PROJECT MANAGEMENT

UNIT - I

 According to Harold Kerzner: A project is any series of activities and tasks that: Have a specific objective to be completed within certain specified time and specifications. Have defined start and end dates Have funding limits Consume resources (i.e. money, people, equipment) Uniqueness from different perspectives.

 Projects are the specific schemes or action units designated for the investment of given resources and skills with an aim of attaining some predetermined objectives. A project starts from the scratch. It has a specific objective. It has a well-defined life span divided into a life cycle. It involves a set of activities within a schedule and budget. It integrates human and non human resources.

 A project is one-time job that has defined starting and ending dates, a clearly specified objective, or scope of work to be performed, a pre-defined budget, and usually a temporary organization that is dismantled once the project is complete. A group of multiple interdependent activities that require people and resources is the Project. Projects generally originate from plans. They serve as the building blocks for development planning. A Plan, Programme and Project are different concepts yet complementary to one another.

 PLAN: A plan is an image, map or vision to represent the forms and/or features of desired situation(s). It is a process of setting future goals for country or organization and choosing the actions to achieve these goals. Plans may be Community Development Plan, District Development Plan or Regional Development Plan depending upon the area it serves and its magnitude.

 Similarly, depending upon different sectors (agriculture, education, Health and so on) there may be different sector-specific plans known as Sectoral Development Plan. And finally, we have the National Development Plan. In Plan document, we can find only the level or sectorspecific Broad Decisions indicating what and how much is to be achieved with the investment of given resources. A plan itself is static. In other words, a plan representing only an imagination or vision will have no meaning unless it is put into operation to achieve its set objective/s. A plan is a set of programmes.

 PROGRAMME: A Programme is the extensive and consistent set of action units stating the needs of interrelated activities to achieve the plans objectives and goal. There could be several programmes within a plan or development plan.

Examples of typical projects are for example: PERSONAL PROJECTS: obtain an MBA write a report plan a wedding plant a garden build a house extension INDUSTRIAL PROJECTS: construct a building provide a gas supply to an industrial estate build a motorway design a new car

BUSINESS PROJECTS: develop a new course develop a new course develop a computer system introduce a new product prepare an annual report set up a new office Projects can be of any size and duration. They can be simple, like planning a party, or complex like launching a space shuttle. Generally projects are made up of: a defined beginning, multiple activities which are performed to a plan, a defined end.

 TERMINOLOGY AND DEFINITIONS: A project is an interrelated set of activities that has a definite starting and ending point and results in the accomplishment of a unique, often major outcome. "Project management" is, therefore, the planning and control of events that, together, comprise the project. Project management aims to ensure the effective use of resources and delivery of the project objectives on time and within cost constraints. An activity or task is the smallest unit of work effort within the project and consumes both time and resources which are under the control of the project manager. A project is a sequence of activities that has a definite start and finish, an identifiable goal and an integrated system of complex but interdependent relationships.

 A schedule allocates resources to accomplish the activities within a timeframe. The schedule sets priorities, start times and finish times. Goal: Goal is what exactly needs to be accomplished after completion of the project. Project Scope: Documented set of standards and criteria that the customer defines as successful completion. Objective: A combination of tasks that concern specific functional groups or structural areas. Activity: A time consuming piece of work with a definite beginning and end. Duration: The elapsed time from the beginning to the end of an activity, task or objective.

 CHARACTERISTICS OF PROJECT: A project has the following characteristics: 1.Objective: Each and every project needs to be guided to achieve an objective or a set of objectives. It ceases to exist when the objective is achieved. 2.Life Span: A project has beginning and end. It cannot continue forever. 3.Constraints: A project has a schedule. It operates within the constraints of time, cost and quality. Every project requires certain investment of resources. 4.Unique: Every project is unique. No two projects are exactly similar. 5.System: All projects need to undergo a system of inputsprocess - Outputs. 6.Life Cycle: Every project will have its own phase-based cycle.

7.Teamwork: A project has many participants. It requires teamwork under the leadership of the Project Manager. 8.Organization Structure: A project is a temporary organization. A project usually has its own budget and management. 9. Planning and Control System: A project requires information, planning and control system. The actual performance is compared with the planned targets. 10. Collection of Activities: A project is a collection of activities that are linked together to constitute a system. 11.Project teams may consist of people from different backgrounds and different parts of the organisation. In some cases project teams may consist of people from different organisations. 12.Project teams may be inter-disciplinary groups and are likely to lie outside the normal organisation hierarchies. 13. The project team will be responsible for delivery of the project end product to some sponsor within or outside the organisation. The full benefit of any project will not become available until the project as been completed.

 Project Environment Environment consists of forces that influence the projects ability to achieve its objective. Projects operate in a dynamic environment. Project environment can be classified into: i Internal Environment Internal environment is located within the project. It is Controllable by the project. It provides strengths and weaknesses to the project. The forces in the internal environment consists of: Project Objective Constraints Structure Resources

ii Task Environment The task environment of a project is made up of stakeholders. They are either involved in the project or their interests are affected by the project. The elements of task environment are: Customer Contractor Consultants Suppliers Government Financiers Competitors Labour Unions

iii. External Environment It is located outside the project. It cannot be controlled by the project. The project can indirectly influence it. It provides opportunities and threats to the project. The forces in the external environment are: Economic Technological Political-Legal Socio-cultural

MANAGEMENT: Management is the process of getting activities completed efficiently and effectively with and through other people. To manage is to forecast and plan, to organize, to command, to coordinate and to control. Management is the art of getting things done through people. Management achieves goals by getting the jobs done efficiently and effectively through and with people by using the means of planning, organizing, staffing, directing and controlling in a dynamic environment.

 PROJECT MANAGEMENT: IT IS THE PLANNING, ORGANIZING,

CONTROLLING OF COMPANY

DIRECTING AND FOR A

RESOURCES

RELATIVELY SHORT TERM OBJECTIVE THAT HAS BEEN ESTABLISHED TO COMPLETE SPECIFIC GOALS AND OBJECTIVES

PROJECT

MANAGEMENT UTILIZES THE

SYSTEMS APPROACH TO MANAGEMENT BY HAVING FUNCTIONAL PERSONNEL HIERARCHY).

(THE

VERTICAL HIERARCHY

ASSIGNED TO A SPECIFIC PROJECT

THE HORIZONTAL

 According to Harold Kerzner: Project management is the planning, organizing, directing and controlling of company resources to complete specific goals and objectives. Project Management is an alternative to the traditional management models. It is planning, implementing and controlling of complex and unique projects to achieve results within constraints in a dynamic environment.

The main characteristics of Project Management Objectives-oriented Change-oriented Single responsibility center Multi-disciplined Requires functional coordination along functional lines. Requires integrated Planning and Control systems. Achieves results within the constraints of time, cost and quality. Key Objectives of Project Management Any project must meet several objectives. Each objective is made up of many concerns, or constraints. Project management should have a document that has all of the details of each concern spelled out.

 ADVANTAGES OF PROJECT MANAGEMENT Project management is based on modern approach of management. It is a distinct departure from traditional business organization form, which is basically vertical and which emphasis a strong super - subordinate relationship. Some of the advantages of project management are as follows: It helps to allocate organization's resources successfully and effectively to satisfy organization objectives. It helps to develop organizational strategies, policies and procedures. It can be used to overcome slow decision - making process through the functional and organizational hierarchies.

 It can be used to overcome slow decision - making process through the functional and organizational hierarchies. It facilitates the introduction and management of change in the organization. It helps to identify the problem for timely corrective actions. It provides the advantages of specialization. It increased productivity, efficiency and reduced wastages. It avoids duplication of efforts and minimize the need for continuous reporting. It helps to identify the time limits for scheduling unlike traditional management. It helps to promote participation and professional management.

 DISADVANTAGES Some of the disadvantages of the project management are as follows:

Strong resistance of change by project employees Ad-hoc organization and lacks long term plans and policies for sustained growth. Problem of low utilization of highly diversified workforce. Problem of project conflict. Problem of changes in technology, goals and resources. Project management may be unsuitable for small firms, which lacks resources. Projects are subjected to constraints of time, cost and quality standards, which may be unrealistic.

 PROJECT ORGANIZATION: When projects are initiated, two issues immediately arise. First, a decision must be made about how to tie the project to the parent firm. Second, a decision must be made about how to organize the project itself. Project Organization consists of: Designing a Structure Pulling together Project Team Establishing Authority and Responsibility relationship Establishing Project Office

There are three major organizational forms commonly used to house the projects. 1. Functional Organization 2. Pure Project Organization 3. Matrix Organization 1. Functional Organization Organization structure is broken into different functional units. The project tasks are performed through functional units. A project tends to be assigned to the functional unit that has most interest in ensuring its success or that can be most helpful in implementing it. Functional elements of the parent organizationAdministrative home for a project.

Advantages: There is maximum Flexibility in the use of staffs. Individual experts can be utilized by many projects Specialists in the division can be grouped to share knowledge and experience-- Synergistic solutions to technical problems Serves as a base of technological, procedural, administrative and overall policy continuity. Functional division contains the normal path of advancement for individuals whose Expertise is in the functional area.

Disadvantages: Lack of Client/Project focus. Focus on unique area of interest. Decision delay No individual is given full responsibility- lack of coordination Tendency to sub optimize the project Weak motivation for people Does not facilitate a holistic approach to the project (e.g. Jet air craft/ emergency room in a hospital can not be well designed unless designed as a totality.)

 2 Pure Project Organization The project is separated from the rest of the parent system. A self- contained unit with its own technical staff/ administration. The project manager has his own line organization with project authority and responsibility. The project has its own resources and management.

Advantages of project organisation: The PM has full line authority over the project Project work force directly responsible to the PM Line of communication- shortened. Focus on project objective High motivation Unity of command Exists Flexible labor force Disadvantages of project organisation: Duplications of efforts/Inefficient use of resources Lack of job security Stock piling of equipments / Technical expertise Projectiles (A disease-that creates animosities between parent organization. staff and project staff)

 3. Matrix Organization A combination of pure project organization and functional Organization It is a pure project organization overlaid on the functional divisions of the parent firm. Project team is assigned from the functional departments. The PM has overall responsibility

 Advantages: The project is the point of emphasis/ special focus Availability of entire reservoir of technical talents in the FD Team identity Less anxiety about job Rapid response to client needs Consistency of policies/ practices/procedures of parent firm Holistic approach/Balance of resources

 Disadvantages: Power and Authority is balanced. Doubt exists who is in charge Division of authority and responsibility is complex Movement of resources from project to project- may foster political infighting among the several PMs. Projectile is still a serious disease. Violates the management principle of unity of command.

 PROJECT PORTFOLIO MANAGEMENT Project portfolio management is the systematic process of selecting, supporting, and managing a firms collection of projects. Projects are managed concurrently under a single umbrella and may be either related or independent of one another. The key to portfolio management is realizing that a firms projects share a common strategic purpose and the same scarce resources.

 For example, Pratt & Whitney Jet Engines, a subsidiary of United Technologies Corporation, is similar to other major jet engine manufacturers in creating a wide portfolio of engine types, from those developed for helicopters to those for jet aircraft, from civilian use to military consumption. Although the products share common features, the technical challenges also ensure that the product line is highly diverse. The concept of project portfolio management holds that firms should not manage projects as independent entities, but rather should regard portfolios as unified assets. There may be multiple objectives, but they are also shared objectives.

 OBJECTIVES AND INITIATIVES: Portfolio management necessitate decision making, prioritization, review, realignment, and reprioritization of a firms projects. Lets consider each of these tasks in more detail. A] DECISION MAKING: The decision whether or not to proceed in specific strategic directions is often influenced by market conditions, capital availability, perceived opportunity, and acceptable risk. A variety of project alternatives may be considered reasonable alternatives during portfolio development.

B] PRIORITIZATION: Since firms have limited resources, they typically cannot fund every project opportunity and they must have to prioritize. For this task, several criteria may be used: Cost: Projects with lower development costs are more favorable because they come with less upfront risk. Opportunity: The chance for a big payout is a strong inducement for funding. Top management pressure: Political pressure from top management (say, managers with pet projects) can influence decisions. Risk: Project payouts must justify some level of acceptable risk; those that are too risky are scratched.

 Strategic fit: If a firm has a policy of pursuing a family of products, all opportunities are evaluated in terms of their complementaritythat is, either their strategic fit with existing product lines or their ability to augment the current product family. Desire for portfolio balance: A firm may want to offset risky initiatives by funding other projects. The Boston Consulting Groups product matrix framework, for example, balances company product lines in terms of relative market share and product growth, suggesting that firms maintain a strategic balance within their portfolios between products with different profiles. A firm might use its profitable but low-growth products to fund investment into projects with high growth prospects. Portfolio balance supports developing a strategy that allows companies to balance or offset risk; explore alternative market opportunities; and/or allow the funding of innovation in other product lines.

C] REVIEW: All project alternatives are evaluated according to the companys prioritization scheme. Projects selected for the firms portfolio are the ones that, based on those priorities, offer maximum return. D] REALIGNMENT: When portfolios are altered by the addition of new projects, managers must reexamine company priorities. In the wake of new project additions, a number of important questions should be considered. Does the new project confirm to strategic goals as characterized by the project portfolio, or does it represent a new strategic direction for the firm? Does a new project significantly alter the firms strategic goals? Does the portfolio now require additional rebalancing? The decision to change a portfolio by adding new projects restarts the analysis cycle in which we must again reexamine the portfolio for signs of imbalance or updating.

E] REPRIORITIZATION: If strategic realignment means shifting the companys focus (i.e., creating new strategic directions) managers must then reprioritize corporate goals and objectives. In this sense, then, portfolio management means managing overall company strategy. A good example of this phenomenon was a commercial jet project was initiated by a aircraft manufacturing company over 20 years ago. The projects cost overruns coupled with poor demand soured companys management on the commercial jet industry that they made the decision to refocus their priorities exclusively on defense-related aviation projects.

 DEVELOPING A PROACTIVE PORTFOLIO: Portfolio management, therefore, is an important component in strategic project management. In addition to managing specific projects, organizations routinely strategically plan for profitability, and the road to profitability often runs through the area of strategic project management. One of the most effective methods for aligning profit objectives and strategic plans is the development of a proactive project portfolio, or an integrated family of projects, usually with a common strategic goal. Such a portfolio supports overall strategic integration, rather than an approach that would simply move from project opportunity to opportunity.

 KEYS TO SUCCESSFUL PROJECT PORTFOLIO MANAGEMENT: Brown and Eisenhardt recently studied six firms in the computer industry; all are involved in multiple project development activities. They determined that successfully managed project portfolios usually reflect the following three factors. A] FLEXIBLE STRUCTURE AND FREEDOM OF COMMUNICATION: Multiple-project environments cannot operate effectively when they are constrained by restrictive layers of bureaucracy, narrow communication channels, and rigid development processes. Successful portfolios emerge from environments that foster flexibility and open communication. When project teams are allowed to improvise and experiment on existing product lines, innovative new product ideas are more likely to emerge.

B] LOW-COST ENVIRONMENTAL SCANNING Many firms devote a lot of time and money in efforts to hit product home runs. They put their faith (and financing) in one promising project and aim to take the marketplace by storm, often without sufficiently analyzing alternative opportunities or future commercial trends. As a rule, successful project portfolio strategies call for launching a number of low-cost probes into the future, the idea behind environmental scanningdeveloping and market-testing a number of experimental product prototypes, sometimes by entering strategic alliances with potential partners. Successful firms do not rely on home runs and narrowly concentrated efforts. They are constantly building and testing new projects prior to fullscale development.

C] TIME-PACED TRANSITION: Successful portfolio management requires a sense of timing, as firms make transitions from one product to the next. Successful firms use project portfolio planning routinely to develop long lead times and plan ahead in order to make the smoothest possible transition from one product to another, whether the product lines are diverse or constitute creating a follow-on upgrade. Gillette, for example, has made a lucrative business out of developing and selling new models of shaving razors. Gillettes product life cycle planning is highly sophisticated, allowing it to make accurate predictions of the likely life cycle of current products and the timing necessary for beginning new product development projects to maintain a seamless flow of consumer products.

 PROBLEMS IN IMPLEMENTING PORTFOLIO MANAGEMENT: Although numerous factors can adversely affect the practice of portfolio management, recent research seems to suggest that the following are among the most typical problem areas. A] CONSERVATIVE TECHNICAL COMMUNITIES: In many organizations, there is a core of technical professionals project engineers, research scientists, and other personnelwho develop project prototypes. A common phenomenon is this groups unwillingness, whether out of pride, organizational inertia, or due to arguments supporting pure research, to give up project ideas that are too risky, too costly, or out of sync with strategic goals. Often, when top management tries to trim the portfolio of ongoing projects for strategic reasons, they find engineers and scientists reluctant to accept their reasoning.

B] OUT-OF-SYNC PROJECTS AND PORTFOLIOS: Sometimes after a firm has begun realigning and reprioritizing its strategic outlook, it continues to develop projects or invest in a portfolio that no longer accurately reflects its new strategic focus. Strategy and portfolio management must accurately reflect a similar outlook. When strategy and portfolio management are out of alignment, one or both of two things will probably happen: either the portfolio will point the firm toward old-fashioned goals or the firms strategy will revert to its old objectives.

C] UNPROMISING PROJECTS The worst-case scenario finds a company pursuing poor-quality or unnecessary projects. A recent battle in consumer video electronics pitted Sonys Blu-ray high definition Digital Video Disc (DVD) technology against Toshibas offering, the High Definition Digital Versatile Disc (HD-DVD). Although the Sony product requires a relatively expensive machine to play the discs, it convinced the majority of the public that its format is the superior one. Major content manufacturers and retailers had been steadily withdrawing their support for the HD-DVD technology, leaving Toshiba to continue developing it alone. After pursing HD-DVD technology for several years at high cost, Toshiba announced in early 2008 that it was abandoning its foray. When portfolio management is geared to product lines, managers routinely rebalance the portfolio to ensure that there are a sufficient number of products of differing type to offset those with weaknesses.

D] SCARCE RESOURCES: A key resource for all projects is human beings. In fact, personnel costs comprise one of the highest sources of project expense. Additional types of resources include any raw materials, financial resources, or supplies that are critical to successfully completing the project. Before spending large amounts of time creating a project portfolio, organizations thus like to ensure that the required resources will be available when needed. A principle cause of portfolio underperformance is a lack of adequate resources, especially personnel, to support required development. Portfolio management is the process of bringing an organizations project management practices into line with its overall corporate strategy.

 Portfolio management is the process of bringing an organizations project management practices into line with its overall corporate strategy. By creating complementarity in its project portfolio, a company can ensure that its project management teams are working together rather than at cross-purposes. Portfolio management is also a visible symbol of the strategic direction and commercial goals of a firm. Taken together, the projects that a firm chooses to promote and develop send a clear signal to the rest of the company about priorities, resource commitment, and future directions. Finally, portfolio management is an alternative method for managing overall project risk by seeking a continuous balance among various families of projects, between risks and return trade-offs, and between efficiently run projects and nonperformers. As more and more organizations rely on project management to achieve these ends, it is likely that more and more firms will take the next logical step: organizing projects by means of portfolio management.

Classification of Projects [ IT projects ] Small Projects (1-3 weeks) Medium Projects (3-6 weeks) Large Projects (6-12 weeks) Super Projects (13 weeks or more)

 Capital-intensive Capital refers to the equipment, machinery, vehicles and so on that a business uses to make its product or service. Capital-intensive processes are those that require a relatively high level of capital investment compared to the labour cost. These processes are more likely to be highly automated and to be used to produce on a large scale. Capital-intensive production is more likely to be associated with flow production (see below) but any kind of production might require expensive equipment.

 Capital is a long-term investment for most businesses, and the costs of financing, maintaining and depreciating this equipment represents a substantial overhead. In order to maximise efficiency, firms want their capital investment to be fully utilised (see notes on capacity utilisation). In a capital-intensive process, it can be costly and time-consuming to increase or decrease the scale of production.

 Labour-intensive Labour refers to the people required to carry out a process in a business. Labour-intensive processes are those that require a relatively high level of labour compared to capital investment. These processes are more likely to be used to produce individual or personalised products, or to produce on a small scale

 The costs of labour are: wages and other benefits, recruitment, training and so on. Some flexibility in capacity may be available by use of overtime and temporary staff, or by laying-off workers. Long-term growth depends on being able to recruit sufficient suitable staff. Labour intensive processes are more likely to be seen in Job production and in smaller-scale enterprises.

 BASED ON FUNDING SOURCE: Indigenous project: the project which is operated with a country's own tradition, vision, thought and style is called indigenous project. It is totally local or home country project. Indigenous project helps to protect tradition and culture of the country. Joint venture project: the project established with the joint effort and investment of two or more persons, firms or countries is joint venture project. So joint venture project may be indigenous or foreign.

 BASED ON FUNDING SOURCE: Bilateral Project: the project which is operated with special agreement between two counties is called bilateral project. Bilateral project helps to build bilateral relationship in between two different countries and accelerates economic growth of the country. Multilateral project: the project which is operated with special agreement between two or more countries is called multilateral project. Group of developed countries operate such projects in developing countries for the development of health , education communication , irrigation and so on example: UNDP, WHO,UNICEF etc

 BASED ON ORIENTATION: Product based company develops the applications for Global clients i.e. there is no specific clients. Here requirements are gathered from market and analyzed with experts.
Process / Project based company develops the applications for the specific client. The requirements are gathered from the client and analyzed with the client.

 BASED ON THE TECHNOLOGY CONTENT: Type A - Established Technology: These projects rely on existing and well established base technologies to which all industry players have equal access. Although such projects may well be very large in scale, no new technology is employed at any stage. The majority of projects in the construction and road building industries fall into this category.

 Type B - Mostly Established Technology: These are similar to Type A, but involve some new technology or feature. While the majority of the work has relatively low uncertainty, the new feature provides market advantage but also a higher degree of uncertainty. Examples include many industrial projects of incremental innovation, as well as improvements and modifications to existing products.

 Type C - Advanced Technology: Often referred to as High-Tech projects, these are projects in which most of the technologies are employed together for the first time. However, the individual technologies already exist, having been developed prior to project initiation. Defense industry projects typically fall into this category.

 Type D - Highly Advanced Technology: Such projects require exploratory development and may be referred to as Super High-Tech. They call for the incorporation of technologies which are not entirely existing, emerging or even unknown solutions at the time of project initiation. Project execution therefore involves technology development, testing and selection from among alternatives. Research and development projects fall into this category.

 Projects are often categorized in terms of their speed of implementation as follows: NORMAL PROJECTS Adequate time is allowed for implementation. All the phases in a project are allowed to take their normal time. Minimum requirement of capital. No sacrifice in terms of quality. CRASH PROJECTS Requires additional costs to gain time. Maximum overlapping of phases is encouraged. DISASTER PROJECTS Anything needed to gain time is allowed in these projects. Around the clock work is done at the construction site. Capital cost will go will go up very high. Project time will get drastically reduced.

 OTHER CLASSIFICATION OF PROJECT 1. On the basis of Expansion: Project expanding the capacity Project expanding the supply of knowledge. 2. On the basis of Magnitude of the resources to be invested: Giant projects affecting total economy Big projects affecting at one sector of the economy Medium size projects Small size projects (depending on size, investment & impact)

3. On the basis of Sector: Industrial project Agricultural project Educational project Health project Social project 4. On the basis of objective: Social objective project Economic objective project 5. On the basis of productivity: Directivity productive project Interactively productive project

6. On the basis of nature of benefits: Quantifiable project Non-quantifiable project 7. On the basis of government priorities: Project without specific priorities Project with specific priorities 8. On the basis of dependency Independent project Dependent project 9. On the basis of ownership Public sector project Private sector project Joint sector project

10. On the basis of location Project with determined location Project with future impact 11 On the basis of social time value of the project Project with present impact Project with future impact 12. On the basis of National policy Project determined by inward looking policy Project determined by outward looking policy 13. On the basis of risk involved in the project High risks project Normal risks project Low risks project

14. On the basis of economic life of the project Long term project Medium term project Short tern project 15. On the basis of technology involved in the project High sophisticated technology project Advance technology project Foreign technology project Indigenous technology project 16. On the basis of resources required by the projects Project with domestic resources Project with foreign resources

17. On the basis of employment opportunities available in the project Capital intensive project Labour intensive project 18. On the basis of management of project High degree of decision making attitude Normal degree of decision making attitude Low degree of decision making attitude 19. On the basis of sources of finance Project with domestic financing Project with foreign financing Project with mixed financing Project with financial institutions

20. On the basis of legal entity Project with their own legal entity Project without their own legal entity 21. On the basis of role played by the project Pilot project Demonstration project 22. On the basis of speed required for execution of the project Normal project Crash project Disaster project