AE / DE / ES / MBA / MM / QM /

POM / PDBA ZC 523 PROJECT

MANAGEMENT – II SEM 2020--
BITS Pilani 2021
Pilani Campus Dr. ARUN MAITY
 BITS Pilani
Pilani Campus

MODULE 1: OVERVIEW OF PROJECT

MANAGEMENT
Lecture No. 1 CHAPTER 1 OF T1
COURSE OBJECTIVES

CO-1
To introduce basic and modern concepts in
managing projects
CO-2
To introduce methods of doing market, technical
and financial analyses for the selection and
prioritization of projects
CO-3
To introduce techniques of project planning,
scheduling and managing risks, and allocation of
responsibilities

BITS Pilani, Pilani Campus

COURSE CONTENT

• Projects: Importance, Types, Life Cycle, Organization

Structure, Roles & Responsibilities of Project Manager
• Projects: Integration, Market & Demand Analysis,
Technical Analysis
• Projects: Time Value of Money, Financial Estimates and
Projections, Balance Sheet, Project Selection
• Project Planning, Scheduling and Control
• Project Risk Management
• Project Procurement and Contracts Management
• Project Audit & Closure, Project Quality Management
• International Project Management

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Evaluation Components

• EC1 : QUIZ -1,2 : 10 Marks

• Experiential Learning : 15 Marks

• EC2: MID SEMESTER TEST : CLOSED BOOK: 30 Marks

• EC3: COMPREHENSIVE EXAMINATION : OPEN BOOK:

45 Marks

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TEXTBOOK

• Clifford F. Grey, Erik W. Larson, Gautam V. Desai

“Project Management The Managerial Process” McGraw
Hill Education(India) Private Limited, New Delhi, Sixth
Edition, 2014

• Prasanna Chandra, Projects: Planning, Analysis,

Selection, Financing. Implementation & Review, McGraw
Hill Education (India) Private Limited, New Delhi, 8th Ed.,
2014.

BITS Pilani, Pilani Campus

REFERENCES

• Kerzner, Harold, Project Management: A Systems

Approach to Planning, Scheduling and Controlling, Wiley
Student Edition 10th Ed., 2013
 
• Tony Kennedy, “Pharmaceutical Project Management”
CRC Press, Second Edition, 2008

• Kim J Pries and John M Quigley, “Project Management

of Complex and Embedded Systems” CRC Press, 2011.
 

BITS Pilani, Pilani Campus

LEARNING OUTCOMES
LO-1
The student will be able to apply modern management
concepts and principles of project management in project
driven as well as in non-project driven organizations
L0-2
The students will be able perform technical, financial and
market analyses for new projects
L0-3
The student will be able to prepare projected cash flow
statement and balance sheet of projects
L0-4
The student will be able to plan and schedule activities of
projects, assign responsibilities and prepare
communication plans
LO-5
The student will be able to Identify Project Risks and
BITS Pilani, Pilani Campus
1. 0 INTRODUCTION TO
PROJECT MANAGEMENT
• Evolution And Application

• Project: Types, Characteristics and Elements

• Project Organization

• Project Management : Importance, Functions

• Role of Project Manager & Project team

• Interpersonal Skills

BITS Pilani, Pilani Campus

1.1. EVOLUTION AND
APPLICATION
• Developed in the late 1950’s to aid planning and
Scheduling of Large Projects
• Construction Industry
• Automakers – Toyota, Nissan, BMW
• Electronics
• Information Technology
• Steel
• Fertilizer
• Oil and Gas
• Pharmaceutical

BITS Pilani, Pilani Campus

1.2 WHAT IS PROJECT?

• A Project is a Complex , Non Routine, One-time Effort

Limited By Time, Budget, Resources And Performance
Specifications Designed To Meet Customers’ Needs

• EXAMPLES
• Introduction of a new kind of detergent in the Indian market
• Enhancing the production capacity of a steel plant from 2.5 MT to 4 MT.
• Reducing the downtime of the machines from 3% to 1%.
• Improving the Quality of Product from existing 95% to 98%.
• Erection and Commissioning of a 300 MW Gas Power Plant
• Preparation of documents for takeover of a Firm
• Implementing World Class Quality in an Automotive Industry

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1.3 SECTORS & TYPES

• Different Sectors: Public Sector, Private Sector, Service

Sector, Joint Sector
• Industrial
• Software
• Service
• Infrastructure
• Construction
• Expansion
• Modernization

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• Maintenance: Capital Repairs, Major Overhauling
• Plant Shutdown and Turnaround
• Diversification
• Integration
• Forward Integration
• Backward Integration
• Vertical Integration
• Acquisition
• Rehabilitation
• Research and Development

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1.4 CHARACTERISTICS

• CHARACTERISTICS
• A Project Consists of series of activities and tasks that
– Have a specific objective to be completed within
certain specifications and performance requirements
– Have definite Start and End dates
– Have Funding Limits
– Consume Resources
– Meet and Exceed Customers’ Needs
– Involvement of several departments and professionals
– Doing something that has never been done earlier

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1.5 ELEMENTS

• Identification of Project
• Prioritization Of Project
• Selection of Project
• Scope Of Work
• Work Breakdown Structure
• Risk Management
• Cost And Time Estimate
• Procurement
• Allocation Of Resources
• Execution Of Jobs

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• Subcontracting
• Performance Evaluation and Monitoring
• Feedback
• Control
• Commissioning
• Final Handing Over To The Client
• Project Closure
• Evaluation Of Project Manager And Team
• Retrospective

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1.6 NEED

 Project: Fulfilling the needs and requirements of the

customer
Successful Project are Path breaker for Future Projects

 Stakeholders: Meeting the needs of stakeholders

 Organization: Meeting the strategic needs of the

organization

 Individuals: Meets the goals and aspirations of Project

manager and project team members

BITS Pilani, Pilani Campus

1.7 PROJECT
ORGANIZATION
 PROJECT DRIVEN ORGANIZATION
• All work is characterized through projects with each
project as a separate cost center having its own profit
and loss statement
 NON PROJECT DRIVEN ORGANIZATION
• Projects exist merely to support the product lines or
functional lines
• Profit and loss are measured on vertical or horizontal
lines
• Priority resources are assigned to revenue producing
functional line activities rather than the projects

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1.7.1 LIMITATIONS OF NON-PROJECT
DRIVEN ORGANIZATIONS

• Projects may be few and far between

• Not all projects have the same project management
requirements
• Executives do not have sufficient time to manage
projects
• Projects tend to be delayed because approvals most
often follow vertical chain of command
• Project staffing is on a local basis
• Heavy dependence upon subcontractors and outside
agencies for project management expertise

BITS Pilani, Pilani Campus

1.8 PROJECT MANAGEMENT
APPROACH
 DRIVING FORCES
 Capital Projects
 Customer Expectations
 Competitiveness
 Executive Understanding
 New Project Development
 Efficiency And Effectiveness
 BENEFITS
 Accomplish work In less time with fewer people
 Increases Profitability
 Enhanced Quality
 Better Control Of Scope Changes
 Customer Focused
 Good Decision Making & Reduced Power Struggle

BITS Pilani, Pilani Campus

1.9 Understanding Need and
Importance of Project Management

• Ability To Plan, Implement And Manage Activities

• Result-oriented Management Styles
• Compression Of Product Life Cycles
• Global Competition
• Knowledge Explosion
• Corporate Downsizing
• Increased Customer Focus
• Multi-project Environment

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1.9.1 Compression of
Product Life Cycle
• Shortening of Product Life Cycle

• Time to market for new products with short life cycles

• A six month project delay can result in 33% loss in

product revenue share

• Speed : As competitive advantage

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1.9.2 Knowledge Explosion

• Growth in knowledge has increased the complexity of

projects

• Increased complexity : materials, specifications, codes,

aesthetics, equipment, specialists

• Product complexity increased the need of divergent

technologies

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1.9.3 Triple Bottom Line

 Planet, People and Profit

• Stringent environmental norms

• Reduce carbon imprint
• Utilize renewable resources
• Flexibility, Innovation, Speed
• Continuous Improvement
• Sustainability

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1.9.4 Corporate Downsizing

• Downsizing or Rightsizing

• Sticking to core competencies

• Flatter organization structure

• Outsource significant segments of project work

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1.9.5 Increased Customer
Focus
• Increased competition

• Customer satisfaction

• Customized products and services

• Close working relationships between provider and

receiver

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1.9.6 Small Projects
represent Big problems
• Small projects carry the same or more risk as do large
projects

• Little impact on bottom line

• Small projects add up to large sum of money

• Need of multi-project environment

BITS Pilani, Pilani Campus

1.10 FUNCTIONS OF
PROJECT MANAGEMENT
• Project Management Involves

– Project Planning
– Project Scheduling
– Project Monitoring & Control

• Project Planning

– Definition Of Work Requirements

– Definition Of Quantity Of Work
– Definition Of Resources Needed

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• Project Scheduling
– List Of Activities To Be Completed
– Activity Relationships
– Gantt Charts
– Critical, Non-critical Activities, Milestones
– Resource Loading, Leveling, Allocation

• Project Monitoring & Control

– Tracking Progress
– Comparing Planned Vs. Actual
– Analyzing Impact
– Making Adjustments
– Time, Cost, Quality Control

BITS Pilani, Pilani Campus

1.11 PROJECT LIFE CYCLE

• Project Life Cycle recognizes that projects have limited

span
• Predictable changes in level of effort and focus over the
life of the project

• Stages:
• Defining Stage
• Planning Stage
• Executing Stage
• Delivery / Closing Stage

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BITS Pilani, Pilani Campus
1.12 PRODUCT LIFE CYCLE

NEW PRODUCT INTRODUCTION

• Research and Development

• Market Introduction
• Growth
• Maturity
• Deterioration
• Death

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BITS Pilani, Pilani Campus
1.13 ROLE OF PROJECT
MANAGER
• Provide direction, coordination and integration to the
project team
• Manage temporary, non-repetitive activities to complete
A fixed life project
• Meet the challenges of each phase of the project life
cycle
• Manage the tension between customer expectations and
what is feasible or reasonable
• Work with vendors, suppliers, subcontractors

BITS Pilani, Pilani Campus

• Responsible for performance

• Ensure appropriate trade-offs between time, cost and

performance requirements

• Inducing the right people at the right time

• To address right issues and make right decisions

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1.13.1 CATEGORIES OF
INTERACTIONS
• Superiors or Bosses
• Colleagues or Peers
• Subordinates or Juniors

• Dealing with each category requires definite skills which

have to be mastered if one is to rise in the organizational
hierarchy

BITS Pilani, Pilani Campus

1.13.2 INTERACTION WITH
SUPERIORS
• Boss is always the boss, though he may not be always
right

– There may be serious differences of opinion with the boss, but

ultimately, the will or opinion or decision of the boss will prevail

– Boss is more accountable than the subordinates and will have to

answer the consequences of his decisions and actions

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• Rather than be a “Yes Man” and agree with everything
the boss says, the subordinate must definitely express
his views and opinions for the consideration of the boss

• If the boss chooses to ignore suggestions or overrule

decisions taken by the subordinate, he does so at his
own discretion and risk

BITS Pilani, Pilani Campus

• Certain bosses who flatly refuses to accept any
suggestions coming from the subordinates, even though
his suggestions are basically sound and would be
interest of the organization

• Such individuals suffer from a sense of insecurity and

are afraid that implementation of the suggestions would
highlight their own shortcomings and bring credit to the
subordinates at their own expense

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• What the boss forgets is that credit for achievement or
good performance first goes to the boss for his ability to
get work done

• The subordinate only gets a part of the credit received by

the boss

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1.13.3 BOSS HAS GREATER
ACCESS TO INFORMATION
• By virtue of position in the organization, the boss has
greater access to vital information affecting the well-
being of the organization

• Some of the decisions may appear to be ill-conceived or

wrong, however it is more likely that a particular decision
may be based on certain information not available to the
subordinate

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1.13.4 BOSS IS MORE
BUSY
• Responsibilities of the boss are considerably greater
than those of the subordinates

• The time at his disposal for dealing with particular

problem is naturally less than the time available with the
subordinate

• Therefore it is the duty of subordinate to do his

homework well, work out options in any given situation
and then put them for consideration and final decision
with his own recommendation

BITS Pilani, Pilani Campus

1.13.5 BOSS IS UNDER
GREATER PRESSURE
• By virtue of his position and responsibility, boss is under
greater pressure to meet targets and deadlines

• Some pressure is bound to get transferred down to lower

levels resulting in FIRING

• Firing is a part of the game and has to be accepted as

such

• One must not be too sensitive to such firings and must

develop a somewhat thick skin in such matters

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• On the other hand, the skin should not be so thick that
firing has no effect at all

• On occasion, unpleasant talk may appear to be entirely

unreasonable

• Outcome of firing of the juniors, who, in turn, may take it

to out on their wives and children

BITS Pilani, Pilani Campus

1.13.6 INTERACTION WITH
COLLEAGUES
• Individuals who are more or less at the same level in the
hierarchy
• Engineers performing shift duty and reporting to
Manager
• Department heads reporting to the Production Manager
• Functional Heads reporting to Unit Head
• Project Engineers reporting to Project Managers
• Project Managers reporting of Head, Projects

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• Feeling of cordiality, cooperation, mutual trust and
atmosphere of healthy competition

• This is easier said than done

• Politics is an integral feature of any organization, as

each individual tries to catch the eye of the boss and
advance his own cause for promotion

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• If the competition leads to confrontation and undermining
the position of others, working is bound to suffer

• Personal equations can lead to formation of groups that

adversely affect organizational working

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1.13.7 INTERACTION WITH
SUBORDINATES
• An engineer in a supervisory position or a manager is
responsible not only for his own actions, but also for the
actions of all those working under his direction

• Delegation: A successful manager once said, “I never do

anything which I can get done by a subordinate”

• This is an excellent way to motivate subordinates and at

the same time freeing the boss from routine matters and
giving him time to concentrate on important issues

BITS Pilani, Pilani Campus

• Delegation does not imply that the boss is absolved of
responsibility for that actions of his subordinates, he should
keep a watchful eye over their activities and issue necessary
direction.

• Earn the respect of subordinates

– It is easy to get work done if subordinates hold the boss in esteem and
respect
– Sound knowledge and thorough understanding of plant or process are
vitally important
– Boss should be capable of doing at least 80% of the work done by each
one of its subordinates
– 20% of his own work should be such that none of his subordinates can
do so effectively

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• Issue clear instructions

– Instructions have no meaning if they are vague and likely to be

misinterpreted

– Some managers are in the habit of deliberately leaving

instructions vague and then pulling juniors for not acting one way
or the other

• Descend to the level of subordinates

– Boss must express himself in a language which the

subordinates can understand

BITS Pilani, Pilani Campus

1.13.8 DEFINE
JURISDICTION
• Areas wherein the subordinate is free to take his
own decisions according to established norms
and guidelines
• Boss will not be troubled with low level decisions
• Subordinate must have clear idea about
– what he can do without informing the boss at all
– what he can do first and inform later
– what he can do only after getting approval

BITS Pilani, Pilani Campus

1.13.9 CATEGORIZE
SUBORDINATES
1. Those who work on their own initiative

2. Those who work only after receiving directives or

guidelines

3. Those who do not work even after receiving directives

and guidelines

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1.13.10 SUBORDINATE PROBLEMS ARE
ULTIMATELY BOSSES’ PROBLEMS

• Any deficiency in working have to be removed by

concerted effort

• Boss cannot get away by saying that these problems

have to be tackled by junior staff alone

• Boss has to get involved and issue necessary directions

to solve the problems

• It is the boss who will have to answer for the working of

all sections under his charge

BITS Pilani, Pilani Campus

1.13.11 STRIVE TO
BECOME REDUNDANT
• Every supervisor or manager must strive to make himself
redundant and superfluous

• Effort must be made to evolve systems and procedures,

so that working is not affected in the absence of
supervisor / manager

BITS Pilani, Pilani Campus

1.13.12 TRAIN SUPERVISOR TO
TAKE YOUR PLACE

• Advancement is easy if there is someone who can

assume charge of the vacated position

• Manager should train his subordinates adequately, not

only to reduce his workload but also to facilitate his own
advancement at the appropriate time

BITS Pilani, Pilani Campus

• Some managers are unduly secretive and habitually conceal
documents and information from subordinates

• Many organizations force their employee to avail due leave and do

not permit leave accumulation to a certain level

– Excellent practice and serves to motivate and train subordinates

for higher responsibilities

– Simultaneously, the boss returns refreshed after leave to do

greater justice to his responsibilities

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1.13.13. BE FAIR AND
APPEAR TO BE FAIR
• Justice must not only be done but seen to be done

• Boss must be fair, but also appear to be fair to his

subordinates

• All subordinates should be treated on merits as far as

distribution of assignments and prospects for
advancement are concerned

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• It is natural to develop liking or dislike for various
subordinates

• One must not get carried away by subjective criteria

• Friendship and personal relations with subordinates

should not act as obstacles to advancement

• The recommended person should reduce the workload

of the boss and make his life easier

BITS Pilani, Pilani Campus

1.14. PROJECT MANAGEMENT:
MANUFACTURING

• Conceptualization of a Product
• Feasibility Study
• Market Survey: Cost, Product Functionality and
Comparative Manufacturer Reliability
• Cost Estimation
• Technology Assessment
• Product Design And Development: Adaptability,
Maintainability And Reliability
• Financing
• Process Planning

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• Quality Specifications
• Personnel Assignment And Training
• Operations Planning
• Facilities Layout
• System Integration
• Production Scheduling
• Production Run
• Product Shipment

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1.15 PROJECT MANAGEMENT:
Automotive Industry

Development process
• Concept Initiation / Approval
• Program Approval
• Prototype
• Pilot
• Launch
Phases of Advanced Product Quality Planning
• Planning
• Product Design and Development
• Process Design and Development
• Product and Process Validation
• Production
• Feedback assessment and corrective actions

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1.16 Department of Defense

FORMAL DESIGN REVIEWS: MIL-STD-1521B

• System Requirements Review
• System Design Review
• Software Specification Review
• Preliminary Design Review
• Critical Design Review
• Test Readiness Review
• Functional Configuration Audit
• Physical Configuration Audit
• Formal Qualification Review
• Production Readiness Review

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1.17 IEEE-1220: PROJECT
MGMT.
• System Definition
• Subsystem Definition
• Preliminary Design
• Detailed Design
• Fabrication, Assembly, Integration And Test
• Production
• Customer Support

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1.18. ELECTRONICS
INDUSTRY: EIA 632
• Assessment Of Opportunities

• Investment Decisions

• Systems Concept Development

• Subsystems Design And Pre-deployment

• Deployments, Operations, Support And Disposal

BITS Pilani, Pilani Campus

1.19. NEED: DRUG
DEVELOPMENT
• How are projects brought to market quickly?

• How do we decide which projects are likely winners or

losers?

• How can we avoid wasted expenditure on projects?

• What can be done to get best return on projects that make it

to the market?

• How do we organize ourselves to develop drugs effectively?

BITS Pilani, Pilani Campus

1.19.1 DRUG
DEVELOPMENT PHASES
• PRECLINICAL PHASE: A drug merits into human clinical
testing

• PHASE 1: A drug merits progression into patent trials

• PHASE 2: To characterize dose response relationship for

efficacy and safety

• PHASE 3: To provide pivotal trial evidence for efficacy

and safety in chronic dosing

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• REGISTRATION : To secure registration approval for the
intended product label

• LIFE CYCLE MANAGEMENT: To maximize the

commercial return for the product

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1.19.2 GOOD STRATEGIES

• Understand the inherent risks and risk management

strategies in product development

• Profitable to flourish in future

• Return on investment

• Time to market

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1.19.3 EXAMPLES:
Pharmaceutical Industry
• Major players were companies operating in industrial
chemicals, retail healthcare, or foods
• Glaxo’s original interests in baby food and other non-
pharmaceutical products, but now has rebuilt its
business around pharmaceuticals with considerable
success.
• Bayer and Hoechst funded r& d intensive pharmaceutical
operations through the cash generated by other
business

BITS Pilani, Pilani Campus

1.19.4 Challenges

• Inefficiency of R & D process became evident and new

regulations introduced to promote safety result in further
escalation of costs and increased timescales

• Increasing competition with similar products reaching the

market meant significantly higher sales and marketing
costs

• Improving the efficiency and effectiveness of R & D

process is an increasingly important objective of most
companies

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• Portfolio Management Is A Subject Of Effectiveness -
Picking The Winners

• Project Management Is More About Efficiency Or

Ensuring That The Selected Products Are Developed
Economically.

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1.19.5 BENEFITS

• Provides a structure for decision making when multiple

projects are competing for common limited resources
• Allows common methods to be used for comparing the
attractiveness of projects
• Creates a group of projects that has the potential to meet
their overall objectives of business.
• Minimizes investment in projects that are judged unlikely
to achieve the technical profile required for commercial
success
• Portfolio management : A dynamic process

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BITS Pilani, Pilani Campus
1.20 PROJECT INTEGRATION
MANAGEMENT
• Focuses all project effort toward the strategic plan of the
organization

• Reinforces mastery of project management and inter-

personal skills

• May require re-engineering of business management

process

– Integration of projects with strategic plan of the organization

– Integration within the process of managing actual projects

BITS Pilani, Pilani Campus

1.20.1 ALIGNMENT OF PROJECTS WITH
ORGANIZATIONAL STRATEGY

• Need: Strategic plans are made by one group of

managers, projects selected by other and implemented
by another

• Independent decisions lead to conflicts, confusion etc.

On unsatisfied customers

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1.20.2 CHARACTERISTICS

• All the parts are inter-related. A change in one of the

parts will influence the whole
• Vision, mission, objectives and strategies need to be
prepared considering internal and external environmental
factors
• External factors: political, social, economic and
technological
• Internal factors: management, facilities, core
competencies, financial conditions

BITS Pilani, Pilani Campus

• Implementing strategies through projects

• Selecting proposals that make largest and most

balanced contribution to the objectives and strategies

• Prioritizing projects so that resources are allocated to the

right projects

BITS Pilani, Pilani Campus

1.20.3 INTEGRATION WITHIN THE PROCESS
OF MANAGING ACTUAL PROJECTS

• Technical side of the management process

– Planning, scheduling, controlling

• Socio-cultural side of the project management process

– Shaping a project culture that stimulates teamwork and high levels

of personal motivation

– Problem solving approach

– Effective communication sessions with stakeholders

BITS Pilani, Pilani Campus