1 Project Analysis and Evaluation

2 Chapter – I

Fundamentals of Project
 Learning Outcomes
3

After studying this chapter, you should be able to;

 Briefly describe projects.

 Explain the typical characteristics of projects.

 Discuss why projects are initiated and undertaken.

 Describe the project environment and relationship with

programs and plans.

 State the classification of projects.

 Concept of project
4

 The past several decades have been marked by

rapid growth in the use of project management as
a means by which organizations achieve their
objectives.

 In recent times, an extensive application of project

analysis methods were observed particularly in
developing countries.
5

 Today, managing a project is becoming an exciting

new profession.
 A project can only be discussed within the
framework of a larger national plan.
 A project can then be considered as a means by
which the objectives set out in the plan are
achieved.
6

 Thus, a project is initiated to achieve a particular

mission.

 What ever the mission may be, the project is

completed as soon as the mission is accomplished.

 The project lives between these two cut-off points. The

time span is known as project life cycle.
 What is project?
7

No definition of project will suit every situation.

In other words there are a number of ways to define a

project.

Projects are different in terms of their nature and

objectives thus, it is difficult to find single
comprehensive definition.
8

 According to USA Project Management Institute,

 “Project is an effort that starts from scratch with a

definite mission, generate activities involving a
variety of human and non-human resources all
directed towards fulfilment of the mission and stops
once the mission is fulfilled.”
9

 A project can be described as a combination of

human and material resources pulled together in an
organization to achieve a specific objective.

 A project has clear start and end points, a defined

set of objectives, and a sequence of activities in
between.
10

 A project is neither a physical nor the end result. It

has something to do with the activities that go on,
which must be the same, whether it is to build a
nuclear power plant or launching a new detergent.

 the term “project” may be common, but the “plants”

are not.
11

Therefore,
 A project is a temporary endeavor
 A Project is a planned set of activities
 A Project has a scope
 A Project has time, cost, quality and resource
constraints
 It requires a commitment of scarce resources
 Every project converts the given inputs into outputs
through the process of implementation
 Characteristics of Project
12

The special feature of project that differentiate it

from any other on-going activities, are
 Objective: A project has a fixed set of objectives.

Once the objectives are achieved the project ceases

to exist
 Life span: A project can not continue endlessly. It
has to come an end at one time.
 Single entity: A project is a single entity and is

normally entrusted to one responsibility centre,

while participants in the projects are many.
13

 Team work: Any project calls for team work-. The

team members may be from different
 discipline,
 organization,
 and even country
 Life cycle: A project has a life cycle reflected by
growth, maturity and decay.
14

 Uniqueness: No two projects are exactly similar

even if the plants are exactly identical or are
duplicated.
 the location,
 the infrastructure,
 the agencies and
 the people make each project unique.
 Project Vs Program
15

 A project is normally originated from a plan which

can be a national plan or corporate plan.
 In many cases the term project is used for what
should be termed as program or work package.
 Some people use the term „project‟ and „program‟
interchangeably. However, there is a quite
difference between the two.
 Program in general is a groups of related projects
that are managed in a coordinated ways to achieve
certain objective.
 Basic differences
16

A program is thus,
 larger in scope,

 not necessarily time bound and its objectives are

broader
PROJECTS PROGRAMS

Specific objectives General objectives

Specific project areas No specific areas

Specific beneficiaries group No Specific beneficiaries group

Clearly determined and allocated funds No clear & detailed financial resource allocation

Specific lifetime No specific lifetime

17

Similarities:
Projects and programs have similar characteristics in a
way that both are:
 Having objectives;
 Requiring financial, human, material, etc inputs (or
resources);
 Serving as instruments for the execution of development
plans in order to boost the national economy.
 Hierarchical Relationships
18

Development Plans

Programs

Projects

Tasks

Work Packages
19

Development plans:
 Most forward looking (futuristic)
 Broad and require systematic thinking, preparation and
appraisal
 Attempts to bring welfare in the society

Programs:
 Derived from development plans
 Exceptionally large with long term objectives

 Explores specific area with broader scope

20

Projects:
 Derived from a program
 A development activity with specific objectives

 Funded by a program

 An implementation element (entity)

Tasks:
 Work elements under a project
 Specific approaches for doing things

 Set of activities comprising a project

21

Work packages:
 Sub elements of a given task (or undertaking)
 Something accomplished stage by stage

 Collection of work packages defines a given task

 Example
22

 The national plan: Poverty Eradication

 Strategy to achieve this national plan: Increase

productivity ( in all sectors)

 Development program: agricultural productivity

This may result in a number of projects like,

 Construction of dams ( irrigation infrastructure)

 Construction of frarmers training centers

23

Health program may have a number of projects like,

 Construction of hospitals

 Training of health officers

 Expansion of health centres

 Classification of Project
24

Revenue Vs capital project

 Project can come in many size and form. They may
be very simple or complex. Major project types are
two. These are,
 Revenue project: Are those which can be carried
out within the normal organizational structure and
normally will be completed within the a single
accounting period.
25

 Capital Project: Are those which can not be carried

out within the normal organizational structure and
are normally stretched over a number of accounting
periods.

 In practice many projects fall between these two

broad categories
26

On the basis of time horizon project can be

 Long term projects : Ex. Power plant project

 Medium term projects : Ex. Construction of a factory

 Short term project: Ex. Exhibition, trade fair

27

On the basis of the type of output:

 Project producing tangible Products: Oil mill

 Project providing services: Telecom project,

Education etc.
On the basis of the scope of the project:
 International project : Euro tunnel project

 National Project: Eth Hydro power project

 Regional Project: Elementary school project

28

Based on the economic sector:

 Agricultural project: Irrigation project

 Industry project : Cement Project

 Service sector project : Bank projects

29

On the basis of technology:

 Capital intensive project : Brewery project

 Labour intensive project : Textile industry project

Based on location :

 Rural Projects

 Urban project
30

On the basis of the nature of the project

 Independent project : Hospital, Hydroelectric

power

 Complementary project : Airport project, Run Way

and airport services are different projects which
are complementary (things required to fully
complete the other or airport) to each other.
 Project Parameters
31

Basic Dimesnsions of any project

Time:
 Projects
have start and end dates
 Meeting these presents biggeset challenge for project
managers,
Cost:
 Most projects are allocated some level of bugdet
 The PM takes on the project knowing he/she cannot
exceed that bugdet.
32

 Companies don‟t usaually mind if you come in under the

bugdet, but you generally can‟t go over the budget.

Scope:
 The project has to produce the product or service that it
was set up to produce.

 Includes all the required capabilities and features

meeting the level of quality that was defined for each.

 We need to complete the full scope of the project.

33

Time, cost and scope are completely interlinked.

 If we start to go over bugdet, we could drop some

of the deliverables, which impacts the scope.

 If we increase the scope to meet some new customer

requirements, this will probably increase both the
time and the budget.
34

 Furthermore, quality is very closely linked to the

scope –in order to fully meet the scope, quality
requirements have to be meet.

 Forinstance, at some quality level an evaluator

would declare that the delivarable is unsatisfactory
– so the scope has not been fully delivered.
35

 Traditionally, it is said that a successfully managed

project is the one that is completed at the specified

level of quality, on or before the deadline, and

within the budget.

36 Chapter Two

Project Cycle