PROJECT

MANAGEMENT
MBA 3RD SEM (C-302)

Prof. Surekha Rana

DMS, KGC, Haridwar
 PROJECT
 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 requirement, including the constrains of time cost and
resources.

 A project is a one slot, time limited, goal-directed, major undertaking,

requiring the commitment of varied skills and resources.
CHARACTERISTICS OF A
PROJECT
 Objectives
 Uniqueness
 Life spam
 Single entity
 Team work
 Life cycle
 Change
 Successive principle
 Made to order
 Unity in diversity
 High level of sub-contracting
 Risk and uncertainty
 PROJECT MANAGEMENT
 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 end with goal achievement.

 PMBOK (Project Management Body Of Knowledge) 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.
IMPORTANCE OF PROJECT
MANAGEMENT
 Rapidly changing technologies

 High entropy of the system

 Squeezed life cycle of products

 Globalization impact

 Large organization

 Customer focus
PROJECT LIFE CYCLE AND ITS
PHASES
 Project life cycle divides the sequence of operations of project in to different phases.

 Project activities must be grouped into phases to facilitate project manager and his team
to plan and organize various inputs effectively.

 It also helps in identifying deviations and thus helps in decision making with regard to
continuation or termination of the project.
 Generally, there are four stages of project life cycle which
are

1. Idea Generation (Concept Phase)

2. Project Planning Phase
3. Implementation or Execution Phase
4. Termination Phase (Clean-up Phase)
 PROJECT AUDIT
Ideally, a project audit should be conducted by an independent examiner, who can
remain objective in the assessment of information.

Key activities during this phase are:

 Ensure completion and acceptance

 Prepare a final report
 Ensure payments
 Assign personnel
CLASSIFICATION OF
PROJECTS
Classification based on duration:
It can be long term, medium term and short term. Long-term projects have a life of more than 10 years,
whereas mid-term projects have a life of 5 to 10 years. Short-term projects last only for less than 5 years.

Classification based on investments:

It is based on how much initial investment is needed to start the project. In India, investment outlay of
above Rs.20 crore is considered high investment, whereas an investment outlay between Rs.5 crore to
Rs.20 crore is considered medium sized industry. And investment below Rs.5 crore is considered low
investment industry. Industry with initial outlay below Rs.50 lac is considered cottage industry.
Classification based on ownership: A project can be owned by government, public sector,
corporate, cooperative, partnership firm or proprietorship firm.

Classification based on risk: This is the most commonly used basis of project classification.
Projects are basically classified as Greenfield project, brown field project, divestment project and
modernization or replacement project.
 GREENFIELD PROJECT
Greenfield project is a totally new venture by a
fresh entrepreneur. It is also known as grass-
root projects. Such projects are fresh and are
exposed to very high risk due to lack of
expertise of entrepreneur and infrastructure.
 BROWNFIELD PROJECTS
 In brown field projects, an existing promoter company or existing project goes for addition of
product/capacity. It is of three types.
(1)Expansion project
 In expansion project, there is increase in the capacity of existing plant without any other change. There is
no change or very nominal change in the product, e.g. a biscuit industry increasing its capacity from
20MT/month to 35MT/month. It can either be achieved through market intensification or market
development.
(2)Vertical integration project
 The degree to which a firm owns its upstream suppliers and downstream customers is called vertical
integration. It is of two types.
()A) Forward integration project: Downstream expansion is called forward integration. The product of
existing industry becomes raw material for the proposed project, i.e., a mango pulp making industry moves to
soft drink manufacturing.
(B) Backward integration project: Upstream expansion is called backward integration. The raw material
needed for the existing industry is proposed to be manufactured by a new project, i.e., a Mango pulp making
industry establishing its own orchard for raw material or soft drink company establishing Mango Pulp making
unit.
 BROWNFIELD PROJECTS CONT.…
(3)Diversification project
 Financial synergy may be obtained by combining two firms: one with better financial resources but poor
technical capabilities and another firm with strong technical capabilities but poor financial resources. Firms
also try to obtain certainty in businesses by combining two or more businesses with seasonal or cyclic
demand factors such as cotton industries (October to April) and wheat floor mill (April to September).
 This combination can certainly lead to strategic fit in operations and enhance the overall efficiency of the
merged firms. This can also lead to better and cheaper purchasing through higher bargaining power.
Diversification leads to reduced risk in operations.
 This can also lead to management synergy as management expertise and experience is applied in different
situations. Management synergy can be achieved when management experience and expertise is applied
to different situations. There are two ways of diversifications
(A) Concentric diversification project: firms adds related products

(B) Conglomerate diversification: firm diversifies into areas that are unrelated to its current line of
business.
 DIVESTMENT PROJECT
Obsolescence of product/service: If a current product or service becomes obsolete or nonprofit able, a firm
may decide to divest from the product or service. A product tending to reach premature life cycle phase of
decline needs to be divested.
Increased level of competition: After taking advantage of monopoly or near monopoly situations, if the
competition increases to such an extent that the firm feels difficult to sustain, the product or service may be
decided to be divested.
Strategic failure: Strategic failure is another big cause for the divestment strategy. Many companies go for
diversifications and sometimes feel that the chosen strategy was not correct. In that case, it may decide to
divest before it is too late.
Increase concentration on fewer product lines: Many times, firms go for very high levels of diversifications
and find it difficult to handle so much varied lines. They may wish to concentrate on fewer lines to perform
better. They may prefer to be master of few rather than jack of all. Tata decided to divest from various product
lines like Tata Oil, Tata Tea, etc., in the 1990s to concentrate on fewer core areas like steel and automobiles.
Better opportunity of investment: Sometimes, profitable business or product lines are discontinued to take
the opportunity of better and more lucrative business opportunity. This is another major driver of divestment
strategy.
MODERNIZATION/REPLACEMENT PROJECT
 In recent times, technology upgradation has been very rapid. Only those organizations can
survive which cope up with the ongoing technological changes. Firms need to upgrade their
technology. Such projects upgradation of technology may need capital investments and are
called modernization projects.
 While manufacturing a food product, a company is applying steam drying method, and
recently a new technology of vacuum drying has been introduced. The new process improves
the quality of the product, leading to better customer satisfaction, which is of utmost
importance in the food industry. The company has to change over to the new technology of
drying. This will attract additional capital investment and is an example of partial
modernization.
 Replacement projects may also be classified into two categories: replacement of the
equipment which is no longer able to work and which deteriorates with time and attracts
higher maintenance costs. In both the above situations, the equipment would be required to
be replaced and will cause additional capital investment.
 PROJECT MANAGEMENT PROCESS

The process of project management starts

with project identification. An entrepreneur
searching for some investment opportunity is
looking everywhere for a project. There are so
many consultancy organizations, seminars and
journals which are helpful in identification of a
project.
TOOLS AND TECHNIQUES OF
PROJECT MANAGEMENT

Project management tools and techniques

define the work flow and how the project will
take shape but it’s always up to the tools to
execute those techniques.
 1. PROJECT SELECTION
TECHNIQUES
(a) COST BENEFIT ANALYSIS

(b) RISK AND SENSITIVITY ANALYSIS

 COST BENEFIT ANALYSIS
 It is a technique used to compare the total costs of a program/project with its benefits using a
common metric.
 This enables the calculation of the net cost or benefit associated with the program.
 Mostly it’s used at the start of the program, when different option or course of action are being
appraised and compared, as an option for choosing the best approach.
 It can also be used, however to evaluate the overall impact of a program in quantifiable and
monetized terms.
 This technique should normally be undertaken for any project which involves policy
development, capital expenditure, use of assets or setting of standards. Depending on the
nature of the issue.
 RISK AND SENSITIVITY
ANALYSIS
 It is a method for modeling risk in any given assignment. Project
sensitivity looks at the big picture to see what out of all the
elements involved, could potentially prevent from achieving goal.
 It also ranks these threats by order of importance from most to least
impactful. Then, it’s up to project manager and their team to
prevent these issues from either coming up or derailing progress.
 2. PROJECT EXECUTION
PLANNING TECHNIQUE
 (a) WORK BREAKDOWN STRUCTURE

 (b) PROJECT EXECUTION PLAN

 (c) PROJECT RESPONSBILITY MATRIX

 (d) PROJECT MANAGEMENT MANUAL

 WORK BREAKDOWN
STRUCTURE
 It is a method for competing a complex, multi-step project.
 It is a way to divide and conquer large projects to get things done
faster and more efficiently.
 The goal of a work breakdown structure is make a large project
more manageable.
 Breaking it down into smaller chunks means work can be done
simultaneously by different team members, leading to better team
productivity easier project management.
 PROJECT EXECUTION PLAN
 A project execution plan is a governing document that defines how
a project is to be executed, monitored and controlled.
 It established exactly how the project execution phase of the project
will be managed to meet the requirements of the project.
 PROJECT RESPONSIBILITY
MATRIX
Responsibility assignment matrix describes the
participation by various roles in completing
tasks or deliverables for a project.
It is used for clarifying and defining roles and
responsibilities in cross functional or
departmental projects and processes.
 PROJECT MANAGEMENT
MANUAL
A project management manual is intended to
guide project managers. But, more importantly,
it is to guide project management at all level of
the team, recognizing that each participant has
a part in a project success.
3. PROJECT SCHEDULING AND
COORDINATING TECHNIQUE
 (a) BAR CHART

 (b) LIFE CYCLE CURVE

 (c) LINE OF BALANCE

 (d) NETWORKING TECHNIQUES

 BAR CHART
 A bar chart is a graphical tool that can be used to present
data in a way that is easy to read, easy to understand, and
provides the ability for easy comparison of all provided
data. It can be used to provide the project team and all of
these looking for project related information data from the
individual schedule activities and work breakdown
structure components.
 LIFE CYCLE CURVE
A standard project typically has the following
four major phases : initiation, planning,
implementation, and closure. Taken together,
these phases represent the path a project takes
from the beginning to its end and are generally
referred to as the project life cycle.
 LINE OF BALANCE
Line of balance is a management control process for
collecting, measuring, and presenting facts relating
to time, cost, and accomplishment- all measure
against a specific plan.
The purpose of LOB is to enable program manager
to see at a single glance which activities of an
operation are in balance.
 NETWORKING TECHNIQUES
 Network technique is technique for planning, scheduling and
controlling the progress of projects.
 Network analysis entails a group of techniques for presenting
information relating to time and resources so as to assist in the
planning, scheduling and controlling of projects.
 The information usually represented by a network, including the
sequences, interdependencies, interrelationships, and criticality of
various activities of the project.
 4. PROJECT MONITORING AND
PROGRESSING TECHNIQUES
 (a) PROGRESS MEASURMENT TECHNIQUE

 (b) PERFORMANCE MONITORING TECHNIQUES

 (C) UPDATING, REVIEWING AND REPORTING TECHNIQUE

 5. PROJECT COST AND
PRODUCTIVITY CONTROL
TECHNIQUE
(a) PRPDUCTIVITY BUDGETING TECHNIQUE

(b) VALUE ENGINEERING

(C) COST/WBS
6. PROJECT COMMUNICATION
AND CLEAN-UP TECHNIQUES
(a) CONTROL ROOM

(b) COMPUTERISED INFORMATION

SYSTEM