PROJECT MANAGEMNET

UNIT – 1
What is a project?
► A unique undertaking composed of interrelated activities which
has a well defined beginning and end , often involving staff
from cross-functional groups, that operates under specific
constraints of resources, schedules, and requirements
► Project : Converting a vision, a dream or a need to reality.
❖ A job that has a beginning and an end (Time)
❖ A specified outcome(Scope)
❖ At a stated level of Performance (Quality)
❖ At a budget(Costs).
► Project Characteristics :
❖ Temporary : Has definite Start and Finish
❖ Unique : Product/Service is different in some distinguishing
way
Definition
► 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.
A Project is A TEMPORARY ENDEAVOR
undertaken to create A UNIQUE PRODUCT,
SERVICE or RESULT!
What is project management?
► A set of skills and methods of planning,
organizing, and managing a project from
inception to its successful completion
► Application of knowledge, skills , tools &
techniques to project activities in order to
meet stakeholder needs & expectations
from a project.
► Needs : stated part of the project
► Expectations : unstated part of the project
► “Completion of Project on time within
Budget without comprising Quality”
Why do companies use PM?
► •To handle projects effectively in an organization.
► • To define the project and agree with the customer
► • To plan and assess resource needs for the project
► • To estimate project cost and make proposals
► • To plan & schedule activities in a project.
► • To allocate the right resource at the right time.
► • To assess risk and failure points and make backup
plans.
► • To lead a project team effectively and communicate
well among team members.
Why do people learn PM?
► • To explore the latest concepts and
techniques of project management.
► • To increase value/contribution to the
organization. To prove yourself skillful in
managing projects.
► • To learn a new thought process that helps
organized thinking and structured approach.
► • To acquire a professional degree/
recognition and increase job prospects.
► • Endless possibilities and benefits……..
 Characteristics
► Objective: Each and every project needs to be guided to
achieve an objective or a set of objectives. It ceases to exist
when the objective is achieved.
► Life Span: A project has beginning and end. It cannot continue
forever.
► Constraints: A project has a schedule. It operates within the
constraints of time, cost and quality. Every project requires
certain investment of resources.
► Unique: Every project is unique. No two projects are exactly
similar.
► System: All projects need to undergo a system of
inputs-process - Outputs.
► Life Cycle: Every project will have its own phase-based cycle.
Characteristics
Teamwork: A project has many participants. It
requires teamwork under the leadership of the
Project Manager.
Organization Structure: A project is a temporary
organization. A project usually has its own budget and
management.
Planning and Control System: A project requires
information, planning and control system. The actual
performance is compared with the planned targets.
Collection of Activities: A project is a collection of
activities that are linked together to constitute a
system
Model of a Project
Benefits of project management
► Project management helps to avail the following benefits:
► Identification of functional responsibilities to ensure that all
activities are accounted for regardless of personnel
turnover.
► Minimizing the need for continuous reporting.
► Identification of time limits for scheduling.
► Identification of a methodology for trade-off analysis.
► Measurement of accomplishment against plans.
► Early identification of problems so that corrective action
may follow.
► Improved estimating capability for future planning.
► Knowing when objectives cannot be met or will be exceeded
Obstacles in project management
► To enjoy the various benefits of project
management given above, the following obstacles
be overcome carefully.
► Project complexities
► Execution of customer’s special requirements
► Organization restructuring is a typical task
► Project risks
► Changes in technology
► Forward planning and pricing.
Project Environment
► Environment consists of forces that influence the project’s
ability to achieve its objective. Projects operate in a dynamic
environment. Project environment can be classified into:
► Internal Environment
Internal environment is located within the project. It is
Controllable by the project. It provides strengths and
weaknesses to the project. The forces in the internal
environment consists of:
► Project Objective
► Constraints
► Structure
► Resources
Project Environment
► Task Environment: The task environment of a project is
made up of stakeholders. They are either involved in the
project or their interests are affected by the project. The
elements of task environment are:
► Customer 
► Contractor 
► Consultants
► Suppliers
► Government 
► Financiers
► Competitors
► Labour Unions
Project Environment
► External Environment
► It is located outside the project. It cannot be controlled by the
project. The project can indirectly influence it. It provides
opportunities and threats to the project. The forces in the
external environment are: 

► Economic

► Technological

► Political-Legal

► Socio-cultural
Functions of Project Management
► Scoping – setting the boundaries of the project
► Planning – identifying the tasks required to
complete the project
► Estimating – identifying resources required to
complete the project
► Scheduling – developing a plan to complete the
project
► Organizing – making sure members understand their
roles and responsibilities
► Directing – coordinating the project
► Controlling – monitoring progress
► Closing – assessing success and failure
Measures of project success: The resulting information
system is acceptable to the customers (e.g. users,
managers).
The system was delivered ‚on time.‛
The system was delivered ‚within budget.‛
Measures of project failure:
Failure to establish upper-management commitment
to the project
Lack of organization’s commitment to the
methodology
Taking shortcuts through or around the methodology
Poor Project management:
Feature creep
Scope creep
Project Life Cycle - Definition

The sequence of phases through which the

project will evolve is a project life cycle.

A project life cycle is basically defined by

it’s phases, according to which a project
swims through & finally reaches to handover
stage.

“The life cycle is the only thing that uniquely

distinguishes projects from non- projects.”
Project life cycle
Project Life Cycle
Conception – Phase 1
It is the idea, thought, initial plan, first stage of thinking
entrepreneur, manager or economic planner about his scheme, plan
for elimination the existing problems in the existing operation or
avail new opportunities prevailing.

The concept may be to set up a new project or to expand the

existing operation or modernize, replace with new concepts or
technologies and to initiate action for quality of improvements.

Formulation is further firming up of the concepts, ideas, thinking etc

for putting the same into a realistic plan. When the concepts about
an existing plan become more and more clear, it would become
necessary to examine all the aspects related to decision-making for
investment aspects may be technical, finance etc.
Definition of the project:
► The definition phase of a system is mainly refinements of
the elements described in the conception phase. All the
sub-systems and elements of the proposed system are
scrutinized as defined.
► Fabrication of final system performance requirements
► Preparing detailed plans
► Estimating cost, schedule, and performance
► Spotting areas of high risks
► Identify and prepare the documents required to system,
such as procedures, documents, budgets and finance
The areas to be examined during this phase
► Raw materials
► Plant size and capacity
► Location and site
► Technology/Process selection
► Project layout
► Plant and machinery
► Electrical and instrumentation works
► Civil Engineering works
► Utilities
► Financial analysis
► Implementation schedule
Planning and Organizing phase
► Starts immediately after the conception phase
► Overlaps definition phase and implementation phase
► Preparation of Project execution plan to mark this phase
► Necessary action to be taken in this phase
► Project infrastructure and enabling services
► System design and basic engineering package
► Organization and manpower
► Schedules and budgets
► Licensing and governmental clearances
► Finance
► Systems and procedure
► Identification of project manager
► Design basis, general conditions for purchase and contracts
► Site preparation and investigation
► Construction resources and materials
Types of Project life cycle
phases
 Project Organization
Project Organization consists of:
❖Designing a Structure
❖Pulling together Project Team
❖Establishing Authority and Responsibility relationship
❖Establishing Project Office

There are three major organizational forms commonly used to

house the projects.

1. Functional Organization
2. Pure Project Organization
3. Matrix Organization
 1 Functional Organization
❖Organization structure is broken into different functional units.
❖The project tasks are performed through functional units.
❖A project tends to be assigned to the functional unit that has most interest in
ensuring its success or that can be most helpful in implementing it.
❖Functional elements of the parent organization- Administrative home for a project
 Advantages:
❖There is maximum Flexibility in the use of staffs.
❖Individual experts can be utilized by many projects
❖Specialists in the division can be grouped to share knowledge and
experience--Synergistic solutions to technical problems
❖Serves as a base of technological, procedural, administrative and overall policy
continuity.
❖Functional division contains the normal path of advancement for individuals whose
Expertise is in the functional area.

Disadvantages:
❖Lack of Client/Project focus. Focus on unique area of interest.
❖Decision delay
❖No individual is given full responsibility- lack of co-ordination
❖Tendency to sub optimize the project
❖Weak motivation for people
❖Does not facilitate a holistic approach to the project (e.g. Jet air craft/ emergency
room in a hospital cannot be well designed unless designed as a totality.)
2 Pure Project Organization
O The project is separated from the rest of the parent system.
O A self- contained unit with its own technical staff/ administration.
O The project manager has his own line organization with project authority and responsibility.
O The project has its own resources and management
 Advantages:
❖The PM has full line authority over the project
❖Project work force directly responsible to the PM
❖Line of communication- shortened.
❖Focus on project objective
❖High motivation
❖Unity of command Exists
❖Flexible labor force

Disadvantages:
❖Duplications of efforts/Inefficient use of resources
❖Lack of job security
❖Stock piling of equipments / Technical expertise
❖Projectiles (A disease-that creates animosities between parent
organization. staff and project staff)
 3. Matrix Organization
❖A combination of pure project organization and functional Organization
❖It is a pure project organization overlaid on the functional divisions of the parent firm.
❖Project team is assigned from the functional departments.
❖The PM has overall responsibility
 Advantages:
❖The project is the point of emphasis/ special focus
❖Availability of entire reservoir of technical talents in the FD
❖Team identity
❖Less anxiety about job
❖Rapid response to client needs
❖Consistency of policies/ practices/procedures of parent firm
❖Holistic approach/Balance of resources
Disadvantages:
❖Power and Authority is balanced. Doubt exists who is in charge
❖Division of authority and responsibility is complex
❖Movement of resources from project to project- may foster
political infighting among the several PMs.
❖Projectile is still a serious disease.
❖Violates the management principle of unity of command.
Tool & Technique
Network Diagrams
► A flow-chart that illustrates;
► The order in which tasks will be performed
► Dependencies between tasks

► Comprise three elements

► Event - sometimes called a milestone e.g. “design begins”,
“draft report approved”
► Activity - work required to move from one event to another
► Span time - the actual calendar time required to complete
an activity
Cost Benefit Analysis
► Cost-benefit analysis (CBA), sometimes
called benefit-cost analysis (BCA), is an economic
decision-making approach, used particularly in
government and business.
► CBA is used in the assessment of whether a
proposed project program or policy is worth doing, or to
choose between several alternative ones.
► It involves comparing the total expected costs of each
option against the total expected benefits, to see
whether the benefits outweigh the costs, and by how
much.
► In CBA, benefits and costs are expressed in money
terms, and are adjusted for the time value of money so
that all flows of benefits and flows of project costs over
time (which tend to occur at different points in time)
are expressed on a common basis in terms of their
"present value.“
Project section techniques:
Cost benefit analysis
Risk and Sensitivity analysis
Project execution planning techniques
Work breakdown structure (WBS)
Project execution plan (PEP)
Project responsibility matrix
Project management manual
Project scheduling and coordinating techniques
Bar charts
Life cycle curves
Line of balance (LOB)
Networking techniques (PERT/CPM)
Project monitoring and progressing techniques
Progress measurement techniques (PROMPT)
Performance monitoring technique (PERMIT) and
Updating, reviewing and reporting technique (URT)

Project cost and productivity control techniques

Productivity budgeting technique
Value engineering
COST/WBS

Project communication and clean-up techniques

Control room
Computerized information systems
Cost-Benefit Analysis
► Accurately estimate all benefits
► identify overall profit impact
► in net present terms
► Accurately estimate all costs
► overall profit impact, in net
present terms
► RATIO: benefits/costs
<=1, don’t adopt >1, profitable
can adopt by highest ratio
Tool & Technique Activity-in-the-Box Network
Diagrams (precedence)

Activity 1 Activity 2
t1 = 5 t2 = 1

END
START

Activity 3 Activity 4 Activity 5

t3 = 1 t4 = 3 t5 = 2

All inputs to an activity box must have been completed before it can begin.
E.g. Activity 1 and 4 must be completed before 5 can commence. Critical Path is red
 Activity-in-the-Box Network Diagram (Making the
Tea)

Re-Boil

10s

Fill Switch Boil Water Put Pour Place Pot

START Scold Pot
Kettle Kettle On (Initial) Tea-bag In Water On Tray
10s 3s 180s 10s 5s 15s 5s

END
Put Milk Put Sugar Put Milk, Sugar,
Get Tray Serve TEA
In Jug In Bowl Cup & Saucer on Tray
SERVED
15s 15s 10s 10s 20s
 Gantt Chart
► Named after its originator Henry Gantt.
► A Gantt chart is a graph which illustrates on a timeline
when each activity will start, finish and end. It’s a
pictorial representation of each stage of the project.
► A GANTT Chart is a horizontal bar chart that illustrates
a Project schedule.
► In the GANTT Chart Time is displayed on the
horizontal axis and the Tasks/ Activities are arranged
vertically from top to bottom, in order of their start
dates.
Tool & Technique
The Gantt Chart
 Tool & Technique
Critical Path Analysis
(for Making the Tea)
Re-Boil

10s

Fill Switch Boil Water Put Pour Place Pot

START Scold Pot
Kettle Kettle On (Initial) Tea-bag In Water On Tray
10s 3s 180s 10s 5s 15s 5s

END
Put Milk Put Sugar Put Milk, Sugar,
Get Tray Serve TEA
In Jug In Bowl Cup & Saucer on Tray
SERVED
15s 15s 10s 10s 20s

Critical Path
TOTAL TIME = TIME ON CRITICAL PATH = 253
secs
 Effect of Resource Changes
New Technology!
Re-Boil

1s

Fill Switch Boil Water Put Pour Place Pot

START Scold Pot
Kettle Kettle On (Initial) Tea-bag In Water On Tray
10s 3s 10s 10s 5s 15s 5s

END
Put Milk Put Sugar Put Milk, Sugar,
Get Tray Serve TEA
In Jug In Bowl Cup & Saucer on Tray
SERVED
15s 15s 10s 10s 20s

Resource Change TOTAL TIME = TIME ON CRITICAL PATH = 83

Critical Path
secs
Strictly speaking not possible as needs 2 people
Relating marketing channels, logistics
management, and supply chain management
The automotive supply chain
Advantages of Supply Chain Management :
1. helps to increase savings in labour and procurement
costs.
2. helps to achieve better inventory control.
3. is used to get better control over suppliers.
4. can increase market visibility.
5. Chances of product failure rate can be reduced
6. is used to provide  better information on customer
needs, tastes etc.,
7. helps to achieve regular and better communication with
the customers.
8. helps to improve customer care service.
9. is used to achieve higher revenues.
10. increases performance and profitability.
Advantages of Supply Chain Management : (Contd.)
11. is used to lower transportation, warehousing and
packaging costs.
12. increases capacity, capability or flexibility.
13. enhances value for money.
14. is used to improve reputation of brand in market.
15. also increases the value of shareholder.
16. is used for faster and more accurate order
processing.
17.allows higher discount on price to wholesaler due
large order size.
18. is also good  for returns and recall management.
19. is used for production tracking.
Disadvantages of Supply Chain Management :

1. Sometimes Supply Chain Management can be

very expensive to implement.
2. Competitors can easily copy the strategy of
Supply Chain Management.
3. For better Supply Chain Management, proper
skills and experience is required to achieve
success.
4. Sometimes in Supply Chain Management various
functions may be difficult to manage.
5. In Supply Chain Management there may be staff
resistance.
 Supply chain Management Logistics Management
Broader concept Narrower concept
New concept Older concept
Extension of Logistics Part of supply chain
management management
Internal integration by itself Optimizing flows within the
organization
It focuses upon the It focuses upon the
management of relationships management of resources
in order to achieve a more with the organization
profitable outcome for all
parties in the chain