project management

Department of Mechanical Engineering, New Horizon college of Engineering, Bengaluru
17MEE55: Project
Management
Module 1
Compiled by: Somashekar S M, Assistant Professor
2017-2018

17MEE55: Project Management
5th Semester BE, Mechanical, NHCE Page 1
Module1: Basics of Project Management:
➢ Introduction,
➢ The evolution of project management
➢ Definition of project,
➢ Characteristics of projects,
➢ Types of projects,
➢ Need for project management,
➢ Phases of project life cycle management,
➢ Project management processes,
➢ Impact of delays in project completions,
➢ Roles and responsibilities of project leader,
➢ Tools and techniques of project management.
➢ Project identification process,
➢ Project initiation,
➢ Pre-feasibility study,
➢ Prioritizing projects,
➢ Securing and negotiating projects.
1.1 INTRODUCTION:
Many people and organizations today have a new or renewed interest in project management. In the
past, project management primarily focused on providing schedule and resource data to top management in
just a few industries, such as the military and construction industries. Today’s project management involves
much more, and people in every industry and every country manage projects. New technologies have become
a significant factor in many businesses, and the use of interdisciplinary and global work teams has radically
changed the work environment. The facts below demonstrate the significance of project management:
The top skills employers look for in new college graduates are all related to project management. Verbal
communications, often ranked at the top of the list, moved down to number four. These top skills are:

• The ability to work in a team structure
• The ability to make decisions and solve problems
• The ability to plan, organize and prioritize work.
Project management has emerged because the characteristics of our contemporary society demand the
development of new methods of management. Of the many forces involved, three are paramount: (1) the
exponential expansion of human knowledge; (2) the growing demand for a broad range of complex,
sophisticated, customized goods and services; and (3) the evolution of worldwide competitive markets for the
production and consumption of goods and services. All three forces combine to mandate the use of teams to
solve problems that used to be solvable by individuals. These three forces combine to increase greatly the
complexity of goods and services produced plus the complexity of the processes used to produce them. This,
in turn, leads to the need for more sophisticated systems to control both outcomes and processes.
1.2 THE EVOLUTION OF PROJECT MANAGEMENT
“Project management provides people with a powerful set of tools that improves their ability to plan,
implement, and manage activities to accomplish specific organizational objectives”. Throughout history,
project management played an important role from the pyramids of Egypt to present day. This paper discusses
the changes and evolution of project management and the changes project management may encounter.
 The Pyramids
Project management predates the building of the pyramids. Like the Red Pyramid of Dashur, The Great
Pyramid of Giza is not a unique structure even though it may be on a grander scale. The Egyptians intricately
built the Great Pyramid using the most modern methods of the times with great precision and detail. Looking
at the building of the Great Pyramid through a project management perspective one can see many obstacles
that probably caused great effort to overcome. The workforce was the most obvious problem, followed by the
engineering plans, and then the originality of the King’s chambers that was built with granite. Granite was
difficult to mine, requiring an hour to cut only one inch. King’s chamber was built using with granite that was
mined over 400 miles away.

The Great Pyramid took roughly 20 years to complete and employed 10,000 people, because these
employees had to bring families with them. The women kept the base camp running by cooking for the men
and the children.
The outside of the pyramid made with limestone and gypsum was easier to mold than the granite. Using
primitive tools of copper, the men cut huge blocks of stone then hauled them around the inclines built for
pushing and dragging the blocks into place. At the completion, whatever building materials needed to make
the Great Pyramid, such as the sloping inclines, had to also be dismantled when complete.
 Medieval
Fast-forwarding a few centuries brings the world to a new place where fortified castles are the norm.
Chillingham Castle in North Umberland, United Kingdom brought about a new era for project managers.
Project managers were simply construction workers with an idea of how to build a fortified stronghold against
enemy advances. Chillingham Castle was first a stronghold during the 12th century and became an actual castle
in 1344 (Chillingham Castle, 2008). The castle remained unchanged since the addition to make the building a
fortified, medieval castle. Chillingham was a strategic stronghold on the border between England and Scotland
and saw many bloody battles (Chillingham Castle, 2008).
The project manager in the medieval times who designed castles had to know how to fortify
strongholds. Angela Doland (2006), traveled to France to see new construction of a modern day European
castle using medieval construction practices. Doland (2006) stated that her tour showed exactly how small
architectural elements deterred invaders. Staircases winding clockwise would force a sword-wielding assailant
to use his left hand, thereby making him awkward and clumsy. In the same realm, at the top of stairs, a low
hanging door would force the aggressor to duck his head. This allowed the defender of the castle to swing his
own sword downward onto the back of the neck, cutting off the invader’s head (Doland, 2006). Large steps on
staircases would force the attacker to take off chain male and armor, or seriously slow the attacker down
making him vulnerable to the protector of the stronghold (Doland, 2006).
 19th Century
In the 19th century, the architects and construction workers separated Architects developed building
designs and sometimes oversaw the building of the project. Building design during this time was considered

an art and most of the builders were lowly construction workers. The functionality of the building became
important during the industrial revolution. Factories and workers needed big spaces for goods and machinery.
Walker (2007) writes about the distinctions and separations, which arose during that time in the
construction world. Architects and builders, and architects and engineers, or surveyors, had a rift that banned
everyone from working together as a unit through various guilds and organizations. Walker (2007) continues
by stating that the lack of organization through the giant rift did not help to stimulate the economy for building
projects. During this time, though technology was progressing tremendously, the tools to complete projects
remained fairly the same (Ill Institute for Research, 2000). The realization of the need for someone to organize
and take charge of the projects began and took the form of a master builder. The master builder became the
overseer of the project yet still helped to build (Ill Institute for Research, 2000). The Ill Institute for Research
(2000) also states that the master builders, or early project managers, could read and write, do arithmetic and
were forerunners of a new era that now incorporates business, finance, and managerial skills.
 20th Century
Taylor and Gantt
The 20th century saw enormous changes in project management. Frederick Taylor (the Father of
Industrial Engineering) and Henry Gantt played an important role in the study of projects. Taylor used the
reasoning of breaking down the elements of a process to improve productivity by eliminating extra movement
within tasks. Before the process, productivity came from the workers working longer hours. Gantt, on the other
hand, created a technique (Gantt chart) of outlining the sequence and duration of tasks (Kozak-Holland, 2008).
Project managers still use the proven Gantt chart in modern project management, and many project-
management software packages use the Gantt chart.
Mass Production and Human Relations
The second industrial revolution introduced electricity and combustion engines that brought about new
technologies such as electrical devices that helped with mass production. During the First World War the ability
to mass-produce became more important and drove an acceleration in planning and supplying due to the mass
production, transportation, and the movement of armies as never before (Kozak-Holland, 2008). After the First
World War, new human relations developed in the work arena between employee and employer.

Project engineers developed or adapted coordination techniques that gave the project managers more
control over the progress of the projects. However, the project management techniques did not attempt to
dictate technological methods to specialized experts. (Kozak-Holland, 2008, para. 17).
The Empire State Building Project
The Empire State Building is a testament of precise project management in the early 20th century. Due
to a competition between General Motors’ executive John J. Raskob and Walter Chrysler to construct the
world’s tallest building, the Empire State Building became a wonder of construction project management.
Starrett Brothers and Eken were the general contractors and started with no equipment for the job. Instead,
they designed and purchased custom equipment needed due to the massive scope of the project. Once the
project was completed, they sold the equipment and credited the investors (Construction Company.com, 2009).
Starrett Brothers and Eken created a tight schedule that included 60 different types of trade people.
They ordered supplies to specifications and made them at the plants. The contractors hired dependable
companies to provide quality and adhere to the schedule. Tasks were scheduled to the minute and some tasks
overlapped so as not to waste time. Overlapping of tasks became the first commercial construction project to
use the fast-track technique, which consisted of starting construction before designs were completed. In
January 1930, excavation of the new building started before the demolition of the current building was
complete (Construction Company.com, 2009).
In March 1930, the contractors began construction on the steel frame. The contractors built four and a
half stores a week by using innovations that saved time and resources. Some people believe that the steel posts
arrived with markings of their place in the framework and the number of the derrick that would put the steel in
place (Construction Company.com, 2009).
On April 11, 1931, construction was complete. The project took 3,500 men and seven million hours.
The Empire State Building completed ahead of schedule by three months and under budget by $18.3 million
(Construction Company.com, 2009).
 Modern Project Management
The third industrial revolution introduced computers, the Internet, and management practices. The
1950s witnessed the development of the Critical Path Method (CPM) and Program Evaluation and Review
Technique (PERT), which gave greater control to project managers. In 1955, the US military invented PERT

to determine the time it takes to complete a task and identify the minimum time it takes to complete a project.
In 1957, the DuPont Corporation created CPM to handle various tasks and interactions of a project by
incorporating algorithms to set project activities. The US Defense also introduced project tools such as the
work breakdown structure that organizes the scope of a project by grouping the project’s work elements
(Construction Company.com, 2009).
In the 1970s, project management became widely used. The Project Management Institute (PMI) was
created to focus on project techniques, and the introduction of Time, Cost, and Quality and how they tie
together to determine the expected value of the project output (Construction Company.com, 2009). The 1980s
saw the incorporation of risk management to project management, which helps determine the risk associated
with the project. Total Quality Management also introduced at this time, is a business management strategy to
incorporate quality within processes (Wikipedia, 2009). PMI also publishes a project management guide called
the PM Book of Knowledge. The 1990s introduced certifications of project management and focused on
managing networks of projects and business benefits (Construction Company.com, 2009).
 21st Century
The future of project management will see changes. One area of concern is risk management and the
need of insurance to cover the risks encountered. More than ever, companies must protect themselves from the
risk of delayed productions and unforeseen accidents. New lines of risk management insurance such as the
General Contractor’s Pollution Legal Liability have increased over the last decade. Developing new insurance
products may increase to handle future liability exposures. Risk management controls can help project a
positive perception by carrying insurance at acceptable levels, and developing procedures to address
scheduling, safety, and quality for each project (XL Capital Ltd, 2009).
Another change in project management may be with the instruction of project management. New
innovative techniques have gained popularity. One new technique is the 4D virtual construction technology,
which allows the user to use 3D graphic models in a time-lapsed sequence of events, virtually allowing a
project to grow without physically building the project (Park and Meier, 2007). The 4D virtual construction
technology does have some drawbacks and maybe the future can remedy the drawbacks or progress the idea
to improved techniques.

1.3 THE DEFINITION OF “PROJECT”
The PMI (Project Management Institute) has defined a project as “A temporary endeavor undertaken
to create a unique product or service”
PRINCE 2 defined Project as, “A temporary endeavor that is created for the purpose of delivering one
or more business products according to a specified Business Case.”
Project also defined as, “It is a temporary endeavor, having a defined beginning and end (usually
constrained by date, but can be by funding or deliverables), undertaken to meet unique goals and objectives,
usually to bring about beneficial change or added value.
A project can also be defined as a complex of non-routine activities that must be completed with a set
amount of resources and within a set time limit.
In industries, there is a close relationship and also dissimilarity between the terms “Project” and
“Production”.
Idea Concrete entity
Plan Factory
Design Building
Highway
Prototype
Both the terms indicate conversion of one form into another. Whereas, the major difference between
these two terms is depends on the frequency of activities which are undertaken. Project is one-time entity or
performed once, typical examples of projects include: construction of a house, performing a marriage,
overhauling a machine, maintenance of equipment, commissioning of a factory, conducting national elections,
research on developing a new technology, launching a new weapon system, conducting a war, pre-crisis
planning for preventing a riot etc.

When it comes to repetitive activities, it belongs to the domain of “Production”.
Project Production
Automobile factory Produce automobiles
Building a house Operate household
Construct Hospital Treat Patients
Conceiving new product Manufacture
Develop prototype Produce multiples
Done once Done repetitively
Projects and Production are intimately interwoven in real life
• Projects: Starting production, solving problems relating to – Operation, Maintenance, Housekeeping,
Marketing, Distribution and Quality.
• Production: The aim of production is to provide goods and services to mankind, -in the right quantities,
- at appropriate place, -at the desired time, - with the required quality, - at a reasonable cost.
1.4 CHARACTERISTICS OF A PROJECT
A project is a temporary endeavor undertaken to create a unique product, service or result.
 Temporary: Temporary means that every project has a definite beginning and definite end. The
end is reached when the project’s objectives have been achieved or it becomes clear that the
project objectives will not or content be met, or the need for the project no longer exists and
project is terminated. Temporary does not necessarily mean short in duration; many projects
last for several years. In every case, however, the duration of the project is finite. Projects are
not ongoing efforts.
In addition, temporary does not generally apply to the product, service or result created
by the project. Most projects are undertaken to create a lasting outcome. For example, a project
to erect a national monument will create a result expected to last centuries. Projects also may
often have intended and unintended social, economic and environmental impacts that far outlast
the projects themselves.
The temporary nature of the projects may apply to the other aspects of the endeavor as
well:

• The opportunity or market window is usually temporary-some projects have a limited
time frame in which to produce their product or service.
• The project team, as a working unit, seldom outlives the project-a team created for the
sole purpose of performing the project is disbanded and the team members reassigned
when the project ends.
 Unique Products, Services or Results: A project creates unique deliverables, which are
products, services or results. Project can create:
• A product or artifact that is produced, is quantifiable, and can be either an end item in
itself or a component item.
• A capability to perform a service, such as business functions supporting production or
distribution.
• A result such as outcomes or documents. For example, a research project develops
knowledge that can be used to determine whether or not a trend is present or a new
process will benefit society.
Uniqueness is an important characteristic of project deliverables. For example, many
thousands of office buildings have been developed, but each individual facility is
unique-different owner, different design, different location, different contractors and so
on. The presence of repetitive elements does not change the fundamental uniqueness of
the project work.
 Progressive Elaboration: Progressive elaboration is a characteristic of projects that
accompanies the concept of temporary and unique. Progressive elaboration means developing in
steps and continuing by increments. For example, the project scope will be broadly described early
in the project and made more explicit and detailed as the project team develops a better and more
complete understanding of the objectives and deliverables. Progressive elaboration should not be
confused with scope creep.
Progressive elaboration of a project’s specifications needs to be carefully coordinated with
proper project scope definition, particularly if the project is performed under contract. When
properly defined, the scope of the project and product specifications is progressively elaborated.

The following examples illustrate progressive elaboration in two different application
areas:
• Development of a chemical processing plant begins with the process engineering to
define the characteristics of the process. These characteristics are used to design the
major processing units. This information becomes the basis for engineering design,
which defines both the detailed plant layout and the mechanical characteristics of the
process units and ancillary facilities. All of this results in design drawings that are
elaborated to produce fabrication and construction drawings. During construction,
interpolations and adaptations are made as needed and are subject to proper approval.
This further elaboration of the deliverables is captured in as-built drawings, and final
operating adjustments are made during testing and turnover.
• The product of an economic development project may initially be defined as “Improve
the quality of life of the lowest income residents of community X.” As the project
proceeds, the products may be described more specifically as, for example, “Provide
access to food and water to 500 low0income residents in community X.” The next round
of progress elaboration might focus exclusively increasing agriculture production and
marketing with provision of water deemed to be secondary priority to be a secondary
priority to be initiated once the agricultural components is well under way.
1.5 ELEMENTS OF PROJECT
There are three basic elements which must be considered in a project cycle. These are discussed below:
❖ Operations
Operations are the activities or jobs which must be performed to meet the project objectives.
These activities should be identified and arranged in a logical sequence. After determining the job
sequence, the method of performing each operation must be determined in advance. The method, in
turn, predetermines the time and cost required to perform each activity.

❖ Resources
The second of the project elements, resource can be classified under manpower, money,
methods, material, machines and time. Time and cost estimates are associated with the method of
performance, where the cost estimate relates resource expenditure to a common measure of cost in
money alone and the time estimate defines the expected duration of the resource use.
❖ Conditions or Restraints
The third project element refers to externally imposed conditions or restraints, like supply of
materials, machines, and designs by outside agencies. The delivery system should be planned carefully
in co-ordination with the activities to be undertaken.
1.6 DIFFERENT TYPES OF PROJECTS
Four ways to classify projects that help people understand the unique needs of each are by, industry,
size, understanding of project scope, and application.
 Classifying by industry: Projects can be classified in a variety of ways. One method is by industry,
which is useful in that projects in different industries often have unique requirements. Several industry-
specific project life cycle models are in use, and various trade groups, and special interest groups can
provide guidance
Example: PMI communities such as, Aerospace and Defense, Automation systems, Consulting, E-
business, Financial services, Healthcare, Manufacturing, Marketing and sales, Oil, Gas, Petrochemical
etc.
All of these groups are in the process of becoming communities of practice that will allow
project managers worldwide to share and learn together. Many of these groups are devoted to specific
challenges faced by project managers in a particular industry.
 Classifying by size: Another method of classifying projects is by size. Large projects often require more
detailed planning and control-just in a more simplified manner.
Example: Construction of a multistory building require a highly detailed construction schedule,
similarly, simpler construction of a one-car garage would also need to follow a schedule.

 Classifying by timing of project scope clarity: A third method of classifying projects deals with how
early in the project the project manager and team are likely to able to determine with a high degree of
certainty of what the project scope will be.
Example: It may be rather simple to calculate the cubic feet of concrete that are required to pour a
parking lot and, therefore, how much work is involved. At the opposite side of the spectrum, when
developing a new pharmaceutical, very little may be determined in the project until the results of some
early experiments are reported. Only at that time it is possible to begin estimating cost and determining
schedule with confidence. The planning becomes iterative, with more detail as it becomes available. In
the first case, project techniques that deal with detailed planning and control of work activities may
work well. In the second case, methods to help determine the scope and plan for risks may be important.
 Classifying by application: Projects such as those dealing with organizational change, quality and
productivity improvement, research and development (R&D), information systems (IS), and
construction, many of these projects include extensive cross functional work, which adds to the
challenge. These various types of projects will demonstrate differences in level of detail in planning,
industry-specific control issues, and different approaches that make sense depending on whether or not
a project’s scope can be determined quickly. All projects require planning and control. Part of the art
project management is determining when to use certain techniques, how much detail to use, and how
to tailor the techniques to the needs of a specific project.
1.7 PROJECT MANAGEMENT
Project management is the discipline of planning, organizing, securing and managing resources to bring
about the successful completion of specific project goals and objectives. Project management is the application
of knowledge, skills and techniques to execute projects effectively and efficiently. It’s a strategic competency
for organizations, enabling them to tie project results to business goals — and thus, better compete in their
markets.

Project management processes fall into five groups such as initiating, planning, executing, monitoring,
controlling and closing. Project management knowledge draws on nine areas, viz., integration, scope, time,
cost, quality, procurement, human resources, communications and risk management. All management is
concerned with these, of course. But project management brings a unique focus shaped by the goals, resources
and schedule of each project. The value of that focus is proved by the rapid, worldwide growth of project
management as a separate area of study and as a mode of functioning.
Project management deals with planning, scheduling, controlling and monitoring the complex non-
routine activities that must be completed to reach the predetermined objectives of the project. On critical
examination, we see that each project has a feedback mechanism. The elements of project management control
include programmed objectives, policy restrictions, resource constraints, government regulations, process
implementation, review of output, feedback, and revision of objectives. Thus, project management involves
the coordination of group activity, wherein the manager plans, organizes staffs, directs, and controls to achieve
an objective, with constraints on time, cost and performance, of the end product. Network techniques are
primarily used for project planning and controlling. Planning is the process of preparing for the commitment
of resources in the most economical manner. Controlling is the process of making events conforms to schedules
by coordinating the action of all parts of the project to achieve the objective.
1.7.1 OBJECTIVES OF THE TECHNIQUE
The basic purpose for initiating a project is to accomplish some goals. The reason for organizing the
task as a project is to focus the responsibility and authority for the attainment of the goals on an individual
(project manager) or a small group (project team).
Project Management is a means by which to fit the many complex pieces of the project puzzle together,
both human and technical, by use of:
❖ Schedules
❖ Budgets, including resource allocation
❖ Scope (product) definition
Project Management fulfills two purposes:

❖ Technical: Documentation techniques to communicate
❖ The 'plan'
❖ Status which compares 'planned' versus 'actual' performance
1.8 NEED FOR PROJECT MANAGEMENT
Project management is the art of managing the project and its deliverables with a view to produce finished
products or service. There are many ways in which a project can be carried out and the way in which it is
executed is project management. Project management includes: identifying requirements, establishing clear
and achievable objectives, balancing the competing demands from the different stakeholders and ensuring that
a commonality of purpose is achieved. Following are the reasons why project management is important.
a) Reduction in the Product Life Cycle
The product life cycle is one of the most significant driving forces behind the demand for project
management. As the lives of the products are shortened, time to market for new products with short life
cycles has become increasingly important. Innovation and invention becomes the key for success and
speed to innovate or invent becomes a competitive advantage. More and more organizations are
depending on cross functional project teams to get new products and services to the market as quickly
as possible.
b) Global Competition
In the globally competitive today’s market, customers want cheaper products and services with
better quality at cheaper prices. This had led to the emergence of the quality movement across the world
in International Standards Organization certification requirements for doing business. Quality
management and improvement essentially requires project management. As the basic elements of
project management concentrate on time, cost and quality, project management has become style of
managing business.

c) Knowledge Explosion
The knowledge explosion world over has increased the complexity of managing projects.
Product complexities have increased and demanded integration of divergent technologies. To manage
all this, project management is the only way.
d) Corporate Downsizing
Restructuring of organizations in the recent years has resulted into the downsizing or
rightsizing. Downsizing and sticking to core competencies have become essential for survival for many
organizations.
e) Increased Customer Focus
Increased competition has increased the expectation of customers. Customers expect
customized products and services instead of generic ones. The customization of products and services
required better understanding of the customers’ needs by project team members. The customers are
more aware and their changing needs are to be taken into account to survive in the market.
f) Managing Small Projects
In today’s competitive world, a situation has emerged in the organizations that many projects
are run concurrently. This resulted into the multi-project environment and also plethora of new
problems. Sharing and prioritizing resources across a portfolio of projects is a major challenge for top
management. In the course of managing many projects, large projects are given more importance than
the small projects. Small projects typically carry the same or more risk as do large projects. Small
projects are perceived as having little impact on the bottom line because they do not demand large
amount of scarce resources and/or money. Unfortunately, many small projects soon add up to large
sums of money and their inefficiency would result into adverse impact.
g) Upsurge of Closed Economies
The gradual opening of emerging economies has created an explosion of demand for goods and
services within these economies for their development. Thus, new markets emerge in the scenario. The
developed markets have started introducing their products and services into these markets. Many firms

are using project management techniques to establish distribution channels and foreign bases of
operations.
1.9 PHASES OF PROJECT LIFE CYCLE
1. Conception or conceptual phase
2. Definition phase
3. Planning and organizing phase or production phase
4. Operation or implementation phase
5. Project clean up or divestment phase
1. Conceptual phase: This is the first phase and it includes the preliminary evaluation of the idea. The idea
may first come to the mind when one is seriously trying to overcome-some problems.
The problems may be ranging from the utilization of plant capacity and funds to the need of creation
of a new product. The idea may also germinate from surrounding environment or suggestions from people. An
important task in this phase is the preliminary analysis of risk. The efforts attributed in this phase must include:
a) Determining the existing needs or potential deficiencies of existing system.
b) Establishing systems and concepts that provide guidance to overcome existing potential
deficiencies.
c) Determine initial technical, economic and environmental feasibility*.
d) Examine alternative ways of achieving system objectives.
e) Identify human and non-human resources required to support the system.
f) Select initial system design that will satisfy the system objectives.
g) Determine initial system interfaces and establish a system or organization.
Feasibility*: an evaluation of how likely a project to be completed effectively, taking resources and
requirements into consideration.

Real Project example
Consider a cement plant operating at low capacity utilization, high power consumption and hence high
operating costs. Some possible ideas that have to be thought of improve the situations are:
 Introduce new technology
 Replace critical part selectively.
 Scrap the plant once for all.
2. Definition phase: The definition phase is basically a refinement of the elements described in the previous
phase. This phase requires firm identification of resources to be requires together with the establishment of
realistic time, cost and performance parameters. This phase also involves preparation of initial documentation
necessary to support the system. For a project based on competitive bidding, the conceptual phase would
include the decision to bid or not while the definition phase would include the development of total bid
package. This phase must include following activities.
a) Preparation of final system performance requirements
b) Preparation of detailed plans to support the system.
c) Determination of realistic cost, schedule and performance requirements.
d) Identification of those areas of the system where high risk and uncertainty is involved.
e) Determination of necessary support systems.
f) Identification and initial preparation of documents required to support the system such as
policies, procedures, budget, job descriptions etc.
Real Project example
The areas to be examined in the definition phase for a cement plant are:
 Nature and type of raw materials to be used.
 Plant size and capacity
 Location and site
 Technology and type of process to be used
 Project layout

 Plant and machinery
 Electrical, civil, and instrumentation work
 Manpower and organization pattern
 Financial analysis and implementation schedule.
3. Planning and organizing phase or production phase: This phase is predominantly a testing and final-
standardization effort so that operations can begin. Almost all documents must be complete in this phase. This
phase must include the efforts such as:
a) Updating the detailed plans conceived and defined during preceding phases.
b) Identification and management of resources required to facilitate the production processes such
as inventory, labor etc.
c) Verification of system production specifications.
d) Beginning of production, construction and installation
e) Final preparation and dissemination (distribution) of policy and procedural documents.
f) Performing final testing of the system to check its performance matches the planned
requirements
g) Development of technical manuals and affiliated documents describing how the system is
intended to operate.
h) Development of plans to support the system during its operation phase.
4. Operation or implementation phase: This is a phase involving hectic activity as people can see the project
moving towards completion. This phase is very important as bulk of the work is done. The phase is very similar
to the definition phase runs parallel to it to a certain extent. This phase must include;
a) Use of the system results by the intended user or customer.
b) Actual integration of the project’s product or service into existing organizational systems.
c) Evaluation of technical, social and economic sufficiency of the project to meet actual operating
conditions.
d) Provision of feedback to the organization planners regarding the development of new project
and systems.
e) Evaluation of adequacy of support systems.

5. Project clean up or divestment phase: This phase includes the reallocation of resources and people to
different projects as the existing project reaches its completion point. This phase evaluates the efforts on the
trial system and serve as important to the conceptual phase for new projects and systems. It has an impact on
other ongoing projects with regard to priority identification.
In this phase the project accounts are closed, material reconciliation* is done, outstanding payments
made and dues collected. This phase includes;
a) System phase down
b) Development of plans transforming responsibility to supporting systems.
c) Divestment or transfer of resources to other systems.
d) Listing the lessons learned and creation of a database including
i. Customer feedback
ii. Major problems encountered and their solution.
iii. Technological advances.
iv. Recommendations for R&D
v. New or improved management techniques.
Material reconciliation: a process used to determine whether the material leaving from inventory matches the
amount consumed, ensuring the two values are balanced at the end of recording period.

1.10 PROJECT MANAGEMENT PROCESSES:
Project management is the application of knowledge, skills, tools, and techniques to project activities to meet
the project requirements. This application of knowledge requires the effective management of the project
management processes.
A process is a set of interrelated actions and activities performed to create a pre-specified product, service, or
result. Each process is characterized by its inputs, the tools and techniques that can be applied, and the resulting
outputs. The project manager needs to consider organizational process assets and enterprise environmental
factors. These should be taken into account for every process, even if they are not explicitly listed as inputs in
the process specification. Organizational process assets provide guidelines and criteria for tailoring the
organization’s processes to the specific needs of the project. Enterprise environmental factors may constrain
the project management options. The five process groups paraphrased from the PMBOK guide are as follows;
➢ Initiating: The Initiating Process Group consists of those processes performed to define a new project
or a new phase of an existing project by obtaining authorization to start the project or phase. Within the
Initiating processes, the initial scope is defined and initial financial resources are committed. Internal
and external stakeholders who will interact and influence the overall outcome of the project are
identified. If not already assigned, the project manager will be selected. This information is captured in
the project charter* and stakeholder register. When the project charter is approved, the project becomes
officially authorized.
Project charter*: The project charter is the document issued by the project initiator or sponsor that
formally authorizes the existence of a project and provides the project manager with the authority to
apply organizational resources to project activities
➢ Planning: The Planning Process Group consists of those processes performed to establish the total
scope of the effort, define and refine the objectives, and develop the course of action required to attain
those objectives. The Planning processes develop the project management plan and the project
documents that will be used to carry out the project. The complex nature of project management may
require the use of repeated feedback loops for additional analysis. As more project information or
characteristics are gathered and understood, additional planning will likely be required. Significant
changes occurring throughout the project life cycle trigger a need to revisit one or more of the planning

processes and possibly some of the initiating processes. This progressive detailing of the project
management plan is called progressive elaboration, indicating that planning and documentation are
iterative and ongoing activities. The key benefit of this Process Group is to delineate the strategy and
tactics as well as the course of action or path to successfully complete the project or phase. When the
Planning Process Group is well managed, it is much easier to get stakeholder buy-in and engagement.
These processes express how this will be done, setting the route to the desired objective.
The project management plan and project documents developed as outputs from the Planning
Process Group will explore all aspects of the scope, time, cost, quality, communications, human
resources, risks, procurements, and stakeholder engagement.
➢ Executing: The Executing Process Group consists of those processes performed to complete the work
defined in the project management plan to satisfy the project specifications. This Process Group
involves coordinating people and resources, managing stakeholder expectations, as well as integrating
and performing the activities of the project in accordance with the project management plan. During
project execution, results may require planning updates and rebaselining. This may include changes to
expected activity durations, changes in resource productivity and availability, and unanticipated risks.
Such variances may affect the project management plan or project documents and may require detailed
analysis and development of appropriate project management responses. The results of the analysis can
trigger change requests that, if approved, may modify the project management plan or other project
documents and possibly require establishing new baselines. A large portion of the project’s budget will
be expended in performing the Executing Process.
➢ Monitoring and Controlling: The Monitoring and Controlling Process Group consists of those
processes required to track, review, and orchestrate the progress and performance of the project;
identify any areas in which changes to the plan are required; and initiate the corresponding changes.
The key benefit of this Process Group is that project performance is measured and analyzed at regular
intervals, appropriate events, or exception conditions to identify variances from the project
management plan. The Monitoring and Controlling Process Group also involves:
 Controlling changes and recommending corrective or preventive action in anticipation of possible
problems,

 Monitoring the ongoing project activities against the project management plan and the project
performance measurement baseline, and
 Influencing the factors that could circumvent integrated change control or configuration management
so only approved changes are implemented.
This continuous monitoring provides the project team insight into the health of the project and identifies
any areas requiring additional attention. The Monitoring and Controlling Process Group not only monitors and
controls the work being done within a Process Group, but also monitors and controls the entire project effort.
In multiphase projects, the Monitoring and Controlling Process Group coordinates project phases in order to
implement corrective or preventive actions to bring the project into compliance with the project management
plan.
➢ Closing: The Closing Process Group consists of those processes performed to conclude all activities
across all Project Process Groups to formally complete the project, phase, or contractual obligations.
This Process Group, when completed, verifies that the defined processes are completed within all of
the Process Groups to close the project or a project phase, as appropriate, and formally establishes that
the project or project phase is complete.
This Process Group also formally establishes the premature closure of the project. Prematurely
closed projects may include, for example: aborted projects, cancelled projects, and projects having a
critical situation. In specific cases, when some contracts cannot be formally closed (e.g. claims,
termination clauses, etc.) or some activities are to be transferred to other organizational units, specific
hand-over procedures may be arranged and finalized.
At project or phase closure, the following may occur:
o Obtain acceptance by the customer or sponsor to formally close the project or phase,
o Conduct post-project or phase-end review,
o Record impacts of tailoring to any process,
o Document lessons learned,
o Apply appropriate updates to organizational process assets,
o Archive all relevant project documents in the project management information system
(PMIS) to be used as historical data,
o Close out all procurement activities ensuring termination of all relevant agreements, and

o Perform team members’ assessments and release project resources.
The process groups are linked by the results they produce-the result or out-come of one often becomes an
input to another. Among the central process groups, the links are iterated-planning provides executed with
a documented project plan early on, and then provide documented update to the plan as the project
progresses. These connections are illustrated in below figure
In addition, the project management processes are not discrete, one-time events, they are overlapping
activities that occur at varying levels of intensity throughout each phase of the project. Following figure
illustrates how the process groups overlap and vary within a phase.

It is important to note that the actual inputs and outputs of the processes depend upon the phase in
which they are carried out.
The nine knowledge areas are paraphrased from the PMBOK guide are as follows;
➢ Integration Management: “processes and activities needed to define, combine, unify and coordinate
the various processes and project management activities.”
➢ Scope Management: “processes required to ensure that the project includes all the work required, and
only the work required, to complete the project successfully.”
➢ Time Management: “processes required to manage timely completion of the project”.
➢ Cost Management: “processes involved in estimating, budgeting and controlling costs so that the
project can be completed within the approved budget”.
➢ Quality Management: “processes and activities of the performing organization that determine quality
policies, objectives and responsibilities so that the project will satisfy the needs for which it was
undertaken.
➢ Human Resources Management: “processes that organize manage and lead the project team”.
➢ Communication Management: “processes required to ensure timely and appropriate generation,
collection, distribution, storage, retrieval, and ultimate decision of project information”.

➢ Risk Management: “processes of conducting the risk management planning, response planning, and
monitoring and control, to increase the probability and impact of negative events in the project.
➢ Procurement Management: “processes necessary to purchase or acquire products, services or results
from outside the project team”.
1.11 IMPACT OF DELAYS IN PROJECT COMPLETIONS
Effect of project delays on direct costs
The variable or direct project costs of materials and workforce man-hours are time-related in several ways.
Cost inflation is one factor, so that a job started and finished later than planned can be expected to cost more
because of intervening materials price rises and increases in wages, salaries and other costs. There are other,
less easily quantifiable, causes where late working implies inefficient working, perhaps through lost time or
waiting time (often the result of materials shortages, missing information, or poor planning, communications
and organization). If any project task takes longer to perform than its planned duration, it is probable that the
budgeted man-hours will also be exceeded. This is true not only for a single task, but also for the project as a
whole.
Effect of project delays on indirect (overhead) costs
The fixed or overhead costs of management, administration, accommodation, services and general facilities
will be incurred day by day, every day, regardless of work done, until the project is finished. If the project runs
late, these costs will have to be borne for a longer period than planned. They will then exceed their budget.
Effect of project delays on the costs of financing
Another important time-related cost is financing. Where the contractor has an overdraft at the bank or relies
on other loan financing, interest has to be paid on the loan. Even if the contractor can finance the project from
internal funds, there is still a notional cost of financing, equivalent to the interest or dividends that the same
funds could have earned had the contractor invested the money elsewhere (such as in a bank deposit account).
If a project runs late, the financing period is extended, and the total amount of interest or notional interest
payable must increase correspondingly.

Much of the finance raised for a large project is likely to be invested in work in progress as the project
proceeds through the execution stage of its life history. This work in progress includes not only the tangible
results of a project such as construction or manufacture, but also the intangible elements such as planning and
engineering or design. In many projects the contractor can only charge the customer for work that can be
demonstrated as finished. For example, in construction and manufacturing projects the amount of work
completed usually has to be inspected and certified by an independent quality surveyor or engineer before it
can be charged out to the customer. The customer will not pay without the receipt of certified invoices. Certified
invoices are often linked to planned events or milestones. If the planned amount of work has not been done, or
if a milestone has not been reached, a certified invoice cannot be issued. The contractor’s revenue is then
delayed, which means that the contractor must continue to finance the mounting costs of the project. The
contractor could suffer severe cash flow problems as a result, even leading to bankruptcy in the worst case.
Cost penalties
Late completion can invoke the ignominy of contract cost penalties. Some contracts contain a penalty
clause which provides the customer with the sanction of a cost penalty against the contractor for each day or
week by which the contractor fails to meet the contracted delivery obligation.
Total cost effect of project delays
All these time/cost considerations mean that delays on a large project can easily cause additional costs
amounting to thousands of pounds per day. It is clear, therefore, that if work can be carefully monitored and
managed so that it proceeds without disruption against a sensible, achievable plan, much of the battle to control
costs will already have been won.
1.12 THE PROJECT MANAGER
In a small sense project managers perform the same functions as other managers. That is, they plan,
schedule, motivate, and control. However, what makes them unique is that they manage temporary, non-
repetitive activities, to complete a fixed life project. Unlike functional managers, who take over existing
operations, project managers create a project team and organization where none existed before. They must
decide what and how things should be done instead of simply managing set processes. They must meet the

challenges of each phase of the project life cycle, and even oversee the dissolution of their operation when the
project is completed.
Project managers must work with a diverse troupe of characters to complete projects. They are
typically the direct link to the customer and must manage the tension between customer expectations and what
is feasible and reasonable. Project managers provide direction, coordination, and integration to the project
team, which is often made up of part-time participants loyal to their functional departments. They often must
work with a cadre of outsiders—vendors, suppliers, subcontractors—who do not necessarily share their project
allegiance.
Project managers are ultimately responsible for performance (frequently with too little authority). They
must ensure that appropriate trade-offs are made between the time, cost, and performance requirements of the
project. At the same time, unlike their functional counterparts, project managers generally possess only
rudimentary technical knowledge to make such decisions. Instead, they must orchestrate the completion of the
project by inducing the right people, at the right time, to address the right issues and make the right decisions.
While project management is not for the timid, working on projects can be an extremely rewarding
experience. Life on projects is rarely boring; each day is different from the last. Since most projects are directed
at solving some tangible problem or pursuing some useful opportunity, project managers find their work
personally meaningful and satisfying. They enjoy the act of creating something new and innovative. Project
managers and team members can feel immense pride in their accomplishment, whether it is a new bridge, a
new product, or needed service.
Project managers are often stars in their organization and well compensated. Good project managers are
always in demand. Every industry is looking for effective people who can get the right things done on time.
Clearly, project management is a challenging and exciting profession.
1.12.1 THE PROJECT MANAGER’S ROLES & RESPONSIBILITIES
. The basic roles and responsibilities of a project manager that we are referring to could be grouped
under twelve heads:
1. Defining and maintaining the integrity of a project;

2. Development of project execution plan;
3. Organization for execution of the plan;
4. Setting of targets and development of systems and procedures for accomplishment of project
objectives and targets;
5. Negotiation for commitments;
6. Direction, coordination and control of project activities;
7. Contract management;
8. Non-human resource management including fiscal matters;
9. Problem-solving;
10. Man management;
11. Satisfaction of customer, Government and the public; and
12. Achievement of project objectives, cash surplus and higher productivity.
1.13 TOOLS AND TECHNIQUES FOR PROJECT MANAGEMENT
There are several tools and techniques which would contribute significantly towards effective project
management these can be broadly grouped under the following heads:
1. Project selection techniques
(a) Cost benefit analysis: is a systematic approach to estimating the strengths and weaknesses
of alternatives (for example in transactions, activities, functional business requirements or project
investments); it is used to determine options that provide best approach to achieve benefits while
preserving savings.
(b) Risk and sensitivity analysis: Sensitivity analysis tries to estimate the effect of achieving
project objectives if certain assumptions do not partly occur, it is a technique for investigating the
impact of changes in project variables (most probable outcome scenario).

2. Project execution planning techniques
(a) Work breakdown structure (WBS): The WBS is a graphical tool—perhaps the most
foundational tool in the project planning process. It organizes all of the project work by placing
elements of work into logical groupings.
(b) Project execution plan (PEP): Project execution is the process or activities associated with
completing the project activities defined in the project plan in order to meet the project objectives
defined during project initiation.
(c) Project responsibility matrix: It defines who in the organization is responsible for
individual work elements and deliverables by forming matrix.
(d) Project management manual: A descriptive manual for how to manage the process of
project management. Major sections are: 1) define and organize the project, 2) plan the project, 3)
track and manage the project.
3. Project scheduling and coordinating techniques
(a) Bar charts: It is also known as Gantt chart, provides graphical illustration of a schedule that
helps to plan, coordinate, and track specific tasks in a project.
(b) Life cycle curves: The curves show the various phases in sequence and approximate effort
involved in each phase, through in real life will overlap.
(c) Line of balance (LOB): is management control process for collecting, measuring and
presenting facts relating to time, cost and accomplishment-all measured against a specific plan.
(d) Networking techniques (PERT/CPM): Network technique is a technique for planning,
scheduling (programming) and controlling the progress of projects.
4. Project monitoring and progressing techniques
(a) Progress measurement technique (PROMPT): It measures progress based on various
techniques including milestones, weighted steps, value of work done, physical percent complete, earned
value, level of effort, earn as planned and more.
(b) Performance monitoring technique (PERMIT): a technique regularly assesses the
achievement of technical, financial and economic goals for the project.
c) Updating, reviewing and reporting technique (URT): a technique regularly updates the status
of the project, review planning’s at various levels and preparing progress reports using formats.

5. Project cost and productivity control techniques
(a) Productivity budgeting techniques:
(b) Value engineering (VE): A creative approach used to optimize project life cycle costs,
save time, increase profits, improve quality, expand market share, solve problems and use resource
effectively.
(c) COST/WBS
6. Project communication and clean-up techniques
(a) Control room: A control room is a room serving as a central space where a large physical
facility or physically dispersed service can be monitored and controlled.
(b) Computerized information systems:
1.14 PROJECT SELECTION
The selection of a new project is a major decision by the top management of an organization. The need
for the new project may be created by the desire to place the company in a more favorable financial position
by introducing a new product, to ward off competition by creating state-of-the-art service facilities or to
introduce e-commerce for online capturing of internet customers. It is generally true that the success and
growth of an organization is dependent on the choice of the right projects at the right time. Project selection
can be divided into three major activities: i) Project identification, ii) Project appraisal and iii) Formal selection.
1.14.1 Project identification process
Project identification is the process to assess each project idea and select the project with the highest
priority. It is the stage, where new opportunities and threats are emerging in the environment is investigated
and suitable proposals that can be adopted by the organization are generated. This is done through the
generation of new ideas by the company’s think tank.
Project identification begins with identifying and framing up of objectives. The objectives are the practical
statements that indicate how project will proceed. Objectives come from multiple sources, which means that
project managers need to collect and redefine them for the work team to understand and carry out. One way to

identify objectives is to first examine a project’s goals. Goals or aims are the long-term results of projects.
They indicate what business wants to achieve through a project.
SWOT analysis: SWOT is a planning tool used to understand Strengths, Weaknesses, Opportunities,
& Threats involved in a project. It is used as framework for organizing and using data and information gained
from situation analysis of internal and external environment. On analysing these factors one can come up with
new ideas on:
❖ Cost reduction
❖ Productivity improvement
❖ Increase in capacity utilization
❖ Improvement in contribution margin
❖ Expansion to promising fields
OBJECTIVES
ALTERNATIVE PROJECT
POSSIBILITIES
STRENGTHS WEAKNESSES
THREATS OPPORTUNITIES

Strengths (Internal factor)
 What advantages (for example, skills, education or personal industry connections) do they have that
others don’t have?
 What makes company standout from its competitors?
 What positive aspects does the company enjoy in the current environment?
Strength can be a competitive advantage like…
▪ Superior product quality
▪ Lowest price
▪ Best expertise
▪ Location
Weaknesses (internal factor):
 Which areas are causing concerns?
 Which issues can be avoided?
 Company’s reputation among its customers.
A weakness can be a disadvantage such as…
▪ A tired brand
▪ Inferior location
▪ High overheads
▪ A lack of R&D
Opportunities (external factor):
 How can the company be more innovative?
 Which are the new markets or consumers that can be tapped?
 Which area has the company not ventured?
 What are the upcoming trends that are catching up in the market?
An opportunity can be…

• A regulatory or tax change
• A high-profile event (marketing opportunity)
• An untapped market
• A gap left by a failed competitor
Threats (external factor):
 Are there any new competitors emerging in the industry?
 What are the issues that threaten the company’s position?
 Is there any significant change(s) in the industry of operation?
A threat can be…
▪ Unfavorable regulation changes
▪ A new entrant into the market
▪ Problems with the economy
▪ Market shrinkage
In order to accomplish objectives with constraints such as strength and weakness, under the market threats and
opportunities, one needs to identify for alternative project possibilities. Though this step is not a systematic but
innovative/scope for creativity in the organization. Brainstorming helps in generating many new ideas. In

brainstorming, the decision group comes together to discuss alternate ways of solving the problem. The
members of the brainstorming group may be from different departments, may have different backgrounds and
training, and may not even know one another. The diversity of the participants helps creating a stimulating
environment for generating different ideas form different viewpoints. The technique encourages free outward
expression of new ideas no matter how farfetched the ideas might appear. No criticism of any new idea is
permitted during the brainstorming session. A major concern in brainstorming is that extroverts may take
control the discussions. For this reason, an experienced and respected individual should manage the
brainstorming discussions. The group leader establishes the procedure for proposing ideas, keeps the
discussions in line with group’s mission, discourages disruptive statements, and encourages the participation
of all members.
After the group runs out of ideas, open discussions are held to weed out the unsuitable ones. It is
expected that even the rejected ideas may stimulate the generation of other ideas which may eventually lead to
other favored ideas. Guidelines for improving brainstorming sessions are presented as follows.
• Focus on specific decision problem.
• Keep ideas relevant to the intended decision
• Be receptive to all new ideas.
• Evaluate the ideas on a relative basis after exhausting new ideas.
• Maintain an atmosphere conducive to cooperative discussions.
• Maintain a record of the ideas generated.
During project selection the top management has to
• Have a vision of future growth.
• Keep long term objectives in mind.
• Conduct a SWOT analysis to map external opportunities and threats with internal strength and weakness.
• Performa preliminary project analysis to assess whether a project proposal is worthwhile or not.

1.14.2 PROJECT INITIATION:
Initiation is the process of formally authorizing a new project or that an existing project should continue
into its next phase. The formal initiation links the links the project to the ongoing work of the performing
organization. In some organizations, a project is not formally initiated until after completion of needs
assessment, a feasibility study, a preliminary plan, or some other equivalent for of analysis that was itself
separately initiated. Some types of projects, especially internet service projects and new product development
projects are initiated informally, and some limited amount of work is done to secure the approvals needed for
formal initiation. Projects are typically authorized as a result of one or more of the following:
▪ A market demand (e.g., a car company authorizes a project to build more fuel efficient cars in response
to gasoline shortages)
▪ A business need (e.g., a training company authorizes a project to create a new course to increase its
revenues)
▪ A customer request (e.g., an electricity utility authorizes a project to build a new substation to serve a
new industrial park)
▪ A technological advance (e.g., an electronics firm authorizes a new project to develop a video game
player after advances in computer memory)
▪ A legal requirement (e.g., a paint manufacturer authorizes a project to establish guidelines for the
handling of toxic materials)
▪ A social need (e.g., a nongovernmental organization in a developing country authorizes a project to
provide potable water systems, latrines, and sanitation education to low income communities suffering
from high rates of cholera)
These stimuli may also be called problems, opportunities, or business requirements. The central theme
of all these terms is that management generally must make decision about how to respond.

➢ Inputs to Initiation
Product description: The product description documents the characteristics of the product or
service that the project was undertaken to create. The product description will generally have less
detail in early phases and more detail in later ones as the product characteristics are progressively
elaborated.
The product description should also document the relationship between the product or service
being created and the business need or other stimulus that gave rise to project. While the form and
substance of the product description will vary, it should always be detailed enough to support later
project planning.
Many projects involve one organization (the seller) doing work under contract to another (the
buyer). In such circumstances, the initial product description is usually provided by the buyer.
Strategic plan: All projects should be supportive of the performing organizations strategic goals-
the strategic plan of the performing organization should be considered as a factor in project selection
decisions.
Project selection criteria: Project selection criteria are typically defined in terms of the merits of
the product of the project can cover the full range of possible management concerns (financial
return, market share, public perceptions etc.)
Historical information: Historical information about both the results of previous project selection
decisions and previous project performance should be considered to the extent that is available.

When initiation involves approval for the next phase of a project, information about the results of
previous phase of a project, information about the results of previous phases is often critical.
➢ Tools and techniques for initiation:
Project selection methods: Project selection methods involve measuring value or attractiveness to
the project owner. Project selection methods include considering the decision criterion (multiple
criteria, if used, should be combined into a single value function) and means to calculate value
under uncertainty. These are known as the decision model and calculation method. Project selection
also applies to choosing the alternative ways of doing the project. Optimization tolls can be used to
search for the optimal combination of decision variables. Project selection methods generally fall
into one of two broad categories;
▪ Benefit measurement methods- comparative approaches, scoring models, benefit
contribution, or economic models.
▪ Constrained optimization methods-mathematic models using linear, non-linear, dynamic,
integer and multi objective programming algorithms.
These models are often referred to as decision models. Decisions models include
generalized techniques (Decision trees, forced choice, and others), as well as specialized
ones (Analytic hierarchy process, logical frame work analysis, and others). Applying
complex project selection criteria in a sophisticated model is often treated as a separate
project phase.
Expert judgment: Expert judgment will often be required to assess the inputs to this process. Such
expertise may be provided by any group or individual with specialized knowledge or training, and
is available from many sources, including:
▪ Other units within the performing organization.
▪ Consultants.
▪ Stakeholders, including customers.
▪ Professional and technical associations.
▪ Industry groups.

➢ Outputs from initiation
Project charter: A project charter is a document that formally authorizes a project. It should
include, either directly or by reference to other documents:
▪ The business need that the project was undertaken to address.
▪ The product description.
The project charter should be issued by a manager external to the project, and at a level
appropriate to the needs of the project. It provides the project manager with the authority to apply
organizational resources to project activities.
When a project is performed under contract, the signed contract will generally serve as the
project charter for the seller.
Project manager identified as signed: In general, the project manager should be identified and
assigned as early in the project as is feasible. The project manager should always be assigned prior
to the start of the project plan execution and preferably before much project planning has been
done.
Constraints: Constraints are factors that will limit the project management team’s options. For
example, a predefined budget is a constraint that is highly likely to limit the team’s options
regarding scope, staffing and schedule.
When a project is performed under contract, contractual provisions will generally be constraints.
Another example is a requirement that the product of the project be socially, economically, and
environmentally sustainable, which will also have an effect on the project’s scope, staffing, and
schedule.
Assumptions: Assumptions are factors that, for planning purposes, are considered to be true, real
or certain. Assumptions affect all aspects of project planning, and are part of the progressive
elaboration of the project. Project teams frequently identify, document, and validate assumptions
as part of their planning process. For example, if the date that a key person will become available
is uncertain, the team may assume a specific start date. Assumptions generally involve a degree of
risk.

1.15 PRE-FEASIBILITY STUDY:
A pre-feasibility study has been following main objectives.
 To determine whether the project offers a promising investment opportunity.
 To determine whether they are any aspects of the project that are critical requiring in-depth
investigation by way of market surveys, laboratory test, pilot plant test etc.
The preliminary feasibility study should examine.
 The market potential for selected product/service, the competitors in the field and their market share,
the market forecast, the training practices in the industry in terms of pricing, credit, distribution.
Government control etc.
 The technologies available and the technology suitable for the project, the manufacturing facilities
required in terms of plant and machinery.
 The availability, cost and sources of raw materials.
 The plant location
 The plant capacity
 The man power requirements in terms of labor, staff and management personnel, their availability and
cost.
 The investment required, the return on investment expected the means of financing the project, the cost
of production and commercial profitability.
Pre-feasibility study usually arrives at major parameters like location of project, production capacity,
raw material and other inputs etc. It also provides rough estimates of project cost, means of financing, cost of
production, sales revenue, financial profitability, social benefits etc. If the pre-feasibility study indicates that
the project is a worthwhile proposition, a feasibility study is taken up. If the pre-feasibility indicates certain
areas of project that need a detailed study is taken up before taking up feasibility study. Such studies are also
known as support studies or functional studies.
Feasibility study: Before making a final decision to take up a project, the technical, economic, commercial and
financial justification of the chosen project shall be ascertained in concrete terms. Feasibility study is also
known by the term ’techno-economic feasibility study’

1.16 SELECTING AND PRIORITIZING PROJECTS
During the selecting and initiating stage of the project, one of the first tasks leaders must do is to identify
potential projects. Ideally, this is accomplished in a systematic manner-not just by chance. Some opportunities
will present themselves. Other good opportunities need to be discovered. All parts of the organization should
be involved. For example, sales people can uncover many opportunities through open discussion with existing
potential customers. Operations staff may identify potential productivity enhancing projects. Everyone in the
firm should be aware of industry trends and use this knowledge to identify potential projects.
Once identified, organizations need to prioritize among the potential projects. The best way to do this
is to determine which projects align best with the major goals of the firm. The executive incharge of selecting
projects need to ensure overall organizational priorities among the potential projects. The degree of formality
used in selecting projects varies widely. In a small company, it may be straightforward. Regardless of the
company’s size and the level of formality used, the prioritization efforts should include asking the following
questions:
• What value does each potential project bring to the organization?
• Are the demands of the performing each project understood?
• Are the resources needed to perform the project available?
• Is there enthusiastic support both from the external customers and from one or more internal
champions?
• Which projects will best help the organization achieve its goals?
1.16.1 PRIORITIZING PROJECTS
Once all projects have been selected, they will need to be prioritized- that is, decision makers will need
to determine which one will get assigned resources and be scheduled to begin first. If a company selects number
of projects for a year (or even for a fiscal quarter), it cannot possibly expect to start all of them at the same
time. The scoring models are very useful in providing input into the starting order of projects. Most leadership
teams will consider the weighted scores of each project as a starting point in assigning resources to projects
and determining their start dates. The leadership team members, however, also generally discuss other issues
such as:

• The urgency of each project
• The cost of delaying expected benefits from various projects
• Practical details concerning the timing
For example, an important process improvement project may be far less disruptive to perform when the
factory is shut down for routine maintenance. One more discussion frequently occurs in the prioritizing
process-if there is a conflict between resource needs for two projects, which one gets needed resources
first? Often this is left to the project sponsors to iron out; for especially important projects, it may be
formally decided by the leadership team. In that way, the probability of the critical project being held up
by a misunderstanding is greatly decreased.
One technique found in practice that is useful for this purpose is completing a priority matrix for the project to
identify which criterion is constrained, which should be enhanced, and which can be accepted:
Constrain: The original parameter is fixed. The project must meet the completion date, specifications
and scope of the project, or budget.
Enhance: Given the scope of the project, which criterion should be optimized? In the case of time and
cost, this usually means taking advantage of opportunities to either reduce costs or shorten the schedule.
Conversely, with regard to performance, enhancing means adding value to the project.
Fig: Project Management Trade-offs
Accept: For which criterion is it tolerable not to meet the original parameters? When trade-offs have
to be made, is it permissible for the schedule to slip, to reduce the scope and performance of the project, or to
go over budget?

Fig: Project Priority Matrix
Fig: displays the priority matrix for the development of a new wireless modem. Because time to market is
important to sales, the project manager is instructed to take advantage of every opportunity to reduce
completion time. In doing so, going over budget is acceptable though not desirable. At the same time, the
original performance specifications for the modem as well as reliability standards cannot be compromised.
1.17 SECURING AND NEGOTIATING PROJECTS
1.17.1 Securing Projects: It pertains to projects that are internal to an organization. It deals with projects a
company (called the client) wants performed, but for which it may hire external resources (called contractors)
to execute significant parts or all of the work. External projects can be viewed either from the perspective of
the client company that wants to perform the work. Client companies may first put prospective external projects
through a selection and prioritization process, if selected then decide whether to perform work internally
(make) or hire the project to be performed by others (buy). If the discussion is to buy, then the client company
needs to plan and conduct the procurement.
Contractor companies need to identify potential project opportunities, determine which they will pursue,
submit proposals, and be prepared to either bid or negotiate to secure the work.
 Identify Potential Project Opportunities: Contractors seeking external projects to perform to should
pursue this in a fashion similar to that of any company considering internal projects. Additionally, since
they look externally, contractor companies should have representatives at trade shows, professional
conferences, and anywhere information on the intentions of potential customers and competitors may

surface. Contractor companies should also actively practice customer relationship management by
establishing and nurturing personal contacts at various levels and functions. Contractor companies can
also practice customer relationship management by linking information systems to the extent practical
so as to identify any useful information concerning potential future projects and improve management
of current projects.
 Determine Which Opportunities to Pursue: Just as all companies should decide which internal projects
to select by making use methods for selecting projects, most contractor companies are best served by
targeting the projects they wish to pursue. Some companies have policies that they will bid on every
potential project, knowing that if they do not bid, they will not be awarded the project. More companies
find that if they target their opportunities, their ‘hit rate’ or probability of securing the work on any
given proposal increases. It takes time and resources to put together a good proposal, so it makes sense
to increase the acceptance rate by developing a bid/no-bid decision strategy.
Each company has strengths and weaknesses compared to its competitors. Hence a quick SWOT
analysis could be used to decide whether to pursue a potential project. Decision makers can also ask
how well a potential project will help achieve their objectives. If they determine a project will help
achieve their objectives, the next considerations are the cost to pursue the work and the probability of
successfully securing the project given the likely competition. A company frequently considers risks
both of pursuing a potential project. Finally, does the company have the capability to perform the work
if it is awarded?
 Prepare and Submit a Project Proposal: When a firm prepares to submit a proposal, it is really
conducting a small project being an accurate and complete proposal. The contractor should understand
the source selection criteria the client will used to decide to whom they will award the project. While
criteria will vary extensively from one project to another, generally four main areas will be considered-
technical, management, financial and operational factors. In other words, a client will likely want to be
convinced that the potential contractor is technically, managerially, financially and operationally
competent. Successful project managers try very hard to convince potential clients that they are capable
in all three dimensions. A short list of these factors are exhibited in the below table;

TYPICAL SOURCE SELECTION CRITERIA
TECHANICAL MANAGEMENT FINANCIAL OPERATIONAL
Technical experience Management experience Financial capacity Production capacity
Needs understanding Project charter Life cycle cost Business size and type
Technical approach Planning & Scheduling Cost basis and assumptions Past performances
Risk mitigation Project control Warranties References
 Negotiate to Secure the Project: Once all proposals have been delivered and evaluated, the client
company may elect to either award the project or enter into negotiations with one or more potential
contractors. On more routine projects, the contract may be award at this point. Further clarifications
and negotiations may follow for complex projects.
A client company and a contractor company may negotiate the amount of money to be paid for a
project. They may also negotiate the contractual terms, schedule, specific personnel to be assigned to
work on the contract, quality standards, reporting mechanisms, and various other items. A project
manager may need to make arrangements with potential suppliers to secure the products and services
needed to perform the project.
Successful project managers understand that they need to prepare well for negotiations. This starts
with a clear understanding of what is most important to their management. Often, it includes fact-
finding with the client company to understand its needs and abilities. Armed with understanding both
perspectives, a project manager attempts to find a solution that allows the organization to secure the
project work with enough profit potential and with the start of a good working relationship with the
client. In the end client company will select contractor(s) and award the contract(s).

project management

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