PROJECT

MANAGEMENT

UNIT - I
Unit I – Basic Concept

THE PROJECT
• A project is a unique endeavor to produce a set of
deliverables within clearly specified time, cost and
quality constraints.

• Projects are different from standard business

operational activities as they:

– Are unique in nature.

– Have a defined timescale.
– Have an approved budget.
– Have limited resources.
– Involve an element of risk.
– Achieve beneficial change.
Unit I – Basic Concept

THE PROJECT: Definition

Project can be defined as a temporary

endeavor undertaken to accomplish a unique
objective at goal.
- Project Management Institute (PMI)
Unit I – Basic Concept

THE PROJECT
A project is accomplished by performing a set of activities.

Ex:- Construction of a House

Activities involved:-

– Digging of foundation pits,

– Construction of Foundation,
– Construction of walls,
– Construction of roof,
– Fixing of doors and windows,
– Fixing of sanitary, fittings, wiring, fuel and power etc.

Other Examples: Writing a Book, building a dam etc.

Unit I – Basic Concept

Characteristics of Project
• Temporariness
• Uniqueness (Non-routine Activities)
• Complexity (Require Team Work due to set of activities)
• Life Cycle (Conceptualization, Design, Implementation, commissioning)
• Risk an Uncertainty
• Ready to Change in response to change in environment
• Involve resources (Financial, Human, Management)
• Optimality (Aim to optimum utilization of resources)
• Multidisciplinary (Knowledge and expertise of different people)
• Involve conflicts
• Forecasting based
• Definite Time limit
Unit I – Basic Concept

Categories of Project
Based on the type of Activity:

• Industrial Projects
Production of Source Goods (generally time limited)

• Non-Industrial Projects
Generally made by the Government for societal benefits like (generally on going
process)

– health care project,

– educational project,
– irrigation project,
– soil conservation project,
– soil conservation project,
– highway project,
– water supply project etc.
Unit I – Basic Concept

Categories of Project
Based on the location of the Project:

• National Projects
With in the national boundaries.

• International Projects
Beyond the national boundaries, Generally made by both the Government and
private sector

– Fully owned abroad

– Joint Venture abroad
– Merger & Acquisition abroad
Unit I – Basic Concept

Categories of Project
Based on the Completion (Time) of the Project:

• Normal Projects
No Constraints on time.

• Crash Projects
To be completed with in the stipulated time (ex: Canal Lining before monsoon)
Unit I – Basic Concept

Categories of Project
Based on Ownership of the Project:

• Private Sector Projects

with objectives of profit maximization

• Public Sector Projects

with objectives of development of the country

• Joint Sector Projects

with objectives of both
Unit I – Basic Concept

Categories of Project
Based on Size of the Project:

• Small Projects
up to Rs. 1 crore

• Medium Projects
In between Rs. 1 crore – Rs. 100 crore

• Large Projects
above Rs. 100 crore

(As per the directives of the Govt. of India)

Unit I – Basic Concept

Categories of Project
Based on Need of the Project:

• New Project
• Balancing Project
• Expansion Project
• Modernization Project
• Replacement Project
• Diversification Project
• Backward integration Project
• Forward Integration Project
Unit I – Basic Concept

Types of Project
• Infrastructure or construction projects.

• Research Projects (Business Model, Model of an Economy, analysis of a large

project etc.)

• Reengineering Projects (For making changes like implementation of

Intranet)

• Procurement Projects (Outsourcing, Imposing new rules etc.)

• Business Implementation Projects (Installing e-commerce, developing

new process etc.)

• Other Projects
– To reach at Moon
– New Labor
– Creation of artificial body part
– Creation of new weapon
Unit I – Basic Concept

Overview of Projects
Unit I – Basic Concept

New product development projects

The justification for these projects is to develop something

that will be sold:

They are undertaken to solve someone else’s problem.

The product of the project is the thing that will be sold. The
product might be software, an airplane engine, the airplane
itself, a camera, a training program, whatever. From a financial
perspective, the profit to be generated from the product is a
key decision in project selection decisions.
Unit I – Basic Concept

Project-is-the-product projects

There is no direct justification for these projects:

They are undertaken to provide support to someone else’s

project. The product of the project is the work of the project.
Most consulting projects fall into this category as do non-profit
fund-raisers. From a financial perspective, the profitability of
the project itself is a key decision in project selection
decisions.
Unit I – Basic Concept

Infrastructure projects

The justification for these projects is to fix a problem :

That prevents the organization from doing something as well

as it could (this includes creating the capacity to do something
it can’t). The product of the project is the ability to do
something. Most internal projects fall into this category: IT,
organizational development, strategic planning, etc. From a
financial perspective, it is often hard to justify these projects
since they deliver no direct benefits.
Unit I – Basic Concept

Project Management
Unit I – Basic Concept

Why Projects Fail???

• Failure to align project with organizational

objectives
• Poor scope
• Unrealistic expectations
• Lack of executive sponsorship
• Lack of project management
• Inability to move beyond individual and
personality conflicts
• Politics
Unit I – Basic Concept

Why Projects Succeed!!!

• Project Sponsorship at executive level

• Good project charter (deed)
• Strong project management
• The right mix of team players
• Good decision making structure
• Good communication
• Team members are working toward common
goals
Unit I – Basic Concept

Is Project Management required???

• Today’s complex environments require

ongoing implementations
• Project management is a method and
mindset and a disciplined approach to
managing chaos
• Project management provides a framework
for working amidst persistent change
Unit I – Basic Concept

Definition of Project Management

Project Management is the skills, tools and

management processes required to undertake
a project successfully. It incorporates:

– A set of skills.
– A suite of tools.
– A series of processes.
Unit I – Basic Concept

Components of Project Management

Unit I – Basic Concept

Project Management

• Project management is about organization.

• Project management is about decision making

• Project management is about changing

people’s behavior

• Project management is about creating an

environment conducive to getting critical
projects done!
Unit I – Basic Concept

Planning the Project

• The Project Life Cycle

• Organizing the Project Team
• Project Plans
Unit I – Basic Concept

Planning the project:

PROJECT DEVELOPMENT CYCLE
The Project Life Cycle refers to a logical sequence of activities to
accomplish the project’s goals or objectives.

Closure
Execution
&
Planning
Controlling

Initiation
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

1) Initiation

In this first stage, the scope of the project is defined along with the approach
to be taken to deliver the desired outputs. The project manager is appointed
and in turn, he selects the team members based on their skills and
experience. The most common tools or methodologies used in the initiation
stage are:

• Project Charter,
• Business Plan,
• Project Framework (or Overview),
• Business Case Justification, and
• Milestones Reviews.
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

1. Initiation
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

2) Planning

The second phase should include a detailed identification and assignment of

each task until the end of the project. It should also include a risk analysis
and a definition of a criteria for the successful completion of each
deliverable.

The governance process is defined, stake holders identified and reporting

frequency and channels agreed. The most common tools or methodologies
used in the planning stage are Business Plan and Milestones Reviews.
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

2. Planning
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

3) Execution and controlling

The most important issue in this phase is to ensure project activities are
properly executed and controlled. During the execution phase, the planned
solution is implemented to solve the problem specified in the project's
requirements.

In product and system development, a design resulting in a specific set of

product requirements is created. This convergence is measured by
prototypes, testing, and reviews. As the execution phase progresses, groups
across the organization become more deeply involved in planning for the
final testing, production, and support. The most common tools or
methodologies used in the execution phase are an update of Risk Analysis
and Score Cards, in addition to Business Plan and Milestones Reviews.
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

3. Execution and Controlling
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

4) Closure

In this last stage, the project manager must ensure that the project is
brought to its proper completion. The closure phase is characterized by a
written formal project review report containing the following components: a
formal acceptance of the final product by the client, Weighted Critical
Measurements (matching the initial requirements specified by the client with
the final delivered product), rewarding the team, a list of lessons learned,
releasing project resources, and a formal project closure notification to
higher management.

No special tool or methodology is needed during the closure phase.

Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

4. Closure
Unit I – Basic Concept

Planning the project:

Project Plans
Unit I – Basic Concept

Planning the project:

Project Plans
• Estimating Time Accurately
• Scheduling Simple Projects
• Gantt Charts – Scheduling Projects with Dependent
Stages
• Critical Path Analysis and PERT – Scheduling Complex
Projects
• The Planning Cycle – A Planning Process for Middle-
Sized Projects

(will discuss in Unit IV in detail)

Unit I – Basic Concept

Planning the project:

Organizing the Project Team

• Project Leader
• The Team
• Work Methods and Procedures
• Work Plan
Unit I – Basic Concept

Planning the project:

PROJECT ORGANIZATIONS
Unit I – Basic Concept

TYPES OF PROJECT ORGANIZATIONS

• There are two fundamentally different ways of

organizing projects within the parent
organization
– The project as part of the Functional Organization
– The project as a free-standing part of the parent
organization (pure Project)
• A third type, called a Matrix Organization is a
hybrid of the two main types
Unit I – Basic Concept

The Project as Part of the Functional Organization

The project Team is staffed from the same department

(function based).

For Example: If project is finance based; team will be from

finance department same as IT, Marketing etc.

If a project is very large then it will be broken down in

different parts (function based) and the staff will be a
appointed based on the specific function.
Unit I – Basic Concept

The Project as Part of the Functional Organization

Example: Production based Project
Unit I – Basic Concept

Advantages of the Functional Organization

– Maximum flexibility in the use of staff

– Individual experts can be utilized by many different projects
– Specialists in the division can be grouped to share knowledge
and experience
– The functional division also serves as a base of technological
continuity when individuals choose to leave the project
– The functional division contains the normal path of
advancement for individuals whose expertise is in the
functional area
Unit I – Basic Concept

Disadvantages of the Functional Organization

– The client is not the focus of activity and concern

– The functional division tends to be oriented toward the
activities particular to its function
– Occasionally, no individual is given full responsibility for the
project
– There are often several layers of management between the
project and the client
– There is a tendency to sub-optimize the project
Unit I – Basic Concept

Pure Project Organization

• A pure project organization is separate from the

parent system. It is a self contained unit with its
own technical staff, administration, and tied to the
parent organization only by periodic reports and
oversight.
• The project Team is staffed from the whole
organization. This is not based on specific function.
Such projects are also called as based on product
organization structure.
Unit I – Basic Concept

Pure Project (Product) Organization

Unit I – Basic Concept

Advantages of Pure Project Organization

– The project manager has full line authority over the project and all
members of the project work force are directly responsible to the project
manager
– When the project is removed from the functional division, the lines of
communication are shortened
– When there are several successive projects of a similar kind, the pure
project organization can maintain a permanent cadre of experts who
develop skills in specific technologies
– A project team that has a strong and separate identity and develops a
high level of commitment from its members
– Because the authority is centralized, the ability to make a swift decision is
enhanced and unity of command exists
– Pure project organizations are structurally simple and flexible, which
makes them relatively easy to understand and implement and the
organizational structure tends to support a holistic approach to the
project
Unit I – Basic Concept

Disadvantages of Pure Project Organization

– Each project tends to be fully staffed which can lead to a duplication of
effort in every area from clerical staff to technological support
– There is a need to ensure access to technological knowledge and skills
that results in an attempt by project managers to stockpile equipment
and technical assistance
– The functional division is a repository of technical lore, but it is not
readily accessible to team members of the pure project team
– Pure project groups seem to foster inconsistency in the way in which
policies and procedures are carried out
– In a pure project organization, the project takes on a life of its own
– There tends to be concern among team members about “life after the
project ends”
Unit I – Basic Concept

The Matrix Organization

The matrix organization is a combination of

functional and pure project
– A matrix organization can take on a wide variety of specific
forms
• “Project” or “strong” matrix organization most resembles the pure
project organization
• The “coordination” or “functional” or “weak” matrix most
resembles the functional form
• The “balanced” matrix lies in between the others
• Rather than being a stand alone organization, like the pure project,
the matrix project is not separated from the parent organization
Unit I – Basic Concept

The Matrix Organization

Unit I – Basic Concept

Advantages of The Matrix Organization

– The project is the point of emphasis
– Because the project is overlaid on the functional divisions, the
project has reasonable access to the reservoir of technology in
all areas
– There is less anxiety about what happens when the project is
completed
– Response to client’s needs is as rapid as in the pure project
organization
– Matrix management gives the project access to representatives
from the administrative units of the parent firm
– The matrix organization allows a better company-wide balance
of resources to achieve goals
– There is a great deal of flexibility in precisely how the project is
organized within the matrix
Unit I – Basic Concept

Disadvantages of The Matrix Organization

There are also disadvantages to using the matrix organization;
most involve conflict between the functional and project
managers:
– The balance of power between the project and functional areas is very
delicate
– The movement of resources from project to project may foster political
infighting
– Problems associated with shutting down projects can be as severe as in
a pure project organization
– The division of authority and responsibility in a matrix organization is
complex, and uncomfortable for the project manager.
– Matrix management violates the management principle of unity of
command. Project workers have at least two bosses, their functional
heads and the project manager.
Unit I – Basic Concept

Mixed Organizational Systems

• Divisionalization is a means of dividing a large

organization into smaller more flexible units
• This enables the parent organization to capture
some of the advantages of small, specialized
organizational units while retaining some of the
advantages that come with larger size units
• Pure functional and pure project organizations
may coexist in a firm
Unit I – Basic Concept

Mixed Organizational Systems

• Advantages of a mixed organization:

– The hybridization of the mixed form leads to flexibility
– The firm is able to meet special problems by appropriate
adaptation of its organizational structure
• Disadvantages include:
– Dissimilar groupings within the same accountability center tend
to encourage overlap, duplication, and friction because of
incompatibility of interests
– Conditions still exist that result in conflict between functional
and project managers
Unit I – Basic Concept

The Project Team

• To staff a project, the project manager works from a

forecast of personnel needs over the life cycle of the
project
– A work breakdown structure (WBS) is prepared to
determine the exact nature of the tasks required to
complete the project
– Skills requirements for these tasks are assessed and like
skills are aggregated to determine work force needs
– From this base, the functional departments are contacted
to locate individuals who can meet these needs
– Certain tasks may be subcontracted
Unit I – Basic Concept

The Project Team

• There are some people who are more critical to the

project’s success than others and should report
directly to the project manager or the project
manager’s deputy:
– Senior project team members who will be having a long-
term relationship with the project
– Those with whom the project manager requires
continuous or close communication
– Those with rare skills necessary to project success
Unit I – Basic Concept

Human Factors and The Project Team

• Meeting schedule and cost goals, without

compromising performance is a technical
problem, with a human dimension
– Project professionals tend to be perfectionists
– Pride in workmanship leads the team member to
improve (and thus change) the product
– These changes cause delays in the project
Unit I – Basic Concept

Human Factors and The Project Team

• Motivating Project Team Members:

– The project manager often has little control over the
economic rewards and promotions of project team
members, but this does not mean he/she cannot
motivate members of the team
– How are technical employees motivated?
• Recognition
• Achievement
• The work itself
• Responsibility
• Advancement
• The chance to learn new skills
Unit I – Basic Concept

Human Factors and The Project Team

• Empowerment of project teams is also a

motivational factor:
– 1. It harnesses (attach) the ability of the team
members to manipulate tasks so that project
objectives are met. The team is encouraged to find
better ways of doing things
– 2. Professionals do not like being micromanaged.
Participative management does not tell them how to
work but given a goal, allows them to design their
own methods
– 3. The team members know they are responsible and
accountable for achieving the project deliverables
Unit I – Basic Concept

cont…
– 4. There is a good chance that synergistic solutions
will result from team interaction
– 5. Team members get timely feedback on their
performance
– 6. The project manager is provided a tool for
evaluating the team’s performance

Chapter 4-27
Unit I – Basic Concept

END OF UNIT - I
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