Entrepreneurial Management

FINALS PERIOD LECTURE

November 23, 2019

PROJECT MANAGEMENT AND ENTREPRENEURSHIP MANAGEMENT

What is a PROJECT?
▪ It simply means an investment opportunity exploited for profit.
▪ It is an idea which is intended to be carried out or a finite task to be completed.
▪ (GILLINGER) – “a project is a whole complex of activities involved in using resources to gain benefits.”
▪ (WORLD BANK) – “a project is an approval for a capital investment to develop facilities that will provide goods
and services.”

LIFE CYCLE OF A PROJECT

A project is initiated to achieve a mission and is completed when the mission is achieved. The intermediate time
between this two cut-offs is called the project life cycle.

1. Pre-investment Stage – is concerned with the following:

a. formulation of objectives
b. demand forecasting
c. evaluation of input characteristics
d. selection of strategy
e. projection of financial profile
f. cost-benefit analysis
g. Surveys and feasibility studies

2. Construction Stage:
a. This is the stage that consumes the maximum expenditures.
b. It consists of developing the infrastructure for the project.
c. Capital Requirements: cost of land, building, civil works, machinery and equipment.

3. Normalization Stage:
a. The phase which objective is to produce the goods and services for which the project was established.
b. Expenditures: raw materials, fuel, facilities, administration and operation maintenance.
What is PROJECT MANAGEMENT?
▪ It is the process of planning, organizing, monitoring, and controlling all aspects of a project and motivating all
involved to achieve project objectives of safety and completion within a defined time, cost, and performance.

PHASES OF A PROJECT:
I. Project Identification: Identification of business/investment opportunities. It involves scanning the environment
to find out investment opportunities.
II. Project Formulation: It is the translation of the idea into concrete project with scrutiny of its preliminary
aspects.
III. Project Appraisal: It involves searching, analysis, and evaluation of market, technical, financial, and economic
variables. It examines the viability of the project.
IV. Project Selection: The process of choosing a project rationally from alternatives based on the results of project
appraisal.
V. Project Implementation: It is the stage of the birthplace of the enterprise. This is where the idea becomes a
reality.
VI. Project Follow-up and Evaluation: It is the process of assessing the performance of the project after it started
functioning. (EVALUATION – means assessing the progress of a project)

OJBECTIVES OF A PROJECT:
▪ (ultimate goal) – to attain the objectives for which the project has been undertaken.
▪ to achieve maximum productivity at minimum cost
▪ Risk reduction and improve efficiency
▪ Maximize income and return

PROJECT FORMULATION:
▪ It is the step through which an opportunity becomes a project that the entrepreneur is willing to invest his time,
money, and other resources.
▪ MAJOR PROBLEMS ENTREPRENEUR FACES IN PROJECT FORMUATION:
a. Knowledge about government regulation
b. Absence of external economics
c. Non-availability of technically qualified personnel
d. Resource mobilization
▪ ELEMENTS OF PROJECT FORMULATION:
a. Feasibility Analysis – involves examination of a project idea given internal and external constraints.
b. Techno-economic Analysis – involves the identification of the project demand potential and selection of
optimal technology suitable for achieving the project objectives.
c. Project Design – concerned with the development of a detailed plan of work of the project and its time
estimates.
d. Network Analysis – identifying the optimal course of action given certain sequential activities that are
interrelated.
e. Input Analysis – primarily concerned about the identification, qualification, and evaluation of project
inputs.
f. Financial Analysis – involves estimates about project costs and revenues and the funds required for the
project.
g. Social cost benefit analysis
h. Pre-investment appraisal – a decision on whether to ACCEPT or REJECT the project.
 TECHNICAL ANALYSIS
▪ Involves ensuring that necessary physical facilities required for production will be available and the best possible
alternative to procure them.
▪ PARTS OF TECHNICAL ANALYSIS:
a. Material inputs
b. Manufacturing process/technology (indigenous or imported technology, technology transfer)
c. Plant capacity – refers to the volume or number of units that can be manufactured during a given
period. (aka. production capacity)
d. Plant location
e. Size of the plant
f. Product Mix – refers to the set of all the products offered by a firm for sale.
g. Factory design refers to the plan for a particular type of building, arrangement of machineries and
equipment, and provision of service facilities.
h. machineries and equipment
i. Plant layout – refers to the arrangement of the machines, equipment, and other physical facilities in the
factory.
▪ TYPES OF PLANT LAYOUT:
1. Line layout (product layout)
2. Process layout (functional layout)
3. Cellular layout

NETWORK ANALYSIS
▪ NETWORK – refers to the combination of activities and events of a project.
▪ NETWORK ANALYSIS – is a system which plan projects by analyzing the project activities and is concerned with
the evaluation of time and resources profile of project activities.
▪ OBJECTIVES OF NETWORK ANALYSIS:
1. Helps minimize total cost.
2. Helps in delegation of power and authority
3. Avoids production delays.
4. Leads to optimal use of resources.
5. Minimize time for a given cost.
▪ TERMS RELATED TO NETWORK ANALYSIS
1. network – series of related activities
2. network diagram – activities and events of a project given in logical sequence (arrow diagram, profit
diagram)
▪ STEPS:
1. Preparation of network
2. Estimation of time to perform each activity
3. Computation of critical path schedules
4. Interpretation of results

▪ TECHNIQUES:
1. CPM (Critical Path Method)
▪ was developed in 1956 by Morgan Walker
 ▪ TERMINOLOGIES:
a. Path – a continuous chain of activities from the start event to end event in a network
diagram.
b. Critical Path – path which takes the longest duration.
c. Critical activities – activities in the critical path.

▪ Steps in CPM are as follows:

• Arrange all activities in a logical sequence.
• Construct arrow diagram and number all the events.
• Mark activity times on arrows.
• Calculate earliest and latest starting/finishing times and mark these times on arrow diagram.
• Identify critical path.

2. PERT (Program Evaluation Review Technique)

▪ is a network technique of scheduling and controlling the project where activity times cannot be
precisely estimated.

Steps in PERT The following steps are used in PERT:

• Activities are arranged in a logical sequence.
• Network diagram is drawn and events are numbered.
• Using 3 time estimates, the expected time for each activity is calculated.
• Slack is calculated and critical path is identified.
• The total project duration is worked out.
• Standard deviation and variance for each activity are found.