Project Management

Project Management Mob-09826410492 Mob-09826410492 -   BY CA. SATYAM SHRIVASTAVA - PART -I PROJECT:- “ A PROJECT IS A SCHEME, DESIGN OR A PROPOSAL OF   SOMETHING INTENDED TO BE ACHIEVED…”   A project can be defined as a scientifically evolved work plan devised to achieve a specific objective within a specified time period. Project may be differ in size, nature, objective and complexity, yet all of them must have following attributes: 1. Specific objective 2. A course of action 3. Definite ti time pe perspective Why Project Management?  Today, Indian industry is striving hard to induct new technology and to produce cost, quality and energy efficient and environment-friendly products to become globally competitive. As a result of this effort, it is expected that India will emerge as one of top economies of the world within the next two decades. How soon India becomes global economic power will depend upon how effectively and rapidly Indian industries (both public and private sector), re-engineer themselves into the world class competitors.  For this, Indian industries would require to take up more and more new projects and complete them within the given cost and time constraints and expected quality standards. In this situation, the role of project management has assumed greater significance affecting profitability, efficiency and productivity of an organization.  Today’s complex environments require ongoing implementations. 

Project management is a method and mindset…a disciplined approach to managing

chaos. 

Project management provides a framework for working amidst persistent

WHAT IS A PROJECT?  Project is a single shot set of activities having a definite beginning and ending points. The activities of a project are performance in a particular order as they have precedence relationships. 

The key concepts of a project is that it is a one time occurrence, and occurrence that will not be repeated daily, weekly or monthly in converting organisational resources into goods or services. Construction of a house,   Construction of a bridge,   Establishing a plant or factory,  Arranging a birthday party or picnic,    Preparing for a competitive examination,   Municipal construction of new tennis court at a park and    Initial production of a new product are all projects.

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Each one is a one-shot set of activities, each has a definite beginning and ending points and each has a series of activities with precedence relationship. 

Project is an organised programme of activities carried out to reach a defined goal, often of a non-recurring nature with a specified terminal point. It is a time-bound package of scheduled and assembled activities dedicated to the attainment of a specified objective of successful completion of a work, on time and within the allotted budget.  A project is also defined as a non-routine, non-repetitive, one-off undertaking normally with–discrete time, financial and technical performance goals. It is a unique endeavor to produce a set of deliverables within clearly specified time, cost and quality constraints.         

It can be considered to by any series of activities and tasks that:  Are unique in nature  Have a specific objective to be achieved within certain specification;  Have defined start and end dates;  Have an approved budget.  Have limited resources.  Involve an element of risk. Consume resources ( time, money equipment etc.) and  Generate wealth ( tangible or intangible )

Project Management: Official Definition:=  A project is a temporary endeavor undertaken to create a unique product or service. It implies:a specific timeframe   a budget   unique specifications working across organizational boundaries  Why this matters to YOU?  Most of us get to where we are by some technical or specific set of skills  If you want to get things done, you need a good blend of   Business knowledge  People management  Knowledge of organizational politics  AND an area of technical expertise

Those are the people that make things happen!  Project Management is the skills, tools and management processes required to undertake a project successfully. It incorporates:  A set of  skills.  A suite of tools.  A series of  processes.  Project management components;=

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Project Management: Unofficial Definition 

 Project management is about organization

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 Project management is about decision making 

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 Project management is about changing people’s behavior 

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 Project management is about creating an environment conducive to getting  critical projects done!

Characteristics of a Project   Mission or a set of objectives  Ownership  Teamwork   Terminal stage  Uniqueness   Risk and uncertainty   Sub contracting   Customer-specific   Life cycle Project Management-An Overview:In the understanding of project management, following aspects are important: 

The Objective, scope and type of management.  The project phase concept   The feasibility study involving preparation of detailed project report and project   selection.  Financial evaluation, cost and time overruns.   Implementation phase in project management.  Other aspect like contracts and specification, foreign exchange and import  controls, power shortage, labour and tax incentives etc. Aims and objectives of project management are:  Timely completion of the project    Avoidance of delay, technical flaws and drawing defects   Proper flow of funds   Proper tooling and techniques   Proper control over chain reaction activities Steps in Project Management I. Initiation and Defining

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II. III. IV.

Project Planning Project Execution Project Completion

Steps in Project Management Step I : Initiation and Defining Activities: 1) Developing and defining objectives. 1) Seeking management’s approval, if the project owner is not the promoter. 1) Team identification with training requirements. 1) Projects details, specifications and authorisation including project scope, communication plan, control meetings, risk analysis, time schedule, project  cost, quality, flow of funds, key project issues, control procedures etc Step II : Project Planning Activities: 1) Planning is directed to answer - what need to be done, when and at what cost. 1) Plans and specification should be clearly understood to weed out confusion, if  any. 1) Project team members to understand the team organisation, project key issues and to demonstrate commitment leading to harmonising the team efforts. Step III : Project Execution Activities: 1) Mobilisation and lining up necessary resources for the project. 1) Carry out assigned work-packages within committed targets. 1) Carry out control meetings, monitor the actuals, review the progress as against  the task set and take corrective actions.  Step IV : Project Completion  Activities: 1) Handover the project to the project owner by way of commissioning the project. 1) Project post appraisal and report.

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 PART -II 

PROJECT PLANNING & PHASES  PROJECT “ A PROJECT IS A SCHEME, DESIGN OR A PROPOSAL OF SOMETHING   INTENDED TO BE ACHIEVED…”  Project planning  It refers to plans of the undertaking 

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1. To build up productive capabilities or  2. To extend its existing capacities or  3. To Diversify its business  Key issues in Project Analysis 1. 2. 3. 4. 5.

Market Analysis Technical Analysis Financial Analysis Economical Analysis Ecological Analysis

Market Analysis  Estimation of potential size of the market for the proposed product to be manufactured or service planned to be offered and get an idea about market share that is likely to be captured. (DEMAND FORCAST for Good & Service and establish objectives related with Market Leadership & Customer Moblisation) 

1. 2. 3. 4. 5. 6. 7.

It requires in-depth study and assessment of various factors like : Pattern of Consumption growth Income & Price elasticity of demand  Composition of Market  Nature of competition Availability of Substitutes Distribution Channels Administrative , legal & technical constraints

Technical Analysis  Analysis of technical & engineering aspects is done continually when a project is being examined and formulated. 

Basic objective of technical analysis is: 1. to ensure technical feasibility in the sense all input required to setup a project  are available & 1. to facilitate the most optimal formulation of the project in terms of technology,  size, location & so on. It comprises System Analysis using techniques of Operation Research to sort out complex problems like: Resource Allocation,  Scheduling & Queuing of Operation with use of PERT/CPM,  Linear Programming,  Goal Programming, &  Simulation etc. Financial Analysis It seeks to ascertain the financial viability of the project. Financial Viable Project A financial viable project 

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is one which meets the burden of debt capital &

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is able to satisfy the return expectations of the equity shareholders.

Aspects to be considered in the Financial Analysis :  Investment Expenditure & Cost of Project  Source of Finance  Cost of Capital  Projected Profitability  Break-even Point  Cash flow & Fund flow of the project  Projected financial position  Risk Level  Resource Allocation  Evaluation of Net Worth Economical Analysis: Also known as Social Cost Benefit Analysis 

1. 2. 3. 4. 5.

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It involves the consideration of following: Contribution of project to the development of economy as a whole. Contribution of project to the industrial development of the region. Direct economic benefits & costs of the project in terms of the efficiency prices. Contribution of the project on the employment opportunities, self sufficiency & social order. Impact of the project on the :*Distribution of income in society, *Level of savings & investments in the society. In the context of planned economies, economic analysis aids in evaluating individual projects within the planning framework which spell out *national economic objectives and  *broad allocation of resources to various sectors Ecological analysis involves the answer to the following:

1. Likely damage caused by the project to the environment 

1. Cost of restoration measures required to ensure that the damage to the environment is contained within the acceptable limits .

Generation & Screening of Project Ideas Which PROJECT will YOU SELECT ? Ans:Obviously a project which is “most profitable”... Project Identification:The idea behind project identification is finding out BUSINESS OPPORTUNITIES -which are feasible & promising and -which merit further examination and appraisal.

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is concerned with the collection, compilation and analysis of economic data

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for the eventual purpose of locating possible opportunities for investment and with the development of the characteristics of such opportunities.

Opportunities:According to PETER F. DRUKER- “Opportunities are of three types :1. Additive opportunities 2. Complementary Opportunities 3. Break Through Opportunities”    Additive opportunities:Those opportunities which enable the decision maker to better utilise the existing  resources without in any way involving a change in the character of the business. Complementary Opportunities:Those opportunities which involves the introduction of new ideas and as such lead to a certain level of change in the existing structure  Break Through Opportunities:= Those which involves a fundamental change in both in the nature and character of  the business Why Projects Fail  Failure to align project with organizational objectives  Poor scope  Unrealistic expectations  Lack of executive sponsorship  Lack of project management  Inability to move beyond individual and personality conflicts  Politics Why Projects Succeed!  Project Sponsorship at executive level  Good project charter  Strong project management  The right mix of team players  Good decision making structure  Good communication  Team members are working toward common goals Sources for Ideas Different sources & methods help to develop a wide range of ideas. Following are some sources of ideas: 1. Knowledge and understanding of economics and the economy. 2. Changing need of the people. 3. Emerging trends in the market. 4. Extensive reading and traveling.

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I)Creativity ;- Creativity plays a vital role in starting a new project “it not only gives one the edge for recognising needs generating business & marketing ideas, but it also helps in solving problems. A person who faces a problem and finds a novel solution or is able to quickly convert problem into an opportunity that has ready solution, will be survivor in the field where others less flexible and less creative will be left behind. II)Project Report;- Project report is a pre-investment and comprehensive study of  investment proposals of an organisation which include a thorough investigation relating to economic, technical, financial, social, managerial and commercial aspects. It is a working plan for implementation of project proposals after an organisation has decided to undertake an investment project. It seeks to evaluate the socioeconomic & technical viability of a project before it is undertaken. A Project Report deals with the various aspects of a new project with reference to: 1. Location of the Project 1. Size and Capacity Level 1. Technological aspects (like Production Process, Availability of raw materials, Requirements of labour and machines) 1. Managerial policies regarding organisation and control aspects of project IV)Location of the Project:By comparing the relative “Cost Advantages” of setting up the project at various places. It may be 1. Availability of Raw Material or 2. Nearness to basic infrastructure facilities or 3. Proximity to the market for the finished products 4. Other Benefits Size and Capacity Level;- A Plant must be planned according to its “OPTIMUM USE”.  Larger plants are economical but idleness is very costly. Because Fixed Overhead do not vary with the capacity levels. Therefore before setting up a plant an adequate optimum capacity should be determined. V)Technological aspects:- Cost Implication of various productive capacities. Out of  various alternatives, management must choose that one which has the least cost. At the planning stage following decision should be finalised: Production Process,  Level of Automation,  Machine capacities,  Raw Material Sources and  Type of labour. Managerial Policies;- Regarding  Organisation and

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Control aspects of project

Advantages of PROJECT REPORT: It lays down the OBJECTIVES in various phases of business & evaluates the objectives in the right DIRECTION  

It identifies the CONSTRAINTS ON RESOURCES to take remedial measures like: Manpower, Equipment, Financial & Technological etc.

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It makes the way for management to seek FINANCIAL ASSISTANCE . Since FI, Banks, Other financials intermediaries (like Merchant Banker & Underwriters) require DETAILED PROJECT REPORT to evaluate financial viability of the project .

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 Line of Action, Comparison of results

CONTENTS OF PROJECT REPORT:1. Industry  Information about Industry and its status in the economy, 

Present production and demand pattern

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Licenced capacity, Installed capacity

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Govt. policies & Export potential 2.Market Trend Broad market trend of the product and by product within and outside of the state/country for 5 years 3. Raw Material  Raw material survey 

Quality and Specification of the Raw Material required

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Sources of availability 4. Production Process Description of production processes 5. Technical Knowhow Availability of technical know how within and outside country 6. Location of Plant Its advantages and justifications 7. Water  Requirement of the water for process, boiler feed, cooling etc. 

Sources of water available 8. Power  Total power requirement for factory specification of power 

Choice between purchased power and generated power

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If power to be generated-

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*Total cost of investment, *Choice of fuel and *Cost of fuel available to the factory 9. Fuel  Requirement for stream raising or processing 

Sources and price 10. Effluents Treatment  Type and quality of the effluents 

Their treatment and disposal

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Investment in the effluent treatment and disposal 11. Implementation Programme Implantation and construction programme in the form of  - CPM/ PERT, - Flow Charts (indicating critical path and schedules) 12. Cost of Project  Land (inclusive of development expenditure to be incurred on the land)  Building to be erected for housing the plant & machinery, the administrative office, stores, services etc.  Plant & Machinery (including other equipment and their estimated cost and installation charges).  Technical know-how, engineering & consultancy fees Preliminary Expenses (share issue, stamp duty, cost of raising equity etc.)   Cost of spares, repairs & maintenance during trial and commissioning period.  Preoperative Expenses (travelling expenses, insurance charges, rent, rates & taxes)  Working capital margin  Provision for contingencies 13. Capital Structure Details of capital structure or financing mix broad pattern. 14.Cost of Production  Project pattern for 5 years.  Break even point of production cost.  Effect of variation of  - Raw Material Cost - Selling Price  Price trend of Finished Goods. 15. Profitability For the five years after commissioning of the project. 16. Other Statements  Cash flow Statement  Pay back period  Repayment Schedule 17. Organisation and Management  Description of corporate management  Promoter background and experience  Organisational Chart  Key Person

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