Entrepreneurship Development

Manisha Raj

CHAPTER: 4

PROJECT MANAGEMENT

Definition: A project can be defined as a problem scheduled for solution. Project management means we define the job, plan the work to be done, and control the work according to plan. A project manager takes responsibility for planning and managing to deliver success on a project. A project plan is a document that includes the starting point, the process for achieving the goal, and anything else that will help the project is successful. There are several things that need to be managed in a project, including the scope of the project, the timeline for when it will be completed, including deciding when work will start, who comes at what times and what job is done each day or hour, managing costs, how to manage human resources, implementing a plan for communication, including who needs to know what information, and how to keep track of it all. A project manager must also come up with contingency plans in case something comes up unexpectedly, as well as manage the procurement process, which entails figuring out what needs to be purchased, how to handle contracts and invoices. In the precise sense, a project presupposes commitment to tasks to be performed with well defined objectives, schedules and budget. It can be defined as a scientifically evolved work plan devised to a achieve a specific objective within a specified period of time. Taken in this perspective, while projects can differ in size, nature, objective and complexity, they must all partake of three basic attributes of being a course of action, of having specific objectives and of involving a definite time perspective. Project Classification Projects have been classified in various ways by different authorities. Little and Mirreless divide the projects into two broad categories, viz., quantifiable projects and non quantifiable projects. The Planning Commission has accepted the sectoral criteria for classification of projects. Projects can also be classified on the basis of technoeconomic characteristics. All India financial institutions classify the projects on the basis of the nature of the project and its life cycle. www.gjpatelcolllege.org 1

Entrepreneurship Development

Manisha Raj

1. Quantifiable and non-quantifiable projects Quantifiable projects are those in which a plausible quantitative assessment of benefits can be made. Non-quantifiable projects are those where such an assessment is not possible. Projects concerned with industrial development, power generation, mineral development are forming part of quantifiable projects. The non-quantifiable projects category comprises health, education and defense. 2. Sectoral Projects According to the Indian Planning Commission, a project may fall in the following sectors: a. Agriculture and Allied Sector b. Irrigation and Power Sector c. Industry and Mining Sector d. Transport and Communication Sector e. Social Service Sector f. Miscellaneous Sector The sector classification of projects in quite useful for resource allocation at macro levels. 3. Techno-Economic Projects Techno-economic projects classification includes factors intensityoriented classification, causation-oriented classification and magnitude-oriented classification. These three groupings are narrated as under: (a)Factor intensity oriented classification: The factor intensity is used as base for classification of project such as capital-intensive or labor-intensive which depends upon the large scale investment in plant and machinery or human resources. (b)Causation oriented classification: The causation-oriented projects are determined based, on causes namely demand based or raw material based projects. The non-availability of certain goods or services and consequent demand for such goods or services or the availability of certain raw materials, skills or other inputs is the dominant reason for starting the project. (c) Magnitude oriented classification: The size of investment forms the basis for magnitude-oriented projects. Projects may thus be classified based on its investment such as large-scale, mediumscale and small-scale projects. www.gjpatelcolllege.org 2

Entrepreneurship Development

Manisha Raj

ii. iii. iv. v.

4. Financial Institutions classification: All India and State Financial Institutions classify the projects according to their age and experience and the purpose for which the project is being taken up. New projects Expansion projects Modernization projects Diversification projects

The projects listed above are generally profit-oriented and the services oriented projects are classified as under: i. ii. iii. iv. Welfare Projects Service Projects Research and Development Projects Educational Projects

Project Identification Project identification is concerned with the collection, compilation and analysis of economic data for the eventual purpose of locating possible opportunities for investment and wit the development of the characteristics of such opportunities. Opportunities, according of Drucker are of three kinds: additive, complementary and break-through. Additive opportunities are those opportunities which enable the decision-maker to better utilize the existing resources without in any way involving a change in the character of business. Complementary opportunities involve the introduction of new ideas and as such do lead to a certain amount if change in the existing structure. Break-through opportunities, on the other hand, involve fundamental changes in both the structure and characteristics of business. Project identification can not be complete without identifying the characteristics of a project. Every project has three basic dimensions- inputs, outputs and social costs and benefits. The input characteristics of a project define what the project will consume in terms of raw materials, energy, manpower, finance and organizational setup. The output characteristics of a project define what the project will generate in the form of goods and services, employment, revenue, etc. In addition to inputs and outputs every project has an impact on the society. www.gjpatelcolllege.org 3

Entrepreneurship Development

Manisha Raj

The Project Life Cycle refers to a logical sequence of activities to accomplish the projects goals or objectives. Regardless of scope or complexity, any project goes through a series of stages during its life. There is first an Initiation or Birth phase, in which the outputs and critical success factors are defined, followed by a Planning phase, characterized by breaking down the project into smaller parts/tasks, an Execution phase, in which the project plan is executed, and lastly a Closure or Exit phase, that marks the completion of the project. Project activities must be grouped into phases because by doing so, the project manager and the core team can efficiently plan and organize resources for each activity, and also objectively measure achievement of goals and justify their decisions to move ahead, correct, or terminate. It is of great importance to organize project phases into industry-specific project cycles. Why? Not only because each industry sector involves specific requirements, tasks, and procedures when it comes to projects, but also because different industry sectors have different needs for life cycle management methodology. And paying close attention to such details is the difference between doing things well and excelling as project managers. Diverse project management tools and methodologies prevail in the different project cycle phases. Lets take a closer look at whats important in each one of these stages: 1) Initiation In this first stage, the scope of the project is defined along with the approach to be taken to deliver the desired outputs. The project manager is appointed and in turn, he selects the team members based on their skills and experience. The most common tools or methodologies used in the initiation stage are Project Charter, Business Plan, Project Framework (or Overview), Business Case Justification, and Milestones Reviews. 2) Planning The second phase should include a detailed identification and assignment of each task until the end of the project. It should also include a risk analysis and a definition of a criteria for the successful www.gjpatelcolllege.org 4

Entrepreneurship Development

Manisha Raj

completion of each deliverable. The governance process is defined, stake holders identified and reporting frequency and channels agreed. The most common tools or methodologies used in the planning stage are Business Plan and Milestones Reviews. 3) Execution and controlling The most important issue in this phase is to ensure project activities are properly executed and controlled. During the execution phase, the planned solution is implemented to solve the problem specified in the project's requirements. In product and system development, a design resulting in a specific set of product requirements is created. This convergence is measured by prototypes, testing, and reviews. As the execution phase progresses, groups across the organization become more deeply involved in planning for the final testing, production, and support. The most common tools or methodologies used in the execution phase are an update of Risk Analysis and Score Cards, in addition to Business Plan and Milestones Reviews. 4) Closure In this last stage, the project manager must ensure that the project is brought to its proper completion. The closure phase is characterized by a written formal project review report containing the following components: a formal acceptance of the final product by the client, Weighted Critical Measurements (matching the initial requirements specified by the client with the final delivered product), rewarding the team, a list of lessons learned, releasing project resources, and a formal project closure notification to higher management. No special tool or methodology is needed during the closure phase.

The Work Breakdown Structure (WBS) is defined by A Guide to the Project Management Body of Knowledge 3rd Edition (PMBOK Guide) as: A deliverable-oriented hierarchical decomposition of the work to be executed by the project team to accomplish the project objectives and create the required deliverables. Don't get scared by this long jargon. Basically, what it means is Work Breakdown Structure is a breakdown of work into as small a task as possible. It will look like the common file explorer (tree diagram) that we use in our computer Window operating system. The main purpose of Work Breakdown Structure is that firstly, it helps to define and organize the scope of the total project more accurately and specifically. The most common way this is done is by using a www.gjpatelcolllege.org 5

Entrepreneurship Development

Manisha Raj

hierarchical tree structure. Each level of this structure breaks the project deliverables or objectives down to more specific and measurable chunks. The second reason for using a Work Breakdown Structure in your projects is to help with assigning responsibilities, resource allocation, monitoring the project, and controlling the project. The WBS makes the deliverables more precise and concrete so that the project team knows exactly what has to be accomplished within each deliverable. This also allows for better estimating of cost, risk, and time because you can work from the smaller tasks back up to the level of the entire project. Finally, it allows you double check all the deliverables' specifics with the stakeholders and make sure there is nothing missing or overlapping. Besides, using the tree structure, you may also use Mind Mapping methodology, if you are familiar with it. The first step to creating your WBS is to get all your team, and possibly key stakeholders, together in one room. Your project team is your most vital asset to this process. Your team possesses all the expertise, experience, and creative thinking that will be needed to get down to the specifics of each deliverable. Next, we have to get the first two levels setup. The first level is the project title, and the second level is made up of all the deliverables for the project. At this stage it is important to function under The 100% Rule. This rule basically states that the WBS (specifically the first two levels) includes 100% of all the work defined in the project scope statement and management plan. Also, it must capture 100% of all the deliverables for the project including internal, external, and interim. In reality the WBS usually only captures between 90-95%, but 100% is our goal. Once we have gotten the first two levels set, it is time to launch into our decomposition or breakdown. Decomposition is the act of breaking down deliverables in to successively smaller chunks of work to be completed in order to achieve a level of work that can be both realistically managed by the Project Manager and completed within a given time frame by one or more team members. This level of breakdown and detail is called the Work Package. Work packages are the lowest level of the WBS and are pieces of work that are specifically assigned to one person or one team of people to be completed. This is also the level at which the Project Manger has to monitor all project work. The very common question is how specific or small does a chunk of work need to be to still be considered a work package? Well PMBOK www.gjpatelcolllege.org 6

Entrepreneurship Development

Manisha Raj

does not seem to give a definitive answer on that. Most project managers concur that this varies by project, but can usually be measured using the 8/80 Rule. The 8/80 Rule says that no work package should be less than 8 hours or greater than 80 hours. Notice we said that the work package is the lowest level of the WBS. Activities and tasks are not included in the WBS. They will be planned from the work packages once they are assigned.

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