PROJECT MANAGEMENT

INTRODUCTION
The word project came from the Latin word
projectum from the Latin verb proicese (to
throw something forwards) which in turn
comes from pro which denote something that
proceeds the action of the next part of the
word.
DEFINITIONS
+ According to Harrison, Project is a non
routine, non repetitive, one-off undertaking,
with well defined time, financial and technical
performance goal;
+ According to Project Management Institute
(PMI), Project can be defined as a temporary
endeavor undertaken to accomplish a unique
objective at goal.
EXAMPLES OF PROJECT
Construction of a house.
Writing a book.
Building a dam.
CHARACTERISTICS OF PROJECT
Objectivity or temporariness
Uniqueness (Non-routine activity)
Complexity (Demands team work)
Life cycle
Risk and uncertainty
Change (In response to environment)
CHARACTERISTICS OF
PROJECT(contd.)
Involves resources
Optimality
Multidisciplinary
conflicts
Forecasting
Definite time limit
TAXONOMY OF PROJECTS
Based on the type of activity
Based on the location of the project
Based on the completion time
Based on ownership
Based on size
Based on need
TYPES OF PROJECTS
Construction projects
Research projects
Reengineering projects
Procurement projects
Business implementation projects
Miscellaneous types
SPECIFIC USES
Schools and universities
Engineering project
RESPONSIBILITIES OF A
PROJECT MANAGER
1. To plan thoroughly all aspects of the project
2. To control the organization of manpower
needed by the project.
3. To control the basic technical definition of
the project.
4. To lead the people and organizations
assigned to the project at any given point in
time.
RESPONSIBILITIES OF A
PROJECT MANAGER
5. To monitor the performance, costs and
efficiency of all elements of the project.
6. To complete the project on schedule and
within costs.
7. To plan thoroughly all aspects of the project,
soliciting the active involvement of all the
areas involved.
8. To control the organization of man power.

RESPONSIBILITIES OF A
PROJECT MANAGER
9. To control the basic technical definition of
the project
10. To lead the people and organisation assigned
to the project at any point in time.
11. To monitor the performance, costs and
efficiency of all elements of the project and
the project as a whole.
12. To complete the project on schedule and
within costs .


WHY DO PROJECTS GO
WRONG?
Project goals are not clearly defined
Short time scale
Resource availability
Quality factors
Human factors

CONSTRAINS ON THE
COMPLETION OF PROJECTS
Time
Resource availability
Quality factors

PROJECT FAMILY TREE
Plan
Programme
Project
Work Package
Task
Activity
CATEGORIES OF PROJECT
Project
International National
Industrial Non-Industrial
Low
Technology
Conventional
Technology
High
Technology
Non Conventional
/R&D
Mini Medium Major Mega
Modification Expansion Grass root
Disaster Crash Normal
PROJECT LIFE CYCLE PHASES
Conception phase
Definition phase
Planning and organising phase
Implementation phase
Project clean up phase
TOOLS AND TECHNIQUES FOR
PROJECT MANAGEMENT
O Project selection techniques
Cost benefit analysis
Risk and sensitivity analysis
O Project execution planning techniques
Work breakdown structure(WBS)
Project execution plan (PEP)
Project responsibility matrix
Project management manual
TOOLS AND TECHNIQUES FOR
PROJECT MANAGEMENT
O Project scheduling and coordinating techniques
Bar charts
Life cycle curves
Line of balance (LOB)
Networking techniques (PERT/CRM)
O Project Monitoring and progressing techniques
Progress measurement techniques(PROMPT)
Performance monitoring technique (PERMIT)
Updating, reviewing and reporting technique (URT)
TOOLS AND TECHNIQUES FOR
PROJECT MANAGEMENT
O Project cost and productivity control techniques
Productivity budgeting technique
Value engineering (VE)
COST/WBS
O Project Communication and clean up techniques
Control room
Computerized information system
INTRODUCTION TO PROJECT
MANAGEMENT
Meaning : Project management is a system of
procedures, practices, technologies and know
how that enables the planning, organising,
staffing, directing and controlling of project
activities to successfully manage a project.

DEFINITION
It is defined as The application of knowledge,
skills, tools and techniques to project activities
in order to meet project requirement.
ELEMENTS OF A SUCCESSFUL
PROJECT
Has been finished on time.
Is within its cost budget.
Performs to technical/performance standards
which satisfies the end user.
3 Ws OF PROJECT
MANAGEMENT
What : Scientific application of modern
techniques and tools.
Whom : in planning, financing, implementing,
monitoring, controlling and coordinating
unique activities of project
Why : to produce desirable outputs in
accordance with predetermined objectives
within constrains of time and cost.
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MANAGEMENT
Knowledge, skills, tools and techniques
PROJECT ACTIVITIES
Conception, design, Implementation, Commissioning
SUCCESSFUL PROJECT
Within planned time, resource, scope and quality
THE SCOPE TRIANGLE
Resources
Project scope and
quality
PROJECT PARAMETERS
Defining project scope
Defining quality
Managing time
Managing cost
Managing resources

IMPORTANCE OF PROJECT
MANAGEMENT
Increasing size and complexity of projects
Increasing importance of financial controls
Urgency of early completion
Growing amount of statutory regulations
Increased sophistication of technology
Inability of managers and architects to manage
the things
BENEFITS OF PROJECT
MANAGEMENT
Clear description of work to be performed
Responsibilities and assessment of tasks
Time limit for task completion
Measurement of accomplishment against plans
is possible
Problems are exposed in advance allowing
corrective action
Objective that cannot be met are identified
early
PROJECT IDENTIFICATION
AND FORMULATION
HOW TO START A NEW
VENTURE
Idea generation
Primary screening or pre-feasibility study
Project feasibility or detailed feasibility study
Support study
Detailed project report (DPR)
Design or planning
Implementation or execution
Termination of project
Idea generation or project identification
Preliminary screening or pre feasibility study
Project feasibility or feasibility study
Detailed project reporter formal approval from sponsors
Planning, organizing & scheduling of project activities
Direction & controlling of activities
Termination of project (commissioning)
Support
Study
Market & demand
Analysis
Technical
Analysis
Financial
Analysis
Social cost benefit
Analysis
Environmental
& risk analysis
IDEA GENERATION OR IDENTIFICATION OF
INVESTMENT OPPORTUNITIES
Idea generation is the process of grouping
logical thoughts based on some factors.
IMPORTANCE OF IDEA
GENERATION
Basis for other steps in completing steps.
Important for continuous growth of
organization.
Survival in the competitive market.
Contribution towards development of society.

SOURCES OF IDEA
GENERATION
Performance of existing industry
Examining the inputs and outputs of various
industries
Review of imports and exports
Availability of cheap materials & labor locally
Price trend, to find demand supply gap
Government guidelines
Analysis of economic and social trends
Study of new technological developments
others

PRELIMINARY SCREENING OR
PRE-FEASIBILITY STUDY
Preliminary screening is done with a view to
avoid unnecessary cost and efforts in detailed
study, if idea is not looking worthwhile in first
instance
DEFINITION : Preliminary screening can be
defined as a series of steps to know whether or
not a complete detailed feasibility study should
be made.
OBJECTIVES OF PRELIMINARY
SCREENING
To determine whether project (idea) is
promising business opportunity or not.
Whether it justified a detailed analysis or not
To find out any critical aspect on which
success or failure depends
To formulate a plan for detailed feasibility
study
ASPECTS OR AREAS OF
PRELIMINARY SCREENING
Acceptable risk level
Consistency with government priorities
Availability of inputs
Adequacy of market
Reasonableness of the costs
Compatibility with promoters
SUPPORT STUDY
Support study can be defined as An in-depth
investigation into any one or a couple of
critical aspects (areas) of a project, to help the
feasibility study.
Critical aspect here means those areas whose
success or failure decides the success of failure
of business or project.
OBJECTIVES OF PROJECT
FEASIBILITY STUDY
It guarantees the success of Project
It works as basic terms of reference for Project
It describes the nature and complexity of
Project
It gives an idea about investment in Project
It also provides us the possible future
difficulties
It gives an idea about economic and social
benefits
Difference between Pre-Feasibility
Study or Project or Detailed
Feasibility Study
Pre-Feasibility
Study
Feasibility
Study
Objective
To determine whether
or not the Project idea
needs further
investigation
To determine the true
profitability of the
Project and selecting
the Project.
Scope Over-view study Detailed study
Type of Data Secondary Data Primary Data
Time involved Low High

Accuracy
Low High
Cost involved Low High
Components of Project of Detailed
Feasibility study
Market and Demand analysis
Technical analysis
Financial analysis
Social Cost-Benefit analysis
Environmental and risk analysis
Detailed Project Report (DPR)
Meaning:
Doing project feasibility is not the end of
Project formulation stage. It also includes
documentation of it, which is known as
Detailed Project Report.
Definition:
A formal written document containing the
process of Project formulation and briefing the
Project scope
Objectives:
I t work as formal communication to Project
Promoters for their approval.
I t also fulfills the need of Project Report to
be provided to the financial institutions/banks
I t can also be submitted as Project Reports
to Govt. Departments for necessary approval.
Format of DPR
General information about the Project
Background and experience of the Project Promoters
Details and working of already owned businesses.
Details of the proposed Projects
Schedule of implementation
Project costs
Means of financing the Project
Marketing and selling arrangements
Profitability and cash-flow estimates
Mode of payment of term-loans
Government Approvals.
PROJECT MARKET
&
DEMAND
Market Demand Analysis
Objective Specification
Collection of
Data
Market
Survey
Market
Description
Demand
Forecasting
MARKET PLANNING
Market Survey
Market Survey is a technique that is aimed at
gathering all possible information (primary
data) by conducting interviews.
Steps under Market Survey
Defining the Target Market
Selecting the Sample
Developing the Questionnaire
Training the Surveyors
Recording the Information
Interpreting the Information
Market Descriptions
+ Competition in Market
+ Study of Market Segments
+ Price
+ Methods of Distribution
+ Sales Promotion
+ Consumers Interest
Demand Forecasting
Demand Forecasting is the art of predicting
demand for a product or a service at some
future date on the basis of certain present and
past behaviour patterns of some related
events.
Characteristics of a Good Demand
Forecasting
Accuracy
Simplicity
Economy
Timeliness
Availability
Methods of Demand Forecasting
O Survey of buyers intentions
O Collective opinion method
O Expert opinion method
O Controlled experiments
O Study of general economic environment
Statistical Methods
a) Trend Projection Method
b) Graphical Method
c) Regression Analysis
Market Planning
This steps under Market and Demand Analysis
is not related to actual analysis, but related to
Market plans of new firm (if idea under
consideration is selected). Under this step, four
Ps of Marketing viz Product, Price, Place and
Promotion should be well designed to achieve
the expected level of Market Penetration.
Objective of Technical Analysis
Primary Objective
First and foremost important objective of technical analysis is
to see whether the project idea is feasible or not from technical
point of view or not
Secondary Objective
To find out the most optimal formulation of the project
technology, size, location etc.
To find out the cost of project, so that profitability can be
calculated.
Activities in Technical Analysis
Technology selection
Material and utilities input requirements
Flexibility in product-mix
Plant capacity
Location and size of the project
Machinery and equipment

Technology Selection
Plant Capacity
Material and utilities input requirements
Investment Outlay and production costs
Use by other units
Flexibility in Product mix
Latest Developments
Appropriateness of technology.
Materials and Utilities Input
Requirements
Raw-materials
Processed Industrial materials and components
Auxiliary materials and factory supplies
Utilities
Product Mix Flexibility
Another area to be analysed under the technical
analysis is flexibility of technology and plan
regarding product mix.
Plant Capacity
Technological requirements
Input constraints
Market conditions
Investment cost & resources of firms
Location and Site selection
Nearness to raw-materials and market
Availability of infrastructure
Labour situations
Government policies
Other factors
Machinery and Equipments
Technical analysis of a project idea should include
the study of required machinery and equipment to
run the project. The machinery and technology
required depends on the plant capacity and type of
technology selected.
Charts and Layouts
Material Flow Diagram
Production Line Diagram
Transport Layout
Utility Consumption Layout
Communication Layout
Organisation Layout
Plant Layout
Work Schedule
= To anticipate problems like to arise during the
installation phase and suggest possible means
for coping with them
= To establish the phasing of investments taking
into account the availability of finances
= To develop a plan operations covering the
initial period (the running - in period).
Cost of Project
Land and site development
Building and civil works
Plant and machinery
Technical Know-how and Engineering fees
Expenses on foreign technicians and training of
Indian technicians abroad
Preliminary and capital issue expenses.
Pre-operative expenses
Margin money for working capital
Initial cash losses
Means of Financing
Share Capital
Term Loan
Debenture Capital
Deferred Credit
Incentive Sources
Miscellaneous Sources
Definition:
A process of raising the funds (money) for an
economically separable project, where
providers of the fund look primarily cash flows
and revenue of that project as a source of
interest (dividend) payment and capital
repayment.
Source of Finance
1. Equity shares
2. Preference shares
3. Debentures
4. Bonds
5. Term Loans from financial institutions
6. Un-secured Loans
7. Lease financing
8. Deferred Credit
9. Capital Investment subsidy
10. Bridge finance (Bridge Loan)
11. Internal accruals (in case of Expansion Projects).
Main Activity
Financial Evaluation of Project
Other Activities
Decision about sources of finance
Cost of Project
Working capital requirement.
Financial Evaluation of a Project
Financial Evaluation is a Planning Process used to
determine whether a firms low term investment in
project is financially feasible or not. On the basis
of expected inflows and outflows in future.
Financial Cost
(from Financial Analysis)
Revenue Cash Inflows
(from Market and
Demand Analysis)
Various Appraisal
Techniques
ARR
PBP
NPV
IRR
PI etc.
Cost of Operators
(from Technical Analysis)
Cost Cash Outflows
Net Cash Inflows
Accept/Reject
Decision
Meaning:
It is a detailed study of several aspects of
given project before recommending it.
Various aspects of Project Appraisal
A. Technical appraisal
B. Commercial appraisal
C. Economic appraisal
D. Financial appraisal
E. Management appraisal.
Definition:
A process of identifying and quantifying the
risks involved in a project and developing
measures to avoid and manage such a risk
Types of Risks
Completion risks
Technical risks
Economic risks
Social risks
Political risks
Production risks
Marketing risks
Financial risks
Activities involved in Risk Analysis
Risk assessment
Risk management
+ Project Scheduling
+ Project Team-management
+ Project Monitoring and implementation