Project Management

Dr. Lalitha Balakrishnan

Principal,
M.O.P. Vaishnav College for Women,
Chennai.

Dr. Gowri Ramachandran

Ex-Project Finance Manager,
RITES (Ministry of Railways),
Bengaluru.

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 Preface

Project Management is no longer about managing the sequence of steps required

to complete the project on time. It is about systematically incorporating the voice of the
customer, creating a discipline way of prioritizing effort and resolving trade-offs,
working concurrently on all aspects of the project in multi-functional teams, and much
more. It involves much closer links between project teams and downstream activities,
e.g. in new product development integration with manufacturing, logistics and after-
sales support – in this case, 80% of costs are determined before they take over.

There are huge opportunities for eliminating wasted time and effort in almost every
project. This book presents the practical aspects of project management which I gained
during my stint with M/s RITES (Ministry of Railways) as regional head of Project
Finance with a huge exposure in dealing World Bank projects. This will be of immense
guide to project managers and students will find the mix of academic debate and
practical case studies helpful.

Dr. Gowri Ramachandran

Dr. Lalitha Balakrishnan
 Acknowledgements

I thank my engineering department colleagues in RITES, Mr. G.VR. Rao,

Mr. Vasudevan, Mr. Parandhamiah and Mrs. Kanakamala in RITES in giving support in
technicalities in the field work. I place on record my thanks to Mrs. Vasuda Sivaraman,
International project manager with a leading Swedish company, now at Canada, for the
valuable inputs given on Project Management.

My sincere thanks to Mr. Jayabalan who typed my manuscript so neatly.

My heartfelt thanks to the publishers M/s Himalaya Publishing House Pvt. Ltd., for
bringing out this very useful book.

Dr. Gowri Ramachandran

Dr. Lalitha Balakrishnan
 Contents

1. Project Management 1 – 15
1.1 Introduction
1.2 Meaning of Project
1.3 Definition and No Change Mode
1.4 Features of a Project
1.5 Types of Projects
1.6 Benefits of Project Management
1.7 Obstacles in Project Management
1.8 Project Management – A Profession
1.9 Project Manager and His Role
1.10 Project Consultants
1.11 What is Operation?
1.12 Difference between Project and Operation
1.13 What is Process in Project Management and Process Groups?
1.14 What is Scope? Difference between Project Group Objectives and
Project Scope
Self Assessment Questions

2. Project Execution and Administration 16 – 34

2.1 Essentials of Project Administration
2.2 Project Team
2.3 Project Design
2.4 Work Breakdown Structure (WBS)
2.5 Project Execution Plan (PEP)
2.6 Contracting Plan
2.7 Work Packing Plan
2.8 Organisation Plan
2.9 Systems and Procedure Plan
2.10 Project Procedure Manual
2.11 Project Diary
2.12 Project Execution System
2.13 Project Direction
2.14 Communication in a Project
2.15 Project Co-ordination
2.16 Pre-requisites for Successful Project Implementation
Self Assessment Questions

3. Project Life Cycle 35 – 78

3.1 Introduction
3.2 Phases of Project Life Cycle
 3.3 Project Management Life Cycle – General
3.4 Project Planning
3.5 Project Execution
3.6 Project Closure
3.7 Project Risks
3.8 Types of Risks: Some Illustrations
3.9 Risk Assessment Techniques with Illustrations
3.10 Project Cost Risk Analysis using Crystal Ball Software
3.11 Estimating Time and Cost Overrun Risks
3.12 Organisation/Procedural/Systemic Reasons for Project Cost Overruns
3.13 Time Overruns
Self Assessment Questions

4. Project Identification, Project Formation and Project Market 79 – 96

and Demand
4.1 Project Identification
4.2 Sources of Project Ideas
4.3 Purpose and Need for Project Identification
4.4 Steps of Project Identification
4.5 Methodology for Project Identification
4.6 Project Identification for an Existing Company
4.7 Introduction
4.8 Stage in Project Formulation
4.9 Feasibility Analysis
4.10 Techno-economic Analysis
4.11 Financial Analysis
4.12 Cost Benefit Analysis
4.13 Project Formulation and Preparation
4.14 Market and Demand Analysis
4.15 Methods of Demand Forecasting
4.16 Market Planning
Self Assessment Questions

5. Feasibility Study and Project Report 97 – 110

5.1 Introduction
5.2 Nature of Project Feasibility Analysis
5.3 Need for Feasibility Studies
5.4 Components of Feasibility Study
5.5 Commercial and Economic Feasibility
5.6 Technical Feasibility
5.7 Financial Feasibility
5.8 Managerial Feasibility
5.9 Social Feasibility
5.10 Format of Feasibility Report
 5.11 Check List for Feasibility Report
5.12 Project Report
Self Assessment Questions

6. Commercial Viability 111 – 127

6.1 Market Analysis
6.2 Commercial Viability – Cost of Production and Profitability
6.3 Commercial Viability – Debt Service Coverage and Repayment
Programme
6.4 Break-even Analysis
6.5 Summary
Self Assessment Questions

7. Project Appraisal 128 – 150

7.1 Introduction
7.2 Appraisal Process
7.3 Market and Demand Appraisal
7.4 Technical Appraisal
7.5 Appraisal of Managerial Competence
7.6 Financial Appraisal
7.7 Profitability Analysis
7.8 Social Cost Benefit Analysis (SCBA)
Self Assessment Questions

8. Technical Feasibility Appraisal 151 – 158

8.1 Introduction
8.2 Technical Feasibility
8.3 Basic Field Level Queries
8.4 Technical Feasibility Study
8.5 The Appraisal Points/Focus
Self Assessment Questions

9. Project Planning, Project Scheduling and Project Monitoring 159 – 179

and Implementation
9.1 Introduction
9.2 Nature of Project Planning
9.3 Need for Project Planning
9.4 Functions of Project Planning
9.5 Steps in Project Planning
9.6 Project Planning Structure
9.7 Project Objectives and Policies
9.8 Tools of Project Planning
9.9 Project Scheduling
9.10 Time Monitoring Efforts
9.11 Bounding Schedules
 9.12 Scheduling to Match Availability of Manpower
9.13 Scheduling to Match Release of Funds
9.14 Problems in Scheduling Real-life Projects
9.15 Introduction
9.16 Situation Analysis and Problem Definition
9.17 Setting Goals and Objectives
9.18 Generating Structures and Strategies
9.19 Implementation
9.20 What is Project Evaluation?
9.21 Why is Project Evaluation Important?
9.22 What are the Challenges in Monitoring and Evaluation?
Self Assessment Questions

10. Project Control 180 – 199

10.1 Introduction
10.2 Projected Control Purposes
10.3 Problems of Project Control
10.4 Gantt Charts
10.5 Milestone Charts
10.6 Critical Path Method (CPM)
10.7 Construction of a Network
10.8 Network Technique in Project Scheduling
10.9 Crashing Project Duration through Network
Self Assessment Questions

11. Project Review and Project Audit 200 – 205

11.1 Project Review
11.2 Initial Review
11.3 Post Audit
11.4 Performance Evaluation
11.5 Abandonment Analysis
11.6 Objectives of Project Audit
11.7 Functions of Project Auditor
11.8 Project Audit Programme
11.9 Difficulties in Establishing Audit Purpose and Scope
Self Assessment Questions

12. Project Financing and Risk Analysis 206 – 229

12.1 Definition of Project Financing
12.2 Sources of Finance
12.3 Equity Shares
12.4 Preference Shares
12.5 Debentures
12.6 Bonds
 12.7 Term Loans
12.8 Lease Financing
12.9 Unsecured Loans
12.10 Deferred Credits
12.11 Capital Investment Subsidy
12.12 Bridge Finance (Bridge Loan)
12.13 Internal Accruals
12.14 Role of Financial Institutions in Project Financing
12.14.1 Financial Analysis
12.15 Activities Involved in Financial Analysis
12.16 Main Activity
12.16.1 Financial Evaluation of a Project
12.17 Other Activities
12.17.1 Estimating the Cost of Project
12.17.2 Decision about Sources of Finance
12.17.3 Working Capital Requirement
12.18 A Note on ‘Trading on Equity’
12.19 Risk
12.20 Risk vs. Uncertainty
12.21 Types of Risk
12.22 Risk Analysis
12.23 Activities Involved in Risk Analysis
12.23.1 Risk Assessment
12.23.2 Risk Management
12.24 Cost Control
12.25 Budgeted Cost (Preparation of Cost Baseline)
12.26 Cost Overruns and their Implications
12.26.1 Cost Escalations
12.26.2 Time Overruns
12.26.3 Scope Changes
12.26.4 Restrictions and Replacements
12.26.5 Unforeseen Contingencies
12.26.6 Budget under Estimation/Omission
12.26.7 Cost Change Control (Changes in Cost Baseline)
Self Assessment Questions

13. Environmental Impact Assessment and Environment Analysis 230 – 237

13.1 Introduction
13.2 EIA Different Countries
13.3 Environmental Analysis
13.4 Components of Environmental Analysis
13.4.1 Economic Environment
13.4.2 Political/Government/Legal Environment
13.4.3 Social and Cultural Environment
 13.4.4 Natural Environment
13.4.5 Global Environment
13.4.6 Technological Environment
13.5 Process and Environmental Analysis
Self Assessment Questions

14. Project Management Software 238 – 253

14.1 Project Management Software – General Factors
14.2 Factors Influencing Price of Project Software
14.3 InstaPlan III
14.4 Yojana
14.5 Prism Project Manager
14.6 Primavera
14.7 Agile Methods
14.8 Scanner Master
Self Assessment Questions

Case Studies 254 – 261

Glossary of Terms 262 – 265
Further Reading 266 – 266
 Chapter

1 Project Management

After reading this chapter you will know

 What is project?
Objectives

 Types of projects
 Benefits and obstacles in Project management
 Role of Project consultant
 Role of Project Manager
 What is Operation & scope?
 Process groups

1.1 Introduction
Projects are the building blocks to meet the organisation’s objectives. Project management is
essentially involved in executing the projects. It is recognized as a management philosophy in the
recent past in addition to that of a discipline. Project management has always been central to the
existence of industries like construction, aerospace and defence, where schedule and cost goals are
contract fundamentals. Apart, in today’s scenario, Information technology projects commands high
value and calls for professional approach.
The new design of Maruti Zen, Concorde supersonic Jet aircraft, Ship Vasundhara, Godrej Puf
Refrigerator, Compaque Computer, L & T crane, Steel rolling mill of the Tatas, New oil base for
ESSAR refinery, new production line of J.K. Cements, Highway roads of Country’s capital city, new
fly over, metro rail projects in metropolitan cities etc,. They all have one thing common; indeed they
are all purposefully unique and they are projects. The basis logic behind on all these projects are:
(a) Investment of Resources for a specific objective and (b) a cause of irreversible change.

1.2 Meaning of Project

Project is a scientifically right man for the right work at the right time work plan devised to
achieve a specific objective within a certain set time frame designed. It can be considered as a
2 Project Management

proposal involving capital investment for the purpose of developing facilities to provide goods and
services engaging human potential, advance techniques. A project is a blue print for action oriented
activities of an organization. A project reflects the plan for action in its totality and holistic perspective
of chain of action plan put in a sequential manner. Like a movie film it is rejection oriented process.
The project has beginning, middle and an end.
For example, Cement Projects, Manufacturing projects,
Power projects, Refinery Projects,
Health Projects, Educational projects,
Social projects, Construction Projects etc.,
Information Technology Projects

1.3 Definition and No Change Mode

A project is a one-shot, time limited, goal directed, manor undertaking, requiring the commitment
of varied skills and resources. It has also been described as a combination of human and non-human
resources pooled together on a temporary organization to achieve a specific purpose. The purpose and
the fact of activities which can achieve that purpose distinguish one project from another.
– Project Management Institute, U.S.A
“We mean by a project any scheme, or part of a scheme, for investing resources which can
reasonably be analyzed and evaluated as an independent unit. The definition is thus arbitrary. Almost
any project could be broken down into parts for separate consideration; each of these parts would then
by definition a project”.
– I.M.D Little and J.A Mirrless
“A specific activity with a specific starting point and a specific ending point intended to
accomplish a specific objective. It is something you draw a boundary around at least a conceptual
boundary and say this is the Project”
– J. Price Gittinger
“Compilation of data which will enable an appraisal to be made of the economic advantages and
disadvantages attendant upon the allocation country’s resources to the production of specific goods
and service…”
– United Nation
It may, therefore, be summarised that a project is essentially self contained, independent entity.

1.4 Features of a Project

 A good project is accolade by its classic components.
 A project can be identified by its features. The special features of a project that would
differentiate from any other on going activity are given below:
 A project has a fixed set of objectives. Once the objectives have been achieved, the project
ceases to exist.
Project Management 3

 It has a specific life span.

 Project has a separate entity and normally entrusted to one responsibility centre.
 Project evolves from a dedicated team of work force.
 Project has a life cycle reflected by growth, maturity and decline.
 Every project is unique by itself. No two projects are exactly similar.
 Change is an inherent feature in any project throughout it’s life.
 Project is based on successive principle and hence it is difficult to learn fully the end results
at any stage.
 A project works for a specific set of goals with the complex set of diversified activities.
 High level of sub-contraction of work can be done in a project. Well qualified professionals,
efficiently execute, the complex mega project.
 Every project has risk and uncertainty associated with it.
 Project needs prefeasibility and appraisal studies. So that the sponsors can make it
commercially viable.

1.5 Types of Projects

Much of what the project will comprise and consequently its management will depend on the
category it belongs to. The location, type technology, size, scope and speed are normally the factors
which determine the effort needed in executing a project. Though the characteristics of all projects are
the same, they cannot be treated alike. Recognition of this distinction is important for management.
Classification of project helps in graphically expressing and highlighting the essential features of the
project.
Projects are often categorized in terms of their need speed of implementation as follows:

Normal Projects
 Adequate time is allowed for implementation.
 All the phases in a project are allowed to take their normal time, as measured previously
 Minimum requirement of capital.
 No sacrifice in terms of quality.

2. Crash Projects
 Requires additional costs to gain time.
 Maximum overlapping of phases is encouraged. Simultaneous work , by subcontracting is
the way out

3. Disaster Projects
These are projects, undertaken, due to unexpected nature’s calamities or fury like floods results in
rehabilitation of dwelling houses for affected people.
Anything needed to gain time is allowed in these projects. Round the clock work is done at the
construction site. Capital cost will go up very high. Project time will get drastically reduced.
4 Project Management

Besides that, projects in general are classified on several basis as given the following illustrative
list.
 United Nations Asian and Pacific Development Institute
 Engineering and Management projects have sub classification as given below:
Engineering Projects Management Projects

Physical items Intangible items

Building, bridge Office move

Refinery New IT system

Pre-production sample Marketing campaign

Source: Google images

1.6 Benefits of Project Management

Project Management helps to avail the following benefits:
Identification of functional responsibilities to ensure that all activities accounted for, regardless of
personnel turnover.
 Minimising the need for continuous reporting and put maximum auto-pilot work atmosphere.
 Identification of time limits for scheduling.
 Identification of a methodology for trade-off analysis.
 Measurement of accomplishment against plans. This ensures continuous review.
 Early identification of problems so that corrective action may follow. This results in hassle
free finishing.
 Improved estimating capability for future planning, with latest technology.
 Knowing when objectives cannot be met or will be exceeded. Time over-run and cost-over
run will minimised.
Project Management 5

1.7 Obstacles in Project Management

Picture Source: Google images

To enjoy the various benefits of project management given above following obstacles should be
overcome carefully.
 Project complexities
 Execution of customer’s special requirement might result time delay and co-ordination with
many agencies.
 Organisation restructuring is atypical task
 Project risks, coupled with statutory changes are nightmare for the project manager.
 Changes in technology needs highly qualified team
 Forward planning and pricing.

1.8 Project Management – A Profession

Project management has been evolved as a distinct field ever since the Second World War. It has
got elevation in the recent times. Certified project management professionals are recruited to monitor
and execute world level project.
Novelty is the hallmark of every project, hence it should exhibit energetico and dynamism. This
requires professional approach in conceiving, implementing and controlling projects. Though the
functional management and project management are related, the degree of professional approach is
highly essential for the efficient management of the project. The project management is mainly driven
by intellectual operation and skilled and mechanical operations. Project management is covered by the
matrix form of organisation, structure where all roles are defined according to a combination rather
than functional specialisation.
Only managers with dedication and dynamism can withstand the overwhelming dizziness in these
incessant operations. Many organisation provides varied activities out of office hours to emerge happy
stress free project managers.
6 Project Management

Hence, the project management requires sound expertise and exposure, which may not be
possessed by the project promoters. So they have to resort for the assistance from project consultants
and project managers. A brief descriptions about the role of project manager and need functions of
project consultants are given below.

1.9 Project Manager and His Role

Project Manager is a pivot where the entire team accelerates its activities. This is to signify a
person who has the overall control of the project and shoulder responsibilities for its execution and
performance. Therefore, he is thoroughly involved in planning the work and monitoring, directing and
leading the participants and seeks to reach the project goal in time-cost-quality conundrum. The
Project Manager is either a specialist or a person having predominantly technical background with
sufficient experience, exposure expertise on multifaceted, multi dimensional and multi disciplinary
projects. It is well evident from the monumental constructions and projects that have been around us
since hay days, that the role of a project manager is quite distinct and demands an allround
performance.
A project manager is always found learning the newest facts from external world around him.
Only managers with sufficient spirit and dynamism can withstand the overwhelming dizziness in these
incessant operations. An ideal candidate of project manager ship should have some prominent personal
characteristics as outlined by R. Archibald.
 Flexible and adaptable to certain circumstances
 Preference for significant initiative and to evolve as a best leader
 Aggressiveness, confidence, persuasiveness, verbal fluency; ultra specialist in ace
communication
 Ambition, activity, forcefulness
 Effectiveness as integrator of project personnel
 Broad scope of personal interests; A multi-faceted person having diverse interest.
 Poised with enthusiasm, in agitation, spontaneity
Able or willing to devote most of his time to planning and controlling,
 Able to identify problems ahead
 Willing to make decisions that are acceptable to the team
 Able to maintain a proper balance in the use of time
The ideal project manager would probably have doctorates in engineering, business and
psychology, sustained with a handful years of experience on similar natured projects or as project
officer occupying different positions, and should have physical fitness to undertake such
machiavellian tasks with feeling of positive stress. Good project managers in industry today would
probably have 60% to 80% of these traits. Good project managers are willing to identify their
shortcomings and know that managing a project is no less arduous than driving a vehicle in a heavy
traffic, they have to balance between the wheels that are mutually exclusive and yet engineered to run
coherently, they ensure that goal is reached by properly accelerating the vehicle to manage the traffic
duly avoiding accidents.
Project Management 7

1.10 Project Consultants

Project consultant who is an embodiment of knowledge is an asset to every organisation. For any
developing country, project management holds the key for development. Without efficient project
management neither cost control nor time control is possible. The basic ingredient of successful
project management is a happy integration of three factor, appropriate estimate, competent contractor
and effective project management. The other important ingredient of successful project management is
an effective management team.
Consultants provide guidance as well as direction to the projects. From the formulation state to
the completion and post project evaluation state, consultant’s services are essential and are also
available in myriad manner. In fact, the consultant is the part of the project management team, though
as a paid member on contractual terms and conditions.
When a project is taken up for execution, the first task would be to assess the requirements of the
services of an outside consultant or the in-house expertise available would be sufficient for the project.

Need of Consultants
Need on Consultants arises:
(i) When a project with new technology is undertaken.
(ii) When the in-house consultant is incapable of meeting the requirement of the project.
(iii) When there is no in-house facility available in the organisation
(iv) When the project is executed on the basis of imported technology and knowhow.
(v) To avail the advantages of expertise available with the outside consultants.
Consultants may be of:
(a) In-house consultants
(b) Outside consultants
 Indigenous
 Foreign consultants
As regards ‘in-house consultant’, it may be stated that in many organisations a separate
department is maintained in the total organisation structure. This department looks after the work of
detailed engineering, drawings and preparation of technical specifications, etc. An office order shall be
issued assigning the jobs along with scope of work, time schedule and job responsibilities to be carried
out.
When the jobs cannot be done by the in-house consultants, the appointment of outside consultants
would become unavoidable. While assigning jobs to the outside consultants the following steps should
be carried out effectively:
 Approval from the competent authority to get the specialist’s service
 Decide about indigenous or foreign consultant, depending on the scope of the project
 Preparation of list of consultants
 Scope of services of consultants
 Preparation of tender documents
8 Project Management

 Inviting offers from leading consultants

 Evaluation of offers
 Award of contract to the consultant
While selecting outside consultants the various factors to be considered are job requirements,
facilities available in their organisations, experience, performance, their organisation structure, fees,
the terms and conditions pre and post commissioning services etc.

Job of Consultants
The functions of a project management consultant have been identified as (1) Assisting the
agency in appropriate site investigation and sourcing of materials. (2) Assisting the agency in selecting
the appropriate contractor; (3) Checking the quality of work, supervision control, testing monitoring
and progress reporting, checking measurements and of bills.
The project management consultant has to give periodic reports to the client on the progress,
trend and completion date, likely slippage in time, adequacy of resources with the contractor and
quality awareness of the contractor, and recommend measures for better control and management,
including additional input to correct slippages in future. If it is necessary, they can also recommend
termination of a contractor, after examining the legal implications. In India, engaging project
consultant for preparation of detailed project reports and site gauging project management consultants
for selection of contractors and supervision of work is somewhat new. The project management
consultant concept makes available for project management the latest developments in technical
engineering, management and information fields.
Main jobs of the consultants are:
(i) Preparation of feasibility report
(ii) Techno-economic report
(iii) Preparation of detailed project report
(iv) Detailed engineering and consultancy services
(v) Detailed commercial viability
(vi) Project monitoring and control
(vii) Supervision of erection and commissioning of report
(viii) Provide pre and post commissioning services
With the passage of time, there has been progress in Indianisation in the spheres of technology,
know how etc. Many firms in public sector as well as in private sector have come up in the
consultancy services. A few well known consultancy firms are;
 TATA Consultancy Services Ltd.
 Birla Technical Services
 Dastur & Co. Ltd.
 Metallurgical & Engineering Consultants (India) Ltd.
 Kirloskar Consultancy Ltd
 Power Consultancy Services India Pvt. Ltd.
 Small Industries Services Institute
Project Management 9

 Technical Consultancy Organisation

 Science and Technology Entrepreneurship Park etc.

Objectives of Project Management

Project management aims to plan, co-ordinate and control the complex and diverse activities of
the modern industrial and commercial projects. All projects are sharing one common characteristic
namely the projection of ideas and activities into new endeavours, undeliable impressions in the
infrastructure aspects of a city. The purpose of project management is to foresee or predict as many
uncertainties and problems as possible and to plan, organise and control activities so that the project is
completed successfully in spite of all the risks.
Setting objectives: The objectives in project management must be specific, instead of being
ambiguous. Such specific objectives will enhance the timely achieving the desired outcome of the
project.
Performance and quality: Performance done properly, speaks volumes of the project. The end
result of a project must fit the purpose for which it was intended. At one time, quality was seen as the
responsibility of the quality control department. In more recent years the concept of total quality
management has come to the force, with the responsibility for quality shared by all staff starting from
top management to the staff at operational level.
Budget: The project must be completed without exceeding the budgeted expenditure. Financial
sources are not always inexhaustible and a project might be abandoned altogether if the funds run out
before completion. If it happens, the time money and effort invested in the project would be forfeited
and written off. In the extreme cases, the project contactor could face enormous financial loss. Hence,
proper attention is to be paid to the cost budgets and financial management.
Time of completion: Actual progress has to match the planned progress. All the significant
stages of the project must take place on or before the specified dates and completion on or before their
respective latest completion times so that the entire project is completed on or before the planned
finish date. The timescale objective is highly important because late completion of a project is not very
likely to please the project sponsors. Delay in one process will lead to further delay in rest of the
process and time over run in the completion.
Besides that, projects in general are classified on several basis as give the following illustrative
list.
 United Nations Asian and Pacific Development Institute
10 Project Management

Categories of Projects
PROJECT

National International

Non Industrial Industrial

Non Conventional R & D High Technology Conventional Low Technology

Mega Major Medium Mini

Gross Root Expansion Modification

Normal Crash Disaster

Classification of Project
The project can be classified on several basis. Major classification of the projects are given below:
1. On the Basis of Expansion
1. Project expanding the capacity.
2. Project expanding the supply of knowledge.
2. On the basis of Magnitude of the resources to be invested.
1. Giant projects affecting total economy
2. Big projects affecting any one sector of the economy
3. Medium size projects
4. Small size projects (depending on size, investment & impact)
3. On the basis of Sector:
1. Industrial project
2. Agricultural project
3. Educational project
4. Health project
5. Social project

4. On the basis of Objective:

1. Social objective project
2. Economic objective project
Project Management 11

5. On the basis of productivity:

1. Defectively productive project
2. Interactively productive project
6. On the basis of nature of benefits:
1. Quantifiable project
2. Non-quantifiable project

7. On the basis of government priorities:

1. Project without specific priorities
2. Project with specific priorities

8. On the basis of dependency:

1. Independent project
2. Dependent project
9. On the basis of ownership:
1. Public sector project
2. Private sector project
3. Joint sector project

10. On the basis of location:

1. Project with determined location
2. Project where location is open
11. On the basis of social time value of the project:
1. Project with present impact
2. Project with future impact
12. On the basis of National policy:
1. Project determined by inward looking policy
2. Project determined by outward looking policy

13. On the basis of risk involved in the project:

1. High risks project
2. Normal risk project
3. Low risk project
14. On the basis of economic life of the project:
1. Long term project
2. Medium term project
3. Short term project
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15. On the basis of technology involved in the project:

1. High sophisticated technology project
2. Advanced technology project
3. Foreign technology project
4. Indigenous technology project
16. On the basis of resources required by the projects:
1. Project with domestic resources
2. Project with foreign resources
17. On the basis of employment opportunities available in the project:
1. Capital intensive project
2. Labour intensive project

18. On the basis of management of project:

1. High degree of decision making attitude
2. Normal degree of decision making attitude
3. Low degree of decision making attitude
19. On the basis of sources of finance:
1. Project with domestic financing
2. Project with foreign financing
3. Project with mixed financing
4. Project with financial financing
20. On the basis of legal entity:
1. Project with their own legal entity
2. Project without their own legal entity

21. On the basis of role played by the project:

1. Pilot project
2. Demonstration project

22. On the basis of speed required for execution of the project:

1. Normal project
2. Crash project
3. Disaster project

1.11 What is Operation?

 Operation is an ongoing work efforts
 The objective of an ongoing operation is to sustain the business.
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 It is repetitive. Once objective is reached adopt a new set of objectives and continue the
work.

1.12 Difference between Project and Operation

Characteristics that are Shared by Project & Operations
 Planned, Executed and Controlled
 Constrained by limited resources (ex: people, material, equipment, financial etc)
 Performed by people
 Activities that cannot be addressed within the organisation’s normal operational limits are
called projects. Therefore, projects are often utilised as a means of achieving an
organisation’s strategic plan.
Projects are authorised as a result of one or more of the following strategic considerations
(Business Case)
 A market demand
 An organisational need
 A customer request
 A technological advance
 A legal requirement
The characteristics of the project or service of the project are determined incrementally and are
continually refined and worked out in detail as the project progresses.

1.13 What is Process in Project Management and Process

Groups?
Process
A Series of actions bringing about a result

Project Management Process Product Oriented Process

 Describe, organise and complete the work of the  Specify and create the Project’s Product
project  Defined by the product life cycle
 The purpose is to initiate, plan, execute, monitor  It varies by application area
and control, and close a project
 It is common to all projects

 Is the application of knowledge, skills, tools and techniques to project activities to meet the
project objectives
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 This is accomplished through the application and integration of the five project management
processes groups (initiating, planning, executing, monitoring and controlling and closing)
and 9 knowledge areas,
 The Project Manager is the person responsible for accomplishing the project objectives.

What is Project?
 Project is a temporary endeavor
 Temporary – Has definite start and definite end
 Unique – one of a kind/deliverable ,even though recurring elements exist
 At the beginning of a project:
 Cost and staffing levels are low
 Risk is high
 The level of uncertainty is the highest, hence probability of completing the project
successfully is very low
 The Stakeholders influence will be high
 Organisations performing projects usually divide each project into several project phases
 The purpose of a project is to attain its objectives and close/terminate the project.
 It closes when its specific objectives have been met

Project Objectives vs. Project Scope

Project Objectives
Refers to a detailed description of the expected/desired outcome of the project
Ex: Build a new website

Project Scope
Refers to the amount of effort required to complete a project
Ex: Build the website using ASP & NET products and Flash media

1.14 What is Scope? Difference between Project Group

Objectives and Project Scope
SCOPE

Product Scope Project Scope

The features and functions that characterise a The work that must be done achieve Product Scope.
product/service/result. Completion of the product Completion of the project scope is measured against
scope is measured against The Project management plan
Product requirements
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Conclusion
Thus, this chapter has explained the various aspects of projects and project management. This
conceptual knowledge will certainly helps you to know about the features of project and project
management, which is at emerging unique discipline. And this chapter has also explained the various
stages of project life cycle, which helps the project manager to ascertain the strength and weakness of
any project at any point of time.
Keywords Used: Project Complexities, Project consultant, Project Manager, Disaster projects,
Operation, Scope, Process groups

Self Assessment Questions

1. Explain the significance of project approach for the economic development of the country.
2. Give an outline about the project opportunities available in different sectors of the economy
3. Describe the various resource potentials of our country.
4. Explain the latest trend in the infra-structural projects in India.
5. Give a brief note about the various on-going social-welfare sector projects.
6. Explain the role of project manager in successfully administering a project
7. Describe the need and functions of project consultants.

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