A project is a set of activities designed and

implemented to accomplish specific

purposes, with given resources, within
stipulated time, by satisfying imposed
conditions.
“A project can be defined as a non-
routine, non- repetitive, one-off
undertaking normally with discrete time
financial and Technical performance
goals.”-F.L. Harrison

“A project is a one-shot set of activities

with a definite beginning and ending
point.” - Adam and Ebert.
“A project is some overall task which has a
definable beginning and a definable end. It
consists of a number of related and dependent
activities, all of which utilize resources and
upon which there are imposed internal and
external conditions.”- R.L. Martino
“A project is a system involving the co-
ordination of a number of separate department
entities throughout the organization and which
must be completed within prescribed
schedules and time constraints.”- American
Project Management Institute (APMI)
1.Specific purpose oriented set of related,
dependent and non-routine activities.
2. Definite beginning and ending time.
3. Given resources, time and quality
constraints.
1. Objectives
2. Operations
3. Resources
4. Conditions
1. Specific Purpose
2. Definite Life Cycle
3. Complex Interdependencies
4. Uniqueness
5. Conflicting Environment
Project life cycle refers to series of related,
interdependent, and sequential steps that a
project has to pass from beginning to end.
 Project
Identific
ation
Project Projec
1 t
Evaluatio
n Prepar
ation
6 Project
Life 2
Project Cycle
Implem Project
entatio Apprai
n sal
5 Project
Negoti
ation 3

4
A. Socio-Economic Activity Based Classification:
1. Industrial Projects
2. Agricultural Projects
3. Education Projects
4. Engineering Projects
B. Input Intensity Based Classification:
1. Capital Intensive Projects
2. Labor Intensive Projects
C. Ownership Based Classification:
1. Single ownership Projects
2. Joint venture Projects
D. Contribution Based Classification:
1. X Type Projects
2. Y Type Projects
3. Z Type Projects
E. Resource Priority Based Classification:
1. Core Projects
2. Non-core Projects
 Project management refers to planning,
execution and controlling of project activities
for attaining project objectives through
efficient utilization of given resources and
satisfying imposed conditions.
“Project Management can be defined as the
planning, directing and controlling of
resources, (people, equipment, material), to
meet the technical, cost and time constraints
of the project”- Chase and Aquilano.
“Project Management is an organized venture
for managing projects that involves scientific
application of modern tools and techniques in
planning, financing, implementing,
monitoring, controlling and coordinating
unique activities or tasks to produce
desirable outputs in consonance with pre
determined objectives within the constraints
of time, cost, quantity and quality.”- BB Goel
“Project management is the application of
knowledge, skills, tools and technique to
project activities to meet project requirements.
Project management is accomplished through
the use of processes such as: initiating,
planning, executing, controlling and closing.” –
Project Management Institute.
1. Preparation of realistic plan of project
activities in the light of project objectives.
2. Preparation of project schedule and budget
according to project plan using modern
techniques.
3. Selection and training of project employees,
assigning duties, and establishing relations
and leadership roles among employees.
4. Designing and administering monitoring and control system to ensure successful
implementation of project.
5. Maintaining liaison with the stake holders of the project.
6. Preparation of post- execution report of the project and hand over the project to
the parent organization.
Project management performance is largely
dependent on the real-world environment.
Project management environment can be
categorized into four groups:
1. Social Environment.
2. Economic Environment.
3. Technical Environment.
4. Managerial Environment.
1. Lack of trust and respect
2. Trader mentality
3. Lack of discipline
5. Political society
1. Heavy reliance on borrowings.
2. Financial irregularity.
3. Inflationary trend.
4. Difficult foreign exchange.
5. Stringent controls.
1. Dependence on imported technologies.
2. Lack of infrastructure.
3. Emphasis on indigenization.
4. Shortage of professional companies.
5. Lack of quality consciousness.
6. Shortage of specialized manpower.
1. Largely non-professional.
2. Procedure-oriented.
3. Power centralized at the top.
4. Finance controlled.
5. Self oriented.
 Adequa
te
Fund
Project
Good
Manage
System
ment

Good
Agency
27
Concept: Project formulation is the process of
generation and conversion of project idea in
to a feasible plan of action. The process
starts with idea invention and ends with
preparation of feasible plan of action.

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“Project formulation refers to a
series of steps to be taken to
convert an idea or aspiration
into a feasible plan of action”-
BBGoel.

29
“Project formulation is one of
the basic techniques through
which planning can be
changed from an intuitive base
to an institutional and rational
base”- G. Myrdal

30
1. Project Identification
2. Technical Analysis
3. Feasibility Study
4. Appraisal of Project

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 Project identification refers to identification
of needs, problems, and aspiration to be
achieved through the project.
Needs/problems or aspiration can be
identified by:
- Individuals
- Organizations
- State

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Analysis of those factors which can influence or
can be influenced by the project.
A. Input Analysis
B. Demand and Supply Analysis

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1. Location
2. Size and Cost of Land
3. Raw Materials
4. Utilities
5. Manpower
6. Transport Facilities

34
7. Incentives and Concessions
8. Environmental Consideration
9. Climatic and Natural Hazard
Consideration
10.Technological Aspect
Consideration

35
1. Survey of Buyers Intentions
2. Composite of Sales-force
opinion
3. Expert’s Opinion
4. Market-test Method
5. Statistical Method

36
Feasibility study is a pre-investment evaluation
of a project. It is a formal project document that
shows results of the analysis, research and
evaluation of a proposed project and determines
if this project is technically feasible,
cost-effective and profitable.
This is the study of a proposed project to
indicate whether the proposal is attractive
enough to justify more detailed preparation.

A feasibility study is a part of the process of

project identification, preparation and
selection.
It involve the process of appraising projects
or group of projects and then choosing to
implement some of them.

This is an extremely important stage in

project management.
1. To find if there is adequate demand for the
project’s output.
2. To find if there is availability of suitable
technology and inputs
3. To find the best options
4. To answer if the project meets the
environmental regulations and priority of the
nations
5. To examine the project’s financial and
economic viability.
8. A feasibility study allows avoiding
unfounded spending of effort, time and
money, so it is a highly effective tool of
project investment evaluation and planning. It
forces investors to put their ideas on paper to
conduct analysis and assessment and then
find out whether the ideas are worth
investing or not.
1. Economic Feasibility Study.
2. Financial Feasibility Study.
3. Commercial Feasibility Study.
4. Managerial Feasibility Study.
Economic feasibility is an evaluation process
that attempts to assess the impact (positive/
negative) of the proposed projects on the
economy as a whole. The scope of economic
feasibility study is very wide.
1.Net National Value-Added
2. Employment Effect
3. Distribution Effect
4. Foreign Exchange Effect
5. Infrastructural Complications
6. Environmental Complications.
Financial feasibility study is the process of
appraising a project in terms of financial
aspects. It assesses how much start-up
capital is needed, sources of capital, returns on
investment, and other  financial considerations.
It looks at how much cash is required, where it
will come from, and how it will be spent.

46
1. Capital Cost
2. Working Capital Requirement
3. Estimates of Operating Costs
4. Estimates of Operating Revenue
5. Taxes/Depreciation and
6. Profits.

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1. Pay Back Period (PBP),
2. Net Present Value (NPV)
3. Benefit Cost Ratio (BCR),
4. Internal Rate of Return (IRR), and
5. Financial Ratios.

48
For business projects commercial feasibility
study is compulsory. Scope of commercial
feasibility study is wider than financial
Feasibility study. This study attempts to assess
present and future market conditions (demand
and supply )of products to be produced from
Proposed project.
1. Existing demand and trend of increase or
decrease in demand.
2. Size of population.
3. Levels of income.
4. Economic condition of country or special
areas.
5. General price levels of product or service.
6. Advancement of technology.
7. Test and consumption pattern of people.
8. Buying behavior of customer.
9. Prices and availability of substitute products.
10. Distribution channel.
11. Marketing strategies of competitors.
12. Government policies.
This study attempts to assess whether parent
organization has competent employees to
manage the project efficiently. Factors are
generally considered to conduct managerial
feasibility study include:
1. Can the parent organization depute a
capable employee to work as project
manager?
2. What will be total manpower requirement of
different skills.
3. Do project employees need training to
improve their skills?
4. Does it require to appoint project manager
from outside?
5. Does the project require special
organizational structure?
Project appraisal is the last stage of project
formulation. It is the stage of reaching
decision, on the basis of results of technical
and feasibility studies, to undertake the project
or not.
BB Goel defined it as “Project appraisal is a tool
to examine as to whether in the given situation
it would be most realistic, reliable and
reasonable one to commit resources or not”.

56
According to P.K. Mottoo “Project appraisal is
the process of evaluating the salient features of
feasibility analysis, techno-economic analysis,
design and network analysis, input analysis,
financial analysis and social cost-benefit
analysis of a project.”
Performance of project management largely
depends on the real-world environment.
Project environment refers to factors and
forces that influence existence and
operations of a project.
Project management environment is
composed of four major components
grouped as follows:
1. Social environment.
2. Economic environment.
3. Technical environment.
4. Managerial environment.
 Managerial Social
Environment Environment

Project
Management
Environment

Economic
Technical
Environment
Environment
1. Lack of trust and respect
2. Trader mentality
3. Lack of discipline
5. Political society
1. Heavy reliance on borrowings.
2. Financial irregularity.
3. Inflationary trend.
4. Difficult foreign exchange.
5. Stringent controls.
1. Dependence on imported technologies.
2. Lack of infrastructure.
3. Emphasis on indigenization.
4. Shortage of professional companies.
5. Lack of quality consciousness.
6. Shortage of specialized manpower.
1. Largely non-professional.
2. Procedure-oriented.
3. Power centralized at the top.
4. Finance controlled.
5. Self oriented.
1. Adequate fund.
2. Good agencies.
3. Good system.
For effective market and demand analysis
project authority needs to have information
about size of the market, income, education,
religion, culture, lifestyle, and purchasing
behavior of people. Adequacy and accuracy of
information is an important precondition of
good market and demand analysis.
1. Situational Analysis and Specification of
Objectives.
2. Collection of Secondary Information
3. Conducting Market Survey
4. Characterization of the Market
5. Demand Forecasting
6. Market Planning
Prediction or projection of future demand of
product or service is known as demand
forecasting.
A. Forecast Based on Judgment and Opinion
i) Executive Opinion
ii) Sales Force Opinion
iii) Customer Surveys
iv) Delphi Method
B. Forecast Based on Time Series Data
i) Moving Average
ii) Weighted Moving Average
iii)Exponential Smoothing
Year Demand (in thousand units)
2001 5000
2002 7250
2003 7500
2004 6000
2005 5500
2006 7000
What will the demand forecast of 2007
considering 4 years data?
F2007 = (7000+ 5500+6000+7500)/4
=(26000)/4
=6500 thousand units
If the actual demand for 2007 is 6400 units
What will be the demand forecast for 2008?
Year Demand (in units)
2001 5000
2002 7250
2003 7500
2004 6000
2005 5500
2006 7000
2007 6400
F 2008 = (6400+7000+5500+6000)
= 24900/4
= 6225 units
If the actual demand of 2008 is 6200 thousand
Units what will be demand forecast for 2009?
Year Demand (in units)
2001 5000
2002 7250
2003 7500
2004 6000
2005 5500
2006 7000
Year Demand Weights
2001 5000
2002 7250
2003 7500 .10
2004 6000 .20
2005 5500 .30
2006 7000 .40
F2007 = .4(7000)+ .3(5500)+.2(6000)
+.1(7500)
= 2800+1650+1200+750
= 6400 units
If the actual demand of 2007 is 6200 units,
what will be the demand forecast for 2008?
Next Forecast = Previous Forecast+
α (Previous Actual - Previous
Forecast)
 M.S. Company deals with a single product.
Forecasted sales for 2007 of the product was
5000 units. Actual demand was 5500 units.
Smoothing constant α is 10%. What will be
the demand forecast for 2008?
Previous Demand Forecast= 5000 units
Previous Actual Demand =5500 units
Error Level (α ) =10% =.1

Forecast 2008 = 5000+ .1(5500-5000)

= 5000+ 50
= 5050 units
If the actual demand for 2008 is 5100 units,
what will be the demand forecast for 2009?
Uncertainties of demand forecast arise mainly
from three sources:
1. Data about past and present market.
2. Method of forecasting.
3. Environmental change:
a)Technological changes
b)Shift in government policy
c) Development of international scenario.
d) Discovery of new sources of raw material.
e)Vagaries of monsoon.
It is the final stage of market and demand
analysis. It covers services, price, distribution
and promotional activities of marketing.
Marketing services incorporate:
1. Product installation
2. Training for product use
3. Warranty
4. After sale services
In setting products prices the marketing
managers need to consider the following
Factors:
1. Production cost
2. Local tax and concessions
3. Profit and discounts
4. Final price consumers are to pay
1. Packaging
2. Transportation system
3. Selection of distribution channel.
4. Determination of commissions of marketing
intermediaries.
1. Branding.
2. Advertisement.
3. Sales promotion
4. Personal selling.
“Project risk is an uncertain
event or condition that has a
negative effect on project
objectives.”
-Gray and Larson
A. Nature and Intensity
1) Stand Alone Risk
2) Corporate Risk
B. Sources of Risk
1. Internal Risk
a) Market Risk
b)Technical Risk
2. External Risk
Risk that negatively affect a single project is
known as stand alone risk. It does not make
other projects to suffer. As project requires
huge investment and serves interests many
stake holders that’s why project initiators
critically assess project risks. In case of
commercial project it is a matter of serious
concern to the investors.
 When risk of a project adversely affects other
projects within a same industry is termed as
corporate risk. Because of a single risky
project other projects belonging to the same
industry need to suffer.
This type of risk appears from inside of a
project. Project people have better control over
it. Internal project risk are of two types:
a) Market risk and
b) Technical risk

Market risk emerges from wrong market

analysis and predictions. Reasons of market
risk include;
1. Incomplete and improper market study.
2. Inability to conduct accurate demand
forecast.
3. Incapability to predict customers changed
needs and demand with the change of time.
4. Failing to collect right information about
competitors’ marketing strategy or
introduction of new product.
Technical risk arises because of:
1. Wrong schedule
2. Improper budget or cost estimation.
3. Poor quality standard.
External risk occurs because of changes or
variations in assumed elements of external
environment. Project authority does not have
right control over those factors that cause
project risk.
- Change in market condition
- Change in competitors activities and
strategies
- Changes in government policies
- Change in interest rate
- Big change in project policy/ decision
- Change in demand and behavior of
customer.
- Relation with Suppliers
- Weather change
- Shortage of labor supply
- Shortage in input supply
- Change in influence of buyers and sub-
contractors.
1. Range
2. Mean Absolute Deviation
3. Variance
4. Standard Deviation
5. Coefficient of Variance
ZRg = Rh - Ri
Where:
Rg = Range of distribution
Rh = Highest possible value
Ri = Lowest possible value
EQUATION OF MEAN ABSOLUTE DEVIATION
n
MAD =  pi Ri  R
i 1

Where:
MAD = Mean absolute deviation
R = Expected value of the distribution
Ri = ith possible value of the variable.
Pi = Probability of the ith possible value.
 n 2

Variance     p R  R 
2
i i
i l
 n 2

 SD = =  p R
i l
i i  R
 σ
CV = 
R
Where CV = Coefficient of variance.
 = Standard deviation.
R = Expected value of the distributions.
A schedule depicts the expected start
and finish time of each job. It is
produced by allocating resources up
to the limit of availability, according to
the requirements given by the plan.”…
R.L. Martino
“Scheduling is the determination of time
required for execution of each
operation and the time order in which
each operation has to be carried out, to
meet the plan objectives.”... Punmia and
Khandelwal
1. Identification of activities involved in
the project with important milestones.
2. Sequences of activities
3. Time estimates for each activity
4. Projected product/work/project
completion time.
5. Resource requirements
1. Schedule maker should set the objective of
scheduling in the light of project objectives.
2. Dividing the entire project in to some
manageable segments.
3. Identification of activities and their
sequences.
4. Estimation of time required for each
activity.
5. Determination of probable project
completion time.
6. Adjusting the schedule on the basis of
availability of resources.
7. Assigning jobs to project employees.
1. Bar Chart
2. Network Technique
(a) CPM
(b) PERT
Following are the information of a construction
project. The project authority desires to apply CPM
technique to prepare project schedule. The table in
next slide contains activities, relations among
activities, and time estimate for each activity.
Required:
a)A network diagram
b)Alternative paths of the network diagram
c)Which path is critical one?
d)How many weeks will be required to complete the
project?
Activity Immediate Predecessor Time (in weeks)
Activity

A None 6
B None 3
C None 7
D A 2
E B,C 4
F B,C 3
G B,C 7

H C 6

I G, H 8

J F 5

K D, E 9
 D
2 5
2 K
A E 9
6 4
B F 5
1 3 3 6 8
3 J
C G 8
7 Dummy
7 I
4 6
7
H
1. A-D-K = 6+2+9= 17 weeks
2. B-E-K = 3+4+9= 16 weeks
3. B-F-J = 3+3+5 = 11 weeks
4. C-Dummy-E-K= 7+0+4+9=20 weeks
5. C-Dummy-F-J= 7+0+3+5= 15 weeks
6. C-Dummy-G-I=7+0+7+8=22 weeks -Cp
7. C-H-I= 7+6+8=21 weeks
Concept: Project implementation refers to
execution of project plan according to budget
and schedule by satisfying quality and other
constraints. In this stage physical progresses
of project works take place.
1. Initiating the Project
2. Specifying and Scheduling the Work
3. Clarifying Authority Responsibility and
Relationships
4. Obtaining Resources
(a) Personnel
(b) Finance
(c) Materials and Equipments
5. Establishing Control System
6. Directing and Controlling
7.Terminating the Project
Key activities of this stage include:
(a) Selection of PD/PM
(b) Approval of project plan, budget, schedule,
and strategies by appropriate authorities.
(c) Making contract for financial and technical
assistances.
Key activities of this stage are:
(a)Select technology to be used
(b)Select equipment
(c)Decide layout
(d)Identify infrastructure facilities
(e)Invite tender and place order
(f) Receive supplies and install machines
(g)Train project employees.
Important issues of this stage include:
(a) Authority to change project schedule;
(b) Authority to use alternative resources, if
necessary;
(c) Authority to complete project before
stipulated time;
(d) Who will handle contingency fund?
(e) Who can change project objectives?
(f) Who will have the authority for procurement?
(g) Who will prepare project reports ?
Important project resources include:
(a)Personnel;
(b)Finance;
(c)Materials and Equipments.
Key stages of control system include:
(a)Setting work standards;
(b)Measuring actual performance;
(c)Finding deviations between standards and
actual performances;
(d)Taking corrective measures, if necessary.
Key activities are:
(a)Issuance of work order;
(b)Instructing the employees;
(c)Supervising the work.
Key activities of the stage are:
(a)Completing project work;
(b)Preparing a project completion report;
(c)Handing over the project to parent
organization.
a. Normal Termination.
b. Early Termination.
c. Late Termination.
d. Non Termination.
 Factors that lead to  Factors and problems
success of projects that lead to failure of
 Political Commitment projects
 Simplicity of Design  Financial Problems
 Careful preparation  Management
 Good management problems
 Involvement of  Technical problems
beneficiaries/commun
ity
 Political problems

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3
Distinctive implementation problems
 Poor scheduling of projects leading to delays

in implementation.
 Misallocation of funds
 Lack of accountability and transparency
 Bureaucracy in decision-making.
 Selfishness/nepotism/favoritism by some

project managers.

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4
Distinctive implementation problems ( contd)
 Weak monitoring systems
 Natural calamities like drought, earthquakes,

landslides, and hailstorms.

 Policy changes
 Migration of beneficiaries
 Lack of team work
 Lack of incentives for implementers.

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5
Evaluation is an analytical process for
systematically and objectively
perceiving the relevance, efficiency,
effectiveness and impact of activities in
the light of their objectives.”

Skylark Chadha
 THANKS
For Your Time and Cooperation