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Project Management

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LESSON 02
CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS
Broad Contents
What is a project?
Why projects?
Attributes of a project
Characteristics of projects
Project environment
Project participants
Projects and strategic planning
Examples of projects
Project types
2.1
What is a Project?
J. M. Juran defined that "a project is a problem scheduled for solution." Problem refers to the
gap between where you are and where you want to be, with an obstacle that prevents easy
movement to close the gap.
Projects are a group of activities that have to be performed with limited resources to yield
specific objectives, in a specific time, and in a specific locality. Thus, a project is a temporary
endeavour employed to create a unique product, service or results. Projects are an
investment on which resources are used to create assets that will produce benefits over an
expanded period of time. It is a unique process, consisting of a set of coordinated and controlled
activities with start and finish dates, undertaken to achieve an objective conforming to specific
requirements, including the constraints of time, cost and resources.
2.1.1
Short Range Projects:
They are completed within one year, and are focused towards achieving the tactical
objectives. They are less rigorous; require less or no risk. They are not cross functional.
These projects require limited Project Management tools, and have low level of
sophistication. It is easy to obtain approval, funding and organizational support for short
range projects. For example, reduce defect in shop number two from 6 to 4 percent.
2.1.2
Long Range Projects:
These projects involve higher risk and a proper feasibility analysis is essential before
starting such projects. They are most often cross functional. Their major impact is over
long period of time, on internal as well as external organization. Large numbers of
resources are required to undertake long range projects and they require breakthrough
initiatives from the members.
2.2
Why Projects are initiated?
Projects are initiated in the following scenarios:
 When starting a new business.
 In order to develop/ modify a product or service.
 For relocating and/or closing a facility.
 For regulatory mandate.
 For some community issues.
 In order to re-engineer the process so as to reduce complaints, reduce cycle time, and
eliminate errors.
 For implementing a new system or process.
 To introduce new equipment, tools or techniques.
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2.3
Attributes of a Project:
Projects focus on a single goal as compared to a program. They have customers who are
affected by the end results. They have to be completed within specified time frame (completion
date), within budget (limited resources including, people, money, machines) and should be
according to the specifications (with a certain level of functionality and quality).
In brief projects are:
 Directed towards achieving a specific result.
 Coordination of undertaking of interrelated activities.
 Of limited duration, a beginning and an end.
 Prone to risks, that is, every project has a certain amount of risk.
2.4
Characteristics of Projects:
As already mentioned projects are temporary with a definite beginning and a definite end.
They also have temporary opportunities and temporary teams.
Projects are terminated when the objectives are achieved, or conversely, if the objectives
cannot be met.
Most of the projects last for several years. However, they have a finite duration.
They involve multiple resources (human and non-human) and require close coordination.
They are composed of interdependent activities.
At the end of the project, a unique product, service or result is created. Some degree of
customization is also a characteristic of projects.
Projects encompass complex activities that are not simple, and may require repetitive acts.
They also include some connected activities. Some order and sequence is required in project
activities. The output from one activity is an input to another.
Project Management lives in the world of conflict. The management has to compete with
functional departments for "resources and personnel".
There exists a constant conflict for project resources and for leadership roles in solving
project problems.
In every project, clients want changes, and the parent organization aims at maximization of
profits.
There can be two bosses at a time and that too with different priorities and objectives.
2.5
Project Environment:
All projects are planned and implemented in a social, economic, environmental, political and
international context.
Cultural and Social Environment is that how a project affects the people and how they
affect the project. This requires understanding of economic, demographic, ethical, ethnic,
religious and cultural sensitivity issues.
International and Political Environment refers to the knowledge of international, national,
regional or local laws and customs, time zone differences, teleconferencing facilities, level
of use of technology, national holidays, travel means and logistic requirements.
Physical Environment is the knowledge about local ecology and physical geography that
could affect the project, or be affected by the project.
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Figure 2.1: Project Environment
2.6
Project Participants:
2.6.1
Stakeholders:
Stakeholders are the ones who have a share, or an interest in an enterprise. Stakeholders
in a company may include shareholders, directors, management, suppliers, government,
employees, customers, and the community.
Stakeholders are influenced by the
outcomes and objectives. They have varying level of responsibility and authority. Thus,
they should not be ignored. A project manager should try to manage and fulfill the
expectations of the stakeholders. There are both positive and negative stakeholders. In
some cases, stake holder's roles and responsibilities are overlapping. For example, an
engineering firm also provides financing.
Project stakeholders are individuals and organizations that are actively involved in the
project, or whose interests may be affected as a result of project execution or project
completion. They may also exert influence over the project's objectives and outcomes.
The project management team must identify the stakeholders, determine their
requirements and expectations, and, to the extent possible, manage their influence in
relation to the requirements to ensure a successful project.
As already mentioned, stakeholders have varying levels of responsibility and authority
when participating on a project and these can change over the course of the project's
life cycle. Their responsibility and authority range from occasional contributions in
surveys and focus groups to full project sponsorship, which includes providing financial
and political support. Stakeholders who ignore this responsibility can have a damaging
impact on the project objectives. Likewise, project managers who ignore stakeholders
can expect a damaging impact on project outcomes.
Sometimes, stakeholder identification can be difficult. For example, some would argue
that an assembly-line worker, whose future employment depends on the outcome of a
new product-design project, is a stakeholder. Failure to identify a key stakeholder can
cause major problems for a project.
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Stakeholders may have a positive or negative influence on a project. Positive
stakeholders are those who would normally benefit from a successful outcome from the
project, while negative stakeholders are those who see negative outcomes from the
project's success. For example, business leaders from a community that will benefit
from an industrial expansion project may be positive stakeholders because they see
economic benefit to the community from the project's success. Conversely,
environmental groups could be negative stakeholders if they view the project as doing
harm to the environment. In the case of positive stakeholders, their interests are best
served by helping the project succeed, for example, helping the project obtains the
needed permits to proceed. The negative stakeholders' interests would be better served
by impeding the project's progress by demanding more extensive environmental
reviews. Negative stakeholders are often overlooked by the project team at the risk of
failing to bring their projects to a successful end.
2.6.2
Key Stakeholders:
Key stakeholders include the following:
a) Project Manager:
The person, who is responsible for managing the project.
b) Customers, End Users:
The person or organization that will use the project's product. These may be
multiple layers of customers. For example, the customer for a new pharmaceutical
product can include the doctors who prescribe it, the patient who take it and the
insurers who pay for it. In some application areas, customers and user are
synonymous, while in others, customer refers to the entity acquiring the project's
product and users are those who will directly utilizes the project's product.
c) Performing Organization:
The enterprise whose employees are most directly involved in doing the work of
project.
d) Project Management Working on the Project:
The members of the team who are directly involved in project management
activities.
e) Project Team Members:
The group that is performing the work of the project. It includes the members who
are directly involved in the project activities.
f) Sponsors:
The person or group that provides financial resources, in cash, or kind, for the
project.
g) Influencers:
People or groups that are not directly related to the acquisition or use of the
project's product, but due to an individual's position in the customer organization
or performing organization, can influence, positively or negatively, the course of
the project.
h) Project Management Organization:
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If it exists in performing organization, the Project Management Organization can be
a stakeholder if it has direct responsibility for the outcomes of the project.
2.6.3
Project Stakeholders:
In addition to these key stakeholders, there are many different names and categories of
project stakeholders, influencing internal or external, owners and investors, sellers and
contractors, team members and their families, government agencies and media outlets,
individual citizens, temporary or permanent lobbing organizations, and society-at-large.
The naming or grouping of stakeholders is primarily an aid to identifying which
individuals and organizations view themselves as stakeholders. Project Managers must
manage stakeholder expectations, which can be difficult because stakeholders often
have very different or conflicting objectives.
For example:
 The manager of a department that has requested a new management information
system may desire low cost, the system architect may emphasize technical
excellence, and the programming contractor may be most interested in maximizing
its profit.
 The vice president of research at an electronics firm may define new product
success as state-of-the-art technology, the vice president of manufacturing may
define it as world-class practices, and the vice president of marketing may be
primarily concerned with the number of new features.
 The owner of a real estate development project may be focused on timely
performance, the local governing body may desire to maximize tax revenue, an
environmental group may wish to minimize adverse environmental impacts, and
nearby residents may hope to relocate the project.
Figure 2.2: Stakeholders and Projects
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Figure 2.3: Relevant Stakeholders
2.7
Projects and Strategic Planning:
Projects are the means of achieving organization's strategic plans. Following are the strategic
considerations that have to be kept in mind while planning for projects:
 The market demand (e.g. a new refinery).
 Organizational needs (e.g. a university offers new courses for revenue generation).
 Customer's requests (e.g. an Internet Service Provider ISP provider lunches DSL).
 Technological demand (e.g. new video games, new cell phones with advance features).
 Legal requirements (e.g. child labor control project, toxic waste disposal center).
2.8
Sub Projects:
Projects are frequently divided into more manageable components or sub projects. Individual
sub projects are also a project and are managed as such. They can be sub contracted or out
sourced.
2.9
The Triple Constraint of Project Management:
Meeting stakeholder needs and expectations involves balancing competing demands among
cost, quality, scope, and time.
Q = f (T, C, S)
Where Q is Quality, S is Scope and T is Time.
Project quality is affected by balancing these three factors.
Projects fail when:
a) Estimates are faulty
b) Time, talent and resources are insufficient or incorrectly applied
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Figure 2.4: Overview of Project Management
Figure 2.4 is a pictorial representation of project management. The objective of the figure is to
show that project management is designed to manage or control company resources on a given
activity, within time, within cost, and within performance expectations. Time, cost, and
performance are the constraints on the project. If the project is to be accomplished for an
outside customer, then the project has a fourth constraint: that is good customer relations.
2.10
Examples of Projects:
Designing and implementing an auto tax filing system in a revenue collection organization.
Hosting a web site of your department.
Executing an environmental clean-up of a contaminated site.
Holding a University alumni reunion.
Provision of clean water to Pakistani nation by 2008.
Developing a new product or service.
Effecting a change in structure, staffing, or style of an organization.
Developing or acquiring a new or modified information system.
2.11
Operations and Projects:
Operations are ongoing and repetitive activities conducted by the staff. Some of these include:
 Financial management and control
 Continuous manufacturing
 Product distribution
Projects are temporary and unique, and are performed by teams that have:
 Clearly defined team and individual roles
 Open and effective communication systems
 Visible rewards for good performance, and have constant pressure to improve poor
performance
Common Characteristics between operations and projects are as follows:
 They are both performed by people
 They are constrained by limited resources
 Both are planned, executed, and controlled
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2.12
Project Types:
Project End Requirements
Well Defined
Poorly Defined
Well Defined
Type I
Type III
Project
Construction
Software
Methods
Poorly Defined
Type II
Type IV
Product Development,
OD, Vision, Training
Space
Assessment
Figure 2.5: Project Types
Type I Projects ­ Large Engineering Projects:
They have well defined project methods and end project requirements, such as construction
projects.
Type II Projects ­ Product Development Projects, Early Space Projects:
They have poorly defined project methods but have well defined project end requirements.
Type III Projects ­ Software Development Projects:
In these, the shape of end product proceeds. They have well defined project methods, but
poorly defined project end requirements.
Type IV Projects ­ Organizational Development Projects, Vision Definition, Assessment
of Impact of Trainings:
They have both poorly defined project methods as well as project end requirements.
Figure 2.6: Why are systems necessary?
Figure 2.6 shows how many companies are structured. There are always "class or prestige" gaps
between various levels of management. There are also functional gaps between working units of
the organization. If we superimpose the management gaps on top of the functional gaps, we find
that companies are made up of small operational islands that refuse to communicate with one
another for fear that giving up information may strengthen their opponents.
The project manager's responsibility is to get these islands to communicate cross-functionally
toward common goals and objectives.
Projects fill an essential need in society. Indeed, projects are the major mode in which change is
accomplished. It is the mode in which corporate strategy is implemented, business change is
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addressed, productive teams and their necessary competencies are dealt with, quality of
deliverables, and tracking pre-established metrics for management's decision making, as well as
closing out a project and creating lessons learned are performed.
This discipline changes over time but the basic business premise never changes:
Accomplish the right thing right the first time within justifiable time, resources, and budget.
Projects are the means for responding to, if not proactively anticipating, the environment and
opportunities of the future.
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Table of Contents:
  1. INTRODUCTION TO PROJECT MANAGEMENT:Broad Contents, Functions of Management
  2. CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS:Why Projects are initiated?, Project Participants
  3. CONCEPTS OF PROJECT MANAGEMENT:THE PROJECT MANAGEMENT SYSTEM, Managerial Skills
  4. PROJECT MANAGEMENT METHODOLOGIES AND ORGANIZATIONAL STRUCTURES:Systems, Programs, and Projects
  5. PROJECT LIFE CYCLES:Conceptual Phase, Implementation Phase, Engineering Project
  6. THE PROJECT MANAGER:Team Building Skills, Conflict Resolution Skills, Organizing
  7. THE PROJECT MANAGER (CONTD.):Project Champions, Project Authority Breakdown
  8. PROJECT CONCEPTION AND PROJECT FEASIBILITY:Feasibility Analysis
  9. PROJECT FEASIBILITY (CONTD.):Scope of Feasibility Analysis, Project Impacts
  10. PROJECT FEASIBILITY (CONTD.):Operations and Production, Sales and Marketing
  11. PROJECT SELECTION:Modeling, The Operating Necessity, The Competitive Necessity
  12. PROJECT SELECTION (CONTD.):Payback Period, Internal Rate of Return (IRR)
  13. PROJECT PROPOSAL:Preparation for Future Proposal, Proposal Effort
  14. PROJECT PROPOSAL (CONTD.):Background on the Opportunity, Costs, Resources Required
  15. PROJECT PLANNING:Planning of Execution, Operations, Installation and Use
  16. PROJECT PLANNING (CONTD.):Outside Clients, Quality Control Planning
  17. PROJECT PLANNING (CONTD.):Elements of a Project Plan, Potential Problems
  18. PROJECT PLANNING (CONTD.):Sorting Out Project, Project Mission, Categories of Planning
  19. PROJECT PLANNING (CONTD.):Identifying Strategic Project Variables, Competitive Resources
  20. PROJECT PLANNING (CONTD.):Responsibilities of Key Players, Line manager will define
  21. PROJECT PLANNING (CONTD.):The Statement of Work (Sow)
  22. WORK BREAKDOWN STRUCTURE:Characteristics of Work Package
  23. WORK BREAKDOWN STRUCTURE:Why Do Plans Fail?
  24. SCHEDULES AND CHARTS:Master Production Scheduling, Program Plan
  25. TOTAL PROJECT PLANNING:Management Control, Project Fast-Tracking
  26. PROJECT SCOPE MANAGEMENT:Why is Scope Important?, Scope Management Plan
  27. PROJECT SCOPE MANAGEMENT:Project Scope Definition, Scope Change Control
  28. NETWORK SCHEDULING TECHNIQUES:Historical Evolution of Networks, Dummy Activities
  29. NETWORK SCHEDULING TECHNIQUES:Slack Time Calculation, Network Re-planning
  30. NETWORK SCHEDULING TECHNIQUES:Total PERT/CPM Planning, PERT/CPM Problem Areas
  31. PRICING AND ESTIMATION:GLOBAL PRICING STRATEGIES, TYPES OF ESTIMATES
  32. PRICING AND ESTIMATION (CONTD.):LABOR DISTRIBUTIONS, OVERHEAD RATES
  33. PRICING AND ESTIMATION (CONTD.):MATERIALS/SUPPORT COSTS, PRICING OUT THE WORK
  34. QUALITY IN PROJECT MANAGEMENT:Value-Based Perspective, Customer-Driven Quality
  35. QUALITY IN PROJECT MANAGEMENT (CONTD.):Total Quality Management
  36. PRINCIPLES OF TOTAL QUALITY:EMPOWERMENT, COST OF QUALITY
  37. CUSTOMER FOCUSED PROJECT MANAGEMENT:Threshold Attributes
  38. QUALITY IMPROVEMENT TOOLS:Data Tables, Identify the problem, Random method
  39. PROJECT EFFECTIVENESS THROUGH ENHANCED PRODUCTIVITY:Messages of Productivity, Productivity Improvement
  40. COST MANAGEMENT AND CONTROL IN PROJECTS:Project benefits, Understanding Control
  41. COST MANAGEMENT AND CONTROL IN PROJECTS:Variance, Depreciation
  42. PROJECT MANAGEMENT THROUGH LEADERSHIP:The Tasks of Leadership, The Job of a Leader
  43. COMMUNICATION IN THE PROJECT MANAGEMENT:Cost of Correspondence, CHANNEL
  44. PROJECT RISK MANAGEMENT:Components of Risk, Categories of Risk, Risk Planning
  45. PROJECT PROCUREMENT, CONTRACT MANAGEMENT, AND ETHICS IN PROJECT MANAGEMENT:Procurement Cycles