CHAPTER 4

PROJECT MANAGEMENT PHASES

PHASE I:
DEFINING THE PROJECT
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INITIATING AND DEFINING PROJECTS
 IN THE PROJECT DEFINITION PHASE, A PROJECT IS CONCEIVED OUT
OF AN IDEA, SUGGESTION OR REQUEST BY AN INTERNAL OR EXTERNAL
CUSTOMER AND IS SPECIFIED IN CLOSE CONSULTATION WITH THE KEY
STAKEHOLDERS INVOLVED.

 THE KNOWN ORGANIZATIONAL AND ENVIRONMENTAL FACTORS ARE

CONSIDERED WHICH MAY OR WILL ULTIMATELY IMPACT ON THE PROJECT
AT SOME FUTURE POINT OF TIME DURING ITS LIFE CYCLE.

 IN PROJECT MANAGEMENT, THIS IS KNOWN AS “SCOPING THE

PROJECT” AND IS A PREREQUISITE BEFORE THE PROJECT ENTERS THE
(DETAILED) PLANNING PHASE, WHERE THE SCOPE MAY BE MODIFIED. 2
• Information
• Funding
• Equipment
• Manpower, Expertise, Knowledge
• Core Competencies
• Risk
• Planning and Control Systems
• Motivating Factors
• Formal and Informal Organization Structures
• Priority System / Multiproject Environment

Some Considerations for

Project Selection 3
Simple Project Scoring Matrix
Criteria Strategic Core Com- Urgency ROI Weighted
(0-10) Fit petencies Total

Weight 3 2 2 3
(1-3)

Project A 8 7 5 6 66

Project B 2 3 1 5 29

Project C 5 5 9 6 61

Project N ... ... ... ... ...

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 Project Portfolio Assessment
High
Technical Feasibility

BREAD & BUTTER PEARLS

(how easy is it?)

WHITE
OYSTERS
ELEPHANTS
Low

Low High
Net Present Value Given Sucess 5
(commercial potential)
 THE PROJECT SCOPE STATEMENT

Project Objectives Initial Project Organization

Project
Project Deliverables Scope Initial Defined Risks
Statement
Cost Estimate
Schedule Milestones

The Project Scope Statement

is the definition of the Approval Requirements
Technical
Requirements project – its primary purpose is to
define as clearly as possible the
deliverables for the end user and
Project Limitations & to focus project plans. Review with Customer
Exclusions 6
THE TYPICAL COMPONENTS OF A PROJECT SCOPE STATEMENT
1. PROJECT OBJECTIVES:

PROJECT OBJECTIVES FOCUSES ON THE PROJECT’S GOALS. SOME PROJECTS MAY

HAVE MULTIPLE GOALS. THE PROJECT’S GOALS ALSO INDICATE PROJECT’S
REQUIRED TIME AND BUDGET FOR COMPLETION i.e.

“TO CONSTRUCT A HIGH QUALITY CUSTOM HOME WITHIN 5 MONTHS AT A COST NOT
TO EXCEED RS. 50 LACS”.

2. PROJECT DELIVERABLES & FEATURES:

AFTER SETTING PROJECT OBJECTIVE THE NEXT STEP IS TO DEFINE MAJOR

DELIVERABLES-THE EXPECTED OUTPUTS OVER THE LIFE OF A PROJECT i.e.

• A 2,200-SQUARE-FOOT, 2 ½ -BATH, 3 BEDROOM FINISHED HOME

• A FINISHED AND INSULATED GARAGE
• KITCHEN APPLIANCES INCLUDING OVEN, MICROWAVE AND DISHWASHER 7
3. PROJECT MILESTONES:
A MILESTONE IS A SIGNIFICANT EVENT IN A PROJECT THAT OCCURS AT A POINT
IN TIME. EXAMPLE
i. PERMITS APPROVED – MARCH 5
ii. FOUNDATIONS POURED – MARCH 14
iii. FRAMING, SHEATHING, PLUMBING INSPECTIONS PASSED – MAY 25
iv. FINAL INSPECTION – JUNE 7

4. TECHNICAL REQUIREMENTS:
TECHNICAL REQUIREMENTS MUST BE MENTIONED HERE i.e.
• HOME MUST MEET LOCAL BUILDING STANDARDS
• ALL WINDOWS SHOULD HAVE GRADE 25 STEEL
• DOORS WOULD BE MADE OF DIAR WOOD

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5. PROJECT LIMITATIONS & EXCLUSIONS:
PROJECT LIMITATIONS AND EXCLUSIONS EXPLICITLY DEFINES WHAT IS
INCLUDED IN THE PROJECT AND WHAT IS NOT. FAILURE TO DEFINE BOUNDARIES
COULD LEAD TO FALSE EXPECTATIONS AND UNNECESSARILY EXPENDING TIME
AND OTHER RESOURCES i.e.
• LANDSCAPING WOULD BE DONE BY OWNER
• REFRIGERATOR IS NOT INCLUDED AMONG KITCHEN APPLIANCES

6. INITIAL PROJECT ORGANIZATION:

THE ORGANIZATION OF THE PROJECT AND IDENTIFICATION OF THE PROJECT
MANAGER, KEY TEAM MEMBERS AND KEY STAKEHOLDERS IS DONE.

7. INITIALLY DEFINED RISKS:

THE KNOWN RISKS WHICH CAN HAVE AN ADVERSE IMPACT ON THE PROJECT. AS
THE PLANNING OF THE PROJECT PROGRESSES, THIS ASPECT CAN BE REFINED
AND MORE, INITIALLY UNKNOWN RISKS, IDENTIFIED AND THEIR POTENTIAL
ADVERSE CONSEQUENCES ASSESSED. 9
8. COST ESTIMATE:
ASSESSING THE PROJECT’S COSTS WITH SOME DEGREE OF ACCURACY.

9. APPROVAL REQUIREMENTS FROM AUTHORITIES:

DEALS WITH APPROVAL REQUIREMENTS THAT MAY BE MANDATED BY ANY
STAKEHOLDER, AND WHICH CAN BE APPLIED TO PROJECT OBJECTIVES,
DELIVERABLES AND WORK PACKAGES.

10. REVIEW WITH CUSTOMER:

COMMUNICATION OF THE SCOPE STATEMENT TO THE CUSTOMER AND SEEKING
HIS/HER APPROVAL OR WHO ARE THE PERSPECTIVE CUSTOMERS AND THEIR
FEEDBACK.

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 THE PROJECT FEASIBILITY STUDY

 A FEASIBILITY STUDY EXAMINES THE TECHNICAL , ECONOMIC AND IN SOME

INSTANCES LEGAL VIABILITY OF A PROJECT. TECHNICAL ASPECTS WHICH
MIGHT BE THOUGHT OVER INCLUDE
• Availability of inputs or raw materials and their quality and prices.
• Determination of tools and equipment needed for the project . Technical feasibility would vary
from project to project, in a construction project it might include
• Land surveys
• Laboratory tests
• Possibility of building with concrete blocks only
• Acceptance of a particular design by authorities etc.
 ECONOMIC AND FINANCIAL ASPECTS INCLUDED IN THE STUDY ARE
• Financing of the project in terms of its capital structure, debt to equity ratio and Promoter's
share of total cost
• Existing investment by the promoter in any other business
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• Projected cash flow and profitability including payback period and Net Present Value
etc.
• Rate of conversion of assets used to cash-liquidity.
• Project's funding potential and repayment terms.
• Sensitivity in the repayments capability.
• Market research studies etc.

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Net Present Value Analysis

$943.39

13
 NPV Example for a Project Spanning 4 Years

Multiply
by the
discount
factor each
year, then
take cum.
benefits –
costs to
get NPV
 FEASIBILITY REPORT SHOULD IDENTIFY ALTERNATIVE
PROJECT SOLUTIONS, ASSESS THEIR RESPECTIVE ADVANTAGES
AND DISADVANTAGES, AND RANK THE SOLUTIONS.

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SECURING APPROVAL FOR PROJECT AND THE PROJECT CHARTER

 ONCE A PROJECT HAS BEEN SCOPED AND, IF REQUIRED,

ANALYZED BY FEASIBILITY REPORT, THE NEXT STEP IS TO
ACQUIRE APPROVAL FOR UNDERTAKING A DETAILED
PROJECT PLAN. THE STAKEHOLDERS INVOLVED IN THE
APPROVAL PROCESS ARE USUALLY SENIOR MANAGEMENT
AND CUSTOMERS.

 AFTER THE APPROVAL THE PROJECT CHARTER IS SIGNED

WHICH ACCORDING TO PROJECT MANAGEMENT INSTITUTE
IS THE “DOCUMENT THAT FORMALLY AUTHORIZES A
PROJECT”.

 THE PROJECT CHARTER PROVIDES THE PROJECT MANAGER

WITH THE AUTHORITY TO APPLY ORGANIZATIONAL
RESOURCES TO PROJECT ACTIVITIES.

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