Chapter 1 Project management
Meaning/concept of project
The word ‘project’ is derived from the Latin word ‘projectum’ which means to throw forward. Actually that means something that comes in advance before anything else happens by considering overall factors of surrounding. Project is a temporary endeavor (purposeful activities) undertaken to create a unique product.
“A project is a temporary endeavor undertaken to create a unique product or service.”- Project management Institute of USA
“Project as one, which starts from scratch with a definite mission, generates activities involving a variety of human and non human resources all directed towards fulfillment of the mission and stop once the mission is fulfilled.”- S. Chaudhary
“A Project is any series of activities and tasks that:
-have a specific objective to be completed within certain specifications -have defined start and end dates- have funding limits-consume resources.- Horald Keranzer
Functionally, project is a one-time short term activity to be conducted and completed within certain parameters like cost, time, quality, resources and so on in a dynamic environment. Project is considered as a cutting edge of development. Its starting date and ending date are prefixed. Its development way is unique. Some examples of project are hydro-electricity project, constitution building and drafting project, report preparing project, film making project, irrigation project, constructing project, etc. In conclusion a project is a series of activities and tasks which convert an idea, a design or a plan into concrete entity that have specific objectives to be completed with certain specification within predetermined time period, budget limits and consumes human and non-human resources.
For example:
West Seti hydro-electricity project
Total investment Rs1 Kharab 20 Arab
Total generation: 750 MW
Location: Far-western region
Signed date: February 28, 2012
Starting date to construct: October 2014
To be completion date: July 2019
Nature: Reservouir type
NOTE:
Ø It has clearly defined objectives
Ø It is something that converts an idea, a design or a plan into some concrete entity.
Ø It is unique, uncertain and accomplishes impermanent (not permanent) tasks.
Ø It integrates the resources (human, physical and financial) as per requirement.
Ø Project is a one-time set of activities that must be completed within constraints of time, cost and quality performance in order to achieve predetermined objectives.
Ø It is only a one-time activity designed to achieve specific objectives.
Ø It has definite starting and ending dates.
Ø It lives between these two cut-off points and passes distinct phases of its life. The time span between these points is known as project life cycle.
Ø Latin word “Projectum” (proicere) ‘to throw something forwards’ originally meant “Something that comes before anything else happens”
Ø Project should be:
Economically viable (cost and benefits, viability, IRR)
Technically feasible
Politically suitable
Socially acceptable
Ø
Features/Characteristics of a project
1) Specific goal/Objectives
2) Temporary nature
3) Life-span/cycle starting and end
4) Constraints time, cost, quality
5) Teamwork project manager as leader
Every project is planned, managed and controlled by an assigned team, the project team to achieve the objective as per specification
6) Unique or special entity
A project is unique and no two projects are similar, even though the inputs, processing, and the results of two projects are identical. The nature of an organisations, and available infrastructures, location of the project, the people associated with a project make project unique.
7) Contracting and sub contracting
8) Dynamic environment
9) Risk and uncertainty
Every project has risk and uncertainty associated with it. The risk is perceived to be variability of actual returns from the estimated returns and uncertainty about future leads to variations in returns. The degree of risk and uncertainty also vary during the life cycle of a project. An ill-defined project has a high degree of risk and uncertainty in comparison of a well-defined project.
10) Beneficiaries
Beside the above mention features there are:
11) Flexibility- adapt to change
12) Resource Integration- consumes and coordinates resources
Planning and control
| Quality |
Project management
Project management is the application of knowledge, skills, tools and techniques to project activities in order to meet or exceed stakeholder’s needs and expectation from a project.
Project management is the science of organizing the components of a project.
Project management is the task of getting the project activities done on time, within budget & according to specification by project team in dynamic environment.
An art or science for the unique application of managerial principles to project in a dynamic environment is called project management.
An act of getting temporary act completed within the limitation of cost, resources and quality standard is called project management.
“Project management is the planning, organizing, directing and controlling of company resources to complete specific goals and objectives.” - Harold Kerzner
“Project management is the art of directing and coordinating human and non-human resources throughout the life of project by using modern management techniques to achieve predetermined objectives of scope, cost, time, quality, participant satisfaction.”- PMI of USA
The planning, organizing, directing and controlling company resources to achieve relatively short term, preset objectives
The discipline of project management provides the tools and techniques that enable the project team to organize the work to meet the objective.
Project management is the process of identification, planning, implementation, appraisal and control of project activities and resources in achieving project specific objectives within limited time, cost and quality performance with effective and efficient utilization of available resources.
Projects and production *both them involve some kinds of conversion from raw materials into finished goods *Frequency we generally undertake each activity *Project supposed to be one time (only once) activity whether production is repetitive activity First time, only once-project
Characteristics
1. Objective oriented
2. Team work
3. Planning, implementation and controlling
4. Change oriented
5. Uniqueness
6. Constraints of time, cost and quality
7. Functional co-ordination
8. Management of project
9. Matrix organization
Benefits/Importance of project management
1) Resources utilization
2) Team development
3) Customer satisfaction
4) Change management
5) Matrix model
6) Social prosperity
7) Time management
8) Quality work
9) Overall development
Emergence, growth or development of project management
Project management has a long history since human civilization. It is not the substitution of traditional management but it is new and modified version of traditional management. Its origin is anciently rooted in antiquity. It was the demand of time rather than desire, due to limited resources, time, cost and quality standards. The growth and development of project management are roughly studied by classifying in following two eras.
A. Ancient era
Project management is started since time immemorial. The pyramid and Babel tower of Egypt are known as the oldest construction project of the world. “The Great Wall of China (220-206 B C),” “Taj mahal (1632-1653 A D),” the churches of Europe, the temples of Nepal and India, the Suez-canal the Panama Canal are some introductory examples of ancient era project. At that time, the rules of managing those construction projects were not matched with the rules of modern project management.
Some examples of ancient era are
v Pyramid of Egypt
v Great Wall of China
v Taj Mahal
v Palaces, Temples, Stupas, Gumba of Kathmandu valley, etc.
B. Modern era
The invention of electric bulbs by Thomas Elba Edison (1711 AD), scientific management propounded by F W Taylor (1856-1915 A D), Principles of administrative management propounded by Henry Fayol (1841-1925 A D), Bureaucracy theory propounded by Max Weber (1864-1925 A D), etc. have given the background for the development of modern era.
Some examples of ancient era are
v Atomic bombs, missiles and aerospace project
v Putrajaya town planning project, Malaysia
v Hydro-electricity project in Nepal, etc.
Modern era emergence and growth of project management can be studied under the following two periods.
a. Informal period of modern era
Informal period of modern era in project management begin from the invention of electric bulb by Thomas Elba Edison (1711 AD) to the period before Second World War. At that period, the concept of project management was used in Army or defense sector of European and American country. To introduce or develop atomic bombs, missiles and other types of weapon, this concept was used in aerospace sector too. US defense department firstly applied and popularized project management informally.
b. Formal period of modern era
The formal period of modern era begin after the completion of Second World War. The quest for military, supremacy and arms race between USSR and USA during the 1950s, 1960s, 1970s, 1980s gave the impetus to rapid development of the concept of project management. The major events in the emergence and growth of concept of project management can be listed as follows
1950s-1960s
Ø Project experts Paul O Gaddis (1959 A D) published a first article about project management titled “The project manager” in Harvard Business Review (HBR).
Ø In 1950, development of Programmes Evaluation and Review Techniques (PERT), Critical Path Method (CPM)
Ø In 1960, matrix organizational structure was developed and tested by NASA in the USA.
Ø In 1962, Keith Davis introduced and implemented one project called “Man Hatton project.”
Ø In this period, project management invested and developed intercontinental ballistic missiles in USA
Ø In 1962, National Aeronautics Space Administration (NASA) implemented Programmes Evaluation and Review Techniques (PERT) with the emphasis of Work Break-down Structure (WBS) and cost control system
Ø In 1963, United air force adopted the project life cycle in defense sector
Ø In 1967, International Project Management Association (IPMA) was established.
Ø In 1969, project management concept began to apply in environmental issues and IT sector
1970s-1980s
Ø Project management begins to apply in various sectors like construction, manufacturing, automobiles, social awareness, and so on.
Ø National Aeronautics Space Administration (NASA) and the department of defense in USA accepted the concept of project management.
Ø Project management occupied a central place for the application of information technology in each and every sector.
Ø Henry Gantt, called the father of planning and control techniques, used the Gantt chart and Gantt formula as a project management tools.
1990s-2000s
Ø Windows networks, internet and E-mail were launched
Ø Development of websites, B2B, mobile and cellular communication has facilitated the virtual teams for the successful implementation of project management.
Ø Total Quality Management (TQM), ISO 9000, Quality management system gained a global acceptance in project management
Ø Many multinational companies began to use the project concept in emerging area like cost management, time management, stress and conflict management and so on.
Ø Nowadays project management has become the major tools of overall development in any country with the parameter of time, cost, resources and quality standard.
In the context of Nepal, project management unknowingly started from the construction of the temple, palaces, Gumba and so on. But up to now, one thousands micro and major (macro) projects are completed with the little-bit development of hydropower projects. It can be the foundation for the social and economical prosperity of Nepal.
Project environment
Project management is an open system to be operated in a dynamic environment. Project management is influenced by internal and external environmental forces. These factors are called environmental forces of projects. They provide and pass SWOT (Strength, Weakness, Opportunities, and Threats). The change in environment brings increase or decrease uncertainty, competition, complexity etc. in all types of resource and goal. The project management team has to change the policies and strategies based on the changes in environment.
Project operates in dynamic environment. Environment consists of forces that influence the projects ability to achieve its objective. In order to achieve the goals, project must continuously adopt to its environment. Failure to adapt to the environment is a major cause due to which project fails.
Project environment can be classified into.
A. Internal environment Controllable environment of the project
It is located within the project. It is controllable by the project. It provides strength and weakness to the project. The forces in the internal environment consists of
Within control
Strength and weakness
Affect the project most
i. Project objectives
SMART
Aspiration with the goal
Desired goals of the project – to satisfy its customer
ii. Project constraints
A project operates within the constraints of cost, time and quality Performance. They determine the scope and boundaries of the project.
WHERE IS Effect?
Limit the activities
iii. Project resources
Human
Non-human
Project has a human and nonhuman resources, the human resources include specialized experts and managerial personnel. Research availability sets a limit on project activities
iv. Project structure
Generally, matrix structure
Right men in right posts with proper rights and duties (authority and responsibility)
Always communication
Part of functional organization/ pure project organization/ Matrix organization
B. External environment
Those factors that are beyond or little control of the project management are called external factors. It provides threats and opportunities (OT) to a project. Project manager should adopt external environment as per the need of project. External environment is made up of the stakeholders (immediate factors) and remote factors (general environment).
1. Immediate or task or stakeholder’s environment
The task environment of a project is made of stakeholders. They are either involved in the project or other interest are affected by the project they affect the project activity project cannot control the tax environment, but can directly influence it.
Consist of the different elements or factors which directly or indirectly influence the project activities
The elements of project task environment are
a) Customers or clients or Beneficiaries
Customers’ needs, opinions and abilities
It satisfies the needs of the customer. The customer specifies the term of reference; the customer greatly influences the project. The project should be focused on customer needs.
Should be focused on clients’ need and requirements
b) Competitors
Competition in cost, price, quality and services
Competition from individual or an organization may create the problems
Competition increases performance quality
c) Contractors
Contracting and sub-contracting
A project involves highly labour of contracting and sub-contracting the greater the complexity, the greater the level of contracting, the constructors influence project progress
Competition in cost, skills and efficiency
Tender
Selection
d) Consultants
Hire experts or consultants
Ideas, suggestions
Influences
The project activity requires professional expertise. So consultants are hired for various activities consultants influence the project activities directly through the professional services.
Experts for advice to perform project activities
e) Suppliers
Materials, labourers, time and qualities
Projects depend on supplier for procurement of equipment, materials, service and labour, they affect efficiency, quality and settled of project through the delivery timing, and projects must build a good relationship with suppliers
f) Financier
Lend money to project- owners/shareholders/donors
Fund provider
Donor and owner
Grants or credit or soft cost
The financiers of the project can be owners, shareholders, institution or foreign donors. They greatly affect fund mobilization for the project.
g) Labour unions
Has to maintain the mutual and cordial relationship with the labour union
Unionization is increasing in project. Labour relation need to be effectively managed by project. Industrial disputes leading to strikes or lockout can adversely affect project progress.
h) Government
Government makes project related rules, regulations policies and directives
2. Remote factors/general environment (PEST) Uncontrollable environment
Creates opportunities and threats to project
a) Political-legal environment
v Political system
Political parties, power blocks and election procedures
v Ideologies/ Political Philosophies
Democratic and socialism [Democratic socialism (DS) and totalitarian socialism (TS)]
(democratic-totalitarian-mixed)
v Power
v Stability
v Rules and regulation
v Organs of state/ Political Institutions
Legislature (parliament), Executive (government), Judiciary (court)
b) Economic environment
v Economic classes
v Economic policies
(Monetary-fiscal-industrial)
v Trade cycle
v GDP
v Economic growth rate
v Economic system
v Per capita income
c) Socio-cultural environment
v Socio-structure
v Caste/creeds
v Class
(Rank within a society determined by its members)
v Languages
v Group
v Attitudes
v Regions
v Beliefs
v customs
d) Technological environment
Ideas, process, tools and methods to convert inputs into outputs (labor based-capital based)
I. Level of technology
v Simple to complex
v Labour intensive and capital intensive
v Labour intensive: use of more labour
v capital intensive: use of more machines, Nano, automation, robotics, computerization
II. Pace of technology
Fast and slow
III. Transfer of technology
v Developed to developing or underdeveloped countries
v Foreign direct investment (FDI)
v Multinational companies
IV. Research and development
v Superior quality
v Affordable
The project ideas should be economically viable, technically, feasible, politically stable and social acceptable.
Skills required for a project manager
1. Conceptual skills
i. Concept
ii. Foresight
iii. Judgmental capacity
iv. Intuition
2. Technical skills
i. Technical knowledge
ii. Performance
iii. Problems
iv. Solution
v. Terms
3. Human relation skills
Build strong relationship among departments and stakeholders
4. Managerial skills
(Planning, Controlling, HRM, Decision making, Leadership, Organizing, Coordinating, Budget allocation)
5. Team building skills
6. Resource allocation skills
7. Other skills
i. Determined
ii. Courage
iii. Patience
iv. Charismatic
Role of a project manager
Role means organized behaviour of a person in relation to a particular position
1) Leadership roles
(Directing-influencing- motivating)
a. Power
b. Inspiring Styles
c. Motivating
2) Interpersonal roles
a. Listener
b. Collector
c. Motivating
3) Decisional roles
a. Rational decision on right time
b. Disturbance handler
c. Conflict management
d. Resource allocation
4) Balancing roles
(Customer-functional departments-stakeholders)
a. Department
b. Stakeholders
c. Teams
Responsibilities of a project manager
Responsibilities are the obligations to perform duties and carried out tasks using authority.
1) Project definition
2) Project team selection
3) Shareholders management
4) Financial management
5) Change and conflict management
6) Resource allocation
7) Project completion and handover
Project life cycle
Project is temporary work having certain beginning and ending points of time period. It passes through different phases from conception to completion. Those phases are collectively called ‘project life cycle.’
Phases or steps or stages of project life cycle
A. Conceptual phase: About 2%
v The idea may first come to mind when one is seriously trying to overcome from certain problems.
v Analyze the positive and negative impact of the project in the society
The phase tries to discover the following facts
i. Need identification
ii. Ideas germination
Project ideas germinates (begin to grow)
iii. Pre-feasibility study
Examines the facts found from the feasibility analysis helps to identify availability the human and non human resources
iv. Requirement of project
Requirement of the project/try to find out the group of beneficiaries
Objective and output of the project
B. Definition phase: About 2%
Will develop the idea generated during the conception phase and produces the documents describing the project in sufficient details
Analyses the budget, implementation schedule, policy, economic and social aspects of the project
i. Project definition
ii. Constraints and objectives
iii. Site identification by Map
iv. Technology selection
v. Rough blue-print preparation
vi. Plant size and capacity
vii. Reasons for selection
C. Planning and organization phase: About 8%
This phase is mainly a testing a final standardization effort so that operation can begin. Almost all documentation must be completed and cleared in this phase.
i. Estimate logically in advance
ii. Planning for all resources and time period
iii. Detail feasibility study and analysis
(Impact of environmental factor)
iv. Operational plan and work schedules
v. Budgeting
Scheduling and budget
vi. Approval and licensing/licensing work and government clearance
vii. Site preparation and investigation
viii. Process and procedures
ix. Pre-tender of contracts
x. Organization structure
D. Implementation Phase
Actual execution stage (longest stage) about 85% of the project work is done
i. Negotiation and contracting
ii. Provision and operation of machinery and equipment
iii. Drawing and construction
iv. Divide sectors into sub-sectors
v. Observation, inspection, control and evaluation mechanism are carried out
vi. Test operation and production
E. Termination/Clean-up phase
Last stage about 3%
Basically clean-up task
Remaining work, if any, has to be completed
Ø Project accounts are closed
Ø Materials reconciliation are carried out
Ø Outstanding payment should be made
Ø Dues should be collected
Ø Planning of the staffs and workers for new project
Ø Designee engineer will leave the project
i. Completion of project work
ii. Evaluation of performance with standard
iii. Closing financial statement
iv. Auditing
v. Evaluation of satisfaction of customers and stakeholders
vi. Lay off personnel/manpower
vii. Handover of project and remaining resources to concerned authority or organization
Comparison between project management and production management
Project management and production management are interrelated disciplines to each other. Production starts when project ends. Each and every project is conducted for producing and generating goods and services. Both production management and project management are the branches of traditional management (i.e. scientific management theory)
Comparison between project management and traditional management
Traditional management is based on scientific and administrative principles propounded by F.W. Taylor and Henry Fayol, etc. the principles of all branches of management are based on traditional management. It has emerged to overcome the limitations of traditional management. It focuses more on innovative than on maintenance for achieving specific goals within fixed period and perimeters.
Following are the differences between project management and traditional management
Project manager and line manager interface
Project management conducts horizontal, vertical and diagonal relationship between managers and subordinates. In this model double bosses are appointed in a project i.e. project manager and line manager. The head of functional department is line manager the head of functional department is project manager. Rights and duties and powers are allocated to both managers. Line manager does work in more than one project at a time; however project manager performs the activities of only project at a time.
Line manager provides various resources like man, materials, machine, money, method and information. Project manager is concerned with the answer of what, when, how, and why but line manager is concerned with where, who and how well of project. So, the working relationship between two managers is called interface between them. It is generally done through open communication, clean-out policy, rules and regulation, negotiation and so on. The main area or points of the project manager and line manager interface are presented as below.
1. Resource allocation
2. Reporting
3. Work package
4. Co-ordination
5. Problem solving
6. Negotiation
7. Open-communication
