PROJECT MANAGEMENT

PE 309
MODULE 3
Course Objectives:
This course enables the students to:
1 Comprehend the scope and types of projects
2 Identify the Project Life Cycle and project constraints
3 Construct organizational structure of project management
4 Realize environmental issues and social cost benefit analysis of projects
5 Apply project scheduling tools (PERT and CPM)
Course Outcomes:
After the completion of this course, students will able to:
• CO1 Recognise the project morphology, organizational structure and elements of project
• CO2 Incorporate the importance environmental issues in projects
• CO3 Handle real-life projects as in various organizations
• CO4 Solve complex scheduling problems in project management using PERT/CPM
• CO5 Prepare project report and budget planning
SYLLABUS
• Module 3: Environmental and social aspects of project [8]
• Environmental considerations in project evaluation, Primary issues
and secondary issues in Feasibility study, Social cost benefit analysis
Environmental considerations in project
evaluation
• The four main environmental issues that are most likely to influence the
activities of a Project are
• Sustainability
• Waste disposal
• Pollution
• Climate change
• Environmental impact assessment (EIA) study is a tool for formulating an
environment management plan. EIA should not be treated just as a tool for
regulatory compliance but as an instrument for improving project
management with proper expertise, time, and budget allocations made for
the purpose.
Background
• Land disputes, water rows, wildlife-man conflicts, debates for rights
over forest resources, and controversies about mining areas and their
management have become common across the country. The fight for
resources is becoming tough by the day.
• Projects where environmental and social considerations have not
been taken into account or addressed early on had to suffer
substantial delays, which further resulted in upsetting budgetary
limits. Some projects had to be suspended for a long time or even
dropped completely — in India, a few large scale mining projects and
hydro-power projects fall in this category.
• Environmental management is often viewed from a narrow regulatory
perspective —for most project managers, all it means is getting an
environment clearance and/or a forestry clearance. A good deal of
energy is spent on ‘how to circumvent’ the legal requirements and if
not, ‘how to minimally comply’ with the clearance conditions.
However, there is a need to understand that environmental
management is not about regulations alone.
• The concept of environmental sustainability revolves around health,
safety, and the resources, which people need and use for living and
livelihood.
• Let us take the construction industry as an example. This industry is
responsible for about 25-30 per cent of green house gas emissions in
the world. It is also responsible for 25-30 per cent of energy
consumption, 15 per cent of water consumption and about 40 per
cent of the waste generated in the world. About 20 to 30 per cent of
the total wastes generated end-up in landfills. Nearly 15 per cent of
the material purchased at the worksite ends up as waste, mainly due
to weak project management. This figure should be of interest to any
project manager, who intends to reduce the cost of operation and
maximize profits.
• “Only after the last tree has been cut down, only after the last river
has been poisoned, only after the last fish has been caught, will one
find that money cannot be eaten.” (Interfaces, Apr-June 2008)
Environmental and Ecological appraisal
• Impact of project on quality of
• Air
• Water
• Land
• Noise
• Human life
• Other

• Major projects ,such as these, cause environmental damage

• Power plants
• Cement industries
• Real estate
• Industries like bulk drugs, chemicals and leather processing
Action Areas:
• Clean environment
• Energy
• Water
• Waste
• Air
• Noise
• Land
• Green spaces & biodiversity
• Buildings & landscaping
• Eco-consumption
Action Plans in Project
• Environmental management
• Waste & energy management
• Eco-consumption
• Information campaigns, etc.
• Annual budget for environmental actions
• Public incentives (competitions, grants, env. laws)
• Green accountancy: identify environmental and financial savings
• Public/Private partnerships
Action Plans in Project
• Clean up of past pollution
• Hazardous waste and hazardous substances disposal;
• Sources of drinking water or food contamination (by heavy
metals, toxic organic compounds or other harmful chemicals).
• Reduction of air pollution
• Pollutants of health concern: particulate matter, sulphur dioxide,
nitrogen oxides, lead and other toxic chemicals in urban areas
• Green-house gases: carbon dioxide, methane, etc.
Action Plans in Project
• Clean water protection
• Industrial waste water treatment plants
• Protection of biodiversity
• Development of infrastructure in protected areas for
species protection and habitat preservation;
Pollutions from Projects
• Introduction by man, waste matter or surplus energy into the
environment, which directly or indirectly causes damage to man and
his environment.
• Damage to human health by specific chemical substances present in
the air, food, water and radioactive material
• Damage to natural environment affecting vegetation, animals, crops,
soil and water
• Damage to visual quality by smoke, fumes, dust, noise and waste
• Damage by radioactive materials and excessive noise
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.
• The feasibility study is an evaluation and analysis of the potential of a proposed
project which is based on extensive investigation and research to support the
process of decision making. Feasibility studies aim to objectively and rationally
uncover the strengths and weaknesses of an existing business or proposed
venture, opportunities and threats present in the environment, the resources
required to carry through, and ultimately the prospects for success
• Feasibility studies may also open new possibilities, opportunities and solutions
one might never have otherwise considered.
• A feasibility study is designed to provide an overview of the primary
issues related to a business idea. The purpose is to identify any issues
that would prevent project from being successful.
• In other words, a feasibility study determines whether the project
idea make sense. A thorough feasibility analysis provides a lot of
information necessary for the project plan.
• Feasibility studies are focussed and specific. They start with a single
question--asking whether the idea, event or action is a viable solution
and focus solely on that question to the exclusion of everything else,
drilling down to explore possible outcomes.
• A feasibility study is not the same as appraisal. A feasibility study is an
investigative tool that might cause one to abandon an idea, whereas a
project appraisal is assess the success potential and frame action
plans based on that. In fact, use a feasibility study as a predecessor to
project appraisal.
Feasibility
study
A feasibility study in project management usually assesses the following
areas:

• Technical capability: Does the organization have the technical resources to

undertake the project?
• Budget: Does the organization have the financial resources to undertake
the project, and is the cost/benefit analysis sufficient to warrant moving
forward?
• Legality: What are the legal requirements of the project, and can the
business meet them?
• Risk: What is the risk associated with undertaking this project? Is the risk
worthwhile to the company based on perceived benefits?
• Operational feasibility: Does the project, in its proposed scope, meet the
organization’s needs by solving problems and/or taking advantage of
identified opportunities?
• Time: Can the project be completed in a reasonable timeline?
Areas of Feasibility Analysis
Technical feasibility
• The technical feasibility is focused on gaining an understanding of the
present technical resources of the organization and their applicability
to the expected needs of the proposed project.
• Technical feasibility assessment is based on an outline design of
systems requirements, to determine whether the company has the
technical expertise to handle completion of the project.
Economic Feasibility
• The purpose of the economic feasibility assessment is to determine
the positive benefits to the organization that the proposed project
will provide. It includes quantification and identification of all the
benefits expected. This assessment typically involves a cost/benefits
analysis.
Operational Feasibility
• Operational feasibility is a measure of how well a proposed project
solves the problems, and takes advantage of the opportunities
identified during scope definition and how it satisfies the
requirements identified.
• The operational feasibility assessment focuses on the degree to which
the proposed development projects fits in with the existing business
environment and objectives with regard to development schedule,
delivery date, corporate culture, and existing business processes
• To ensure success, operational outcomes such as reliability,
maintainability, supportability, usability, producibility, disposability,
sustainability, affordability and others. These parameters are required
to be considered at the early stages of design if desired operational
behaviours are to be realized.
Schedule Feasibility
• A project will fail if it takes too long to be completed before it is useful.
Typically this means estimating how long the system will take to develop,
and if it can be completed in a given time period.
• Schedule feasibility is a measure of how reasonable the project timetable
is.
• Given the technical expertise and other constraints, are the project
deadlines reasonable? Some projects are initiated with specific deadlines.
Deadlines can be mandatory or desirable.
Social cost-benefit analysis (SCBA)
• Social benefit-cost analysis is a process of identifying, measuring and
comparing the social benefits and costs of an investment project or
program.
• Social Cost Benefits Analysis (SCBA) means to analyse the social cost
and total social benefits if we accept any project.
• It refers to the study of feasibility of a project in terms of its total
economic cost and total economic benefits.
• The cost of environmental damages should also figure in the SCBA.
Discount future costs and benefits to obtain present values

• The rate that converts future values into present values is known as the discount rate.
• If the discount rate were constant at r per cent per year, a benefit of Bt dollars received
in t years is worth Bt/(1+r) t now.
• To determine the net present value (NPV) of an option, the costs and benefits need to be
quantified for the expected duration of the project.
• The net present value is calculated as:
NPV = (Bt-Ct)/(1+r)t
where
Bt = the benefit at time t
Ct = the cost at time t
r = the discount rate
t = the year
Why discount?
• The need to discount future cash flows can be viewed from two main
perspectives:
• Opportunity cost of the cash flows
• For monetised flows to be directly comparable in a SCBA, those costs or benefits
incurred in the future need to be discounted back to current dollar terms.
• Accounting for inflation
• Inflation is another reason that a dollar in the future is worth less than a dollar
now. A general rise in the price level means that a dollar in the future buys fewer
goods. Analysts conducting a SCBA have the choice of whether to include future
cash flows in terms of their actual monetary value at the future date (the
‘nominal’ value) or in terms of their current dollar value (the ‘real’ value).
However, since all cash flows need to be converted to current dollar terms to be
comparable in a SCBA, it is usually simplest to adopt the latter approach.
• Consider an option that will require industry to install new project to limit air pollution. The
equipment costs $5 million to install and will operate for the following four years. Operating
(annual maintenance) costs to business are $1 million a year (in constant prices). The benefits are
estimated at $3 million a year (in constant prices). The discount rates are 3 per cent, 7 per cent
and 10 per cent.