PROJECT MANAGEMENT

SYLLABUS
1.

Introduction, Scope and coverage, Project Function in an organization, Layout of Project Department, Role of Consultants in Project Management

2.

Project Identification Selection of product, identification of market, preparation of feasibility study/report, Project formulation, Evaluation of risks, preparation of project report.

3.

Selection of location and site of the project, Factors affecting location, Policies of Central and State Governments towards location, Legal aspects of Project management

4.

Financial analysis-Profitability Analysis, Social Cost Benefit Analysis Budget and Cash Flows

5.
6.

Materials Management in Project Planning-Procurement, storage and disposal

Financing of the project Sources of Finance, Cost implications thereof , Financial InstitutionsGuidelines for funding projects, Risk Analysis Sensitivity Analysis

7.

Quantitative aspects of projects PERT/CPM, Network analysis for monitoring of the project

8.

Computer applications Selection of software packages for application to Project Management

REFERENCE BOOKS
1. Project Management By S.Chaudhury;
2. Text Book of Project Management

By P.Gopalakrishnan and V E Ramamoorthy;

3.Project Management By Prasanna Chandra 4. Project Appraisal By P K Mattoo; 5. Project Management By Vasant Desai 6. Project Management by ICFAI Centre for Management Research; 7. ICFAI : Finance Series- Project Management: Vol. I to V by ICFAI; 8.Project Management The Managerial Process : By Clifford F. Gray and Eric W. Larson

INTRODUCTION
TO

PROJECT MANAGEMENT

PROJECTS
BRING ABOUT CHANGE AND PROJECT MANAGEMENT IS RECOGNIZED AS THE MOST EFFICIENT WAY OF MANAGING SUCH CHANGE.

INTRODUCTION

Project Management is the business process of creating a unique product, service or result. A project is a finite endeavour having specific start and completion dates undertaken to create a quantifiable deliverable. A Project is a specific activity on which money is spent in the expectation of returns. There is therefore a specific starting point, a specific end point and it is intended to achieve a specific objective.

DEFINITION
Project Management Institute (PMI) : A Project is a temporary endeavour undertaken to create a unique product or service. Project Management is the application of knowledge , skills, tools and techniques to project activities in order to meet or exceed stakeholder needs and expectations.

Examples of Project

Redesigning or relocating a production facility Implementing a management information system Constructing national highway. Organizing Olympics Constructing a dam for better irrigation facilities.

PROJECT CHARACTERISTICS

Some of the characteristics of the tasks that qualify to be projects are:

Unique activities; Attainment of a specific goal; Sequence of activities; Specified time; Interrelated activities.

PROJECT PARAMETERS Scope

Quality
Time Cost Resources

Time management Scope Management Cost management

Risk Management

Knowledge areas of Project Management

Quality management

Integration Management

Human Resource Management

Communication Management

Procurement Management

BENEFITS OF PROJECT MANAGEMENT

Project management was developed to save time by

properly planning a project and considering all relevant factors which may affect its outcome

The benefits have been proven - it saves time and

money - and generates a more successful outcome

. if guidelines are followed

WHAT PROJECT MANAGEMENT HELPS YOU TO ACHIEVE

Plan

tasks in project Avoid dependencies problems Reduce risks Track progress accurately Organize project process and timeline Improve stakeholder - staff communication Improve management of stakeholders expectations Complete within budget and on time

PROJECT SUCCESS FACTORS

Stakeholder

involvement Executive management support Clear statement of requirements Proper planning Realistic expectations Smaller project milestones Competent staff Ownership Clear vision and objectives Hard working and focused staff

THE PROJECT CYCLE

Programming

Evaluation

Identification

Financin g decision Implementation

Formulation

Financing decision

Defining the scope is very important. Scope should be defined in quantitative manner to the extent possible. Qualitative terms in scope definition only lead to litigation.

SCOPE AND COVERAGE

Project Scope
Project Scope details the work to be done to deliver a required product with specific features.

What ?

Work Breakdown Structure

How?

Plans and Specifications

Who?

Organisation Breakdown Structure

How Much? When?

Cost Breakdown Structure (Via Estimates);

Schedule

SCOPE AND COVERAGE

Scope is a brief and accurate description of the end-products or deliverables to be expected from the project that meet the requirements.

It describes all the activities that are to be performed, resources that will be consumed and the end-products from the successful completion of the project, including quality standards.

The scope also includes the target outcomes, prospective customers, outputs, work, financial and human resources required to complete the project.

The primary tool to describe a project's scope (work) is the work breakdown structure.

SCOPE STATEMENT

As a baseline, scope statements should contain:

The project name

The project charter - is a statement of the scope, objectives and participants in a project.

The project owner, sponsors, and stakeholders

The problem statement

The project goals and objectives The project requirements The project deliverables The project non-goals (what is out of scope) Milestones Cost estimates

WORK BREAKDOWN STRUCTURE

The WBS is a tree structure, which shows a subdivision of effort

required to achieve an objective; for example a program, project, and

contract.

In a project of contract, the WBS is developed by starting with :

the end objective and

successively subdividing it into manageable components in terms of size, duration, and responsibility (e.g., systems, subsystems, components, tasks, subtasks, and work packages)

which include all steps necessary to achieve the objective.

For each element of the WBS, a description of the task to be

performed is generated.

This technique (sometimes called a System Breakdown Structure) is

used to define and organize the total scope of a project.

A WBS is not an exhaustive list of work. It is instead a comprehensive classification of project scope.

It is considered poor practice to construct a project schedule (e.g.

using project management software) before designing a proper WBS.

This would be similar to scheduling the activities of home

construction before completing the house design.

ORGANISING PROJECT DEPT.

Organisational planning is a process of identifying, documenting, and assigning project roles, responsibilities, and reporting relationships.

Choosing an appropriate organisational structure facilitates the effective implementation of an organisational plan.

A project managers choice of organisational structure depends on the nature of the project and the degree of control required for its implementation.

Some of the organisational structures that a project manager can consider are: Traditional Organisational Structure

Pure PRODUCT Organisational Structure

Pure PROJECT Organisational Structure Matrix Organisational Structure.

TRADITIONAL ORGANISATIONAL STRUCTURE

01/01/2010

It

is developed around the functional aspects of the

organisation such as engineering, manufacturing, marketing,

human resource and information systems.

Advantages

Easy control, budgeting procedures Sharing of knowledge and responsibility and grouping of specialists Flexibility in use of broad manpower Continuity in functional disciplines Reporting structure with good control over people Quick reactions to situations depending upon the functional managers priority.

24

Disadvantages

No single person is responsible for the total project lack of authority and hence

reduced motivation and innovation

Project-oriented emphasis is absent and hence lacks customer focus and slow in responding to customers needs, ideas are function oriented and not projectorienteddifficulty in achieving tasks

Complex coordinating systemconsumes more time in approving the decisions

Possibility of partiality in decision making Lack of proper project-oriented planning and authority-leads to difficulty in pinpointing responsibilities.

25

Pure Product Organisational Structure

It is

developed on the basis of managing individual products as Each individual product is assigned a

functional departments.

product manager who has functional specialists to assist him.

The basic advantage of this structure is the individual line of authority, i.e. a single individual has the authority to control the entire activity.

Its narrow reporting structure helps develop a strong communication channel along with accelerated feedback.
26

Advantages

Enables strong control because of single project authority Direct link between the project manager and other stakeholders Develops strong communication channels Maintains project expertise without sharing key personnel Facilitates speedy reactions to situations Facilitates loyalty of team members towards project Retains attention on customer relations Enhances decision making efficiency of senior management

Disadvantages

Duplication of efforts, facilities and personnel leading to prohibitive costs of maintenance in

multi-product organizations

Retains personnel in projects longer than necessary Firms progress is hindered by the lack of strong functional groups and technology Controlling functional specialists requires top level coordination Technology is not shared among projects No career prospects for the project team

Pure Project Organisational Structure

Organisations working on large and long-term projects usually adopt pure project organisational structure.

This type of organisation structure contains functional departments within the individual projects.

All the team members contribute on full time basis. This is a vertical organisational structure which avoids conflicts and problems faced by the traditional and product organisational structures.

28

Advantages Disadvantages
The Project Manager has complete authority over Inefficiency in resource utilization the project The Project Manager has the freedom to acquire the Duplication of facilities resources needed for the projects progress The Project team reports directly to the Project Sourcing personnel from internal Manager thus develops a formal communication functional departments to work on channel between the Project Manager and his team the project affects work in the functional departments The Project personnel are shared between the project and the project organization Facilitates unity of command

29

The Matrix Organisational Structure

A Matrix organisational structure is formed as a result of combining the

advantages of all the aforementioned organisational structures.

It is suitable for project driven organisations like software development firms.

It makes the Project Manager totally responsible and accountable for the success for a project.

Every project is treated as profit centre.

Hence the GM directly assigns

power and authority to the Project Manager to handle the project

30

The Project Manager is responsible for the technical excellence functional departments in managing the departments.

of the

This structure functions in a collaborative manner i.e. it shares the information

and personnel while executing the project.

The primary objective of the Matrix organisational structure is to derive synergy through shared responsibility between the project and functional management.

The strength of the structure depends on the level of control that the Project Manager is able to exercise over the functional resources.

Advantages of the Matrix organisational structure:

Enables the Project Manager to exercise control over all the resources Every project has its own independent set of policies and procedures Authorises the Project Manager to commit the company resources ensuring that scheduling does not clash with other projects Facilitates quick response to conflicts, changes and other project needs Derives support of the functional department to the project Enables proper HR Development by enhancing the career prospects of team members Facilitates cost minimisation by sharing key personnel Facilitates spending more time to solve complex problems Develops a strong technical base

Eases solving of the problems that require top management involvement

Minimises conflicts Ensures optimum balance among time cost and performance Enables authority and responsibility sharing There are some pre-conditions to be fulfilled for a Matrix Organisation Structure to be established. They are: It should be ensured that :

All the team members commit to spend full time on the project Conflicts are resolved quickly.

32

A diagrammatic representation of a Matrix Organisational Structure:

General Manager

01/01/2010

General Admn. Manager

HR Manager

Produc tion Manager

Marketing/ Sales Manager

Finance Manager

PM 1

PM 2

PM 3

Vertical Lines: Functional Relationships/Responsibilities;

: Horizontal Lines from PMs (Project Managers) : Project Relationships/Responsibilities; : Personnel in the various departments;

33

SELECTING AN ORGANISATIONAL
STRUCTURE

The parameters to be considered while selecting the type of organisational structure may generally include: size of the project, duration of the project, physical location of the project, availability of resources uniqueness of the project,

experience of the organisation in managing projects and transparency at the senior management level

After selecting the appropriate structure, it is necessary to select the personnel required to work on the project.

The Right People for the Right Jobs have to be identified and engaged for the success of 34 the project.

2. ORGANISING PROJECT DEPT.

1. 2. 3. 4.

5.

6.
7.

According to Hobbs and Menard, the following seven factors influence the choice of PM structure: Size of Project; Strategic importance; Novelty and need for innovation; Need for integration (number of departments involved; Environmental complexity; Budget and time constraints and Stability of resource requirements.

ROLE OF CONSULTANTS IN PROJECT MANAGEMENT

Project Management consulting is one of the growing consultation businesses since, before starting any projects, more and more companies seek the services of

consultancy firms for their project needs, to eliminate risk.

Some of the areas where consultants play an important role are:

Pricing and cost recovery, generating new sources of revenues to finance the infrastructure balancing economic and environmental considerations in practice, by assessing the environmental impacts, suggesting the measures for their mitigation and identifying the economic costs of environmental degradation, so that pricing of infrastructure services takes these costs into account.

Policy and institutional framework, including thrust areas for investment, norms for
setting up projects and financing them, organisations involved, and the regulatory framework-including centre-state matters;

Advisory services, such as project formulation, covering scouting, feasibility and modalities, liaison and documentation, environmental and sociological issues, and sectoral expertise;

Financing mechanisms, for stakeholders, including government, debt and/or equity participation, and alliances, both domestic and foreign;

Techno-sociological management synergy, to bring about collaborative efforts of specialists, community, government and other stake holders.