Project management

CHAPTER ONE

1. INTRODUCTION TO PROJECT AND PROJECT MANAGEMENT

After completing this unit, students will be able to:
 understand the meaning and definition of project,
 explain the features of project,
 Narrate projects and plans
1.1 Meaning and Definition of Project

What is a project?

There is no one comprehensive definition for a project.

Its definition varies from author to author, from organization to organization, and based on the
nature, objective and other characteristics of the project. As a result you may find several
definitions of a project in the literature.

As a working definition, several authors have provided various definitions of a project.

 Little and Mirrlees (1980) describe project as any scheme or part of a scheme, for
investing resources, which can reasonably be analyzed and evaluated as independent unit.
 In relation to agricultural activities, Gittinger (1982) defined project as a whole complex
of activities in an undertaking that involves uses of resources to gain benefits. A project is
a temporary endeavor undertaken to create a unique product, service or result (PMI,
2004).

 Project is a unique process intended to achieve target outcomes (Zwikael and Smyrk,
2009).

 The World Bank: defined it as “capital investment to develop facilities to provide goods
and services”.

A major misconception about a project is relating it to only construction or creation of such

physical facilities as buildings, roads and dams.

 However, project may involve intangible things such as

 creation of awareness (e.g. about HIV/AIDS),

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 eradication of diseases (e.g. polio vaccination),

 combating harmful practices (e.g. genital mutilation) and

 Capacity building (e.g. training to enhance service delivery capabilities of

public sector employees).

 Thus, projects may range from:

 physical or technical (construction of physical facilities)

 Nonphysical (dealing purely with behavioral aspects of an organization).

 mixed (involving both physical and nonphysical things)

A project is seen primarily as a planning process, which uses one or more scarce resources
during a specific time for the purpose of producing some economic returns or output at a later
date.
A project is a capital investment to develop facilities to provide goods and services (Bierman
and Smidth, 1970).
A project according to UNIDO Manual (1972), involves the utilization of scarce or at least
limited resources in the hope of obtaining in return some benefits over a long period.
A project is also seen as an optimum set of investment oriented actions by means of which a
defined combination of human and material resources is expected to cause a determined amount
of economic and social development.
A project in another sense can consist of a set of coordinated activities to bring into existence
something of value and the utilization of resources to produce value or benefits at a later date
A project may be described as a discrete investment activity, with a specific starting point and a
specific ending point, intended to accomplish specific objectives.
Project comprises a well-defined sequence of investments, which are expected to result in a
stream of specific benefits over time.
A project is “a unique endeavor to produce a set of deliverables within clearly specified time,
cost and quality constraints”.
A project is a temporary effort to create a unique product or service. Projects usually include
constraints and risks regarding cost, schedule or performance outcome.
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A project is a temporary organization of related tasks set up to deliver one or more products.
A project is an investment activity where we expend capital resources to create a producing asset
from which we can expect to realize benefits over an extended period of time.
A project is an activity on which money is spent in expectation of returns and which logically
seems to lend itself to planning, financing and implementation as a unit.

A project is also defined as a proposal for an investment to create, expand and develop certain
facilities in order to increase the production of goods and services in a certain period of time.
Furthermore, for evaluation purposes, a project is a unit of investment, which can be
distinguished technically, commercially and economically from other investments.
1.2 The Triple Constraint
A project is “a unique endeavor to produce a set of deliverables within clearly specified time,
cost and quality constraints”.
Thus every project is constrained in different ways by it’s:
 Scope goals: What work will be done?
 Time goals: How long should it take to complete?
 Cost goals: What should it cost?
It is the project manager’s duty to balance these three often-competing goals.

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The general rule is that project goals should be SMART – an acronym for:
 Specific – well defined and clear to anyone that has a basic knowledge of the project,
 Measurable – how do we know how far away completion is and when it has been
achieved,
 Action-oriented – indicate what should be done to achieve the objective,
 Reliable/achievable – do we have the resources (human, financial, material,
information, time) to make the goal happen? Is the objective achievable with the
available resources and timeframe, and
 Time-based – it should identify a definite target date for completion and/or
frequencies for specific action steps that are important for achieving the goal
on/within a specific time period.
1.3. Features of a project

Regardless of its type and complexity, a project can be more explained in terms of its
characteristics.

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1. It is Unique

2. Definable objective

3. defined timescale

4. Defined budget

5. Involves risk

6. It is temporary

7. It has life cycle

1. Each project is specific and unique:

A project is considered to be a unique endeavour in various terms including its size,

complexity, duration, timing, location, stakeholders, design, objective and other several
variables. A project is a one-time activity, never to be exactly repeated again. They do not
involve repetitive processes. Every project undertaken is different from the last, whereas
operational activities often involve undertaking repetitive (identical) processes

2. Project involves a definable objective usually specified in terms of cost, schedule, and
performance requirements.

3. Projects have a defined timescale: Projects have a clearly specified start and end date within
which the deliverables must be produced to meet a specified customer requirement

4. Projects have an approved resource and budget: Projects are allocated a level of financial
expenditure within which the deliverables must be produced to meet a specified customer
requirement

Reasons for Project Failure

There are many causes of project failure and every failed project will have its own set of issues.
But there are common reasons for project failure.

1. Inadequate project planning (budget, schedule, scope)

2. Lack of executive commitment

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3. Lack of linkage to the business strategy

4. Wrong team members

5. No measures for evaluating the success of the project

6. Inadequate risk management

7. Inability to manage change (inflexibility)

Why Do Projects Succeed?

1. Sound project planning and management processes

2. Project tied to the organization’s business goals

3. Senior management commitment

4. Good change management

5. Realistic schedule

6. Good stakeholder relationships

7. Skilled and appropriate team members with defined roles and responsibilities

1.4 Project Management

Project management is “the application of knowledge, skills, tools and techniques to project
activities to meet project requirements.

Project Management is the skills, tools and management processes required to undertake a
project successfully”.

Project management is a set of principles, practices, and techniques applied to lead project teams
and control project schedule, cost, and performance risks to result in delighted customers.

It is a temporary endeavor that involves management functions to achieve certain pre-defined

objectives.

Project management involves a series of management techniques and processes required to

monitor and control time, cost, quality and scope of projects. Project Management comprises a

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set of skills. Specialist knowledge, skills and experience are required to reduce the level of risk
within a project and thereby enhance its likelihood of success.

Project management is the discipline of planning, organizing, directing, and controlling resources
to bring about the successful completion of specific project goals and objective.

All the management functions are required to effectively and efficiently manage resources
required to complete the project

Project planning:

 Project planning is part of project management, which relates to the use of schedules
such as Gantt charts to plan and subsequently report progress within the project
environment.

 It is looking ahead and charting out future course of operation for projects

 Formulation of Objectives, policies, procedure, rules, schedules and budgets

 Project Plan: is "A formal, approved document used to guide both project execution and
project control.

 Is alternatively defined as “a statement of how & when a project's objectives are to be

achieved, by showing the major products, activities and resources required on the project.

At a minimum, a project plan answers basic questions about the project like:

 Why? - What is the problem or value proposition addressed by the project? Why is it
being sponsored?

 What? - What is the work that will be performed on the project? What are the major
products/deliverables?

 Who? - Who will be involved and what will be their responsibilities within the project?
How will they be organized?

 When? - What is the project timeline and when will particularly meaningful points,
referred to as milestones, be complete?

Project organizing involves

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Bringing resources together and tying them together in the pursuit of common objectives.
Enumeration and identification of activities, classification of activities, fitting individuals into
functions and assignment of authority for action.

Project directing involves

 Guiding, overseeing and leading people

 Motivating, leadership, decision making.

Project Controlling

 Laying standards, comparing actual performance against standards and correcting

deviation-achieve objectives according to plans.

 The role of management is to integrate resources and tasks to achieve organizational

goals. Project management is required to achieve three project goals.

Virtually every project has three overriding goals: to accomplish work for a client or end-user in
accordance with budget, schedule, and Scope /performance requirements.

1. Budget: The budget is the specified or allowable cost for the project; it is the target cost
of the work to be done.

2. The schedule includes the time period over which the work will be done and the target
date for its completion.

3. Scope/performance requirements: specify what is to be done to reach the end-item or

final result. It include required features, size and quality of the final product or service,
technological specifications, and quality and quantity measures, whatever is important to
the client or end-user.

Project management tools and techniques assist project managers and their teams in various
aspects of project management. Specific tools and techniques include:

1. Project charters and scope statements

2. Gantt charts, network diagrams, CPM and PERT

3. Cost and benefit estimates

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The project management process means planning the work and then working the plan. Steps are:

1. Clearly define the project objective.

2. Divide and subdivide the project scope into major “pieces”

3. Define the specific activities for each piece (work package)

4. Graphically portray the activities that need to be performed for each work package in order to
accomplish the project objective – in the form of network diagram (CPM and PERT can be used)

5. Make a time estimate for how long it will take to complete each activity – resources needed.

6. Make a cost estimate for each activity.

7. Calculate a project schedule and budget to determine whether the project can be completed
within the required time, with the allotted founds, and with the available resources.

1.5 Types of projects/capital investment

Based on the nature of investment projects:

 Mutually Exclusive Projects: A set of projects where only one can be accepted.

 Independent Projects: Projects whose cash flows are not affected by the acceptance or
non-acceptance of other projects.

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 Contingent (dependent projects): projects that necessitate the implementation of both

projects. The functioning of one project depends on the functioning of the other project as
well.

Based on the means of investment it may be classified as physical, monetary, or intangible.

 Physical assets are tangible investment like land, building, plant, machinery; etc.

 Monetary Assets are financial claims against some parties. Deposits, bonds, and equity
shares are examples of monetary assets.

 Intangible assets are not in the form of physical assets or financial claims. It may
include:

 Training,

 Market development,

 Franchises and so on.

 Research & development

Based on the objective, the following categories are found in most classifications:

 mandatory investments,

 replacement investments,

 expansion investments,

 diversification investments

 R &D investments

 Miscellaneous investments

 A mandatory investment is a capital expenditure required to comply with statutory

requirements, e.g. pollution control equipment, a faire fighting equipment etc.

 A replacement investment is meant to replace worn out equipment with new equipment
to reduce operating costs, increase the yield, and improve quality

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 An expansion investment is meant to increase the capacity to cater to a growing demand.

 A diversification investment is aimed at producing new products or services or entering

into new geographical areas.

 R&D investments are meant to develop new products and processes which would sharpen
the technological edge of the firm.

 Miscellaneous investments represent a catch-all category that includes items like interior
decoration, recreational facilities, and landscape.

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