JIGJIGA UNIVERSITY

SCHOOL OF GRADUATE STUDIES

COLLEGE OF BUSINESS AND ECONOMICS

PROJECT PLANNING & MANAGEMENT

INSTRUCTOR
Dr. Abenet Yohannes (Ph.D.)

Saturday 20 January 2024 08:19 AM

 CHAPTER 1- INTRODUCTION

1.1 Meaning and definition of project

1.2 Features of a project
1.3 Projects and Plans
1.4 Project and program
1.5 Project management
 CHAPTER 2 PROJECT CYCLE

• 2.1 Meaning and Definition of Project Cycle

• 2.2 World Bank Project Cycle

• 2.3 UNIDO Project Cycle

 CHAPTER 3 PROJECT IDENTIFICATION

• 3.1. Project Idea – meaning

• 3.2. Sources of Project Ideas

• 3.2.1. Macro sources

• 3.2.2. Micro sources

 CHAPTER 4 PROJECT PREPARATION
• 4.1. Markets and Demand Analysis

• 4.2. Raw Materials and Supplies Study

• 4.3. Location, Site and Environment Impact Assessment (EIA)

• 4.4. Production Program and Plant Capacity

• 4.5. Technology Selection

• 4.6. Organizational and Human Resource

 CHAPTER 5 FINANCIAL AND ECONOMIC ANALYSIS
• Initial investment cost

• Production cost

• Marketing cost

• Projection of cash flow

• Financial evaluation
• Net present value (NPV)
• Internal rate of return (IRR)
• Benefit cost ratio (BCR)

• Payback period (PBP)

• Accounting rate of return (ARR)

• Break – even analysis (BEA)

Chapter 6 SOCIAL COST BENEFIT ANALYSIS (SCBA)

• 6.1. Rationale for SCBA

• 6.2. UNIDO Approach

• 6.3. Net Benefit in Terms of Economic Prices

• 6.4. Savings Impact

 CHAPTER 7 PROJECT FINANCING
• 7.1. Source of Project Finance( Ethiopian Context)
• 7.1.1. Equity
• 7.1.2. Loan financing
• 7.1.3. Leasing
• 7.2. Cost of Capital
• 7.3. Public Policy and Regulations on Financing
• 7.4. Financing Institutions
 Chapter 8 : PROJECT RISK MANAGEMENT

• 8.1 Risk management defined

• 8.2 Objectives of risk management

• 8.3 Steps in risk management process

• 8.4 Risk identification

• 8.5 Risk measurement

• 8.6 Selecting the appropriate tools of risk management

• 8.7 Risk administration

 SUGGESTED READINGS

• 1. Prasana Chandra: Projects-Planning Analysis, Selection, Implementation &

Review, Tata McGraw Hill, New Delhi.

• 2. Prasana Chandra : Financial Management, Tata McGraw Hill, New Delhi.

• 3. M.Shaghil and M. Mushtaque : Project Planning and Management Vol. 1

• 4. C. Choudhury : Project Management, Tata McGraw Hill, New Delhi – 1995

• 5. I.M. Pandey : Financial management, Vikas Publishing. Ed. 8.

• 6. Laura Brown and Tony Grundy : Strategic Project Management

• 7. P. Gopala Krishnan and V. Rama Moorthy : Project Management

• 8. Johan, M. Nicholas : Project Management for Business & Technology, Ed. 2nd.
 Course objectives
 Understand the basic concepts of project planning and evaluation.

 Identify the major approaches, procedures, techniques in the

development of a project.

 Understand the basic techniques of project appraisal.

 Explain the cost and benefit of a given project

 Develop the skill of project designing.

 Develop the skill of basic techniques of project evaluation/ review.

 Develop small-scale projects at community level.

CHAPTER ONE: INTRODUCTION
 Historical Background & Project Concepts
• Cost and benefit analysis of project is a technique began in
19th century to appraise (assess) public project.

• The 1st systematic study was made in 1930 when USA

company needed to assess dam project

• During the great depression Keynesians advocated

government intervention

– Investment to create job, thus appraisal was needed using

cost accounting technique
 Historical Background (Continued)
• Full-fledged project analysis has 55-65 years of age

• In 1968 OECD (Organization for Economic Corporation and

Development) manual of project analysis was developed
based on neoclassical economics, centered on growth

• In 1972 UNIDO (United Nations Industrial Development

Organization) guideline was introduced and distributional
concern was reflected

• Later LM Little and Mirrlees “Project Appraisal and planning

for Developing Countries” in 1974
 Historical Background (Continued)
• Squre and van der Tak “(Economic Analysis of Projects” in
1975 and then

• Irvin book “Modern Cost and Benefit Methods” in 1978 and

• Gittinger “Economic Analysis of Agricultural Projects” in 1982

• Now, Project Planning and Analysis is beyond the traditional

cost benefit analysis. It includes social, economical,
environmental and cross-cutting issues as well.
 Reflection

What is a Project?

What features do projects have?

 What is a Project?
“A unique set of activities meant to produce a defined outcome
within an established time frame using specific allocation of
resources”
(Harvard Business Review)

“a project is a temporary endeavor undertaken to create a unique

product or services.

(PMI)

Project management is like juggling three balls– times, cost and

quality. (G. Reiss)
 What is a Project?
• Project is a temporary effort involving a connected sequence of activities
and a range of resources, which is designed to achieve a specific and
unique outcome, which operates within time, scope, cost and quality
constraints and which is often used to introduce change (Lake, 1997).

• According to the British Standard 6079 of 1996 , a project is

defined as a unique set of coordinated activities, with definite
starting and finishing points, undertaken by an individual or
organization to meet specific objectives within defined
schedule, cost, and performance parameters.
18
 Project Characteristics
1. Objectives

A project has a set of objectives or a mission. For example, the

objective of a project may be construction of a highway connecting two

cities “A” and “B”, covering a distance of 200 km. Once the construction

of the highway is completed the project comes to an end.

The objective is specified in terms of cost, schedule, and performance

requirements.
 Project Characteristics…Cont’d
2. Life Cycle
 A project has a life cycle. The life cycle consists of the
following stages:

a) Project Initiation

b) Project Planning

c) Project Execution, and

d) Project Closure
 The task, people, organizations, and other resources change as
the project moves from one phase to the next.
 Project Characteristics…Cont’d
3. Definite Time Limit (Temporary)
• A project has a definite time limit. It cannot continue forever.

4. Uniqueness
• Every project is unique and no two projects are similar.
Constructing a highway connecting two cities A & B and
constructing another highway between cities C & D are unique
in themselves. In view of the differences existing in the
organization, infrastructure, location, technical specifications
and the people behind the projects.
 Project Characteristics…Cont’d

5. Teamwork

 Any project calls for the services of experts from a

host of disciplines. Coordination among the diverse
areas call for teamwork. Hence, a project can be
implemented only with teamwork.
 Perhaps more than any other human endeavor, project
work is teamwork.
 Project Characteristics…Cont’d
6. Complexity
 A project is complex set of activities relating to diverse areas.
Technology survey, choosing the appropriate technology,
procuring the appropriate machinery and equipment, hiring the
right kind of people, arranging for financial resources,
execution of the project in time by proper scheduling of the
different activities, etc. contribute to the complexity of the
project.
 Project Characteristics…Cont’d

7. Risk and Uncertainty- a risk free project cannot be

thought of.

8. Sub-contracting- to give a contract to somebody else

to do part of the work.
 CHARACTERISTICS OF PROJECT

(9) 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.

(10) Change :

Changes occur through out the life span of a project as a natural outcome
of many environmental factors. The changes may very from minor changes,
which may have very little impact on the project, to major changes which
may have a big impact or even may change the very nature of the project.
 CHARACTERISTICS OF PROJECT

(11) Optimality

A project is always aimed at optimum utilization of

resources for the overall development of the economy.

(12) Unity in diversity

A project is a complex set of thousands of varieties. The

varieties are in terms of technology, equipment and
materials, machinery and people, work, culture and
others.
 CLASSIFICATION OF PROJECTS
– New, updating and expansion

– Market based, Resource based, Felt need

– Private, NGOs, and/or government

– Industrial, Agricultural and Service

 Typical Project Examples

(a) Construction projects

(b) Development projects

(c) event management (Weddings, world cup)

(d) services (Company audits, major litigations)

(e) Personal project( research paper)

Examples- New product development
Examples -Mega Construction Projects
EXAMPLES
Events/ Festivals
Local example
WORLD'S BUSIEST AIRPORT............... NEW YORK
WORLD'S LONGEST BRIDGE............... CHINA
Project :
Converting a vision, a dream or a need to reality.
 A job that has a beginning and an end (Time)
 A specified outcome (Scope)
 At a stated level of Performance (Quality)
 At a budget (Costs).
 Project Goals
 every project has three overriding goals: to
accomplish work for a client or end-user in accordance
with budget, schedule, and performance requirements.

(i) Budget: the budget is the specified or allowable

cost for the project.

-It is the target cost of the work to be done.

 Project Goals
(ii) Schedule: the schedule includes the time period
over which the work will be done and the target date for
when it will be completed.

(iii) Performance Requirements: Specify what is to be

done to reach the end-item or final result.
Note: The three goals are interrelated and must be addressed
simultaneously; exclusive emphasis on any one goal is likely to
detract from the others.
 What is not a project
Organizations perform either Operations, or Projects
• “Operations” are ongoing and repetitive

• “Projects” are temporary and unique

> Temporary : definite beginning and ending

> Unique: different in some characteristic

= Unique, one-time operation designed to achieve an objective in a

limited time.

= Series of related jobs focused on the completion of an objective.

Differences Between Process & project
 Project Management
Project management is:

• an organized venture for managing projects.

• “…the application of knowledge, skills, tools and techniques to project

activities in order to meet stakeholders needs and expectations from a

project.” – (PMI, 1996):PMBOK

 “The process by which projects are defined, planned, monitored, controlled

and delivered so that agreed benefits are realized,” – (APM, 2006): PMBOK

 “Project management is the skills, tools and management processes

required to undertake a project successfully”.

 PM skills
Project management as its objectives could enhance the
following attributes of professionals:
• Technical skill,

• Communication skill,

• Decision making skill,

• Problem-solving skill,

• Interpersonal skill,

• Leadership skill,
 Why do companies use PM?
1. The expansion of knowledge (knowledge explosion)

2. The increasing demand for new products (services)

3. The increase in world wide market

4. Increased competition

5. The belief that “better living through technology”

6. Expanding size of projects – some projects may be expanding too

much thus requiring project management.

 Why do companies use PM?
 To handle projects effectively in an organization.

 To define the project and agree with the customer

 To plan and assess resource needs for the project

 To estimate project cost and make proposals

 To plan & schedule activities in a project.

 To allocate the right resource at the right time.

 To assess risk and failure points and make backup plans.

 To lead a project team effectively and communicate

• well
 Functions of the Project Managers
 Project managers perform the following major functions:
1. Plan work (scope, budget, schedule),

2. Obtain and manage resources,

3. Resolve conflicts and problems,

4. Motivate people

5. Communicate to the team, to the organization, and to the clients,

6. Set priorities,

7. Make decisions,

8. Control technical quality, budget, and schedule

9. Integrate multiple skills

 PLANS AND PROJECT
• Planning:
• Is a continuous process.

• Involves decisions or choices about alternative ways of using

available resources.

• Aims at attaining a particular goal or set of goals at some time in

the future.

• Serves as a tool for enhancing the effectiveness in mobilizing

resources.

• Enables allocation of resources into priority areas of development.

 Projects and Plans

Planning is a form of decision making in using scare resources in

selective and economical ways to achieve a pre-determined
objectives or goals.
Planning is necessary because:
 it helps to make necessary arrangements in advance of possible
challenge
 it helps an organization to think ahead and anticipate future events
 it gives clear picture of future events to measure and control actual
activities
 it helps to identify operational problems of past performance and future
corrections
01/20/2024 Dr.Abenet Yohannes
 Development Planning
• Development Planning is defined as the process of
determining development goals and the courses of
actions for attaining these goals.
• What ? goals
• When? time
• How ? Method

• The how? of the plan can be answered through

programs and projects.
01/20/2024 Dr.Abenet Yohannes
• Projects exist as components in broader developmental

plans, their identification, formulation and

implementation should be linked to short, medium and

long term national development plans.

• Sound development plans require good projects, just as

good projects require sound planning. The two are

interdependent.
01/20/2024 Dr.Abenet Yohannes
Stages of Planning:
 PROJECTS AND PROGRAMS

• A program is an collection of related/associated

projects that are managed together to achieve a
number of objectives.

• Since programs comprise multiple projects, they

are larger in scope than a single project.
 Policies are implemented through programs usually overall
lengthy time scale of five to ten years.

Programs have broadly expressed development objectives. while

projects are the building blocks of programs and are usually of
shorter duration.

A project is a means by which national, regional local, etc

plans are made operational.

The
package
of
action • Program: which is the first step in plan elaboration and
can be
divided
into two
• Project: the second step in plan elaboration.
broad
categori
es.
 Project Program
Narrow in scope Wide in scope; can comprise many projects
Differences

as components.

Specific and detail Comprehensive and general

More precise and accurate in its Broader goal related to sectoral policy

objectives and features

Possible to calculate the costs Difficult to calculate costs and returns

and returns
Similarities

• Have purpose/ objectives

• Require input (financial, manpower, material)

• Generate output (goods and/or services)

• Operate over space and time

 COURSE WORK & CRITICAL REVIEW
INDIVDUAL Assignment (10%)
“Provide a critical analysis of project failure. Focus on the
main areas and identify selected themes, especially
considering the human and organizational aspects and the
management of change, in respect of project failure. Give
examples and show how learning derived from these can
be used to improve practice, in future.”
"He who asks is a fool for five minutes, but he who
does not ask is a fool forever."
(traditional Chinese proverb)

Thank You