Project - Management - Unit I

Project Management Unit I
PROJECT MANAGEMENT
It is a set of various activities that are planned and executed to create a unique product within
expected time and budget.
A project can be defined as a duty or task which has a fixed deadline to create a unique product
or service. For example: mending the National Highways, flyover construction, organising
common wealth games etc.
Acc. to British standards a project is a unique set of coordinated activities with definite starting
and finishing points, undertaken by an individual organization to meet specific objectivities
within the defined schedule, cost and performance parameters.
1.1 Characteristic of project:

1. Uniqueness: Every project possesses a group of activities which are unique in nature
to organization. Each project is a non-routine activity e.g. designing a hybrid
automobile or landing mechanical rovers on Mars are unique projects. On the other
hand construction projects require customizations which make them unique.
2. Deadline: A project has a specific starting and completion date, the deadlines of the
project are either decided by the individual who handles the project or by the
project clients. Individuals move from one project to the next once one project is
completed.
3. Life Cycle: A project has a life cycle. The life cycle consists of five stages i.e.
conception stage, definition stage, planning & organising stage, implementation
stage and commissioning stage.
4. Objectives: every project aims at achieving a specific objective whether it is
constructing a 12 story apartment by Jan 1, or releasing version 2.0 of specific
software.
The objectives of the project must be SMART
S : Specific : expressed singularly.

M : Measurable : ideally in quantitative terms.
A : Acceptable to stakeholders.
R : Realistic in terms of achievements.
T : Time bound.
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5. The activities of a project have to be performed in sequence to deliver the product

to the customer. For example, it is necessary to plan the activities before they are
implemented.
6. The various activities of a project are inter-related because one activity is the input
for another activity. For example in the project of building a shopping mall, the
activity of creating the plan for constructing the mall work as an input for the activity
of constructing the mall.
7. Team work: Project requires the combined efforts of variety of specialists –
engineers, financial analyst, marketing professionals and quality control specialists.
They all work in a team under the guidance of project manager.
8. Each project is bind with specific time, cost and performance requirements. Projects
are evaluated according to accomplishment, cost and time spent. These triple
constraints impose a higher degree of accountability in projects than in any other
jobs.
9. Risk and uncertainty : Risk and uncertainty go hand in hand with project. A risk-free,
it only means that the element is not apparently visible on the surface and it will be
hidden underneath.
10. Customer specific nature : A project is always customer specific. It is the customer
who decides upon the product to be produced or services to be offered and hence it
is the responsibility of any organization to go for projects/services that are suited to
customer needs.
Program: A group of related projects designed to accomplish a common goal over an

extended period of time. Each project within a program has a project manager.
e.g. program for curing cancer
1.2 Classification of Project:
1. Replacement Project – these projects are undertaken for the replacement of existing
fixed assets. They may become necessary because of expiry of normal life or because of
change in technology.
2. Modernisation and Rationalisation projects – these projects are undertaken for

improving productivity, increasing efficiency, reducing costs and ensuring greater
reliability.
3. Expansion projects – these projects are undertaken for increasing capacity.
4. Diversification projects – it aimed at producing new products and services or entering

into new geographical areas.
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4. New product projects – these projects are undertaken to manufacture new products.
5. Research and Development projects are meant to develop new products and
processes which would sharpen the technological edge of the firm.
6. Obligatory and welfare projects: some projects are obligatory and done for employee
welfare.
7. Mandatory projects: these projects are undertaken to comply with statutory

requirements e.g. pollution control equipment, fire fighting equipment, a medical
dispensary etc.
8. Miscellaneous projects: it includes items interior decoration, recreational facilities

and landscaped gardens.
1.3 Project Management:
Project Management is the application of knowledge, skills, tools and techniques to project
activities to meet project requirements.
It involves the overall planning and co-ordination of a project from beginning the
completion. It is aimed at meeting the client’s requirements and ensuring completion on
time within cost and in accordance with the demanded quality standards.
Project Management in nothing but planning, directing, and controlling of company resources
for a relatively short term project, which has been established for competition of specific goals.
Project management includes developing and implementing a plan for the project while
considering the available resources such as manpower, material and cost in the
organization.
Inputs
Output
 Goals
Project
 Team Deliverables
 Money
 Time
 Equipment
Project Management involves the following activities.
 Planning and analyzing the objectives of the project.

 Measuring and enrolling the risk involved in the project.
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 Estimating the organizational resources required in the project.

 Assigning the tasks to the employees related to project.
 Directing and motivating the employees to improve their performance.
 Organizing the project activities.
 Formulating the project
 Forecasting future trend in the project.
 Competing the project on time
 Assuring the quality of the project
Project Management is best described in terms of five activities, which are:
- Initiating – Planning – Executing – Controlling – Closing

Process of project Management (Project Management Process)
Initiating
Planning
Monitoring Executing
&
Controlling
Closing
Project Management Objectives

There are three primary objectives of a project to be met, which include:
 Performance: This is to satisfy the specified standards of performance / function, reliability and
safety.
 Containment of expenditure within budgets to ensure smooth running.
 Time scale – Timely implementation of project the last two objectives are linked to the
resources which are limited. A project has many other objectives e.g.
Quality of product, fastest completion time, Lowest capital investment, Use of local suppliers,
Safety during operation, Use of local sub contractors
Objectives of Project in various phases –

(i) Conception phase –
 Project and programme goals are identified and analysed.

 Project schedule and cost estimates are determined.
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 Different project ideas are developed and evaluated through feasibility study.
(ii) Planning phase – All detailed drawings, specifications bills of materials, schedules, plans, cost
estimates & other documents are prepared and checked. Appropriate machinery and
manpower are procured.
(iii) Implementation phase / Execution phase - In this phase project is compiled, debugged and
accepted. In this phase project objectives are performance, time and cost.
(iv) Termination phase – In this phase objective is smooth handing over of the plant to the client.
The Project Manager: The project mgr performs the same functions as other managers – they plan,
schedule, motivate and control but they manage temporary, non repetitive activities to complete a fixed
life project. They must decide what and how things should be done instead of simply managing set
processes. Unlike functional manager who takes over existing operations, project manager create a
project team and organisation where none existed before. They must meet the challenges of each phase
of the project life cycle. Project manager must work with a diverse group of characters to complete the
project. Project manager provide direction, coordination and integration to the project team which is
made up of part time participants. They often work with outsiders – vendors, suppliers and
subcontractors etc. Project manager is ultimately responsible for performance. They must ensure that
appropriate tradeoffs are made between the time, cost and performance requirements of the project.
Importance of Project Management
Competing in a global market influenced by rapid change, innovation, and time to market means
organizations manage more and more projects. Some means for coordinating and managing
projects in this changing environment is needed. Centralization of project management processes
and practices has been the practical outcome. For example, Dell, IBM, Hewlett-Packard, and Intel all
have over 1,000 projects being implemented concurrently every day of the year across borders and
differing cultures.
Compression of the Product Life Cycle
One of the most significant driving forces behind the demand for project management is the
shortening of the product life cycle. For example, today in high-tech industries the product life cycle
is averaging 1 to 3 years. Only 30 years ago, life cycles of 10 to 15 years were not uncommon. Time
to market for new products with short life cycles has become increasingly important. A common rule
of thumb in the world of high-tech product development is that a six-month project delay can result in
a 33 percent loss in product revenue share. Speed, therefore, becomes a competitive advantage;
more and more organizations are relying on cross-functional project teams to get new products and
services to the market as quickly as possible.
Knowledge Explosion
The growth in new knowledge has increased the complexity of projects because projects encompass
the latest advances. For example, building a road 30 years ago was a somewhat simple process.
Today, each area has increased in complexity, including materials, specifications, codes, aesthetics,
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equipment, and required specialists. Similarly, in today’s digital, electronic age it is becoming hard to
find a new product that does not contain at least one microchip. Product complexity has increased
the need to integrate divergent technologies. Project management has emerged as an important
discipline for achieving this task.
Triple Bottom Line (planet, people, profit)
The threat of global warming has brought sustainable business practices to the forefront. Businesses
can no longer simply focus on maximizing profit to the detriment of the environment and society.
Efforts to reduce carbon imprint and utilize renewable resources are realized through effective
project management. The impact of this movement towards sustainability can be seen in changes in
the objectives and techniques used to complete projects.
Corporate Downsizing
The last decade has seen a dramatic restructuring of organizational life. Downsizing (or rightsizing if
you are still employed) and sticking to core competencies have become necessary for survival for
many firms. Middle management is a mere skeleton of the past. In today’s flatter and leaner
organizations, where change is a constant, project management is replacing middle management as
a way of ensuring that things get done. Corporate downsizing has also led to a change in the way
organizations approach projects. Companies outsource significant segments of project work, and
project managers have to manage not only their own people but also their counterparts in different
organizations.
Increased Customer Focus

Increased competition has placed a premium on customer satisfaction. Customers no longer simply
settle for generic products and services. They want customized products and services that cater to
their specific needs. This mandate requires a much closer working relationship between the provider
and the receiver. Account executives and sales representatives are assuming more of a project
manager’s role as they work with their organization to satisfy the unique needs and requests of
clients. Increased customer attention has also prompted the development of customized products
and services. For example, 10 years ago buying a set of golf clubs was a relatively simple process:
You picked out a set based on price and feel. Today, there are golf clubs for tall players and short
players, clubs for players who tend to slice the ball and clubs for those who hook the ball, high-tech
clubs with the latest metallurgic discovery guaranteed to add distance, and so forth. Project
management is critical both to development of customized products and services and to sustaining
lucrative relationships with customers.
Determinants of Project Success
Project success must take into consideration the elements that define the very nature of the project:
that is, time (schedule adherence), budget, functionality/quality and customer satisfaction. The
Managers normally applied three criteria of project success.
Time: projects are constrained by a specified time frame during which they must be completed. Thus the
first constraint that governs the project management involves the basic requirements: the project
should be completed on or before its established schedule.
Cost: A second key constraint for all projects is a limited budget. Project must meet budgeted
allowances in order to use resources as efficiently as possible.
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Performance: All projects are developed in order to adhere to some initially determined technical
specifications. Before starting any project, it is known well in advance what the project is supposed to do
or how the final product is supposed to operate. Measuring performance means determining the
finished product operates according to specifications.
This is called triple constraints by which project performance is routinely assessed. This criterion make
the perfect sense as it focused internally on efficiency and productivity measures. More recently
however, the traditional triple constraint has come under increasing criticism as a measure of project
success. The final product, for example could be a failure, but if it has been delivered in time and on
budget and satisfies its original specifications, the project itself could still be declared a success. Adding
the external criteria of client acceptance corrects such obvious shortcomings in the assessment process.
First it refocuses corporate attention outside the organization, towards the customers who will probably
be dissatisfied with a failed final product. It recognizes that the final arbiter of project success is not the
firm’s accountants, but rather the marketplace. A project is successful only to the extent that it benefits
the client who commissioned it. Finally, the criterion of client acceptance requires project managers
and teams to create an atmosphere of openness and communication throughout the development of
the project. Therefore today a fourth criterion has been added to these three:
Client acceptance: The principle of client acceptance argues that projects are developed with customers,
or clients, in mind and their purpose is to satisfy customers’ needs. Once the project is complete, we
must ask whether the project is acceptable to the customers for whom it was intended.
An additional approach to project assessment argues that another factor must be taken into
consideration: the promise that the delivered project can generate future opportunities whether
commercial or technical for the organization. In other words, it is not enough to assess a project
according to its immediate success. We must also evaluate it in terms of its commercial success as well
as its potential for generating new business and new opportunities. As per the scheme, the four relevant
dimensions of success:
Project efficiency: Meeting budget and schedule expectations.
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Impact on the customer: meeting technical specifications, addressing customer needs and creating a
project that satisfies the client’s needs.
Business Success: Determining whether the project achieved significant commercial success.
Future potential: Determining whether the project opened new markets or new product lines or helped
to develop new technology
A final model has been offered by Atkinson, according to which, all groups that are affected by a project
(stakeholders) should have hand in assessing its success. The context and type of a project may also be
relevant in specifying the criteria that will clearly define its success or failure.
Roles and Responsibilities of Project Manager:
Acquiring project resources: it refers to all personnel and material resources necessary to successfully
accomplish project objectives. Many projects are underfunded in the concept stage. Many projects face
extremely tight budgets and inadequate human resources. There are some options open to project
managers as they seek to supplement their project’s resource support. If the resource problem is a
personnel issue, project manager may seek to find alternative avenues to solve the difficulty. For
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example a project manager is assigned a task to upgrade to an existing software package a company
uses to control material flow and warehousing in manufacturing. If trained programmer are unavailable
to work on the upgrade, the project manager may hire temporary contract employees. People with
specialized skills such as programming are often acquired on a short term basis to fill the gaps in the
unavailability of in-house personnel to do the same assignment.
Functions of Project Manager
The functions are as follows:
1. Developing a unique product or process and manage change.
2. Identification of the need for project.
3. Finding different alternatives of the project.
4. Developing a plan of action.
5. Training operators.
6. Establishment of quality assurance cell to control quality.
7. Incorporation of changes as and when needed while implementing project.
8. Selection of suitable equipment.
9. Finding suitable financial resources.
10. Assessment of alternatives and obtaining approval to proceed.
11. Measuring performance of the project.
12. Transfer of material, funds and settling all accounts after completion of project.
13. Monitoring progress and reporting to higher authorities.
14. Closing all records, submission of final report and transfer of responsibility after completion of
specified project
Generation and Screening of Project Ideas ( From Prasanna Chandra pg 3.2 to 3.13)
Identification of a new project is a complex problem. Project selection process starts with the generation
of project ideas. In order to select the most promising project, the entrepreneur needs to generate a
few ideas about the possible project one can 6 undertake. The project ideas as a process of
identification of a project, begins with an analytical survey of the economy (also known as pre-
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investment surveys). The surveys and studies will give us ideas. The process of project selection consists
of following stages :
 Idea generation
 Environment appraisal
 Corporate appraisal
 Scouting for project ideas
 Preliminary screening
 Project rating index
 Sources of positive Net Present Value
 Entrepreneur qualities.
Idea Generation:- Project selection process starts with the generation of a project idea. Ideas are
based on technological breakthroughs and most of the project ideas are variants of present products or
services. To stimulate the flow of ideas, the following are helpful:
SWOT Analysis :- SWOT is an acronym for strengths, weaknesses, opportunities and threats. SWOT
analysis represents conscious, deliberate and systematic effort by an organisation to identify
opportunities that can be profitably exploited by it. Periodic SWOT analysis facilitates the generation of
ideas.
Operational objectives of a firm may be one or more of the following.
• Cost reduction.
• Productivity improvement.
• Increase in capacity utilisation.
• Improvement in contribution margin.
Fostering a conducive climate :- To tap the creativity of people and to harness their entrepreneurial
skills, a conducive organisation climate has to be fostered. Two conspicuous examples of organisation
which have been exceptionally successful in tapping the creativity of employees are the Bell Telephone
Laboratory and the 3M Corporation. While the former has succeeded in harnessing creativity by
providing an unconstrained environment, the latter has effectively nurtured the entrepreneurial skills of
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its employees as sources of idea generation. The project ideas can be generated from various internal
and external sources.
These are :-
• Knowledge of market, products, and services.
• Knowledge of potential customer choice.
• Emerging trends in demand for particular product.
• Scope for producing substitute product.
• Market survey & research.
• Going through Professional magazines.
• Making visits to trade and exhibitions.
• Government guidelines & policy.
• Ideas given by the experienced person.
• Ideas by own experience.
• SWOT analysis.
Environment appraisal :- An entrepreneur or a firm systematically appraise the environment and

assess its competitive abilities. For the purposes of monitoring, the business environment may be
divided into six broad sectors as shown in fig. no. 1.3. The key elements of the environment are as follow
Economic Sector
• State of the economy
• Overall rate of growth
• Cyclical fluctuations
• Inflation rate
• Growth rate of primary, secondary and territory sector
• Growth rate of world economy
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• Trade surplus and deficits
• Balance of Payment
Government Sector
• Industrial policy
• Government programmes and projects
• Tax structure
• EXIM policy
• Financing norms
• Subsidies incentives and concessions
• Monetary policy
Technological Sector
• Emergence of new technologies
• Access to technical know-how, foreign as well as indigenous
Socio-demographic Sector
• Population trends
• Age shifts in population
• Income distribution
• Educational profile
• Employment of women
• Attitudes toward consumption and investment
Competition Sector
• Number of firms in the industry and the market share of the top few
• Degree of homogeneity and differentiation among the products
• Entry barrier
• Comparison with substitutes in term of quality and price
• Marketing polices and practices
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Supplier Sector
• Availability and cost of raw material
• Availability and cost of energy
• Availability and cost of capital
Corporate Appraisal:- A realistic appraisal of corporate strengths and weaknesses is essential for
identifying investment opportunities which can be profitably exploited. The broad areas of corporate
appraisal and the important aspects to be considered under them are as follow :
Marketing and Distribution
• Market Image
• Product Mix
• Distribution Channels
• Customer loyalty
• Marketing & distribution costs
Production and Operations
• Condition and capacity of plant and machinery
• Availability of raw material and power
• Degree of vertical integration
• Locational advantage
• Cost structure
Research and Development
• Research capabilities of the firm
• Track record of new product developments
• Laboratories and testing facilities
• Coordination between research and operations
Corporate Resources and Personnel
• Corporate image
• Dynamism of top management
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• Relation with government and regulatory agencies
• State of industry relations
Finance and Accounting
• Financial leverage and borrowing capacity
• Cost of capital
• Tax structure
• Relation with share holders and creditors
• Accounting & control system
• Cash flow and liquidity
SCOUTING AND SCREENING OF PROJECT IDEAS

An entrepreneur has an infinitely wide choice with respect to his project in different dimensions
such as product/service, market, technology, equipment, scale of production, time phasing and
location. Hence, the identification of investment opportunities (projects) calls for understanding
the environment in which one operates, sensitivity to emerging investments possibilities,
imaginative analysis of a variety of factors and also chance luck.
PROJECT IDEAS
It is the first and foremost task of an entrepreneur to find out suitable business which is feasible
and promising and which merit further examination and appraisal. Therefore, he has to first
search for a sound of workable business idea and give a practical shape to his idea. While doing
so, the entrepreneur has to tackle the various problems from time to time to achiever the ultimate
success. Since the good project ideas are elusive, a variety of sources should be trapped to
stimulate the generation of project ideas.
SOURCES OF PROJECT IDEAS
Project ideas could originate from the various sources viz.,

· Success story of a friend/relatives
· Experience of others in manufacture/scale of product
· Examining the inputs and outputs of industries
· Plan outlays and government guidelines
· Suggestions of financial institutions and developmental agencies
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· Investigation of local materials and resources

· Economic and social trend of the economy
· New technological developments
· Project profiles and industrial potential surveys
· Visits to trade fairs
· Unfulfilled psychological needs
· Possibility of reviving sick units
The various sources from which the project idea can be generated are explained
below:
1. Analysis the performance of existing industries
A study of existing industries in terms of their profitability and capacity utilization is helpful.
The analysis of profitability and break even level of various industries indicates promising
investment opportunities. Opportunities which are profitable and relatively risk free. An
examination of capacity utilization of various industries provides information about the potential
for further investment. Such a study becomes more useful if it is regionwise, particularly for
products which have high transportation costs.
2. Examine the inputs and outputs of industries
An analysis of the inputs required for various industries may throw up project ideas.
Opportunities exist when (I) materials purchased parts, or supplies are presently being procured
from different sources with attendant time lag and transportation costs and (ii) several firms
produce internally some components/parts which can be supplied at a lower cost by a single
manufactures who can enjoy economies of scale.
A study of the output structure of existing industries may reveal opportunities for further
processing of output or even processing of waste
3. Examine imports and exports
An analysis of import statistics for a period of five to seven years is helpful in understanding the
trend of imports of various goods and the potential for import substitution. Indigenous
manufacture of goods currently imported is advantages for several reasons:
It improves the balances of payments situations
It provides market for supporting industries and services
It generates employment
Likewise, an examination of export statistics is useful in learning about the exports possibilities
of various products.
4. Plan outlays and government guidelines
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The governments play a very important role in our economy. Its proposed outlay in different
sector provides useful pointers toward investment opportunities. They indicate the potential
demand for goods and service required by different sectors.
5. Suggestions of financial institutions and developmental agencies:
In a bid to promote development of industries in their respective states, state financial
corporations state industrial development corporations and other developmental bodies conduct
studies, prepare feasibility reports and offer suggestions to potential entrepreneur. The
suggestions of these bodies are helpful in identifying promising projects.
6. Investigate local materials and resources
A search for project ideas may begin with an investigation into local resources and skills, various
ways of adding value to locally available materials may be examined. Similarly, the skills of
local artisans may suggest products they may be profitably produced and marketed.
7. Analysing economic and social trends
A study of economic and social trends is helpful in projecting demand for various goods and
services. Changing economic conditions provide new business opportunities. A great awareness
of the value of time is dawning on the public. Hence the demand for time saving products like
prepared food items, ovens and powered vehicles has been increasing. Another change that we
are witnessing is that the desire for leisure and recreational activities has been increasing. This
has caused and growth in the market for recreational products and services.
8. Explore the possibility of reviving sick units
Industrial sickness is rampant in the country. There are over 20,000 units which have been
characterized as sick. These units are either closed or face the prospect of closure. A significant
proportion of sick units, however, can be nursed back to health by sound management, infusion
of further capital and provision of complementary inputs. Hence there is a fairly food scope for
investment in this area. Such investments typically have a shorter gestation period because one
does not have to begin from scratch. Indeed, in many cases marginal efforts would suffice to
revive such units.
9. Identify unfulfilled psychological needs
For well established, multi brand product groups like bathing soaps, detergents, cosmetics and
tooth pastes, the question to be asked is not whether there is an opportunity to manufacture
something to satisfy an actual physical need but whether there are certain psychological needs of
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consumers which are presently unfulfilled. To find whether such an opportunity exists, the
technique of spectrum analysis may be followed. This analysis is done somewhat as follows.
(i) Important factors influencing brand choice are identified (ii) respect of the factors identified
in step (iii) gaps which exist in relation to consumer psychological needs are identified.
10. Visit to trade fairs

Attending the National and International trade fairs provides an excellent opportunity to know
about new products and new development.
The above said sources of project ideas may be generated by the Government agencies, credit
institutions, non-governmental organizations and also by public.
The Preliminary Screening

In the second stage project ideas generated above are screened in a preliminary exercise to weed
out the bad or unviable ides. All project ideas would not pass the screening test. Some project
ideas may be imaginary to warrant any serious consideration.
After gathering the project ides from the various sources as aforesaid, it is essential to eliminate
ideas which prima facie are not promising. This process of eliminating the irrelevant and
unviable ideas is called screening of project ideas. It can be done with the help of testing the
following conditions of the propositions.
a.) Compatibility with the promoter - The project idea must be compatible with interest
personality and resources of the entrepreneur. It should be accessible to him and also it offers
him the prospects of rapid growth and high return on invested capital.
b.) Consistency with governmental priorities - The project idea must satisfy or go along with the
governmental priorities, National goals and governmental regulatory framework.
e.g. No Contrary environmental effects to governmental regulations
Easily accommodation foreign exchange requirements
No difficulty in obtaining license.
c.) Availability of inputs - The resources and inputs required for the project must be reasonably
assured. This feature of the project can be assessed with the help of determining the following
points relating to a project.
· Capital requirement within manageable limit
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· Obtaining technical know-how

· Availability of raw materials at a reasonable cost
· Obtaining power supply
d.) Adequacy of market - Identifying the adequacy of market is the key factor to select, the
viable project idea. To judge the adequacy of market the following factors have to be examined.
· Total present domestic market
· Competitors and their market shares
· Export market
· Quality price profile of the product.
· Sale and distribution system
· Projected increase in consumption
· Barriers to the entry of new units
· Economic social and demographic trends favourable to increased consumption
· Patent protection
e.) Reasonableness of cost - Reasonableness of cost is another factor to screen the project ideas.
The cost structure of the proposed project must enable it to realize and acceptable profit with a
competitive price. The following cost factors must be carefully considered to design a viable cost
structure.
Cost of material inputs, labour costs, factory overheads.
General administration expenses, selling and distribution costs. Service costs, economics of scale
etc.
f.) Acceptability of risk level - Acceptability of risk level is another factor which helps to screen
the project ideas and hence determine the desirability of a project.
Types of projects Much of what the project will comprise and consequently its management will
depend on the category it belongs to. The location, type, technology, size, scope and speed are
normally the factors which determine the effort needed in executing a project. Though the
characteristics of all projects are the same, they cannot be treated alike. Recognition of this
distinction is important for management. Classification of project helps in graphically expressing
and highlighting the essential features of the project.
Projects are often categorized in terms of their speed of implementation as follows:
NORMAL PROJECTS
♦ Adequate time is allowed for implementation.
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♦ All the phases in a project are allowed to take their normal time.
♦ Minimum requirement of capital.
♦ No sacrifice in terms of quality.
CRASH PROJECTS Requires additional costs to gain time. Maximum overlapping of phases is
encouraged. DISASTER PROJECTS Anything needed to gain time is allowed in these projects.
Around the clock work is done at the construction site. Capital cost will go will go up very high.
Project time will get drastically reduced. Besides that, projects in general are classified on
several basis as give in the following illustrative list.
CLASSIFICATION OF PROJECT The project can be classified on several basis. Major classification of the
projects are given below:
1. On the basis of Magnitude of the resources to be invested:
Giant projects affecting total economy
Big projects affecting at one sector of the economy
Medium size projects
Small size projects (depending on size, investment & impact)
3. On the basis of Sector:
Industrial project
Agricultural project
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Educational project
Health project
Social project
4. On the basis of objective:
Social objective project
Economic objective project
6. On the basis of nature of benefits:
Quantifiable project
Non-quantifiable project
7. On the basis of government priorities:
Project without specific priorities
Project with specific priorities
8. On the basis of dependency
Independent project
Dependent project
9. On the basis of ownership
Public sector project
Private sector project
Joint sector project
10. On the basis of location
Project with determined location
Project with future impact
11 On the basis of social time value of the project 1.
Project with present impact
Project with future impact
13. On the basis of risk involved in the project
High risks project
Normal risks project
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Low risks project
14. On the basis of economic life of the project
Long term project
Medium term project
Short tern project
15. On the basis of technology involved in the project
High sophisticated technology project
Advance technology project
Foreign technology project
Indigenous technology project
16. On the basis of resources required by the projects
Project with domestic resources
Project with foreign resources
17. On the basis of employment opportunities available in the project
Capital intensive project
Labour intensive project
19. On the basis of sources of finance
Project with domestic financing
Project with foreign financing
Project with mixed financing
Project Team
 Characteristics of high performing teams

 The team shares a sense of common purpose, and each member is willing to work
toward achieving project objectives.
 The team identifies individual talents and expertise and uses them, depending on
the project’s needs at any given time.
 Roles are balanced and shared to facilitate both the accomplishment of tasks and
feelings of group cohesion and morale.
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 The team exerts energy toward problem solving rather than allowing itself to be
drained by interpersonal issues.
 Difference in opinions are encouraged and freely expressed.
 To encourage risk taking and creativity, mistakes are treated as opportunities for
learning rather than reasons for punishment.
 Members set high personal standards of performance and encourage each other to
realize the objectives of project.
 Members identify with the team and consider it an important source of both
personal and professional growth.
Five Stages of Team Building model in project management
 Forming- during the initial stage the members get acquainted with each other and
understand the scope of the project. They begin to establish ground rules by trying to find
out what behaviours are acceptable with respect to both the project (what role they will
play, what performance expectations are) and interpersonal relations (who is really
incharge). This stage is completed once members begin to think of themselves as part of a
group.
 Storming – This stage is marked by a high degree of internal conflict. Members accept
that they are part of a project group but resist the constraints that the project and group
put on their individuality. There is conflict over who will control the group and how
decisions will be made. As these conflicts are resolved, the project manager’s leadership
becomes accepted and the group moves to the next stage.
 Norming – the third stage is one in which close relationships develop and the group
demonstrates cohesiveness. Feeling of camaraderie and shared responsibility for the
project are heightened. The norming phase is complete when the group structure
solidifies and the group establishes a common set of expectations about how members
should work together.
 Performing – The team operating structure at this point is fully functional and accepted.
Group energy has moved from getting to know each other and how the group will work
together for accomplishing the project goals.
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 Adjouring- For project teams, this is the completion phase. During this stage, the team
prepares for its own disbandment. High performance is no longer a top priority. Instead
attention is devoted to wrapping up the project. Responses of the members vary in this
stage. Some members celebrate the project team’s accomplishments, others may be
depressed over loss of friendships gained during the project life.
Building High Performance Project Teams
Project managers play a key role in developing high-performance project teams. They recruit
members, conduct meetings, establish a team identity, create a common sense of purpose or a
shared vision, manage a reward system that encourages teamwork, orchestrate decision making,
resolve conflicts that emerge within the team, and rejuvenate the team when energy wanes.
The process of selecting and recruiting project members will vary across organizations. Two
important factors affecting recruitment are the importance of the project and the management
structure being used to complete the project. Often for high-priority projects that are critical to
the future of the organization, the project manager will be given virtual carte blanche to select
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whomever he or she deems necessary. For less significant projects, the project manager will have
to persuade personnel from other areas within the organization to join the team. In many matrix
structures, the functional manager controls who is assigned to the project; the project manager
will have to work with the functional manager to obtain necessary personnel. When selecting and
recruiting team members, project managers naturally look for individuals with the necessary
experience and knowledge/technical skills critical for project completion. At the same time, there
are less obvious considerations that need to be factored into the recruitment process:
• Problem-solving ability. If the project is complex and fuzzy, then a manager wants people who
are good at working under uncertainty and have strong problem identification and solving skills.
These same people are likely to be bored and less productive working on straightforward projects
that go by the book.
• Availability. Sometimes the people who are most available are not the ones wanted for the
team. Conversely, if members recruited are already overcommitted, they may not be able to offer
much.
• Technological expertise. Managers should be wary of people who know too much about a
specific technology. They may be technology buffs who like to study but have a hard time
settling down and doing the work.
• Credibility. The credibility of the project is enhanced by the reputation of the people involved
in the project. Recruiting a sufficient number of “winners” lends confidence to the project.
• Political connections. Managers are wise to recruit individuals who already have a good
working relationship with key stakeholders. This is particularly true for projects operating in a
matrix environment in which a significant portion of the work will be under the domain of a
specific functional department and not the core project team.
• Ambition, initiative, and energy. These qualities can make up for a lot of shortcomings in other
areas and should not be underestimated
Conducting Project Meetings
There are typically three objectives project managers try to achieve during the first meeting of
the project team. The first is to provide an overview of the project, including the scope and
objectives, the general schedule, method, and procedures. The second is to begin to address some
of the interpersonal concerns captured in the team development model: Who are the other team
24
members? How will I fit in? Will I be able to work with these people? The third and most
important objective is to begin to model how the team is going to work together to complete the
project. The project manager must recognize that first impressions are important; her behavior
will be carefully monitored and interpreted by team members. This meeting should serve as an
exemplary role model for subsequent meetings and reflect the leader’s style.
Establishing a Team Identity
One of the challenges project managers often face in building a team is the lack of full-time
involvement of team members. Specialists work on different phases of the project and spend the
majority of their time and energy elsewhere. They are often members of multiple teams, each
competing for their time and allegiance. Project managers need to try to make the project team as
tangible as possible to the participants by developing a unique team identity to which participants
can become emotionally attached. Team meetings, co-location of team members, team names,
and team rituals are common vehicles for doing so.
Creating a Shared Vision
Unlike project scope statements, which include specific cost, completion dates, and performance
requirements, a vision involves the less tangible aspects of project performance. It refers to an
image a project team holds in common about how the project will look upon completion, how
they will work together, and/or how customers will accept the project. At its simplest level, a
shared vision is the answer to the question, “What do we want to create?” Not everyone will
have the same vision, but the images should be similar. Visions come in a variety of shapes and
forms; they can be captured in a slogan or a symbol or can be written as a formal vision
statement. What a vision is, is not as important as what it does. A vision inspires members to
give their best effort. Moreover, a shared vision unites professionals with different backgrounds
and agendas to a common aspiration. It helps motivate members to subordinate their individual
agendas and do what is best for the project.
Managing Project Reward Systems
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Project managers are responsible for managing the reward system that encourages team
performance and extra effort. One advantage they have is that often project work is inherently
satisfying, whether it is manifested in an inspiring vision or simple sense of accomplishment.
Projects provide participants with a change in scenery, a chance to learn new skills, and an
opportunity to break out of their departmental cocoon. Still, many projects are underappreciated,
boring, interfere with other more significant priorities, and are considered an extra burden. In some
of these cases, the biggest reward is finishing the project so that team members can go back to what
they really enjoy doing and what will yield the biggest personal payoffs. Unfortunately, when this
attitude is the primary incentive, project quality is likely to suffer. In these circumstances, external
rewards play a more important role in motivating team performance. Most project managers we talk
to advocate the use of group rewards. Because most project work is a collaborative effort, it only
makes sense that the reward system would encourage teamwork. Recognizing individual members
regardless of their accomplishments can distract from team unity. Project work is highly
interdependent, so it can become problematic to distinguish who truly deserves additional credit.
Cash bonuses and incentives need to be linked to project priorities. It makes no sense to reward a
team for completing their work early if controlling cost was the number one priority.
Project Life Cycle

Any project will pass through four stages as in any life cycle. These phases are:-
1. Conception phase
2. Planning phase
3. Execution phase
4. Termination phases
Conception Planning Execution Termination
Level of Effort
4% efforts 8% efforts 85% efforts 3% efforts
26
Different activities are involved at each stage which are interlinked. Different key factors are responsible
for the success of each stage but they are also interlinked.
I). Conception phase:- This phase involves the preliminary evolution of an idea. This include the
recognition and acceptance of a problem or a need, analyzing the requirements and finding ways to
fulfill the need or solve the problem.
This phase includes the following activities:-
 Identify need/problem/potential deficiencies in the existing system.

 Examine alternative ways to solve problem
 Establish feasibility and practicability
 Identify the approximate resources (human & others) required for the system.
 Establish the basic concepts, program and process schematics.
 Prepare sketches and outline drawings.
 Prepare basic budget and schedule
 Prepare project team
 Present proposal to top management and obtain approval.
Critical success factors are project mission & clients consultation.
II). Planning Phase:- The idea conceived in the preceding phase is now investigated in greater details.
This phase involves the initial preparation of all the documents necessary to support the system such as
policies, procedures, job descriptions, budgets and funding papers.
This phase includes the following activities:-
 Develop plans, block diagrams, sketches and standards.

 Conduct studies.
 Select equipment and arrange manpower.
 Prepare-budget, schedule and cash flow statement.
 Prepare and submit project brief to the top management.
 Obtain approval to implement.
Critical success factors in this phase are project mission top management support, client consultation
and client acceptance.
Conception and planning stages are completed with the sanction of the project by the top management.
Activities related to the project begin with the execution stage.
III). Execution phase: This is also referred to as production phase, as the system is produced in this
phase. The efforts are now focused on standardization, testing and evaluation of an alternative detailed
design and the production based on the acceptable detailed design. The role of the project manager in
27
this phase is to control resources, to motivate workers and to report the project progress to the user of
the project. The specific tasks in this phase are:-
 Set up project organization

 Prepare working drawings and specifications
 Design review
 Procure equipments
 Procure construction services
 Quality assurance
 Verify performance
 Modify as required
Critical success factors in this phase are project mission, schedule and plans, trouble shooting, client
consultation, technical task, personnel, communication, monitoring and feed back.
IV. Termination phase:- In this phase necessary formalities are completed before the project is handed
over to the client. Trial runs and smooth handling over of the plant to the client are part of this phase.
This phase include the following activities.
 Transfer materials
 Transfer operators
 Transfer all documents and operating manuals.
 Transfer responsibility
 Release resources
 Develop the lesson learnt from the project for future use.
Critical success factors in this phase are project mission, technical tasks, client consultation and client
acceptance. It is noted that client consultation and clarity of required at all four phases.
Tools and Techniques of project Management
1. Project Schedule
2. Budget
3. Work breakdown structure
4. Responsibility Assignment Matrix
5. Decision Tree Analysis
6. PERT
7. CPM
8. Sensitivity Analysis
9. Gantt Chart
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Project - Management - Unit I

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Project - Management - Unit I

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Project Management Unit I

1.1 Characteristic of project:

S : Specific : expressed singularly.

5. The activities of a project have to be performed in sequence to deliver the product

Program: A group of related projects designed to accomplish a common goal over an

e.g. program for curing cancer

1.2 Classification of Project:

2. Modernisation and Rationalisation projects – these projects are undertaken for

3. Expansion projects – these projects are undertaken for increasing capacity.

4. Diversification projects – it aimed at producing new products and services or entering

7. Mandatory projects: these projects are undertaken to comply with statutory

8. Miscellaneous projects: it includes items interior decoration, recreational facilities

1.3 Project Management:

Project Management involves the following activities.

 Planning and analyzing the objectives of the project.

 Estimating the organizational resources required in the project.

Project Management is best described in terms of five activities, which are:

- Initiating – Planning – Executing – Controlling – Closing

Project Management Objectives

Objectives of Project in various phases –

 Project and programme goals are identified and analysed.

Importance of Project Management

Compression of the Product Life Cycle

Triple Bottom Line (planet, people, profit)

Increased Customer Focus

Determinants of Project Success

Project efficiency: Meeting budget and schedule expectations.

Roles and Responsibilities of Project Manager:

Functions of Project Manager

The functions are as follows:

1. Developing a unique product or process and manage change.

2. Identification of the need for project.

3. Finding different alternatives of the project.

4. Developing a plan of action.

6. Establishment of quality assurance cell to control quality.

7. Incorporation of changes as and when needed while implementing project.

8. Selection of suitable equipment.

9. Finding suitable financial resources.

10. Assessment of alternatives and obtaining approval to proceed.

11. Measuring performance of the project.

13. Monitoring progress and reporting to higher authorities.

Operational objectives of a firm may be one or more of the following.

• Increase in capacity utilisation.

• Improvement in contribution margin.

• Knowledge of market, products, and services.

• Knowledge of potential customer choice.

• Emerging trends in demand for particular product.

• Scope for producing substitute product.

• Market survey & research.

• Going through Professional magazines.

• Making visits to trade and exhibitions.

• Government guidelines & policy.

• Ideas given by the experienced person.

• Ideas by own experience.

Environment appraisal :- An entrepreneur or a firm systematically appraise the environment and

• State of the economy

• Overall rate of growth

• Growth rate of primary, secondary and territory sector

• Growth rate of world economy

• Trade surplus and deficits

• Government programmes and projects

• Subsidies incentives and concessions

• Emergence of new technologies