EMS 313: INDUSTRIAL PROJECT MANAGEMENT

Lecture 1
Introduction to Industrial Projects
Project Management Institute (PMI) defines
project as “a temporary endeavor
undertaken to create a unique product,
service or result”. It includes new structures,
process, plant, system or software,
……………. “project is a one off investment”
 The UK Association for project management

defines project as “discrete undertaking with

defined objectives often including time, cost
and quality performance goals”
 Projects vary in scale and complexity from
small improvements to existing products to
large capital investments.
 Project is investment of resources to produce

goods and services; it costs money, time,….

 The criteria for investment in projects is

generation of goods and services that are

valuable than the predicted costs of the
project. And thus it has a defined date for
completion.
 Attributes of projects
◦ Unique purpose
◦ Temporary: start & finish
◦ Has specific objectives
◦ It is a cause and means for change
◦ It involves risks and uncertainties
◦ Requires commitment of human, materials and
financial resources.
 PMI defines project management as “art of
directing and coordinating human and material
resources through the life of project by using
modern management techniques to achieve
the predetermines goals of scope, time,
quality, cost and participants satisfaction”
 Hence; project management intends to
manage change, but explicitly planned change
such that from initial concept the change is
directed towards the unique creation of
functioning system.
Project Performance Dimensions
 The major dimensions that defines project includes
scope, time and cost. These parameters are
interrelated and interactive.
 Change in one affects the other
 For example if scope is enlarged, the project might
require more time for completion and increased cost.
 So presented mathematically as;
project performance = f(scope, time, cost)
 Project Life Cycle
 A project life cycle is a collection of project phases.
 Project phases vary by project or industry, but some general phase:

 Concept  Development Implementation  Support

 Product Life
CyclesLife Cycle (PDLC) is a framework for
Product Development
describing the phases in developing and maintaining products.
Typical PDLC phases - planning, analysis, design,
implementation, and maintenance.

Project life cycle applies to all projects regardless the product.

Product life cycle models vary considerably based on the
nature of the product.
Most large projects are developed as a series of smaller
projects
Project management is a cross life cycle activity done is all of
the product life cycle phases.
 Project Life Cycle

Intermediate
Phases (one
or more) Final
Initial
Phase Phase

Time
Start Finish

Milestones :
• defined state of the project
• decision point
 Conception phase, starting with the seed of
an idea, it covers identification of the
product / service, Pre-feasibility, Feasibility
studies and Appraisal and Approval.
 The project idea is conceptualized with initial

considerations of all possible alternatives for

achieving the project objectives.
 As the idea becomes established a proposal is

developed setting out rationale, method,

estimated costs and benefits for appraisal of
the stakeholders
 In this phase the project structure is planned
based on project appraisal and approvals.
 Detailed plans for activity, finance, and
resources are developed and integrated to the
quality parameters. Major tasks performed:
◦ Identification of activities and their sequencing
◦ Time frame for execution
◦ Estimation and budgeting
◦ Staffing.
 This phase of the project witnesses the
concentrated activity where the plans are
put into operation.
 Each activity is monitored, controlled and

coordinated to achieve project objectives.

Important activities in this phase are:
◦ Communicating with stakeholders
◦ Reviewing progress
◦ Monitoring cost and time
◦ Controlling quality
◦ Managing changes
 This phase marks the completion of the
project wherein the agreed deliverables are
installed and project is put in to operation
with arrangements for follow-up and
evaluation.
 There is no standard classification of the
projects. However considering project goals,
these can be classified into two broad groups,
industrial and developmental.
 Each of these groups can be further classified

considering nature of work (repetitive, non-

repetitive), completion time (long term, shot
term etc), cost (large, small, etc.), level of risk
(high, low, no-risk), mode of operation ( build,
build-operate-transfer, …….).
 Industrial projects are also referred to as
commercial projects, which are undertaken to
provide goods or services for meeting the
growing needs of the customers and providing
attractive returns to the investors/stake holders.
 Following the background, these projects are
further grouped into two categories i.e.,
demand based and resource / supply based. The
demand based projects are designed to satisfy
the customers’ felt as well the latent needs
such as complex fertilizers, agro-processing
infrastructure.
 The resource/ supply based projects are those
which take advantage of the available
resources like land, water, agricultural
produce, raw material, minerals and even
human resource.
 Resource based projects include food product
units, metallurgical industries, oil refineries.
 Projects based on human resource (skilled)
availability include projects in IT sectors,
research projects in bio services.

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 Development projects are undertaken to
facilitate the promotion and acceleration of
overall economic development.
 These projects act as catalysts for economic

development providing a cascading effect.

 Development projects cover sectors like

irrigation, agriculture, infrastructure health and

education.
QN: Make use of the projects of your choice to
describe the project phases by detailing the
unique features of a development vs an
industrial project. Individual Assignment 1
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 help in handling complex, costly and risky
assignments by providing interdisciplinary
approach in handling the assignments.
 help in handling assignments in a specified time
frame with definite start and completion points.
 provide task orientation to personnel in an
 Organization in handling assignments. Example:
Organizations in IT sector handling software
development assignments for clients.
 ………………………………………………………….
 Once you have initiated the project and gather
all necessary information, next is planning.
 The planning stage depends on the size of your
project, how much information you have to
organize and how large your team is.
 The end result of planning is a clear project
plan or schedule, from which everyone will
follow their assigned tasks.
 Different tools, techniques and planning
programs may be used by the project manager
for planning the project implementation.
Planning process:
Identifies specific work to be performed and the

goals that define the project.

Provides documented estimates regarding

schedule, resources and cost for planning,

tracking and controlling the project.
Obtains organizational commitments that are

planned, documented and agreed upon.

Development and documentation of project

alternatives, assumptions and constraints

Establishes a baseline of the plan from which

the project will be managed.

Involves the following:
1) Development of project management plan

2) Scope management – collect requirements,

define scope, create WBS

3) Time management – define activities,

sequence activities, estimate activities resources,

estimate activity duration and develop schedule.
Create WBS - subdivide the project’s deliverables
and the project’s work into smaller, more
manageable components.
 Project management plan refers to: "a
formal, approved document used to guide
both project execution and project control.
 The primary uses of the project plan are to

document planning assumptions and

decisions, facilitate communication among
stakeholders and document approved
scope, cost and schedule baselines. A
project plan may be summarized or
detailed.“
 Project plan answers basic questions about

the project i.e., What, Why, Who & When?

 A project charter is a short document that lists
the scope, objectives, deliverables, and
stakeholders of a project and delineates roles
and responsibilities of each member of the
project team.
 A project plan is a formal, approved document

that guides project execution and control. It

explains in detail how and when to
 fulfill the project objectives by showing the

major products, milestones, activities, and

resources required on the project.
The Department of Engineering Management Studies, Mzumbe
University has recently received a grant for upgrading mechanical
workshop (different machines and equipment – machining, metal
forming, joining etc from COSTECH under Research Infrastructures
support. Develop the project plan for the implementation.
Group Assignment 1
 An essential aspect of project appraisal is reduction of
risk to a level which is acceptable to an investor.
 This starts with realistic assessment of uncertainties
associated with the data and predictions during appraisal.
 Project risks are classified as:
 Political – regulation for competition, public inquiry, approvals
 Legal risks - changes in laws and regulations
 Commercial – wider aspects of demand and supply, social
acceptability
 Environmental risks – changes in standards in environmental
consents.
 Elemental risks – risks associated with the elements of the
project (operation and implementation risks)
 Financial and revenue risks
 Risk management is the systematic process of
managing an organization's risk exposures to
achieve its objectives in a manner consistent
with public interest, human safety,
environmental factors, and the law.
 It consists of the planning, organizing, leading,
coordinating, and controlling activities
undertaken with the intent of providing an
efficient pre-loss plan that minimizes the
adverse impact of risk on the organization's
resources, earnings, and cash flows.
 Project risk management is the art and
science of identifying, assigning, and
responding to risk throughout the life of a
project and in the best interests of meeting
project objectives
 Project risk involves understanding potential
problems that might occur on the project
and how they might impede project success
 In project management terms, risks are
those factors that may cause a failure to
meet the project’s objectives.
 Why Take Risks?
Because of Opportunities!

Financial
Danger, Rewards,
Failure, Success,
Loss, Prosperity
Anger, Happiness,
Confrontation Friendship
Try to balance risks and opportunities

Risks Opportunities
 Risk Utility

• Risk utility or risk tolerance is the amount of

satisfaction or pleasure received from a potential
payoff
– Utility rises at a decreasing rate for a person who
is risk-averse
– Those who are risk-seeking have a higher
tolerance for risk and their satisfaction increases
when more payoff is at stake
– The risk neutral approach achieves a balance
between risk and payoff
 The goal of project risk management is to
minimize potential risks while maximizing
potential opportunities.
 The approach for risk management has to be
systematic;
 Many approaches are available – essentially
they should cover:
 When should risk management be applied;
 How risks should be identified; and
 What to do with the risks once they have
been identified.
 Risk Analysis and Management for Projects
(RAMP) by ICE and Institute of Actuaries,
1998;
 Process launch;
 Risk review;
 Risk management; and
 Process close-down.
 BS 6079 Guide to Project Management
 PM BoK for the Association of Project
Management, UK, 2000;
 Step 2:
Step 1: Analyse and
Identify the Risks evaluate
the Risks

Step 3:
Step 4:
How will you
Monitor and review risks
manage or 'treat' the
Risks
R is k M a n a g e m e n t P la n n in g

R is k Id e n tific a tio n

Q u a lita tive R is k A n a lys is

Q u a n tita tive R is k A n a lys is

R is k R e s p o n s e P la n n in g

R is k M o n ito rin g a n d C o n tro l

 Obtain additional information
 Perform additional tests/simulations
 Allocate additional resources
 Improving communication and managing

organizational interfaces
 Allocating risks to the party best able to

control/manage that risks

 Why project’s risk? &
Management of?
 Public procurement involves;

◦Public entity
◦Public funds
◦Public process
◦Public interest