Establishing An

Enterprise and Project

Management
Project & Project Management

• A temporary endeavor undertaken to create a unique product or

service . Defined as scientifically evolved work plan devised to
achieve a specific objective with the specified period of time.

• The application of knowledge, skills, tools, and techniques to

project objectives to meet stakeholder needs and expectations.
Characteristics and Features

• Investment pattern.
• Benefits of gains.
• Location.
• Objectives.

Characteristic features
• Life span.
• Team work.
• Interrelated.
• Uniqueness.
• Change.
• Successive principles.
• Made to order or customer specific.
• Unity in diversity.
• High levels of sub-contracting.
• Risk and uncertainty.
Knowledge Areas

• Scope Management
• Time Management
• Cost Management
• Quality Management
• Human Resources Management
• Communications Management
• Risk Management
• Procurement Management
• Integration Management
Project Classification

1. Quantifiable and Non-Quantifiable projects

2. Sector projects
3. Techno-economic projects
4. Financial institutions classification
5. Services projects
 Project Classification
• Quantifiable and Non-Quantifiable projects
• Quantifiable projects are those in which a reasonable quantitative
assessment of benefits can be made
• Non-quantifiable projects are those where such an assessment not
possible
• Sector Projects
• Agriculture Industry and mining
• Transport
• Social services
• Techno-economic projects
• Causation-oriented classification (RM based)
• Factor intensity oriented classification (LLCO)
• Magnitude oriented classification (Large /Small)
• Financial Institutions classification
• New projects
• Expansion projects
• Diversification projects
• Services Projects
• Welfare services
• Service projects
• Educational projects
 Project Life Style Stages
• Conception Stage or Project Identification
• Idea germination
• Project identification

• Definition stage or project formulation : 

• In this stage the project will develop the idea generated during the conception stage. The
areas examined in this stage are ( Eg ..cement plant) Raw materials, Plant size, Location,
Technology, Project layout, Plant layout, Electrical works, Civil works, Utilities – fuel, power,
Manpower Financial Implementation schedule

• Planning and Organizing stage or project design : 

• Prepare project execution. Take necessary action for realization of project like, Project
Infrastructure System design, Licensing, Identification of project manager

• Implementation: 
• 85% of the work done in this stage

• Project Clean-up stage: 

• Drawing, documents, files, operation and maintenance manuals are catalogued and handed
over to the customer Handing over
Project Management and
Other Disciplines
• Finance
• HRM
• Operations
• Purchase and logistics
• R& D
• Marketing
Project Formulation

• Defined as “ taking a first look carefully and critically at

a project idea by an entrepreneur to build up an all
round beneficial to project after carefully weighing its
various components”
Phases of Project Formulation

1. Conception of an idea

2. Analysis of related aspects

3. Formulation of a project

4. Design of a project
Sequential Stages in Project
Formulation
• Feasibility study

• Techno-economic analysis

• Project Design and Network analysis

• Input Analysis

• Financial analysis

• Social cost benefit analysis

• Pre-investment analysis
 Project Planning
• Project Plan “Is a formal, approved document used to manage and control
project execution”
• Project Plan Development – Output of Planning processes in other
knowledge areas:
• Historic Information
• Stakeholder skills and knowledge
• Organizational Policies
• Limitations and Assumptions
• Project Planning Methodology
• Project Plan
• Project Scope

• To whom the project is prepared

• The target audience
• The usefulness for the stakeholders
• Project Planning Objectives

• To satisfy the stakeholder

• To show one’s expertise

• To get the approval

 Feasibility Study

• A feasibility study is an analysis of the viability of an idea

through a disciplined and documented process of thinking
through the idea from its logical beginning to its logical
end. A feasibility study provides an Investigating function
that helps answer “Should we proceed with the proposed
project idea? Is it a viable business venture?” A feasibility
study should be conducted to determine the viability of an
idea BEFORE proceeding with the development of a
business.
Distinction between pre-
feasibility study and Feasibility
study
Pre-Feasibility
Study Feasibility Study
• No thoughts on the • Deeper knowledge
viability of the on various feasibility,
project from such as economic,
economic, social, social, technical,
technical, managerial, market
managerial, market and financial
and financial point of
view
Various Feasibility Studies

1. Socio-Economic Feasibility

2. Technical Feasibility

3. Managerial Feasibility

4. Market Feasibility

5. Financial Feasibility
 Various Feasibility Studies
Socio-Economic Feasibility
Technical Feasibility

• Manufacturing process/technology
• Identify and Estimate all Capital
selected
Expenditures
• Technical collaboration
• Identify and Estimate all Variable Costs
related to the Proposed Business Venture • Capacity/size of the project/ scale
of operation
• Identify People and Skills required to
• Location of the project
operate

• Availability of physical and social

• Determine Wages, Salaries, and Benefits
infrastructure
• Identify and Estimate Project Related Costs
• Plant layout

• Infrastructure development or
• Factory building
improvements
 
• Advertising and Promotion Legal Fees

• Municipal & State Development taxes

• Identify and Estimate all Fixed Costs

 
• Managerial Feasibility
Various Feasibility Studies
• The levels of Management

• Designing about the posting and recruitment

• Allocating of power

• Market Feasibility
• The target audience

• Segments of your projects

• The end users

• The cost of the project

• The competitors Market entry

• Supply chain management

• Financial Feasibility
• Capital and operating costs

• Funds flow

• Cash flow

• Ratio analysis

• Break-even

• Profitability

• Investment process
Michael Porter: Aligning
Strategy & Project Management

• https://www.youtube.com/
watch?v=CKcSzH1SvCk&list=WL&index=1
Feasibility Reports
Presentation
• A feasibility report provides primary
economic information, financial data and
technical details which serves as the basis
for carrying out the project successfully. The
feasibility report should cover the following
important aspects all the feasibilities studies
such as market, financial, economic, social
etc…
Project Feasibility Report
Checklist
• Socio-Economic Feasibility

• Technical Feasibility

• Managerial Feasibility

• Market Feasibility

• Financial Feasibility

• HR feasibility

• Operational Feasibility
 Sources of Finance
• Short Term

• Medium Term

• Long Term

• Bank credit

• Trade credit

• Installment credit

• Customer advances

• Issue of shares

• Issue of debentures

• Loans form banks and other financial institutions

• Public deposits (For existing concerns)

• Ploughing back of profits

Break Even Analysis
• Break Even Analysis

• Refers to determining the level of activity

where total cost is equal to the total sale

• Break even is a point of zero profit and zero

loss

• BEP in terms of sales = Fixed Cost x Total

amount of sales /Total Contribution
• Utility of BE Analysis

• It serves as the most useful and important

managerial tool to study cost-output-relationship
at varying levels of output

• It is useful in reviewing pricing policies

• It aids in planning capitalization of the enterprise

• It provides the entrepreneur to decide whether

to acquire or not assets involving additional fixed
costs
Project Design
• In project design, the entrepreneur is expected
to design prototype & test them. Design is the
new weapon and the key driver is innovation to
fight out the competition. For design to become
culturally embedded in an organization three
forces have to be considered:

• A deeper user understanding

• Multiple prototyping

• Strategic business design

Network Design

• Network Design is a system which plans both large and

small projects by analyzing the project activities.
Projects are broken down into simple activities, which
are then arranged in a logical sequence using
network tools like PERT, CPM.
History of CPM/PERT

• History of Critical Path Method (CPM)

• E I Du Pont de Nemours & Co. (1957) for construction of

new chemical plant and maintenance shut-down

• Deterministic task times

• Activity-on-node network construction

• Repetitive nature of jobs

• Project Evaluation and Review Technique (PERT)

• U S Navy (1958) for the POLARIS missile program

• Multiple task time estimates (probabilistic nature)

• Activity-on-arrow network construction

• Non-repetitive jobs (R & D work)

Project Network

• Network analysis is the general name given to certain

specific techniques which can be used for the
planning, management and control of projects
• Use of nodes and arrows
• Arrows lead from tail to head directionally
• Indicate ACTIVITY, a time consuming effort that is required to
perform a part of the work.

• A node is represented by a circle

• Indicate EVENT, a point in time where one or more activities
start and/or finish.
 Activity & Event
• Activity
• A task or a certain amount of work required in the project

• Requires time to complete

• Represented by an arrow

• Indicates only precedence relationships.

• Event
• Signals the beginning or ending of an activity

• Designates a point in time

• Represented by a circle (node)

• Network Shows the sequential relationships among activities using nodes and arrows

• Activity-on-node (AON) nodes represent activities, and arrows show precedence relationships

• Activity-on-arrow (AOA) arrows represent activities and nodes are events for points in time
PERT Analysis

• https://www.youtube.com/watch?v=V5FmgNCD5Rw
PERT

• PERT is based on the assumption that an activity’s

duration follows a probability distribution instead of
being a single value
• Three time estimates are required to compute the
parameters of an activity’s duration distribution:
• pessimistic time (t p ) - the time the activity would take if
things did not go well
• most likely time (t m ) - the consensus best estimate of the
activity’s duration
• optimistic time (t o ) - the time the activity would take if
things did go well
Steps in PERT

• Development of project network

• Time estimation

• Determination of critical path, event slacks and

activity floats

• Development of project schedule

• Calculation of variability duration and the probability

of completion in a given time

 
Location of an Enterprise

• Location considerations for the establishment of

manufacturing plants is critical to the operation of the
setup in an uninterrupted and least resistant manner.

• An ideal site is certainly contributes to the smooth and

efficient functioning of an enterprise.
Steps in selection of
Enterprise Location
I. Selection of region
II. Selection of the locality or Community
III. Selection of the exact site; and
IV. Selection of the optimum site
Factors to be consider in
studying the location for an
Enterprise
• Location. . .
• Deciding a suitable area/place, etc. where the plant/
factory will start functioning.
• It involves 2 major activities:
1. To select a proper Geographic region
2. Selecting the specific site within the region.
1. Nearness to raw materials
2. Transport Facilities
3. Nearness to Market
4. Availability of labour
5. Availability of Fuel and Power
6. Availability of Water
7. Climatic Conditions
8. Financial and other Aids
 9. Land topography
10. Community attitude
11. Presence of related industries
12. Existence of Hospitals, Schools, Banks, Clubs, Post
offices etc.
13. Local bye-laws, taxes, etc
14. Housing Facilities
15. Security
16. Facilities for Expansion