INTRODUCTION TO PROJECT MANAGEMENT

Introduction
Realization of these objectives requires systematic planning and careful
implementation. To this effect, application of knowledge, skill, tools and techniques in
the project environment, refers to project management. Project management in recent
years has proliferated, reaching new heights of sophistication. It has emerged as a distinct
area of management practices to meet the challenges of new economic environment,
globalization process, rapid technological advancement, and quality concerns of the
stakeholders.

Project Definition
Project in general refers to a new endeavor with specific objective and varies so widely
that it is very difficult to precisely define it. Some of the commonly quoted definitions are
as follows. Project is a temporary endeavor undertaken to create a unique product or
service or result. (AMERICAN National Standard ANSI/PMI99-001-2004)

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.
(ISO10006)

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.
It may be noted that each of these projects differ in composition, type, scope, size and
time.

Project Characteristics
Despite above diversities, projects share the following common characteristics.
▪ Unique in nature.
▪ Have definite objectives (goals) to achieve.
▪ Requires set of resources.
▪ Have a specific time frame for completion with a definite start and finish.
▪ Involves risk and uncertainty.
▪ Requires cross-functional teams and interdisciplinary approach.
Project Performance Dimensions
Three major dimensions that define the project performance are scope, time, and
resource. These parameters are interrelated and interactive. The relationship generally
represented as an equilateral triangle. The relationship is shown in figure 1.

Time Cost

Scope

Figure 1. Project performance dimensions

It is evident that any change in any one of dimensions would affect the other. For
example, if the scope is enlarged, project would require more time for completion and the
cost would also go up. If time is reduced the scope and cost would also be required to be
reduced. Similarly any change in cost would be reflected in scope and time. Successful
completion of the project would require accomplishment of specified goals within
scheduled time and budget. Thus the performance of a project is measured by the
degree to which these three parameters (scope, time and cost) are achieved.

Mathematically
Performance = f(Scope, Cost, Time)

In management literature, this equilateral triangle is also referred as the “Quality

triangle” of the project.

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. Typical project consists of four
2
phases- Conceptualization, Planning,

3
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.

i. Conceptualization Phase
Conception 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.

ii. 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.

iii. 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
iv. Termination Phase
This phase marks the completion of the project wherein the agreed deliverables
are installed and project is put into 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.

100
Slow finish
Percentage completion

Quick
Momentum

Slow start

Time
Figure 2. Project life path –“S” shape

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 on course, transplantation is under taken. This is shown in figure 3.
 100

% Completion

Time
Figure 3. Project life cycle path - “J” Shape

PROJECT CLASSIFICATION
There is no standard classification of the projects. However considering project goals,
these can be classified into two broad groups, industrial and developmental. Each of these
groups can be further classified considering nature of work (repetitive, non-repetitive),
completion time (long term, shot term etc), cost (large, small, etc.), level of risk (high,
low, no-risk), mode of operation ( build, build-operate-transfer etc).

INDUSTRIAL PROJECTS also referred as commercial projects, which are

undertaken to provide goods or services for meeting the growing needs of the customers
and providing attractive returns to the investors/stake holders. Following the background,
these projects are further grouped into two categories i.e., DEMAND BASED and
RESOURCE / SUPPLY BASED.
The demand based projects are designed to satisfy the customers’ felt as well as the
latent needs. Examples are complex fertilizers, agro-processing infrastructure etc.
The resource/ supply based projects are those which take advantage of the available
resources like land, water, agricultural produce, raw material, minerals and even human
resource. Projects triggered by successful R&D are also considered as supply based.
Examples of resource based projects include food product units, metallurgical industries,
oil refineries etc. Examples of projects based on human resource (skilled) availability
include projects in IT sector, Clinical Research projects in bio services and others.
 DEVELOPMENTAL PROJECTS are undertaken to facilitate the promotion and
acceleration of overall economic development. These projects act as catalysts for
economic development providing a cascading effect. Development projects cover sectors
like irrigation, agriculture, infrastructure health and education.

The essential differences between Industrial projects and Developmental

project are summarised below

Table 1. Difference between Industrial and Developmental Projects

Dimension Industrial Project Developmental Project

Scale of Project Limited Large
Promoters Entrepreneurs or corporates Government, Public
Sectors,
NGOs
Investment --- High
Gestation Period --- High
Profitabilty High, Considered on IRR Modest, Considered on
( ERR
Internal Rate of Return) (Economic Rate of Return)
Finance Stringent debt equity norms Operates on higher debt-
equity norms
Source of fund National stock markets and International organizations
from domestic financial like World
institutions Bank,
IMF,ADB,DFID and
others mostly as loan ,yet
times
providing for some grants.
Interest rates and Market rate and the Very low for borrowed
repayment period: repayment period is funds and the repayment
generally 7 to 10 years period extends up to 25
years and
even beyond.
PROJECT MANAGEMENT
Project management is a distinct area of management that helps in handling
projects. It has three key features to distinguish it from other forms of management and
they include: a project manager, the project team and the project management system.
The project management system comprises organization structure, information
processing and decision- making and the procedures that facilitate integration of
horizontal and vertical elements of the

project organization. The project management system focuses on integrated planning and
control.

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.
PROJECT FORMULATION
Project Formulation Concept
“Project Formulation” is the processes of presenting a project idea in a form
in which it can be subjected to comparative appraisals for the purpose of
determining in definitive terms the priority that should be attached to a project
under severe resource constraints.

Project Formulation involves the following steps:

PROJECT FORMULATION
↓
OPPORTUNITY
STUDIES/Support Studies
↓
IDENTIFICATION OF PRODUCT/SERVICE
↓
PREFEASIBILITY STUDY
↓
FEASIBILITY
STUDY (TECHNO
ECONOMIC
FEASIBILITY)
↓
PROJECT APPRAISAL
↓
DETAILED PROJECT REPORT

Figure 4. Project Formulation –Schematic

view

Opportunity Studies
An opportunity study identifies investment opportunities and is normally
undertaken at macro level by agencies involved in economic planning and
development. In general opportunity studies there are three types of study – Area
Study, sectoral and Sub-sectoral Studies and Resource Based Studies. Opportunity
Studies and Support studies provide sound basis for project identification.
Pre feasibility Studies / Opportunity Studies
A pre-feasibility study should be viewed as an intermediate stage between a
project opportunity study and a detailed feasibility study, the difference being
primarily the extent of details of the information obtained. It is the process of
gathering facts and opinions pertaining to the project. This information is then
vetted for the purpose of tentatively determining whether the project idea is worth
pursuing furthering. Pre feasibility study lays stress on assessing market potential,
magnitude of investment, technical feasibility, financial analysis, risk analysis etc.
The breadth and depth of pre feasibility depend upon the time available and the
confidence of the decision maker. Pre feasibility studies help in preparing a
project profile for presentation to various stakeholders including funding agencies
to solicit their support to the project. It also throws light on aspects of the project
that are critical in nature and necessitate further investigation through functional
support studies.

Support studies are carried out before commissioning pre feasibility or a

feasibility study of projects requiring large-scale investments. These studies also
form an integral part of the feasibility studies. They cover one or more critical
aspects of project in detail. The contents of the Support Study vary depending on
the nature of the study and the project contemplated. Since it relates to a vital
aspect of the project the conclusions should be clear enough to give a direction to
the subsequent stage of project preparation.

Feasibility Study
Feasibility Study forms the backbone of Project Formulation and presents
a balanced picture incorporating all aspects of possible concern. The study
investigates practicalities, ways of achieving objectives, strategy options,
methodology, and predict likely outcome, risk and the consequences of each course
of action. It becomes the foundation on which project definition and rationale will
be based so that the quality is reflected in subsequent project activity. A well
conducted study provides a sound base for decisions, clarifications of objectives,
logical planning, minimal risk, and a successful cost effective project. Assessing
feasibility of a proposal requires understanding of the STEEP factors. These are as
under Social, Technological, Ecological, Economic, and Political.

A feasibility study is not an end in itself but only a means to arrive at an

investment decision. The preparation of a feasibility study report is often made
difficulty by the number of alternatives (regarding the choice of technology, plant
capacity, location, financing etc.) and assumptions on which the decisions are
made. The project feasibility studies focus on
- Economic and Market Analysis
- Technical Analysis
- Market Analysis
- Financial Analysis
- Economic Benefits
- Project Risk and Uncertainty
- Management Aspects