Assignment No.

1
Basics of Project Management

1.1 Introduction

_ A farmer taking up crop cultivation

_ A construction company constructing a bridge
_ Indian Railways changing the meter gauge railway track to broad gauge
_ An FMCG company introducing its products into a new virgin market
_ A company hiring fresh graduates
_ A student pursuing MBA
What is common to all these? All these are projects.
A project is not merely establishing an industry or constructing a building. It is just something new,
something unique, planned and executed for good.

1.2 Definition of Project

PMBOK (Project Management Body of Knowledge) defines project as a temporary endeavour

undertaken to create a unique product or service. Temporary means that every project has a definite
end, and Unique means that the product or service is different from all similar products or services.
Turner defines projects as an endeavor in which human (or machine), materials, financial and knowledge
resources are organized in a novel way, to undertake a unique scope of work of given specification,
within constraints of cost and time, so as to deliver quantitative, qualitative, and consumer oriented
product and service. Bridge field group defines project as a related set of activities and milestones with a
preset goal and time frame that is designed as a specific event and not an ongoing process.
Project can also be defined as a single use plan to achieve a certain objective of introducing
something unique or a change and ensure that progress is maintained in line with the objective, generally
in terms of time, cost, and various technical and quality performance parameters. following are the
important aspects of a project:
_ Starting date
_ Specific goals and conditions
_ Defined responsibilities
_ Budget
_ Planning
_ Fixed end date
_ Parties involved

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 ends with goal
achievement. PMBOK 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.

1.3 Project Characteristics

The various characteristics of the project are

_ Fixed set of objectives: The project starts when the objective(s) is finalized. The project comes to an
end as soon as the objectives are attained.
_ Tenure: Project is never a continuous activity, it has to come to an end. Its life span is fixed.
_ Team work: It needs a team to accomplish various activities.
_ Unique: All projects are unique in themselves, no two projects are exactly similar.
_ Life cycle: Like all living organisms, project starts slowly (definition phase), then starts building up in
size (planning phase), then reaches peak (implementation phase) before finally getting terminated.
_ Made to order: The customer always decides the objective and informs the constraints like time and
cost.
_ Single entity: Generally, projects are the responsibilities of a single person/entity but certainly there are
many participants in a project, who are helping the single entity in the accomplishment of project
objectives.
_ Multi-skilled staff: The staff needed for a project, including the project manager needs to have a wide
range of skills including technical skills, human skills, financial skills, negotiation skills, etc.
_ Subcontracting: Subcontracting is practically unavoidable in project management. As specialized
knowledge or workforce is needed for a very small duration in a project, it is difficult and costly to
employ or retain. Therefore, they are just hired for small duration or specific job from outside
agency.
_ Risk and uncertainty: Projects are risky as the activities involved in projects are non-retrievable. Thus,
risk is unavoidable. However, risk can be reduced considerably using various forecasting techniques and
project management and control tools.

1.4 Objectives of Project management

There are four major objectives of project management

_ Scope: Scope means what are the expectations from you as a project manager and your team. A civil
contractor always has well-defined scope, like all civil works including excavation, foundation,
concreting, brickwork, plastering of all walls as per the attached drawings.
_ Performance: A project is always expected to have a well defined performance level. If a project is
unable to adhere to the desired performance of a customer, it is certainly an unsuccessful project.
_ Time: A successful project is the one which is completed within the time limits perceived during the
planning. As the cost is dependent on time, time management becomes a crucial activity of project
management.

_ Cost: It is dependent on all the above objectives. Mathematically it can be written as: Cost = f (P, T, S).
Therefore, cost is a function of performance, time and scope. If any of the above increases, it is surely
going to increase the cost of the project. Another approach in defining the objectives is the SMART
approach.
_ Specific: Project should target a specific goal
_ Measurable: It should be quantifiable
_ Attainable: It should be attainable with resources available
_ Realistic: It should be realistic in nature
_ Time Limit: There should be fixed time limits
1.5 Importance of Project Management
What has led to increased usage of the concept of project management in recent times?

_ Rapidly changing technologies: Technologies are changing very fast, so all manufacturing as well as
service organizations have to cope up with technological changes, which provide a big scope for project
management.
_ High entropy of the system: Changes are very fast. So, energy levels are high. To adapt to the fast
changing world, no organization can stick to old things or systems. Any modification or modernization
leads to the need ofproject.
_ Squeezed life cycle of products: Product life cycle is squeezed to a great extent with innovations
taking place at a very rapid rate. Projects are needed for the up gradation of products.
_ Globalization impact: All producers and service providers in the present world are exposed globally.
They need to modify their system of operations to match the global practices, thus creating opportunity
for projects.
_ Large organizations: They face problems of management of huge workforce and work division, so
they divide their work in projects and create a team to accomplish the objectives in the form of projects.
This has also helped the organization to develop a method for performance appraisal.
_ Customer focus: Increased customer focus has been a market trend in recent times. A few years back,
cost reduction was a major formula of success for an enterprise. Thus, there was more emphasis on
standardization. In recent years, customer focus has redirected market towards customization.
Though it is not purely customization, it is more of a combination of
standardization and customization. All this has led to the application of project
management.

Project Life Cycle

2.1. Project life cycle and its phases
Project life cycle divides the sequence of operations of project in to differentphases. Regardless of scope
or complexity, any project goes through a series of stages during its life. 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:
2.1.1. Idea Generation (Concept Phase)
Anyone who is planning to invest starts searching everywhere for new ideas. One can start a new project
by defining its objectives, scope, purpose and deliverables to be produced. He will also hire his project
team, set up the project office and review the project, to gain approval to begin the next phase.
The basic processes of this initiation phase are
_ Project document:
This is a statement describing the characteristics of the project undertaken.
_ Project feasibility document: This contains constraints and alternative solutions. The four steps in the
project feasibility study are:
_ Problem description
_ Approach to be used
_ Alternate generations for solving the problem
_ Preliminary recommendations
_ Project concept document: It will answer the following questions
_ What is to be done?
_ How will it be done?
_ Why is it to be done?
_ Project charter: Project charter formally communicates the initiation of the project. It consists of
project scope, project authority and KSF (Key Success Factors).
2.1.2. Project Planning Phase
Project planning phase follows the project initiation phase. Countless hours during the succeeding phases
can be saved with proper planning.
The purpose of the project planning phase is to:
_ Determine project requirements
_ Decide project cost and schedules
_ Search for sources of all resources
The basic processes of the project planning phase are:
_ Defining the scope: Define the scope of the project and its limitations.
_ Preparing the work breakdown structure: Divide the whole project into smaller activities
_ Role assignment: Assign jobs to individuals or group of individuals as predefined activities or tasks.
_ Project scheduling: Determine optimum schedule of the project and show it on a Gantt Chart.
_ Fund allocation: Allocation of funds for individual activities Other subsidiary processes in the
planning stage are:
_ Risk management planning: It includes identification of possible causes and effect of the risks and
trying to reduce the impact of risk.
_ Procurement planning: Decisions regarding all products, services or resources needed to accomplish
the project. In the planning stage, various steps are taken which includes:
_ Final techno-economic feasibility of the project: This is the last chance for changing the decision, as
after this stage, it proves too closely to shut down the project or change the project.
_ Basic engineering and process design: The process is selected and basic engineering is done. The
documents with respect to equipment specification are prepared.
_ Division of work/responsibilities: Different activities are allocated to individuals or groups.
_ Identify potential vendors and subcontractors: No project is complete without the help of outside
expert agencies called subcontractors. The potential suppliers of various equipment, civil construction
agencies and similar agencies are identified and negotiated.
_ Detailed engineering design: based on the designs of equipment supplier, detailed engineering is
performed. The final layout is prepared and the work schedule prepared.
_ Final estimation of the cost of the project: The above steps leads to finalizing quite accurate cost of
the project. This is essential as the next step would involve arrangement of funds.
_ Decision of capital structure and means of finance: The final decision with respect to financing the
project is needed during the planning phase. It is a crucial decision generally taken by core strategic group
with the advice of finance managers.
_ Final schedule of implementation (next phase): The next phase will be implementation. A proper
schedule of implementation is essential to avoid confusions. The schedule of implementation tells all the
members of the team when a particular activity should start and end. It will provide the milestones
of every activity. The techniques used are PERT, CPM, Gantt chart, crashing resource allocation and
resource leveling.
2.1.3. Implementation or Execution Phase
Project execution is characterized by the actual work on the tasks planned and project control involves
the comparison of the actual performance with the planned performance and taking appropriate corrective
action to get the desired output. During this phase, project team is responsible for the following activities:
_ The team members perform the tasks allocated in the earlier phase under the supervision of the project
manager and report to him.
_ Project manager is responsible for performance measurement, which includes finding variances with
respect to cost, schedule and scope.
_ Project manager is responsible for providing project status report to all key stakeholders. He should
specifically inform the deviation from the plan to the stakeholders. He should also determine the root
cause for the deviations and suggest the alternate actions to encounter the deviation caused or expected.
This helps stakeholders to decide the corrective action to be taken.
_ All project key stakeholders are responsible for the review of the variances.
_ All project key stakeholders are responsible for taking necessary action of the variances thus determined
so as to complete the project within time and cost.
The basic process of the project execution can be:
_ Execution of the project plan
_ Handle the changes
_ Project control
The subsidiary processes during project execution can be:
_ Quality control
_ Performance monitoring
_ Project administration
_ Risk monitoring and control
_ Scope and control
_ Schedule and cost control
_ Management of outside agencies (subcontractors)
The key activities during this phase of execution include:
_ Award contracts to contractors, vendors, subcontractors: Final selection of suppliers of various
supplies of services (generally termed contractors) and physical equipment (generally termed vendors).
_ Procure equipment and services: After continuously monitoring the suppliers, the project team has to
procure the goods and services.
_ Erection of equipment: The procured equipment needs to be placed on the designed place after
preparing the required foundation.
_ Control and monitor project cost, schedule and scope: As majority of efforts, time and cost are
incurred during this phase, it is critical to monitor the project schedule and cost during this phase. This is
generally done using various tools like Gantt chart and Earned Value Analysis.
_ Motivation of project team: As this phase consumes maximum energy of the team members,
motivating them during this phase is critical to the success of the project.

2.1.4. Termination Phase (Clean-up Phase)

The last step performed to say good bye to a project is the termination phase. The termination of a project
is inevitable, but how it is terminated and when may have a profound and long lasting impact on the
organization and its employees. In the end, all projects, both successful and unsuccessful, will have to be
terminated. During the termination phase, the project’s resources are redistributed, financial records are
closed, and project personnel are reassigned. The organization’s sensitivity to the concerns of the project
team can have a lasting impact on their commitment and productivity. Lastly, a final report, which
discusses the project’s successes and shortcomings, is prepared for senior management. This report can
significantly influence how the organization manages projects in the future. According to Meredith and
Mantel (1995), there are three ways to terminate a project: extinction, inclusion, or integration.
Termination by extinction means the project is completed. For example, the new project has been
developed and given to the client, the building has been completed and accepted by the purchaser, or the
software has been installed and is running. By contrast, termination by inclusion is a very different
process. The complete project team and its equipment are transferred to a new division. As one might
expect, this type of change places significant additional stress on the day-to-day operations of the
organization. Project managers and team members must be sensitive to these stresses until the
organization is able to settle into a new and more stable routine. The most common, but also the most
complex, method of termination is by integration. The project’s resources, personnel, and functions are
absorbed as a part of the original organization. The major problem associated with this termination
process is the ability of the organization to blend technological differences between the project and the
organization. Past experience appears to play a key role in successfully integrating terminated projects