Introduction

• A project can be defined as a non-routine, non-repetitive, one off

undertaking, normally with discrete time, financial and technical
performance goals.
• It can also be described as an investment carried out according to a
plan in order to achieve a definite objective, within a certain time and
which will cease when the objective is achieved.
• A project is a specific task, with well-defined objectives, which require
certain time and resources for its implementation, which can be
reasonably planned and appraised in advance and can be evaluated
as an independent work unit.
Characteristic Features of Project
• Goals and objectives-
It has a well-defined set of goals and objectives, such as development of a specific
industry, setting up a plant, construction of a building etc.
• Planning in advance-
In order that a project may be completed within the resources provided and as per
time schedule, all activities need to be analyzed in depth and the implementation
should be planned in advance.
• Requirement of resources
An estimate of the resources required at different stages of implementation is made
with the help of experts. Sources from which the additional resources need to be
generated are identified and a detailed plan for raising the resources should be
confirmed with the resource providers.
Characteristic Features of Project
• Investment decision
The investment decisions in commercial projects are based on returns
on investment, whereas for social projects, these are based on social
benefits exceeding social costs.
• Risk and uncertainty
A project being a future activity is marked by risk and uncertainty at all
stages and therefore requires appropriate control systems.
• Non-routine and non-repetitive
A project is a set of non-routine and non-repetitive activities.
Characteristic Features of Project
• Work content, tasks and activities
A project consists of specific tasks which may be further broken down
and expressed in terms of work packages such as contracting,
documentation, construction, purchasing etc.
• Life Cycle:
A project has a well-defined life cycle starting with project conception
and formulation and ending with implementation and evaluation of
results.
Characteristic Features of Project
• Team Activity
A project requires well-coordinated effort from diverse functions as a
team, for its successful completion.
• Justification
The expected gains and benefits from the project should be as per the
expectation of the sponsors, funding agency and target beneficiaries.
• Performance measurement
A project requires continuous monitoring during implementation and
evaluation after its completion.
Features of Project as an Investment
• It has a long-term perspective
• The requirement of investment and expected returns from the
investment cannot be estimated with certainty.
• Project related decisions are higher level decisions.
• Formulation of a project requires feasibility analysis.
• It requires detailed examination of various aspects such as costs and
benefits expected in the present and in future, risk and uncertainty,
competition etc.
Distinction between Project and
Programme
• A project is a set of inter-related activities, technically conceived,
involving use of physical, human and financial resources in a phased
manner over a period of time, aiming at the achievement of certain
pre-defined objectives.
• A programme is a collection of inter-dependent projects, managed in
a coordinated manner so that all of these together will provide the
desired outcome. It consists of related projects, such as the health
programme, the educational programme, the research and
development programme etc.
Management Appraisal of Projects
• It is done to judge the competence, commitment and suitability of
the management to undertake the project.
• The project management team should have prior experience of
handling similar or related projects.
• It should be able to gear itself up in order to engage people, sourcing
technical knowledge and procuring assets.
• The commitment of the organization regarding the project may be
judged by their commitment of their own resources, funds, time and
attention to the project.
Management Appraisal of Projects
• The form of ownership of project organization may be proprietorship,
partnership or a Joint Stock Company, which should be suitable for the
challenges involved in the project.
• In order to judge the competence of the workforce of the project
organization , the method of recruitment and the arrangements for
training and development should be looked into.
• The policies regarding purchase, product development. Marketing and
advertising should be sound.
• In case of projects funded by international institutions such as World
Bank, IMF etc., they insist upon placing their nominees on Board of
Directors of assisted companies.
Market Appraisal of Projects
• The objective of market appraisal is to ensure that the estimates of
demand have been properly worked out and fall within the acceptable
limits.
• The estimates of present and future demand are prepared.
• An estimate of present and future price of the product is made.
• The method of sale and distribution of product is assessed.
• The competitors in the industry and the extent of competition is
analyzed.
• The economic and social background of the prospective consumers and
their consumption habits are analyzed.
Financial Appraisal of Projects
• The objective of financial appraisal is to ensure that sufficient
arrangement has been made to meet the financial requirements, the
capital structure designed is appropriate, funds shall be raised from
the most appropriate sources at minimum cost etc.
• Proper estimation of project cost, including the cost of land, plant
and machinery, miscellaneous fixed assets, working capital and
contingencies.
• Suitability of capital structure designed, considering the aspects of
risk, return and control.
• Identification of most appropriate sources of funds
Financial Appraisal of Projects
• Proper determination of cost of funds.
• Arrangement for meeting the working capital requirement is
assessed.
Economic Appraisal of Projects
• The objective of economic appraisal is to ensure the adequacy of the
rate of return on capital employed, as well as cash flows to cover the
cost of funds and provide for payment of dividend to shareholders
and for maintaining future growth of the organization.
• Estimation of sales revenue.
• Estimation of cost of production.
• Estimation of surplus generated from the above.
• Tax factor
• Rate of return on investment.
Environmental Appraisal of Projects.
• The objective of environmental appraisal is to ensure that the project
meets the requirements of statutes, regulations and guidelines for
the protection and preservation of environment and pollution control.
• Particular care is required in this respect in case of projects using
scarce natural resources, those likely to cause pollution and
environmental hazards etc.
Phases in Project Life Cycle
[Link] conception phase
(a) Scouting for ideas
(b) Preliminary screening of ideas
(c) Establishment of need
(d) Feasibility Testing
(e) Identification of project
[Link] definition phase
(a)Visualization of project features
(b) Preparation of a detailed project report
Phases in Project Life Cycle
[Link] planning phase
(a)Appraisal of project-Examination of technical, managerial, marketing,
financial, economic, environmental and social aspects
(b)Investment decision
[Link] phase
(a)Establishment of project organization
(b)Scheduling work
(c)Supply chain management and allocation of resources
(d)Monitoring and control
(e)Project follow up
Phases in Project Life Cycle
[Link] up phase
(a)Project termination
(b)Delivery of results-distribution and consumer services
(c)Project audit
(d)Ex-post evaluation
Business Project and Research
Project
• The objective of a research project is to develop solution of a research
problem, whereas the objective of a business project is implementation
of a business activity within given time, cost and performance norms.
• A research project involves creativity and mental activities in large
measures whereas a business project involves physical activities such
as funds flows, purchase-sale, operations, services etc. also in addition
to mental activities.
• Whereas profitability or return on investment is not a necessary
condition for a research project, it is mostly a necessary condition for
business projects.
Responsibilities of Project Sponsor
• Ensures that the project objectives are in alignment with the
objectives and needs of the organization.
• Selects the project manager.
• Approves the project report.
• Maintains oversight over the implementation.
• Provides funding and ensures flow of resources.
• Maintains support and commitment
• Resolves problems and issues arising from time to time.
Project Manager-Functions &
Responsibilities
• Selection of project core team in consultation with the project
sponsor
• Preparation of project report and getting it approved.
• Leading the project team
• Securing resources and their allocation to tasks and activities.
• Monitoring and management of progress, risk issues and control over
work.
• Managing budget, time and scope.
• Reporting the progress to sponsor from time to time.
Project Manager-Functions &
Responsibilities
• Delivering project deliverables and benefits to the users.
Project Management & General
Management
• Whereas general management is responsible for managing the present
status, project management is responsible for overseeing a change.
• Whereas general management follows a permanent organizational
structure, project management requires a dynamic organizational structure.
• Whereas tasks are repetitive in nature in case of general management,
project management is predominantly concerned with innovation.
• Sequence of activities is largely similar over time in case of general
management, whereas it is as per overall requirement of tasks in case of
project management.
Engaging Project Stakeholders
• Stakeholders are people and organizations that are actively involved
in the project or whose interests may be positively or negatively
affected by the project. The stakeholders affect the project in the
following ways:
• The project manager is responsible for the overall coordination and
supervision of the project.
• The project team manages and completes the project.
• Administrative support groups such as HR, IT, Purchase, Maintenance
etc. provide support services and impose requirements on the
project.
Engaging Project Stakeholders
• Functional Managers are responsible for assigning project personnel,
resolving technical issues and overseeing the completion of different
segments of the project. They are also concerned with minimizing the
disruptions the project may have on their own operations.
• Top management approves funding of the project and approves the
adjustments in scope and schedule of the project. They have a vested
interest in its success but have to be responsive to what is best for the
entire organization.
• Project sponsors use their influence to gain approval for the project.
They need to be kept informed about major developments as they
defend the project when it comes under attack.
Engaging Project Stakeholders
• Contractors are responsible for ancillary segments of the project
scope. In case their work is of poor quality or a schedule slip happens,
it can affect the work of entire project team.
• Vendors/Suppliers provide the resources for the project. Delays,
shortages and poor quality can bring the project to a standstill.
• Customers define the scope of the project and its success depends on
their satisfaction. They are mainly concerned with getting a good deal,
which always requires the project team to maximize its effectiveness.
Management by Wandering Around
(MBWA)
• This term refers to an interactive management style used by project
managers to build relationship with the main stakeholders of a
project.
• Project managers are able to keep themselves informed about the
progress of the project and get the required cooperation by
interacting face to face with the stakeholders at their respective
locations.
• In this way they are able to anticipate potential problems, provide
encouragement and reinforce the objectives and vision of the project.
Factors affecting Project Team
Development
• There should be 10 or fewer members per team.
• The members should volunteer to serve on the project team.
• Members should serve on the team from beginning to end.
• Members should be assigned to the project on a full time basis.
• Members are required to report only to the project manager.
• All functional areas should be represented on the team.
• Members should be located within conversational distance of each
other.
Building High-Performance Project
Teams
In order to develop high-performance project teams, the project
managers take the following steps:
• For high-priority projects that are critical to the future of the
organization, the project manager is given complete authority to
select the member whom he considers to be the most suitable.
• For less significant projects, personnel are assigned to the project by
the top management.
• The First Project Team Meeting (also known as project kick-off
meeting) should provide an overview of the project, scope and
objectives, general schedule, method and procedures.
Establishment of Ground Rules for
Working of Project Teams
Some of the issues to be addressed while establishing ground rules for
the working of project teams are as follows:
• How will the project plan be developed?
• What are the deliverables of the project?
• How will progress be assessed?
• Who will generate and distribute reports?
• How will plan changes be documented and evaluated?
• What department or organizations will the team need to interact with
during the project?