SMS104: Fundamental of Project Management (2 Units C: LH 30)

Learning Outcomes

At the end of this course, students should be able to:

1. Define the concept and purpose of project management;

2. Identify the processes and actors in project management;
3. Demonstrate a working knowledge of key project management methods;
4. Describe the tools and techniques used in project management; and
5. Identify projects bottle neck and possible solutions.

Course Contents

 Concept of project management.

 Purpose of Project management.
 Processes of project delivery within any project management environment.
 Actors.
 The tools and techniques used in project management.
 Traditional and contemporary project management methods.
 Projects bottle neck and possible solutions.
 Project life cycle.

Definitions and meaning of a project.

Project has been defined in various ways. Some authorities see projects as mere activities while
others see them as programmes of action. Longman Dictionary of Contemporary English defines
a project as “an important and carefully planned piece of work that is intended to build or
produce something new, or to deal with a problem”. From this simple definition, we can see
that a project, apart from being Important, should be carefully planned so as to produce
something. Some of the things that a project seeks to produce may be tangible or intangible. A
motorcycle is a tangible product but conducting a census is not a tangible product. Also, A
project is a temporary endeavor undertaken to create a unique product, service, or result. Like
most organizational effort, the major goal of a project is to satisfy a customer’s need. Beyond

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this fundamental similarity, the characteristics of a project help differentiate it from other
endeavours of the organization.

Types or classifications of projects.

There are various types of projects that we might encounter in our different organisations as
managers. Some of these types includes tangible and intangible projects.

1. Tangible Projects Tangible projects are those projects whose output are tangible and can be
seen with the naked eye. They may include the following:
 A civil engineering project
 a hospital building project
 a water borehole project
 an aircraft manufacturing plant
 a milk manufacturing plant
 an urban playground.
2. Intangible Projects Intangible projects are those that require commitment of resources but
whose output cannot be seen with the naked eye. In most cases, they are social projects and
in some cases they may be political projects. Examples of intangible project in Nigeria
include:
 the Nigeria general elections
 the national census
 building of Instagram, Facebook or WhatsApp softwares.

Characteristics of a Project

The major characteristic of a project are;

1. An established objective.
2. A defined life span with a beginning and an end.
3. Usually, the involvement of several departments and professionals.
4. Typically, doing something that has never been done before.
5. Specific time, cost, and performance requirements.

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Note, projects have a define objective – The following are examples of define objectives of
projects:

 Construction of a 500-bed hospital at Amarata by the Bayelsa State Government. Or

constructing a 2-story apartment complex in UAT by ANAN or releasing version 2.0 of a
specific software package as quickly as possible.
 Dualisation of the Warri-Port Harcourt highway by the Federal Ministry of Works.
 Sinking of 10 water bore-holes at Angalabiri community by the local government council.
From whatever angle we see these projects, some of their features are that they will require
the commitment and deployment of scare resources, and what are these scare resources.

Objectives of Project

1. Objective of Completion Time; is the projected duration of the project. Any contractor who
are given contracts ensures that projects are completed on time. Most projects, when
formulated, have completion times. A normal football match lasts for about 90 minutes. It is
the duty of the referee to ensure that the football match is completed within the set time.
Most public sector projects even at the time they are awarded or initiated always have a time
frame attached to them. For example, the rehabilitation of the Lagos-Benin expressway may
be projected to be completed in 24 months.
Another point to note about completion time of projects is that late completion or delivery of
an agreed project will not please the sponsor of a project. Consider, for example, that the
Federal Ministry of Works awards a contract for the dualization of the Owerri-Onitsha road
to Julius Berger and the road is to be completed in 24 months under the terms of the
underlying contract. If Julius Berger, the contractor, fails to complete the road project in 24
months, the Ministry of Works will not be pleased with it. Besides, time is money and if a
contractor fails to operate within a time frame, inflation may set in and delay the project
completion or increase the cost.
2. Performance Objective; these are goal oriented objectives designed to attain specific results.
All projects have objectives which they set out to achieve. For example, a public hospital
project should have the objective of providing safe and affordable healthcare to the
community. Also, a private sector fast food project has the objective of manufacturing
hamburgers, fish cake, hot dogs, etc. for its customers. This is a performance objective.

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3. Quality Objectives; these are main methods adopted by organizations to transform quality
policy into plans for improvements. They are goals relevant to enhance satisfaction and are
consistent with quality policy. Apart from the performance objective, most projects have a
quality objective. For example, a hospital should have the objective of providing healthcare.
This is a performance objective. But the provision of the service should be safe. For example,
hospital workers (nurses, doctors, etc.) while treating patients must take adequate care so as
not to infect the patients with the HIV through use of unsterilized needle. This is a quality
objective. Most organisations have quality as one of their major objectives. See, for example,
what Daimler Benz has done with Mercedes Benz cars. Sony products are reputed for their
amazing quality. Finally, another aspect of performance is reliability. A good product should
also be reliable especially in the case of medical testing devices like PH meters. In patient
care, an unreliable thermometer may raise a false alarm concerning the health of a patient and
lead to wrong diagnosis.
4. Budgetary Objective; these are specific goals that outlines the expected income and
expenditure for a defined period through a budgetary process. All projects involve financial
outlays. The financial outlays (expenditures) attached to a project are usually controlled by
the budget. The budget sets a limit as to the quantity of funds a project can consume. In most
organisations, the budget for every project is usually set aside. The reason why a project
should be monitored is that failure to do so in some cases may lead to exhaustion of funds
and abandonment of the project in question. We have seen that projects may have three main
objectives, namely: time, performance and budget objectives. A major task facing project
managers is how to balance these three objectives. What it means is that at all times the focus
of managers must be on the three objectives.
Importance of Project

A project, be it tangible or intangible is considered to have presented several importance, these

are:

1. A Clear Focus on Objectives: Project management helps define the goals, scope, and purpose
of a project, ensuring that everyone involved knows what they are working toward. This
minimizes confusion and keeps the team aligned.

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2. Efficient Resource Utilization: With proper planning and coordination, project managers
ensure that time, money, and human resources are used effectively and efficiently, reducing
waste and avoiding duplication of efforts.
3. Risk Management: Every project comes with risks. Project management involves identifying,
assessing, and mitigating risks early on to prevent issues from derailing progress or
increasing costs.
4. Quality Control: Project managers enforce quality standards and regular reviews, ensuring
that deliverables meet expectations and requirements, reducing the need for rework.
5. Improved Communication: Project management fosters structured communication within
teams and with stakeholders, ensuring that everyone is informed about progress, changes,
and issues.
6. Better Budget Management: Through detailed planning and tracking, project managers help
control costs and avoid budget overruns by monitoring expenses and adjusting plans as
needed.
7. Time Management: Using tools like Gantt charts and timelines, project managers help ensure
that milestones and deadlines are met, keeping the project on schedule.
8. Stakeholder Satisfaction: With regular updates, transparency, and proper delivery of
outcomes, project management ensures stakeholder needs are addressed and satisfaction is
high.
9. Continuous Improvement: Project management promotes lessons learned and post-project
evaluations, which help organizations improve processes and performance over time.
10. Competitive Advantage: Organizations that excel at project management are more likely to
deliver successful projects consistently, giving them a competitive edge in their industry.

Meaning of Project Management

If we define a project as an important piece of work, project management is the planning,

organising, directing and controlling of resources for a relatively short-term objective that has
been earlier established to complete specific goals. For example, the construction of a 500-bed
hospital at Amarata by the Bayelsa State government will require a lot of resources: financial,
raw material and labour and time. There will be need for procurement of land. There will also be
need for architects to design the hospital. There will be need for structural engineers, civil and

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building engineers and electrical engineers. Different types of equipment will be sourced for e.g.
X-ray machines, laboratory equipment, etc. to equip the hospital. Hence, there should be a way
in which all these resources should be coordinated and managed to ensure effectiveness and
proper time management. In such situations, project management comes in to ensure that the
needed expertise is provided to achieve the goal of bringing the hospital project into fruition.

Purpose of Project Management

From the onset, it will be necessary to stress that many projects are very complex in nature. The
complexities may be introduced by the nature of technology required to execute the project. For
example, a census project is one of the most difficult and complex projects that public sector
managers may face. Also, managing the elections in Nigeria is a sort of complex project. Most
projects may require elements of critical risks and uncertainty. For example, how do we predict
what will happen next year? Even if we could predict the political future with a measure of
certainty, predicting the movement of prices and costs of materials in Nigeria involves a lot of
risks and uncertainty.

In all cases therefore, we would say that ‘‘the purpose of project management is to foresee the
future and associated problems and therefore, plan, organise and control key activities so that
projects are completed successfully and on time’’. If we see project management from that
perspective, it follows logically that project management starts even before financial resources
are committed and lasts until the completion of the project.

Factors Affecting the Location of Projects

Whether in the private sector or the public sector, projects are located according to set
guidelines. In the private sector, project location is based purely on economic guidelines,
usually put in place by the various organisations. These guidelines regulate the ways and means
by which projects are located. In the public sector, projects may be located according to a
different set of guidelines and they may not be driven by Profit motive. It is the discussion of
these factors affecting the location of projects that will now take our time.

 Nearness to Markets - A major factor affecting the location of projects is their nearness to
markets. Most businesses are established primarily for profit. A business organisation will

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 make profit if the goods or Produced are purchased by third parties. It is the difference
between revenues and costs that constitute profit. You will easily and quickly realise that
most populations that constitute markets are located mainly in the urban areas of Nigeria. So
we shall hold firmly to the fact that the nearness to markets is a major factor influencing the
location of most projects in Nigeria. Most of the entire population of Nigeria is located in
such areas like Lagos, Onitsha, Port Harcourt, Kano, Ibadan, Abuja, etc. Because of this,
most businesses and government establishments are located near the critical markets that
they wish to serve. That is to say those businesses follow their markets. Concentrations of
people or critical markets are very important to corporate officials who design marketing
plans. If you take a good look at your environment, you will realise that a lot of companies
are located within Lagos. It is not by accident. Rather it is by design. Businesses are
attracted to areas of core concentration of people who constitute vital markets.
 Nearness to Sources of Raw Materials - Nearness to sources of raw materials is another
strong factor affecting the location of projects, especially manufacturing concerns. Service
based projects can locate without reference to any raw material source. But manufacturing
concerns cannot afford to gloss over the issue of raw materials. For a manufacturing
concern, the raw material source is very important because in most cases, raw materials may
constitute over 80% of a product. If a company decides to establish its factory very far away
from its raw material source, it is going to end up spending a lot of money to transport raw
materials from the source to its factory. This will mean added costs and in the long run, the
company may not be able to compete effectively in its chosen market. If you sit back and
think deeply, you will see patterns of industrial locations that tend to suggest that most
industrial projects are located close to the sources of raw materials. The Nigerian Coal
Corporation Enugu is located in Enugu close to the source of coal. Most cocoa processing
firms are located in the western parts of Nigeria because cocoa is found in abundant
quantities there. In the eastern parts of the country, oil mills and vegetable oil plants litter
the economic landscape simply because the oil palm grows wildly there and it is also the
major raw material for palm oil manufacture and vegetable oil. If you go up north, you will
also realise that the tea producing company is located at the Mambilla Plateau because the
plateau is very rich in tea cultivation.

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 Nearness to Power Supply - Power supply is a very critical input in business, whether
service based or manufacturing based. In the case of service-based concerns like banks,
electricity will be needed to power computers, servers and other equipment needed to
provide service to customers. In a manufacturing concern, electricity is everything. Without
electricity, a manufacturing concern is not likely to operate. Electricity is needed to mix
chemicals, to drive machinery and equipment and to start electric motors etc. So in the
choice of where to locate, every concerned establishment or business should properly
address the issue of power supply. Interruptions in power supply create production problems
for industries; this also translates to inability to meet production schedules, and inability to
meet production schedules leads to frequent customer complaints for failed deliveries.
Frequent failures to deliver goods on schedule may lead to loss of customers. In our peculiar
Nigerian situation, irregular power supply has taken its toll on the manufacturing sector and
even service-based activities. The result of this poor public power supply has led most
organisations to operate their own plants but with the attendant high operating costs of both
fuel and servicing of generating plants.
 Nearness to Water Supply- Water is very important in business especially in manufacturing
industries. Many manufacturing companies use a lot of water for manufacturing activities.
Soft drink manufacturers for example, use a lot of water in the production process. In the
agricultural sector, garri processing factories use a lot of water and they are attracted to
areas where there is plentiful supply of water.
 Availability of Good Road Networks - Availability of good road networks is another major
factor influencing the location of projects in the economic landscape. Road networks are
very important. They are important for the movement of essential raw materials from raw
material sources to factories and also for the movement of finished goods to the markets
where they are needed. Most investors in the economy are usually attracted to areas with
good road networks. Good road net works reduce the cost of transportation.
 Availability of a Good Rail System - Another important factor influencing the location of
projects is the availability of a good rail system. A good railway system ensures cheap
transportation and evacuation of raw materials from their sources to factory locations and
also the movement of finished goods to markets. You may observe that the development of
trading locations in Nigeria seemed to have followed the railway system. The North –

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 Eraaislwtearyn system runs through towns today which have become trading posts. Aba,
Umuahia, etc., all enjoy good trading activities because they are located along railway line
routes.
 Nearness to Airports- Another identified factor affecting location of projects is nearness to
airports. A lot of businesses tend to be located close to Airports. encourage quick movement
of people to and from various locations. If you take a good look at the country today, the
towns that are served with air links tend to be enjoying faster economic growth and
development. Port Harcourt, Calabar, Enugu, etc., enjoy good air links which facilitate the
movement of people.
 Availability of Land - In economic theory, there are four factors of production namely: land,
labour, capital and the entrepreneur. Each of these factors is very important. However, Land
appears to assume very important dimensions especially where large scale agricultural
projects are involved. Very large agricultural projects like oil palm plantations require vast
areas of land before they can become profitable. A cassava farm which will feed a garri
processing plant needs to be very vast in terms of land space. You may realise that
invariably projects are attracted to areas where there is adequate land.
 Political Considerations- The location of most business projects is driven mainly by
economic motives. Private sector projects are mainly profit-driven and their location is
based only on economic merits. Also the public sector, since the era of economic reforms,
has bought the idea of economic reforms and is now locating projects based on economic
merit and viability. However, not all projects are located based on sound economic
judgment. Political considerations occasionally play very important roles in deciding where
a project will be located. For example an oil refinery may be located very far away from
crude oil sources. The cost of transporting crude oil to the refinery may result in the refinery
operating at a loss. Intervention Projects - Intervention projects are those projects which are
conceived and located within specific areas to correct inequalities in distribution of
resources. In the emerging political dispensation, the issue of uneven development has been
brought to the front line of discussions. Complicating the discussions is the issue of resource
control and the attendant political and social implications. The Niger Delta region of Nigeria
produces a major percentage of the oil revenues of Nigeria. Recent thinking is that the
region has Not received sufficient attention as a major oil producing region. Currently, the

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 federal government is focusing attention on the region and a lot of developmental projects
are now springing up in the area.

Processes of project delivery within any project management environment. (Project

Definition and implementation)

Meaning of Project Definition

Project definition is a process which seeks to describe a project from the idea stage to the stage
when the project has been completed. All information about the project is usually embodied in
the definition of the project. Usually, before a project starts, it must be properly defined so that
the parties involved properly understand their clear roles.
Discussion Case: Rehabilitation of Lagos-Ibadan Expressway
Let us use a familiar case as a discussion case. In 2005, the federal government decided to
rehabilitate the Lagos-Ibadan expressway which was in a terrible state. The engineering firm of
Julius Berger Nigeria PLC was chosen as the competent firm to carry out the rehabilitation
work. We can describe the project by considering the various processes involved before the
project was commissioned.

Discussions between Federal Government of

Nigeria and Julius Berger Plc

Engineering designs
- Engineering calculations
- Purchase schedules
- Purchase orders
- Material receipts

Actual Construction

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 Commissioning and Handover

Processes of project delivery within any project management environment.

Traditionally (depending on what project management methodology is being used), project

management includes a number of elements: four to five project management process groups,
and a control system. Regardless of the methodology or terminology used, the same basic project
management processes or stages of development will be used. Major process groups generally
include:

 Initiation
 Planning
 Production or execution
 Monitoring and controlling
 Closing

In project environments with a significant exploratory element (e.g., research and development),
these stages may be supplemented with decision points (go/no go decisions) at which the
project's continuation is debated and decided. An example is the Phase–gate model.

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Project management relies on a wide variety of meetings to coordinate actions. For instance,
there is the kick-off meeting, which broadly involves stakeholders at the project's initiation.
Project meetings or project committees enable the project team to define and monitor action
plans. Steering committees are used to transition between phases and resolve issues. Project
portfolio and program reviews are conducted in organizations running parallel projects. Lessons
learned meetings are held to consolidate learnings. All these meetings employ techniques found
in meeting science, particularly to define the objective, participant list, and facilitation methods.

Initiating

Initiating process group processes

The initiating processes determine the nature and scope of the project. If this stage is not
performed well, it is unlikely that the project will be successful in meeting the business' needs.
The key project controls needed here are an understanding of the business environment and
making sure that all necessary controls are incorporated into the project. Any deficiencies should
be reported and a recommendation should be made to fix them.

The initiating stage should include a plan that encompasses the following areas. These areas can
be recorded in a series of documents called Project Initiation documents. Project Initiation
documents are a series of planned documents used to create an order for the duration of the
project. These tend to include:

 project proposal (idea behind project, overall goal, duration)

 project scope (project direction and track)
 product breakdown structure (PBS) (a hierarchy of deliverables/outcomes and components
thereof)
 work breakdown structure (WBS) (a hierarchy of the work to be done, down to daily tasks)
 responsibility assignment matrix (RACI - Responsible, Accountable, Consulted, Informed)
(roles and responsibilities aligned to deliverables / outcomes)

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 tentative project schedule (milestones, important dates, deadlines)
 analysis of business needs and requirements against measurable goals
 review of the current operations
 financial analysis of the costs and benefits, including a budget
 stakeholder analysis, including users and support personnel for the project
 project charter including costs, tasks, deliverables, and schedules
 SWOT analysis: strengths, weaknesses, opportunities, and threats to the business
Planning
After the initiation stage, the project is planned to an appropriate level of detail (see an example
of a flowchart). The main purpose is to plan time, cost, and resources adequately to estimate the
work needed and to effectively manage risk during project execution. As with the Initiation
process group, a failure to adequately plan greatly reduces the project's chances of successfully
accomplishing its goals.

Project planning generally consists of;

 determining the project management methodology to follow (e.g. whether the plan will be
defined wholly upfront, iteratively, or in rolling waves);
 developing the scope statement;
 selecting the planning team;
 identifying deliverables and creating the product and work breakdown structures;
 identifying the activities needed to complete those deliverables and networking the activities
in their logical sequence;
 estimating the resource requirements for the activities;
 estimating time and cost for activities;
 developing the schedule;
 developing the budget;
 risk planning;
 developing quality assurance measures;
 gaining formal approval to begin work.

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Additional processes, such as planning for communications and for scope management,
identifying roles and responsibilities, determining what to purchase for the project, and holding a
kick-off meeting are also generally advisable.

For new product development projects, conceptual design of the operation of the final product
may be performed concurrent with the project planning activities and may help to inform the
planning team when identifying deliverables and planning activities.

Executing

Executing process group processes

While executing we must know what the planned terms that need to be executed are. The
execution/implementation phase ensures that the project management plan's deliverables are
executed accordingly. This phase involves proper allocation, coordination, and management of
human resources and any other resources such as materials and budgets. The output of this phase
is the project deliverables.

Project documentation

Documenting everything within a project is key to being successful. To maintain budget, scope,
effectiveness and pace a project must have physical documents pertaining to each specific task.
With correct documentation, it is easy to see whether or not a project's requirement has been met.
To go along with that, documentation provides information regarding what has already been
completed for that project. Documentation throughout a project provides a paper trail for anyone
who needs to go back and reference the work in the past. In most cases, documentation is the

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most successful way to monitor and control the specific phases of a project. With the correct
documentation, a project's success can be tracked and observed as the project goes on. If
performed correctly, documentation can be the backbone of a project's success

Monitoring and controlling

Monitoring and controlling process group processes

Monitoring and controlling consist of those processes performed to observe project execution so
that potential problems can be identified in a timely manner and corrective action can be taken,
when necessary, to control the execution of the project. The key benefit is that project
performance is observed and measured regularly to identify variances from the project
management plan.

Monitoring and controlling include:

 Measuring the ongoing project activities ('where we are');

 Monitoring the project variables (cost, effort, scope, etc.) against the project management
plan and the project performance baseline (where we should be);
 Identifying corrective actions to address issues and risks properly (How can we get on track
again);

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 Influencing the factors that could circumvent integrated change control so only approved
changes are implemented.

Two main mechanisms support monitoring and controlling in projects. On the one
hand, contracts offer a set of rules and incentives often supported by potential penalties and
sanctions.[42] On the other hand, scholars in business and management have paid attention to the
role of integrators (also called project barons) to achieve a project's objectives. [43][44] In turn,
recent research in project management has questioned the type of interplay between contracts
and integrators. Some have argued that these two monitoring mechanisms operate as
substitutes as one type of organization would decrease the advantages of using the other one.

In multi-phase projects, the monitoring and control process also provides feedback between
project phases, to implement corrective or preventive actions to bring the project into compliance
with the project management plan.

Project maintenance is an ongoing process, and it includes:

 Continuing support of end-users

 Correction of errors
 Updates to the product over time

Monitoring and controlling cycle

In this stage, auditors should pay attention to how effectively and quickly user problems are
resolved.

Over the course of any construction project, the work scope may change. Change is a normal and
expected part of the construction process. Changes can be the result of necessary design
modifications, differing site conditions, material availability, contractor-requested changes, value

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engineering, and impacts from third parties, to name a few. Beyond executing the change in the
field, the change normally needs to be documented to show what was actually constructed. This
is referred to as change management. Hence, the owner usually requires a final record to show all
changes or, more specifically, any change that modifies the tangible portions of the finished
work. The record is made on the contract documents – usually, but not necessarily limited to, the
design drawings. The end product of this effort is what the industry terms as-built drawings, or
more simply, "as built." The requirement for providing them is a norm in construction contracts.
Construction document management is a highly important task undertaken with the aid of an
online or desktop software system or maintained through physical documentation. The increasing
legality pertaining to the construction industry's maintenance of correct documentation has
caused an increase in the need for document management systems.

When changes are introduced to the project, the viability of the project has to be re-assessed. It is
important not to lose sight of the initial goals and targets of the projects. When the changes
accumulate, the forecasted result may not justify the original proposed investment in the project.
Successful project management identifies these components, and tracks and monitors progress,
so as to stay within time and budget frames already outlined at the commencement of the project.
Exact methods were suggested to identify the most informative monitoring points along the
project life-cycle regarding its progress and expected duration.

Closing

Closing process group processes

Closing includes the formal acceptance of the project and the ending thereof. Administrative
activities include the archiving of the files and documenting lessons learned. This phase consists
of:

 Contract closure: Complete and settle each contract (including the resolution of any open
items) and close each contract applicable to the project or project phase.

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 Project close: Finalize all activities across all of the process groups to formally close the
project or a project phase

Also included in this phase is the post implementation review. This is a vital phase of the project
for the project team to learn from experiences and apply to future projects. Normally a post
implementation review consists of looking at things that went well and analyzing things that
went badly on the project to come up with lessons learned.

Project control and project control systems

Project control (also known as Cost Engineering) should be established as an independent

function in project management. It implements verification and controlling functions during the
processing of a project to reinforce the defined performance and formal goals. The tasks of
project control are also:

 the creation of infrastructure for the supply of the right information and its update
 the establishment of a way to communicate disparities in project parameters
 the development of project information technology based on an intranet or the determination
of a project key performance indicator system (KPI)
 divergence analyses and generation of proposals for potential project regulations
 the establishment of methods to accomplish an appropriate project structure, project
workflow organization, project control, and governance
 creation of transparency among the project parameters. Fulfillment and implementation of
these tasks can be achieved by applying specific methods and instruments of project control.
The following methods of project control can be applied:

 investment analysis
 cost–benefit analysis
 value benefit analysis
 expert surveys

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 simulation calculations
 risk-profile analysis
 surcharge calculations
 milestone trend analysis
 cost trend analysis
 target/actual comparison

Project control is that element of a project that keeps it on track, on time, and within budget.
[41]
Project control begins early in the project with planning and ends late in the project with post-
implementation review, having a thorough involvement of each step in the process. Projects may
be audited or reviewed while the project is in progress. Formal audits are generally risk or
compliance-based and management will direct the objectives of the audit. An examination may
include a comparison of approved project management processes with how the project is actually
being managed.[51] Each project should be assessed for the appropriate level of control needed:
too much control is too time-consuming, too little control is very risky. If project control is not
implemented correctly, the cost to the business should be clarified in terms of errors and fixes.

Control systems are needed for cost, risk, quality, communication, time, change, procurement,
and human resources. In addition, auditors should consider how important the projects are to
the financial statements, how reliant the stakeholders are on controls, and how many controls
exist. Auditors should review the development process and procedures for how they are
implemented. The process of development and the quality of the final product may also be
assessed if needed or requested. A business may want the auditing firm to be involved
throughout the process to catch problems earlier on so that they can be fixed more easily. An
auditor can serve as a controls consultant as part of the development team or as an independent
auditor as part of an audit.

Businesses sometimes use formal systems development processes. This help assure systems are
developed successfully. A formal process is more effective in creating strong controls, and
auditors should review this process to confirm that it is well designed and is followed in practice.
A good formal systems development plan outlines:

 A strategy to align development with the organization's broader objectives

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 Standards for new systems
 Project management policies for timing and budgeting
 Procedures describing the process
 Evaluation of quality of change

PROJECT CYCLE
Phases in a Project
The project cycle refers to the various stages that are involved in a project from the conception
of a project idea to when the project is executed or actually takes off (Joseph; 2012). The
understanding of a project cycle is really very important as it enables us understand the total
picture of a project.

Project Idea Stage

Project Identification Stage

Project Evaluation Stage

Project Selection Stage

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 Project Execution Stage

Project Cycle

1. Project Idea; the project idea stage is the first stage of a project cycle. The idea about a
project arises from a variety of sources within the market place or from the environment.
New project ideas could originate from within an organisation or from outside it. In a public
sector organisation, it emanates mainly from the assigned roles of the relevant body. For
example, anti-malaria net distribution project is most likely to emanate from the state
ministry of Health. The idea of rural roads is also likely to emanate from a Works ministry.
In the private sector, project ideas could emanate from within an organisation or from
outside. From within, it could arise out of contacts between salesmen and customers. It
could also arise from outside if customers specifically request for possible bigger or better
products. In practice, new project ideas may fall into any of the following categories:
a. a proposal to build a community health centre in a very remote village in Kwara
state;
b. a proposal to upgrade a rural medical clinic to a general hospital in Baruten LGA of
Kwara state;
c. a proposal to conduct a population census in Nigeria after the general election in
2023; and
d. a proposal to build a mega railway line that will link the northern part of Nigeria
with the southern part.
2. Project Identification; the project identification stage consolidates the project idea
stage. Project ideas are not actually useful except if they are clearly identified and put
down in a systematic manner for further processing. A government agency may conceive
the idea of poverty alleviation in a particular local government area of Oyo state, but you
will note that the concept of poverty alleviation covers a very vast area of possible
interventions. So apart from simply coming up with the poverty alleviation, the
government agency should go ahead to identify the mode of intervention. The poverty
alleviation project could be any of the following:
a. rural women attending seminar or workshop on soap making or tailoring;
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 b. rural women micro-credit scheme to facilitate rural trading; and
c. millet planting project and so on.
3. Project Evaluation; When a project has been identified, the next step is to evaluate the
project. Project evaluation involves the estimation of the costs and benefits of a project.
Costs and benefits should be measured in terms of cash flows. It will be important here for
us to understand that the estimation of cash flows of a project is a very difficult task. It is
difficult in the sense that cash flows which are likely to arise in the future may be difficult
to estimate (Smith, 1995). In a public sector set up, other factors come to play when
evaluating a project. For example,
a. the employment generation potentials of a project may be taken into consideration
when estimating the benefits of a project.
b. Political considerations may also come into play e.g project selection and siting
c. Social benefits of a project can come to play e.g improved quality of life
4. Project Selection; after the project evaluation stage, the next stage is the project
selection stage. Faced with an array of projects with different values and worth, there is
need to select which projects will be embarked upon. Besides, budgetary and financial
considerations will also come into play since the resources for projects are limited. Project
selection is a top management responsibility. In the selection of projects, top
management usually considers the financial cost outlays involved and match them with
the benefits to be derived from a project. Projects that add positive benefits to the
community should be selected.
5. Project Execution; the project execution stage is the final stage in the project cycle. After
a project has been selected, it moves on to the execution stage. In most organisations, the
responsibility for execution of projects is vested on a project management team raised by
management or government. The function of the project management team is to ensure
that the budget for the project is actually spent on the project and that the project is
completed on schedule. In an ideal organisation, the project management team usually
prepares a monthly or quarterly budget report on projects. This is important for project
monitoring, evaluation and control, which may be conducted during project execution or

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after completion of the project. Basically, three major activities that are involved during
project execution are as follows:
a. Implementation Planning- This activity includes tactics and logistics. If a boat is to
be built upside down, the details of how it will be done must be worked out. A
fixture must be constructed that will hold the boat and allow it to be turned over
without being damaged. This is called "working out the tactics." It also includes the
sequence in which the work will be done, who will do what, and how long each
step will take. Logistics deal with making sure the team has the materials and other
supplies needed to do their jobs. Ordinarily, we think about providing teams with
the raw materials they need, but if the project is in a location where they can't get
food, work will soon come to a grinding halt. So, provisions must be made for the
team to be fed-and possibly housed.
b. Execution and Control- Once the plan implementation has been developed and
approved, the team can begin work. This is the execution phase, but it also
includes control, because, while the plan is being implemented, progress is
monitored to ensure that the work is progressing according to the plan. When
deviations from the plan occur, corrective action is fundamentals of project
management taken to get the project back on track, or, if this is not possible, the
plan is changed and approved, and the revised plan becomes the new baseline
against which progress is tracked.
c. Closeout- When all the work has been completed, the closeout phase requires a
review of the project be conducted. The purpose is to learn lessons from this
project that can be applied to future ones. Here, two questions are asked: What
did we do well? and What do we want to improve the next time?. One needs to
note that it is not appropriate to ask what was done wrong. This question tends to
make people defensive, and they try to hide things that may result in their being
punished. In fact, a lessons-learned review should never be conducted in a blame-
and-punishment mode. If you are trying to conduct an inquisition, that's different.
The purpose of an inquisition is usually to find who is responsible for major

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 disasters and punish them. Lessons learned sessions should be exactly what the
words imply.

Exercise and response - List the stages of a project cycle.

The Project Idea Stage; the project idea stage is the first stage of a project cycle. The idea about
a project arises from a variety of sources within the internal environment or market place.
New project ideas could originate from within an organisation or from outside the organisation.
If the idea originates from within, it could be from a sales person who has encountered some
success or problem with customers while performing his or her functions. a new project idea
could emanate from outside an organisation. Coming from outside an organisation, it could be
requests from existing customers asking for bigger or better products. New project ideas may fall
into any of the following categories.
 Proposal to add new products to existing lines: A company with existing product lines
may decide to add new products to its existing lines.
 Proposal to expand capacity in existing lines: A company may have a proposal to expand
capacity to enable it take advantage of enlarged market opportunities. there is need to
stress that new project ideas may originate from any level in an organisation. A factory
cleaner within an organisation may come up with a new product idea. Also an executive
director in an organization may also generate a new project idea.
The Project Identification Stage - After the project idea stage, the next stage is the project
identification stage. The project identification stage consolidates the idea stage. Project ideas are
not really useful unless they are clearly identified and put down in a systematic manner for
further processing.
The idea to introduce a new product into the market may come from a company salesman who
is very familiar with the market. At the boardroom room level, the entire organisation has to
see the project idea properly and clearly identify it as a possible area of business investment.
The totality of the new idea would be considered.
The Project Evaluation Stage - When a project has been identified, the next step is to evaluate
the project. Project evaluation involves the estimation of the benefits and costs of a project.
Benefits and costs should be measured in terms of cash flows. We have to emphasise at this point
that the estimation of the cash flow of a project is a very difficult task. It is difficult in the sense

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that the cash flow to be estimated is future cash flow. For example in the year 2007, we will tried
to estimate the cash flow for the year 2008.
In a corporate setup, the evaluation of projects should be carried out by a team of experts drawn
from the various departments like production, marketing, accounts and administration. The team
of experts should be objective in their evaluation of projects. Alternatively, the evaluation of a
project may be contracted to a third party like consultants. Contracting evaluation of projects to
tends to eliminate bias.
The Project Selection Stage - After the project evaluation stage, the next stage is the project
selection stage. Faced with an array of projects with different values and worth, there is need to
select which projects to embarked upon. There is no standard procedure for selecting projects as
this will differ from benefit seen. The important thing to note is that the project selection
function is a top management responsibility which in most cases goes to Board of Directors of an
organisation. In selecting projects, management usually considers the financial outlays involved
andmatches them with the financial capabilities of the firm. For example, a firm that has only
N10,000,000 (ten million naira only) be considering a new investment that involves a capital
outlay o f N40,000,000 (forty million naira only) except if it can source money externally e.g.,
from banks.
The Project Execution Stage - The project execution stage is the final stage in the project cycle.
After a project has been selected, it moves on to the execution stage. In most organisations, the
responsibility for execution of projects is vested on a project management team raised by top
management. The function of the team is to ensure that the budget for the project is spent entirely
on the project and that the project is completed on schedule. In an ideal organisation, the project
management team usually prepares a monthly budget consideration report on projects for top
management consideration. This is important for project monitoring and control.

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