Development

Planning and Project

Analysis II
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 Chapter I. An Overview of
Project and project life cycle
1.1. The concept of project
The concept of project planning has originated
some 90+ years ago.
It appeared in USA and former Soviet Union in
late 1930s
It has been widely adopted particularly in the
external funding agencies who finance public
sector projects.
The last 40 years an extensive application of
project analysis methods particularly in developing
countries were observed.
Currently managing a project is becoming exciting
new profession.
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 Concepts of Project (con…)
Project managers are in great demand. They are highly
demanded nearly everywhere
 Publishing house
 University
 Agricultural rural development
 Social works
 Individual construction projects and the like
 It appears that they are required wherever there is
work
 Any one holding a responsible position in a project is a
project manager
 and if he pursues his own style in discharging his
project management responsibilities, he can hardly be
blamed
Because what a project manager does in one company is not
the same as what another does in another company
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 Concepts of Project (con…)
 In order to understand issues related to project, we must
first understand what a project really is.
It is common to hear
 Cement project
 Power project
 Refinery project
 Road project, Etc.
While the term project is common to all of them, the
plants are not.
In each cases the project is for the plant. Which means
as soon as the plant is operational the project is deemed
to be completed.
The same is true for any other projects, say for a
project for method improvement. The project is completed
when method improvement has been achieved.
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 Concepts of Project (Cont…)
For better understanding let us summarize how a project is
conceived first,
In a business setting an organization must grow at least for the
sake of its survival
The organization is therefore, continuously on the look out for
good business idea which ensure growth either on
 Existing line of business or
 Diversified area
However, the idea must be
 Technically feasible
 Economically viable
 Politically suitable and
 Socially acceptable
 Environmentally sustainable
Once the idea pass these test then an investment proposal is
made. When the investment proposal is approved the project
commences.
.

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 The concepts of Project (Cont…)

Thus, a project is initiated to

achieve a particular mission.

 What ever the mission may be,

the project is completed as soon as
the mission is accomplished.

The project lives between these

two cut-off points. The time span
is known as project life cycle.
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 Definition of Project
What is project?
No definition of project will suit every
situation. In other words there are a
number of ways to define a project.

Project is in general a building block of an

investment plan.

A project can be described as a combination

of human and material resources pulled
together in an organization to achieve a
specific objective.

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 Definition of Project (Cont…)
According to USA Project Management Institute,

“Project is a one shot, time limited, goal directed,

major undertaking, requiring the commitment of
varied skills and resources”
It also describes a project as “a combination of human
and non-human resources pooled together in a
temporary organization to achieve a specific purpose.”

“Project is an effort that starts from scratch with a

definite mission, generate activities involving a variety
of human and non-human resources all directed to
words fulfilment of the mission and stops once the
mission is fulfilled.”
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 Def. of Project (Cont…)
ISO-8402. ( ISO document define project as)
“A unique process consisting of a set of
coordinated and controlled activities with
start and finish dates, undertaken to
achieve an objective conforming to
specific requirement including constraints
of time, cost and resources”

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 Def. Project (Cont…)
From the above all definitions we can learn that
 A project is an economic/development activity
 It requires a commitment of scarce resources
 It brings some benefit from its accomplishment
 The benefit should exceed its cost
Implementation of a project needs resources or
inputs.
Every project converts the given inputs into outputs
through the process of implementation
The out puts in the short run lead to outcomes
while in the long run it will result in impact

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 Characteristics of Project
A project is a big-work. It is basically a work of one
whole thing

This means that while there may be contribution from

many people, it can be regarded as one whole thing.

A comparison can be made with a book

There may be many chapters in the book sometimes written

by different authors (which can be considered as sub-
project), the book is a single entity and is supposed to serve
a single purpose.

The various work that constitute the whole are inter-related

and together they tell the whole story.

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 Characteristics of Project (cont…)

In the same way all works that are interrelated

can be grouped together and termed as a
project

Thus, with project there is a concept of

Wholeness despite diversity of work.
The wholeness concept does exist in a factory or
any organization in any other work. But, in case of
a project the whole has to be completed in one-shot
(once for all)
There is a missionary zeal, an unknown force, pushing
people forward for achievement of something beyond
their immediate work.
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 Characteristics of Project (cont…)

The special feature of project that

differentiate it from any other ongoing
activities, are

Objective: A project has a fixed set of objectives. Once

the objectives are achieved the project ceases to exist
Life span: A project can not continue endlessly. It has
to come an end at one time.
Single entity: A project is a single entity and is normally
entrusted to one responsibility centre, while participants
in the projects are many.
Team work: Any project calls for team work-. The team
members may be from different
 discipline,
 organization,
 and even country
Life cycle: A project has a life cycle reflected by
growth, maturity and decay. 13
 Characteristics of Project (cont…)
Uniqueness: No two projects are exactly similar even if the
plants are exactly identical or are duplicated.
 the location,
 the infrastructure,
 the agencies and
 the people make each project unique.
Change: A project sees many changes through out its life while
some of these changes may not have any major impact, there
can be changes which will change the entire course of the
project.
Unity in diversity: A project is complex set of verities.
Varieties in terms of
 Technology
 Equipments and material
 People and machinery
 Work culture and ethics
But they remain interrelated
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 Characteristics of Project (cont…)

High level of sub contracting : A high

percentage of a work in a project is done
through contractors. The more complex is a
project, the more will be the extent of
contracting
Risk and Uncertainty: Every project has a risk
associated with it.
The degree of risk and uncertainty will depend on
how a project has passed through its various
life cycle.

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Project Vs program
A project is normally originated from a plan
which can be a national plan or corporate plan.

In many cases the term project is used for

what should be termed as program or work
package.

Some people use the term „project‟ and

„program‟ interchangeably. However, there is a
quite difference between the two.

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 Program
Program in general is a groups of related
projects that are managed in a coordinated
ways to achieve certain objective. Any
development plan can be considered as a
program

A program is thus,
larger in scope,
activity oriented
not necessarily time bound and
its objectives are broader
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 Program (Cont …)
Example,
The national goal: Poverty Eradication
Strategy: Increase productivity ( in all sectors)
Development program: Increase agricultural
productivity

This may result in a number of projects like,

Construction of dams ( irrigation infrastructure)
Upgrading the skill of agricultural practices
Construction of training centers
Health program may have a number of projects like,
Construction of hospitals
Training of health officers
Expansion of health centres 18
 Program and Projects hierarchy
Plan : National, Regional or company plan with development target

Program: Specific program within the frame of national or regional

plan (health, education)

Project: School project, Power plant or housing project

Work Package : Water supply and distribution package, Power

supply and distribution package

Task: Award of water supply contract, Construction of foundation

Activity
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 Classification of Project
Revenue Vs capital project

Project can come in many size and form. They may be very
simple or complex. Major project types are two. These
are,

Revenue project: Are those which can be carried out within

the normal organizational structure and normally will be
completed within the a single accounting period.

Capital Project: Are those which can not be carried out

within the normal organizational structure and are normally
stretched over a number of accounting periods.
In practice many projects fall between these two broad
categories
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 Classification of Project (cont …)
Capital project always require considerable capital
investment. The main feature of capital projects
are,
 They usually occupy considerable time
 They usually employ huge capital investment

As a result they do not fit readily into conventional

organizational structure but cut across functional
and time boundaries and thus, require an
organizational structure particular to themselves.

When we say project we are mainly referring to the

capital projects.

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 Classification of Project (cont …)

In general projects be it revenue or

capital can be classified from different
perspectives.
a) On the basis of time horizon
project can be
Long term projects : Power plant project
Medium term projects : Construction of a
factory
Short term project: Exhibition, trade fair

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 Classification of Project (cont …)
b) On the basis of the type of output:
Project producing tangible Products : Oil mill
Project providing services: Telecom project,
Education etc.
c) On the basis of the scope of the project:
International project : Euro tunnel project
National Project: Eth Hydro power project
Regional Project: Elementary school project
d) Based on the economic sector:
Agricultural project: Irrigation project
Industry project : Cement Project
Service sector project : Bank projects
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 Classification of Project (cont …)
e) On the basis of technology:
Capital intensive project : Brewery project
Labour intensive project : Textile industry project
f) Based on location :
Rural Projects
Urban project
g) On the basis of the nature of the project
Independent project : Hospital, Hydroelectric
power
Complementary project : Airport project, Run Way
and airport services are different projects which
are complementary to each other.

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 1.2. THE PROJECT CYCLE

A project cycle is a sequence of events, which a project

follows.
These events, stages or phases can be divided into several
equally valid ways, depending on the executing agency or
parties involved.
Some of these stages may overlap.
Capital expenditure decision is a complex decision
process, which may be divided into the following broad
phases.

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