LECTURE HANDOUT-1 CHAPTER INTRODUCTION COURSE - PROJECT MANAGEMENT BBA PROGRAM, IIUC Farid A. Sobhani1 CHAPTER OBJECTIVES: 1.

1 Understanding the Concept of Project 1.2 Identifying the characteristics of a Project 1.3 Classifying Projects 1.4 Defining Project Management 1.5 Why Project Management 1.6 Functions and Skill Set in Project Management 1.7 Project Life Cycle 1.8 McKinsey 7S Framework in Project Management DISCUSSION ON THE ISSUES: 1.1 Concept of Project The word Project is derived from the Latin word projicere meaning to throw forth. (Chadha, 1989: p. 8). The original meaning of project has been modulated over the years. Nowadays the term project is loosely used to express any undertaking or assignment. But any initiative or task should not be referred to mean a project. Project means a set of activities to be performed within a specific period of time under a prescribed budget to achieve a specific goal or objective. Someone defines project as the deployment of manpower, material and financial resources to achieve a preset objective within a prescribed time period. There are a number of widely used definitions of the term project. Project Management Institute (PMI) is a reputed project-oriented organization in the USA to foster the growth of project management as well as building professionalism in this field throughout the world. PMI defines a project as a temporary endeavor undertaken to create a unique product or service. It also describes a project as a combination human and non-human resources pooled together in a temporary organization to achieve a specific purpose. United Nations Industrial Development Organization (UNIDO) in its publication-Manual for Evaluation of Industrial Projects gives a comprehensive definition of project. According to UNIDO a project is a proposal for an investment to create and or develop certain facilities in order to increase the production of goods and or services in a community during a certain period of time. (UNIDO, 1998: P.4). The classical examples of routine projects may be as under: Designing a software package Developing a new office lay-out Implementing a new decision support system

Associate Professor & Ex-Head, Department of Business Administration, IIUC

Introducing a new product to the market Designing an airplane or a workstation Opening a new store Publishing a book or journal Constructing a bridge, dam or highway Relocating an office or factory Performing a major maintenance or repair Starting up a new manufacturing facility Producing and directing a movie Organizing a scientific workshop etc.

The following interventions should not be considered as projects, but these are programs2: Poverty alleviation Food for work Adult literacy movement Islamization of knowledge Family planning Birth control Immunization campaign Quality education Campus development Social responsibility Maintaining law & order situation 3 National election The following entities should not be treated as projects, rather as institutions 4 or organizations: Beximco Pharma (Beximco Pharmaceutical Ltd.) IIUC (International Islamic University Chittagong) Nitol Motors (Nitol Motors Ltd.) Chittagong cement (Chittagong Cement Ltd) GSK (Glaxosmithkline Ltd.) Lever (Lever Brothers Ltd.) PHP (PHP Group) 1.2 Characteristics of a Project A project has the following chrematistics or features by which it can be identified:
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A set of activities Deployment of manpower, material and financial resources To be performed within a prescribed timeframe One time activity

Program is a set of similar projects Election of a particular territory is a govt. project 4 Most of the projects are initiated by an institution

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Has a life cycle Has a beginning & end Flexibility in process An investment proposal Exposed to risk & uncertainty Has a prescribed budget Two projects never be similar Objective oriented

Classification of Projects Project may be classified from different points of view. It can be divided in view of goal, phase, ownership, region, period, volume of activities, sector and professional segmentation. a. In terms of goal / profit generation Examples Commercial / profit making project Forming a partnership business Social / development / non-profit project Establishing hospital b. In terms of phase: Greenfield project Growing project Sick project5 Closure project c. In terms of ownership: Public project Private project Pre-investment project Projects earning profit Required finance for BMRE Lay-off project Govt. project Project under NGOs

d. In terms of region / geographical location: Local project Construction of a bridge National project Preparation of a national budget International project Signing MOU between two countries e. In terms of period: Short term projects (<1 yr in duration) Construction of a bridge Medium-term projects (<5 yr in duration) Developing computer software Long-term projects (>5 yr in duration) Construction a big project f. In view of volume of activities: Small scale project Medium scale project Large scale project
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Formation of a proprietorship firm Forming a limited company Development of an airport

While a project incurs losses in three consecutive years or closure to lay-off

g. In terms of sector6:
Agricultural project Industrial project Urban project Rural project Irrigation projects Development of a power plant Real estate project Sanitation project, Digging pond Construction projects Nutritional project, Immunization Organizing a workshop Filing a criminal case

h. In terms of professional segmentation: Engineering project Health project campaign Education & training project Judicial project 1.4

Defining Project Management: Project management (PM) is receiving much attention nowadays. Almost everyday newspapers carry advertisements asking for project managers. It is now being recognized as a valuable career path in many organizations as well as a way to gain valuable experience within the organization. The scenario was not so bright a few years ago. However, let us know what the project management is. The notion of project management emerged at the beginning of 1960s with NASA7 space program. (Coudere, 2001:p.2). This term was later used in respect of major civil engineering works, gradually spreading over other sectors including development projects. It is also said that project management is what a project manager does. A project manager does many things where a big portion of total activities is not related to a project. So it is a misleading conception about project management. Simply project management means managing all the activities of a project from conception to completion. It provides a manager with powerful managerial tools and techniques in planning, directing and controlling a project in order to meet various resource constraints. On the other hand, project management is an well established integrated course with a number of developed techniques to ensure successful implementation of a project through efficient control of different inputs required, which include human resources, financial resources and material resources. These techniques also ensure that the project achieves the specific targets set out for it. Finally, we can say that project management is a recognized subject of managerial tools and techniques to the deployment of human, material and financial resources and to get a project done by others most effectively and efficiently to achieve pre-determined objectives within an established period of time. 1.5 Why Project Management: Project management may be treated as the best way to accomplish certain goals. The main objective of project management is to meet specified performance within cost
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Projects may also be originated from sectors like State, Market and Civil Society NASA stands for National Aeronautic Space Administration.

and schedule. Specifically, the project form of organization allows a manager to be responsive to: (a) the client and the environment, (b) identify and correct problems at an early time, (c) make timely decisions about trade-offs between conflicting project goals, and (d) ensure that project team works for total optimization of the project, not for suboptimization of individual tasks. A significant proportion of users report that project management is used for shortening development times, costs, and enhancing quality, reliability, and profit margins. Other advantages include a sharper orientation towards results, better interdepartmental coordination, and higher worker morale. Three primary forces behind project management are: (i) the growing demand for complex & customized goods & services; (ii) the exponential expansion of human knowledge; and (iii) the global production consumption environment. (Meredith et al, 2000: P.12-22) Project can be said as a cake piece of Development Cake. Project has a diversity effects towards economic development. The importance of project management can be realized from the following points: i) PM is indispensable for economic development or growth of a country or an enterprise. ii) It ensures effective and efficient resources utilization and management. iii) It leads to GDP growth. iv) It leads to increase of per capita income and enhancement of standard of living. v) It helps to overcome the problems of time and cost overruns. vi) It leads to optimum use of available resources. vii) It increases international competitiveness. viii) It is the key to cost management of producing goods and services. ix) It is an essential condition for getting assistance and loan. x) It impacts have been long term and hence has a temporal spread. xi) It helps to achieve self-reliance in the country. xii) It is base to implementing national development strategies. xiii) It is a precondition of transfer of technology. xiv) It may lead to a balanced growth of agriculture and industry. xv) It is helpful towards exploration of resources, innovations and researchers and discoveries. xvi) It brings not only economic prosperity but also honor and prestige to a nation because economic prosperity means economic power. xvii) It will lead to a capacity to render financial assistance to other poor and least developed countries. 1.6 Functions or Skills Set in Project Management Some researches has indicated that the following fifteen functions are essential for effective project management which are listed below: 1. Define project scope 2. Identify stakeholders, decision makers and escalation procedures

3. Develop details of task list( Work-Break Down Structures - WBS) 4. Estimate time requirement 5. Develop initial project management flow chart 6. Identify required resources and budget 7. Evaluate project requirements 8. Identify and evaluate risk 9. Prepare contingency plans 10. Identify interdependencies 11. Identify and track critical milestones 12. Participate in project phase review 13. Assemble needed resources 14. Manage the change control process 15. Report project status Project Life Cycle A project life cycle is similar with a product life cycle. Most of the projects go through a similar stage on the path from origin to end. A standard concept of a product or project life cycle wherein it goes through a start-up phase, a building phase, a maturing phase and a termination phase. The pattern slow-rapid-slow progress towards the project goal is common. Any one who has watched the construction of a home or a building has observed this phenomenon. For the most part, it is a result of the changing levels of resources used during the successive stages of the life cycle. The life cycle must not be the same for all projects. To understand the difference, let us consider baking a cake. Once the ingredients are mixed, we are instructed to bake the cake in a 3500 (F) for 35 minutes. At what point in the baking process do we have a cake? Experienced bakers know that the mixture changes from goop (a technical term well known to bakers and cooks (to cake quite rapidly in the last few minutes of the baking process. A number of actual projects have a similar life cycle, for example some computer software projects, or chemical engineering plants. However, it is necessary for a project manager (PM) to estimate the precise shape of he life cycle curve, but the PM must know whether the later part of the curve is concave or convex to the baseline. Meredith et al. 2000: P.13-16).

The four phases of a project are also known as initiation, planning, executive, and closure. Initiation involves starting up the project, by documenting a business case, feasibility study, terms of reference, appointing the team and setting up a Project Office. Planning involves setting out the roadmap for the project by creating the following plans: project plan, resource plan, financial plan, quality plan, acceptance plan and communications plan. Execution involves building the deliverables and controlling the project delivery, scope, costs, quality, risks and issues. Closure involves winding-down the project by releasing staff, handing over deliverables to the customer and completing a post implementation review. A more detailed description of the Project Management Methodology and Life Cycle follows:

Project Initiation: Project Initiation is the first phase in the Project Life Cycle and essentially involves starting up the project. You initiate a project by defining its purpose and scope, the justification for initiating it and the solution to be implemented. You will also need to recruit a suitably skilled project team, set up a Project Office and perform an end of Phase Review. The Project Initiation phase involves the following six key steps:

Project Planning: After defining the project and appointing the project team, you're ready to enter the detailed Project Planning phase. This involves creating a suite of planning documents to help guide the team throughout the project delivery. The Planning Phase involves completing the following 10 key steps:

Project Execution: With a clear definition of the project and a suite of detailed project plans, you are now ready to enter the Execution phase of the project. This is the phase in which the deliverables are physically built and presented to the customer for acceptance. While each deliverable is being constructed, a suite of management processes are undertaken to monitor and control the deliverables being output by the project. These processes include managing time, cost, quality, change, risks, issues, suppliers, customers and communication. Once all the deliverables have been produced and the customer has accepted the final solution, the project is ready for closure. Project Closure: Project Closure involves releasing the final deliverables to the customer, handing over project documentation to the business, terminating supplier contracts, releasing project resources and communicating project closure to all stakeholders. The last remaining step is to undertake a Post Implementation Review to identify the level of project success and note any lessons learned for future projects.

1.8 McKinsey 7S Framework in Project Management The McKinsey 7S framework developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be united if it is to be successful. The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you: Improve the performance of a project; Examine the likely effects of future changes within a project; Align departments and processes during a merger or acquisition; or Determine how best to implement a proposed strategy.

The model ensures all parts of a project are working in harmony The Seven Elements The McKinsey 7S model involves seven interdependent factors which are categorized as either "hard" or "soft" elements: Hard Elements Strategy Structure Systems Soft Elements Shared Values Skills Style Staff

Hard elements are easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems. Soft elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful. The way the model is presented in Figure 1 below depicts the interdependency of the elements and indicates how a change in one affects all the others.

Lets look at each of the elements specifically: Strategy: The plan devised to maintain and build competitive advantage over the competition. Structure: The way the organization is structured and who reports to whom. Systems: The daily activities and procedures that staff members engage in to get the job done.

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Shared Values: Called superordinate goals when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. Style: the style of leadership adopted. Staff: the employees and their general capabilities. Skills: the actual skills and competencies of the employees working for the company.

Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements. The companys structure, strategy, systems, style, staff and skills all stem from why the organization was originally created, and what it stands for. The original vision of the company was formed from the values of the creators. As the values change, so do all the other elements. Key Points: The McKinsey 7Ss model is one that can be applied to almost any organizational or team effectiveness issue. If something within your organization or team isnt working, chances are there is inconsistency between some of the elements identified by this classic model. Once these inconsistencies are revealed, you can work to align the internal elements to make sure they are all contributing to the shared goals and values. The process of analyzing where you are right now in terms of these elements is worthwhile in and of itself. But by taking this analysis to the next level and determining the ultimate state for each of the factors, you can really move your organization or team forward. REFERENCES: 1. Chadha, Skylark (1989), Managing Projects in Bangladesh, Dhaka. 2. Chowdhury (1998), Project Management, India. 3. Coudere, Hugo (2001), Course Materials on Management of Development Projects, University of Antwerp (IDPM), Belgium. 4. Meredith et al (2000), Project Management A managerial approach, USA. 5. UNIDO (1998), Manual for Evaluation of Industrial Projects, New York. 6. Chase, Aquilano and Davis, Operations Management, USA [N. B. Students are advised to follow the deliberations in the classes for doing well in the examinations] COURSE TEACHER: F. A. SOBHANI BBA (Hons) MBA, MS in Project Management (Belgium) Associate Professor & Ex-Head Department of Business Administration International Islamic University Chittagong Email: sobhani_farid@yahoo.com Contact: +8801726123003

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