INTRODUCTION

Projects have a major role to play in the economic development of a country.

Since the introduction of planning in our economy, we have been investing large
amount of money in projects related to industry, minerals, power, transportation,
irrigation, education etc. with a view to improve the socio-economic conditions of the
people. These projects are designed with the aim of efficient management, earning
adequate return to provide for future development with their own resources. But
experience shows that there are several shortcomings in the ultimate success of
achieving the objectives of the proposed project.

CONCEPT OF PROJECT AND PROJECT MANAGEMENT

The term project has a wider meaning. A project is accomplished by performing a

set of activities. For example, construction of a house is a project. The construction of a
house consists of many activities like digging of foundation pits, construction of
foundation, construction of walls, construction of roof, fixing of doors and windows,
fixing of sanitary fitting, wiring etc. Another aspect of project is the non-routine nature of
activities. Each project is unique in the sense that the activities of a project are unique and
non routine. A project consumes resources. The resources required for completing a
project are men, material, money and time. Thus, we can define a project as an organized
programme of pre determined group of activities that are non-routine in nature and that
must be completed using the available resources within the given time limit.

Some definitions of ‘project’. Newman et. al define that “a project typically

has a distinct mission that it is designed to achieve and a clear termination point
the achievement of the mission”.

Gillinger defines “project” as the whole complex of activities involved in

using resources to gain benefits. Project management is an organised venture for
managing projects, involves scientific application of modern tools and techniques
in planning, financing, implementing, monitoring, controlling and coordinating
unique activities or task produce desirable outputs in accordance with the
determined objectives with in the constraints of time and cost.
CHARACTERISTICS OF PROJECT

Objectives : A project has a set of objectives or a mission. Once the objectives

are achieved the project is treated as completed.
Life cycle : A project has a life cycle. The life cycle consists of five stages i.e.
conception stage, definition stage, planning & organising stage,
implementation stage and commissioning stage.
Uniqueness : Every project is unique and no two projects are similar. Setting
up a cement plant and construction of a highway are two different projects
having unique features.
Team Work : Project is a team work and it normally consists of diverse areas.
There will be personnel specialized in their respective areas and co-
ordination among the diverse areas calls for team work.
Complexity : A project is a complex set of activities relating to diverse areas.
Risk and uncertainty : Risk and uncertainty go hand in hand with project. A risk-
free, it only means that the element is not apparently visible on the
surface and it will be hidden underneath.
Customer specific nature : A project is always customer specific. It is the
customer who decides upon the product to be produced or services to be
offered and hence it is the responsibility of any organization to go for
projects/services that are suited to customer needs.
Change : Changes occur through out the life span of a project as a natural
outcome of many environmental factors. The changes may very from
minor changes, which may have very little impact on the project, to major
changes which may have a big impact or even may change the very nature
of the project.
Optimality : A project is always aimed at optimum utilization of resources for
the overall development of the economy.
Sub-contracting : A high level of work in a project is done through
contractors. The more the complexity of the project, the more will be the
extent of contracting.
Unity in diversity : A project is a complex set of thousands of varieties.
The varieties are in terms of technology, equipment and materials,
machinery and people, work, culture and others.
CLASSIFICATION OF PROJECTS

The location, type, technology, size, scope and speed are normally the
factors which determine the effort needed in executing a project. Project can be
classified under different heads, some of which are shown in figure 1.2.

TYPES OF PROJECTS

National International

Non-Industrial Industrial

Non-Conventional High Conventional Low

R&D Technology Technology Technology

Mega Major Medium Mini

Grass Expansion Modification Replacement

Diversification New Project

Normal Crash Disaster

PROJECT SELECTION PROCESS

Identification of a new project is a complex problem. Project selection process

starts with the generation of project ideas. In order to select the most promising project,
the entrepreneur needs to generate a few ideas about the possible project one
canundertake. The project ideas as a process of identification of a project begins
with an analytical survey of the economy (also known as pre-investment surveys).
The surveys and studies will give us ideas. The process of project selection
consists of following stages :

Idea generation

Environment appraisal.

Corporate appraisal

Scouting for project ideas.

Preliminary screening.

Project rating index

Sources of positive Net Present Value.

Entrepreneur qualities.
 PROJECT LIFE CYCLE

A project is not a one shot activity. Even a shooting star has a time and life span.
Project lifecycle is spread over a period of time. There is an unavoidable gestation
period for the complex of activities involved to attain the objectives in view. This
gestation period, however, varies from project to project but it is possible to
describe, in general term, the time phasing of project planning activities common
to most projects. The principal stages in the life of a project are :

Identification

Initial formulation

Evaluation (selection or rejection)

Final formulation (or selection)

Implementation

Completion and operation

GENERATION OF PROJECT IDEAS

New ideas which are based on significant technological breakthrough, most of the project ideas
involve
• Combining existing fields of technology
• Offering variants of present products or services
Idea Generation
• SWOT Analysis
• Fostering a conducive climate
The project ideas can be generated from various internal and external sources.
• Knowledge of market, products, and services.
• Knowledge of potential customer choice.
• Emerging trends in demand for particular product.
• Scope for producing substitute product.
• Market survey & research.
• Going through Professional magazines.
• Making visits to trade and exhibitions.
• Government guidelines & policy.
• Ideas given by the experienced person.
• Ideas by own experience.
• SWOT analysis.
SWOT Analysis
• SWOT is an acronym for strengths, weaknesses, opportunities and threats.
• SWOT analysis represents conscious, deliberate and systematic effort by an organisation
to identify opportunities that can be profitably exploited by it.
• Periodic SWOT analysis facilitates the generation of ideas.

Preliminary screening
• Preliminary screening in project management refers to the initial assessment and
evaluation of potential projects to determine their
• -feasibility
• -viability and
• -alignment with organizational goals before committing significant resources.
• This phase is crucial for selecting the right projects and avoiding the allocation of time
and resources to initiatives that may not contribute to the overall success of the
organization.
Key aspects of preliminary screening in project management
• Project Identification
• Project Proposal
• Feasibility Analysis
• Risk Assessment
• Resource Assessment
• Alignment with Strategic Objectives
• Cost-Benefit Analysis
• Stakeholder Analysis
• Selection Criteria
• Decision-Making
• Documentation
Project rating index
• A project rating index typically refers to a system or metric used to evaluate and assess
the performance or success of a project. The specific criteria and factors considered in a
project rating index can vary depending on the nature of the project and the goals of the
evaluation. Here are some common elements that might be included in a project rating
index:
• Project Objectives:
• How well did the project meet its stated objectives?
• Were the goals and targets clearly defined and achieved?
• Timeline and Schedule:
• Was the project completed on time?
• How well did it adhere to the planned schedule?
• Budget Adherence:
• Did the project stay within its allocated budget?
• Were there significant cost overruns or unexpected expenses?
• Quality of Deliverables:
• How high is the quality of the project outputs or deliverables?
• Did the project meet the required standards and specifications?
• Stakeholder Satisfaction:
• How satisfied are the key stakeholders with the project outcomes?
 • Were their expectations met, exceeded, or not fulfilled?
• Risk Management:
• How effectively were risks identified and managed throughout the project?
• Were contingency plans in place and executed when needed?
• Team Performance:
• How well did the project team collaborate and communicate?
• Were roles and responsibilities clearly defined and fulfilled?
• Innovation and Creativity:
• Did the project introduce innovative solutions or approaches?
• Was there creativity in problem-solving and decision-making?
• Adaptability to Changes:
• How well did the project adapt to unforeseen changes or challenges?
• Were there effective change management processes in place?
• Post-Implementation Evaluation:
• What are the results and impacts of the project after implementation?
• Are there ongoing benefits, and has the project created lasting value?
• The above elements are just a starting point, and the specific components of a project
rating index can be customized based on the nature of the project and the goals of the
evaluation.

SOCIAL COSTS AND SOCIAL BENEFITS

Social Cost-Benefit Analysis (SCBA) is a technique used in project management and economics
to evaluate the social impact of a project.
It goes beyond traditional financial analysis by considering both the costs and benefits that
accrue to society as a whole, not just to the project sponsor or stakeholders.
SCBA is particularly useful for projects with significant externalities or social implications.
Social Cost is the cost to society from an action, project or policy change.
Social benefit means the improvements attained in the living conditions of its beneficiaries that
are directly attributable to the project.
OBJECTIVES OF SCBA
The main focus of SCBA is to determine
• Economic benefits of the project in terms of shadow prices.
•The impact of the project on the level of savings and investments in the society.
•The impact of the project on the distribution of income in the society;
•The contribution of the project towards the fulfilment of certain merit wants (self-sufficiency,
employment etc).

How Social Cost-Benefit Analysis works in project management:

Identification of Costs and Benefits:
Costs: Identify all the costs associated with the project, including direct costs borne by the
project sponsor and indirect costs that might affect society at large.
Benefits: Identify both direct and indirect benefits that the project is expected to generate. Direct
benefits are those that directly impact the project sponsor, while indirect benefits are those that
accrue to society.
Monetization of Costs and Benefits:
Assign monetary values to the identified costs and benefits. This step involves estimating the
economic value of items that may not have a market price, such as environmental impacts or
changes in quality of life.
Discounting:
Adjust the values of costs and benefits over time using a discount rate. This is done to reflect the
time value of money and to compare costs and benefits that occur in different time periods.
Aggregation and Calculation of Net Present Value (NPV):
Sum the present values of all costs and benefits to calculate the Net Present Value. If NPV is
positive, it indicates that the benefits outweigh the costs, suggesting that the project is socially
beneficial.
Sensitivity Analysis:
Assess the sensitivity of the results to changes in key assumptions or parameters. This helps in
understanding the robustness of the analysis and the potential impact of uncertainties.
Distributional Analysis:
Examine how the costs and benefits are distributed across different segments of the population.
This is crucial for assessing the equity implications of the project.
Qualitative Analysis:
In addition to quantitative analysis, consider qualitative factors that may not be easily monetized
but are still relevant to the social impact of the project.
Social Cost-Benefit Analysis is a comprehensive approach that allows decision-makers to assess
the overall desirability of a project from a societal perspective. It helps ensure that projects
contribute positively to the well-being of the community and provide a basis for making
informed decisions about resource allocation.

APPROACHES TO SCBA:
Two approaches for SCBA
UNIDO Approach:-
This approach is mainly based on publication of UNIDO ( United Nation Industrial Development
Organisations) named Guide to Practical Project Appraisal in 1978.

L-M Approach (Little-Mireless) :-

IMD Little and J.A. Mireless approach for analysis of Social Cost Benefit in Manual of Industrial Project
“ Analysis in Developing countries and project Appraisal and planning for Developing Countries.