PROJECT MANAGEMENT
A project is an activity to meet the creation of a
unique product or service and thus activities that
are undertaken to accomplish routine activities
cannot be considered projects.
According to the PMBOK (Project Management Body
of Knowledge), A project is defined as a “temporary
endeavor with a beginning and an end and it must be
used to create a unique product, service or result”.
Further, it is progressively elaborated. What this
definition of a project means is that projects are those
activities that cannot go on indefinitely and must have a
defined purpose.
Characteristics/Features of Projects
1. Change: Projects are “a way to introduce change”.
2. Temporary: Project is never a continuous activity,
it has a “definite beginning” and a “definite end”.
i.e. Its life span is fixed.
3. Unique: All projects are unique in themselves, no
two projects are exactly similar.
4. Life cycle: Like living organisms every project
also has a defined life cycle which can be divided
into four phases.
Phase I: Initiating phase, during which project
idea or goal is conceived.
Phase II: Planning phase, during which
project plan is made and it starts building its
size.
Phase III: Execution phase, during which the
plan made in planning phase is executed.
Phase IV: Closing phase, during which
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project output or deliverables are handed over
to client and a review is done about complete
project.
5. Defined objective/goal: All the projects have their
own defined objective/goal for which they are
carried out, as every project is undertaken to create
a unique product, service or result.
6. Multitalented/skilled staff: As every project
involves many interrelated task done by many
specialists, the involvement of people from several
departments is very much important.
7. Co-ordination: As multiple people from various
organisations are required for proper function of
projects.
8. Made to order: Customer or sponsor decides the
objective and informs constraints like time and
cost.
9. Subcontracting: Subcontracting is practically
unavoidable in project management. As specialized
knowledge or workforce is needed for a very small
duration in a project, which are difficult and costly
to employ or retain.
10. Risk and uncertainty: Projects are risky as certain
activities involved in projects are non repeatable.
Hence, risk is unavoidable.
Operations
Operations are ongoing execution of activities that
produce same output or provide a repetitive
service.
There are few similarities between operations and
projects.
Both are executed by individuals.
Both are subjected to constraints like resources,
schedule, risk etc.
Both are planned, executed and controlled.
Both are executed to meet strategic and
Organisational objectives.
Difference between Operations And Projects (c) User/Customer
User/Customer are people or organisations,
which will use the project product, service or
result.
Note: Usually Customer and User sounds similar but in
certain cases they may be different.
Customers: Who acquires the project product.
User: Who directly consumes or uses the product.
(d) Sellers or Business Partners
Seller/Suppliers or Contractors are
organisations which provide materials,
components or necessary service for the
project.
(e) Project Team
Project team is responsible for execution and
attaining the objectives of Project.
(f) Departmental Managers
Departmental managers are important
individuals which plays a managerial role in
an administrative or functional area.
(g) Board of Directors:
Board of directors are individuals responsible
for high level governance, which are mainly
responsible for review of return against
investment, value of project, risk associated at
Stakeholders various levels and other attributes of projects.

Stakeholder is a person, group of individuals or (h) Project Management Office:

organisations, who is positively or negatively Project Management Office is group of people
impacted by the project and/or anyone who can responsible for successfully achieving the
exert influence over the project’s objectives and objectives of project by completing it on
results. schedule, within cost and performance criteria
(a) Project Manager with prescribed human, physical resource and
other constraint’s.
A project manager is an individual with
authority, accountability and responsibility for Project Constraints
managing a project to achieve its goals.
Constraints are limiting factors or holding back
(b) Sponsor elements that decide upon the boundaries of
project.
Sponsor is an individual or group of persons,
who provides funds for the project.
Project sponsor plays an important role in
Identifying and defining the scope of project.
They are involved in various important issues
like authorizing changes in scope, review of
project at various stages and providing “Go or
No-Go” decisions when the risk factor is very
high.

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Note: Out of above discussed constraints Cost, Time projects.
and Scope are also called as Triple constraints Functions of Project Management
Triangle.
According to IS-Code following are the functions of
What is Project Management? Project Management.
According to PMBOK “Project Management is 1. Define work or scope of the project
application of knowledge, skill, tools and
techniques to project activities to meet project 2. Decide how the activities of project are to be
requirements”. executed.

In simple words “Project Management is the 3. Develop a suitable organisational structure.

process which includes initiating the project, 4. Develop implementation plan, procedure, standards
developing a plan, executing the project as per and metrics. Involve all the participants and ensure
approved plan, monitoring and controlling the all the project components (or elements) are inter-
project, handing over the output of the project to related, integrated and coordinated.
the client, and finally closing the project.
5. Finalize contracting plan and policy, prepare
Objectives of Project Management contract document and decide contractor’s
(i) Scope: Scope means what are the expectations responsibility.
from you as a project manager and your team. 6. Prepare time schedules, cost (or budgets) and
(ii) Performance: A project is always expected to identify Milestones.
have a well-defined performance level. 7. Develop monitoring and control, information and
(iii) Time: A successful project is the one which is reporting system, and ensure their desired
completed within the time limits perceived during operation.
the planning. 8. Establish healthy communication and coordination
(iv) Cost: It is dependent on all the above objectives. among projects.
Mathematically it can be written as: Cost=f (P, T, 9. Provide consultation, training and oversight about
S). projects.
(a) “SMART approach”. 10. Creating organisational assets in terms of
(i) Specific documentation and templates of Project
management policies, procedure and standards.
(ii) Measurable
Program
(iii) Attainable
According to PMI, “Program is “a group of
(iv) Realistic related projects managed in a coordinated way
(v) Time limit to obtain benefits and control, which is not
available from managing them individually”.
(b) “7-S of Project Management” This means that a program will have multiple
(i) Strategy projects which are inter-related to each other.

(ii) Structures Program Management

(iii) System Program management is defined as

Centralized coordinated management of a
(iv) Staff program to achieve its strategic objectives i.e.
(v) Skill in program management interrelated on
interdependent projects are managed under
(vi) Style/culture one head to achieve the desired goal.
(vii) Stakeholder Portfolio
Project Management Office Portfolio is a group of related or non-related
Project Management Office is a group or organizational projects or programs.
body, which is assigned various responsibilities related Note that in program management only related
to the centralized and coordinated management of projects were managed whereas in portfolio

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 related and non-related projects are managed.
Portfolio Management
Portfolio Management has a bigger scope and
objective than program management.
Portfolio management is an effective,
centralized management (including
identifying, Prioritizing, authorizing and
controlling of a collection of projects or
program and other work that are grouped
together to meet strategic business objectives.
Project Life Cycle
Project management office can divide projects into (b) At the start of project probability of
phases to provide better management control over successfully completing project is lowest and
the projects. As project life cycles defines. hence risk and uncertainty are highest. As
(a) What work should be done in each phase project progresses probability of successfully
(feasibility study is part of planning or completing project increases and risk reduces.
initiation phase)?
(b) Who should be involved in each phase (e.g.,
resources that need to be involved in various
activities of project)?
Hence it helps in identifying deviations of various
levels which helps in decision making with regard
to continuation or termination of project.
Collectively these phases are called as “Project
Life Cycle”.

(c) Initially total project cost of project is low and

it increases as project continues. In initiating
phase rate of increase of Total Project Cost is
slow, which increases in planning phase. This
rate of increase of Total Project Cost is
maximum in Execution phase and finally in
closing phase it is slowest.

Most project life-cycle descriptions share a number

of common characteristics:
(a) Cost and staffing levels are low at the start of
the project, it increases progressively during
planning phase, reaches to peak in execution (d) At the start of project ability of stakeholders
phase. Finally it drops rapidly in closing to influence final output of project is highest
phase.

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 and gets progressively reduced as project different projects
progresses. A major reason for this
The functional division containing the normal path
phenomenon is that the cost of "changes and
of advancement for individuals whose expertise is
error correction" increases as project
in the functional area. Employee feels secure &
continues.
therefore they perform job responsibility.
Characteristics of Good Project Manager
Budgeting and cost control is easier.
1. Good technical skills
Flexibility in use of manpower.
2. Leadership skills
There is no duplication of work as roles and
3. Resource management responsibility of each employee is fixed.
4. Human Resource Management Clear cut hierarchy i.e. each employee reports to
his functional manager, which results in better
5. Communication skill
communication and co-operation.
6. Negotiation and Influencing skill
Better accountability of work.
7. Conflict Management skill
Disadvantages
8. Marketing, Contracting, customer relationship skill
No one person is responsible for the total project.
9. Budgeting & Costing skill
Project-oriented focus for achieving project goals
10. Scheduling and time management skill is absent.
11. Team building Decisions are influence by stronger functional
departments.
12. Motivation skills
Work of functional division usually takes
13. Decision making skills
precedence over the project work.
14. Political and Cultural awareness
Lack of coordinated effort tend to make response
15. Trust building to client needs slow.

Organizational Structures Employees might feel bored due to the

monotonous, repeated type of work and may
An organization is divided into a spec ialised functional become lazy.
departments, undertaking corresponding specialised
task of each project. Cost of high skilled employee is higher.

Each department is/are supervised by a functional
manager who has expertise in the same field,
A department may have more than one projects at a
time.
Any project is not identified by one special person
or department.
Communication is not good among the
departments, which causes poor inter-department
co-ordination. This reduces flexibility and
innovation.
Project manager has little or no authority.
Projectised Organization

In this kind of system functional manager has all
the authority i.e. budget allocation, resource
allocation, decision making etc.
Generally position of project manager does not
exist, whereas if there is a project manager their
role will be limited and requires approvals from
functional managers.
Sometimes Project manager may have title of
Project Co-Coordinator
Advantages
Individual experts can be utilized by many
In projectised organisation structure, project
manager has full authority to assign priorities,
apply resources, and direct the work persons
assigned to the project.
Projectised organisation structure is opposite to
functional organisational structure. Here, either
there will be no functional manager, or if exits, he
will have very limited role and authority.
Projectised organization are only interested in
project work which they get from external clients.

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Advantages
It is very simple to establish.
Fast completion of the projects is ensured.
There are no functional division heads whose
approval needs to be sought.
Project manager directly communicated with senior
management which results in shorter
communication channels.
Project team forms a strong & separate identity
which results in high level of dedication.
Motivation is high
Unity of command exist
Team members becomes versatile and flexible due
to experience in different kinds of project.
Disadvantages
It creates internal rift in the organsiation. It is
known as project ties which means a gap gets
created between the project teams and other people
in parent organisation, as project members feel
they are only important for the organisation.
As project manager has full authority and power
over his team, he can become arrogant and
dominating.
Employees are less loyal to the organization
because there is a sense of insecurity among them
i.e. once the project is complete, they feel that they
may lose their jobs.
Cost of employees and equipment can be higher
because we may be hiring skilled persons and
specialised equipment for a shorter period of time.
Matrix Organization
The matrix organization structure takes the
characteristics of both types of organization
structures.
Here the knowledge, skill, or talent of an employee
is shared between the functional department and
project management team.
In matrix organization structure there are two
chains of command, one along functional lines and
the other along project lines.
Project manager will have authority over the
administrative part of the project, such as what to
do, follow-up on the schedule, evaluate the
performance, etc.
1. Weak Matrix Organization Structure
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In weak matrix organizations, the project manager
will have limited power and authority.
He will have a part time role and no administrative
staff will report to him.
His role will be more like a coordinator or an
expediter. Here, the functional manager controls
the project budget.
A weak matrix organization structure resembles the
characteristics of a functional organization
structure.
2. Balanced Matrix Organization Structure
In balanced matrix organizations, power and
authority are shared between the functional
managers and the project managers.
Although, the project manager has a full time role,
he will have a part time or otherwise limited
project management administrative staff under
him.
In this type of structure, both managers control the
project budget.
3. Strong matrix Organizational Structure:
In strong matrix organizations, most of the power
and authority is held by project manager.
The project manager has a full time role, has a full
time project management administrative staff under
him, and he controls the project budget.
The functional manager will have a very limited
role within the strong matrix Organization.
The strong matrix structure has a lot of the
characteristics of a projectized organization.
Advantages
Project manager responsible for managing the
project, for bringing it on time, within cost and
specification.
Response to requirement of client is fast.
Highly skilled resources can be shared between
functional units and departments.
It creates a good working and co-operative
environment which helps in integrating the
organisation.
As there is a sense of job security, employees tend
to be loyal to the organization and perform well,
and therefore efficiency increases.
Disadvantages
Matrix management violets the management
 principle of unity of command.
Employees have to report to two bosses, which
may create confusion and conflict.
A conflict might arise between the project manager
and the functional manager for the share of
authority and power.
If priorities are not clearly defined, employees may
have confusion between their role and
responsibility, especially when they are assigned a
task which is different from what they were doing.
POWERS OF PROJECT MANAGER
Power implies ability and authority to make
something work
(a) Positional Power: Denotes authority of a person
coming from the hierarchical position of that
person in any organisation. It can be of following
subtypes.
(i) Legitimate Power: It is power or authority
he derives from his formal position held in
the organisation.
(ii) Reward power: It involves the use of
incentives such as money, status,
promotions, official recognition or special
work assignments; these are used as a
reward to get some desired behavior or
assignment.
(iii) Coercive Power: It is negative approach of
power; it uses some form of punishment or
penalty treat to get people to do things.
(b) Personal Power: It is the personal competence,
and strength that individual gradually acquire in the
course of their development.
(i) Referent Power: Referent power in
leadership is the ability of project manager
to cultivate the respect and admiration of
subordinates in such away that they want to
be like him.
(ii) Expert Power: Expert power in leadership
is the ability of project manager to influence
his subordinates based on his skill,
knowledge, experience on expertise related
to work.
Phase To Phase Relationship
Sequential Relationship
In sequential relationship next phase can start if
and only if previous phase is complete.
Traditionally construction projects generally use
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sequential relationship.
Step by step nature of this approach reduces
uncertainty but also eliminates options for
shortening the schedule.
In overlapping phase relationship next phase can
begin before the completion of previous phase.
This technique allows schedule compression called
fast tracking.
This technique can lead to increase in risk and may
result in rework if a subsequent phase progress
before accurate information is available from
previous phase.
Predictive Life Cycle
This life cycle is also known as “plan driven”
lifecycle or “Water fall” life cycle.
In a predictive life cycle, the three major
constraints of the project i.e. scope, time and cost,
are defined in complete details early in the project
life cycle as practically.
Then project is split up into phases which can be
either sequential or overlapping.
Requirements are defined early and not expected to
change.
Work in each phase is different from subsequent or
from previous phases, hence each phase acts as a
sub project.
Iterative and Incremental Life Cycle
This life cycle is also known as “Incremental”
lifecycle.
In Iterative life cycle, the project is split up into
phases (or iteration’s) which can be either.
Sequential or overlapping, same as predictive
lifecycle.
In Iterative life cycle, scope is not defined ahead of
time at a detailed level, but only for the first
iteration or phase of the project. Once a phase is
completed, the detailed scope for next phase is
worked out, and so on.
This life cycle is used for projects where change in
the scope is need to be managed.
Adaptive Life Cycle
This life cycle is also known as “Change-Driven”
life cycle or “Agile” life cycle.
Adaptive life cycle is also iterative and
incremental.
In Adaptive life cycle also, project is split up into
 phases (or iteration’s) which can be either
sequential or overlapping, same as predictive
lifecycle.
This life cycle is used for projects where rapid
changes are expected and it is not possible to
define scope in the start.
Conflict Resolution Techniques
1. Withdraw/Avoid
What is “knowledge areas”?
2. Smooth/Accommodate Knowledge areas are designed to group processes
which have common knowledge characteristics.
3. Compromise/reconcile
Hence Knowledge Areas are formed by grouping
4. Force/Direct 47 processes of project management into
5. Collaborate/Problem solve 10specialized and focused areas.
Each Knowledge Area is made up of a set of
processes, each with inputs, tools and techniques,
PROCESS GROUP AND KNOWLEDGE AREAS and outputs.
This means that knowledge areas are divided to
According to Project Management Institute, Project keep the same type of skill set (or knowledge) in
Management is accomplished by the appropriate one group.
application and integration of 47 processes. Knowledge areas describe specific skills and
To perform any particular process we need three experience needed by the Project manager to
essential elements i.e. Input, Output, Tools and achieve project goals.
Techniques. Knowledge Areas
Inputs are essential ingredients for start of any
(1) Project Integration Management
particular process. Output are outcome or result of
any process. Project integration management ensures that the
project is properly planned, executed, and
Whereas Tools and Techniques are methodology
controlled, including the exercise of formal project
and actions required for the transformation of input
change control.
of any process into Output.
(2) Project Scope Management
These processes are organized of classified into “5
process groups” and “10 knowledge areas”. Changes to project scope are often the factors that
kill a project.
What is “process groups”?
(3) Project Time Management
Project management process groups are a logical
categorization of 47 Project management processes This knowledge area involve processes related with
which are organized in the way that the projects are time constraints of the project.
being performed. (4) Project Cost Management
Hence 47 project management processes are This knowledge area involve processes related with
grouped into five categories, cost constrains of the project.
(i) Initiating Process Group, Project cost management involves estimating the
(ii) Planning Process Group, cost of resources, including people, equipment,
materials, and such things as travel and other
(iii) Executing Process Group, support details.
(iv) Monitoring and Controlling Process Group, (5) Project Quality Management
and finally
This knowledge area involve processes which
(v) Closing Process Group. assure that project meets its quality obligations.

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 Project quality management includes both quality Project Identification
assurance (planning to meet quality requirements)
and quality control (steps taken to monitor results Primary goal of project identification is to generate
to see if they conform to requirements). new ideas about the possible project that can be
undertaken or implemented.
(6) Project Human Resource Management
Primary ideas can be discovered from various
This knowledge area involve processes related with internal and external sources which can be as listed
obtaining and managing the project team. below:
(7) Project Communications Management (i) Knowledge of potential customer
This knowledge area involve processes related with requirements.
planning and managing communication (ii) Watching emerging trends in demands for
mechanisms required for the project. specific products.
(8) Project Risk Management (iii) Scope for producing alternative product.
This knowledge area involve processes related with (iv) By reading certain professional magazines
project-related risk management. catering to specific interests like electronics,
Project risk management is the systematic process computers etc.
of identifying, quantifying, analyzing, and (v) Success stories of known entrepreneurs,
responding to project risk friends, relatives or etc.
Techniques of Project Identification
PROJECT INITIATION (a) SWOT Analysis
The process of project management state with project (b) Brain Storming
identification.
Pre-Feasibility Studies
This is also called as prima facie analysis or
screening of ideas or preliminary filtration.
Following details are looked for during Project
Identification stage
Performance of existing industries
Price trend
Price difference between international and
domestic prices
Government policies
Location aspects
Financial position
Project Feasibility Or Formulation studies
Projects which have crossed the hurdle of ‘project
screening’ are studied in detail to have a look at the
viability of a idea with an emphasis on identifying
potential problems and attempting to answer one
main question:
“Will the idea work and should we proceed with
it”?
Various in depth analysis done in this stage
includes:

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 1. Market Feasibility demand-supply gap has been the technique for
estimating market potential.
2. Financial feasibility
This process starts with estimating demand in
3. Technical feasibility
future and then comparing the same with present
4. Economic/Socio Economic feasibility supplies and prospective new suppliers.
5. Environmental feasibility i.e. Environmental A positive demand-supply gap favours the market
Impact Assessment potential and vice versa.
At the end all these feasibility data are collected Future demands can be forecasted or predicted.
together in a document called Detailed Project
(c) Demand Projection and forecasting Technique
Report (DPR).
Demand projection should take note of domestic
Market Feasibility potential and export possibilities. It should cover
United Nations Industrial Development Organization following aspects:

(UNIDO) has published in the “Manual For the (i) The estimates for potential demand for the
Preparation of Industrial Feasibility Studies” to help in product.
the standardization of industrial feasibility study. (ii) Estimates of potential supplies
(a) Project background and history (iii) Degree of market penetration.
(b) Demand and market study 1. Qualitative Techniques
(c) Demand projection and forecasting techniques (i) Jury Opinion
(d) Export projections (ii) Delphi Technique
(e) Market penetration (iii) Nominal Group Technique
(f) Sensitivity analysis (iv) Collective opinion survey/Sales force
(g) Sales forecast and marketing polling/Expert opinion polls.

(a) Project Background and History (v) Survey of Buyer’s Intentions (Opinion
Surveys)
This document is to be prepared by project
manager and while preparing this he may provide 2. Quantitative Methods
following information to give “initial impressions” (i) Simple average method
about the project to potential investors.
(ii) Moving Average Method
(a) Primary focus (what is to be addressed by
the project) (iii) Weighted Moving Average Method

(b) A list of prerequisite (cost etc.) and key
reasons to launch.
(c) A very common description of how to
perform the project
(d) A rough estimate of desired outcome.
(b) Demand and Market Study
On of the first step in market feasibility is to
estimate the potential size of market for the
proposed product.
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
(iv) Regression (Time Series)
(d) Exports Projections
After demand forecasting we further study for
present exports options available.
(e) Market Penetration
Market penetration is a measure of the extent of a
products sales volume relative to the total sales
volume of all competing products.
It can also include the activities that are used to
increase the market share of a particular product or
service.
(f) Sensitivity
There are large number of assumption used on
variety of aspects relating to the project.

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 These assumptions can be affected by If working capital is more, then it reduces profit
unpredictable events on inherent errors in project level of the company as excessive working capital
data inputs. makes the funds idle.
(g) Sales Forecast and Marketing (b) Estimation of Project Cash Flow
The demand analysis done in above paragraphs Project cash flow refers to inflow and outflow of
gets transformed into sales forecast. money in the project sources of initial project
finance.
Simultaneously, Decision is made on the modes of
distribution market promotion strategy, pricing
strategy etc.
Analysis of sales and sales income is thus afollow-
up of market study and demand analysis.
Financial feasibility
Financial feasibility is an assessment of financial
aspects of project. To avoid these problems various financing sources
Steps in financial feasibility are: could be tapped.
Main sources of project financing are discussed as
below.
1. Long term Rupee Funds
(a) Equity and Preference Share Capital
(a) Estimation of Project Cost
(i) Promoter Group’s Contribution
(i) Fixed cost
(ii) State Government contribution
Land and site development
(ii) Public Subscription
Construction cost
(iii) Seed Capital assistance
Plant and machinery
(iv) RCTFC assistance
Technical know-how
(v) Share subscription by financial institutions
Utility and mutual funds
Miscellaneous fixed assets (vi) Share subscription by NRIs
Preliminary expenses (vii) Employee Stock Options – ESO
Preoperative expenses (ix) Internal Generation of Funds
Contingency (x) Lease Financing
(ii) Working Capital (xi) Public Sector Bonds
Working capital = Current Assets– Current (xii) Long-term rupee loans
liabilities
2. Foreign Currency Funds
Current assets = Cash in hand or cash at bank; bills
receivables; short term advances; inventory stock (a) External Commercial Borrowings
such as raw material, work in progress, stores and (b) External Aid
spares, finished goods; and etc.
(c) Short-term Rupee Funds for Working
Current liabilities = Cost of raw materials to be
purchased and operating cost like rent or lease Capital:
payment, property tax or insurance charges, fuel From commercial banks
cost of production, cost of utilities, wages etc.
Public deposits
Working capital measures the short term financial
strength of an organization. Debentures/Bonds

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 Supplier’s Credits P.V of future cash inflows
  100
(c) Estimation of expected rate of return P.V of future cost
Techniques of Capital Budgeting Accept the project when P.I > 1
Non-discounting techniques are those techniques Reject the project when P.I < 1
which do not consider time value of money. Mayor may not accept when P.I = 1
Discounting techniques take time value of money
(d) Internal Rate of Return (IRR)
into account.
Internal rate of return (IRR) is the rate at which the
1. Non-discounting budgeting technique/non net present value of an investment becomes zero.
discounting cash flow techniques
 P1 P2 P3 Pn 
(a) Pay-back period NPV      ...   P0
 1  IRR  1  IRR 
1 3
1  IRR 3
1  IRR  
n
Pay-back period is the length of time taken 
by the company to recoup (or payback) the
initial cost of producing the product, service, Highest IRR or IRR above minimum expected rate
result of the project. of return - accept the project.
Initial Investment Lower value of ARR or ARR below a min.
Payback period =
Annual Cash Flow expected rate - reject the project.
Shorter the pay-back period -accept the Technical Feasibility
project.
1. Location and site
Longer the payback-Reject the project
(a) Size, Suitability and Cost of the Land
(b) Accounting or average rate of return
(ARR)method (b) Suppliers
(c) Market proximity
Annual average profit after tax
 100
Average Investment (d) Infrastructure

Highest ARR or ARR above minimum (e) Labour Availability

expected rate of return - accept the project. (f) Political and Social Environment
Lower value of ARR or ARR below a min. (g) Government Support
expected rate - reject the project.
(h) Environmental Regulation
2. Discounting Budgeting Technique/ Discounted
2. Capacity Planning and Cost Capacity
Cash Flow Techniques Relationship
Net present value (NPV) is more over same as Another important decision in technical feasibility
present value except that cost involved is also is the determination of optimum capacity of the
factored in. project.
Example, we have constructed a building with a Over capacity may result in lower operating
P.V of 50,00,000 (F.V is 75,00,000) but it’s cost efficiency and wasteful investments and, on the
(i.e., expenses for construction) is35,00,000. other hand, under capacity may be losing
NPV = 50,00,000 – 35,00,000 = 15,00,000 opportunities.

If NPV is positive – accept the proposal (a) Primary Factors

If NPV is zero or negative – Reject the proposal Market potential

(c) Profitability index/Benefit Cost (B/C) Ratio Resource available

It if an improvement of NPV method. Funds availability

Profitability index Break even efficiency

(b) Secondary Factors

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 Legal rules Every business has the primary purpose of
obtaining profit from their goal.
Competitor’s analysis
But they cannot go away with the fact that they
Technical reasons
operate in a social environment.
3. Technology
Social Cost and Benefit Analysis (SCBA)
The technology that is selected should be appropriate
SCBA can be defined as the systematic evaluation
technology.
of a concern’s social performance as distinguished
An improper selection of technology can be from its economic performance.
futile for a project.
Social Costs
There are so many cases where the selection of
Social cost is the cost related to the working of the
a wrong technology has led a project to be sick
firm but is not explicitly borne by the firm instead
in the early years.
it is the cost to the society due to production of a
Appropriate technology can be defined as the commodity.
technology which is best suited for the
Types of social costs
conditions of its operations (time and
location). Environmental damage
A technology which is appropriate today may Ecological imbalance
become inappropriate in future. So, time is one
Human services used
big factor which can make a technology
inappropriate. Material used
Factors to be considered while selecting a technology Usage of public utility
are:
Unemployment caused
(a) Environmental
Depletion of energy and global warming
(b) Ethical and cultural
Usage of foreign exchange
(c) Social
Subsidies
(d) Economical
Social Benefits
4. Design, Layout and Plant and Machinery
Improve environment
Feasibility study should briefly specify
Products and services provided
recommended design of processes and plant with
essential assumption and design calculations. Employment creation
5. Inputs Taxes
Various kinds of inputs to be considered are given Indirect employment
below:
Earning foreign exchange
(a) Raw material
Hospital and educational facility
(b) Components and sub-assemblies
Development of backward area
(c) Processed materials
Environmental/Ecological Feasibility
(d) Spheres and wear and tear parts
Environmental feasibility study is a comparative
(e) Gas, fuel, electricity process that looks at all potential solution, then
Socio-Economic Feasibility evaluates them against specific criteria considering
both human and environmental health factors, to
Socio Economic Feasibility studies are conducted ultimately find the best choice.
to determine the degree to which the design or
location of project is economically or socially Environment Impact Assessment
justified. EIA is management tool or process used for
evaluating the likely impacts of a proposed project

13 | P a g e
 or development taking into account socio- (b) Net present value (NPV)
economic, cultural and human-health impacts both
(c) Profitability Index
beneficial and adverse.
(d) Internal Rate of Return
Main aspects of EIA
(e) Real Options
(i) Appraisal of prevailing environmental conditions.
(f) Scoring Model
(ii) Appraisal of production methods – both existing
and proposed Numeric Models
(iii) Methodologies related to environmental impact (a) The Sacred Cow
assessment
(b) The operating necessity
(iv) Possible impact of projects on environment both
existing and proposed. (c) The competitive necessity

(v) Development of the techniques of conservation of (d) Product line extension

environment by modifying and improving the (e) Comparative benefit model
existing production technology.
(f) Q Sort model
DPR has details of all feasibility studies i.e.
Technical, financial, Market etc. Project Charter
Detailed Project Report (DPR) is an essential Project charter is 1st document of the project
building block for the projects as it serves the
Project charter is a document issued by the project
purpose of investment decision making and
sponsor/initiator that formally authorize the
approval.
existence of a project and allocates the project
As DPR contains complete details of project, same manager with authority to apply organizational
is being submitted to banks and financial resources to the project activities.
institutions for getting financial assistance.
DPR also acts as a base document for project
Role of Project Charter
planning and implementation.
(a) Documents reasons for undertaking the project.
Project Appraisal/Evaluation
(b) Outlines the objectives (i.e. project goals) and the
Project Appraisal is the evaluation of the overall constraints faced by the project.
ability of the feasible project to succeed.
(c) Identifies the main stakeholders of the project
After preparation of Detailed Project Report
(DPR), project appraisal is done for overall (d) Defines level of authority, roles and responsibilities
assessment of the relevancy, feasibility, and of a project manager.
sustainability of a project prior to making the
decision whether to undertake it or not i.e. to
determine viability of project. PROJECT PLANNING
Aim of project appraisal is to consider and The purpose of the Project Planning process is to
compare the possible feasible project and select the kickoff a new project and establishes an accurate
best one that meets the objectives. plan and schedule.
Project Selection/Decision Steps of Project Planning
Project selection is a process to assess each project idea
and select the project with highest priority.
There are two basis types of project selection model:
Numeric models
Non numeric models
(a) Pay Back Period

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Project Kickoff Meeting
A kickoff meeting is the first formal meeting of the
project team, key stakeholders and project
management, which forms the basis of launch of a
new product idea at project manager office.
Defining Scope of Work
During defining scope of work we try to define
various elements within the scope and out of the
scope in order to clearly understand what will area
under the project control.
Basically during this process we try to establish
scope baselines, and procedure for scope changes.
Scope base line is used to measure what is actually
being produced against what is expected to be
produced in relation to the project and product
scope.
Scope changes are changes to the current project
scope that are known and accepted by both parties
(owner and contractor).
Work Breakdown Structure (WBS)
The WBS is described as a hierarchical structure
which is designed to logically sub-divide all the
work-elements of the project into a graphical
presentation.
Full scope of work for the project is placed at the
top of the diagram, and then sub-divided smaller
elements of work at each lower level of the
breakdown.
At the lowest level of the WBS the elements of
work is called a work package.
A list of project’s activities is developed from the
work packages.
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Benefits WBS
1. WBS forces the team to create detailed steps
2. WBS lays the groundwork for schedule and budget
3. WBS creates accountability
4. WBS creation breeds commitment
Role Assignment
After preparing WBS, next step is to assign roles
and responsibilities to various people of project
team because everybody in the project needs to
understand their role and responsibilities.
This task of role assignment is very effectively and
efficiently done by the concept of RACI matrix.
The acronym RACI stands for:
Responsible
Accountable
Consulted
Informed
Project Scheduling
Project scheduling is a process of determining
project completion time such that implementation
of project is done within this estimated time limit.
Steps in project scheduling
1. Defining the activities
2. Sequencing the activities
3. Estimating the resources required
4. Estimating the time required
5. Developing the schedule
Estimation of Project Cost
An important part of project management is the
project cost management.
It covers the scopes of cost estimations and
budgeting. Moreover, cost control ensures that the
project stays within the financial borders which are
defined in the budgeting process.
In order to estimate the project cost and to generate
an appropriate budget, it is necessary to have an
overview of the different kinds of costs that are
implemented in the nature of projects.
Budget Planning
Budget is an estimation of cost revenue and expenses
over a specified future period of time.
There are two main types of budgeting approaches:
(i) Top-down approach: First decide the whole
project cost and the divide the amount between the
work packages.
Budgeting is mostly done by senior
management.
It starts by setting upper limit of expenditure
then allocating it for different activities.
Advantages
Senior management don’t have to wait and rely on
lower level managers to come up win budgeting
information.
It allows lower-level managers to execute their
regular business.
Disadvantages
Upper level executive may not have detailed
knowledge about individual departments.
Budget may not be realistic due to lack of
knowledge.
Poor resource allocation to different departments.
(ii) Bottom-up approach: Estimating the total cost of
the project by costing the lowest level work
packages first then finding the cost of higher levels
of work.
Advantages
Involvement of lower level employees resulting in
better accuracy
Improves morale, team work, cohesiveness among
employee due to their involvement.
Employees feel that their concerns are heard and
respected.
Disadvantages
Management can feel loss of control.
Lower level employees may increase budget
unnecessarily.
Increased performance pressure as they were
involved in budget preparation.
Project Support Plans
A project consists of large no activities and
processes.
For proper execution and integration of these
processes and activities, we require to create/
formulate certain project support plans.
Quality Plan
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It is process of identifying quality requirements and/or
standards for the project, its deliverable and
documenting how the project will demonstrate
compliance with quality requirements.
Risk Management Plan
Risk management plan includes the process of
conducting risk management planning, identification,
analysis, response planning, and controlling risk on
project.
Procurement Plan
Procurement plan includes process required to
purchase or acquire products service or results
needed form outside the project team.
Communication Plan
Communication plan includes the processes that are
required to ensure timely and appropriate, planning,
collection creation, distribution, storage, retrieval,
management, control, monitoring, and the ultimate is
position of project information.
Human Resource Plan
Human resource planning is the process of
identifying and documenting project roles,
responsibilities required skills, reporting
relationship and creating a staffing management
plan.
Stakeholder Management Plan
Stakeholder management includes the processes
required to identify the people, groups, or organizations
that could impact or be impacted by the project, to
analyze stakeholder expectations, and their impact on
the project, and to develop appropriate management
strategies for effectively engaging stakeholders in
project decisions and execution.
Project Management Plan
After doing all the works in planning like preparing
WBS, creating schedule, budget, cost estimation,
and support plan and holistic document is prepared
which is called as Project Management Plan.
This Project Management Plan (PMP) is a formally
approved document which is further used to
manage project execution.
RISK MANAGEMENT
Risks is an uncertain event or condition such that if
it occurs, it will have a positive or negative effect
on at least one of the project objective.
 A risk may occur due to one or more causes. It can
be classified as below:
Positive Risk: A positive risk is a condition such
that if it occurs, will have a positive impact on any
of the project objective.
Negative Risk: A negative risk is a condition such
that if it occurs it will have a negative impact on
the project objectives.
Every risk is made up of two components as
mentioned below.
Likelihood (Probability): Extent to which the risk
event are likely to occur.
Impact (Consequence): Effect that a risk will
have on the project if it occurs.
(a) Risk tolerance: It gives the idea about an
organization’s or individual sensitivity towards the
various risks. High tolerance means people are
willing to take high risk whereas low tolerance
means people are not willing to take high risk
unless the benefits of taking risk out weights the
fear of risk.
(b) Risk threshold: It is the amount of the Risk, that
on organization or individual are willing to accept.
It is usually a definite figure.
Sources of Risk
particular project.
Risk identification is an iterative process because
new risks may become known as the project
progresses through its life cycle and previously
identified risks may drop out.
The team considers:
Threats: A risk that will have a negative impact on
a project objective if it occurs.
Opportunities: A risk that will have a positive
impact on a project objective if it occurs.
Triggers: Symptoms and warning signs that will
indicate whether a risk is becoming a near-certain
event.
Residual risks: Risks that remain even after
developing responses to the project’s original risks.
Example: You identify delays caused
Secondary risks: Secondary risks are caused
response to the project’s original risks.
Risk interaction: The combined effect of two or
more risks occurring simultaneously is greater than
the sum of the individual effects of each free
standing risk.
Risk Identification Tools & Techniques

1. Operational Risk 1. Brainstorming

2. Market Risk 2. Delphi Technique

3. Economic Risk 3. Interviewing

4. Financial Risk 4. SWOT Analysis

5. Technological Risk Steps of Risk Management Planning

6. Commercial Risk
7. Quality risk
8. Legal or regulatory risk
9. International risk
Risk Management Planning
Risk management planning is the process of
deciding how to approach and conduct risk
management activities for a project.
The main output of risk management planning is
“Risk Management Plan”.
Risk Identification
Risk identification is the process of understanding
what potential events might hurt or enhance a

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Risk Analysis
Qualitative Risk Analysis
Qualitative risk analysis process considers all the
risks identified during risk identification process.
Qualitative risk analysis is application of methods
for ranking identified risks according to their
probability of occurrence and corresponding
impact on project based on inputs from sponsor
and stakeholders.
Basically this process prioritizes risk based on their
potential effect on project objectives.
Qualitative risk analysis is one way of determining
the importance of addressing specific risks and
guides risk response measures.
Tools & Techniques
Probability Impact Matrix
This method is also called as risk assessment
matrix.
Risk probability and risk impact may be described
in qualitative terms such as very high, high,
moderate, low and very low.
Risk Probability is the likelihood that a risk will
occur.
Risk Impact is the effect on project objectives if
that risk occurs, which may cause negative
effect(threat) or a positive effect (opportunity).
These two factors of risk are applied to specific
risk, not to the overall project.
The first step in developing probability impact
matrix is to define the rating scale for probability
and impact.
The rating scale of probability and impact are
assessed in meetings or by interviews. Participants
include subject matter (area of risk) experts and
project team members.
Probability or likelihood is measured using a
relative scale as given below.
Top Ten Risk Item
Top ten item tracking is a tool for maintaining an
awareness of risk throughout the life of a project.
It establishes a periodic review of the top 10project
risk items.
Expert Judgment
Organizations rely on the judgment, intuitive
18 | P a g e
feelings and past experience of experts to help
identify potential project risks.
Experts can categorize risks as high, medium or
low with or without more sophisticated techniques.
Quantitative Risk Analysis
Quantitative risk analysis is a way of numerically
estimating the probability that a project will meet
its cost and time objective.
It is based on a simultaneous evaluation of the
impact of all identified and quantified risk.
Outcome of quantitative risk analysis is a
probability distribution of the projects cost and
completion date based on the identified risk in the
project.
(a) Sensitivity Analysis
It simply determines the effect on the whole project
by changing one of its risk variables such as delay
in design or cost of materials.
It highlights how the effect of a single change in
one risk variable can produce a marked difference
in project outcome.
Output of sensitivity analysis is generally shown
with the help of tornado diagram,
(b) Expected Monetary Value Analysis (EMV)
Expected monetary value (EMV) is a quantitative
technique in risk analysis which is used to quantify
risk, which helps the project manager to calculate
contingency reserve.
Hence we can say that:
(a) It helps in calculating amount required to
manage all identified risks.
(b) It helps in selecting the choice which
requires least money to manage risk.
Expected monetary value (EMV) = Probability×
Impact
(c) Decision Tree Analysis
Decision tree analysis is another technique which is
helpful in dealing with risky capital investment
proposal.
Decision tree is a graphical method for selecting
best course of action in situations where future
outcomes are uncertain.
Generally decision tree and EMV are used together
to make an more effective analysis which helps in
better decision capabilities.
(d) Modeling and Simulation
Most commonly used technique under the
modeling and simulation technique is “Monte
Carlo Technique”
Risk Response Planning
The main Objective of risk response planning is to
reduce or avoid the probability of happening
negative risks or their effects, and increases the
chance of happening of positive risks or their
impact.
Strategies to deal with negative risk or threats are
as follows.
(a) Avoid
(b) Transfer
(c) Mitigate
Strategies used to deal with Positive Risks or
Opportunities are as follows:
(a) Exploit
(b) Enhance
(c) Share
Strategies used to deal with both Threats and
Opportunities are as follows:
(a) Acceptance
Acceptance of a risk means that the severity of the
risk is low enough that we will do nothing about
the risk unless it occurs.
Many of the project risks will fall into this
category.
(i) Active acceptance. Acceptance is active
when a risk is identified as being acceptable
but we decide to establish a contingency
reserve (in the form of time, money, or
resources) or to make a plan for handling
threats or opportunity. This approach is also
called as Contingency plan.
(ii) Passive acceptance. Acceptance is passive
when nothing is to be done to plan for the
risk occurrence and project team is being
told to deal with these threats or
opportunities as they occur. This approach is
also called as Workaround .
Risk Monitoring and Controlling
Risk Monitoring involves tracking of identified risk,
residual risk, new risk and evaluation effectiveness of
risk response plan throughout the life cycle.
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Risk control involves choosing best response
strategy, implementing a contingency plan and
taking corrective actions if required.
Main output of risk monitoring and control are
corrective action, project change request and
updated to other plans.
Review
But this is a very important activity as review may
help in further improvement (reduction of risk to a
greater extent).
Moreover, if the desired results are not obtained,
then some more steps may be required which are
identified during the review phase.
PROJECT EXECUTION
Project execution (or implementation) is the third
phase of project life cycle in which plan created at
the end of planning stage is put into action.
The purpose of project execution is to deliver the
project expected product service or results.
Typically, this is the longest phase of the project
management lifecycle, where most resources are
applied.
During project execution phase project team
utilizes all the schedules, procedures and templates
that were prepared and anticipated during planning
phases.
Basically project execution is the process whereby
project inputs are converted to project outputs. It
involves:
(a) Putting into practice what was proposed in
the Project Execution plan/Project Execution
plan (i.e., transforming the project proposal
into actual project).
(b) Management of the project or executing the
project intentions.
Project Execution plan is developed by expanding
project Management Plan by specifying day-to-day
operations.
Objectives of Execution Phase
Putting action plan into operation.
Achieving tangible change and improvements.
Ensuring that new infrastructure, new institution
and new resources are sustainable in every aspect.
Ensuring that any unforeseen conflicts that might
 arise during the stage are re-solved. Management Problems
Ensuring transparency with regard to finances. Poor scheduling of projects
Ensuring that benefits are not captured by elites at Bureaucracy in decision making
the expenses of poorer social groups.
Selfishness/favoritism by some project manager
Approaches to Project Execution Weak monitoring system
1. Top to down Execution approach: In this system Financial Problems
there is a clear cut system of command and control
from the Govt./Senior management on the project, Misallocation of funds.
which concerns the people. Delay or lack of counterpart funding
The top to down system show: Factors Affecting Project Execution
(i) Clear and consistent goals formed by top
Factors leading to successful execution
executives.
Political commitment
(ii) Knowledge and pertinent cause and effects.
Simplicity of design
(iii) Clear hierarchy of authority.
(iv) Rules established at top and policy is aligned with Careful preparation
the rules. Good management
(v) Resources/capacity to carry out commands. Involvement of beneficiaries commonly
2. Bottom up Execution approach: This system Factors Leading to Poor Execution
initiates with the target groups and service
deliverers or beneficiaries because they find that 1. Multi-tasking – doing several things at once
the target groups are the actual implementers of
2. Procrastination (student syndrome): putting off
policy.
until the last minute.
3. Collaborative participatory approach: Both top
3. Poor synchronization
to down and bottom-up approaches to execution
are used in this process. 4. Lack of detail planning
Issues in Project Execution 5. Poor communication and Coordination

Technical Problems 6. Poor prioritization

Defining project activities 7. Well defined strategic goals.

Developing network 8. Strategy creep

Establishing time, cost and resources needs 9. Weak leadership

Behavioural Problems 10. Unwillingness or in ability to change.

Team building based on project needs

Leadership & motivation PROJECT MONITORING
Communication Project Monitoring is collecting, recording, and
Environmental Problem reporting of information concerning project
performance that project manager and others wish
Awareness of market about major compilations, to know.
vendors & fluctuations in prices.
Project control is the process that uses data
Government regulation and changes through New collected during project monitoring and to bring
legislation actual performance to planned performance.
New Technology Project monitoring is an aspect of project
Natural calamities management which is performed throughout the
project whereas controlling is performed whenever

20 | P a g e
 it is necessary to take corrective or preventive Tools and Techniques for monitoring
action.
(i) S Curve
Why do we Monitor?
Analysis of S-curves allow project managers to
Monitoring provides information that may be useful quickly identify project growth, slippage, and
in: potential problems that could adversely impact the
(a) Analysing situation of the project project if no remedial action is taken.
(b) Determining whether resources of project are It is graphic display of cumulative costs, labour
properly utilised. hours, or other quantities, plotted against time.
(c) Ensuring all activities are carried out properly by (ii) Earned Value Analysis
right people and in time. Earned Value Management (EVM) is a project
(d) Using lessons learned from one project on to management technique that objectively tracks
another. physical accomplishment of work.
(e) To improve planning and other project EVM integrates the scope, schedule, and cost of a
management processes. project.
(f) To determine quality and its deviation from desired It is an “early warning” program/project
plan. management tool that enables managers to identify
and control problems before they become
(g) To convey actual project status of concerned insurmountable.
stakeholder.
1. Planned Value (PV) or Budgeted Cost of
What do we Monitor? Work Scheduled (BCWS)
Basically we try to monitor every thing and The sum of budgets for all work packages
anything project manager and stakeholders will scheduled to be accomplished within a given
like to know about, but specifically we try to time period.
monitor 6 major constraints of the project as
mentioned below: 2. Earned Value (EV) or Budgeted Cost of
Work Performed (BCWP)
1. Scope
The budgeted cost of work actually performed
2. Time in a given period or the budgeted level of
3. Cost effort actually expended.

4. Quality/Performance 3. Actual Cost (AC) or Actual Cost of Work

Performed (ACWP)
5. Risk
The amount of money (or effort) actually spent
6. Team in completing work in a given period.
When do we Monitor? 4. Cost Variance (CV) = Earned Value (EV) –
Continuously and regularly throughout the project Actual Cost (AC) = BCWP – ACWP
such that there is enough time for corrective and Positive CV indicates the project is under-
necessary action to be taken. budget.
Where do we Monitor? Negative CV indicates the project is over-
The place of monitoring depends on situation and budget.
parameter to be monitored hence it could be at the spot, 5. Schedule Variance (SV) = Earned Value
at site office or at head office too. (EV) –Planned Value (PV) = BCWP –
How do we Monitor? BCWS

(i) Meeting +Ve SV indicates we are ahead of schedule.

(ii) For schedule update –Ve SV indicates we are behind schedule

(iii) Tests and inspections 6. Cost Performance Index (CPI)

CPI = Earned Value (EV) / Actual Cost (AC)

21 | P a g e
 =BCWP / ACWP
CPI = 1, indicates actual cost = estimated
cost& utilizing the resources is as planned.
CPI > 1, Indicates actual cost > estimated
cost& utilizing the resources is better than
planned.
CPI < 1, Indicates actual cost < estimated
cost& utilizing the resources is worse than
planned.
7. Schedule Performance Index (SPI)
SPI = Earned Value (EV) / Planned Value
(PV)=BCWP/BCWS
SPI > 1, project team is very efficient in
utilizing the time allocated to the project.
SPI <1, project team is less efficient in
utilizing the time allocated to the project.
8. Budget at Completion
Budget at Completion (BAC) is the total
budget allocated to the project.
BAC is used to compute the Estimate at
Completion (EAC)
9. Estimate at Completion (EAC)
At the start of the project BAC and EAC will
be equal.
EAC will vary from BAC only when actual
costs(ACWP) vary from the planned costs
(BCWP).
(a) EAC = Actual to date plus a new estimate
for all remaining work.
10. Estimate to Complete (ETC)
ETC = Estimate At Completion (EAC)- Actual
Cost(AC).
This is the estimated additional cost to
complete the project from any given time.
11. Variance at Completion (VAC)
VAC = Budget At Completion (BAC)-
Estimate At Completion EAC
This is the money value by which the project
will be over or under budget.
(iii) Line of Balance - LOB is used for collection,
measuring & presenting of data related to time cost
and progress.
(iv) Critical Ratio [CR]
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EV EV
Critical ratio = CPI × SPI = 
AC PV
CR < 1 means poor project performance
CR = 1 means project performance is on target
CR > 1 means good project performance
Project Control
What to Control
We control the things which we actually
monitories., anything and everything project
manager and stakeholders wants to control but
specifically we control Scope, time, cost, quality/
performance, risk and team
Purpose of Control
The fundamental purpose of control is to:
1. Regulation of results through the alteration of
activities.
2. Taking care for efficient and sustainable use of
organizational assets.
3. Having power of project control (be in control of
the project), because control is the act of reducing
difference between reality and plan.
Element of Control In Project
(a) Establish Standard
(b) Measuring Performance Against Standard
(c) Correcting Variation from Standards
Type of Control Systems
(i) Cybernetic Control
(ii) Go/No Go Control
(iii) Post-Control
(iv) Feedback control
PROJECT CLOSURE & REVIEW
Project closing involves delivering final output to
the customer, closing procurement contracts,
releasing resources, communicating closure of
project to sponsor and all concerned stakeholder
and then documenting a project closure report for
future reference.
Objectives/Benefits of Project Closing
We might have delivered the outputs, but this does
not mean that project is complete because unless
 and until project has been closed with planned
procedures, it’s value will be null or void.
Project closing ensures that there are no further
obligations in project.
Ensuring project output can be used.
Hearing about good and bad points, so that in the
future, success can be repeated and failures can be
avoided.
Releasing of resources like staff, equipments etc.,
so that they can be assigned a new project.
Ensuring Physical Completion
This step ensures whether the project objectives,
benefits and deliverable’s were completed successfully
to the customer’s satisfaction or any outstanding
activities are to be completed for project closing.
Closing Procurement or Other contracts
It is not good that we deliver outputs to our
customer without closing the contracts of our
vendors.
Contracts closing involves verifying that specified
work was completed and updating of all contract
records.
Handing Over Of Output And obtaining
Formal Acceptance
Each output should be formally handed over to the
customer or sponsor who confirm their
23 | P a g e
delivery(sign them off) so that there is no dispute
about it later on.
Documenting Project Records
Once the project is complete and deliverables are being
handed over to customer and customer agreed upon it.
Performing Financial Closure
Financial closure is the process of completing all
project-related financial transactions, finalizing and
closing the project financial accounts, disposing of
project assets and releasing the work site.
It is prerequisite to post implementation review. As
it establishes final project costs for comparison
against budgeted costs as part of the post review.
Documenting Lessons Learned
After conducting financial closure, project manager
need to document lessons learned from the project
which can be used as a references for future
projects to avoid project failure.
These lessons learned are not only about the
problems faced or mistakes that were made during
the project, but he should also document good
things that happened in the project.
Releasing/Redistribution of Resources
After documenting lessons learned we must hand over
the resources to the concerned department so that they
can be assigned to other projects.
Performing Post Implementation Review
It is also called as Post Project Review.
A Post Implementation Review is a critical part in
the project life cycle, as it’s during this review that
the success of the project is measured.
A Post Implementation Review, is performed 1.5to
10 months after a project is complete i.e. when
project is live.
Archiving Project Records
Archiving project documents provides following
benefits.
(a) Retaining organisational knowledge
(b) Making project data available for future
projects
(c) Making project data available for internal
and external audit
Project Audit
 Audit is generally defined as an unbiased 4. Social Audit
examination and evaluation of the process
This type of audit is generally applicable to either
documents or statements of an organization.
public sector undertakings or government projects,
It can be done internally by (employee of which are generally performed with the objectives
organization) or externally by an outside firm. of social benefits.
Objectives of Audits are as listed below. Types for Project Closing And Termination
(i) Building up an information base to help Project closing or termination is one of the most
proper estimation of project cost & time. serious decisions a project management team and
(ii) Educating all those concerned with the its control board have to take.
project about the realities of project (a) Gray and Larson (2008) identify five
management. circumstances for project closure:
(iii) Establishing correct time-cost relationship. 1. Normal closure
(iv) Creation of appropriate standards for work The common condition of project closure is when
based on suitable work techniques. the project is completed and planned are achieved.
(v) Sharing of project audit information among 2. Premature Closure
all concerned – In order to build up better
understanding of the project and its problem Many projects are stopped before completion due
areas. So that mistakes can be avoided in the to various reasons such as cost inuring is more than
future. planned, project being obsolete due to new
technology or product etc.
Different Types of AUDIT
3. Perpetual projects
1. Financial Audit
As some project are suffered by consistent scope
Financial Audit is done for the following costs to creep, add on, changes, numerous delays, setbacks
verify that the actual is as per the estimates and problems.
/projections made at the time of planning or
appraisal: 4. Failed project
(i) Project Cost under various heads. In rare circumstances, projects simply fail, for a
variety of reasons.
(ii) Operating Costs.
1. Poorly defined project scope
(iii) Profitability
2. Inadequate risk management
(iv) Cash Flow
3. Project managers who lack experience and
(v) Sources & Application of Funds. training
2. Technical Audit 4. No use of formal methods and strategies
This audit throws light on the other objectives of 5. Lack of effective communication at all levels
the project, that is, quality and scope.
5. Changed Priority
During this audit actual quality & quantity of
production, scope of the project and operating costs Organization’s strategies often changes during the
attained by product and services are compared with course of time according to market environment
the planned parameters. changes.
3. Schedule Audit (b) According to medredith and mentel (1995),project
termination or closing can be by following four
Time is another important objective of any project. ways:
A delayed project may lead to a huge loss in the 1. Termination by addition
form of opportunity cost or unsatisfied customer.
If a project is a major success, it may be terminated
Schedule audit aims at comparison of actual time by institutionalizing it as a formal part of the parent
of completion of a project as compared to projected organization, project staff and resources are
time. transferred to new project.

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2. Termination by integration 4. Termination by Extinction
It is the most common method for terminating of Termination by extinction occurs when a project
successful projects. stops. In other words when a project stops whether
the project is successful or unsuccessful; it is terms
Output of project is integrated with the operations
or termination by extinction.
of the client.
Project are terminated by extinction by various
Project staff and resources are distributed among
reasons such as
existing parent organization.
(i) When a project has successfully completed the
3. Termination by Starvation
scope and delivered to client
Termination by starvation involves greatly
(ii) When due to technological advancement,
reducing the budget of a project.
project becomes obsolete.
It is used when i t is politically dangerous to cancel
(iii) When it has no longer support from the senior
a project
management.
A special case of termination by extinction is and
termination by murder “which can range from
political assassination to accidental projecticide.

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