Professional Documents
Culture Documents
management
What is a
project?
Meaning of project
It is a blue print for the action oriented
activities of an organization. It reflects the
plan of action in its totality
It is a scientifically evolved work plan
devised to achieve a specific objective within
a specified period of time.
Definition of project
A project is a one-shot, time-bound, goal-directed
major undertaking, requiring the commitment of
varied skills and resources. It has also been
described as a combination of human and nonhuman resources pooled together in a temporary
organization to achieve a specific purpose. The
purpose and the set of activities which can
achieve that purpose distinguish one project from
another.
project management Institute,USA
Features of a project
Types of project
On the basis of expansion Project expanding the capacity
--project expanding the supply of knowledge
Industrial project
Agricultural project
Educational project
Health project
Social project
Project
Project
Project
Project
with
with
with
with
domestic financing
foreign financing
mixed financing
financial institutions
Pre-investment phase
Implementation phase
Project and engineering design-blue print,plant
design etc
Negotiation and contractions-construction of
building and civil works, supply of machine and
equipments etc
Construction-site preparation, building
construction, installation of machinery
Training engineers technicians and workers
Plant commissioning
Operation phase
Transition phase
Project monitoring
Project evaluation
Preinvestment
phase(4-8%)
Implementati
on
phase(85%)
Operation
phase(3%)
CONCEPTION PHASE
DEFINITION
PLANNING AND ORGANISING
IMPLEMENTATION
PROJECT CLEAN UP
A.PROJECT IDEA
GERMINATION
PROJECT may be to overcome existing
problems
Develop comparitive ideas
C. INFRASTRUCTURE,ENABLING
SERVICES,
Systems design
Basic engineering package,
Organisation,
Manpower,scheudles,budget,licensing and
government clearances,finance,systems and
procedures
Site preparation and investigation
Construction resource and materials
Work packaging
D.IMPLEMENTATION-80-85%
PREparation of specification for equipment
and machinery
Ordering of equipment
Lining up of construction contracts
Issue of construction contractors drawings
Equipment foundations
Project clean up
Physical handover of project hardware to
production phase
Handover of drawings
Documents,files,operation and maintenance
manuals
Project account closed
Dues settled etc
INVESTMENT SIZE
LOCATION
Technology
Equipment
marketing
Project management
It is an existing new profession which
receives much attention
It is concerned with the management of
resources to successfully complete the
project
It is designed to manage or control company
resources of a given activity within
time,cost,performance
Overview of project
management
Cost
Resources
time
performanc
e
Components of a project
management system
Objective-fundamental rationale
Requirement-sine qua non or a irreducible
Alternative-a surrogate
Selection criteria- a matter of carrying out
Constraint-a demarcation point
Steps in project
management
Grouping of activities
Single responsibility centre
Support and service system
Commitment-coordinating and directing
towards goals
Follow-up-budgets schedules and controls
Deciding what is to be done.maintaining
integrity and making sure it is done.
Benefits of Project
management
Obstacles in P.M
Project complexities
Execution of customers special
requirements
Organization restructuring
Project risks
Changes in technology
Forward planning and pricing
Project identification-project
ideas
A variety of sources should be tapped to
stimulate their generation.
Conceptual stage
Screening stage(compatibility with promoter,
consistency with governmental priorities,
availability of inputs, adequacy of market,
reasonableness of cost, acceptability of risk
level)
Identification stage Pre-feasibility stage
Pre-feasibility stage_SWOT
ANALYSIS
Project formulation
It is the investigating process which precedes
investment decision.(scientific procedure)
The objectives goals and justification for the
acceptance of the project are to be explained.
(subjective and objective information is to be
presented)
The major task is to assess the financial,
technical and managerial involvement and its
justification considering the resource constraint.
Feasibility analysis
Techno-economic analysis
Project design and network analysis
Input analysis
Financial analysis
Cost benefit analysis
Pre-investment appraisal
Forecasting
Setting up priorities and choosing the goals
Searching for alternatives
Carrying out detailed studies
estimating the needed resources
Arranging funds
Preparing time schedule for all jobs
Distributing the work to various departments
Execution and controlling the project
Evaluating the performance of each project
Feasibility report
It is an investment proposal based on certain
information and factual data appraising the project
It is prepared during the definition phase of a
project. It lies in between the project formulation
stage and appraisal and sanction stage.
It is prepared to present an in-depth technocommercial analysis carried out on the idea for
consideration of the financial institutions and other
authorities empowered to take the investment
decision.
Gamut (components) of
feasibility study
Technical feasibility-technicians
angle.
Feasibility report should give types of
technology to be adopted
Requirements of equipment, labour and
other inputs.
Size of the plant,location of the
project,pollution caused by the project,
production capacity of the project and
strength of the project.
Managerial feasibility
Heredity skill
Skill acquired through training
Skill acquired during the course of work.
Social feasibility
To generate more employment opportunities
and to improve the standard of living of the
people small scale projects can be
encouraged.
Project Report
It is a document which narrates the various
aspects of a project in a prescribed form.
It is a post-investment decision exercise
General information
Name and address of the entrepreneur
The qualifications,experience and other
capabilities
A small analysis of the industry-present
status,the way of the organisation, the
problems
The organisational structure
The utility of the product and range of products
rationale
To look at the broad rationale of the project
to ensure that project is justified and
accepted,
Establishment of a modernisation and
pollution control may be fully justified
Project description
Input factors
Raw materials
Labour
Power
Fuel and water
Waste discharge
Communication and transportation facilities
Capacity and technology
Quality control
Market potential
Estimation of demand and supply
Marketing strategy-before and after the
sales.
Objective
Scope of information management
Time span
Cost s involved
Reliability
Depth of analysis
Differences between FR
AND PR
Feasibility report
Aims to serve top
management in arriving
feasible and viable project
alternatives.
Information in areas like
technical, economic
commercial and
environmental areas
Project report
Focuses on formally
communicating the project
sponsors decision to the
government and financial
institutions
70 to 80% information based on
which certain reliable forecasts
are made and decisions taken
by management.
continued
Exploratory research-6 to 15
months
Average of 1.5% and 3% of
the project costs
Official document-1 to 2
years-utility after the
decision is made
Total costs 5% and 7.5% of
the expected investment.
Long run used as a
databank.-major signpost
The depth and magnitude
is perfectly maintained by
furnishing intricate details
of the project.
PROJECT RISKS
TYPES:
Design
Implementation
Operational
Environmental
Finance
Interest risk
Structural
Human resource
Execution
Management
Technology
disruption
Focussing on the
constraints
Identifying the risks
projects with quantified
benefits
projects with nonquantifiable benefits
No prescribed standard
format-based on the
appraisals missions
judgement
PROJECT
APPRAISAL
ASSESSMENT OF A PROJECT in terms of
economical, social and financial viability
Reshape the project so as to upgrade it.
Aims at sizing up the quality and long term
profitability
Emphasis on economic and technical soundness
and
Earning potential than the adequacy and liquidity
of the security
TECHNICAL
APPRAISAL-project to be found
sound from technical and engineering point of view.
Core technology
Engineering and design technology
Intermediate technology
Component technology
Managerial appraisal
Character
Capacity
Credit worthiness
Capital
Collateral
conditions
Principle of three cs
Attribute
How is it measured?
Previous experience,
credit reference, market
integrity
Viability of the
project,generation of
surplus
Educational and family
background
Networth of the borrower.
Marketability-market
value of the collateral
General economic
condition of the country:
stability of the borrowers
income relative to these
conditions
Financial appraisal
Objectives:
To assess whether the unit will generate sufficient
surplus to meet the outside obligations
Ratio analysis
Loan safety ratio=liabilities
--------------------owners funds
Productivity ratio=
Capital employed to value of output sales
CE TO NVA
Investment per worker
Productivity per worker
Profitability ratio
Profitability ratio
Percentage
output
Percentage
output
Percentage
Percentage
Percentage
SCBA
Methodology to assess the utility of the project to
society as a whole.
Separates all expected changes
Represents inputs and outputs of a project and a
price can be put to each of these inputs and outputs
Combines the costs and benefits that arise over the
economic life of the project
Methodological guidelines developed by OECD AND
UNIDO
We look, too, at issues that directly affect the lives of ordinary people, like
how much they pay in taxes and social security, and how much leisure time they
can take. We compare how different countries school systems are readying
their young people for modern life, and how different countries pension
systems will look after their citizens in old age.
costs
------------------
Social cost of
extra GDP to
be generated
by the project
----------------
Routine
radiation in
value
----------------
Waste
management
--------------
Proliferation
-----------------
Civil liberties
-------------------
Shadow prices
Also known as the accounting price
Refers to adjusted price of the input/output
so as to reflect its real cost of value
Accounting price of an input
viz.capital,labour or foreign exchange
represents its opportunity cost or the loss to
the economy that would result from a
reduction in its supply by one unit.
Socio-Economic appraisal
SCBA IS A PERFECT NECROPSY where the
identification and determination of the best
among project alternatives is made with
reference to a country economic and social
Position.
Project planning
Blue print to foresee some predicted goals
It is a skeleton which consist of a bundle of
activities with its future prospects
Guided activity
A predefined and detailed plan of action
Helps the managers to perform their task
effectively and efficiently.
Functions of project
planning
Organization of activities
and allocation of
responsibilities
Communication and coordination
Induces people to look ahead
Instills a sense of urgency and time consciousness
Basis for monitoring and control
(gist: prj mgr should structure the work
manageable,independent,integratable and
measurable in terms of progress)
Planning
Planning
Planning
Planning
the
the
the
the
project work
manpower and organization
money
information system
Traditional tools
Gantt chart
1.
oldest formal planning designed by Henry Gantt in
1903
2.
activities are broken down into a series of well-defined
jobs of short duration whose cost and time can be
estimated.
3.
pictorial device in which the activities are represented
by horizontal bars on the time axis
4. The length of the bar-estimated time
5. The left hand end of the bar shows the beginning time,
right hand and the ending time
merits
demerits
It is simple to understand
Can be used to show
progress
Used for manpower
planning
Network techniques
Sophisticated than the traditional bar chart
Activities, events and their relationships are
represented by a network diagram
Also called an arrow diagram
It is drawn in which lines between the nodes
represent the jobs, the nodes being
numbered to identify the jobs.
merits
Effectively handle
relationships among
project activities
Identify the activities
which are critical
Handle large and complex
projects
Computerized and
updated
PERT-
ADVANTAGES
Gives the management the
ability to plan the best possible
use of resources to achieve a
given goal within the overall
time and cost limitations
Helps the management to
handle the uncertainities
It presses for the right action at
the right point and at the right
time
DISADVANTAGES
Basic difficulty comes in
the way of time estimates
Does not consider
resources required at
various stages
Requires frequent
updating and revising the
PERT calculation and this
costly affair
Advantages
Helps in ascertaining time schedule
Control by the management is made
easy
Makes better and detailed planning
Provides a standard method for
communicating project plans,
schedules time and cost
performance
Identifies the most critical elements
and attention is paid to these
activities
Disadvantages
Fails to incorporate
statistical analysis
Based on the
assumptions that there is
a precise known time but
not true in reality
Cannot be used as a
controlling device
especially when changes
are introduced
PERT
CPM
Time estimates
Essential to fix a time target for each and
every activity
Helps to complete the projects as per time
schedule
Different approaches
Purpose of project
scheduling
Successively detail out the schedule to
provide physical equivalence with reality
Adopt the schedule to the changed realities
Provide intervention when stability of the
work system
At zero date
During detailed engineering
During procurement and subcontracting
During construction
Project organisation
Project organisation should have specific
objectives,a formal structure of authority
with some persons in leadership roles and
others in subordinate roles,division of work
which entails specialsiation by members in
various activities or functions, a formal
system of communications,and generally a
set of formal procedures and customs that
distinguish them from the social entities.
Forms of organisation
Personnel
Engineeri
ng
Technical
constructio
n
finance
Administratio
n contract
commercial
purchase
Multilateral funding
agencies
World bank
Regional development banks
EDF-European development funds
UNDP-united nations development program
Advantages:
1.
long period
2.
Lower rate of interest
3.
Participation will endorse credit for interested
parties
4.
Co-financing is possible
Suppliers credit
Buyers credit
Arrangement between banks of the country
with that of banks of other countries(client)
Lending banks should to make progress
payments in cash to the contractor or
submission of invoices together with
appropriate paper such as BOL
Commonly used in Asian and pacific region.
Project overruns
Inability of the project administration to
complete the venture within the stipulated
framework of cost and time
Spending more time than the scheduled time
Cost overrun is the excess of actual cost
incurred on a project over the budgeted or
planned cost.
Internal reasons
Underestimation at the project preparation and evaluation stages
unsuitability of the location,changes in the designs of civil
structure,additions and changes in various items of plant and
equipment
Effective project implementation requires competent management
with ability to forecast problems
Tendency of management to overspend on travel,entertainment
,non-productive activities etc
Incompetent and dishonest management Delay in recruitment of project implementation staff,excessive
expenditure on foreign technicians,failure to comply with
institutional conditions,inadequate contingency provisions for nonfirm items ,complex technology etc
External reasons
Delay in availability of utilities-power
General short supply of materials and escalation in prices
Delay in sanction and disbursement of assistance by financial
institutions
Delay in development of an industrial area and provision of necessary
infrastructure
Changes in government policies
Foreign currency fluctuations
Unforeseen political developments
Inability of domestic machinery to adhere to the delivery schedules due
to over booking,strikes,non-availabilty of components etc
Delay in the arrival of foreign technicians
Sudden changes in the market conditions
On
On
On
On
tools
Gantt charts
Bar charts
Milestone charts
Critical path method
PERT
USES OF NETWORK
TECHNIQUES
Graphic representation of how each activity is dependent on
others help in better scheduling, monitoring and control
Serve as indicators
Illustrates the type and extent of coordination required
among several functionaries of the project team
Identifying critical tasks and helps in diverting resources
Helps in identifying the critical path
Helps in resource allocation
Helps in resource smoothening
Whether or not to crash the project
Cost control
Project review
Important aspect in the process of planning
Important tool to identify the shortcomings during
the implementation period and to develop
corrective actions to improve the delivery and
administrative function
Final phase of project management
Initial review
Performance evaluation
Abandonment analysis
Behavioral issues in project abandonment
Administrative aspects of capital budgeting
Evaluating the capital budgeting system in
org
Performance evaluation
It is done periodically
On going process
Economic rate of return=cash flow+changes in
present value/pv at the beginning of the year
Abandonment analysis
Investment decision is guided by NPV
criterion.
Applied to a project continuation versus
abandonmentdecision
Project to be abandoned if the NPV
associated with continuation
Financial review-purpose
Reasonableness of the estimate of capital
cost
Reasonableness of the estimate of working
results
Adequacy of the rate of return
Appropriateness of the financing pattern
Financial review
Cash flow stream
Debt service coverage ratio
Refinement in financial
evaluation
Risk analysis
Inflation analysis
Better monitoring
Project mix
Capacity
Process of manufacture
Engineering know-how and technical collaboration
Raw materials and consumables
Location and site
Building
Plant and equipments
Break even point
Marketing review
Resourcefulness Understanding
Commitment
Economic review
Effective rate of protection and Domestic
resource cost
World bank
Turnkey Trap
When do not have expertise often resort to
Turnkey trap
Owner expects that the turnkey contractor
can take care
It is single point responsibility, this
responsibility is with respect to
TIME,PERFORMANCE PARAMETERS AND
PROJECT COST
CM AND DM companies
The owner when he is not doing things
himself,needs someone who is not working
for profit.
These are construction management and
design management
Project audit
Formal and systematic examination of the
performance of an ongoing project as
compared to its requirements
Independent and authentic source of
information and critique
objectives
Creating awareness among the project staff of the
types and magnitude of the problems-producing
quality products, in planned volume and at
competitive costs
Providing clear picture, from time to time of the
actual status of project
Prompt identification of the factors that might
cause product quality problems
Identify specific training needs
Establishment appropriate standards and systems
Advantages of WBS
Partition the major project deliverables into smaller components
to improve the accuracy of cost estimates
Provide a mechanism for collecting and organising actual costs
Provide a mechanism for performance measurement and control
Defines the final and intermediate products of a project and their
relationships
Uses a tree diagram to show the resolution of overall requirments
into increasing levels of detail.
Allws a team to accomplish its general requirements by
partitioning a large task into smaller components and focusing on
work that can be more easily accomplished