Project Management & appraisal
Overview
The Project Management is the field of study through the
techniques developed by the army in USA over several
decade.
Modem Project management started with the Manhattan
project in United State developed atomic bomb After 2nd world
war.
Definition
“Any undertaking that has definite final
objectives representing specific values to be
used in the satisfaction of some need or desire.
Characteristic of Project.
1. All of them have a desired outcome at the end.
2. They consume significant amounts of resources-
time and money.
3. They have limitations on resources that are
available.
4. They are not undertaken frequently.
5. They are well defined activities with clear cut
start and end.
Commercial projects
Commercial project involves following key
considerations.
What is cost
What is time require?
What are the capabilities that it provides to
organization?
Whether it fit into the strategies of the
organization?
Project Management
Managing the project is called project Management.
Project Management can be defined as planning, organizing,
staffing, directing and controlling some parts of the organization for
relatively shorter period of time to achieve the project objectives
within laid down constraints.
some time staffing do not consider as part of project management.
Big project a separate project office is set up. people recruited from
the organization & outside of the organization.
period of time varies with types of industry.
Constraints of the projects are -cost (budget), time (schedule) and
performance levels.
Project management is aimed at achieving goal within the
constraints.
Why project management?
Setting up project management division is subjective.
This is based on case to case basis.
The factors to be considered for separate management
division are:-
(1) interdependencies between various departments
(2) sharing of common resources
(3) The important of project to organization
(4) size of project
(5) change in market.
Project management is required because of
interdependencies of various department.. Task to be
completed by putting them under one roof.
use the project management when there are scare
resources which are critical to project.
Project management division will be setup if the project is
very important -achieving organizational mission, future
success, target achievement.
An organization requires substantially more resources time
(people) or machinery- normally use project management.
Market is continuously changing, repaid technology
changes, value and behavior of consumer -to manage,
project management is required.
For reputation of the organization in failure in completion,
degree of unfamiliarity of project also lead to set up project
management division.
Life Cycle of a Project
The life of the project can be divided in to four phases –
corresponding with the changes in the level of activities.
These are broadly divided in to :-
(1) Conception & Selection
(2) Planning and scheduling
(3) Implementation & Monitoring
(4) Evaluation and termination
Cont….
•Start low level and then raise slowly.
•The effort spent on project indicated in the chart.
Phase III
Level of effort
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Phase IV
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Time
Conception and Selection
The activates in this phase start at low level and
then rises slowly.
The functions to be performed by the project
manager working on project are:
1. Identifying a need for a project.
2. Establishing goals to be achieved by the
project.
3. Estimating the amount that the firm will have to
commit for the project.
4. Presenting the project idea or various
alternative ideas to the management and get
their approval.
Planning & Scheduling
This phase is preparatory to the actual
implementation of the project.
Planning how to implement the project and
scheduling how the implementation should be
carries out are done in this phase.
The level of activity & also project cost rise
rapidly during this phase.
The functions to be carried out are :
1. Set up a technical team to decide on how the
project can be implemented.
2. Plan for the requirements of personnel, finance,
materials .
3. Prepare a schedule keeping in view the date given by
the client or the management.
Phase III: Implementation, Monitoring and Control:
The project cost reaches its peak during this stage.
The major function that are to be carried out in this
phase are :
Procuring materials Building and testing the tools.
Developing the support system
Making modifications to bring the performance to the
required level.
Towards the end of this phase the focus of the project
manager generally changes to meeting the schedule
than the cost and /or performance .
Evaluation & Termination
In this phase the activity levels decline steeply
and reach zero.
The entire concentration of all staff and the
managers will be handing over the project on
time.
The functions that are carried out in this phase
are:
Training the operational staff.
Transferring the responsibilities
Releasing surplus resources.
Releasing the project staff for next assignment.
Project Manager
The project Manager’s duty- coordinate and integrate
activities.
Strong communication and interpersonal skills.
Project manger should good at handling men and matters
Project manger should work effectively with different group of
peoples, interact with different department head, and
integrate all functions related to project.
Balancing the managerial and technical functions.
Coping with risk associated with project management.
It should be technical specialist/ managerial skill.
Managing the line staff balancing the managerial/ technical
function coping risk and relationship with organization
The Line Manager
The responsibility of line manager is to execute
the task.
Line manager is always technical, specialist.
The line manager generally faces the problem like
resources, deadlines to be met, task of
unscheduled changes in the task to be done,
technical breakdown, employment turnover
Growth of project Management
Most of management tools were invented by 1950’s
Mid of late 60’s project management gained widespread
acceptance
Late 60’s industry tasks where complex aerospace, defense,
construction, engineering, adopted project management
Initially task was carried out without setting up a project
management department
Handling was done by line manager
With complexities ,size of investment, technology,
integration of several activities lead to set a project
management division
Some organizations adopt formal, informal management
concepts
Contd…
Resistance from people, pay projects, power in
organization, share of resources adversely
affected the project management.
NASA virtually forced sub- contractor for adoption
of formal project management techniques.
Realization of having single head responsible for
success, a accountable, dedicated to project work
and for integrated planning, required project
management.
Project Management in INDIA
Project management have been accepted in India after
independence.
It is not successful since most of the projects there is time and
cost over-run.
Reason for:-
Dispute for land acquisition
Not proper selection of technology
Non availability technical person
Lack of planning, labor dispute
Absence of coordination between different departments
External resources
Funds are not released in time by government.
Change in foreign exchange rates
Inflation
Political instability
Project initiation and resources
allocation
Chapter II
Project iniation and resources
allocation
Strategic Plan
Every company has strategic plan.
This follows the allocation of resources in confirmation to
the plan.
The strategic plan and allocation of funds should go hand in
hand.
The resources allocation is done at two level (1) corporate
or firm level (2)Department or business unit level..
Resource allocation
(A) Corporate level.
At the corporate level the resource allocation is done on the basis of
business functions (marketing, finance, production) or geographical (in case
of MNC)
This should be resulted into optimal allocation
This in turn depends on how best firm can be divided in such way that each
division contribute to be achievement of the strategic objectives
Allocation of resources depends on need for change in the existing pattern
of allocation or whether the firm are growing or declining and whether a
change is called for.
In some companies the resources allocation is also made based on formula.
There may be two situations (1)Growth in resources and (2) Decline in
sources.
(1)Growth in Resources:
When the resources are increasing it is easy to
bring about a change in their relative distribution.
It can be achieved by simply directing fresh flows
in the areas where they are required.
(2)Decline in resources:
When there are decline of resources
Allocation will be based centrally imposed priority,
some times division gets merged and allocation is
done.
The division offer higher return will get fund first
in case of declining resources allocation will not
be based on formula or bargaining.
Resources allocation at Business
Unit Level
In small firm, where there is one unit there is only one level
of allocation.
Where there are more than one firm, resources are
allocated to different units of a firm based on, formula or
units have effectively deployed them previously.
If the allocation based on open competition or free
bargaining, the unit will have ready with their investment
plan.
Whatever may be the level of allocation the investment
needs of the unit depends on two factors(1) Identifiaction
of investment opportunities (2)Strategic abilities.
The identification investment alternatives of the unit based
on:-
Analysis of environment
-Analysis of strategic capabilities
Analysis of environment
There are various techniques and models put forth
to analyze various components or factors in the
environment.
Two popular models are:-
PEST MODEL
MICHAEL PORTER 5 FORCES MODEL
Pest analysis – environment like
Political legal factors
Economic factor
Socio-cultural factors
Technology factors
[Link] legal Economic factors
Stability of Government Interest rate
Labor legislations Trends in GDP
Tax laws Inflection
Foreign Trade regulations Unemployment
Monopolies legislations Disposal income
3 socio-culture factors 4Technological fact
Changes in lifestyle New discovery
Attitude towards work Level of R &D
Income distribution technology transfer
Income distribution rate of obsolescence
Level of education
Social mobility
Michael Porters Model
Porter model –popular model for analyzing the competitive
position of firm
The model is based on set of 5 force
Threats of entry- indicate how likely of more and more
competitors likely to enter.
The entry of more and more player is influenced by how
easy or difficult to enter in to market.
– there are some factors called entry barriers
Economies of scale
Minimum capital requirements
Cost advantage
Legislation, governing entry
2. Bargaining Power of the Buyers
strong bargaining power the producer
can never be sure getting fair price for
his products.
the bargaining power of the buyers will
be high
Alternative success of supply
Buyers are few and supply is high.
Material cost is major cost of production
[Link] power of suppliers
Few suppliers and more buyers
No alternative suppliers
Switching from one supplier to other suppliers is difficult
supplier has Strong brand image
[Link] of substitutes
availability of substitutes products can act as a selling on price
Difficult for consumer in switching from original product to substitutes
[Link] of competitive rivalry – higher rivalry will lead to
threats in entry
- Competitive pressure will based on the size of firm
- Stagnation for long time
- High exist barriers
Identification of opportunities
So far we have analyzed the activities, resources and
environment
This helps to understand the strength of firm for making
investment
Apart from the above analyzed the investment opportunities
can be identified-
Study of inputs/outputs of various industries
Imports substitutes
Reports of studies conducted
Rival of sick industries
Creativity and idea generation
Creativity – ability to create what does already not exist
Creative ideas often call for change
People oppose the change
Trying new methods is risky
a) Individual creativity
- first thing that things are ineducate to meet
- New idea to generate to meet
- The focus should be on quality and quantity
b) group creativity- when one person is not able to solve the problem group
techniques are used to:-
Brain storming
Delphi market demand analysis
Nominal group techniques, discussion of result, presentation, idea,
classification, voting and ranking, discussion and result.