Project management
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Project management involves organizing the components of a project, which includes scope, cost, schedule, quality, and time. It typically follows the pattern of definition, planning, execution, control, and closure. Techniques like the work breakdown structure, critical path method, Gantt charts, and network analysis are used. Project risks must be identified, assessed, controlled, ranked, and mitigated. The project life cycle includes idea, evaluation, identification, planning, implementation, monitoring, reporting, appraisal, and selection. Project financing creates a separate entity that receives loans and equity and relies on the project's cash flows to repay debt. Common financing models are BOO, DBFO, BTO, BBO, LOO,
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Project management
- 1. Project Management By:- Hemanshu Virendra Koradia
- 2. Project Management Project management is the science (and art) of organizing the components of a project, whether the project is development of a new product, the launch of a new service, a marketing campaign, or a wedding.
- 3. A project consists of three components namely, scope, cost and schedule. Scope Quality Cost Time
- 4. -:Basics:- No matter what the type of project, project management typically follows the same pattern: Definition Closure Planning Control Execution
- 5. -:Work Breakdown Structure:- Project Act A Act B Act A.1 Act A.2 Act B.1
- 6. -:Project Planning & Scheduling:- Techniques depends upon:- • Size Techniques are:- • Complexity • Duration CPM or Gantt Network • Personnel Chart Analysis System • Owner Requirement
- 7. -:Identifying and Managing Project Risk:- Risk Assessment Risk Control Risk Ranking Risk Mitigation
- 8. -:Project Life Cycle:- Project idea Project Evaluation Identification Monitoring Project and Preparation Reporting Project Project Implementa appraisal tion Planning for Project implementati selection on Negotiation and Financing
- 9. -:Project Financing:- • A separate project entity is created that receives loans from lenders and equity from sponsors. • Component of debt is very high in project financing. • Debt services and repayments entirely depend on the projects cash flows. • Project assets used as collateral for loan repayments. • Project financing most appropriate for projects involving large amount of capital expenditure and involving high risk.
- 10. -:Project Financing Models:- Build Own Operate (BOO) Model Design Build Finance Operate (DBFO) Model Build Transfer Operate (BTO) Model Buy Build Operate (BBO) Model Lease Own Operate (LOO) Model Design Bid Build (DBB) Model Build Develop Operate (BDO) Model
Editor's Notes
- A project is an endeavor that is undertaken to produce the results that are expected from the requesting party. A project consists of three components namely, scope, cost and schedule. When a project is first assigned to a project manager it is important that all three of these components be clearly defined. Scope represents the work to be accomplished, i.e., the quantity and quality of work. Cost refers to costs, measured in dollars and /or labor-hours of work. Schedule refers to the logical sequencing and timing of the work to be performed. The quality of a project must meet the owner’s satisfaction and is an integral part of project management, which is shown as an equilateral triangle to represent an important principle of project management: a balance is necessary between the scope, budget, and schedule.
- Defining the ProjectIn this stage the project manager defines what the project is and what the users hope to achieve by undertaking the project. This phase also includes a list of project deliverables, the outcome of a specific set of activities. The project manager works with the business sponsor or manager who wants to have the project implemented and other stakeholders -- those who have a vested interest in the outcome of the project.Planning the ProjectDefine all project activities. In this stage, the project manager lists all activities or tasks, how the tasks are related, how long each task will take, and how each tasks is tied to a specific deadline. This phase also allows the project manager to define relationships between tasks, so that, for example, if one task is x number of days late, the project tasks related to it will also reflect a comparable delay. Likewise, the project manager can set milestones, dates by which important aspects of the project need to be met.Define requirements for completing the project. In this stage, the project manager identifies how many people (often referred to as "resources") and how much expense ("cost") is involved in the project, as well as any other requirements that are necessary for completing the project. The project manager will also need to manage assumptions and risks related to the project. The project manager will also want to identify project constraints. Constraints typically relate to schedule, resources, budget, and scope. A change in one constraint will typically affect the other constraints. For example, a budget constraint may affect the number of people who can work on the project, thereby imposing a resource constraint. Likewise, if additional features are added as part of project scope, that could affect scheduling, resources, and budget.Executing the ProjectBuild the project team. In this phase, the project manager knows how many resources and how much budget he or she has to work with for the project. The project manager then assigns those resources and allocates budget to various tasks in the project. Now the work of the project begins.Controlling the ProjectThe project manager is in charge of updating the project plans to reflect actual time elapsed for each task. By keeping up with the details of progress, the project manager is able to understand how well the project is progressing overall. A product such as Microsoft Project facilitates the administrative aspects of project management.Closure of the ProjectIn this stage, the project manager and business owner pull together the project team and those who have an interest in the outcome of the project (stakeholders) to analyze the final outcome of the project.
- For a large or small size project, it is necessary to develop a well-defined work breakdown structure (WBS) that divides the project into identifiable parts that can be managed. The concept of WBS is simple: in order to manage a whole project one must manage and control each of its parts. The WBS is the cornerstone of the project work plan. It defines the work to be performed, identifies the needed expertise, assist in selection of the project team and establishes a base for project scheduling and control. A WBS is a graphical display of the project that shows the division of work in a multi-level system.
- Project planning is the process of identifying all the activities necessary to successfully complete the project. Project scheduling is the process of determining the sequential order of the planned activities, assigning realistic durations to each activity, and determining the start and finish dates for each activity. Thus, project planning is a prerequisite to project scheduling because there is no way to determine the sequence or start and finish dates of activities until they are identified.
- Risks are those events or conditions that may occur and whose occurrence has a harmful or negative impact on a project. Project risk management aims to identify the risks and then take actions to minimize their effect on the project. Project risk management entails additional cost. Hence project risk management can be considered cost-effective only if the cost of managing project risk is considerably less than the cost incurred if the risk materializes.Important components in project risk management are:Risk Assessment – The assessment and identification focuses on enumerating possible risks to the project. Identify the possible risks and assess the consequences by means of checklists of possible risks, surveys, meetings and brainstorming and reviews of plans, processes and products. The project manager can also use the process database to get information about risks and risk management on similar projects.Risk Control – Identify the actions needed to minimize the risk consequences. Develop a risk management plan. Focus on the highest prioritized risks. Prioritization requires analyzing the possible effects of the risk event in case it actually occurs. This approach requires a quantitative assessment of the risk probability and the risk consequences. For each risk, determine the rate of its occurrence and indicate whether the risk is low, medium or of high category. If necessary, assign probability values in the ranges as prescribed based upon experience. If necessary assign a weight on a scale of 1 to 10.Risk Ranking – Rank the risk based on the probability and effects on the project; for example, a high probability, high impact item will have higher rank than a risk item with a medium probability and high impact. In case of conflict, use judgment.Risk Mitigation – Select the top few risk items for mitigation and tracking. Refer to a list of commonly used risk mitigation steps for various risks from the previous risk logs maintained by the project manager and select suitable risk mitigation step. The risk mitigation step must be properly executed by incorporating them into the project schedule. In addition to monitoring the progress of the planned risk mitigation steps, periodically revisit the risk perception for the entire project. The results of this review are reported in each milestone analysis report. To prepare this report, make fresh risk analysis to determine whether the priorities have changed.
- A project is a sequence of activities that has a definite start and finish, an identifiable goal and an integrated system of complex but interdependent relationships. Project Life Cycle consists of sequential phases through which projects undergo. The phases are important in planning a project since they provide a framework for budgeting, manpower, resource allocation, scheduling project milestones, project reviews etc. All projects go through the following stages whether big or small.1. Project idea /conceptionAn idea regarding intervention in a specific area to address and identify a problem is developed or formed. Sources of ideas includeMarket demand where one may be facing increasing demand thus becoming a problemTechnological changes- this forces an organization to change in order to make use of the new technologyNatural calamities like fire, floods, landslides, drought etc.Resource availability- makes use of the available resourcesPolitical considerationsNeed to avail basic requirements or necessities to a community2. Project IdentificationAfter conception of ideas, potential projects arising from the ideas crystallized above are identified. The information may be captured in the form of a proposal or proposals and submitted to an agent or agency for consideration and objective judgement to assess the potential and justification for the intervention before the idea goes to the next stage in the cycle.3. Project PreparationInvolves a more thorough and detailed collection of data and information on the proposed project. This is normally done by people with technical and analytical skills in consultation with the target beneficially. The objective of the project is defined and alternative solutions described. Its usually conducted by people with technical and analytical skills in order to determine whether the project can be achieved and to establish whether the project is feasible. Feasibility involves viability of the project i.e. costs of the project and benefits of the project.The feasibility studies include:Financial feasibilityEconomic feasibilityTechnical feasibilityEnvironment feasibilityMarket feasibilityLegal feasibility & Social feasibility4. Project appraisalThis involves further comprehensive and systematic analysis of the proposed projects by an independent team of experts in consultation with the stakeholders of the project, so as to assess whether the proposal is justified before large amounts of money are committed. The effects of the project on the organization and society are investigated and documented. On the basis of appraisal a decision is made on whether to go ahead with the project or not where a critical a view is done by a team of independent experts who are not involved in feasibility studies done earlier. This provides an opportunity to reexamine every aspect of the project before funds raised are committed.5. Project selectionFrom appraisal, several projects may be found to be beneficial. However not all viable projects can be implemented. We therefore need to choose one or a few based on available resources and the priorities of the shareholders. Where all projects are viable we may also need to prioritize them in order of possible implementation. This is due to scarcity of resources for project implementation6. Negotiation and Financing Once the project to be implemented is selected and agreed upon, the next step is to negotiate for funding and other related aspects e.g. conditions for grants, repayment period, interest rates, graze period, flow of funds, contributions from stakeholders etc. This culminates into a binding document for all concerned.7. Planning for implementationThis is done before final implementation of project. This stage involves all stakeholders including implementers, beneficiaries, funding agency. It enables the Project Manager to address issues like the project objectives, scope of the project, financial arrangements, implementation schedules, project environment, likelihood of changes to design, monitoring and evaluation plans etc. It enables definition of objectives, outputs, inputs, activities that will go into the project, the indicators, means of verification and assumptions of the project. The most important outcomes of such planning include time schedules. Budget committed for various activities and quality plans. It is also important to come up with project log frames (logical formula) i.e. PPM (project planning matrix) especially for developmental project.8. Project ImplementationIt is the most crucial stage for most projects since project activities are carried out at this stage. Many projects that fail normally do so at this stage. Monitoring of progress and reporting are crucial. Implementation is considered to be a ‘mini-cycle’ within the project life cycle. It has three phases: Investment, development, and the full development phase.Investment period: It can take 1-3 years depending on the project. The major investment like buying of capital items, warehouses etc of the project undertaken.Development period: This occurs when production builds up and the actual activities are being done.Full development period: This is reached when production picks up and continues until the project ends.9. Monitoring and ReportingThis is an on-going activity during implementation. Monitoring is the collection of data on project implementation. The aim is to ensure that the activities go on according to plan. Any problems can be easily detected and corrective action taken. It can be done by beneficiaries, implementing staff, supervisory staff and PM team. Communication channels should be clear and easy to allow transparency and accountability of those involved.10. EvaluationIt involves a systematic review or examination of the element of success and failure in projects. The information collected from monitoring is the main input into evaluation.Is conducted at three stages:Ex-Ante evaluation-done before implementation is done e.g. skills, resources requiredConcurrent/ongoing Evaluation-done during process of implementationEx-Post Evaluation-done at the end of the implementation i.e. What has been achieved? What is not achieved? Why we didn’t achieve? etc.
- Project finance is typically defined as limited or non-recourse financing of a new project through separate incorporation of vehicle or Project Company. Project financing involves non-recourse financing of the development and construction of a particular project in which the lender looks principally to the revenues expected to be generated by the project for the repayment of its loan and to the assets of the project as collateral for its loan rather than to the general credit of the project sponsor.
- Build Own Operate (BOO) Model: In BOO, the concessionaire constructs the facility and then operates it on behalf of the public agency. The initial operating period {over which the capital cost will be recovered} is defined. Legal title to the facility remains in the private sector, and there is no obligation for the public sector to purchase the facility or take title. The private sector partner owns the project outright and retains the operating revenue risk and all of the surplus operating revenue in perpetuity. As an alternative to transfer, a further operating contract {at a lower cost} may be negotiated.Design Build Finance Operate (DBFO) Model: Under this approach, the responsibilities fro designing, building, financing and operating are bundled together and transferred to private sector partners. They are also often supplemented by public sector grants in the from of money or contributions in kind, such as right of way. In certain cases, private partners may be required to make equity investments as well. DBFO shifts a great deal of the responsibility for developing and operating to private sector partners, the public agency sponsoring a project would retain full ownership over the project.Build Transfer Operate (BTO) Model: The BTO model is similar to BOT model except that the transfer to the public owner takes place at the time that construction is completed, rather than at the end of the franchise period. The concessionary builds and transfers a facility to the owner but exclusively operates the facility on behalf of the owner by means of management contract.Buy Build Operate (BBO) Model: A BBO is a form of asset sale that includes a rehabilitation or expansion of an existing facility. The government sells the asset to the private sector entity, which then makes the improvements necessary to operate the facility in a profitable manner.Lease Own Operate (LOO) Model: This approach is similar to a BOO project but an existing asset is leased from the government for a specified time. The asset may require refurbishment or expansion.Build Lease Transfer (BLT) Model: The concessionaire builds a facility, lease out the operating portion of the contract, and on completion of the contract, returns the facility to the owner.Build Own Lease Transfer (BOLT) Model: BOLT is a financing scheme in which the asset is owned by the asset provider and is then leased to the public agency, during which the owner receives lease rentals. On completion of the contract the asset is transferred to the public agency.Build Lease Operate Transfer (BLOT) Model: The private sector designs finance and construct a new facility on public land under a long term lease and operate the facility during the term of the lease. The private owner transfers the new facility to the public sector at the end of the lease term.Design Build (DB) Model: A DB is when the private partner provides both design and construction of a project to the public agency. This type of partnership can reduce time, save money, provide stronger guarantees and allocate additional project risk to the private sector. It also reduces conflict by having a single entity responsible to the public owner for the design and construction. The public sector partner owns the assets and has the responsibility for the operation and maintenance.Design Bid Build (DBB) Model: Design bid build is the traditional project delivery approach, which segregates design and construction responsibilities by awarding them to an independent private engineer and a separate private contractor. By doing so, design bid build separates the delivery process in to the three liner phases: Design, Bid and Construction. The public sector retains responsibility for financing, operating and maintaining infrastructure procured using the traditional design bid build approach.Design Build Maintain (DBM) Model: A DBM is similar to a DB except the maintenance of the facility for the some period of time becomes the responsibility of the private sector partner. The benefits are similar to the DB with maintenance risk being allocated to the private sector partner and the guarantee expanded to include maintenance. The public sector partner owns and operates the assets.Design Build Operate (DBO) Model: A single contract is awarded for the design, construction and operation of a capital improvement. Title to the facility remains with the public sector unless the project is a design\\build\\operate\\transfer or design\\build\\own\\operate project. The DBO method of contracting is contrary to the separated and sequential approach ordinarily used in the United States by both the public and private sectors. This method involves one contract for design with an architect or engineer, followed by a different contract with a builder for project construction, followed by the owner’s taking over the project and operating it. A simple design build approach credits a single point of responsibility for design and construction and can speed project completion by facilitating the overlap of the design and construction phases of the project. On a public project, the operations phase is normally handled by the public sector under a separate operations and maintenance agreement. Combining all three phases in to a DBO approach maintains the continuity of private sector involvement and can facilitate private sector financing of public projects supported by user fees generated during the operations phase.Lease Develop Operate (LDO) or Build Develop Operate (BDO) Model: Under these partnerships arrangements, the private party leases or buys an existing facility from a public agency invests its own capital to renovate modernize, and expand the facility, and then operates it under a contract with the public agency. A number of different types of municipal transit facilities have been leased and developed under LDO and BDO arrangements