categories can you list the resources required for
implementing a project?
3. How does PMBoK define project management?
4. Explain why is project management is considered both a science and an
art.

1.7 Project Management Context

It is important for a project manager and the project management team to
understand that while management principles, methods and techniques are
essential for conducting the day to day operations of the project; these are
to be applied in an environment that is broader than the project. This
broader context needs to be kept in view and they must understand that
application of the techniques alone will not guarantee the success of the
project. Aspects of the environment which influence the project progress and
its results can be classified under following heads:
1.7.1 Stakeholders
According to Project Management Institute's (PMI) guide to PMBOK, project
stakeholders are ' individuals and organizations who are actively involved in
the project, or whose interests may be positively or negatively affected as a
result of project execution or project completion‟. It is therefore necessary
for the project management team to identify the stakeholders. The major
stakeholders of a project include:

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 Project Manager
 Customer
 Performing organization
 Project team members
 Sponsor
 Society
Customer
The aim of the project is to create a product, service or facility and deliver it
to the customer as per his stipulated requirement .Hence the project team
must consider all the customer's requirements for the deliverable.
The customer can be any one of the following:
– Internal customer – individuals within the parent organization e.g. the IT
department assigned to provide a software package to the accounts
department. The accounts department is the internal customer.
– Intermediate customer – is external to the company but not the final user
of the product e.g. distributors and wholesalers.
– External customer – Individual or organization that pays for and uses the
final product.
Project manager
He is the interface between the customer and Management. He holds the
responsibility for the successful implementation of the project. He is an
important stakeholder.
Project team members
Team members working in their individual areas of expertise play a crucial
role in the success of the project. They work directly with or under the
project manager depending on the organization structure adopted for the
project. The project manager must therefore use team building skills to
ensure that the team members work as a team.
Sponsor
A sponsor is an individual or a group within or external to the performing
organization, the parent organization who arranges the financial resources
in cash or in kind for the project themselves. The sponsor may be a senior
executive or a junior manager with formal authority who is responsible for
the project. He acts as a link between the project and the performing
organization.

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Performing organization
The performing organization is the enterprise whose employees are most
directly involved in doing the work of the project. Therefore, the project
should contribute towards achieving the corporate goals of the performing
organization.
In addition, there are several stakeholders like project owner, fund-
providers, suppliers or contractors, govt. agencies & media outlets and
society at large. Stakeholder roles & responsibilities may overlap e.g. when
an engineering firm provides financing for a plant that it is designing or
constructing or both designing & constructing. The naming or grouping of
stakeholders is primarily an aid to identify individuals or organizations who
view themselves as stakeholders.
1.7.2 Organizational influences
Projects are initiated by organizations which are larger than the projects
themselves. These organizations can be a business corporation, Govt.
Department, R&D centers etc. They may also be joint ventures or
partnerships. Organizations that initiate projects have an influence on the
implementation of the project from the aspects of their Organizational
system, Organizational culture & style, Organizational structure. The
influence of these organizational aspects is summarized hereunder:
Organizational systems
From the standpoint of project implementation, organizations can be
classified as Project based organizations & Non-project based
organizations. Project based organizations are those that earn their
revenues mainly by undertaking projects e.g. Consultancy firms,
Engineering-Procurement-Construction (EPC) contractors, infrastructure
contractors, architecture firms. Non-project based organizations are those
which carry out routine operations such as manufacturing companies,
hotels.
Project-based organizations have well designed management systems like
project planning & scheduling tools, finance systems for accounting, project
progress tracking & control systems. This makes it easy for the Project
manager & his team to handle the project implementation. Non-project
based organizations do not normally have management systems to address
project needs. Hence, it is difficult to manage projects in such organizations.

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Hence such organizations will need to subcontract the project management

work to external consultancy firms or EPC contractors depending on the
size & complexity of the project. It is, however, possible that some non-
project driven organizations have divisions or subdivisions who work with
project oriented management systems to execute in-house projects of
limited size.
The Project manager and the project management team should therefore
understand the influence of the systems in their company for project
implementation.
Organizational Culture and style
Most organizations have developed unique and describable cultures of their
own. Organizational culture represents the organization's shared values,
norms and beliefs. The policies and procedures adopted in the organization
will reflect this culture. This culture and management style have a direct
impact on the project management team and hence the project. The
following examples illustrate this impact
 An aggressive or entrepreneurial organization is likely to approve an
unusual or high-risk proposal from a team. Such an organization will not
favor employing a conservative, cautious project manager.
 A project manager with a highly participative style of management is apt
to encounter problems in a rigidly hierarchical organization. Similarly, a
project manager with an authoritarian style will be equally challenged in
an organization which encourages participative management style.
Organizational structure
The organizational structure has a significant impact on the functioning of a
project manager. It is important that the resources required for project
implementation should flow freely from the organization to the project, to
enable successful completion of any project. This is true both for project-
based organizations, which will be engaged in simultaneously implementing
several sizeable projects, as well as a non-project based organization,
which may decide to handle a small project in-house. Hence, selecting the
right organizational structure will provide a competitive advantage to the
organization. The important effects of the organizational structure on the
functioning of a project manager are as under:

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Authority: In the function-driven organization, the project manager has

almost no authority, while in a project-driven organization; the project
manager has near total authority. A project manager having less authority
requires more effort to get decisions approved and implemented.
Communication: Generally, all organizational structures facilitate vertical
(top-down or bottom-up) channel of communication. A project manager's
communication often runs counter to such a channel, since his
communication needs to cut across functional departments. Hence he
should do whatever is necessary to keep all the stakeholders informed and
coordinated for achieving the project objectives.
Priority: Since the organization‟s resources are limited, projects will
compete for such resources to be allocated to the project. These resources
will comprise manpower, equipment & funding. In a function-driven
organization, project managers will face the prospect of their needs being
trimmed to meet the needs of the ongoing operations of the organization.
Project managers in project-driven organizations may also face such
limitations when the organization takes up multiple projects, even though the
organizational structure in these organizations will be far more suited for
project management when compared to function-driven organizations.

Focus: In project-driven organizations, the focus is predominantly on

revenues generated by projects, and every employee works towards
achieving this single objective, since the employees work on project or
projects all the time. This focus and feeling of responsibility increases
employee morale.

Chain of command: The chain of command required for project

implementation may sometimes or often go against the organizational
structure i.e. the project often cuts across functional boundaries. When this
happens, more functional managers are required to approve decisions, and
thus the project manager has to put in more effort to bring a problem to a
functional manager's attention for eliciting a decision. If certain functional
groups have competing interests, clashes over authority can result. In order
to ensure that the project does not get derailed on such counts, the
Management will require getting involved in resolution of major conflicts.

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Project-oriented organizations have their organization structure set up for

project implementation, thus making it easy to run projects. However, the
project manager is likely to encounter difficulties in dealing with the authority
structure, for which he will have to rely on his expertise and experience.
Broadly, we visualize 3 types of organizational structure
Functional organization (fig.1-4)
Project-based organization (fig. 1-5)
Matrix-based organization (fig. 1-6)

Fig. 1-4: Functional Organization

(Source: Chapter 2, Fig.2-7 of PMBoK, PMI, USA)

Fig. 1-5: Project based Organization

(Source: Chapter 2, Fig.2-8 of PMBoK, PMI, USA)

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Fig. 1-6: Matrix based Organization

(Source: Chapter 2, Fig. 2-11 of PMBoK, PMI, USA)

Variations of these structures are however possible. We note the basic

characteristics of these structures thus:
Functional organization is a hierarchical structure. It defines a clear Superior
– Subordinate relationship i.e. .the line of control is clear. Each department
carries out work in its area of specialization, and employees in this
department work with this expertise within this department's line of control.
In a manufacturing organization, the departments can be production,
finance, marketing, quality control, engineering, administration, personnel
etc. If a new product is to be developed, the engineering dept. will handle
only the design development phase of the product. If the answer to any
question concerning manufacturing, marketing or quality control is to be
found, the query will be passed on to the respective dept. through formal
communication channels.
A project-based organization is designed to provide near total authority to
the project manager to direct the work of and set priorities for individuals
assigned to him for the project. Functional depts. exist in this organization,
but the groups working in these depts. report directly to the project manager
in the execution of various projects.

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A matrix organization combines the characteristics of functional and project-

based organizational structures. Here, project managers and functional
managers have equal authority, which implies that the functional staff
member reports to both project manager and his functional manager. This
constitutes a dual reporting system for each functional staff member.
An organization will have one of these 3 organization structures. The
structure has an impact on the project initiated by the organization. To
handle a project, the operating procedures and reporting structures need to
be formed, keeping in view the size and complexity of the project. For
example, when a project team is formed in a functional organization, the
team will have to form its own operating procedures and reporting structures
that are similar to that of a project-based organization.
1.7.3 General external environment
Conditions and trends in the external environment in general will have
varying degrees of influence on a project. The range of topics that fall into
this general category is very wide to enable a summarized discussion. The
project management team must understand the possibility of the project
getting affected by these factors. Some typical areas of influence are
discussed below:
Cultural influences: Every project must operate within a context of one or
more cultural norms. PMBoK refers to the definition of culture as “the totality
of socially transmitted behavior patterns, arts, beliefs, institutions and all
other products of human work and thought. We can visualize this area as
including political, economic, demographic, educational, ethical, ethnic,
religious and other areas of practice, belief and attitudes that affect the way
in which people and organizations interact.
Internationalization: With globalization catching up, more and more
organizations are engaging themselves in work spanning national
boundaries. Personnel need to acclimatize themselves with the realities of
time zone differences, national and regional holidays, local language and
food preferences, logistics of teleconferencing, volatile political differences
at times, travel requirements for face to face meetings etc.
Environmental impact: With the increasing public awareness of the need for
protecting the environment, organizations are accountable for the

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environmental impact resulting from their activities. While mandatory

standards are put in place by governments, possible reactions of the public
populace also need to be factored into the planning and execution of the
project. Adherence of the project is required to both „standards‟ and
„regulations‟. A standard is a good practice to be adopted and a company
can choose its standard, while a regulation is mandatory. However, this
distinction becomes a thin line in many cases. Standards of good
engineering practice are prescribed by Standards Institutes in several
countries such as BIS (India), ANSI (USA) etc. and these are widely
specified for adherence by consultants and contractors in many tenders.
Accordingly, these standards by implication become mandatory since they
will become part of the contracts entered into with them by the owner
While some of the influences referred above will be known to the project
management team, the unknown influences are also reckoned as part of
project risk management.
1.7.4 Project phases and Project life cycle
Since projects are unique undertakings with a certain degree of uncertainty,
organizations performing the project need to divide each project into several
project phases, the phases arranged in a sequential logic. This is necessary
to improve management control and to coordinate the project activities with
those of the organization. A phase is a collection of related project activities
required for completion of one or more deliverables. A deliverable is a
tangible, verifiable work product such as a feasibility report, WBS, Critical
path, a project budget. A review of the performance of the deliverable /
deliverables of each phase is conducted at the end of every project phase
– To check if the project can proceed to the next phase
– To identify and correct mistakes in a timely and cost effective manner.
From a holistic viewpoint, four basic phases of a project can be identified.
 Initiation phase
Here the need is identified. The project actually begins when an
appropriate response to the need is determined and described. In this
phase the issues of feasibility (can we do the project?) and justification
(should we do the project?) are addressed.

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 Planning phase
Here, the product solution is further developed in as much detail as
possible. The final deliverable of the project is broken into intermediate
deliverables, along with the strategy for producing them. Formulating
this strategy involves breaking down the project into work elements
(tasks) and sequence of executing them (the sequence determines the
schedule), estimating the amount of money & time required to perform
the work, and when the work is to be done. The question of feasibility
and justification surfaces again, as formal approval to proceed with the
project is normally sought before continuing.
 Execution phase
Here, the prescribed work is performed under the watchful eye of the
project manager. Progress is continuously monitored and appropriate
adjustments are made and recorded as variances from the original plan.
Throughout this phase, the project team remains focused on meeting
the objectives developed and agreed upon at the outset of the project.
 Close-out phase
Here, the emphasis is on verifying that the project has satisfied or will
satisfy the original need. A successful project culminates with a smooth
transition from the deliverable creation (Project) to the deliverable
utilization (post-project cycle). Through this phase, the members of the
project team are gradually redeployed and the project is finally shut
down.
Project Life cycle
Collectively, the project phases are known as the project life cycle. Thus the
project life cycle serves to define the beginning and end of the project. For
example, when an organization identifies an opportunity, it will conduct or
authorize a feasibility study to decide if it should undertake the project. The
project life cycle definition will determine whether the feasibility report is
treated as the first project phase, or as a separate standalone project. The
phase sequence defined by most project life cycles generally involves
transfer of deliverables (or technology) such as:
Requirements to design
Design to production or construction
Production to distribution
Construction to operation

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Deliverables from preceding phase are usually approved before work starts
on the next phase. The requirement of speedy completion of the total project
will often necessitate overlapping of phases i.e. a subsequent phase is
begun prior to approval of the previous phase deliverables, when the risks
involved are deemed acceptable. This overlapping is termed fast tracking.
Typical sequence of phases in a project life cycle shown hereunder (fig. 1-7)

Figure 1-7: Typical sequence of phases in a project life cycle

Source: Chapter 2, Fig. 2-3 of PMBoK. PMI

Self Assessment Questions IV:

Answer the questions
1. List 6 stakeholders in a typical project
2. List the differences between the functional organization and the matrix
organization.
3. What is the main difference between a standard and a regulation?
4. List four phases in the project life cycle.
5. State whether the following statements are true or false.
a) In a function-driven organization, the project manager has greater
authority than in a project driven organization.
b) A matrix organization combines the characteristics of functional and
project-based organizational structures.
6. The project life cycle is a collection of project phases
7. A project phase is marked by the completion of one or more deliverables

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In a functional organization, the line of control is clear

A pure project organizational structure is adopted by operating companies
executing small expansion projects
Fill in the blank
1. ------ organization treats every project as a profit centre.

1.8 Overview of Project management processes

For an understanding of the project management process, reference is
made to Unit 2 and Unit 3 which is based on the definitions of and
interactions between processes identified in the PMBoK. Project
management of a single project essentially comprises a number of
interlinked processes. While each process can be viewed as a discrete
element to enable understanding its purpose in project management, the
processes, in addition to having well defined interfaces also overlap in
practice. The underlying concept for the interaction among the processes is
the Plan-Do-Check-Act (PDCA) cycle which is referred in the ASQ
(American Society for Quality) handbook. In this cycle, the result from one
part of the cycle becomes the input to another as shown in fig. 1-8

PLAN
ACT

DO

CHECK

Figure 1-8: The P-D-C-A cycle

Source: Chapter 3, Figure 3-1 of PMBoK, PMI, USA

(Note: Wherever PMBoK, PMI, USA edition is not mentioned, the latest
edition viz. 3rd edition of 2004 is implied)

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In managing this overall process, we need to understand that a project is a

combination of several processes. PMBOK defines process as "a set of
interrelated actions and activities that are performed to achieve a pre-
specified set of products, results or services”. The processes involved in a
project are interrelated, and project management is a coordinated and
integrated endeavor towards managing interrelated processes. A success or
failure in an activity of the series will affect other activities and / or other
processes. These interactions can be very evident, or they may be subtle
and uncertain. For example, a change in the scope of a project is most likely
to affect the cost and time of completion, whereas its effect on employee
morale is hard to predict. Most often, it may not affect employee morale; if it
happens very frequently, it may have an effect. For this reason, interactions
often necessitate tradeoffs among project objectives i.e. to enhance
performance in one area, the performance in another area may need to be
compromised. For a project to be successful, the objectives must therefore
be balanced. A broad illustration of this balancing is also implicit in the P, C
T, S triangle of Fig. 1-3.
In view of this integrative nature of project management, understanding the
component
Processes of a project and their interactions are of primary importance.
Project processes are performed by the project team and generally fall into
one of two major categories:
 Project management processes describe and organize project activities.
Project management processes that are common to most projects have
been classified into nine classifications by PMBoK. Each of these
processes is discussed in detail in Unit 2. Though each of these
processes discusses the significance of individual activities in relation to
the project, all the processes are interrelated. For instance, project
procurement management, which is a process for acquiring goods and
services from a firm external to the project organization, will need to be
performed to satisfy the project requirements implicit in scope
management, cost management, quality management etc.
1. Project Integration management
2. Scope management
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3. Time management
4. Cost management
5. Quality management
6. Human resource management
7. Communications management
8. Risk management
9. Procurement management
 Product-oriented processes specify and create the project's product.
These processes are typically defined by the project life cycle. Examples
of product processes specific to products such as construction project,
pharmaceutical project are shown in Unit 1.6 under Project life cycle.
Project management processes and product-oriented processes overlap
and interact throughout the project. For example the scope of the project
cannot be defined in the absence of some basic understanding of how to
create the product.
The project-oriented processes are grouped in the PMBoK as falling into
one of the under-mentioned 5 Process Groups (PG)
Initiating PG
Planning PG
Executing PG
Monitoring and Control PG
Closing PG
In relation to the P-D-C-A cycle, we can view the Process groups defined in
PMBoK as under:
Initiating PG starts the P-D-C-A cycle
Planning PG relates to the PLAN component of P-D-C-A
Executing PG relates to the DO component of P-D-C-A
Monitoring and Control
PG relates to the CHECK and ACT components
of P-D-C-A
(This PG interacts with every aspect of the other PGs)
Closing PG closes the P-D-C-A cycle

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This can be graphically understood as shown in fig. 1-9.

Monitoring & Control processes

\
Planning processes

Initiating processes Closing processes

Executing processes

Figure 1-9: Project management processes mapped to the P-D-C-A cycle

(Source: Chapter 3, Fig. 3-2 PMBoK of PMI, USA)

(The Monitoring & Control process group interacts with every aspect of the
other process groups)

Self Assessment Questions IV

Answer the questions as noted
1. Expand the acronym PDCA (Answer: Plan, Do, Check, Act)
2. List all the classifications of the project management processes as per
PMBoK.
3. Fill in the blanks
a) Initiating process group ------ the PDCA cycle.
b) Planning process group relates to the ------ component of the PDCA
cycle
c) Executing process group relates to the ------ component of the PDCA
cycle

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d) Monitoring and control process group relates to the ------ and ------
components of PDCA
e) Closing process group ------ the PDCA cycle.

1.9 Summary
A project is a one time endeavor comprising a set of activities to accomplish
a certain objective or a set of objectives. A project is time bound and
invariably requires heavy deployment of resources over a limited period of
time. Mankind has been undertaking projects from the dawn of civilization.
However, project management as a discipline of study and practice for
managing projects has developed from the early twentieth century. The
industrial revolution, the two World Wars, man‟s quest to explore space by
launching satellites and space ships and the advent of computers have all
contributed in significant measures to this development.
In the last few decades, the principles and good practices of project
management have evolved (and are still evolving) into a Project
management Body of Knowledge (PMBoK), which is published as a
document by several Institutes constituted by project management
professionals for developing project management as a discipline. The
PMBoK of PMI (Project Management Institute), USA defines project
management as „the application of knowledge, skills, tools and techniques
to project activities to meet project requirements‟.
A project is a onetime endeavor and is therefore different from „operations‟ in
that operations are on-going and repetitive and a project is temporary and
unique. However, commonalities exist between projects and operations in
that both are performed by people, both require resources, and both have to
be planned, executed and controlled.
The parameters of a project are four in number viz. P (Performance
requirements), C (Cost), T (Time of completion) and S (Scope). We must
note that only three of these parameters can be fixed independently and the
fourth one will be derived from the combination of the three. The twelve
characteristics of a project discussed in section 1.4 help to give the student
an overall conceptual understanding of a project.
Since a project is a onetime endeavor comprising a group of unique, inter-
related activities to be carried out in a sequence, every project becomes
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unique, even though two projects may have similar goals. For example, if
two power plants of the same capacity and utilizing the same raw materials
and technology are to be constructed, the location, the design parameters
which are location specific and the environment in which the projects are to
be implemented will differ for each project.

It is important to realize that a project gets implemented in an environment

and context that is broader than the project itself. This means that the
success of a project depends on factors much broader than the mere
planning and execution of the day to day activities comprising the project.
While management principles, methods and techniques are essential for
conducting the day to day operations of the project, the context in which the
project gets implemented comprises stakeholders, organizational influences,
social-economic-environmental influences and project life-cycle / project
phases.

The PMBoK identifies the processes involved in project management and

every project will employ most of these processes in its implementation. The
project management processes are discussed in other units of this SLM.
The underlying concept for the interaction among these processes is the P-
D-C-A cycle (Plan-Do-Check-Act) cycle explained in section 1.8.

1.10 Terminal Questions

1. Give a brief history of project management as a professional discipline.
2. Projects are different from operations although they have some common
features. Explain.
3. Describe briefly the 12 characteristics and 4 parameters of a project
4. Discuss the resources required for implementing a project.
5. Explain why project management is considered both an „Art‟ and a
„Science‟.
6. A project manager operates in a context broader than the project.
Explain.

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1.11 Answers to SAQs and TQs

SAQ 1
1. See section 1.3
2. See section 1.3
3. See Section 1.3
SAQ II
1. See section 1.4
2. Budget
Logical
Time, money, manpower
Outcome, outcome
SAQ III
1. P, C, T & S –see section 1.5 for explanation
2. Manpower, materials, tools &plants, infrastructure
3. See section 1.6 first line
4. See section 1.6
SAQ IV
1. See section 1.7.1
2. See section 1.7.2
3. A standard is a good practice to be adopted and a company can
choose its standard. A regulation is mandatory.
4. Initiation, Planning, Execution, Close-out.
5. a (F)
b (T)
6. (T)
7. (T)
8. (T)
9. (F)
10. Matrix
SAQ V
1. Plan, Do, Check & Act
2. Initiation, Planning, Executing, Monitoring & Controlling, Closing

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3. a. starts
b. plan (P)
c. do (D)
d. check, act
e. closes
Answers to TQs
1. (Section 1.1 & 1.2)
2. (Section 1.4)
3. (Sections 1.4 and 1.5)
4. (Later part of Section 1.5)
5. (Section 1.6)
6. (Section 1.7)

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