The document discusses project planning and definitions. It provides definitions of a project from various sources and outlines the key characteristics of a project such as having specific objectives, a finite timeline, constraints of time, cost and quality, and producing unique outputs. It also discusses the differences between projects and programs. The document then covers the project life cycle and stages from identification to evaluation. It elaborates on project appraisal methods including technical, financial, economic and environmental appraisions. Key financial appraisal metrics like NPV, IRR, payback period and B/C ratio are explained. Finally, it outlines the importance of project planning and the key elements involved.

1. Unit 4: Plan, planning Programme
and Project
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2. Project
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• Latin word projectum from the Latin verb proicere, "to throw
something forward“
• pro-, which denotes something that precedes the action of the
next part of the word in time and
• iacere, "to throw" Project is a specific job which is non routine
and temporary job with specific objective which serves a
certain purpose uniquely.

3. Project
3
• According to Cleland and King, a project is a combination of
human and non human resources pulled together in a
temporary organization to achieve a specified purpose
• According to Harold Kerzner, a project is any series of
activities and tasks that have a specific objective to be
completed within certain specifications, have defined start and
end dates, have funding limits and consume resources

4. Project Management
4
• Dr. Govinda Ram Agrawal in his book, “Project Management
in Nepal” describes project as, a set of activities designed to attain
specific objectives within the constraints of time, cost and quality
performance in a dynamic environment, through the planning use
and control of a variety of resources to create a unique product or
service within a temporary life span in a dynamic environment.
• Project management is the discipline of planning, organizing,
controlling and managing every aspect of the project to bring
about the successful completion of specific project goals and
objectives

5. PROJECT DEFINITIONS – MODEL OF A
PROJECT
Environment
Time Objectives Cost
People
Quality Performance
Time
performance
Cost
performance
Quality
performance

6. Program vs Project
6
Programs Projects
Program is a collective set of multiple projects
Project is well-defined set of specific
activities. Usually represents a single
objective
It has series of projects mostly inter-linked with
each other
It goes single-handedly
The components of programs are projects
The components of projects are
smaller tasks/activities
It has a bigger team to look at things
holistically
Small group of people working
together
It tends to be of longer duration for years
It is comparatively smaller/shorter in
duration
It is planned to be accomplished in different
stages
Usually accomplished in single phase
It produces outcome
It produces outputs within a defined
time frame
Comparatively less strict in context to time
Strictness in duration of start and end
of the project and has definite time
frame
It is less organized compared to projects Highly organized in all aspect

7. Project Management
7
Programs Projects
It is based on broad vision and mission Based on certain goals and objectives
It has multiple stakeholders of diverse field Limited number of stakeholders
Programs has more strategic planning
Projects may not require strategic
planning
Top level staffs and higher officials are
involved in designing the programs
Projects are designed by the mid-level
staffs
It has several functional units Has single functional unit
Involves high level of complexity and
uncertainty
Less complex and lower uncertainty
Runs on the basis of organization calendar and
timeline
It has its own timeline
It has more financial complications and hectic
budgetary processes
It has fixed budget. Thus, less
financial complications
It is vulnerable to major changes in the market
and country policies
Less vulnerable to market changes and
country policies
Program runs/gives rise to project Project can be part of the program
Success of the program is determined by the
ability to fulfill the needs of the beneficiaries
Success of project is determined by its
quality, time and resource
management

8. Characteristics of Project
 S: Specific, clearly defined, not vague.
 M: Measurable, so that the project achievement can be
measured, compared and controlled.
 A: Agree, by all the members of the team. Agreed goals raise the
sense and commitment.
 R: Realistic considering the given possible resources,
experience, knowledge and time available.
 T: Time bound, if there is no time to complete the process it will
never be completed.

9. Project Characteristics
 Specific Objective: A project clearly defines objectives, on achievement of which a
project succeeds. Objects are the deliverables of a project and the end results.
Objectives are predetermined and outputs are measurable.
 Temporary (Life Span): A project cannot continue endlessly. It is a temporary
endeavor. It has beginning and end from its birth to death. It passes through various
stages i.e. formulation, planning, design, construction, operation and termination.
 Non-routine and Non-repetitive: A project is non routine and non- repetitive in
nature.

10. Project Characteristics
 Constraints: A project operates within constraints of time, cost and quality.
 Uniqueness: No two projects are exactly similar. There are complex set of
activities involved within a project which doesn’t go with some other case.
 Flexibility: A project operates in a dynamic environment, so project needs
flexibility to provide rapid response to changing environment. Risks and changes
are inevitable and project needs to address these issues for which a project needs
to be flexible.

11. Project Characteristics
 Resource Integration: Every project uses resources such as man, machine,
money and minutes. So, integration of these resources is necessary for
efficient use of these resources.
 Team Work: A project normally consists of diversified personnel
specialized in their respective area. They work from a various discipline so
the coordination among them is called team work. A manager leads the team
to accomplish the goal of the project.
 Planning and Control: each project has an effective planning and control
system in order to efficient and effective completion of the project.

12. Project Characteristics
 Contracting and Subcontracting: Most projects are contract
based. Complexity of a project increases the need of contracting
and subcontracting. Contract may be of various types such as,
lump-sum contract, unit price contract, negotiated cost plus fixed
fee contract and turnkey contract.
 Beneficiaries: The ultimate users of the project are the project
beneficiaries. Each project has certain community of beneficiaries
who are directly associated with the project outputs.

13. Project Financing/Source
 International Project Finance Association (IPFA) defined project financing
as: “The financing of long-term infrastructure, industrial projects and public
services based upon a limited recourse financial structure where project debt and
equity used to finance the project are paid back from the cash flows generated by
the project.”
 Project finance is especially attractive to the private sector because they can fund
major projects off balance sheet.

14. Stages in Project Financing.
Pre Financing Stage
Financing Stage
Post Financing
Project identification
Risk identification & minimizing
Technical and financial feasibility
Equity arrangement
 Negotiation and syndication
 Commitments and documentation
 Pay-out.
 Monitoring and review
 Financial Closure / Project Closure
Stage
 Repayments & Subsequent monitoring.

15. Project Cycle
 Project life cycle is a series of phases of a
project from initiation to completion.
 The life cycle gives a practical approach to
problem solving applied to all aspects of a
project.
 Phases in a project life cycle encompasses
sequential and overlapping phase.

16. Project Cycle
(John W. Cusworth and Tom R. Franks

17. Project Cycle
17
1. Identification:
• This is the stage in which a project is defined as an idea
or possibility worthy of further investigation and study.
• This may come as the result of the discovery of a
resource, need or demand to be satisfied. For example,
(A valuable mineral deposit in a remote region)
needs to be extracted in a project.

18. Project Cycle
2. Formulation:
The formulation or preparation stage involves the definition of
alternatives for the project along with the selection and planning of
optimum alternatives covering aspects like size, location, technical
details, markets, and institutional arrangements.
2.2 Appraisal
It is the process in which
all the aspects of the
project are reviewed, to
decide whether to
proceed with the project
or not. It is accompanied
by major negotiations
between the leading
agency and the host
government.
2.1 Outline design
This is a design
process carried out to
a sufficient level of
detail and accuracy. It
allows the estimation
of technical, social,
and institutional
parameters. It also
aids feasibility study
with cost and benefit
assessment.
2.3 Detailed design
After the project
appraisal, a detailed
design is prepared with
sufficient accuracy to go
the implementation
ahead. This design
includes specific
organizational forms and
procedures, and
construction documents
with the cost estimate.

19. 3. Implementation
• Through the re-appraisal and negotiation of design to finalize details of the
plan Implementation can be commenced. It is the stage that involves the
disbursement of the largest portion of the project fund and time. The
activities of mining excavation are carried out in the field.
4. Commissioning
• It is the process executed between Implementation and Operation. It leads
to the successful operation of the assets.
5. Operation
• This is the phase when the assets created by the project implementation
are put into work and yield a flow of benefits. The project phase is by the
time operations are commenced. The mine is producing minerals that
can be processed further.
6. Evaluation
• Evaluation is the investigating and reviewing of the effects of the
completed project, to see whether the benefits which were planned to flow
from it have been achieved or these benefits have had their intended
consequences. Is the mine excavation project completed in allocated
time and budget, and fulfilled its envisioned objectives i.e livelihood
enhancement of locals, economic gain, etc.

20. Project appraisal
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“ the assessment of a project”
• Critical examination of project from all aspects
• Assessment of a project in terms of its economic,
social and financial viability
• Made for both proposed (Ex-ante analysis) and
executed projects (Post-ante analysis)
• Generally performed by independent party who is
not involved in the project
• Require combined efforts of a multidisciplinary
team

21. Objective of Project Appraisal
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• A project appraisal involves detailed pre- investment
analysis of market and technical feasibility; financial
soundness, economic desirability and finally, measuring
its investment worth.
• Distribute the limited resources as compared to the needs of
the society.
• Utilize the resources in the best possible ways (socio-
economic benefits)
• Decision making for allocating resources

22. Project appraisal….
Project
appraisal
22
Financial
Environment
Technology
Relevance

23. Project appraisal….

24. Technical appraisal
24
• Technical feasibility: technology selected, availability of
infrastructure, project schedule
• Technological capacity, resource availability
• Site and location – raw materials, transportation facility,
water/ irrigation, power, labor etc.
• Socially acceptable technology
• Realistic work schedules
• Proper layout of the infrastructure

25. Environmental appraisal
25
• Impact of project on quality of
- Air
- Water
- Noise
- Vegetation
- Human life
- Environmentally related health risks
• soil erosion, deforestation, air and water pollution.

26. Financial Appraisal
26
• Fund required for the project
• Capital expenditure for purchasing plant and machinery,
initial working capital and pre-operating expenses.
• Capital costs-assets (land, plant and machinery) +
management and supervision cost
• Whether the project is financially viable?
• Relates purely with finances and generation
• Cost analysis
• Level of risk

27. Present Value (PV)
27
• Present value (PV) is the current value of a future sum of
money or stream of cash flows given a specified rate of
return.
• Present value is the value right now of some amount of
money in the future.
• Mathematically
Where,
PV = Present value
r = rate of return (discount rate)
FV = Future value
n = number of period

28. Net Present Value (NPV)
28
• The NPV is the most useful and one of the most commonly
used criteria for determining whether a project should be
accepted.
• The net present value of a project is simply the present
value, PV, of its net benefit stream.
• It is obtained by discounting the stream of net benefits
produced by the project over its lifetime, back to its value
in the chosen base period, usually the present. The net
present value formula is:

29. NPV
29

30. Internal Rate of Return
30
• IRR is a discount rate that makes the net present value
(NPV) of all cash flows equal to zero in a discounted
cash flow analysis.
• IRR is the interest rate at which the net present value of
all the cashflows (both positive and negative) from a
project or investment equal zero.
• Standard rule: Accept a project if its IRR is greater than
the appropriate market-based discount rate, reject if it is
less

31. Internal Rate of Return
31

32. Profitability index / Benefit Cost Ratio (B/C ratio)
32
• The benefit-cost ratio (BCR) is an indicator showing the
relationship between the relative costs and benefits of a proposed
project, expressed in monetary or qualitative terms
• This is the ratio of project benefits versus project costs. It
involves summing the total discounted benefits for a project over
its entire duration/life span and dividing it over the total
discounted costs of the project
• Mathematically B/C ratio can be written as;

33. Profitability index / Benefit Cost Ratio (B/C ratio)
33
Understanding the results of B/C ratio
• If B/C ratio is less than 1 (B/C ratio < 1.0): In economic terms,
the costs exceed the benefits. Solely on this criterion, the project
should not proceed.
• If B/C ratio is equal to 1 (B/C ratio = 1.0): Costs equal the
benefits, which means the project should be allowed to proceed,
but with little viability.
• If B/C ratio is greater than 1 (B/C ratio > 1.0): The benefits
exceed the costs, and the project should be allowed to proceed.

34. Pay Back Period:
34
• The payback period is the length of time it takes to recover the
cost of an investment or the length of time an investor needs to
reach a breakeven point (neither loss nor gain).
• The payback period refers to the length of time it takes to recover
the cost of an investment.
• Payback Period is the duration of time required to equal the
cumulative cash inflows to its cash outflows.
• The shortest payback period is generally considered to be the most
acceptable. The reason being, the longer the money is tied up, the
less opportunity there is to invest it elsewhere.

35. Project planning
35
Project plan is a concrete output of project
plannning, which presents all essential information
about the project: who, what, where, how, by
whom and with what resources.
The relevance, feasibility, sustainability and internal
and external risks of the project can be analysed with
the help of the appraisal.

36. Project planning
36
• Guides the execution of the project, coordinates the
activities.
• Facilitates better communication between the
project stakeholders.
• Provides a means of tracking and monitoring the
progress
• Provides a detailed documentation regarding
planning decisions

37. Project planning….
37
• Project planning is of significant importance for the
success of the project
- Careful planning helps prevent costly mistakes.
- Good planning is the key to meet the project
objectives within defined time and budget.
• Different techniques can be used for project
planning.

38. Project planning….
38
• Any planning approach should have the following
elements:
- The establishment of project objectives
- The analysis of the characteristics of the project
- The establishment of an infrastructure consisting of an
appropriate organization and set of standards, methods
and tools
- The identification of the products of the project and
the activities needed to generate those projects
- The allocation of resources to activities

39. Project planning….
39
Project planning involves:
• Develop and define scope, quality requirements,
budget, schedule
• Plan procurements, risk management and project
integration
• Define organizational needs, acquire key staff
• Identify stakeholders’ power/interest/concern

40. Project planning….
40
Planning different activities
• When to start and when to finish
• Which activity to prioritize
• Bottlenecks for implementation (Staffing, resource),
• Resource allocations

41. Project planning process
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• Budget planning – specifying the budgeted cost to be
incurred at the completion of the project
• Procurement planning – focusing on vendors outside
your company and subcontracting
• Risk management – planning for possible risks and
considering optional contingency plans and mitigation
strategies
• Quality planning – assessing quality criteria to be used
for the project
• Communication planning – designing the
communication strategy with all project stakeholders

42. Limitation
42
• Quality of project analysis depends on the quality
of data and forecast made about the costs and
benefits.
• In the view of uncertainty about the future, it is
difficult to quantify completely the risk.
• project analysis is a useful tool only if major apart
of benefits are quantifiable.