INTRODUCTION TO

PROJECT
AGEMENT

INTRODUCTION
A project is a unique, transient endeavor, undertaken to achieve planned objectives,
~hich could be defined in terms of outputs, outcomes or benefits. Project management
is the application of processes, methods, knowledge, skills and experience to achieve
the project objectives. A project is unique in that it is not a routine operation, but a
specific set of operations designed to accomplish a singular goal. So a project team
often includes people who do not usually work together - sometimes from different
organizations and across multiple geographies.
Project management processes can be categorized into five steps such as:
Initiating
 2 IProject and Programme Management

Planning
. Executing
Monitoring and Controlling
Closing

CONCEPT OF A PROJECT
Project management has been proven to be the most effective method of delivering
products within cost, schedule, and resource constraints. This intensive and hands-on

,
course gives one the skills to ensure projects are completed on time and on budget while
giving the user the product they expect. One will gain a strong working knowledge
of the basics of project management and be able to immediately use that knowledge
to effectively manage work projects. A project is a temporary endeavor undertaken
to create a unique product (a component of another item or an end item in itself),
capability to perform a service, or result such as a document that develops knowledge
in support of a business function. The temporary nature of projects indicates a definite
beginning and end. The end is reached when the projects objectiv~s have been achieved
or when the project is terminated because its objectives will not or cannot be met, or
when the need for the project no longer exists.
"Project management is the process of the application of knowledge, skills, tools,
and techniques to project activities to meet project requirements." That is, project
management is an interrelated group of processes that enables the project team to
achieve a successful project. These processes manage inputs to and produce outputs
from specific activities; the progression from input to output is the nucleus of project
management and requires integration and iteration.
For example, a feasibility report could be an input to a design phase; the output
of design phase could be a set of_ plans and specifications. This progression requires
prOJect management acumen, expertise, tools and techniques, including risk management,

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 Introduction to Project Management I 3

contingency development, and change control.

Project management, which is considered to be a vital
rocess within an organization, is only a success when it is
Planned, processed and executed well by the project manager.
Without proper planning, or understanding the importance
of a given project, a project cannot be executed effectively.
"Project managers need not be praised for starting a
project, but for finishing it. It is his responsibility to create
as well as execute a project plan."

•
. •

.. Project
Optlmiiatlon . .

Project
Management /

. .
Project . .
Oper;at ion

_•·· · • ·· _ · =

. . - -

Figure 1: Project management.

Planning without action is useless and an action without
planning is lethal. A project execution plan has to encompass ten
knowledge areas scope, time, cost, quality, HR, communication,
risk, procurement, stake holders, integration. Implementation is
The major objective of a project should be very clear the realization of an
right at the beginning; it should not be treated as an ordinary application, or execution
of a plan, idea, model,
document but something which formulates plans, establishes design, specification,
. procedures to efficiently and effectively manage execution. standard, algorithm, or
A project concept is a complete documentation of the policy.
proposed project but needs to be implemented yet. The term
'.'concept" means that it is under planning and processing for
implementation.

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 4 IProject and Programme Management
· f f U wing documentation such as· p .
A full blown project concept consist o o o d ·1 d d . , ro1ect
feasibili studies (technical, financial, environmental, etc.),_ etai e rawu:~gs/plans
and s e~cations, detailed estimates for project cost, environm~ntal permit, social
accep£ability of the project and other requirements for fund sourcing.

A project concept is also called project proposal and can only be called "project"
,
when it is funded and under implementation.
The term "project" has a wider meaning. A project is accomplished by performing
a set of activities. For example, construction of a house is a project. The construction of
a house consists of many activities like digging of foundation depths, construction of
foundations, construction of walls, construction of roof, fixing of doors and windows,
fixing of sanitary fittings, wiring etc. The construction of a house is accomplished by
performing the set of activities. Another aspect of "project" is the non-routine nature
of activities. Each project is unique in the sense that the activities of a project are
unique and non-routine. · -
Project is 'an organized unit dedicated to the attainment of goal the successful
completion of a development project on time, within budget, in conformance with
pre-determined programmed specifications'.
A project is any scheme or part of a scheme for investing resources which can be
reasonably analyzed and evaluated as an independent unit.

Project Cycle

The project cycle can be explained in terms of five phases:

Identification,
Preparation and formulation,

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 Introduction to Project Management I 5

Review and approval,

Implementation and,
Evaluation.
Distinctions among these phases, especially between identification and preparati~n,
are often unclear in practice and their relative importance varies greatly, depending
on the character, scale and history of the project.

Identification

Evaluation

Implementation Review and

approval

· Figure 2: .Project cycle.

Project Identification
Project identification starts from an understanding of the mandate and objectives.
It ·involves identifying environmental problems to be addressed and the needs and
interests 9f possible beneficiaries and stakeholders. The problems and the most realistic
and effective interventions are analyzed, and ideas for projects and other actions are
identified and screened.

Situation Analysis
An environmental situation needs to be assessed and analyzed. This objective analysis
enhances understanding of the likely ·causes and linkages between existing problems
and the needed actions. A situational analysis based on a scientifically sound conceptual
framework generates key actions and strategies to be applied for the intended project
intervention. Latest country reports and statistics prepared by governments, researchers,
or international organizations on the relevant environmental, social and economic issues,
including gender and poverty, can facilitate the assessment. A situation analysis should

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IProject and Programme Management
. al f d m·terests strengths and weaknesses of key stakeholders and
include an yses o nee s, ,
beneficiaries. ·

The Identification Test .

. al . b d ed to have passed the identification test and be ready for
A propos may e eem
detailed preparation when: . .. . ..
Major options and alternatives have been identified and some 1mhal choices
made;
The principal institutional and policy issues ~fecting project outcome have
been identified and deemed amenable to solution;
The project options selected are ~xpected to be justified, given rough estimates
of the expected costs and benefits;
There is justifiable expectation that the project will have adequate support
from the relevant political authorities, other stakeholders and the intended
beneficiaries;
There is compatibility with mandate and objectives.

, Preparation of Concept Proposal for Sponsorship

Project formulation begins with the drafting of a proposal for sponsorship that lays out
preliminary ideas, objectives, results, strategies, outputs and activities. This proposal
is used as the basis for consultations with implementing partners and governments.

Project Preparation and Formulation

Feasibility Study
A feasibility study should form the core of the proposal preparation process. Its purpose
is to provide stakeholders with the basis for deciding whether or not to proceed with
the project and for choosing the most desirable options. ·
The feasibility study must provide answers to the following basic questions:
Does ~e _p_roject conform to the development and environmental objectives
and pnonties of the specific country and or region? .
Is the project technically and scientifically sound, and is the methodology the
best among the ·available alternatives?
Is the project administratively manageable?
Is there adequate demand for the project's outputs?
Is the project financially justifiable and feasible?

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Introduction to Project Management I 7

Is the project compatible with the customs and

traditions of the beneficiaries?
Is the project likely to be sustained beyond the
intervention period?

Project Document Formulation

Project preparation and formulation and project document
formulation are simultaneous processes. Once the feasibility Feasibility Study is an
study has taken place and implementation arrangements are evaluation and analysis of
the potential of a proposed
agreed upon, the concept proposal (which would have been project which is based on
revised throughout the process) is transformed and expanded extensive investigation and
into a project document throughout the project preparation research to support the
and formulation phase. The project document is a summary process of decision making.
of the situation assessment, justification of methodology and
strategies for achieving the targeted changes, which come from
each step taken through project cycle phases 1 and 2. Since
project formulation is an iterative process, it is important to
consult again with selected partners and colleagues as the
document is formulated.

Establishment of Baseline and Target Data

Data or information in the subject area of the intended project
should be gathered during the project identification process
(phase 1) and analyzed to assess the condition or situation
of the targeted populations or areas. It is possible that the
existing data or information are insufficient or not valid,
or that the necessary data or information do not exist at
all. The project identification process will need to include
rapid assessments. Collection and analysis of data from the
baseline data for developing indicators for measuring outputs
and re~ults. The feasibility study guides project managers in
proposmg reasonable and achievable targets or outcomes.

Project Review and Approval

proj~c_t _review and approval mechacism comprising an

mter-d1v1s1onal review (IDR) and a project approval group
The inter-divisional review aims:
To improve quality of project proposals;

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8 I Project and Programme Management

. mon colleagues in a similar field
To promote knowledge-shan_ng a bst!ntive and technical knowledge a of
. b haring best practices, su d. . f . ' nct
expertise Y. s . tation suggestions, inclu mg m ormahon about
methodological or_ unp1emen rting organizations; and
cooperating agenaes or suppo . . . .
. r-divisional dialogue and collabora~on m proiect implementation.
To~~ mteal . can take place either with the concept proposals for
Inter-division reviews
sponsorship, at the stage before .
Th . al and approval process of the proiect approval group for projects
• an: : : work plans varies depending on the level and sources of funding.
· al p applies the following approval criteria:
The project approv grou .. . .
which the activities, results and objectives conform and contribute
Theex tent to
to the mandate and strategic and programmed ob"iec tives;
The extent to which the results identified are realistic, achievable and sustainable;
The extent to which gender and poverty perspectives are reflected in project
strategies and activities; .
The linkage between the justification or background and the intervention
being proposed;
The capacity of project and implementing partners to undertake the project;
The extent to which the project incorporates and builds on the previous
experience and lessons learnt of a project;
The level of risk in full project implementation; and
The extent to which the proposed intervention is sustainable and replicable.

Project Implementation
Projects that go through the appropriate steps in phases 1 and 2 will take less time
between approval and implementation, and significantly reduce the risks involved in
implementing a project. Budgeted resources are more likely to be used to implement
activities and achieve the intended results and objectives. Project managers monitor
expenditure, activities, output completion and workflows against their implementation
plans, output delivery and the progress made towards achieving the results and
objectives according to their anticipated milestones or benchmarks. Project sustainability
beyond the proje~ d~ation and reliability of the project strategy and methodology
should be borne m mind throughout the implementation period.

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 Introduction to Project Management I 9

Risk Assessment and Management

Projects often meet risks during implementation. Managing
risks by recognizing and preparing for arrange of possible
future outcomes is an integral part of project management.
Risks arise out of uncertainty, both from internal and external
sources.
These could include:
Adverse changes in economic factors;
Incorrect assumptions regarding project logic or
sustainability considerations;
Dissatisfaction on the part of target beneficiaries;
A breach of legal or contractual responsibility by the
implementing agencies;
Changes in the political and bureaucratic structure
of the partner governments;
Failure of the partner governments to meet their
obligations to the project;
Fiscal. fraud and deficiencies in financial controls Risk Assessment is
and reporting; the determination of
quantitative or qualitative
A threat to physical safety of the personnel or breach value of risk related to a
of security; and Mismanagement. concrete situation and a
During project implementation, the implementing agencies recognized threat.
and project managers should update and refine their risk
assessment and formulate a risk management ·plan. When
contingencies arise, risk management strategies should be
implemented.

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10 IProject and Programme Management

Monitoring
Monitoring is a continuous process that aims primarily to provide project managerne
and give the main stakeholders early indications of progress or lack of progress towar~t
achieving project objectives. A pro~s~ :malysis during project implementa:ion through
monitoring serves to validate the irutial assessment of relevance, effectiveness a
efficiency. or to fill in the gaps. It may a1so d etect ear1 . o f the proJect
. y signstin. •
· ,s succ nd
ess
or failure. Monitoring assists project managers and imp1emen g agencies to address
any impediments to progress and make adjustments so that results can be achieved
within the design ate timeframe. . .
Monitoring is an internal process that als~ looks at .project p~ocesses (both
programmatic and financial) and makes changes m assumptions and risks associated
with target groups, institutions or the surrounding environment.

l Project Evaluation

,
Evaluation is a time-bound exercise that attempts to assess the relevance, performance
and success of current or completed projects, systematically and objectively. Evaluation
determines to what extent the intervention has been successful in terms of its impact,
effectiveness, sustainability of results, and contribution to capacity development.
Evaluation, more than monitoring, asks fundamental questions on the how and why
of the overall progress and results of an intervention in order to improve performance
and generate lessons learned. When carried out after project completion, evaluation
can contribute to extracting lessons to be applied in other projects. Evaluations at the
midpoint of the project or programmed also provide timely learning that can suggest
mid-course adjustments.

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 Introduction to Project Management I 11

PROJECT PROCESS AND RESOURCES

Project management 1s . one of the critical
. . processes of any proi·ect · This is
. due to. 'tithe
fact that project management is the core process that connects all other proiect activi es
and processes together.
When it comes to the activities of project management, there ar~ pleno/· However,
these plenty of project management activities can be categorized into five main processes.

Project
Start-Up

Project
Project
Close-Out &
Initiation
Evaluation

Project
Planning
Validation

Figure 3: Project process.

Project Initiation

Project initiation is the starting point of any project. In this process, all the activities
related to winning a project takes place. Usually, the main activity of this phase is
the pre-sale.
During the pre-sale period, the service provider proves the eligibility and ability
of completing the project to the client and eventually wins the business.
During the requirements gathering activity, all the client requirements are gathered
and analyzed for implementation. In this activity, negotiations may take place to change
certain requirements or remove certain requirements altogether.
Usually, project initiation process ends with requirements sign-off.

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 12 IProject and Programme Management

Project Planning

Project planning is one ~f !e :::i:

• ro·ect management processes. If the pro·
Jere could be h~avy negative conseque~~ct
management teamhgets this£the pproiect Therefore, the proJect management tea111 ,,)lsl
during the next p ases o J • • t 1
have to pay detailed attention to this proce~s of the proJeC . . .
. th •ect plan is derived m order to address the proJect requirell1ent
In this process, e proJ th . t 1 . s
. ts scope budget and timelines. Once e proJeC p an 1s derived
su ch as, reqwremen , ,
then the project schedule is developed.
Depending on the budget and the schedule, the r~sources are ~en allocated to the
. ct This hase is the most important phase when 1t comes to proJect cost and effort
proJe . p •

Project Execution
After all paperwork is done, in this phase, th~ project managen:ient executes the project
in order to achieve project objectives. When 1t comes to execution, each member of the

,
team carries out their own assignments within the given deadline for each activity.
The detailed project schedule will be used for trackirlg the project progress. ·
During the project execution, there are many reporting activities to be done. The
senior management of the company will require daily or weekly status updates on
the project progress.
In addition to that, the client may also want to track the progress of the project.
During the project execution, it is a must to track the effort and cost of the project
in order to determine whether the project is progressing in the right direction or not.
In addition to reporting, there are multiple deliveries to be made during the project
execution. Usually, project deliveries are not one time deliveries made at the end of the
project. Instead, the deliveries are scattered throughout the project execution period
and delivered upon agreed timelines.

Control and Validation

During the project life cycle, the project activities should be thoroughly controlled and
valida~ed. The contr~lling can be mainly done by adhering to the initial protocols such
as proJect plan, quality assurance test plan and communication plan for the project.
. Sometimes, there can be instances that are not covered by such protocols. The
pro1ect manager should use adequate and necessary measurements in order to control
such situations .
. Validation is a suppo~~ activity t!13t runs from first day to the last day of a
!'roJect. Each ~d every activity and delivery should have its own validation criteria
m order to verify the successful outcome or the successful completion.

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Introduction to Project Management I 13

When it comes to project deliveries and requirements, a

separate team called 'quality assurance team' will assist the
project team for validation and verification functions.

Closeout and Evaluation

Once all the project requirements are achieved, it is time to
hand over the implemented system and closeout the project.
If the project deliveries are in par with the acceptance criteria
defined by the client, the project will be duly accepted and
paid by the customer.
Once the project closeout takes place, it is time to evaluate
the entire project. In this evaluation, the mistakes made by the
project team will be identified and will take necessary steps
to avoid them in the future projects.
During the project evaluation process, the service provider Evaluation is a systematic
determination of a
may notice that they have not gained the expected margins subject's merit, worth and
for the project and may have exceeded the timelines planned significance, using criteria
at the beginning. governed by a set of
standards.
The project is not a 100% success to the service provider.
Therefore, such instances should be studied carefully and
should take necessary actions to avoid in the future.

Project Resources
In project management terminology, resources are all the
items that are required to carry out the project activities.
They include people, equipment, facilities, time, money, or
anything else required for the completion of the project. All
these elements are interrelated and linked to the scope of
the project. Each of them must be estimated and managed
effectively if the project is to be a success.'

Key Project Resources

People

People are the most important resource for a project. Managing

the people means having the right people, with the right skills,
at the right time. It also means ensuring that the project staff

3G E-LEARNING
 14 IProject and Programme Management
h and motivating them to take ow
knows what needs to be done, when, an d ow, nership
in the project.

Equipment
The equipment that needs to be managed as part of a project depends on the nature
of the project. In public health, the equipment that is needed for the project is usually
limited to office material, computers, and sometimes test equipment. The project
management for equipment is much like for people resources. They have the right
equipment in the right place at the right time and that it has the supplies'it needs to
operate properly.

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 Introduction to Project Management I 15

Time
Time is a critical resource for any project. Project managers who succeed in meeting their
project schedule have a good chance of staying within their proje~t budget. ~o ~~able
time management, the different project activities need to be detailed and pnontized.

Budget
Each project comes with costs and a budget to match these costs. On the income side,
the main sources of funding are subsidies, grants, donations, and own contributions.
On the costs side, the types of expenditure vary according to the nature of the project,
but the most common cost factors are staff costs, equipment, travel and subsistence,
subcontracting and overheads. The financial management of a project requires that
all expenditure must be allocated to a detailed budget, which means that the budget
must be carefully planned.

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JG E· LEARN ING
 Introduction to Project Management I 17

· d f ced by the official

and techniques trusted by entrepreneurs everywhere, an re eren
project management body of knowledge.

Figure 4: Project cost.

Cost Estimating
Cost estimating is a well formulated prediction of the probable cost of a particular
project. In layman's terms, they are doing what they can in order to predict the total
cost of a project in order to help make sense of the scope of project and the frame of
time that they will be working within. In project management, the 'project triangle' is
a graphic which helps managers understand the relation between the projects' main
attributes. In deciding to focus on two of the features, the other will suffer. ~

More than a simple number, cost estimates are carefully determined for reference
when breaking down required funding, and to gauge the needs for a project. A cost
estimate should not be confused with a project budget. A project budget will include
the total of the cost estimate and will also include plans for saving and borrowing.
A cost estimate can be classified as one of two different types:
Conceptual and,
Detailed estimates.
Each one can be broadly defined in the following way:
Conceptual: Also known as parametric estimating, conceptual estimates include
· considering the historical data known for costs related to the project (for
example, wages, materials, etc.). Initially, these estimates are not thorough and
are typically declared before there is any in-depth research done or context
developed.
Detailed: A detailed cost estimate is the product of a process that breaks down
~e items of work in an orderly and logical way, determining the cost of each
item through the use of cost estimating tools and techniques.

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 Introduction to Project Management I 19

Maintaining cost performance to detect and understand cost variances from

the cost baseline.
Recording all appropriate changes accurately against the cost baseline.
Preventing incorrect, inappropriate, or unapproved changes from being included
in the reported cost or resource usage.
Informing appropriate stakeholders of approved changes.
Acting to bring expected cost overruns within acceptable limits.
Entrepreneurs are most comfortable when they have the freedom to think on
their feet and make decisions on the fly. The project management body of knowledge
supports its relevancy by giving founders the insight that they need to make calculated
decisions and plan for the unexpected.

Project Management
For project managers, the eight key project management disciplines are:

Stakeholder Management
Identifying project stakeholders and their requirements and managing their
communication needs and issues.

Figure 5: Project management.

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 Introduction to Project Management I 21

complaints by 50%" would be a good objective. The measure can be, a simple yes or
no answer, for example, "did we reduce the number of customer complaints by 50%?"
While there may be one major project objective, in pursuing it there may be interim
project objectives. In lots of instances, project teams are tasked with achieving a_series
of objectives in pursuit of the final objective. Teams can only proceed in a stau step
fashion to achieve the desired outcome. If they were to proceed in any othe~ manner, .
they may not be able to develop the skills or insights along the way that will enable
them to progress in a productive manner.
Project management has developed over the years, and involves various activities
before a project is completed. Objectives should be specific so they are measurable,
and although there may be one major project objective, there may be minor objectives
throughout the project.

Advantages of Project Management

The benefits of project management serve everyone involved in the Project management
(PM) process, the manager who oversees the project, the client who anxiously waits for
the completed project and the production teal¥ which gets the project up and running.
Some advantages of project management are given as:
Better Efficiency in Delivering Services: Project management provides a
"roadmap" that is easily followed and leads to project completion. Once they
know where to avoid the bumps and pots holes it stands to reason that they
are going to be working smarter and not harder and longer.
Improved I Increased I Enhanced Customer Satisfaction: Whenever one get
a project done on time and under budget, the client walks away happy. And
a happy client is one will see again. Smart project management provides the
tools that enable this client/manager relationship to continue.
Enhanced Effectiveness in Delivering Services: The same strategies that allowed
to successfully completing one project will serve in many times over.
Improved Growth and Development within Team: Positive results not only
command respect but more often than not inspire the team to continue to
look for ways to perform more efficiently.
Greater Standing and Competitive Edge: This is not only a good benefit of
project management within the workplace but outside of it as well; word
travels fast and there is nothing like superior performance to secure place in
the marketplace. ·
Opportunities to expand their Services: A by-product of greater standing.
Great performance leads to more opportunities to succeed.
Better Flexibility: Perhaps one of the greatest benefits of project management

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 Introduction to Project Management I 23

project Planning and Initiation

This phase includes important planning, organization and administration tasks. .
The phase begins when authorization is given by management to formally start
a new project. In order to start this phase, the necessary up-front business planning
and cost justification analysis that occurs in the business analysis phase of the product
development life cycle (PDLC) should have taken place and been approved by
management. The key deliverables from the business analysis phase - the beginning
project charter and product functional requirements should be available as input into
this phase.
The key to project success is the adequate planning of the project. The planning
tasks include the definition of project·scope, deliverables and constraints (what will
be done), the selection of management and technical methods that wili'be used (how
it will be done), the definition and organization of the project team (who will do
it), the estimation of effort and resources required (how much it will cost), and the
determination of project milestones and schedules (when it will be done). This project
planning foundation has to be laid to ensure the success of the project execution. The
planning information will be documented in the key deliverable of this phase the project
charter. The project charter is reviewed and approved by the designated participants
before the project team is formed and the project is initiated.
After approval of the project charter, the project team is formed and the project
is initiated.

'Project Execution and Control

This phase is primarily focused on carrying out the project plans documented in the
project charter. All of the work required to define, design, construct, test and deploy
the product is done during this PMLC phase. Successful project execution will require
the use of the management and control methods identified in this phase.
The primary purpose of project management during this phase is to monitor, evaluate
and communicate project progress and to define and implement corrective measures if
progress does not meet the expectations defined in the project charter. These include
expectations for product functionality, performance, quality, cost of development, and
development/deployment sche_d ules. Project issues, problems and change requests have
to be identified, evaluated and resolved. These have to be communicated to all project
team members (organizational technical and management, and contractors) involved in
evaluating and resolving them. Improvement measures may be applicable to individual
, project teams, working environments, processes and tools.
.. Organizational product development process methods employed during this phase
mclude those for project reporting, verification and validation, risk management,

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 Introduction to Project Management I 25

Industry Description and Outlook

Describe industry, including its current size and hi~toric growth rate as well as other
trends and characteristics (e.g., life cycle stage, pro1ected growth rate).

Information about Target Market

Narrow target market to a manageable size and many businesses make the mistake
of trying to appeal to too many target markets.
R~search includes the following information about market:

Distinguishing Characteristics
· What are the critical needs of potential customers?
Are those needs being .met?
What are the demographics of the group and where are they located?
Are there any seasonal or cyclical purchasing trends that may impact business?

Size of the Primary_Target Market

In addition to the size of market, what data can we include about the annual purchases
market makes in industry? What is the forecasted market growth for this group?

Pricing and Gross Margin Targets

Define pricing structure, gross margin levels, and any discount that we plan to use.
When one includes information about any of the market tests or research studies we
have completed, be sure to focus only on the results of these tests.

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In some circumstances it may be possible for the trade itself to take responsibility
for price collection. It has already been noted that some markets make available
information on daily transactions. Such information can either form the basis of a
management information system (MIS) operated by the market itself or used by a
governmental, semi-governmental or commercial MIS. It is also feasible for information
to be provided by market traders through, e.g., traders' associations or chambers of
commerce or agriculture. However, any MIS using such information from the private
sector would need to build in checks for accuracy, given the possibility that some traders
would wish to bias information to their perceived advantage. Nevertheless, the lack
of resources experienced by many governments suggests that, in future, alternatives
to the standard design of an MIS will need to be considered. One of these could be
a service which does not collect primary data but receives information from a variety
of sources for subsequent dissemination to users.

How often and when to Collect Market Information?

Information on grain markets probably needs to be collected less frequently than
information on perishables. While in some countries grain market prices can change
quite rapidly in, for example, situations where urban storage is lacking and roads are
blocked, the normal pattern appears to be for relatively small daily price fluctuations.
This is primarily because grains are harvested, processed and subsequently stored and
thus daily supplies to the market are not subject to the vagaries of climate, perishability,
etc. Prices of non-grain staples can, however, change more rapidly, particularly those
of fresh cassava which is highly perishable. .
Horticultural produce prices can change quickly. As quantities of particular varieties
handled at a market can be relatively small and as products are perishable, the arrival
of a new consignment can often have a significant impact on prices. Moreover, while
demand may change little on a day-to-day basis, production levels can fluctuate

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 Introduction to Project Management I 29

th sarne time every day. The information disseminated must be consistent to ~ermit
ernparison from day to day. This will not be the case if prices are collected m the
co ing on one day and in the afternoon of the following day. Thus a collection
· time,
·
rno rn ..
:r ce decided, must be adhered to and the MIS needs to arrange for close supervision
data collectors to ensure that this is done.

FACTORS AFFECTING MARKET INFORMATION

The environmental factors that are affecting marketing function can be classified into:
1) Internal environment,
2) External environment.

Internal Environment of Marketing

This refers to factors e·x isting within a marketing firm. They are also called as controllable
factors, because the company has control over these factors:
It can alter or modify factors as its personnel, physical facilities, organization and
function means, such as marketing mix, to suit the environment.

Political Technological

Economic -

Social Environmental

Figure 7: Internal environment of marketing.

There are many internal factors that influence the marketing function, they are:
Top Management: The organizational structure, board of director,
professionalization of management etc. Factors like the amount of support
the top management enjoys from different levels of employees, shareholders
and board of directors have important influence on the marketing decisions
and their implementation.

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Introduction to Project Management I 31

·e factors influence the company's non-capacity to produce and serve the market. _
0
The factors are:
:e
) Suppliers: The suppliers to a firm can also alter its competitive position and marketing
1e 1
s, pabilities. These are raw material suppliers, energy suppliers, suppliers of labor ~d
c:pital. "The relationship between suppliers and the firm epitomizes a power equation
~etween them. This equation is based on the industry condition and the extent to
.,ll
0
which each of them is dependent on the other."
The bargaining power of the supplier gets maximized in the following situations:
a
The seller firm is a monopoly or an oligopoly firm.
1e The supplier is not obliged to contend with other substitute products for sale
rs to the buyer group.
:e The buyer is not an important customer.
1e The suppliers' product is an important input to the buyer's business and
finished product.
d The supplier poses a real threat of forward integration.
le
2) Market Intermediaries: Every producer has to have a number of intermediaries for
promoting, selling and distributing the goods and service to ultimate consumers.
if These intermediaries may be individual or business firms. These intermediaries are
lt middleman (wholesalers, retailers, agent's etc.), distributing agency market service
g agencies and financial institutions.
t,
3) Customers: The customers may be classified as:

n
Ultimate customers: These customers may be individual and householders.
d Industrial customers: These customers are organizations which buy goods
g and services for producing other goods and services for the purpose of other
n earning profits or fulfilling other objectives.
Resellers: They are the intermediaries who purchase goods with a view to
resell them at a profit. They can be wholesalers, retailers, distributors, etc.
Government and other non-profit customers: These customers purchase goods
and services to those for whom they are produced, for their consumption in
;s most of the cases. ·
.t.
International customers: These customers are individual and organizations
of other countries who buy goods and services either for consumption or
for industrial use. Such buyers may be consumers, producers, resellers, and
governments.
Competitors: Competitors are those who sell the goods and services of the
same and similar description, in the same market. Apart from competition on
price, there are like product differentiation. Therefore, it is necessary to build
an efficient system of marketing. This will bring confidence and better results.

3G E· LEARN I NG
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Introduction to Project Management I 33

an alternative to the marketing concept. The social forces attempt to make

the marketing socially responsible. It means that the business firms should
take a lead in eliminating socially harmful products and produce only what is
beneficial to the society. These are numbers of pressure groups in the society
who impose restrictions on the marketing process.

DEMAND FORECASTING
D mand forecasting is the strategy of projecting the demand for goods and servi~es
eer a specific period of time. Doing so makes it much easier to adjust production
o;hedules so that the demand can be met efficiently, while still avoiding the possibility
~f producing quantities that exceed the demand. By matching production with demand,
businesses help to keep inventories low, which helps to cut expenses as well as lower
the taxes assessed on finished goods. The concept of demand forecasting can also be
applied to the purchase and sale of investment instruments, such as stocks or bonds.

De:m.and
Forecasting
Forecast

::',; <y ~ \
'
I
F ts

F
Roo
ast
· ts Int
J!IJ t
Ba tls
on De
I
!-

L.:::.. ~~--~ - - ~--~~~~

Figure 8: Demand forecasting.

Manufacturers make use of demand forecasting as a means of planning production
schedules. The process normally involves looking closely at historical data regarding
orders placed by regular customers, general industry trends, and any other relevant
factors. ~s a result of their research, manufacturers will attempt to determine how
~any uruts of each product in their line must be produced in the current time period
order to meet consumer demand in the upcoming time period. Once the projection
Is complete, it is much easier to place orders for raw materials, adjust the workforce

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Introduction to Project Management I 35

Delphi Method
'!he Delphi method conceals the identity of the individuals participating in th~ fore~~~
Everyone has the same weight. Procedurally, a moderate creat~s a questionnaire . e
·stributes it to participants. Their response are summed and given back to the entir
d1 f .
group along with a new set o questions.

Quantitative Approach of Demand Forecasting

1. Uses the range of mathematical and statistical techniques used to analyze

data.
Categories
Time Series Models: Demand forecasting typically does use strategies in the
time series method to forecast the demand of products and services. The
time series method can be split up into two different types of methods. These
include frequency domain methods and time domain methods. Even though
the frequency domain method is classified as a time series method, it is not
based on time, but on frequency of the occurrence happening or a product
being bought. Time domain will show quantities purchases with respect to time.
Casual Models: Other methods included in demand forecasting include casual
methods. These methods work under the assumption that underlying incidents
can affect sales numbers of products and services. Examples of casual methods
include holidays and seasons that boost sales of certain items.
For Example, a candy store may sell more candy canes during the holiday
season than other parts of the year. These casual methods also may use linear
relationships between sales and another component that remain consistent over
time. If the linear relationship remains consistent, then it is a safe prediction.
2. A time ordered sequence of observations taken at regular intervals over a
period of time
3. Trend
4. The forecast of demand for the next period is assumed to be equal to the
actual demand in the current period.
5. Uses an average of 'n' most recent periods of demand data to forecast the
next period demand.
Fo: example, it is often used in technical analysis of financial data, like stock
prices, returns or trading volumes. It is also used in economics to examine
gross domestic product, employment or other macroeconomic time series.
6. exponential smoothing older data is given progressively-less relative weight
(importance) whereas newer data is given progressively-greater weight. Next

JG E· LEAR.N ING
 Introduction to Project Management I 37

. on and last the election of the forecast model.

hortz .
The whole process begins with the determination of the forecast purpose. It IS
ood to know that different targets require different kind of information, som_e need
fo be more precise than others. Nobody wants to do unnecessary work while less
would be enough.
On the other side, too general information in a complex situation might not be
.dent. Therefore, it is important to be aware of the purpose of the forecast and
su ff1 . ts for 1't•
the information reqmremen
At this point it is good to know that usually the fidelity of the distinctive prod~ct
f ecast is lower than the one made for product family. Consequently, the extension
:;ere to take the forecast should be carefully considered.
The time horizon for the forecast needs to be clarified to the forecasters. The
forecasts can be made for a time period happening within the following three months
or then it can be conducted to the one after ten years; the forecasts made to the near
future are more precise while the ones made for further will be less accurate. When
choosing the most proper forecasting method, a company should keep in mind that
there are several different methods available. These differ in accuracy, complexity
and costs as well as in the personnel required providing the different steps of the
forecasting process. All of the methods are not suitable for all situations. The long term
forecasting is commonly very general in nature and investigates demand as wholeness.
Usually, it is conducted by the top managers. The targets of these forecasts are to
discover the long term trend and turning points in demand. The decisions affected by
these forecasts are related to the capacity planning and product life cycles. Medium-
run decision might have an effect to the issues that will happen during the next half
a year or even to the ones happening after three years. People who are creating the
forecast are usually marketing and operations managers. The information that is used
to make the decisions has to be accurate as it will have a straight impact on many
operations. The need for a carefully conducted demand forecast is crucial. A short
run forecast is the most detailed one. It needs to be accurate and precise. Actual sales
order can be the source of data to this forecast. Production is planned according to
~s information and the procurement acts by following it. The people responsible for
it are the low level managers. As a summary, when considering how a short-medium
t:rm forecast should be conducted, a company should concentrate on keeping it as
simple, affordable and easy to implement as possible. .
After the baseline has been settled, the appropriate forecasting model is chosen.
Characteristics of the target of the forecast settle limits that should be taken into
acc?unt when choosing the method. In other words, a demand might be seasonal
or It might be easily affected by a variable like a new technological invention. Both
of these require their own way of forecasting. The forecasters solely investigate the
paS t data. Consequently, it is important to know if it is likely for the same trend to
continue in the future or are there lots of random fluctuations that cannot be predicted.

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3G E-LE /\RN I NG
 Introduction to Project Management I 39

A time series model is one of the cheapest and fastest ways to conduct a demand
forecast. Moreover, it is easy to use. Yet, the simplicity of the method has its downside:
s the model only concentrates on investigating the numbers it neglects the reasons
~ehind the changes. In other words, it is na'ive. Consequently, if a corporation decides
to use this model it should constantly follow the progress of the data in order to noti~e
the deviations and take actions according to them. The basic idea behind the model is
that the past demand patterns will continue similarly and therefore it can be projected
to the future. In this model, time is always an independent variable. Dependent
variable changes according to the issue that is being forecasted. Then, there are four
basic elements that a forecaster interprets from past periods. Firstly, trends appoint
the upwards and downward of the general demand curve. Often, it is a linear curve
or close to it. Secondly, seasonality is a data pattern, fluctuation in the curves, which
occur every year at the same time. Additionally, other repetitions of patterns that are
taken a place in a shorten time period are called similarly. Thirdly, cyclical changes
are patterns appearing in several years,
For example: due to economic cycle, finally, random variation is an unexpected
change in the demand that cannot be foreseen. It appears irregularly and the only
thing that can be done is to measure the error in order to be aware of it in the future.
Moving averages is a simple and widely used method. It is suitable especially
for situations where random fluctuation appears. The model computes the average of
the decided number of most recent periods of data to solve the upcoming one. The
correspondence depends on the number of periods chosen; the more periods there are
included in the research the slower is the response.
If sudden changes need to be seen quickly, the number of time periods should
be shown as:
MA: I demand in previousn periods
n

If a more sophisticated method of forecasting is needed, then a forecaster should

consider an exponential smoothing model. It is often used when there are no bigger
changes in the demand. It adds the previous forecast to the most recent error. Unlike
the moving average, exponential smoothing emphasizes the most recent data. Forecast
for .the next period (F t+t) is calculated by counting the difference between the last
per10~s actual demand (A1) and forecast (FJ This error can be either positive or
negative. Then, the error is multiplied by the chosen smoothing constant (a), which is
a fraction between O and 1, and in the end added to the previous forecast. The bigger
the fraction is the greater the change between the forecasts will be. A lower fraction
offers stability to the forecast.

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 Introduction to Project Management I 41

Frequently, a product line includes different products that are offered to the public
. rying price points. This way, a manufacturer or company can ensure that_ all
at ':ucts within a line will be purchased by all kinds of people. Product line extension
prfoers to any additional products that may be added to a current product line.
re

: :~uct Marketing
• Marcon
Inside-out - 4 - • Manufacturing/
Product Line shipping
View • Support and training
• Sales

• Sales drivers
Product Lin • Functionality
Customer • Value Proposition
Centric • Positioning
Criteria • Brand Values
•ROI
Outside-in
•TCO
Product Line • End user input
View • Reseller input
~ - - ~ - - • Partner input
• Press
• Analysis
• Competitors

Figure 11: Product line analysis.

Most of the time, product extensions are introduced to the public in order to
ward off competitors. By creating products that match other, competitive products,
manufacturers are able to keep customers interested in a product that they are familiar
with. Since most people purchase brands that they know, these same consumers are
more likely to purchase a new product from a brand that they are comfortable with
rather than purchase a product from an unknown brand.
Marketers create target markets based upon age groups, geographical locations,
and ethnicity. Target markets refer to a group, or groups, of people that are likely to
purchase one product. Thus, even though products might be related, some products
may look different, smell different, and even appear unrelated in order to appeal to
different types of people.
For example, many air freshener manufacturers offer a variety of products ranging
from flameless candles, targeted to parents with young children; to simple aerosol air
fresheners, targeted to consumers who do not want to spend a lot of money on an air
freshener. While these products are related, they are vastly different.
Clearly, a great deal of strategy goes into marketing various products. Marketers
. must be aware of competition at all times in order to advise manufacturers on new
products that should be added to an existing product line. In addition, a marketing
agency should be aware of those products that sell, and those that remain unpopular.
Through the collection of statistical data, marketers can effectively determine what
products should be kept within a product line, and what products should be phased

1g'
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 Introduction to Proi·ect Management I 43
-
I

. 1to start with some basic products

ct1ca . and bu'ld k
1 mar et sha A
Jll re pra inaY allow the company to diversify into othe . d . re. company's
0.1,,11.ologY duct mix. r m ustnes and build the
1eo"· f the pro
·dth .
O ·
.

iength
·x length pertains to the number of total products or •t .
:t duct rrn . M A . 1 ems m a company's
pro t inix, "Marketing anagement: nalysis, Planning, Implementation and C t 1,,
rodUC on ro.
P le ABC Company may have two product lines, and five brands 'thin ch
,, forexarnt Pli~e. Thus, ABC's product mix length would be 10. Companie;'1th I hea
roduc . . ti' k . a ave
p . le product lines w111 some mes eep track of their average length per product
e 1
:.tithe average length of an ABC Company's product line is five.

Depth
De th of a product mix pertains to the total number of variations for each product.
Va~ations can include size, flavor and any other distinguishing characteristic.
For example, if a company sells three sizes and two flavors of toothpaste, that particular
brand of toothpaste has a depth of six. Just like length, companies sometimes report
the average depth of their product lines; or the depth of a specific product line.

Consistency
Product mix consistency pertains to how closely related product lines are to one
another in terms of use, production and distribution. A company's product mix may
be consistent in distribution but vastly different in use.
For example, a small company may sell its health bars and health magazine in retail
stores. However, one product is edible and the other is not. The production consistency
of these products would vary as well.

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