1. Assignment for
As a part of curriculum for Project management fundamental (MBA512)
By group four
S.N Name ID No.
1. Markos Wodato 447/13
2. Agmas Azmeraw 449/13
3. Ermias Demissie 448/13
4. Selamawit Gebeyehu 445/13
5. Hana Debela 221/13
MBA 2nd
year
Section D
MASTERS OF BUSINESS ADMINISTRATION (MBA) PROGRAM
NEW GLOBAL VISION COLLEGE
(N.G.V.C)
Addis Ababa, Ethiopia
5th,
Dec. 2021
Submitted to: Dr. Abraham.
2. Table of Contents
#1 Project and project management....................................................................................................1
#2. Factors in project formulation/preparation .................................................................................2
#3. Project Identification/procedures followed in project identification .........................................4
#4. Project Characteristics .................................................................................................................11
#5. Summary of units (1, 3, 4, 6 and 7)................................................................................................13
Unit 1: Introduction........................................................................................................................13
Unit 3: Feasibility............................................................................................................................17
Unit 4: Planning ..............................................................................................................................20
Unit 6: Monitoring and Evaluation...............................................................................................23
Unit 7: Project Termination...........................................................................................................26
3. 1
#1 Project and project management
project is a temporary endeavor involving a connected sequence of activitiesand a range of
resources, which is designed to achieve a specific and unique outcome, which operates within
time, scope, cost and qualityconstraints and which is often used to introduce change. Some
quoted definitions of project are as follows. Project is a temporary endeavour undertaken to
create a unique product or service or result. (AMERICAN National Standard ANSI/PMI99-
001-2004). Project is a unique process, consist of a set of coordinated and controlled
activities with start and finish dates, undertaken to achieve an objective confirming to specific
requirements, including the constraints of time cost and resource. (ISO10006).
Project management is a methodical approach to planning and guiding project processes from
start to finish. It is the method of planning the plan. It starts from project definitions and ends
with goal achievement. PMBOK defines project management as the application of
knowledge, skill, tool and techniques to project activities in order to meet stakeholder’s needs
and expectations from a project. Bridge group defines it as the methods and disciplines used
to define goals, plan and monitor tasks and resources, identify and resolve issues, and control
costs and budgets for a specific project.
Examples of project include Developing a watershed, creating irrigation facility, developing
new variety of a crop, developing new breed of an animal, developing agro-processing centre,
Construction of farm building, sting of a concentrated feed plant etc. It may be noted that
each of these projects differ in composition, type, scope, size and time.
Purpose of Project Execution and Control
The basic reason for the existence of a project is to solve a problem, address a need or take
the advantage of opportunity. Project Execution and Control is to develop the product or
service that the project was commissioned to deliver. Typically, this is the longest phase of
the project management lifecycle, where most resources are applied. Project Execution and
Control utilizes all the plans, schedules, procedures and templates that were prepared and
anticipated during prior phases. Unanticipated events and situations will inevitably be
encountered, and the Project Manager and Project Team will be taxed to capacity to deal with
them while minimizing impact on the project’s CSSQ. The conclusion of the phase arrives
when the product of the project is fully developed, tested, accepted, implemented and
transitioned to the Performing Organization. Accurate records need to be kept throughout this
phase. They serve as input to the final phase. This phase consists of the following processes:
4. 2
Conduct Project Execution and Control Kick-off, where the Project Manager conducts a
meeting to formally begin the Project Execution and Control phase, orient new Project
Team members, and review the documentation and current status of the project.
Manage CSSQ, where the Project Manager must manage changes to the Project Scope
and Project Schedule, implement Quality Assurance and Quality Control processes
according to the Quality Standards, and control and manage costs as established in the
Project Budget.
Monitor and Control Risks, where the Project Manager and Project Team utilize the Risk
Management Plan prepared in previous phases, and develop and apply new response and
resolution strategies to unexpected eventualities.
Manage Project Execution, where the Project Manager must manage every aspect of the
Project Plan to ensure that all the work of the project is being performed correctly and on
time.
Gain Project Acceptance, where the Project Manager, Customer Decision-Makers and
Project Sponsor acknowledge that all deliverables produced during Project Execution and
Control have been completed, tested, accepted and approved, and that the product or
service of the project has been successfully transitioned to the Performing Organization.
#2. Factors in project formulation/preparation
The decision maker should first identify the criteria for the selection of a project. A project
which is good for one firm or entrepreneur may not be suitable for another. A detailed list of
various possible factors/ criteria is provided here.
➢ Marketing factors
• Size of potential market and focused customer segment
• Probability of extensions or expansion of market
• Export opportunity/import threat
• Customer acceptance
• Impact on current products
• Expected market share and current status of rival companies
• Time to achieve proposed market share
• Current stage of product life cycle.
➢ Production factors
• Time to complete the project
5. 3
• Availability of resources
• Flexibility of operations
• Connections with existing production lines
• Energy requirements and its sources
• Expected quality of the product or services
• Availability of technology and technology life cycle
➢ Financial factors
• Cost of project and means of sources
• Impact on current financial position of the firm
• Profitability in terms of profit margins and returns on investments
• Payback period
• Time period to reach the breakeven point
• Working capital needs
• Personnel factors
• Requirement of manpower and skills required
• Impact on existing employees
• Change in working environment
• Technical skill requirement
➢ Legal factors
• Government policies
• Patents and its protection
• Any other major legal complexity
➢ Strategic factors
• Impact on the image of the company
• Acceptance by existing shareholders
• In line with long-term mission of the firm
• Ease to exit in the case of failure
Factors Considered in Technical Analysis
There are so many factors needed to be considered in technical feasibility
6. 4
Figure: Aspects of technical feasibility
#3. Project Identification/procedures followed in project identification
Introduction
Project identification is an important step in project formulation. These are conceived with
the objective of meeting the market demand, exploiting natural resources or creating wealth.
The project ideas for developmental projects come mainly from the national planning
process, whereas industrial projects usually stem from identification of commercial prospects
and profit potential. As projects are a means to achieving certain objectives, there may be
several alternative projects that will meet these objectives. It is important to indicate all the
other alternatives considered with justification in favour of the specific project proposed for
consideration. Sectoral studies, opportunity studies, support studies, project identification
essentially focuses on screening the number of project ideas that come up based on
information and data available and based on expert opinions and to come up with a limited
number of project options which are promising.
“Project Formulation” is the processes of presenting a project idea in a form in which it can
be subjected to comparative appraisals for the purpose of determining in definitive terms the
priority that should be attached to a project under sever resource constraints. Project
identification involves the following steps (Figure 1).
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Opportunity studies/support studies
Identification of product/service
Prefeasibility study
Feasibility study
(Techno economic feasibility)
Project appraisal
Detailed project report
Figure 1. Project identification –Schematic view
I. Opportunity Studies
An opportunity study identifies investment opportunities and is normally undertaken at macro
level by agencies involved in economic planning and development. In general opportunity
studies there are three types of study – Area Study, sectoral and Sub-Sectoral Studies and
Resource Based Studies. Opportunity Studies and Support studies provide sound basis for
project identification.
II. Pre-feasibility Studies / Opportunity Studies
A pre-feasibility study should be viewed as an intermediate stage between a project
opportunity study and a detailed feasibility study, the difference being primarily the extent of
details of the information obtained. It is the process of gathering facts and opinions pertaining
to the project. This information is then vetted for the purpose of tentatively determining
whether the project idea is worth pursuing furthering. Pre-feasibility study lays stress on
assessing market potential, magnitude of investment, technical feasibility, financial analysis,
risk analysis etc. The breadth and depth of pre-feasibility depend upon the time available and
the confidence of the decision maker. Pre-feasibility studies help in preparing a project
profile for presentation to various stakeholders including funding agencies to solicit their
support to the project. It also throws light on aspects of the project that are critical in nature
and necessitate further investigation through functional support studies.
Support studies are carried out before commissioning pre-feasibility or a feasibility study of
projects requiring large-scale investments. These studies also form an integral part of the
feasibility studies. They cover one or more critical aspects of project in detail. The contents
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of the Support Study vary depending on the nature of the study and the project contemplated.
Since it relates to a vital aspect of the project the conclusions should be clear enough to give a
direction to the subsequent stage of project preparation.
III. Feasibility Study
Feasibility Study forms the backbone of Project Formulation and presents a balanced picture
incorporating all aspects of possible concern. The study investigates practicalities, ways of
achieving objectives, strategy options, methodology, and predict likely outcome, risk and the
consequences of each course of action. It becomes the foundation on which project definition
and rationale will be based so that the quality is reflected in subsequent project activity. A
well conducted study provides a sound base for decisions, clarifications of objectives, logical
planning, minimal risk, and a successful cost effective project. Assessing feasibility of a
proposal requires understanding of the STEEP factors. These are as under Social, Economic,
Technological, Ecological, and Political.
A feasibility study is not an end in itself but only a means to arrive at an investment decision.
The preparation of a feasibility study report is often made difficulty by the number of
alternatives (regarding the choice of technology, plant capacity, location, financing etc.) and
assumptions on which the decisions are made. The project feasibility studies focus on
Economic and market analysis
Technical Analysis
Market Analysis
Financial Analysis
Economic Benefits
Project Risk and Uncertainty
Management Aspects
Economic and Market Analysis
In the recent years the market analysis has undergone a paradigm shift. The demand forecast
and projection of demand supply gap for products / services can no longer be based on
extrapolation of past trends using statistical tools and techniques. One has to look at multiple
parameters that influence the market. Demand projections are to be made keeping in view all
possible developments. Review of the projects executed over the years suggests that many
projects have failed not because of technological and financial problems but mainly because
of
the fact that the projects ignored customer requirements and market forces.
9. 7
In market analysis a number of factors need to be considered covering – product
specifications, pricing, channels of distribution, trade practices, threat of substitutes, domestic
and international competition, opportunities for exports etc. It should aim at providing
analysis of
future market scenario so that the decision on project investment can be taken in an objective
manner keeping in view the market risk and uncertainty.
Technical Analysis
Technical analysis is based on the description of the product and specifications and also the
requirements of quality standards. The analysis encompasses available alternative
technologies, selection of the most appropriate technology in terms of optimum combination
of project components, implications of the acquisition of technology, and contractual aspects
of licensing. Special attention is given to technical dimensions such as in project selection.
The
technology chosen should also keep in view the requirements of raw materials and other
inputs
in terms of quality and should ensure that the cost of production would be competitive. In
brief
the technical analysis included the following aspects.
Technology
− Availability
− Alternatives
− Latest / state-of-art
− Other implications
Plant capacity
− Market demand
− Technological parameters
Inputs
− Raw materials
− Components
− Power
− Water
− Fuel and Others
Availability skilled man power
Logistics
Environmental consideration (pollution)
Requirement buildings/ foundation
Other relevant details
Environmental Impact Studies
All most all projects have some impact on environment. Current concern of environmental
quality requires the environmental clearance for all projects. Therefore, environ impact
analysis needs to be undertaken before commencement of feasibility study.
Objectives of Environmental Impact Studies:
10. 8
•To identify and describe the environmental resources/values (ER/Vs) or the environmental
attributes (EA) which will be affected by the project (in a quantified manner as far as
possible).
•To describe, measure and assess the environmental effects that the proposed project will have
on the ER/Vs.
•To describe the alternatives to the proposed project which could accomplish the same results
but with a different set of environmental effects.
•The environmental impact studies would facilitate providing necessary remedial measures in
terms of the equipment’s and facilities to be provided in the project to comply with the
environmental regulation specifications.
Financial Analysis
The Financial Analysis, examines the viability of the project from financial or commercial
considerations and indicates the return on the investments. Some of the commonly used
techniques for financial analysis are as follows.
•Pay-back period.
This is the simplest of all methods and calculates the time required to recover the initial project
investment out of the subsequent cash flow. It is computed by dividing the investment amount
by the sum of the annual returns (income – expenditure) until it is equal to the capital cost. The
drawback in this method is that it ignores any return received after the payback period and
assumes equal value for the income and expenditure irrespective of the time.
•Return on Investment (ROI)
The ROI is the annual return as percentage of the initial investment and is computed by
dividing the annual return with investment. It is calculation is simple when the return is
uniform. Both the pay-back period and ROI are simple ones and more suited for quick analysis
of the projects and sometimes provide inadequate measures of project viability. It is desirable
to use these methods in conjunction with other discounted cash flow methods such as Net
Present Value (NPV), Internal Rate of Return (IRR) and Benefit-Cost ratio.
•Net Present Value (NPV)
The principle of discounting is the reverse of compounding and takes the value of money over
time. To understand his let us take an example of compounding first. The computed discount
factor tables are also available for ready reference. In the financial analysis the present value is
computed for both investment and returns. The results are presented in three different measures
i.e. NPV, B-C Ratio, and IRR.
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•Profitability Index(PI)/Benefit Cost Ratio
Net Present Value is considered as one of the important measure for deciding the financial
viability of a project. The sum of discounted values of the stream of investments in different
years of project implementation gives present value of the cost (say C). Similarly sum of
discounted returns yields the present value of benefits (say B). The net present value (NPV) of
the project is the difference between these two values (B- C). Higher the value of NPV is
always
desirable for a project.
•Internal Rate of Return (IRR)
Internal Rate of Return (IRR) indicates the limit or the rate of discount at which the project
total present value of return (B) equals to total present value of investments (C) i.e. B-C=
Zero. In other words, it is the discount rate at which the NPV of the project is zero. The IRR
is computed by iteration i.e. Computing NPV at different discount rate till the value is
nearly zero. It is desirable to have projects with higher IRR.
Risk and Uncertainty
Risk and Uncertainty are associated with every project. Risk is related to occurrence of
adverse consequences and is quantifiable. It is analysed through probability of occurrences.
Whereas uncertainty refers to inherently unpredictable dimensions and is assessed through
sensitivity analysis. It is therefore necessary to analyse these dimensions during formulation
and appraisal phase of the programme. Factors attributing to risk and uncertainties of a
project are grouped under the following;
• Technical – Relates to project scope, change in technology, quality and quantity of inputs,
activity times, estimation errors etc.
• Economical – Pertains to market, cost, competitive environment, change in policy,
exchange rate etc.
• Socio-political – Includes dimensions such as labour, stakeholders etc.
• Environmental – Factors could be level of pollution, environmental degradation etc.
Economic Benefits
Apart from the financial benefits (in terms of Return on Investment) the economic benefits of
the project are also analyzed in the feasibility study. The economic benefits include
employment generation, economic development of the area where the project is located,
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foreign exchange savings in case of import substitutes or earning of foreign exchange in case
of export oriented projects and others.
Management Aspects
Management aspects are becoming very important in project feasibility studies. The
management aspects cover the background of promoters, management philosophy, the
organization set up and staffing for project implementation phase as well as operational
phase, the aspects of decentralization and delegation, systems and procedures, the method of
execution and finally the accountability.
Time Frame for Project Implementation:
The feasibility study also presents a broad time frame for project implementation. The time
frame influences preoperative expenses and cost escalations which will impact the
profitability and viability of the project.
IV. Project Appraisal
The project appraisal is the process of critical examination and analysis of the proposal in
totality. The appraisal goes beyond the analysis presented in the feasibility report. At this
stage, if required compilation of additional information and further analysis of project
dimensions are undertaken. At the end of the process an appraisal note is prepared for
facilitating decision on
the project implementation.
The appraisal process generally concentrates on the following aspects.
• Market Appraisal: Focusing on demand projections, adequacy of marketing infrastructure
and competence of the key marketing personnel.
• Technical Appraisal: Covering product mix, Capacity, Process of manufacture engineering
know-how and technical collaboration, Raw materials and consumables, Location and site,
Building, Plant and equipment’s, Manpower requirements and Breakeven point.
• Environmental Appraisal: Impact on land use and micro-environment, commitment of
natural resources, and Government policy.
• Financial Appraisal: Capital, rate of return, specifications, contingencies, cost projection,
capacity utilization, and financing pattern.
• Economic Appraisal: Considered as a supportive appraisal it reviews economic rate of
return, effective rate of protection and domestic resource cost.
• Managerial Appraisal: Focuses on promoters, organization structure, managerial
personnel, and HR management.
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• Social Cost Benefit Analysis (SCBA): Social Cost Benefit Analysis is a methodology for
evaluating projects from the social point of view and focuses on social cost and benefits
of a project. There often tend to differ from the costs incurred in monetary terms and
benefits earned in monetary terms by the project SCBA may be based on UNIDO method
or the Little-Mirriles (L-M) approach. Under UNIDO method the net benefits of the
project are considered in terms of economic (efficiency) prices also referred to as shadow
prices. As per the L-M approach the outputs and inputs of a project are classified into (1)
traded goods and services (2) Non traded goods and services; and (3) Labour.
V. Detailed Project Report (DPR)
Once the projects are appraised and the investment decisions are made a Detailed Project
Report (DPR) is prepared. It provides all the relevant details including design drawings,
specifications, detailed cost estimates etc. and this would act as a blue print for project
implementation.
#4. Project Characteristics
A project has several characteristics:
➢ Has a unique purpose.
➢ Is temporary.
➢ Is developed using progressive elaboration.
➢ Requires resources, often from various areas.
➢ Should have a primary customer or sponsor.
➢ The project sponsor usually provides the direction and funding for the project.
➢ Involves uncertainty.
Uniqueness
Projects involve doing something that has not been done before. The presence of repetitive
elements does not change the fundamental uniqueness of the project work.
• The objectives of projects and operations are fundamentally different
• The purpose of a project is to attain the objective and close the project
• Project ceases when it declared objectives have been attained
• The objective of an ongoing non-projectized operation is normally to sustain the business.
• Non-project undertakings adopt a new set of objectives and continue to work.
A temporary nature
✓ The duration of a project is finite; they are not ongoing efforts
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✓ Temporary does not necessarily mean short in duration; many projects last for several
years
✓ Temporary does not generally apply to product or service created by the project
✓ Most projects are undertaken to create a lasting result.
✓ A successful project is the one which is completed within the time limits perceived during
the planning. As the cost is dependent on time, time management becomes a crucial
activity of project management.
Progressive elaboration
Due to the uniqueness of project results, the precise details in terms of the deliverables
contributing to the results are not known from the outset. At the start of a project, the
characteristics of its deliverables and the project parameters of scope, time, cost and
performance will be broadly defined. During the development of the project plans, and as the
early stages of the project progress, a better understanding of the project will be obtained – it
will be progressively elaborated. The ‘amount’ of elaboration needed to obtain a detailed
definition of a project will depend on the level of knowledge about the project. We can
differentiate projects between two extremes: fuzzy and clear. If the project’s deliverables are
well defined, it will be closer to the clear end of the spectrum, and less elaboration will be
required. The fuzzier the project’s deliverables are; the more elaboration will be required.
Fixed set of objectives: The project starts when the objective(s) is finalized. The project
comes to an end as soon as the objectives are attained.
There are four major objectives of project management
− Scope: Scope means what are the expectations from you as a project manager and your
team. A civil contractor always has well-defined scope, like all civil works including
excavation, foundation, concreting, brickwork, plastering of all walls as per the attached
drawings.
− Performance: A project is always expected to have a well-defined performance level. If a
project is unable to adhere to the desired performance of a customer, it is certainly an
unsuccessful project.
− Cost: It is dependent on all the above objectives. Mathematically it can be written as:
Cost = f (P, T, S).
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Therefore, cost is a function of performance, time and scope. If any of the above increases, it
is surely going to increase the cost of the project. Another approach in defining the objectives
is the SMART approach.
• Specific: Project should target a specific goal
• Measurable: It should be quantifiable
• Attainable: It should be attainable with resources available
• Realistic: It should be realistic in nature
• Time Limit: There should be fixed time limits
Tenure: Project is never a continuous activity; it has to come to an end. Its life span is fixed.
Team work: It needs a team to accomplish various activities.
Life cycle: Like all living organisms, project starts slowly (definition phase), then starts
building up in size (planning phase), then reaches peak (implementation phase) before finally
getting terminated.
Made to order: The customer always decides the objective and informs the constraints like
time and cost.
Single entity: Generally, projects are the responsibilities of a single person/entity but
certainly there are many participants in a project, who are helping the single entity in the
accomplishment of project objectives.
Multi-skilled staff: The staff needed for a project, including the project manager needs to
have a wide range of skills including technical skills, human skills, financial skills,
negotiation skills, etc.
Subcontracting: Subcontracting is practically unavoidable in project management. As
specialized knowledge or workforce is needed for a very small duration in a project, it is
difficult and costly to employ or retain. Therefore, they are just hired for small duration or
specific job from outside agency.
Risk and uncertainty: Projects are risky as the activities involved in projects are non-
retrievable. Thus, risk is unavoidable. However, risk can be reduced considerably using
various forecasting techniques and project management and control tools.
#5. Summary of units (1, 3, 4, 6 and 7)
Unit 1: Introduction
A project is a temporary endeavor involving a connected sequence of activities and a range
of resources, which is designed to achieve a specific and unique outcome, which operates
16. 14
within time, scope, cost and quality constraints and which is often used to introduce change.
Temporary means that a project is something that has a specific start date and a specific end
date. The end is reached when the project’s objectives have been achieved and effectively
handed over to the business. Projects are a means to respond to those requests that cannot be
addressed within the organization’s normal operational limits. The product or service is
different in some distinguishing way from all other products or services within an
organization Identifying and focusing on uniqueness is important to project management. It
helps identify new organization risk areas, enabling management to develop and implement
timely risk management strategies.
A project utilizes a variety of resources includes human, financial, material, information, etc
to carry out the activities or tasks. Organization: is vital to coordinate resources to achieve the
project objectives- organizations can be public, private or NGOs.
Characteristics of project
• Has a unique purpose.
• Is temporary.
• Is developed using progressive elaboration.
• Requires resources, often from various areas.
• Should have a primary customer or sponsor.
• The project sponsor usually provides the direction and funding for the project.
• Involves uncertainty
Classification of project
Projects range in size, scope, cost and time from mega international projects costing millions
of dollars over many years to small domestic projects with a low budget taking just a few
hours to complete.
On the basis of time: short vs. long-duration
On the basis of type of products (project producing goods and services)
Scope-project catering for regional, national or international
Size (large, medium & small-scale projects)
Technology (labor intensive, capital, energy)
Ownership (private, public, joint-venture, cooperative, NGOs)
Project Vs program
➢ “project” is a group of activities to produce a project purpose in a fixed time frame
17. 15
➢ “program” is a series of projects whose objectives together contribute to a common
overall objective, at sector, country or even multi-country level.
➢ A program is an assortment of related/associated projects that are managed
➢ together to achieve a number of objectives.
➢ Programs may also contain elements of ongoing operations.
➢ programs comprise multiple projects, they are larger in scope than a single project.
Figure 1 Relationship of polices, program and projects
Table 1 difference and similarities of project and program
Differences
Project Program
Narrow in scope Wide in scope; can comprise
many projects as components.
Specific and detail Comprehensive and general
More precise and accurate in
its objectives and features
Broader goal related to sectoral policy
Possible to calculate the costs and returns Difficult to calculate costs and returns
Similarities
✓ Have purpose/ objectives
✓ Require input (financial, manpower, material)
✓ Generate output (goods and/or services)
✓ Operate over space and time
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Projects Vs operations
Organizations perform two types of work which are project work and operational work.
Operations are ongoing and repetitive while projects are temporary and unique. The
purpose of a project is to attain its objective and then terminate whereas the objective of an
ongoing operation is to sustain the business.
Project Management the application of knowledge, skills, tools and techniques to project
activities to meet project requirements and objectives.
Figure 2 The project cycles
Identification
Potential projects emerge from specialists, local leaders and national development
strategies. Identification of potential stakeholders, particularly primary
stakeholders. Carry out problem assessment and decide upon key objectives.
Assess alternative strategies for meeting objective.
Preparation
and
Appraisal
The technical, institutional, economic, environmental, and financial issues
facing the project studied and addressed —including whether there are alternative
methods for achieving the same objectives. Assessing feasibility as to whether and
determining whether to carry out more advanced
planning. Evaluation of all of the feasibility studies to determine the ability of the
project to succeed
Detailed
Planning
The project solution is further developed in as much as detail as possible
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Implementation
and monitoring
The project plan is implemented over a specified time period. Monitoring of
project performance with a management information system to enable
correction of implementation problems as they arise.
Unit 3: Feasibility
Feasibility is the measure of how beneficial or practical the development of an information of
will be to an organization. Feasibility analysis is the process by which feasibility is measure.
A feasibility study is part of the process of project identification, preparation and selection. It
involves the process of appraising projects or group of projects and then choosing to
implement some of them. Key factors looked at in a feasibility study: Availability of
adequate market, Growth potential of the project, Investment, operation and distribution
costs, Demand and supply factors and Social and environmental conditions
A feasibility study should contain the following analyses:
• Commercial /market analysis
• Technical analysis
• Organization/administrative analysis
• Financial analysis
• Environmental analysis
• Economic analysis
• Socio-political analysis
Commercial/Market Analysis
The commercial aspects of a project include the arrangement for marketing output produced
by the project, and the arrangements for the supply of inputs needed to build and operate the
project. On the output side, careful analysis of the proposed market for the projects
production is essential to ensure that there will be an effective demand at a remunerative
price. E.g. of questions to be asked include: where will the products be sold? Is the market
large enough to absorb the new production without affecting the price? if the price is likely to
be affected, by how much? What share of the total market will the proposed project supply?
And are there
appropriate facilities for handling the new production?
Technical Study
The other aspects of project analysis can only proceed in light of the technical analysis. Good
technical staff are essential for this work; they can be drawn from consulting firms or from
technical assistance agencies. Technical analysis may identify gaps in information that
Technical analysis gives an indication of the capacity of operations within the project. It also
Evaluation
& closure
On-going and final assessment of the success of the project against original
objectives, to learn lessons to help improve future project.
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includes the quality of machinery and equipment's. There should be provision for
maintenance of the machinery and equipment's as well. This also include appropriateness of
technology which, will depend on the level of development in the community. Technology
should be examined at two levels. The technology used must be suitable for the realization of
specific objective of a given project. The technology must also be examined for suitability
according to the prevailing socio-economic environment. The location and layout of the
project is also part of the technical analysis.
To meet their targets related to time and cost, it is necessary that the site has been properly
selected. The basic considerations in location study are;
❖ Availability of land, soil, characteristics and cost of land
❖ Source of raw material and transportation requirements
❖ Transportation and marketing of finished products
❖ Source and availability of water
❖ Availability of power and sources
❖ Availability of skilled manpower
❖ Social amenities in the area
❖ Availability of tax incentives if any
❖ Facilities for drainage and waste disposal
❖ Availability of engineering and maintenance facilities
❖ Acceptance of the project by local bodies
Organizational Analysis
A whole range of issues in project preparation revolves around the overlapping institutional,
organizational, and managerial aspects of projects. Frequent questions asked is whether the
institutional setting of the project is appropriate and, the socio- cultural patterns and
institutions of those communities that the project will serve must be considered.
➢ E.g does the project design take into account the customs and culture of the stakeholders
who will participate?
➢ Or will the project involve disruption of the ways in which actors are accustomed to
working?
➢ For projects to be carried out successfully, they need to relate properly to the institutional
structure of the country and region.
➢ This may include structure of companies, partnership and other organizational set ups.
➢ Other factors may include the projects manpower requirements, transportation of
machinery, maintenance and commissioning.
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➢ Terms and conditions which are adhered to by contactors must be carefully weighed to
ensure that they are in line with the overall project objectives.
Financial Analysis
The financial aspects of project preparation and analysis include the financial effects of a
proposed project on each of its various stakeholders. For example, in agricultural projects, the
stakeholders include farmers, private sector firms, public corporations, project agencies and
etc. All the initial project costs as well as the operation costs should be carefully considered.
An analysis of the financial aspect of the project administration will also include:
❖ What investment funds will the project need and when?
❖ What will be the operating expenses when the project is underway?
❖ will these expenses depend on budget allocations or will the project produce sufficient
revenue to cover for its administration costs?
❖ The analyst makes assessment of incentives for actors to participate in the project?
❖ What will be the probable change in project income?
❖ What will be the timing of this change?
Financial feasibility study needs investment decision making/capital budgeting. In capital
budgeting, decisions to accept/reject an independent project does not affect decisions about
another project whereas acceptance of a mutually exclusive project precludes other projects.
Methods used to guide managers’ investment
decisions are:
➢ Non-discounting
❖ Payback Period
❖ Accounting Rate of Return (ARR)
➢ Discounting
❖ Net Present Value (NPV)
❖ Internal Rate of Return (IRR)
Economic Analysis
Economic analysis is basically concerned with the following:
− How to identify effects of a proposed project to the society.
− Quantification of the effects of the proposed project.
− Pricing of costs and benefits to reflect their values to the society.
− In economic analysis, shadow prices are used while in financial analysis the market prices
are used.
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The economic aspects of project preparation and analysis require a determination of the
likelihood that a proposed project will contribute significantly to the development of the total
economy and that its contribution will be big enough to justify using the scarce national
resources it will need.
Social Analysis
We have mentioned that projects should consider the social patterns and practices of the
clientele the project will serve. More frequently, project analysts are expected to examine
carefully the broader social implications of proposed investments. Social consideration
should be carefully considered to determine whether a proposed project is responsive to
national objectives e.g the case of creating employment opportunities, and also issues that are
dealing with income distribution within the society.
Unit 4: Planning
Project planning involves the creation of resource plan, financial plan, quality plan, risk plan,
acceptance plan, communication plan and procurement plan. project planning is “the
answering of the following questions: What must be done? How should it be done? Who will
do it? By when must it be done? How much will it cost?
Why a plan? Because: used as a basis for organizing project activities and allocating
responsibilities to individuals. A means of communication and coordination between all those
involved in the project.
➢ Encourages people to look ahead
➢ Inspires a sense of urgency and time consciousness
➢ Establishes the basis for monitoring and control
What do we plan?
❖ The work
❖ Manpower and organization
❖ Financial resources
❖ Information system
Planning is essential parts of project management; they enable people to understand what is
needed to meet the project goals and reduce the uncertainty of outcomes.
The project plan includes: -
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1. Project objectives, requirements, and scope are set. These outcome elements specify
project end items, desired results, and time, cost, and performance targets. The scope
includes specific acceptance requirements that the customer uses to determine
acceptability of results or end items.
2. The specific work activities, tasks, or jobs to achieve objectives are broken down, defined,
and listed.
3. A project organization is created specifying the departments, subcontractors, and
managers responsible for work activities.
4. A schedule is prepared showing the timing of work activities, deadlines, and milestones.
5. A budget and resource plan is prepared showing the amount and timing of resources and
expenditures for work activities and related items.
6. A forecast is prepared of time, cost, and performance projections for the completion of the
project.
These steps need to be followed each time because every project is somewhat unique,
requires different resources, and must be completed to specific time, cost, and performance
standards to satisfy users’ requirements.
The difference between the summary plan in the proposal and the master plan is that the
former is intended for the customer, and the latter for the project team. The summary plan
need only contain enough detail to give the customer an overview; the master plan must be of
sufficient detail to guide the team in the execution of the project. Once top management
approves the plan it gives the project manager tacit authority to conduct the project in
accordance with the plan.
Contents of Master Plans
The contents of master plans vary depending on the size, complexity, and nature of the
project. usually, the plan has three major sections:
a. Management Summary.
b. Organization Section
c. Technical Section
The project is initiated with the preparation of a formal, written master plan. The purpose of
this plan is:
➢ To guide the project manager and team throughout the project life cycle;
➢ To tell them what resources are needed, when, and how much they will cost; and,
➢ To permit them to measure progress and performance.
i. Management Summary
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Brief explanation of the project in favour of top- level management. It includes: a brief
description of the project, its objectives, overall requirements, constraints, problem areas (and
how they will be overcome), and the master schedule showing major events and
milestones/indicators.
ii. Organization Section
Which specifies the organization and personnel requirements for the project? It includes:
a. Project Management and Organization: Describes how the project will be managed and
identifies key personnel and authority relationships.
b. Manpower: forecasts of workforce requirements in terms of skills, expertise, and
strategies for locating and recruiting qualified people.
c. Training and Development: Summary of the executive development and personnel
training necessary to support the project.
iii.Technical Section
Describes major activities, timing, and cost. It includes:
Statement of work and scope of work: General description of major project activities and
tasks, and results or end-items.
a. Work breakdown: List of work packages and description of each.
b. Responsibility assignments: List of personnel and responsibility for work packages.
c. Project schedules: showing major events, milestones, and points of critical action or
decision. May include bar charts, project networks, and diagrams.
d. Budget and financial support: Estimates and timing of capital and development expenses
for labour, materials, and facilities.
e. Testing: Listing of things to be tested, including procedures, timing, and persons
responsible.
f. Change control plan: Procedures for changes request to any aspect of the project plan.
g. Quality plan: Measures for monitoring quality and accepting results for individual work
tasks, components, and end-item assemblies.
h. Work review plan (may be included in quality plan): Procedures for periodic review of
work, noting what is to be reviewed, by whom, when, and according to what standards.
i. Documentation: List of documents to be produced and how they will be organized and
maintained.
j. Implementation: Discussion and guidelines showing how the customer will convert to, or
adopt, the end-item of the project.
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k. Economic justification: Summary of alternatives in meeting project objectives showing
trade-offs between costs and schedules.
l. Areas of uncertainty and risk: Contingency plans for areas of greatest uncertainty in terms
of potential work failure or missed milestones.
Much of the technical content of project plans is derived from the basic tools described in
this. They include:
1. Work breakdown structure (WBS) and work packages (WP)—used to define the project
work and break it down into specific tasks.
2. Responsibility matrix—used to define project organization, key individuals, and their
responsibilities.
3. Events and milestones—used to identify critical points and major occurrences on the
project schedule.
4. Gantt Charts—used to display the project master schedule and detailed task schedules.
Unit 6: Monitoring and Evaluation
Project evaluation is a periodic assessment of an ongoing or completed project - its design,
implementation and results. Evaluation involves identifying and reflecting upon the effects of
what has been done, and judging its worth. Evaluation is a systematic and objective
assessment to determine the elements of project success or failure - performance,
effectiveness and impacts of a project. It focuses on making judgments on the performance,
value, outputs, success and impacts of a project. Evaluation can be done during project
implementation, some years or several years after the completion of the project depending on
its purpose.
The ultimate objective of evaluation is to determine the relevance and fulfilment of project
objectives, efficiency, effectiveness, impact and sustainability of the project. Relevance/
appropriateness concerns whether the rationale behind a project is in line with the priorities of
the stakeholders and the society in question such as; objectives compared with available
resources, comparison of current needs with the original needs, appropriateness of
intervention, solutions/technologies compared with target group needs.
Effectiveness concerns the extent to which the purpose has been achieved, or can be expected
to be achieved. Original objectives compared with outcomes (what was desired and what was
achieved), outcomes compared with needs, current outcomes compared with past outcomes,
outcomes compared with standards, and comparison between the target groups within the
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project area. Efficiency is a measure of the “productivity” of the implementation process
(efficient use of financial, human and material resources). Current costs compared with past
costs (materials, people, tools, technology, and processes), costs compared with similar
interventions elsewhere (benchmarking), and extent of implementation compared with
targets.
Sustainability concerns with what happens after the project has been completed. The
sustainability of any project will depend on whether the positive impact justifies the
investments. Impact/consequences of the extent of socio-economic, technological,
environmental, and psychological changes attributable to the project’s interventions. It
includes both positive and negative consequences, whether these are foreseen and expected or
not.
Project monitoring and evaluation differ and are distinct concepts. Yet, they are closely
related or interactive processes. Both monitoring and evaluation gather and analyze data &
information in order to examine the progress, effectiveness, outcomes & impacts of projects.
So, they are processes that gather and analyze information to be used for the effective
management of projects. Information generated through monitoring and evaluation provide
project staff with a clearer basis for decision-making. Nevertheless, monitoring and
evaluation have their own focuses and strategies, Monitoring is a continuous or periodic
review of project implementation focusing on inputs, activities, work schedules, outputs,
which is used as an input for evaluation function. Monitoring is more descriptive in nature
(quantitative), which provides the data on which the evaluation of a project is based.
Generally, through routine tracking of project progress, monitoring can provide both
quantitative and qualitative data useful for the evaluation function.
Purpose of project monitoring and evaluation
✓ To judge the value of project outputs and impacts, and provide a clear picture of the
extent to which the intended objectives of the project have been realized,
✓ To identify the constraints or bottlenecks that hinder the project in achieving its
objectives,
✓ To provide solutions by taking into consideration the benefits and costs that accrue to the
intended beneficiaries of the project,
✓ To draw lessons from the project implementation experience and use of the same for
future projects.
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Types of project evaluation
There are different types of project evaluation, which can be categorized in a variety of ways.
The categories and types of project evaluation are not mutually exclusive and are often used
in combination. Ultimately, the approach and method used in any project evaluation is
determined by the target audience and purpose of the evaluation. It is best to involve key
stakeholders in the evaluation process as much as possible. Project evaluations can be
categorized in a variety of ways.
1. According to evaluation timing
2. According to who conduct the evaluation
3. According to evaluation methodology
Project evaluation frame work
Steps in designing an evaluation framework include the following:
o Review project objectives
o Convert project objectives into evaluation objectives
o Identify and list down key factors
o Select the key factors that should be used for developing the evaluation tools
o Determine indicators for key factors
o Utilize the indicators in formulating key questions
o Check the relevance of the key questions to the information needs
o Pre-test evaluation tools
o Orient the evaluation team on the tools before putting the tools to use
Planning an evaluation system
➢ Determining the Purpose and Type of Evaluation
• Determine the purpose/goals of the evaluation.
• Identify evaluation objectives
• Decide on the type of evaluation.
• Decide on who conducts evaluation (evaluation team)
• Review existing information in program documents including monitoring information.
• List the relevant information sources including location
• Describe the users of the evaluation.
• Assess your own strengths and limitations.
➢ Selecting Appropriate Evaluation Methods
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• Decide on the appropriate evaluation
design
• Identify measurement standards
• Identify measurement indicators
• Develop data collection instruments
• Formulate evaluation questions
• Develop an evaluation schedule
• Develop a budget for the evaluation
➢ Collecting and Analysing Information
• Pre-test data collection instruments
• Make amendment to the instruments
• Undertake data collection activities
• Analyse data.
• Interpret the data.
➢ Reporting Findings
• Write the evaluation report
• Decide on the method of sharing the evaluation results and on communication strategies
• Share the draft report with stakeholders and revise as needed
• Disseminate evaluation report
➢ Implementing Evaluation Recommendations
• Develop a new/revised implementation plan in partnership with stakeholders
• Monitor the implementation of evaluation recommendations and report regularly on the
implementation progress and plan the next evaluation.
Unit 7: Project Termination
All projects end when the objectives have been completed or it is no longer makes sense to
finish. The last step performed to say good bye to a project is the termination phase. The
termination of a project is inevitable, but how it is terminated and when may have a profound
and long lasting impact on the organization and its employees. The varieties of project
terminations are: -
1. Termination by extinction
Extinction occurs in any scenario where the project goes away
− Successful
− Unsuccessful
− Take too long
− Murder
− Changes in environment
2. Termination by addition
− Applies to an in-house project
− When the project is successful, it is institutionalized
− While the project goes away, project personnel and assets are transferred to the new
business
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3. Termination by integration
− The most common way to terminate a project
− The project comes into the business
− It is absorbed into the existing structure
− That structure absorbs the assets of the project
➢ Aspects of the transitions from project to integrated operations
− Personnel
− Manufacturing
− Accounting/finance
− Engineering
− Information systems
− Marketing
− Purchasing
− Risk management
4. Termination by starvation
− Termination by starvation involves greatly reducing the budget of a project
− Used when it is politically dangerous to cancel a project and bad manners to enquire the
status of the project.
➢ When to terminate a projects
− Projects take on a life of their own
− It may be easy to terminate a project that is finished
− But it can be very difficult to terminate a project prior to its completion
Critical success factors for a projects
• Project mission
• Top-management support
• Project schedule/plan
• Client consolation
• Personnel
Fundamental reasons why some projects fail
• Technical tasks
• Client acceptance
• Monitoring and feedback
• Communication
• Trouble-shooting
− A project organization is not required
− Insufficient support from senior management
− Naming the wrong person as project manager
− Poor planning
Non-Technical Reasons for Termination
− Political, Cross-cultural, Senescence
Things to do when terminating the project work
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✓ Ensure tasks are completed
✓ Notify the client
✓ Finish the paperwork
✓ Send out final invoices to the client
✓ Redistribute resources
✓ Clear with legal counsel
✓ Determine what records to keep
✓ Assign support
✓ Close the project books
A final report (project history) includes the following points
− Project performance
− Administrative performance
− Organizational structure
− Project and administrative teams
− Techniques of project man