PROJECT MANAGEMENT

&
ENTREPRENEURSHIP

KHU-702

UNIT-3

BY
DR. DEVESH SINGH
 Content – Unit III

• Project management: meaning, scope & importance,

role of project manager;
• project life-cycle Project appraisal: Preparation of a
real time project feasibility report containing
Technical appraisal, Environmental appraisal,
• Market appraisal (including market survey for
forecasting future demand and sales) and
Managerial appraisal.
 Project
A project is defined as a specific, finite set of
activity that produces an observable and
measurable result under certain preset
requirements.
Project is a temporary endeavor undertaken to
create a unique product or service or result.
Temporary means that every project has a
definite end, and Unique means that the product
or service is different from all similar products or
services.
 Project

Project is a unique process, consist of a set of

coordinated and controlled activities with start and
finish dates, undertaken to achieve an objective
confirming to specific requirements, including the
constraints of time cost and resource.
Examples of project include Developing a watershed,
Creating irrigation facility, Developing new variety of
a crop, Developing new breed of an animal,
Developing agro-processing centre, Construction of
farm building, sting of a concentrated feed plant etc.
 Project Characteristics

The various characteristics of the project are:

 Fixed set of objectives: The project starts when
the objective(s) is finalized. The project comes to an
end as soon as the objectives are attained.
Tenure: Project is never a continuous activity, it has
to come to an end. Its life span is fixed.
Team work: It needs a team to accomplish various
activities.
 Project Characteristics

Unique: All projects are unique in themselves, no

two projects are exactly similar.
 Life cycle: Like all living organisms, project starts
slowly (definition phase), then starts building up in
size (planning phase), then reaches peak
(implementation phase) before finally getting
terminated.
Made to order: The customer always decides the
objective and informs the constraints like time and
cost.
 Project Characteristics

Single entity: Generally, projects are the

responsibilities of a single person/entity but
certainly there are many participants in a project,
who are helping the single entity in the
accomplishment of project objectives.
Multi-skilled staff: The staff needed for a project,
including the project manager needs to have a wide
range of skills including technical skills, human
skills, financial skills, negotiation skills, etc.
 Project Characteristics

 Subcontracting: Subcontracting is practically

unavoidable in project management. As specialized
knowledge or workforce is needed for a very small
duration in a project, it is difficult and costly to employ
or retain. Therefore, they are just hired for small
duration or specific job from outside agency.
Risk and uncertainty: Projects are risky as the
activities involved in projects are non-retrievable.
Thus, risk is unavoidable. However, risk can be
reduced considerably using various forecasting
techniques and project management and control tools.
 Project Management

Project management is a methodical approach to planning

and guiding project processes from start to finish. It is the
method of planning the plan. It starts from project
definitions and ends with goal achievement.
Project management is the application of knowledge, skill,
tool and techniques to project activities in order to meet
stakeholder’s needs and expectations from a project.
It is the methods and disciplines used to define goals, plan
and monitor tasks and resources, identify and resolve issues,
and control costs and budgets for a specific project.
 Benefits of Project Management Approach

The rationale for following project management approach is as follows.

 Project management approach will help in handling complex, costly
and risky assignments by providing interdisciplinary approach in
handling the assignments. Example: R&D organizations.
 Project management approaches help in handling assignments in a
specified time frame with definite start and completion
points .Example handling customer orders by Industries involved in
production of capital goods.
 Project management approaches provide task orientation to
personnel in an Organization in handling assignments. Example:
Organizations in IT sector handling software development
assignments for clients.
 Objectives of Project management

There are four major objectives of project management

 Scope: Scope means what are the expectations from you
as a project manager and your team. A civil contractor
always has well-defined scope, like all civil works
including excavation, foundation, concreting, brickwork,
plastering of all walls as per the attached drawings.
Performance: A project is always expected to have a
well defined performance level. If a project is unable to
adhere to the desired performance of a customer, it is
certainly an unsuccessful project.
 Objectives of Project management

 Time: A successful project is the one which is

completed within the time limits perceived during
the planning. As the cost is dependent on time, time
management becomes a crucial activity of project
management.
Cost: It is dependent on all the above objectives.
Mathematically it can be written as: Cost = f (P, T,
S). Therefore, cost is a function of performance, time
and scope. If any of the above increases, it is surely
going to increase the cost of the project.
 Importance of Project Management

What has led to increased usage of the concept of project

management in recent times?
 Rapidly changing technologies: Technologies are
changing very fast, so all manufacturing as well as service
organizations have to cope up with technological changes,
which provide a big scope for project management.
High entropy of the system: Changes are very fast.
So, energy levels are high. To adapt to the fast changing
world, no organization can stick to old things or systems.
Any modification or modernization leads to the need of
project
 Importance of Project Management

Squeezed life cycle of products: Product life

cycle is squeezed to a great extent with innovations
taking place at a very rapid rate. Projects are needed
for the upgradation of products.
Globalization impact: All producers and service
providers in the present world are exposed globally.
They need to modify their system of operations to
match the global practices, thus creating opportunity
for projects.
 Importance of Project Management

Large organizations: They face problems of

management of huge workforce and work division, so
they divide their work in projects and create a team to
accomplish the objectives in the form of projects. This
has also helped the organization to develop a method
for performance appraisal.
 Customer focus: Increased customer focus has been
a market trend in recent times. A few years back, cost
reduction was a major formula of success for an
enterprise. Thus, there was more emphasis on
standardization.
 Importance of Project Management

In recent years, customer focus has redirected

market towards customization.
Though it is not purely customization, it is more of a
combination of standardization and customization.
All this has led to the application of project
management.
 TOOLS AND TECHNIQUES FOR PROJECT
MANAGEMENT

1. Project selection techniques

(a) Brain Storming
(b)Cost benefit analysis and
(c) Risk and sensitivity analysis
2. Project execution planning techniques
(a) Work breakdown structure (WBS)
(b) project execution plan (PEP)
(c) Project responsibility matrix and
(d) Project management manual
 TOOLS AND TECHNIQUES FOR PROJECT
MANAGEMENT

3. Project scheduling and coordinating techniques

(a) Bar charts
(b) Life cycle curves
(c) Line of balance (LOB) and
(d) Networking techniques (PERT/CPM)
4. Project monitoring and progressing techniques
(a) Progress measurement technique (PROMPT)
(b) Performance monitoring technique (PERMIT) and
(c) Updating, reviewing and reporting technique (URT)
 TOOLS AND TECHNIQUES FOR PROJECT
MANAGEMENT

5. Project cost and productivity control techniques

(a) Productivity budgeting techniques
(b) Value engineering (VE) and
(c) COST/WBS
6.Project communication and clean-up techniques
(a) Control room and
(b) Computerised information systems
 Project Team

 The project team consists of people with assigned roles and

responsibilities for completing the project.
 Project team members have varied skill sets and they may
be assigned full or part-time.
 Team members may be on-site, or remote in which case the
project manager needs to know how to deal with a virtual
team.
 The team would have a mix of people so that all the
necessary skills, knowledge and understanding are
collectively within that team, subject to any further
specialized support that is needed.
Project Team
 Project Manager

A good project manager delivers projects within the

deadline and budget set by the clients, meeting or
even exceeding the expectations of the stakeholders.
But what does it take to make a good project
manager great?
Here are the top 10 qualities one must have to
become a successful project manager.
 Characteristics of Project Manager
1. Leadership
A great project manager will set the tone for the project and provide
a clear vision about its objectives for the team. A sense of
foresight helps as well: by anticipating potential problems, you
can have your team ready to solve them in the blink of the eye.
Enthusiasm and passion are crucial to ensure that people follow
you—nobody will do so if you’re sporting a negative attitude.
2. Task delegation
Being a leader doesn’t mean that you need to think about every tiny
little detail of a project. Show your team members you trust them
and delegate tasks to them. Of course, you should be able to judge
your team members’ skills and assign the tasks in accordance
with their strengths.
 Characteristics of Project Manager
3. Communication
Good communication is not only about transmitting your vision to
your team, it’s also about maximising the efficiency of meetings to
make decisions and solve problems. People get easily bored during
long, unorganised gatherings. The same goes for written
communication: emails and reports are a means of communication
you use daily so you need to be able to make most of them.
4. Empathy
As a team leader, you’ll need to be empathetic rather than
sympathetic. Sometimes the work of your team members might be
affected by the difficulties they experience in their private lives. It’s
important that your team stays focused on the project and that each
member remains productive even when having personal troubles.
 Characteristics of Project Manager
5. Organisation
Good organisation is a key factor for creating a productive work
environment as well as solving problems under pressure. Being
well-organised helps to stay focused on the big picture and to
prioritise your own tasks and responsibilities.
6. Competence
Being on top of your projects entails a vast amount of industry
knowledge to be effective in what you do. Some knowledge on the
financial and legal side of your projects will not hurt either. You
need to be perceived as capable and competent by your team.
Mind you, it’s not about technical expertise: you’re there to lead,
which means encouraging, challenging and inspiring the
members of your team.
 Characteristics of Project Manager
7. Integrity
This word essentially means loyalty and honesty. You should be
able to gain the trust of your team, at the same time setting the
ethical tone on the projects and showing that you yourself follow
the rules you set for others. Projects must be profitable, sure, but
that doesn’t mean you’ll need to bend your morality to do so. If
you’re project manager material, you’ll be able to come up with
various solutions that will serve your ends.
8. Problem solving
 You are the leader of the team, but that doesn’t mean you’ll solve
all the problems yourself. Great project managers work with a
team of experts or consultants and use their expertise to tackle
problems in most efficient ways.
 Characteristics of Project Manager
9. Collaboration
This is crucial—every great project manager knows how important their
team is. A grasp of team dynamics is essential if you want your team to
work smoothly on your projects. When developing your team, keep this
in mind: conflicts and disagreements are bound to happen; as a leader,
you’ll need to be able to mediate them and make sure all you team
members work toward the same goal.
10. Team development
Delivering projects within the time and budget limit can be quite
stressful; it’s your job not to crumble under the pressure and make
sure none of your team members do. Good leaders know that problems
make up the fabric of life and are to be expected: they will treat
problems as events that could possibly influence the project in a new
way by providing a different perspective on its future.
 Project Life Cycle

Every project, from conception to completion,

passes through various phases of a life cycle
synonym to life cycle of living beings.
There is no universal consensus on the number of
phases in a project cycle.
An understanding of the life cycle is important to
successful completion of the project as it facilitates
to understand the logical sequence of events in the
continuum of progress from start to finish.
 Project Life Cycle

 Typical project consists of four phases-

 Conceptualization,
 Planning,
Execution and
Termination.
Each phase is marked by one or more deliverables
such as Concept note, Feasibility report,
Implementation Plan, HRD plan, Resource
allocation plan, Evaluation report etc.
Project Life Cycle
 Project Life Cycle

 Conceptualization Phase: Starting with the seed of an

idea, it covers identification of the product / service, Pre-
feasibility, Feasibility studies and Appraisal and Approval.
 The project idea is conceptualized with initial
considerations of all possible alternatives for achieving the
project objectives.
 As the idea becomes established a proposal is developed
setting out rationale, method, estimated costs, benefits and
other details for appraisal of the stakeholders. After
reaching a broad consensus on the proposal the feasibility
dimensions are analyzed in detail.
 Project Life Cycle

 Planning Phase
 In this phase the project structure is planned based on project
appraisal and approvals. Detailed plans for activity, finance, and
resources are developed and integrated to the quality
parameters.
 In the process major tasks need to be performed in this phase
are:
 • Identification of activities and their sequencing
 • Time frame for execution
 • Estimation and budgeting • Staffing
 A Detailed Project Report (DPR) specifying various aspects of the
project is finalized to facilitate execution in this phase.
 Project Life Cycle

Execution Phase:
This phase of the project witnesses the concentrated activity
where the plans are put into operation. Each activity is
monitored, controlled and coordinated to achieve project
objectives.
Important activities in this phase are:
Communicating with stakeholders
Reviewing progress
Monitoring cost and time
 Controlling quality
Managing changes
 Project Life Cycle

Termination Phase:
 This phase marks the completion of the project
wherein the agreed deliverables are installed and
project is put in to operation with arrangements for
follow-up and evaluation.
 Life Cycle path

 The life cycle of a project from start to completion follows

either a “S” shaped path or a “J “ shaped path (Figure 2 and
3).
 In “S” shape path the progress is slow at the starting and
terminal phase and is fast in the implementation phase.
 For example, implementation of watershed project. At the
beginning detailed sectoral planning and coordination
among various implementing agencies etc. makes progress
slow and similarly towards termination, creating
institutional arrangement for transfer and maintenance of
assets to the stakeholders progresses slowly.
Life Cycle path
 Life Cycle path

In “J” type cycle path the progress in beginning is

slow and as the time moves on the progress of the
project improves at fast rate.
 Example, in a developing an energy plantation. In
this the land preparation progresses slowly and as
soon as the land and seedling are transplantation is
under taken.
Life Cycle path
 Project Feasibility Report

 Prior to project commencement, conducting a feasibility

study is paramount.
 During the analysis, a detailed study is conducted evaluating
the project’s feasibility from all angles such as its technical,
economical, political, ecological, environmental etc.
 Robust figures achieved in all these various analyses justify
through this report the need of initiating the project, which
in itself is key to building a Detailed Project Report, to
assess various strengths and weaknesses, risk aspects and
their mitigation. This helps an investor make suitable
decisions. 
 Project Feasibility Report…

 Project Feasibility Report is a documented output of all

these studies summarised to establish whether the project
is technically feasible and economically viable.
 A feasibility study conducted by an investment company
focuses on product demand, market situation, production
capacity, cost vs revenue, financial & organizational
structure of the company, and Return on Investment
projection.
 The report also highlights the risks involved and offers a
fair comparison between suitable investment proposals.
 Project Feasibility Report…

 A well-framed Project Feasibility Report quickens the

process of obtaining consensus from all the stakeholders
involved, speeds up negotiations with parties, help
government bodies fast-track issuance of licenses,
subsidies, and incentives.
 This study offers an opportunity to take corrective
measures prior to any financial, resource, or time
commitment made.
 Project feasibility report is not the same as a Detailed
Project Report but is definitely an unavoidable
component of it.
 Project appraisal

The project appraisal is the process of critical

examination and analysis of the proposal in totality.
The appraisal goes beyond the analysis presented in
the feasibility report.
At this stage, if required compilation of additional
information and further analysis of project
dimensions are undertaken.
At the end of the process an appraisal note is
prepared for facilitating decision on the project
implementation.
 Types of Project Appraisal

Project appraisal enables to take a decision on

investment with long term effects.
During the appraisal stage, measurement of costs
and benefits are difficult as these are spread over a
long term with high degree of uncertainty
Types of Project Appraisal
 Types of Project Appraisal

Technical Appraisal
 It determines whether the technical parameters are soundly
conceived, realistic and technically feasible.
 Technical feasibility analysis is the systematic gathering and analysis
of the data pertaining to the technical inputs required and formation
of conclusion there from.
 The availability of the raw materials, equipment, hard/software,
power, sanitary and sewerage services, transportation facility, skilled
man power, engineering facilities, maintenance, local people etc.,
depending on the type of project are coming under technical analysis.
 This feasibility analysis is very important since its significance lies in
planning the exercises, documentation process, risk minimization
process and to get approval.
 Types of Project Appraisal

 Checklist for Technical Appraisal

 Physical scale
 Technology used & Type of equipments & Suitability conditions
 How realistic is the implementation schedule
 Labour intensive method or others
 Cost estimates of Engineering Data
 Escalation are taken care of or not
 Procurement arrangement
 Cost of operation & Maintenance
 Necessary raw material & Inputs
 Potential impact of project on human & physical Environment
 Types of Project Appraisal

 Financial Appraisal
 To determine whether the financial costs and returns are properly
estimated and whether the project is financially viable. Following
minimum details are determined in the financial appraisal;
1. Total Cost
2. O & M Expenditure
3. Opportunity costs
4. Other costs
5. Returns on Investment over project life
6. NPV
7. CBR
8. IRR
 Types of Project Appraisal

Institutional Appraisal
To determine whether the implementing agencies as
identified in the report are capable for effective
implementation, monitoring, and evaluation of the
scheme.
Managerial competence, integrity, knowledge of the
project, the promoters should have the knowledge and
ability to plan, implement and operate the entire project
effectively.
The past record of the promoters is to be appraised to
clarify their ability in handling the projects. Checklist
 Types of Project Appraisal

checklist for Institutional Appraisal

Whether the entity is properly organised do the job
Strength to use capability and take initiatives to
reach the objectives
Openness to new ideas and willingness to adopt long
term approach to extend over several projects
 Types of Project Appraisal

 Commercial Appraisal
 The demand and scope of the project among the
beneficiaries, customer friendly process and preferences,
future demand of the supply, effectiveness of the selling
arrangement, latest information availability on all areas,
government control measures, etc.
 The appraisal involves the assessment of the current
demand/market scenario, which enables the project to get
adequate demand.
 Estimation, distribution and advertisement scenario also to
be here considered into.
 Types of Project Appraisal

Environmental Appraisal
To see any detrimental environmental impacts and
how to minimise the impacts.
Environmental appraisal concerns with the impact of
environment on the project. The factors include the
water, air, land, sound, geographical location etc.
 Types of Project Appraisal

Economic Appraisal
How far the project contributes to the development
of the sector, industrial development, social
development, maximizing the growth of
employment, etc. are kept in view while evaluating
the economic feasibility of the project.
Legal Appraisal
To determine whether the project satisfies the legal
issues related to land acquisition, title deed,
environmental clearance etc.
 Types of Project Appraisal

Market Appraisal: Focusing on demand

projections, adequacy of marketing infrastructure
and competence of the key marketing personnel.
Managerial Appraisal: Focuses on promoters,
organization structure, managerial personnel, and
HR management.
 Market Appraisal

 Demand Analysis:
Market potential of a product or service is the estimated maximum
total sales revenue of all supplies of a product or service in a market
during a certain period.
Estimation of demand alone is not sufficient and other marketing
aspects such as proper pricing, distribution and advertising issues
are also essential to assess the market.
Since the inception of project planning, estimating demand-supply
gap has been the technique for estimating market potential.
The process starts with estimating demand in future and then
comparing the same with present supplies and prospective new
suppliers. A positive demand-supply gap favours the market
potential and vice versa.
 Demand forecasting techniques

Demand forecasting is a crucial aspect in gap

analysis.
There are various quantitative and qualitative
methods used for forecasting in different situations.
Demand forecasting techniques
 Qualitative Techniques

Jury Opinion: It is a method of combining views of

several executives regarding a forecast.
The general practice is to bring together top
executives from various fields of management, viz.,
finance, human resources, marketing, purchasing
and production. They provide information
experiences and opinions to project planning.
 Jury opinion is simple and commonly used as it is
less time-consuming.
 Qualitative Techniques…

 Delphi technique is drawing upon the group’s expertise by

getting individual submissions, without the drawback of face-
to-face meeting.
 It is a systematic and interactive (though no direct interaction
is involved) forecasting method which is based on the
outcomes of responses of panels of experts.
 The convener of the process prepares a questionnaire and
mails it to various experts.
 Based on the preliminary responses, a secondary
questionnaire is prepared and resent to the experts. It
sometimes may require more than two rounds of
questionnaires.
 Delphi Technique…

After each round, a moderator provides summary

of the experts forecasts from the previous round as
well as the reasons they provided for their
judgment.
This encourages participant experts to revise their
earlier responses.
Finally, the experts converge in their opinion
without any direct interaction.
 Statistical Techniques

 Moving Average Method: Simple moving average

method uses simple mean of last few time intervals to
forecast future demand. The number of time intervals
generally varies from three to five.

 Weighted Moving Average Method A weighted

average is any average that has multiplying factors to give
different weights to different data points. But in technical
analysis, a weighted moving average (WMA) has the
specific meaning of weights which decrease arithmetically.
 Statistical Techniques…

 Exponential smoothing refers to a particular type of moving

average technique applied to time series data, either to produce
smoothed data for presentation, or to make forecasts. The time
series data themselves are a sequence of observations.
 The simplest form of exponential smoothing is given by the
formula. F t+1 = F t + αe
 Where F t +1 is next year forecast; Ft is current year forecast;
and α is the smoothing factor, and the smoothed Ft is a simple
weighted average of the latest observation Dt and the previous
smoothed statistic Ft-1
O < α < 1
 e = Dt – Ft
 Statistical Techniques…

Regression methods involve determining the trend of

consumption based on past consumption and project
future consumption by extrapolating this trend. Linear
relationship D = a + bT
where D = Demand, T = year, a & b = constants
Regression is the most commonly used technique for
forecasting demand in project planning as it provides
demand forecast for many years to come.
The earlier methods are generally applied in operations
management whereas this method is significantly useful
in project management due to its longer time horizon.
Thanks!