Proj

ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

MODULE5
9.PROJECTSMANAGEMENT
Apr
oject
Apr
ojecti
splannedt
oachi
eveaspeci
fi
cobj
ect
ivewhi
chcal
l
sforaspeci
fi
caut
hor
it
yto
i
mpl
ementit.

Ev
erypr
ojecthas3at
tri
but
e:

The i nput characteri

sti
cs,output char
acterist
ics and t he socialcost benef i
ts
characteri
sti
cs.Thei nputchar
act
eri
sti
csdefinewhatt heproj
ectwi
llconsume.Pr oj
ects
requir
er awmat eri
als,ener
gy,manpower,f
inancialresources&anorganizati
onalsetup.
Iti
snecessar ytoevaluatethenat
ure&magni tudeofeachoft heseessential
inputs.

Theoutputchar
acter
ist
icsofaprojectdefi
newhatt heproj
ectwillgener
ate-
product
ion
ofaddi
ti
ongoods&pr ovisi
onofadditi
onalservi
ces.I
tisessent
ialtohavebroadideaof
qual
it
ati
veaswellasquantit
ati
veoftheprojecti
deas.

Soci
alcost-
benef
it
s aspectaf f
ects cur
rentequi
li
bri
um ofthe avai
labi
l
iti
es & non-
avai
l
abi
li
ti
esinaneconomy .I
tinvol
vestheenti
resoci
etyi
nit
simpl
icati
ons.

I
ntr
oduct
ion
Industr
ial
izati
oni sapr ocesswhi chaccel erat
eseconomi cgr owth,effect
sst r
uctur
al
changesi ntheeconomyi nr especttoresourceutil
izat
ion,
productionfuncti
ons,i
ncome
generati
on,occupat i
onalpat t
ern,populati
ondistri
buti
on&f oreignt r
ade.Itprovi
desa
meanst oachi evesocio-economict ransfor
mat i
onsanddev elopmentofagr i
cul
tur
e,
transport
,trade,ser
vices&ot herspotenti
alsector
s.

Choosi
ngani
dea
Est
abli
shi
ngasasuccessf
ulent
repreneurdependsonchoosi
ngagoodidea.Theidea
mustnotonlybegood forthemar ket
,butgood fortheproj
ect& good forthe
ent
repr
eneur
s.Thei
deashoul
dgivesatisf
yingr
esul
ts

Di
ff
erentsour
cesofi
deasar
e

 Goodunder
standi
ngofeconomi
cs&t
heeconomy

 Changi
ngneedsoft
hepeopl
einal
ocal
i
ty/
soci
ety

 Emer
gingt
rendsi
nthesoci
ety

1
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

 Ext
ensi
vet
rav
ell
i
ng&awi
der
angeofr
eadi
ng

Ot
hersour
cesi
ncl
udet
hef
oll
owi
ng

1.Creat
ivi
ty:I
thel
pstotr
eattheprobl
em asanoppor
tuni
tybynotdoi
ngt
hingsi
n
tr
adit
ional&st
andar
dmethods.

2.Brai
nstor
ming:I
tisprocessofdetachi
ng anal
ysisofideasfrom t heactual
devel
opmentofi
deas.Wei
rd&sil
lyi
deascanbeusefulwhennotcri
ti
cized.Av
oid
exper
tsastheyt
endtoimposet
radi
ti
onalappr
oaches

3.Observi
ngmarket
sf orproductanalysis&mar ketsur vey:Oneshoul
dst udythe
demand&suppl yoft hepr oducttoestimatei t
sf uturedemand.Pr oj
ectidea
shoul
dascert
aint
heext entofmar ketabi
l
ityofthepr oposedproduct
,itsgeneral
use,i
ndust
ri
eswhichusei t
,it
send-useandi t
sbuy er
s.

4.Signi
fi
canceoft radef ai
rs:Tr
adef air
shel psinassessingthemar kettr
end,
assessi
ngt heatti
tudeoft hecompet it
ors,compari
ngt heprices& qual
i
tyof
si
mi l
arproduct
s,establ
ishi
ngpersonalcontact
s,meet
inglargenumberofbuyer
s
&exchangingthei
rsv i
ews

Sel
ect
ionofpr
oduct
Var
iousf
act
orsi
nfl
uencet
heent
repr
eneuri
nsel
ect
ingt
her
ightpr
oduct

1.I
mpor
trest
ri
cti
onsort
hei
temssel
ect
edar
ebannedi
tems.

Bannedimpor
tedi
temsf
inddomest
icmar
ket
ssi
ncesuchpr
oductmaynotbe
metbyimport
.

2.Subst
ant
ial
exper
iencei
nthemanuf
act
ure&mar
ket
ingofcer
tai
ngoods.

3.Degr
eeofpr
ofi
tabi
l
ityt
hatgener
all
yrul
esi
nthemar
ket
.

4.Productsthatenj
oysasubstant
ialamountofi
ncent
ives,concessi
ons,l
i
ber
al
taxat
ionpoli
ci
esfr
om gov
ernment.

5.Productsbel
ongi
ngtoSSIsect
or&pri
ori
tyi
ndust
ri
esl
i
stedbygov
ernmentf
or
purchasi
ngexcl
usi
vel
yfr
om t
hesmal
lsect
or.

6.Mar
ketf
ort
hepr
oduct
.Expor
tmar
ketwi
densscopef
ormar
ket
ing.

7.Whet
hert
hepr
oductbel
ongst
oli
censedcat
egor
yorde-
li
censedcat
egor
y.

2
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

8.Products pr
oduced on f
ree-
tr
ade zone ori
n backwar
d ar
eas enj
oyspeci
fi
c
advantages.

9.I
faproductbel
ongstoanancil
lar
yuni
t&serv
esasamaj
orcomponentf
ort
he
par
enti
ndust
ry,
itpr
ovi
desareadydemand.

TheAdopt
ionpr
ocess
Theadopti
onofaninnovat
iondemandsplannedmanagementofchange.Anadopti
on
processi
saprocessofbri
ngingaboutachangei
nabuy er
’sat
ti
tudes&percept
ion.It
i
ncludesf
oll
owi
ngsteps:

1.Awar
eness

Apersonlearnsaboutanewidea,productorpract
ice.Hehasl
i
mit
edknowl
edge
aboutspeci
alqual
it
ies,
usef
ulness,per
formance,et
c.

2.I
nter
est

Henow devel
opsani nt
erestint
heinnovat
ion.Heseeksdetai
ledi
nfor
mat
ion
aboutt
henewproduct
,it
sutil
i
ty&per
formancefrom r
adi
o,TVads.

3.Ev
aluat
ion

Theaccumul
atedinf
ormat
ion&evi
dencesar
eweighedbyt
hepersoni
nordert
o
assessthewort
hoft heinnov
ati
on.Heconductsamentaltr
ialofthenew
product
.

4.Tr
ail

Theper sonisnow r eadytoputtheideaintopr

act
ice.Compet
entper
sonal
assi
stanceisnecessarytoputt
hei
nnov
ationt
ouse.

5.Adopt
ion

Iti
sthef i
nalstageinwhichhemakesadeci si
ont
obuy .I
fthepost
-pur
chase
exper
ienceisgood,hebecomesarepeatbuy
er&atalki
ngadver
ti
sementofthe

3
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

pr
oductori
nnov
ati
on.

Pr
oducti
nnov
ati
on
I
nor dert ocreatecust omer,anybusinessent er
pri
semusthav e2basi cf uncti
ons:
mar keti
ng&i nnov ati
on.Innovat
ionaloneassuresgrowth&sur vi
val
.Theev oluti
onof
new pr oductsisapr acti
calbusinessfuncti
on&i sdescr ibedasapr ocesspr oduct
management .Thepr ocessofpr oductplanni
ng&dev el
opmenti sal
way sadoptedf or
producti nnovat
ion.Pr oductdevelopmentcoversthesear chofnew products&new
i
nnov ationsaswell astheimprovementofexisti
ngproducts.

Pr
oductpl
anni
ng&dev
elopmentst
rat
egy
Mar
keter
shav e4alter
nat
ivewaysofbr i
ngingaboutanincreaseinsales&pr ofi
ts:
mar
ketpenet
rati
on,
marketdev
elopment
,productdev
elopment
, pr
oductdi
ver
sif
icat
ion.

1.Mar
ketpenet
rat
ion

Itinvol
vestheexpansionofsalesoft
heexist
ingproductsintheexi
sti
ngmar kets
bysel l
i
ngmor et opresentcustomer
sorgainingnew cust omer
sintheexisting
mar ket
s.Thisisdonet hr
oughamor eaggressi
vemar keti
ngmix.Customer s
from ri
valsorpotenti
albuyerscanbeattr
acted.Theremaybet emporar
ypr ice
cuttoraisethevolumeofsales&penetr
atethemar keti
nabi gway.

2.Mar
ketdev
elopment

Inmarketdevel
opment,thepresentpr
oducti
sintroducedinanew mar ketor
segment.i
tisthecreat
ionofnew market
sbydiscov er
ingnew appl
i
cati
onsfor
exi
sti
nggoods.E.g.
,mini-
buscanbemadeav ail
ablef orgoodsorpassenger
s.
Thefi
rm canoff
erit
sexist
ingpr
oductst
onewmar kets.

3.Pr
oductdev
elopment

Productdev el
opmentoccurswhenaf i
rmi ntr
oducesnewpr oductsintoamarket
i
nwhi chitiswellest
abli
shed.Iti
stheintroducti
onofnewpr oductsinthepr
esent
market,e.g.
,new synthesi
sfiber
sf orknownt exti
leproducts.Establ
i
shedfir
ms
withhighpat ronagemayhav enew pr oductsaddit
ionsuponexi st
ingmarket
successes.

4.Di
ver
sif
icat
ion

Di
ver
sif
icat
ionoccur
swhenaf
ir
m seekst
oent
eranewmar
ketwi
thacompl
etel
y

4
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

new product .Suchaf i

rm hasnei t
hermar ketexper t
isenorproductknowl edge.
Thef ir
m mayadoptadar i
ngst rategybycr eati
ngnewpr oductsforent i
relynew
mar kets.Onl yinnov at
ion mar ketersv enturet o go inf ordiversif
ication of
product s.Thestrategyi sr iskybutt heinnov atorcanhav espect acul
arr esul
ts.
Polaroid camera,t elevi
si on,mi cro-wave ov ens & digi
talwat ches are some
exampl es.Phili
psadopt edt hi
sst rat
egyt hatincludesradiolamps,l i
ghtbul bs,
tel
ev i
siontubes,radioset s,taper ecorder
s,etc.

Exi
sti
ngmar
ket
s Newmar
ket
s
Exist
in
g
produc
Mar
ketpenet
rat
ion Market
dev
elopment
A
New B
pr
oduc
t
s

Product Di
ver
sif
icat
ion
devel
opment
D
C

Fi
g.Fourbasi
cty
pesofoppor
tuni
ti
esf
orsal
esgr
owt
h

Pr
oductpl
anni
ng&dev
elopmentpr
ocess
Ther
ear
esev
enst
epsi
nthepl
anni
ng&dev
elopmentofanewpr
oduct
.

5
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

1.Newpr
oducti
deas

The det
ail
ed featur
es ofa modelpr oductarev i
suali
zed.Ideas may be
cont
ri
butedbyscienti
sts,pr
ofessi
onaldesi
gner
s,r
ival
s,customer
s,sal
esfor
ce,
topmanagement,deal
ers,et
c.

2.I
deascr
eeni
ng

Thereisaneedtoeval
uatealli
deas&invent
ions.Poororbadideasaredropped.
Promisi
ng&pr of
it
ableideasarepickedupf orfurt
herdetai
l
edi nv
esti
gation&
resear
ch.

3.Conceptdev
elopment&t
est
ing

Alli
deasthatsurvi
vethepr ocessofscr eeningwillbestudiedindetai
l.Theywil
l
bedev el
opedintomat urepr oductconcept s.Apr eci
sedescr ipt
ionofideas&
feat
uresoftheproposedpr oductisobtained.Atthisstage,customerprefer
ence
canbei ncor
porat
edintot heagenda.Underconceptt est
ing,thecompanymay
choosethebestamongt heal t
ernati
vepr oductconcept
s.

4.Busi
nessanal
ysi
s

Oncet hebestproductconcepti spickeditwi

llbesubj ectedtorigor
ousscruti
ny
toev al
uat
ei t
smar ketpotenti
al,capi
tali
nvest
ment ,rateofr et
urnoncapital
,etc.
businessanalysi
sisacombi nationofmarketi
ngresear ch,cost-
benefi
tanaly
sis&
assessmentofcompet i
ti
on.Busi ness anal
ysis willpr ov
et he soundness &
vi
abilit
yoftheselect
edproductconceptf r
om businessv iewpoint
.

5.Pr
oductdev
elopmentpr
ogr
amme

Thisstageincludes3st epswhenapaperi deaisconv er

tedint
oaphy si
cal
product
.a)pr ototy
pedev el
opment,gi
vingav isualimageoft heproduct,b)
consumertest
ingoft hemodelorpr
otot
ype,c)
branding,packagi
ng&labeli
ng.

6.Testmar
ket
ing

Theent ir
emar ketprogrammei stri
edoutforthef i
rstti
mei nasmal lnumberof
well-selectedt estmarkets,i.
e.,
testcit
iesorareas.Thisstepisnecessarytof
ind
outt hev iabi
li
tyoff ul
lmar keti
ngpr ogr
ammef ornat i
onaldist
ribut
ion.Cust
omers
reactionscanbet estednor malmar ketcondi
tions.Ithelpsthecompanyt oget
additionalv aluablecluesf orpr oductimprov
ement&f ormodi f
icati
onsinour
mar ketingmi x.

7.Commer
cial
i
zat
ion

6
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

Oncet hetestmarketi
nggi v
esagr eensi gnalfort
heproduct,t
hecompanycan
proceedtof i
nal
iseallfeaturesofthepr oduct.Themarketi
ngmanagementcan
l
aunch a f ul
l
-fl
edged adv ert
isi
ng promot i
on campai
gn formassdi st
ri
buti
on.
Masspr oducti
onwi l
lst art&alldistr
ibuti
onchannelswillbedulyor
ganiz
ed.A
newpr oducti
sborn&wi ll
starti
tsl
ifecycle.

Concept
sofpr
oject
s&cl
assi
fi
cat
ion
MEANI
NGOFPROJECT

Projectisascient
if
ical
lyev
olvedworkpl
andev i
sedtoachi
eveaspeci f
icobject
ive
withinaspecif
iedperi
odoftime.Eachpr
ojectdi
ffer
sinsi
ze,nat
ure,obj
ect
ivesand
compl exi
ty.

Gener
aleconomi
stsandbanker
shav
edef
inedapr
ojecti
ndi
ff
erentway
sasbel
ow:

“Pr
ojecti
sanapprovalforacapi
tali
nvest
mentt
odev
elopf
aci
l
iti
est
opr
ovi
degoods
andservi
ces.
”-Wor
ldBank.

“Apr
ojecti
sthewhol
ecompl
exofact
ivi
ti
esi
nvol
vedi
nusi
ngr
esour
cest
ogai
nbenef
it
s”
-Gor
don.

Al
lpr
oject
shav
e3basi
cat
tri
but
es:

 Acour
seofact
ion

 Speci
fi
cobj
ect
ives

 Def
ini
tet
imei
nter
val

CHARACTERI
STI
CSOFAPROJECT

Theyhav
efourbasi
cchar
act
eri
sti
cs:

 I
nvest
mentpat
ter
n

 Benef
it
sorgai
ns

 Ti
mel
i
mit

 Locat
ion.

Thechar
act
eri
sti
cfeat
uresofapr
ojectar
e:
7
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

1.Pr
ojecthasami
ssi
onorsetofobj
ect
ives

2.Thepr
ojecti
sonesi
ngl
eent
it
y

3.Pr
ojectcal
l
sfort
eam wor
k

4.Pr
ojecthasal
i
fecy
cle

5.Pr
ojecti
sal
way
scust
omer
-speci
fi
c

6.Pr
ojecti
sexposedt
ori
sksanduncer
tai
nty

7.Pr
ojecti
samot
ivat
edor
gani
zat
ion

8.Pr
ojecthasl
ear
ningcomponent

9.Pr
ojectpr
ocessi
sfl
exi
ble

10.
Proj
ecti
sint
err
elat
ed.

Inshort
,“t
heprojecti
saneconomi
cact
ivi
tywi
thwel
ldef
inedobj
ect
ivesandhav
inga
speci
fi
cbeginni
ngandend.
”

CLASSI
FICATI
ONOFPROJECT:

i
)Quant
if
iabl
eandnon-
quant
if
iabl
epr
oject
s:

Proj
ectsforwhi
chari
ghtquant
itat
iveassessmentofbenef
it
scanbemadear eter
med
asquanti
fi
abl
eproj
ect
s.Ex:pr
oject
sr el
atedtopowergener
ation,mi
ner
aldev
elopment
et
c.

Proj
ect
sforwhichar i
ghtquant
it
ati
veassessmentofbenefi
tscannotbemadear e
t
ermedasquant
if
iabl
eproj
ect
s.Ex:pr
oject
srel
atedt
oheal
th,
educati
on,def
ence,
etc.

i
i
)Sect
oral
proj
ect
s:

Projectsareclassi
fi
edbasedont hesector
s.Ex:automobi
l
esector,heal
thsector
,
educationsect
or,Ir
ri
gati
onandpowersect
or,i
ndust
ryandmini
ngsector
,soci
alser
vice
sector,et
c.

i
i
i)Techno-
Economi
cpr
oject
s:

Pr
oject
scanbebasedont
hei
rtechno-
economi
cchar
act
eri
sti
cs.Thi
shas3gr
oups.

 Fact
ori
ntensi
ty-or
ient
edcl
assi
fi
cat
ion:

8
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

Basedonintensityoffactors,proj
ectsmaybecl assif
iedascapitalorlabour
i
ntensi
ve.I
fal argeinvestmenti smadei nplantandmachi nery,thensuch
proj
ect
sarecal ledcapitalintensi
ve.I
fthepr oj
ectsinv ol
vel
argenumberof
humanresourcest hent
heyar etermedaslabouri
ntensi
v e.

 Causat
ion-or
ient
edcl
assi
fi
cat
ion:

Inthi
spr oj
ectsar
eclassi
fi
edasdemandbasedorr aw materi
albased.The
exi
stenceofdemandongoodsorser vi
cesmakestheprojectdemandbased.
Theav ai
l
abil
it
yofraw mat
erial
,ski
l
lorotherr
esour
cesmakest hem resour
ce
based.

 Magni
tude-or
ient
edcl
assi
fi
cat
ion:

I
nt hi
sproj
ectsarecl
assi
fi
edasl argescale,medi
um scal
eandsmal
lscal
e
pr
oject
sdependi
nguponthetot
alprojecti
nvest
ment
.

Proj
ectclassi
fi
cat
ionbased ont echno-economiccharact
eri
sti
csi
sfound usef
uli
n
faci
l
itat
ingt
heprocessoff
easibi
l
ityappraisaloft
hepr
oject.

i
v)Fi
nanci
alI
nst
it
uti
onsCl
assi
fi
cat
ion:

AllI
ndiaandStateFinanci
alinst
it
uti
onsclassi
fytheproject
saccordingtothei
rage
andexperi
enceandthepurposeforwhi
chtheprojecti
sbeingtakenup.Theyar
e:

a)Newpr
oject
s

b)Expansi
onpr
oject
s

c)Moder
nizat
ionPr
oject
s

d)Di
ver
sif
icat
ionPr
oject
s

v
)Ser
vicesPr
oject
s:

Theser
vicesor
ient
edpr
oject
sar
ecl
assi
fi
edas:

a)Wel
far
ePr
oject
s

b)Ser
vicePr
oject
s

c)Resear
chanddev
elopmentPr
oject
s

d)Educat
ional
Proj
ect
s

9
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

PROJECTFEATURES

Ever
yproj
ectmusthav
ecer
tai
nfeat
urest
omai
ntai
nuni
for
mit
yandensur
esuccess.
Thesear
e:

a)Si
mpl
i
cit
yandcl
ari
ty.

b)Av
ail
abi
l
ityofat
tr
act
ivet
echnol
ogyt
opr
omot
ethepr
oject
.

c)Int
egrat
ionofbasi
cpr
oduct
ionser
vices,l
i
kei
nputsuppl
y,cr
edi
t,mar
ket
ingand
extensi
on.

d)Compat
ibi
l
ityoft
hepr
ojectwi
thi
ntheexi
sti
ngadmi
nist
rat
ivemi
x.

PROJECTLEVELS

Pr
ojectwor
ktakespl
aceat3l
evel
s:

 Atthenationallev
el,wher
enat ionali
nvest
mentplansarefor
mul
ated,pr
ior
it
ies
amongsect orsareestabl
ished,andthemacroeconomicfr
ameworkofpoli
cies
foreconomicgrowthisputinplace.

 Att he sectorlevel
,where pr
ior
it
ies f
ori
nvest
mentwit
hin each sect
orare
determined.Andt heissuesandpr obl
emsaff
ecti
ngt
hedev el
opmentoft he
sectorareaddressed.

 Atthe Projectlevel,wher
ei ndiv
idualproj
ects areident
if
ied,prepar
ed,and
i
mplement ed.Attent
ionisgiv
ent ot hei
rtechni
cal,economic,f
inanci
al,soci
al,
i
nst
itut
ional,andotherdi
mensions.

ASPECTSOFAPROJECT

Therearetwoaspect sofapr oject

.Fir
st,apr
eli
minaryaspectofanal
ysingthepr
oduct,
i
tsmar ket
ing,techni
cal
,fi
nancialandeconomicaspects.Second,
thefeasi
bil
it
yaspects
which contai
n adequatei nformation fordeci
sion making and sometimes,ev en
i
mpl ementati
on.

Thei
mpor
tantaspect
sofapr
ojectar
e:

Aspect
s Concer
nedwi
th

I
.Pr
eli
minar
y

Pr
oduct
/ser
vice i
)Choi
ceofapr
oduct
/ser
vice

10
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

i
i
)Techni
cal
char
act
eri
sti
cs

i
i
i)Uses

i
)Consumerpr
efer
ences

Mar
ket
ing i
i
)Nat
ureofcompet
it
ion

i
i
i)Pot
ent
ial
demand

i
)Locat
ion

Techni
cal i
i
)Scal
eofoper
ati
on

i
i
i)Manuf
act
uri
ngpr
ocess

i
v)Pl
antandmachi
ner
y

v
)Wor
kschedul
e

i
)Cur
rentasset
s

Fi
nanci
al i
i
)Wor
kingcapi
tal

i
i
i)Shor
tandl
ongt
ermf
inance

i
v)Bi
l
ls

i
)Empl
oymentgener
ati
on

Economi
c i
i
)Anci
l
lar
ydev
elopment

i
i
i)Ut
il
it
ytosoci
ety

i
v)Soci
albenef
it
s

I
I.Feasi
bil
it
y

i
)Cost
sandbenef
it
s

Fi
nanci
alv
iabi
l
ity i
i
)Ri
skchar
act
eri
sti
cs

i
i
i)I
nter
nal
rat
eofr
etur
n

i
)Rev
enues,
ear
nings

Pr
ofi
tabi
l
ity i
i
)Cost
s

i
i
i)Pr
ofi
ts

11
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

i
)Pr
ofor
mabal
ancesheet

Fi
nanci
alPr
oject
ions i
i
)Sour
cesanduseoff
unds

i
)Soci
algoal
s

Soci
o-economi
cdesi
rabi
l
ity i
i
)Desi
rabi
l
ityoft
hepr
oject

i
i
i)Maxi
mum r
etur
ns

THEPROJECTCYCLE

Thepr oj
ectworkcompr i
sesofsev
eraldi
sti
nctstages,commonl ycal
l
edast heproj
ect
cycle.Thepri
nci
palstagesofthecyclearetheidentif
icat
ionofapr oj
ect
;itsdesi
gn,
preparat
ionandappraisal
;it
simpl
ementati
on;andi t
sev al
uati
ononcetheinvestment
phasehasbeencompl eted.

Thepr
ojectl
i
fecy
cleconsi
stsoft
hreemai
nphases:

1.ThePr
e-i
nvest
mentphase–Thef
ir
stphaseofapr
oject
.

2.TheConstruct
ionphase–Itconsi
stsmainl
yofdev
elopi
ngt
hei
nfr
ast
ruct
uref
or
thepr
ojectaswellascr
eat
ionofasset
s.

3.TheNormali
sati
onPhase–Thepr i
maryobj
ecti
veofthi
sphasei
stopr
oduce
goodsandser
vicesf
orwhi
chapr
ojecti
sest
abli
shed.

1)Projectident
if
icat
ion:Theprojectcy
clebeginswi
ththei
dent
if
icati
onofproj
ect
i
deast hatappeartor epr
esentahigh-pr
ior
it
ytoachi
evei
mportantdev
elopment
objecti
ves.

2)Pr
ojectprepar
ati
on:Atthenextst
age,afeasibi
li
tystudyshouldbetakenini
ts
pr
inci
paldimensi
onstechni
cal
,economi
c,financi
al,soci
al,et
ct oest
abli
shthe

12
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

j
ust
ifi
cati
onoftheproj
ect
.Proj
ect
sshoul
dbedesi gnedwi
thav
iewt
ohowt
hey
wi
ll
bei mplement
ed.Appr
opr
iat
edesi
gnisessent
ial.

3)Projectimplementat
ion:Allprojectident
ifi
cat
ion and pr
epar
ati
on wor
kis
dir
ectedtowardfacil
it
atingproj
ectimplementat
ionandhelpingtoensur
eit
s
success.I
tisacri
ti
calstageofpr
ojectwork.

4)Ex-postev al
uat
ion:Ex-
postevaluat
ion shoul
d pr
ovi
dea comprehensi
veand
detai
led revi
ew ofthe el
ements ofsuccess and f
ail
ure oft
he proj
ectf
or
enhancingthedevel
opmentimpactofproj
ectwork.

PROJECTI
DENTI
FICATI
ON

Projectident
if
icat
ionisconcer nedwitht hecoll
ecti
on,compi l
ati
onandanal ysi
sof
economi c dat
af ort he eventualpurpose oflocating possi
ble oppor
tuni
ti
es for
i
nv estmentandwiththedevelopmentofsuchopportuni
ties.
Projecti
denti
fi
cati
onmaycomef r
om oneorotherofthefoll
owingways:-

(
i) Observati
on:Observ ati
oni soneoft hev eryi
mpor t
antsourcesofprojecti
dea.
Thescarcit
yofapar t
icul
arpr oductorser vi
cemayl eadtot hedevel
opmentof
that
.Theav ai
l
abili
tyofr awmat eri
alorskillmayleadtoanideaofut i
l
izi
ngthem
toproducegoods.Obser v
ationsofexi st
ingprocesses/
productsal
sosomet i
mes
l
eadt onewprojectideas.

(
ii
) Tradeandprofessi
onalmagazi
nes:Tr
adeandpr
ofessi
onall
i
ter
atur
ekeepsa
personintouchwithlat
estdevel
opment
sandtrendsandalsosti
mulat
eto
developnewi
deas.

(
ii
i) Bul
leti
nsofResearchInst
it
uti
ons:R & D bul
l
eti
nsofsomeinst
it
uti
onsalso
pr
ovidesomenewideasbasedonthef
indi
ngswhichar
epubl
i
shedi
nthebul
l
etin.

(
iv) GovernmentSources:Depar
tmentalpubli
cat
ions ofvar
ious depar
tments of
Governmental
soprovi
deusef
uli
nformati
onthatcanhel
pinidenti
fi
cat
ionofnew
pr
ojecti
deas.

FEASI
BILI
TYREPORT

Beforestart
ingasmal lscalei
ndustry
,itismandat or
yforent r
epreneur
stoconsul t
theDirectorofI ndustri
esServiceInsti
tut
e( SISI
)inone’sst ate.TheSISIguides
entr
epreneursregar di
ngt hety
peofi ndustr
yt ostart
,whereandhow t ost
artit.It
hel
pst hem t o selectthev ari
ousi t
emsofmanuf act
urewhi ch havescopef or
devel
opmenti ndi ffer
entareas.Itprovi
dest echni
calguidancei nthesel
ecti
onof

13
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

properr
aw materi
alsandtypeofmachi
ner
y.Italsogi
vesvaluabl
einf
ormat
ionon
vari
ousi
ncent
ivesavai
labl
etotheSSI
sfr
om v
ariousor
gani
zat
ions.

PROJECTFEASI
BILI
TYANALYSI
S

Aprojectfeasi
bil
it
yanalysi
sincludesmarketanalysi
s,t
echni
calanal
ysis,f
inanci
al
andsocialprofi
tabil
i
tyanal
ysis.Itsgoali
st oidenti
fytheexi
sti
ngstrengthsand
weaknessofthepr oj
ect
.

 MARKETFEASI
BILI
TYSTUDY

Mar ketfeasibi
li
tyst
udyi samethodofscreeningproj
ecti
deasaswellasmeansof
eval
uatingapr oj
ect’
sfeasibi
li
tyi
nter
msoft hemarket. A mar ket analy
sis will
assesswhet hertheproducthasgoodmarket,andshoul
dcovert
hefol
lowingareas:

(
i)Natur
eoft hemarket:Thenatureofmar
keti
ncl
udi
ngmar
ketar
eas,met
hodsof
t
ransport
ati
on,di
str
ibut
ionchannel
s,et
c.

(i
i
)CostofProducti
on:I
tisessent
ialt
ost
udyandcont
rolcostofpr
oduct
ion.Cost
ofpr
oduct
iondeci
desthesel
li
ngpri
ce.

(i
ii
)Sel
li
ngpriceandprof
it
:Sel
l
ingpr
icepl
aysavi
talrol
einprof
it
.Inpr
icesensi
ti
ve
goodsl
ikecosmeti
cs,
oneshoul
dbecaref
uli
nfi
xi
ngt hepri
ce.

(
iv)
Demand:Presentdemandanddemandf
orecastar
epr
epar
edandst
udi
ed.Thi
s
wi
lldeci
det
hef
acili
typl
anni
ng.

(
v) MarketShar
e:Esti
matedmar
ketshar
eist
obemade.Compar
isoni
smadewi
th
shar
eofsimil
arpr
oducts.

 TECHNI
CALFEASI
BILI
TYSTUDY

Atechni
calanalysi
sshouldrevi
ew thetechni
quesorprocessest
obeappl
i
ed.I
n
t
echni
calfeasi
bil
i
tystudy
,thefol
l
owingpointsar
estudi
ed:

(
i) Locat
ionoftheproj
ect
:Thedataregar
dingthelocat
ionofpr oj
ecti
sver
y
i
mportant
.Itmaybel
ocat
edi
nrur
al,
urbanorsemi-
urbanareas.

(
ii
) Constr
ucti
onoffactor
y,bui
ldi
ngandi
tssi
ze:Theconstr
ucti
ondetai
l
s,t
he
nat
ure/t
ypeofbui
l
dingandit
ssizef
ort
hepr
ojectar
etobeanal
yzed.

(
ii
i) Avai
labi
li
tyofraw mater
ial
s: Thestudyofavai
labi
l
ityofr aw mater
ial
s,
sour
cesofsupply
,al
ter
natesour
ces,i
tsqual
i
tyandspecif
icat
ionscostetc.
,

14
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

ar
etobest
udi
ed.

(
iv) Sel ecti
onofMachi nery:Thesel
ect
ionofmachineryrequi
redtoproducethe
i
nt endedpr oductistobecarri
edout.Thespecif
icat
ionsarecapacit
y,cost
,
sour cesofsuppl y
,technol
ogyeval
uati
on,del
i
verydates,ter
msofpay ment
,
etc.ar est
udied.

(
v) Uti
li
ti
es:Thedetail
saboutavai
labi
l
ityofut
il
it
iesl
i
kewat
er,gas,el
ect
ri
cit
y,
pet
rol,
diesel
etc.
,ar
etobestudi
ed.

(
vi) Pr
oduct
ionCost
:Anest
imat
eoft
hepr
oduct
ioncostoft
hepr
oduct
.

(
vii
) St
affRequi
rement:St
udyandanal
ysi
sofr
equi
rementofwor
ker
s,t
echni
cal
st
affandof
ficer
set
c.i
stobemade.

(
vii
i
) Adet
ermi
nat
ionoft
het
ypeandquant
it
yofwast
etobedi
sposedof
.

(
ix) Adescr
ipt
ionoft
hesel
ect
edmanuf
act
uri
ngpr
ocess.

(
x) Adescr
ipt
ionoft
hepr
oduct
.

 FI
NANCI
ALFEASI
BILI
TYSTUDY

Fi
nanci
alfeasi
bil
i
tyisthemosti mpor
tantaspectofabusi
nessopport
unit
y.The
emphasisis on the pr
eparat
ion offi
nanci
alstatement
s.Some oft he aspect
s
i
nvolv
edinfinanci
alf
easibi
li
tyare:

(
i) Totalcapit
alcostofproject
:Itisver
yessent
ialtostudythetotalcostof
proj
ect.Thi
sincl
udesf
ixedcapit
al,
worki
ngcapi
talandi
nter
estfact
or.

(
ii
) Sour
cesofcapital
:Thestudyofmainsour
cesofcapi
tali
stobemade.I
f
capi
tal
isbor
rowed,i
nter
estbur
deni
stobest
udi
edindet
ail
.

(
ii
i) Fi
nanci
ngf
orf
utur
edev
elopmentofbusi
ness.

(
iv) Breakev enanal y
sis( BEA):BEAi stobecar ri
edouttoseeatwhatl ev
elof
producti
on/sal
eswi l
lmaket heorganizat
ionnol oss/
nopr
ofi
tsi
tuat
ion.BEAis
veryuseful
toidenti
fythelev
elofproducti
onthatmakespr
ofi
t.

(
v) Est
imat
ionofcashandf
undf
lows.

(
vi) Ret
urnsoni
nvest
ment
(ROI
)

(
vii
) Pr
oposedbal
ancesheet
s

15
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

(
vii
i
) Costofl
abourandt
echnol
ogy
.

 SOCI
ALFEASI
BILI
TYSTUDY

Soci
alf
easibi
li
tyst
udyisimpor
tanti
nthesocial
envir
onment .
 Locati
on:Thelocat
ioni
sinsuchapl acethatitshoul
dnothav
eobj
ect
ionf
rom t
he
nei
ghbors.

 Soci
alpr
obl
em:
Theent
erpr
iseshoul
dnotcr
eat
eanynui
sancet
othepubl
i
c.

 Poll
uti
on:Thereshoul
dnothaveanysor
tofnoi seorot
herpoll
uti
onobj
ect
ionabl
e
soci
ety.Sui
tabl
emeasuresar
etobet
akenforcontr
oll
i
ngpol
lut
ion.

 Otherprobl
ems:Anyot
herpr
obl
emsr
elat
edt
othesoci
etyandpeopl
ear
etobe
st
udied.

PROJECTFORMULATI
ON

Meani
ng
Projectfor
mul at
ionisdefi
nedasapr ocesswherebytheentr
epreneurmakesan
objecti
ve&i ndependentassessmentoft hevari
ousaspectsofaninvestment
propositi
onofapr ojecti
deafordeterminingit
stotal
impact&alsoitsli
abi
li
ty.Theai
m
ofpr oj
ectformulat
ionistoachiev
et heprojectobj
ecti
veswit
hthemi ni
mum expendit
ure
&adequat eresources.

I
tistheassessmentofthefeasi
bil
i
tyofaproposalofaborr
owerbasedonthe
examinati
onoffactorsl
ikethecapaci
tyoftheuni
ttoproduce,t
herepay
ingcapaci
ty
gener
atedbyt hefundsaskedfor,
theassets&li
abi
li
ti
es,etc.

Thepr
ojectsi
zeisdet erminedbytaki
ngint
oconsiderat
ionfactor
sli
kethear
ea
ofoperati
on,
thetypes&l evelsofacti
vi
ti
esundert
aken,
amountofi nv
estment
necessary&theti
mer equir
edf orthecomplet
ionoft
heact i
vit
ies.

Anal
ysisof Formulat
io
Concepti
on Desi
gnofa
rel
ated nofa
ofanidea pr
oject
aspects proj
ect

16
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

Fi
g.Phasesofpr
ojectf
ormul
ati
on

St
epsi
npr
ojectf
ormul
ati
on
A pr
ojectcompri
sesa seri
esofacti
vit
iesforachiev
ing pr
edet
ermi
ned obj
ect
ives.
Obj
ecti
vescanbedef
inedunderf
oll
owi
ngcategor
ies

i
) Gener
alobj
ect
ives

i
i
) Oper
ati
onal
obj
ect
ives

A generalobjecti
ve stat
ein broad t
ermsthe achi
evement
sexpect
ed whereasan
operat
ionalobject
ivesspeci
fi
cal
l
yment ionsr
esul
tsexpect
edfr
om t
heimplementat
ion
oftheproject
.

Thenextst r
ategyisconcer
nedwi
ththelocat
ion&sizeofthepr
oject
.Thelocat
ionof
theprojectisinfl
uencedbytheavai
labi
l
ityorexi
stenceofvar
iousresour
ces& the
i
nfrast
ructur
alfaci
li
ti
es.

Sequent
ialst
agesofpr
ojectf
ormul
ati
on
Thepr
ocessofpr
ojectf
ormul
ati
oni
sdi
vi
dedi
nto7sequent
ial
stages.Theyar
e

1.Feasi
bil
i
tyanal
ysi
s

2.Techno-
economi
canal
ysi
s

3.Pr
ojectdesi
gn&net
wor
kanal
ysi
s

4.I
nputanal
ysi
s

5.Fi
nanci
alanal
ysi
s

6.Soci
alcost
-benef
itanal
ysi
s

7.Pr
e-i
nvest
mentanal
ysi
s

1.Feasi
bil
i
tyanal
ysi
s

17
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

Atthisstage,proj
ectideaisexaminedf r
om t hepointofvi
ewofwhet hertogoi nfora
detai
ledinvestmentproposalornot.I
tcoul dr esul
tin3alt
ernat i
ves.Fir
st,theproject
i
deaseemst obef easibl
e;second,t
hepr ojectideaisnotfeasibleandt hi
rd,unableto
arr
iveataconcl usi
onf orwantofadequat edat a.I
fiti
sfeasibleproceedtosecondst ep,
i
fnotf easi
ble,abandont hei
deaandi fsuffici
entdataisunav ai
labl
e,effort
sar etakento
col
lectrequir
eddat a.

2.Techno-
economi
canal
ysi
s

I
nthi
sstep,
esti
mat i
onofpr
ojectdemandpot ent
ial
andchoiceofopti
mal t
echnol
ogyi
s
made.I
tisr
equir
edtoknowthemar ketforgoods&serv
icesproduced.Thechoi
cefor
t
echnol
ogyisbasedonthedemandpot enti
al.

3.Pr
ojectdesi
gn&net
wor
kanal
ysi
s

Thisstepdef
inesindi
vi
dualact
ivi
ti
eswhichconst
it
utetheproject&thei
rint
er-
rel
ati
onshipwit
heachother
.Adet ai
ledworkpl
anoft heproj
ectispr
eparedwitht
ime
all
ocati
onforeachacti
vi
ty&presentedi
nnetworkdrawing.

4.I
nputanal
ysi
s

Thisstepassessestheinputrequirement sduri
ngtheconstr
uct
ionofthepr oj
ect&also
duringtheoper
ationoftheproject.Inputsincl
udemateri
als&humanr esources.I
t
considersther
ecurri
ng&non- recurri
ngr esour
cerequi
rementsoftheproject&
evaluatest
hefeasibi
li
tyoftheprojectfrom thepoi
ntofviewoftheavail
abili
tyoft
hese
resources.

5.Fi
nanci
alanal
ysi
s

Thisstageinvol
vesesti
mat i
ngthepr oj
ectcost
s,est
imatingi
tsoperati
ngcost s&fund
requi
rements.Financi
alanal
ysishelpsincompari
ngv ari
ousproj
ectproposalsona
commonscal e.Someoft heanal y
tical
tool
susedinfinanci
alanal
ysisarediscount
ed
cashflow,cost-
volume-pr
ofi
trelati
onship&rat
ioanal
y si
s.

6.Cost
-Benef
itanal
ysi
s

Cost-benef
itanal
ysi
swi l
lconsi
dertheproj
ectfr
om thenat
ionalvi
abil
i
typointofv
iew.I
t
takesintoaccountt
hecostswhi chal
lenti
ti
esconnect
edwiththeproj
ecthavetobear&
thebenefit
swhichwill
beenj oy
edbyallsuchenti
ti
es.

7.Pr
e-i
nvest
mentanal
ysi
s

18
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

Alltheresul
tsobtainedintheabov estepsar econsolidated& vari
ousconclusi
ons
arri
vedattopresentclearpictur
e.Thepr ojecti
spr esentedinsuchawayt hatthe
proj
ect-
sponsor
ing body,the proj
ect-
implementi
ng body & t he ext
ernalconsul
ti
ng
agenci
esareabletodecidewhethertoaccepttheproposalornot.

Pr
ojectev
aluat
ion
Apartfrom looki
ngintothefi
nanci
alviabi
l
ityofapr oj
ectintermsofinvestmentcosts&
benefi
ts,i
tisnecessar ytoconsi
derthetotalimpactoft heprojectontheeconomyof
thenati
on.Wi ththevi
ewt oeval
uatetheproject
, t
hesocialcost-
benefi
tanalysi
sisused.
I
tistakeni ntoaccountastheexisti
ngequi l
ibr
ium oftheeconomy .Social
-benef
itcost
i
ndicat
est heextenttowhichtheproj
ectwillhel
pt hesoci
ety.

Allcosts& benef
it
sareclassi
fi
ed int
o 3 cat
egor
iesaspr
imar
ycost
s& benef
it
s,
secondar
ycosts&benef
it
sandtert
iar
ycost
s&benefits.

Primarycosts&benef i
tsaccruet otheproj
ectimpl
ementi
ngbody.Secondar ycost
s&
benef i
tsaccruet o part
iesot herthan theproj
ect
-i
mplementi
ng body.Mostoft he
projectscont
ribut
etot henati
onalexchequerbywayofdirectori
ndir
ecttaxes.Pri
mary
&secondar ycosts&benef i
tsar equant
if
iabl
e.

Proj
ecthasanimpactonthecommuni tyortheareaofoperat
ion.Thi
siscal
l
edspill
-
overeff
ect
s&multi
pli
ereff
ect.Thi
sconsti
tut
ester
tiar
ycost
s&benef i
tswhi
charenon-
quanti
fi
abl
e.Someofthem ar
e

1.Organizat
ionalaspect
:forsuccessf
ulimplementat
ion ofpr
ojectitmay be
necessarytohavesuff
ici
entt
echni
cal
,ski
l
ledorunski
l
ledmanpower.

2.Commercialaspect:i
tinvolv
est heexaminationofthear
rangementsforbuyi
ng
oracqui
ri
ngnecessaryi nput
sr equi
redforthei mpl
ement
ationoftheproj
ectas
rawmateri
als,
labour,
power ,f
erti
li
zer,
pest
icides,et
c.

3.Legalaspect:adequatesecur
it
yf ordiff
erenttypesofloansshoul dbemade
avai
labl
etot hebanksaspertheirrequi
rements.Legalpr
oblemsrelati
ngtotitl
e
deeds,l
andlegisl
ati
onsshoul
dbel ookedint
oindepthbeforeproj
ectisfi
nanced.

4. Ri
sk& uncertai
ntyininvest
mentdeci si
ons:each vari
abl
e enter
ing the pr
oject
eval
uati
oncouldbeasourceofuncertai
ntysincei
tisnotpossiblet
opr edictf
uture
changes.Thefeasi
bil
i
tyofapr oj
ectdependsont hesizeofinvest
ment ,oper
ating
costs&salesr
evenue.

19
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

10.PROJECTDESI
GNANDNETWORKANALYSI
S
I
NTRODUCTI
ON:

Theexecutionofaprojectf
oll
owsadefini
tepathofplanni
ng,schedul
i
ngandcontroll
i
ng.
Thefir
standf or
emostaspectofaprojectist
heprojectdesi
gn.Itdef
inest
heindi
v i
dual
acti
vi
tiesandenablest oi
denti
fyt
hef l
ow ofeventwhi chmustt akeplacefort he
successful
implementati
onofthepr
oject.

Net
wor
ktechni
queshel
pthemanagementofanor
gani
zat
ioni
nper
for
ming t
hese

20
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

functionseffi
ci
entl
yandef f
ecti
vely
.Br
ief
ly,
projectdesi
gni st
heframeworkofaproj
ect
formul at
edwi thdetai
l
edsequencesanddev elopsanaccept abl
eworkpl anforthe
project.Ithel
pstheent r
epreneurtoi
mplementt heprojectasschedul
edwi t
houtany
hindrances.

I
MPORTANCEOFNETWORKANALYSI
S

(
i) Thewhol eproj
ecthast o beconsider
ed wi
threfer
encetothe
sequenceofact
ivi
ti
esandev ent
s.Sequencemeansacti
vi
ti
est
hat
aretofol
l
owoneaf t
eranot
herleadi
ngtoanevent
.

(
ii
) The event
s shoul
d be consi
der
ed as di
ff
erent br
anches of
oper
ati
ons.

(
ii
i) The di
ff
erentsegmentsoft he pr
ojectaretreat
ed asseparate
net
workwhi char
efi
nal
lyi
ntegrat
edtotheover
allnet
work.Thenthe
ent
ir
eprojectmaybeputononenetwor k.

(
iv) The time esti
mates may be done based on eit
herprevious
experi
enceofsi mil
artypesofoperat
ionsormaybebased on
probabi
li
ti
esfortheoneswher
eprevi
ousexper
iencedoesnotexist
.

(
v) Costest
imat
eswoulddependupontheproj
ectt
imeesti
mat
esand
thechar
geofpr
icesofdi
ff
erentf
act
orsorpr
oduct
ion.

(
vi) Thephysicalprogressoft heproj
ect,nat
ureofevents,j
obsformed
and snags in differentareas ofpr oj
ectwor k would cal
lfor
cor
recti
ve acti
on atappr opr
iatet i
me.The conceptofcr ashi
ng
wouldbehelpfultor educepenalt
ies.

ORI
GINOFPERTANDCPM

PERTandCPM t echni
queswer edevelopedint heU. S.independent l
y,whil
eCPM
camei ntofocusabout1957asanof f
shootofcol laborati
onbet weenDuPontand
RemingtonRand.Theemphasi sofCPM i sessential
lyont heact iv
iti
esthemselves,the
costsassociatedwi t
hcompl et
ionofeachact ivi
tyandopt imum planf ortheproj
ectasa
whole.PERT, whi chwasdev elopedabout1958asar esultofcollaborati
onbetweent he
Operati
onalResear chdivi
sionoft heU.S.Navyandaf ir
m ofbusi nessconsul t
ants,had
foremphasist heev ent
srat herthant heactiv
iti
esleadingt oevents.PERTwasappl i
ed
tohelpsolv
epr oblemsofpr oduci ngthePolarisMissi
lesy stem toav eryti
ghtschedule.

NETWORK

Net
wor
kisasetofsy
mbol
sconnect
edwi
theachot
herwi
thasequent
ialr
elat
ionshi
p

21
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

witheachstepmakingthecomplet
ionofapr oject
/event
.Networkanal
ysi
sisasy stem
whichplansbothlar
geandsmal lproject
sbyanal ysi
ngtheproj
ectacti
vi
ti
es.Project
s
arebrokendownintosi
mpleacti
vit
ies,whicharethenarr
angedinalogi
calsequence.It
i
sal sodecidedastowhichtaskwi llbeperformedsimult
aneousl
yandwhi chot her
s
sequenti
all
y.

NETWORKTECHNI
QUES

A businesspl anoranypr ojectcontainsvar

iousact iv
iti
es– whichcanbet akenup
concur r
entl
yandwhi chcanbet akenuponlyaftercompl eti
ngsomeot heracti
vi
ties.Any
delayinanyact ivi
tywil
laff
ectt heotheracti
vit
ies,proj
ectisdelayed,costswillgoup
l
eadi ngtoreducedpr of
it
.Anumberofnet worki
ngt echniqueshavebeendev el
opedf or
projectscheduli
ngandcontrol.Theyare:

(
i) Pr
ogr
ammeEv
aluat
ionandRev
iewTechni
ques(
PERT)

(
ii
) Cr
it
ical
pat
hMet
hod(
CPM)

(
ii
i) Li
neofBal
ance(
LOB)

(
iv) Gr
aphi
cal
Eval
uat
ionandRev
iewTechni
ques(
GERT)

(
v) Wor
kshopAnal
ysi
sandSchedul
i
ngpr
ogr
amme(
WASP)

Amongt hese,PERTandCPM aret hemostwidel

yusednetworkanalysistechniquesin
proj
ectmanagement .Thesetechniquescanbeappl
iedindiv
ersekindsofpr ojectsli
ke
constructi
onofabuildi
ngorahi ghway,pl
anni
ngandlaunchi
ngofanewpr oduct,l
arge
maintenancepr oj
ect
s,end-
of-t
hemont hclosi
ngofaccounts,lar
ger esearchpr oj
ects,
etc.

NEEDFORNETWORKTECHNI
QUES

Networkanal ysi
shelpsindesigning,planning,coordinati
ng,contr
oll
inganddecision
makinginor dertoaccompli
shthepr ojecteconomi cal
lyintheminimum av ai
l
ableti
me
wit
ht hel i
mi t
edav ai
labl
eresources.Net workt echniquesweredev elopedfrom the
Mil
estonechar tandBarchart
.Theseconv enti
onalplanningmethods,becauseofsome
l
imit
ations,couldnotbeusedf orpl anninglargeandcompl exproj
ects.Theyhadt he
f
oll
owingdi sadvant
ages:

a)Abarchartdoesnotpoi
ntoutwhi
chtasksshoul
dbegivenpr
ior
it
y
asr
egardsresour
ces(men,
money,mater
ial
s,machi
ner
y).

b)Theef
fect
sofchangesi
nschedul
ecannotbeev
aluat
edwi
tht
he
hel
pofabarchar
t.

22
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

c)A barchartdoes nott

ellsat
isf
act
ori
l
ythe t
ime atwhi
ch t
he
act
ivi
ti
esbegi
nandend.

Thefunctionsofmanagementareessentialtoeveryent erpr
iseregardl
essoft hety
pe,
si
ze,purpose,orcomplexi
tyoftheoperation.Techniquesv arybecauset heymustbe
adaptedtoandappropri
ateforeachi
ndivi
dualf i
rm andi tsownci rcumstances.Sothe
networktechni
quesl
ikePERTandCPM ar econsiderablymor eusefultothemanagers.

PROGRAMMEEVALUATI
ONANDREVI
EW TECHNI
QUES(
PERT)

PERTwasf i
rstdevel
opedasamanagementai dforcompl et
ingPolar
isBal l
isti
c
Missi
leprojectinUSAdur i
ng1958.Itwor kedwellincomplet
ingt hispr
ojectwel lin
advance.From thenonPERTbecameawi delyusedproj
ectmanagementt echnique.
PERTschedul esthesequenceofacti
vit
iestobecompl et
edinor dertoaccomplisht he
proj
ectwithi
nashor tperi
odofti
me.Ithelpstoreducebot
hcostandt i
meofthepr oj
ect.

STEPSI
NVOLVEDI
NPERT

(
i) Thev ar
iousactivi
ti
esinv
olvedi
nt heproj
ectaredr
awnupi
na
sequent
ialr
elat
ionshi
ptoshowwhichact
ivi
tyf
oll
owst
hat
.

(
ii
) Theti
mer equi
redforcompleti
ngeachact
ivi
tyoft
hepr
ojecti
s
est
imat
edandnotedonnetwork.

(
ii
i) Thecr
it
ical
act
ivi
ti
esoft
hepr
ojectar
edet
ermi
ned.

(
iv) Thepr
ojectschedul
eisdev
eloped.

(
v) Thevari
abil
i
tyofthepr
ojectdurat
ionandprobabil
i
tyoft
hepr
oject
complet
ioninagi
venti
meper i
odar ecal
cul
ated.

Adv
ant
agesofPERT

 I
tdet
ermi
nest
heexpect
edt
imer
equi
redf
orcompl
eti
ngeachact
ivi
ty.

 I
thel
pscompl
eti
onofpr
ojectwi
thi
nexpect
edt
imeper
iodandcostl
i
mit
ati
ons.

 I
thelps managementi
n handl
i
ng uncer
tai
nti
es i
nvol
ved i
nthe pr
ojectand
r
educesr
isk.

 I
thel
psi
ndet
ail
edpl
anni
ngofact
ivi
ti
es.

23
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

Li
mit
ati
onsofPERT

 Dif
fi
culttopr
ovi
der
eal
i
sti
cti
meest
imat
esf
ornew act
ivi
ti
esi
ntheabsenceof
pastdata.

 I
tcal
l
sforf
requentupdat
esandr
evi
sionofcal
cul
ati
onwhi
chi
sexpensi
ve.

CRI
TICALPATHMETHOD(
CPM)

CPM wasf ir
stdev el
opedbyDuPontofUSAi n1956f ordoingperi
odicoverhauli
ngand
maint enanceofchemi calplant.Thedurat i
onofeachact i
vit
yinCPM isdet erministic.
TheCPM i sgener al
lyusedt of i
ndtheopt imum projectcostandt i
me.Theopt imum
projectcosti st hemi nimum costatwhi chtheprojectcanbecompl et
ed.Thiscanbe
determi nedbyusi ngt heconceptofcr ashingofacti
viti
es.Crashi
ngofact i
vi
tyisnot hing
butr educi ng the time r equir
ed to compl et
e an act i
vi
ty,byal l
ocat
ions additional
resour ces,whichaddscost .CPM i sal
sousedt of i
ndmi nimum ti
meatwhi chapr oject
canbecompl eted,ir
respectiveofcost,whichmaybenecessar yundercr
isi
ssi t
uati
ons.

Adv
ant
agesofCPM

 I
thelpsinascer
tai
ningt
het
imeschedul
eofact
ivi
ti
eshav
ingsequent
ial
r
elat
ionshi
p.

 I
tmakescont
rol
easyf
ort
hemanagement
.

 I
tdef
inesmostcr
it
ical
elementoft
hepr
oject
.

 I
tgi
vesdet
ail
edandbet
terpl
anni
ng.

Li
mit
ati
onsofCPM

 I
toperatesonassumpt
ionthatt
her
eisapreciseknowntimethateachact
ivi
tyi
n
t
heprojectwi
ll
takeandthi
smaynotbetr
uei nrealpr
act
ice.

 I
tsest
imat
esar
enotbasedonanyst
ati
sti
cal
anal
ysi
s.

 I
tisnotady
nami
ccont
rol
l
ingt
echni
que.

DI
FFERENCEBETWEENPERTANDCPM

SL.
NO PERT CPM

1 I
tsor
igi
nismi
l
itar
y i
tsor
igi
nisi
ndust
ry

24
 Proj
ect
smanagement
Pr
ojectdesi
gn&networ
kanaly
sis

2 Ev
entor
ient
edappr
oach Act
ivi
tyor
ient
edappr
oach

3 Al
l
owsuncer
tai
nty Doesnotal
l
owuncer
tai
nty

4 I
thast
hreet
imeest
imat
es Si
ngl
eti
meest
imat
es

5 Ti
mebased Costbased

6 Pr
obabi
l
ist
icmodel Det
ermi
nist
icmodel

7 Nodemar cati
onbetweencr
it
icaland Mar
kscr
it
ical
act
ivi
ti
es
non-
cri
ti
calacti
vi
ti
es

8 I
tav
eragest
ime Doesnotav
eraget
ime

9 Suit
able wher
e hi
gh pr
eci
sion i
s Suit
ablewher
ereasonabl
epr
eci
sioni
s
requi
red requi
red

25