PROJECT ENGINEERING SYLLABUS

1. Introduction of Project & Project Management [6 hrs]

2. Project Appraisal and Project Formulation [8 hrs]
3. Project Planning and Scheduling [12 hrs]
4. Project Implementation and Controlling. [ 7 hrs]
5. Project Risk Analysis and Management [7 hrs]
6. Introduction to Project Financing [5 hrs]
PROJECT ENGINEERING SYLLABUS
Tutorials:
• Writing project Proposal [2 hours]
• Scheduling Using Bar chart & CPM [ 4 hours]
• Scheduling Using Planning Software [4 hours]
• Project Control Method (EVA) [1 hour]
• Capital Structure Planning Exercise [2 hours]
• Capital Budgeting Exercise [2 hours]
References:

1. Ishwar Adhikari and Santosh Kr. Shrestha, “A text book of Project

Engineering” 2011, Chandeshwori Publication, First Edition.
2. Dhurba P.Rizal, “Project Management” 2001, Ratna pustak bhandar,
First Edition.
3. E.R. Yescombe, “Principles of Project Finance” 2002, Yescombe-
Consulting Limited.
4. K. Nagarajan, “Project Management”, ISBN: 81-224-1340-4, New Age
International (P) Limited, New Delhi, India, 2001.
5. Dr. Govinda Ram Agrawal, “Project Management in Nepal” Edition:
2006, M.K. Publishers and Distributors, Kathmandu, Nepal.
1.1 Definition of Project

• Project is planned investment to transform the

conception into reality; technically feasible,
economically viable, politically suitable and socially
acceptable;
• Project starts from scratch with definite objectives;
objectives be SMART; use resources (money, people,
materials, machines etc.) to achieve the objectives.
• Project is unique, uncertain, and impermanent.
1.1 Definition of Project

• According to the Project Management Institute of USA – “A

project is a one shot, time limited, goal directed, major
under taking, requiring the commitment of varied skills and
resources ….in a temporary organization”.
• According to Dr. Govind Ram Agrawal – “A project is a unique
group of tasks designed to attain a specific objective within
the constraints of time, cost and quality based on planning
and control through the use of a variety of resources in a
dynamic environment”.
1.1 Definition of Project
• Project is an investment; starts with specific
objectives; has set of activities; consumes resources;
has a start and end date. Once goal is finished project
ends.
• Project people work within the constraints of time,
cost, and quality in a dynamic environment. It is
project people who make or break the project.
Characteristics of a Project
1. Objective: be SMART (specific, measurable, acceptable, realistic & time bound)
2. Life span: a fixed start date and an end date.
3. Organization: a temporary organization ( a well-defined start and end).
4. Team work: PM co-ordinates and team work under the leadership of project manager.
5. Expenditure: needs rapid expenditure.
6. Constraints: project schedule; constraints of time, cost, quality, and resources.
7. Demanding time scale: eg: Montreal Olympic Stadium-Canada, SAARC Villa-Kathmandu.
8. Unique: No two projects are similar in all aspects.
9. Contracting: contracting and high level of sub-contracting.
10.Flexibility: be flexible to work in the dynamic environment of risk during implementation.
11.Collection of activities: activities are linked together to constitute a project.
12.Planning and control: compared actual performance with planned; corrective measures
in case of deviation.
1.2 Classification of Project
Basis of classifications:
1. Source of investment:
i. Private sector project - Nursing homes, Apartments
ii. Government sector project - Road, Hospitals, Schools
iii. Grant project - KOICA investment in ICT Building
iv. Loan project - Engineering Education Project, Development Project in IOE
2. Size and scale
v. Mega project - Huge investment e.g.; Upper Karnali Hydropower Project
vi. Major project - Smaller than Mega project e.g.; Middle Marshyangdi Hydropower
Project
vii. Medium project - Khimti/Bhotekoshi/Jhimruk Hydropower Project
viii. Small project – Smaller than Medium Hydropower Project
1.2 Classification of Project
3. Use of technology
i. Labor intensive project: Extensive use of labor e.g.; Green Road Projects
ii. Capital intensive project: Extensive use of machinery and equipment
4. Nature
iii. Simple project
iv. Complex project
v. Innovative project
vi. Emergency project
1.2 Classification of Project
5. Time frame and speed
i. Normal project - to be completed on normal time frame
ii. Crash project - to be completed within targeted time bound
6. Source of funding project
iii. Joint venture project - Sharing ownership e.g.; Maruti-Suzuki
iv. Bilateral project - Funding from both Donor and Government
v. Multilateral project - Funding from multi-Donors and
Government such as UNDP, DFID, and Government e.g.;
Decentralized Financed Development Project (DFDP)
1.2 Classification of Project
7. Functions
i. Disaster prevention project
ii. Development project
8. Service sector project
iii. Environment friendly project
iv. Orientation
v. Product oriented project
vi. Process oriented project
1.3 Project Objectives and Goal
According to Kast and Rosenzweig, Goal represents the desired future
conditions that individuals, groups or organizations strive to achieve.
Effective project objectives and goal must be SMART (specific,
measurable, achievable, realistic, and time bound). “Improve quality”
is not a clear goal.
• Specific: Goal should not be vague or ambiguous e.g. ‘maximize
profit’; But 10% profit is specific.
• Measurable: Goal should be quantitatively measurable. It should be
possible to verify whether or not the goal has been achieved.
• Achievable: Goal should be achievable and must be linked to reward.
• Realistic: Goal should be attainable yet challenging to employees.
• Time-bound: Goal should be time-bound. E.g. ‘increase market share
by 10% in one year’.
1.3 Project Objectives and Goal
Goal is set at the beginning of a project; represents the desired results;
defines the right thing.
PM must understand clearly defined goal; performance should be
weighed against a standard to determine one’s success or failure.
Activities of the project are directed to achieve objectives (desired
results). Public projects like health projects, road projects, irrigation
projects, etc. have social objective as the prime objective.
In general, the objectives and goals of any project should be:
1. complete the project within the budgeted fund.
2. complete the project within the scheduled time.
3. execute the project with quality standard.
4. complete the project to the satisfaction of end users.
1.3 Project Objectives and Goal

Importance of setting objectives and goal

1. Goal provides a clear vision, guidance, and direction of future.
2. Goal is the starting point for planning.
3. Goal provides unified direction to organized efforts.
4. Goal reduces uncertainty in decision making.
5. Goal motivates employee’s commitment and improves performance in
achieving end results.
6. Goal provides a basis for control. It serves as a standard in evaluating actual
performance and taking corrective action.
7. Goal serves as a basis for rewarding employees.
8. Goal is important in understanding organizational behavior.
1.4 Project Life Cycle Phases
Project is created with planned investment to achieve specific objective.
Every project has a fixed life span i.e. a well-defined start and end point.
Life span of a project is divided into four phases of development or life
cycle of a project. The four phases in the life cycle of a project are:
1. Formulation phase
2. Planning phase
3. Implementation phase
4. Termination phase
These four phases are also called as Conceive, Develop, Execute, and
Finish (CDEF).
1.4 Project Life Cycle Phases

Formulation Phase

Termination Phase Project Life Cycle Planning Phase

 

Implementation Phase

Figure: Project life cycle

 
1.4 Project Life Cycle Phases
1. Conceive or Formulation Phase
A project starts from the felt need, conception, creative ideas and
demand.
Need is identified and a concept is created; project idea is
conceived or born in this phase .
Feasibility study of various alternatives and Impact assessments
are initiated assuming a viable project approval will be received.
Proposal is prepared after pre-feasibility study, preliminary design
and preliminary estimate of resources.
1.4 Project Life Cycle Phases
2. Develop or Planning Phase
Planning phase include feasibility study, project appraisal and detailed
design.
Feasibility study involves:
i. Technical analysis: Detailed design, work breakdown structure,
work schedules, and cost estimate.
ii. Financial analysis: benefit-cost analysis including a budget.
iii. Marketing analysis: market demand and sales forecast.
iv. Environmental analysis: impact of the project on the
environment.
1.4 Project Life Cycle Phases
2. Develop or Planning Phase contd.
Project appraisal is the assessment of the ability to achieve
specific objectives.
Detailed design determines activities and resources, and sets
down work schedules.
At the end of Planning Phase, the final project brief is complete;
which includes the essentials of a project plan, funding
requirements, and final funding approval is received.
This is the major “go – no go” decision point.
1.4 Project Life Cycle Phases
3. Execute or Implementation Phase
Implementation phase starts after receiving the funding approval. Basic tasks
in this phase are implementation and control.
Implementation involves setting up of project organization and project team.
Tasks of team are allocated, management information system is setup,
procurement of resources and construction are completed.
Control involves supervision, monitoring and control of project performance.
Monitoring identifies problems in project performance. Control involves
corrective action to prevent recurrence of problems and to track the project
as per the established plan.
1.4 Project Life Cycle Phases
4. Finish or Termination Phase
Basic tasks of termination phase are project evaluation and
handover.
Evaluation measures the effects and impacts of the project
and helps to improve future project planning and
management.
Testing, commissioning and training of operators is important
after completion of the project.
Then the project is handed over to the owner or client.
1.4 Project Life Cycle Phases
Formulation Phase Planning Phase Implementation Phase Termination Phase
Effort

Time
1.5 Project Environment

Project encounters difficulty during implementation and

perform in a rapidly changing dynamic environment.
Environment influence on project’s performance may be
complexity, uncertainty, competition for resources, flexibility,
and rapid technological changes.
Project environment can be classified as:
1. Internal environment
2. Task environment
3. External environment
1.5 Project Environment
1. Internal environment
Internal environment is controllable by the project.
Forces that influence internal environment of project are:
i. Objectives: Project activities must focus on objectives or end results.
ii. Constraints: Project operates within the constraints of quality, cost,
& time.
iii. Structure: A project is a temporary organization with various
disciplines and varied experiences.
iv. Resources: Availability of resources affects on the progress of
project.
1.5 Project Environment
2. Task environment (Stakeholders)
Interests of stakeholders greatly influence and affect project activities. The elements of task
environment are:
1. Client: Client invests, their needs and requirements affect project activities.
2. Contractor: Performance of the contractor affects the progress of the project.
3. Consultants: Consultants greatly influence the project.
4. Suppliers: Resources are procured from the suppliers affect the quality and schedule of the
project.
5. Government: Government rules and regulations may influence the performance of the
projects.
6. Financers: Financers may affect the fund mobilization.
7. Competitors: Competition is everywhere and competitor’s action affects the project.
8. Labor unions: Disputes leading to strikes by labor union may adversely affect project’s progress.
1.5 Project Environment
3. External environment
External environment cannot be controlled by the project itself influences the
project’s progress. Elements of external environment are:
a. Political environment
i. Political system: Political instability may adversely affect the projects.
ii. Political institutions: Legislature (Parliament), Executive, Judiciary.
iii. Political philosophies: Democratic, Totalitarian, or a mix of both.
b. Legal environment
iv. Laws: Protects the rights and interests of project participants.
v. Courts of Law: Three-tier court systems to solve the disputes.
vi. Law administrators: Govt. agencies, layers, police, and jails.
1.5 Project Environment
3. External environment contd.
c. Economic environment
Economic system: Free market economy, centrally planned economy and mixed
economy.
Economic policies: Monetary policy (money supply, price stability, interest rates
and credit availability); Fiscal policy (Taxation, Govt. expenditure, & capital exerts);
Industrial policy (Licensing, location, incentives, foreign investment, technology
transfer).
Economic conditions: Income (expenditure, saving & investment); Business cycle
(prosperity, recession & recovery), Inflation.
Regional economic groups: SAARC, ASEAN, EU etc. promote cooperation among
member countries.
1.5 Project Environment
3. External environment contd.
d. Social environment
Demographics: Demography is concerned with human population and
its distribution, which affects availability of labor.
Social institutions: Social institutions and social class.
Pressure groups: Consumerism, environment protection, human rights,
good governance, etc.
Social change: Life style and social values promote social change.
1.5 Project Environment
3. External environment contd.
e. Cultural environment
i. Influencing the type of project: Use of type of food, drink, clothes, building
materials
ii. Creating attitudes towards work and leisure: work motivation, attitude
towards time
f. Technological environment
iii. Level of technology: Labor-based technology, capital-based technology
iv. Pace of technological change: Project adapt the technological change.
v. Technology transfer: Turn-key projects, trade, technical assistance, and
training.
vi. Research and Development: Expectations for improved technology is
increasing.
1.6 Introduction to Project Management
What is Management?
Management include planning, organizing, staffing, leading, directing, controlling,
and managing resources to achieve the organization’s goals and objectives.
According to Mary Parker Follet, “Management is the art of getting things done
through people”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to
command, to coordinate and control”.
According to Stphen P. Robbins, “Management is the process of getting activities
completed efficiently and effectively with and through other people”.
A construction company or manager must have profit as an overall goal.
1.6 Introduction to Project Management
What is Project Management?
According to Harold Kerzner – “Project management is the planning, organizing, directing
and controlling of company resources to complete specific goals and objectives”.

Project management is the application of knowledge, skills, tools and techniques to

project activities to meet the project requirements.

Processes of project management include: Initiating, Planning, Executing, Monitoring and

Controlling, and Closing.
1. Initiating
Identifying the needs, addressing the various requirements, concerns and expectations of
shareholders.
1.6 Introduction to Project Management
What is Project Management? Contd.
2. Planning
Planning is the process of setting the goals, choosing the future courses of
actions from among the alternatives, and then establishing the programs
and procedures for achieving objectives.
The main purpose of planning is to reduce the uncertainty that exist
before a project.
Planning implies or suggests the systematic way of doing things, specifies
the procedures, programs and an effective monitoring and control system
to achieve the project goals.
 1.6 Introduction to Project Management
What is Project Management? Contd.
3. Executing
Executing involves coordinating people and resources to complete the project in
accordance with the plan and specifications.
4. Monitoring and controlling
Monitoring and control is required to track, review, and regulate the progress
and performance of the project.
Monitoring involves collecting data on quality, cost, and time; and reporting
them to the project implementation unit.
Controlling is the measurement of work performed, comparison of actual
performance with a pre-determined standard and then the taking of corrective
action, when necessary, to ensure that performance meets standard.
1.6 Introduction to Project Management
5. Closing
Closing include project evaluation and handover.
Evaluation measures the effects and impacts of the project and helps to
improve future project planning and management.
Testing, commissioning and training of operators is important after
completion of the project.
Then the project is handed over to the owner or client.
Project is closed after handover.
2. PROJECT APPRAISAL AND PROJECT FORMULATION [8 hours]

2.1 Concept of Project Appraisal,

2.2 Project Proposal (technical and financial),
2.3 Procedure for Developing Project Proposal,
2.4 Techniques of Project Formulation: Feasibility
analysis, Cost Benefit analysis, Input analysis,
Environmental analysis
2.1 Concept of Project Appraisal
Development project impose costs and benefits on recipient countries.
Those costs and benefits can be social, environmental, or economic in
nature.
For example, Irrigation projects may facilitate the growing of cash crops in
one locality, but may cause water shortage, and hence economic, social, and
environmental pressures in another.
Project appraisal is the evaluation of overall ability of feasible project to
succeed.
Project appraisal process starts after the completion of feasibility study.
The aim of project appraisal is to consider and compare feasible project.
2.1 Concept of Project Appraisal
Appraisal is based on the findings of the feasibility studies. It focuses on:
Project’s ability to achieve stated objectives.
Comparison of proposed project in terms of investment costs/benefits, job
creation, profit, social benefits etc.
Primary function of appraisal is to evaluate a project’s ability to achieve its
objectives. For private project, the objective is profitability. For a public project,
the objective is socio-economic development in the country through economic
growth, employment, poverty reduction etc.
Project appraisal will take a holistic view of the costs and benefits associated
with development activities. The objective of appraisal is to ensure that the
project is viable from the following angles:
2.1 Concept of Project Appraisal
1. Technical Appraisal: Technical know-how, process, design
requirements, specifications, risks and uncertainties, resource
availability, capacity, location and geology,, break-even point etc. are
assessed.
2. Marketing Appraisal: Marketing capacity, demand, coverage,
revenue, distribution network, transport facilities, competition, ability
to satisfy customers etc. are assessed.
3. Management Appraisal: Organization and management, institutional
relationships, management capability and impact of stakeholders on
the project are assessed.
2.1 Concept of Project Appraisal
4. Environmental Appraisal: Positive and adverse environmental
aspects are assessed. EIA is reexamined.
5. Financial Appraisal: Capital requirements, sources of fund, cash flow,
capacity to meet financial obligations are assessed. Sensitivity analysis
is done to test effects of change in variables such as cost, price and
time. Ratio analysis is done to assess liquidity and profitability. Effect of
inflation is assessed.
6. Economic Appraisal: Social cost benefit analysis is made.
After appraisal, the competent authority approves the project.
2.1 Concept of Project Appraisal
Project appraisal report should contain:
1. Executive summary.
2. Overview - description of objective.
3. Comparison with ongoing projects.
4. Technical feasibility assessment.
5. Marketing feasibility assessment.
6. Management feasibility assessment.
7. Environment feasibility assessment.
8. Financial feasibility assessment.
9. Integration of pros and cons of feasibility findings.
10. Recommendations - choice and reasons of choice
11. Appendix.