Project Management & Appraisal
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Project Management & appraisal
Overview
The Project Management is the field of study through the techniques developed by the army in USA over several decade.
Modem Project management started with the Manhattan project in United State developed atomic bomb After 2nd world war.
Definition
1. 2. 3. 4. 5.
“Any undertaking that has definite final objectives representing specific values to be used in the satisfaction of some need or desire. Characteristic of Project. All of them have a desired outcome at the end. They consume significant amounts of resourcestime and money. They have limitations on resources that are available. They are not undertaken frequently. They are well defined activities with clear cut start and end.
Commercial projects
Commercial project involves following key considerations. What is cost What is time require? What are the capabilities that it provides to organization? Whether it fit into the strategies of the organization?
Project Management
Managing the project is called project Management. Project Management can be defined as planning, organizing, staffing, directing and controlling some parts of the organization for relatively shorter period of time to achieve the project objectives within laid down constraints. some time staffing do not consider as part of project management. Big project a separate project office is set up. people recruited from the organization & outside of the organization. period of time varies with types of industry.
Constraints of the projects are -cost (budget), time (schedule) and performance levels.
Project management is aimed at achieving goal within the constraints.
Why project management?
Setting up project management division is subjective. This is based on case to case basis. The factors to be considered for separate management division are:(1) interdependencies between various departments (2) sharing of common resources (3) The important of project to organization (4) size of project (5) change in market. Project management is required because of interdependencies of various department.. Task to be completed by putting them under one roof.
use the project management when there are scare resources which are critical to project. Project management division will be setup if the project is very important -achieving organizational mission, future success, target achievement. An organization requires substantially more resources time (people) or machinery- normally use project management. Market is continuously changing, repaid technology changes, value and behavior of consumer -to manage, project management is required. For reputation of the organization in failure in completion, degree of unfamiliarity of project also lead to set up project management division.
Life Cycle of a Project
The life of the project can be divided in to four phases – corresponding with the changes in the level of activities.
These are broadly divided in to :(1) (2) (3) (4)
Conception & Selection Planning and scheduling Implementation & Monitoring Evaluation and termination
Cont….
•Start low level and then raise slowly. •The effort spent on project indicated in the chart.
Ph as e
II
Level of effort
Phase III
Ph as
e1
Phase IV
Time
Conception and Selection 1. 2. 3. 4.
The activates in this phase start at low level and then rises slowly. The functions to be performed by the project manager working on project are: Identifying a need for a project. Establishing goals to be achieved by the project. Estimating the amount that the firm will have to commit for the project. Presenting the project idea or various alternative ideas to the management and get their approval.
Planning & Scheduling
1. 2. 3.
This phase is preparatory to the actual implementation of the project. Planning how to implement the project and scheduling how the implementation should be carries out are done in this phase. The level of activity & also project cost rise rapidly during this phase. The functions to be carried out are : Set up a technical team to decide on how the project can be implemented. Plan for the requirements of personnel, finance, materials . Prepare a schedule keeping in view the date given by the client or the management.
Phase III: Implementation, Monitoring and Control:
The project cost reaches its peak during this stage. The major function that are to be carried out in this phase are : Procuring materials Building and testing the tools. Developing the support system Making modifications to bring the performance to the required level. Towards the end of this phase the focus of the project manager generally changes to meeting the schedule than the cost and /or performance .
Evaluation & Termination
In this phase the activity levels decline steeply and reach zero. The entire concentration of all staff and the managers will be handing over the project on time. The functions that are carried out in this phase are: Training the operational staff. Transferring the responsibilities Releasing surplus resources. Releasing the project staff for next assignment.
Project Manager
The project Manager’s duty- coordinate and integrate activities. Strong communication and interpersonal skills. Project manger should good at handling men and matters Project manger should work effectively with different group of peoples, interact with different department head, and integrate all functions related to project. Balancing the managerial and technical functions. Coping with risk associated with project management. It should be technical specialist/ managerial skill. Managing the line staff balancing the managerial/ technical function coping risk and relationship with organization
The Line Manager
The responsibility of line manager is to execute the task.
Line manager is always technical, specialist.
The line manager generally faces the problem like resources, deadlines to be met, task of unscheduled changes in the task to be done, technical breakdown, employment turnover
Growth of project Management
Most of management tools were invented by 1950’s Mid of late 60’s project management gained widespread acceptance Late 60’s industry tasks where complex aerospace, defense, construction, engineering, adopted project management Initially task was carried out without setting up a project management department Handling was done by line manager With complexities ,size of investment, technology, integration of several activities lead to set a project management division Some organizations adopt formal, informal management concepts
Contd…
Resistance from people, pay projects, power in organization, share of resources adversely affected the project management.
NASA virtually forced sub- contractor for adoption of formal project management techniques.
Realization of having single head responsible for success, a accountable, dedicated to project work and for integrated planning, required project management.
Project Management in INDIA
Project management have been accepted in India after independence. It is not successful since most of the projects there is time and cost over-run. Reason for: Dispute for land acquisition Not proper selection of technology Non availability technical person Lack of planning, labor dispute Absence of coordination between different departments External resources Funds are not released in time by government. Change in foreign exchange rates Inflation Political instability
Project initiation and resources allocation Chapter II
Project iniation and resources allocation Strategic Plan
Every company has strategic plan.
This follows the allocation of resources in confirmation to the plan.
The strategic plan and allocation of funds should go hand in hand.
The resources allocation is done at two level (1) corporate or firm level (2)Department or business unit level..
Resource allocation (A) Corporate level.
At the corporate level the resource allocation is done on the basis of business functions (marketing, finance, production) or geographical (in case of MNC)
This should be resulted into optimal allocation
This in turn depends on how best firm can be divided in such way that each division contribute to be achievement of the strategic objectives
Allocation of resources depends on need for change in the existing pattern of allocation or whether the firm are growing or declining and whether a change is called for.
In some companies the resources allocation is also made based on formula.
There may be two situations (1)Growth in resources and (2) Decline in sources.
(1)Growth in Resources: When the resources are increasing it is easy to bring about a change in their relative distribution. It can be achieved by simply directing fresh flows in the areas where they are required. (2)Decline in resources:
When there are decline of resources
Allocation will be based centrally imposed priority, some times division gets merged and allocation is done.
The division offer higher return will get fund first in case of declining resources allocation will not be based on formula or bargaining.
Resources allocation at Business Unit Level
In small firm, where there is one unit there is only one level of allocation. Where there are more than one firm, resources are allocated to different units of a firm based on, formula or units have effectively deployed them previously. If the allocation based on open competition or free bargaining, the unit will have ready with their investment plan. Whatever may be the level of allocation the investment needs of the unit depends on two factors(1) Identifiaction of investment opportunities (2)Strategic abilities. The identification investment alternatives of the unit based on: Analysis of environment -Analysis of strategic capabilities
Analysis of environment
There are various techniques and models put forth to analyze various components or factors in the environment. Two popular models are: PEST MODEL MICHAEL PORTER 5 FORCES MODEL Pest analysis – environment like Political legal factors Economic factor Socio-cultural factors Technology factors
1.Political legal Economic factors Stability of Government Interest rate Labor legislations Trends in GDP Tax laws Inflection Foreign Trade regulations Unemployment Monopolies legislations Disposal income 3 socio-culture factors 4Technological fact Changes in lifestyle New discovery Attitude towards work Level of R &D Income distribution technology transfer Income distribution rate of obsolescence Level of education Social mobility
Michael
Porters Model
Porter model –popular model for analyzing the competitive position of firm The model is based on set of 5 force Threats of entry- indicate how likely of more and more competitors likely to enter. The entry of more and more player is influenced by how easy or difficult to enter in to market. – there are some factors called entry barriers
Economies of scale Minimum capital requirements Cost advantage Legislation, governing entry
2. Bargaining Power of the Buyers strong
bargaining power the producer can never be sure getting fair price for his products. the bargaining power of the buyers will be high Alternative success of supply Buyers are few and supply is high. Material cost is major cost of production
3.Bargaining power of suppliers
Few suppliers and more buyers No alternative suppliers Switching from one supplier to other suppliers is difficult supplier has Strong brand image
4.Threats of substitutes
availability of substitutes products can act as a selling on price Difficult for consumer in switching from original product to substitutes
5.Extent of competitive rivalry – higher rivalry will lead to threats in entry -
Competitive pressure will based on the size of firm Stagnation for long time High exist barriers
Identification of opportunities
So far we have analyzed the activities, resources and environment This helps to understand the strength of firm for making investment Apart from the above analyzed the investment opportunities can be identified Study of inputs/outputs of various industries Imports substitutes Reports of studies conducted Rival of sick industries
Creativity and idea generation Creativity – ability to create what does already not exist Creative ideas often call for change People oppose the change Trying new methods is risky a) Individual creativity - first thing that things are ineducate to meet New idea to generate to meet The focus should be on quality and quantity b) group creativity- when one person is not able to solve the problem group techniques are used to: Brain storming Delphi market demand analysis Nominal group techniques, discussion of result, presentation, idea, classification, voting and ranking, discussion and result.
Overview
The Project Management is the field of study through the techniques developed by the army in USA over several decade.
Modem Project management started with the Manhattan project in United State developed atomic bomb After 2nd world war.
Definition
1. 2. 3. 4. 5.
“Any undertaking that has definite final objectives representing specific values to be used in the satisfaction of some need or desire. Characteristic of Project. All of them have a desired outcome at the end. They consume significant amounts of resourcestime and money. They have limitations on resources that are available. They are not undertaken frequently. They are well defined activities with clear cut start and end.
Commercial projects
Commercial project involves following key considerations. What is cost What is time require? What are the capabilities that it provides to organization? Whether it fit into the strategies of the organization?
Project Management
Managing the project is called project Management. Project Management can be defined as planning, organizing, staffing, directing and controlling some parts of the organization for relatively shorter period of time to achieve the project objectives within laid down constraints. some time staffing do not consider as part of project management. Big project a separate project office is set up. people recruited from the organization & outside of the organization. period of time varies with types of industry.
Constraints of the projects are -cost (budget), time (schedule) and performance levels.
Project management is aimed at achieving goal within the constraints.
Why project management?
Setting up project management division is subjective. This is based on case to case basis. The factors to be considered for separate management division are:(1) interdependencies between various departments (2) sharing of common resources (3) The important of project to organization (4) size of project (5) change in market. Project management is required because of interdependencies of various department.. Task to be completed by putting them under one roof.
use the project management when there are scare resources which are critical to project. Project management division will be setup if the project is very important -achieving organizational mission, future success, target achievement. An organization requires substantially more resources time (people) or machinery- normally use project management. Market is continuously changing, repaid technology changes, value and behavior of consumer -to manage, project management is required. For reputation of the organization in failure in completion, degree of unfamiliarity of project also lead to set up project management division.
Life Cycle of a Project
The life of the project can be divided in to four phases – corresponding with the changes in the level of activities.
These are broadly divided in to :(1) (2) (3) (4)
Conception & Selection Planning and scheduling Implementation & Monitoring Evaluation and termination
Cont….
•Start low level and then raise slowly. •The effort spent on project indicated in the chart.
Ph as e
II
Level of effort
Phase III
Ph as
e1
Phase IV
Time
Conception and Selection 1. 2. 3. 4.
The activates in this phase start at low level and then rises slowly. The functions to be performed by the project manager working on project are: Identifying a need for a project. Establishing goals to be achieved by the project. Estimating the amount that the firm will have to commit for the project. Presenting the project idea or various alternative ideas to the management and get their approval.
Planning & Scheduling
1. 2. 3.
This phase is preparatory to the actual implementation of the project. Planning how to implement the project and scheduling how the implementation should be carries out are done in this phase. The level of activity & also project cost rise rapidly during this phase. The functions to be carried out are : Set up a technical team to decide on how the project can be implemented. Plan for the requirements of personnel, finance, materials . Prepare a schedule keeping in view the date given by the client or the management.
Phase III: Implementation, Monitoring and Control:
The project cost reaches its peak during this stage. The major function that are to be carried out in this phase are : Procuring materials Building and testing the tools. Developing the support system Making modifications to bring the performance to the required level. Towards the end of this phase the focus of the project manager generally changes to meeting the schedule than the cost and /or performance .
Evaluation & Termination
In this phase the activity levels decline steeply and reach zero. The entire concentration of all staff and the managers will be handing over the project on time. The functions that are carried out in this phase are: Training the operational staff. Transferring the responsibilities Releasing surplus resources. Releasing the project staff for next assignment.
Project Manager
The project Manager’s duty- coordinate and integrate activities. Strong communication and interpersonal skills. Project manger should good at handling men and matters Project manger should work effectively with different group of peoples, interact with different department head, and integrate all functions related to project. Balancing the managerial and technical functions. Coping with risk associated with project management. It should be technical specialist/ managerial skill. Managing the line staff balancing the managerial/ technical function coping risk and relationship with organization
The Line Manager
The responsibility of line manager is to execute the task.
Line manager is always technical, specialist.
The line manager generally faces the problem like resources, deadlines to be met, task of unscheduled changes in the task to be done, technical breakdown, employment turnover
Growth of project Management
Most of management tools were invented by 1950’s Mid of late 60’s project management gained widespread acceptance Late 60’s industry tasks where complex aerospace, defense, construction, engineering, adopted project management Initially task was carried out without setting up a project management department Handling was done by line manager With complexities ,size of investment, technology, integration of several activities lead to set a project management division Some organizations adopt formal, informal management concepts
Contd…
Resistance from people, pay projects, power in organization, share of resources adversely affected the project management.
NASA virtually forced sub- contractor for adoption of formal project management techniques.
Realization of having single head responsible for success, a accountable, dedicated to project work and for integrated planning, required project management.
Project Management in INDIA
Project management have been accepted in India after independence. It is not successful since most of the projects there is time and cost over-run. Reason for: Dispute for land acquisition Not proper selection of technology Non availability technical person Lack of planning, labor dispute Absence of coordination between different departments External resources Funds are not released in time by government. Change in foreign exchange rates Inflation Political instability
Project initiation and resources allocation Chapter II
Project iniation and resources allocation Strategic Plan
Every company has strategic plan.
This follows the allocation of resources in confirmation to the plan.
The strategic plan and allocation of funds should go hand in hand.
The resources allocation is done at two level (1) corporate or firm level (2)Department or business unit level..
Resource allocation (A) Corporate level.
At the corporate level the resource allocation is done on the basis of business functions (marketing, finance, production) or geographical (in case of MNC)
This should be resulted into optimal allocation
This in turn depends on how best firm can be divided in such way that each division contribute to be achievement of the strategic objectives
Allocation of resources depends on need for change in the existing pattern of allocation or whether the firm are growing or declining and whether a change is called for.
In some companies the resources allocation is also made based on formula.
There may be two situations (1)Growth in resources and (2) Decline in sources.
(1)Growth in Resources: When the resources are increasing it is easy to bring about a change in their relative distribution. It can be achieved by simply directing fresh flows in the areas where they are required. (2)Decline in resources:
When there are decline of resources
Allocation will be based centrally imposed priority, some times division gets merged and allocation is done.
The division offer higher return will get fund first in case of declining resources allocation will not be based on formula or bargaining.
Resources allocation at Business Unit Level
In small firm, where there is one unit there is only one level of allocation. Where there are more than one firm, resources are allocated to different units of a firm based on, formula or units have effectively deployed them previously. If the allocation based on open competition or free bargaining, the unit will have ready with their investment plan. Whatever may be the level of allocation the investment needs of the unit depends on two factors(1) Identifiaction of investment opportunities (2)Strategic abilities. The identification investment alternatives of the unit based on: Analysis of environment -Analysis of strategic capabilities
Analysis of environment
There are various techniques and models put forth to analyze various components or factors in the environment. Two popular models are: PEST MODEL MICHAEL PORTER 5 FORCES MODEL Pest analysis – environment like Political legal factors Economic factor Socio-cultural factors Technology factors
1.Political legal Economic factors Stability of Government Interest rate Labor legislations Trends in GDP Tax laws Inflection Foreign Trade regulations Unemployment Monopolies legislations Disposal income 3 socio-culture factors 4Technological fact Changes in lifestyle New discovery Attitude towards work Level of R &D Income distribution technology transfer Income distribution rate of obsolescence Level of education Social mobility
Michael
Porters Model
Porter model –popular model for analyzing the competitive position of firm The model is based on set of 5 force Threats of entry- indicate how likely of more and more competitors likely to enter. The entry of more and more player is influenced by how easy or difficult to enter in to market. – there are some factors called entry barriers
Economies of scale Minimum capital requirements Cost advantage Legislation, governing entry
2. Bargaining Power of the Buyers strong
bargaining power the producer can never be sure getting fair price for his products. the bargaining power of the buyers will be high Alternative success of supply Buyers are few and supply is high. Material cost is major cost of production
3.Bargaining power of suppliers
Few suppliers and more buyers No alternative suppliers Switching from one supplier to other suppliers is difficult supplier has Strong brand image
4.Threats of substitutes
availability of substitutes products can act as a selling on price Difficult for consumer in switching from original product to substitutes
5.Extent of competitive rivalry – higher rivalry will lead to threats in entry -
Competitive pressure will based on the size of firm Stagnation for long time High exist barriers
Identification of opportunities
So far we have analyzed the activities, resources and environment This helps to understand the strength of firm for making investment Apart from the above analyzed the investment opportunities can be identified Study of inputs/outputs of various industries Imports substitutes Reports of studies conducted Rival of sick industries
Creativity and idea generation Creativity – ability to create what does already not exist Creative ideas often call for change People oppose the change Trying new methods is risky a) Individual creativity - first thing that things are ineducate to meet New idea to generate to meet The focus should be on quality and quantity b) group creativity- when one person is not able to solve the problem group techniques are used to: Brain storming Delphi market demand analysis Nominal group techniques, discussion of result, presentation, idea, classification, voting and ranking, discussion and result.
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