MODULE 5

PROJECT MANAGEMENT
&
NEW CONTROL
TECHNIQUES
25-Nov-19 Dr. G.PURUSHOTHAM 1
 Project Management
Project management is the discipline of initiating, planning, executing, controlling,
and closing the work of a team to achieve specific goals and meet specific success criteria at
the specified time.
A project is a temporary endeavor designed to produce a unique product, service or result
with a defined beginning and end (usually time-constrained, and often constrained by
funding or deliverable) undertaken to meet unique goals and objectives, typically to bring
about beneficial change or added value.
Some examples of a project are:
Developing a new product or service, Constructing a building or facility,
Renovating the kitchen, Designing a new transportation vehicle,
Acquiring a new or modified data system, Organizing a meeting,
Implementing a new business process.

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 Objectives of Project
Management
The main objectives and principles behind good project management are as follows:
• Agree exactly what a project is meant to do and what it is meant to deliver.
• Agree the scope, timescales, cost and quality of a project.
• Maintain a schedule and project plan.
• Deliver the agreed outcomes of the project to the right scope, timescales, cost
and quality.
• Provide communications, reports and progress updates throughout the lifecycle of the
project.
• Manage risks, issues and dependencies.
• Make sure that the business gets the outcome that it wants from the project.
• Manage policies, processes, tools, frameworks, techniques, people and relationships to a
successful project outcome.
• Minimize any impact on normal business operations.
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 Objectives can often be set under three headings
• 1. Performance and Quality
• The end result of a project must fit the purpose for which it was intended. At
one time, quality was seen as the responsibility of the quality
control department.
• 2. Budget
• The project must be completed without exceeding the authorized
expenditure. Financial sources are not always inexhaustible and a
project might be abandoned altogether if funds run out before
completion. If that was to happen, the money and effort invested
in the project would be forfeited and written off.
• 3. Time to Completion
• Actual progress has to match or beat planned progress. All significant stages
of the project must take place no later than their specified dates, to result
in total completion on or before the planned finish date. The timescale
objective is extremely important because late completion of a project is
not very likely to please the project purchaser or the sponsor.
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 Characteristics of a Project
Every project has the following characteristics:
• Consists of temporary activities that have predetermined start
and end dates
• Uses restricted resources
• It has a single goal or a set of goals
• All events are to be realized to develop a single and new output
• Usually has a budget
• Usually a project manager is responsible for co-ordinating
all activities
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 PROJECT
• strategic IDENTIFICATION
Project (Predetermined)
identification isplanning
the first step
process. in
Before
spending significant
the
time and resources on a project, restoration practitioners should
be able to identify the biological importance and likelihood of
restoration success at potential project sites.
• An initial feasibility analysis should also be performed that
evaluates how the local or state political climate, permits,
funding, or community acceptance might support or impede a
project. As project planning proceeds, a team should be
assembled that is knowledgeable of the opportunities,
complexities, and potential pitfalls of the project. Finally, the
development of partnerships and consideration of funding
opportunities are also important steps in planning
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 Sources of Information for
project identification
1. Consumers
2. Existing products and services
3. Distribution channels
4. Government sources
5. Observation
6. Trade and professional journals

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 Importance of Project management
• Project management is important because it ensures risks are properly
managed and mitigated against to avoid becoming issues. Risk management
is critical to project success. But having a robust process
around the identification, management and mitigation of risk is what
helps prevent risks from becoming issues.
• The scope can be broken down and refined by using a variety of break down
structures:
• Product breakdown structure (PBS)
• Work breakdown structure (WBS)
• Organizational breakdown structure (OBS)
• Cost breakdown structure (CBS)
• Responsibility assignment matrix (RAM)
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 EXAMPLE OF A PRODUCT BREAKDOWN
STRUCTURE (PBS)

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 Why Project Management is important?
• 1. Strategic Alignment
Project management is important because it ensures
what is being delivered, is right, and will deliver real value against the
business opportunity.
• 2. Leadership
Project management is important because it brings
leadership and direction to projects.
• 3. Clear Focus & Objectives
Project management is important because it ensures
there’sa properplan for executing on strategic goals.
• 4. Realistic Project Planning
Project management is important because it ensures proper expectations are set
around what can be delivered, by when, and for how much
• 5. Quality Control
Projects management is important because it ensures the quality of whatever is
being delivered, consistently hits the mark.
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• 6. Risk Management
Project management is important because it ensures risks are properly managed and
mitigated against to avoid becoming issues.
• 7. Orderly Process
Project management is important because it ensures the right people do the right
things, at the right time – it ensures proper project process is followed throughout
the project lifecycle.
• 8. Continuous Oversight
Project management is important because it ensures a project’s progress is tracked
and reported properly.
• 9. Subject Matter Expertise
Project management is important because someone needs to be able to understand
if everyone’s doing what they should.
• 10. Managing and Learning from Success and Failure
Project management is important because it learns from the successes and failures
of the past.
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 PROJECT LIFE
CYCLE
Concept and
Proposal

Development
Implementation

Verification

Termination

Initial Phase Intermediate Phases Final Phase

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 PROJECT LIFE
CYCLE
1

2
4

The Project Management Life Cycle has four phases:

Initiation,
Planning,
Execution
Closure.
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• Phase #1: The Conceptualization Phase
• This can also be referred to as the ‘Initiation Phase’ and is the starting point of any
project or idea. For the Conceptualization Phase to begin, a strategic need for the
project or service must be recognized by upper management.
• Phase #2: The Planning Phase
• The second phase of the project management life cycle is referred to as the
Planning Phase. Once management has given the OK to launch a project, a more
formal set of plans—outlining initial goals—is established.
• Phase #3: The Execution Phase
• The third phase is labeled Execution. This is when the actual work of the project is
performed. Required materials, tools, and resources are transformed to reach the
project goals. During this phase, performance is continually measured to ensure
the project is successful.
• Phase #4: The Termination Phase
• The fourth and final phase is called Termination Phase, also referred to as Project
Closure. This phase begins once the project has been completed.
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 PROJECT
SCHEDULING
• The Project Schedule is the tool that communicates what work needs to be
performed, which resources of the organization will perform the work
and the timeframes in which that work needs to be performed.
• The project schedule should reflect all of the work associated with delivering
the project on time. Without a full and complete schedule, the
project manager will be unable to communicate the complete effort, in
terms of cost and resources, necessary to deliver the project.
• Online project management software allows project managers to
track project schedules, resources, budgets and project related
assets in real time. The project schedule can be viewed and
updated by team members associated with the project, keeping
everyone well informed on the overall project status.
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 CAPITAL BUDGETING
• Capital budgeting is the process in which a business determines
and evaluates potential expenses or investments that are large
in nature. These expenditures and investments include projects
such as building a new plant or investing in a long-term venture.

• Capital budgeting and investment appraisal, is the planning

process used to determine whether an organization's long term
investments such as new machinery, replacement of machinery,
new plants, new products and research development projects are
worth the funding of cash through the firm's capitalization
structure
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 Generating Capital Investment Project
• IdeasProposals
for new capital investments can come from many sources, both inside and
outside a firm. Proposals may originate at all levels of the organization —from
factory workers up to the board of directors. Most large and medium -size firms
allocate the responsibility for identifying and analyzing capital expenditures to
specific staff groups.
• These groups can include cost accounting, industrial engineering, marketing
research, research and development, and corporate planning. In most firms,
systematic procedures are established to assist in the search and analysis steps. For
example, many firms provide detailed forms that the originator of a capital
expenditure proposal must complete.
• These forms normally request information on the project’s initial cost, the revenues
it is expected to generate, and how it will affect the firm’s overall operating
expenses. These data are then channeled to a reviewer or group of reviewers at a
higher level in the firm for analysis and possible acceptance or rejection.
• Where a proposal goes for review often depends on how the particular project is
classified.
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 Classifying Investment
Projects
• Projects Generated by Growth Opportunities

• Projects Generated by Cost Reduction Opportunities

• Projects Generated to Meet Legal Requirements and

Health and Safety Standards
• Project Size and the Decision-Making Process
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 Investment Proposals
There is no standard application form for IFC
(International
Finance Corporation) financing. A company or
entrepreneur,
foreign or domestic, seeking to establish a new
venture or expand an existing
enterprise can approach IFC directly.
An investment proposal should include the following preliminary
information:
• 1. Brief description of project.
• 2. Sponsorship, management & technical assistance:
• 3. Market & sales:
• 4. Technical feasibility, manpower, raw material resources & environment:
• 5. Investment requirements, project financing, and returns:
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• 6. Government support & regulations:
 Project Report
Reports give you a visual representation of how your
projects are shaping up so that with one glimpse you
know where your projects are standing. They often use
graphs, images and charts to capture and present useful
information such as project status, length of an activity
and time spent doing each task.
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 What do you mean by a project report?
An assessment that takes place during a project or process, that
conveys details such as what sub-goals have been accomplished,
what resources have been expended, what problems have been
encountered, and whether the project or process is expected to
be completed on time and within budget
Meaning of Project Report:
A project report is a document wherein all the details obtained
from technical analysis, financial analysis, profitability analysis,
economic analysis etc. are put together.
A project report may be defined as a document with respect to
any investment proposal based on certain information & factual
data for the purpose of appraising the project.
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 Significance / Importance of Project
• Project report is an important cornerstone for setting up an enterprise. It is a business
Report:
plan to convert a business idea into a productive venture. It is like a blue print for any
construction activity without which one would land in confusion or chaos at a later
stage. The significance of a project report is as follows;
• Serves as a Master Plan-
• For successful management, effective planning is absolutely essential. A project report serves as a
business plan indicating the objectives or goals of the enterprise & states in detail how these
objectives are going to be achieved at various stages of the enterprise.
• Describes Direction / Road Map-
• A project report is like a road map. It describes the direction in which the enterprise should go &
how to reach the goal. Without well defined goals & operational methods as stated in the report,
most enterprises land in troubled waters & flounder on the rocks of hard times.
• Shows Feasibility-
• A project report also shows the feasibility of the proposed project & the probability of achieving
profit. Whether a project is feasible from different angles- economic, financial, commercial, social
etc. can be ascertained while preparing a project report.
• Foresees requirements-
• A project report enables an entrepreneur to realize what he needs for implementing the project
well in advance. It also gives a general idea of his various resource requirements like raw materials,
man25p-Noovw-19er, finance, infrastructure facilities Der.tGc.P.UaRUnSHdOTaHlAsMo the means of 22
• Indicates Profitability-
• It gives an indication of likely & benefits which a prospective entrepreneur can
get from his venture. This profitability indication will help an entrepreneur to
take an important investment decision.
• Helps in Decision Making-
• Crucial decisions have to be made at various stages of production. How much to
produce to achieve Break-Even-Level? How to fix the repayment schedule? Such
important decisions can be taken with the help of a project report prepared well
in advance. It also anticipates problems in advance so that suitable decisions can
be taken then & there to solve those problems.
• Paves way for Financial Assistance-
• The preparation of a project report is absolutely essential for those enterprises
which apply for financial assistance from different financial institutions & banks.
It is on the basis of project report, that the financial institutions could be given or
not. In most cases, the quality of the firms project report weighs heavily in taking
lending decisions
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 FORMULATION OF PROJECT
REPORT
• A project report is like a road map. It is an operating document. What
information and how much information it contain depends upon the
size of the enterprise, as well as nature of production.
• Vinod Gupta has given a general set of information in his
study
“Formation of a project report.” According to Gupta,
project
formulation divides the process of project development into
eight distinct and sequential stages as below:
• (1) General information
• (2) Project description
• (3) Market potential
• (4) Capital costs and sources of finance
• (5) Assessment of working capital requirements
• (6) Other financial aspects
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• (7) Economical and social variables
 CONTENTS OF A PROJECT
REPORT
Objectives and scope of the report
• Product characteristics (product design, specifications,
quality standards, uses and applications).
• Market position and trends (current capacity for
production, potential demand, export prospects, trends in
import-export, price structure etc).
• Raw materials (types, quality, sources, price).
• Manufacturing (process, production schedule, technique
used.
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• Plant and machinery (types, infrastructure support, cost).
• Land and building (Requirement, building
construction schedule, choice of location, cost).
• Financial implications (Capital structure, fixed andworking
capital investment, project cost, profitability).
• Marketing channels (Trade practices, marketing
and advertising strategy).
• Personnel (Requirement of staff, skilled-unskilled
labor, salary and wage payment, qualifications, experience)

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 PROJECT ANALYSIS
• The project analyst provides critical data support to a technical team.
Research and analysis functions may include budget tracking and
financial forecasting, project evaluation and monitoring, maintaining
compliance with corporate and public regulations, and performing any
data analysis relevant to project tasks
• What is system analysis of a project?
• The development of a new information system involves several different, but
related activities. These activities, or phases, usually include planning,
analysis, design, implementation, and maintenance/support. In other words,
SDLC is a conceptual model that guides project management in information
system development.

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 PROJECT ANALYSIS

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 PROJECT EVALUATION AND
SELECTION
The candidates' proposals are evaluated by an internal and
external selection process according to strict selection criteria
focusing on candidates' professional skills and research
potential. The entire process can be distinguished into several
steps: the eligibility check. a “matching process”
The entire process can be distinguished into several steps:
• the eligibility check
• a “matching process”
• the interview and submission of the application
• the evaluation and selection stage
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 PROJECT FINANCING
Project financing is a loan structure that relies primarily on the
project's cash flow for repayment, with the project's assets, rights
and interests held as secondary security or collateral. Project
finance is especially attractive to
the private sector because
companies can fund major
projects off balance sheet.
Project finance is the long-term
financing of infrastructure and industrial
projects based upon the projected cash
flows of the project rather than the
balance
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sheets of its sponsors. Dr. G.PURUSHOTHAM 30
 PROJECT IMPLEMENTATION
PHASE
• Project implementation (or project execution) is the phase where visions
and plans become reality. This is the logical conclusion, after
evaluating, deciding, visioning, planning, applying for funds and finding
the financial resources of a project.

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 PROJECT IMPLEMENTATION PHASE

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 PREREQUISITES FOR SUCCESSFUL PROJECT
IMPLEMENTATION
The Prerequisites for successful project implementation
are as follows:
• Adequate formulation.
• Sound project organization.
• Proper implementation planning.
• Advance action.
• Timely availability of funds.
• Judicious equipment tendering and procurement.
• Better contract management.
25-Nov-19 • Effective monitoring.
Dr. G.PURUSHOTHAM 33
 NEW CONTROL
TECHNIQUES

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 NEW CONTROL
TECHNIQUES
• A project consists of a number of constituted activities. It is examined
in detail and the details are utilized to compile the sequential narration
of the constituent activities of a project. The compilation is known as
the project logic. When it is represented in the form of a graphical
portrayal it is called as network. Network in simple words is defined as
the graphical representation of interrelated activities of the project.
• A network generally comprises a set of symbols connected with each
other in a sequential relationship with each step making the
completion of an event. The network diagram and scheduling
computations enable the project formulation team to identify the
longest series of activities through the project implementation phase
which determines the project duration.
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 Critical Path Method (CPM)
• The CPM is a logical mathematical model of the project
based upon the optimal duration required for each activity
and optimal use of available limited resources. It is a
deterministic model.
• Use of CPM
• The CPM is almost similar to the PERT. However it is activity oriented and focuses
on cost and not time. The CPM is generally used to find the optimum project cost
and time. The optimum project cost is the minimum cost at which the project can
be completed. This can be determined by using the concept of crashing of
activities. Crashing of activity is nothing but reducing the time required to
complete an activity, by allocations additional resources, which adds cost. CPM is
also used to find minimum time at which a project can be completed, irrespective
of25-Nov-19
cost, which may be necessary under crisis situations.
Dr. G.PURUSHOTHAM 36
Advantages of CPM
(1) CPM allows for a comprehensive view of the entire project. Because of the sequential
and concurrent relationships, time scheduling becomes very effective.
(2)Identifying critical activities keeps the project manager alert and in a state
of preparedness, with alternative plans ready in case these are needed.
(3)Selective management principle may be used in project management. In the
network analysis, the critical activities become item ‘A’ the sub-critical activities item ‘B’
and all others, item ‘C’. Breaking down the project into smaller components permits
better and closer control.
(4) Through the plan schedule derived from CPM, delegation can be effectively practised.
Limitations of CPM
(5)CPM is deterministic model based on certainty assumptions as regards time. But
it may not be true in practice.
(6) CPM does not use statistical analysis in making time estimates.
(7) It cannot be used as a controlling device since any changes introduced will alter the
entire structure of network.
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 Program Evaluation and Review
Technique (PERT)
• The PERT is primarily a scheduling technique. It shows any job or
project as a set of processes of operations called ‘activities’
which must take place in a certain sequence. All activities
have to be compelled in order to accomplish the project. It
is a probabilistic model and introduces uncertainties in
project network.

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Use of PERT
The following steps are used in PERT:
(1) The activities of the project are identified along with their
interrelationships and graphically represented using networks.
(2)The time required for completing each activity is estimated and noted
on the network.
(3)The minimum time required for
completing the entire project is estimated.
(4)The critical activities are identified for
the efficient allocation of resources in order to complete the project
earlier, if necessary.
(5)Closer watch on critical and other activities so as to complete the
project on Time.
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• ADVANTAGES OF PERT
• (1) It determines the expected duration of activities and
consequently of the project duration.
• (2) It incorporates risk analysis in project network.
• (3) It determines critical activities in the project.
• (4) It determines the most economical scheduled for fixed
project duration.
• (5) It enables optimal allocation of limited resources.
• LIMITATIONS OF PERT
• (1) The time estimates to perform activities constitutes a
major limitation of this technique.
• (2) The probability distribution of total time is assumed to be
normal which in real life situations may not be true.
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 Differences between PERT and CPM
Though both PERT and CPM are used for managing projects, yet there
are differences between them. These are listed below…

• PERT
1. It is event oriented approach
2. It allows uncertainty
3. It is probabilistic model
4. It is time based
5. It averages time
6. It has three estimates of time
7. It is suitable when high precision
is required.
• CPM
• It is an activity oriented approach
• It does not allow uncertainty
• It is deterministic model
• It is cost based
• It does not average time
• It has single estimate of time
• It is suitable where reasonable
precision is required.

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