UNIT-4  All Indian financial institutions classify the projects based on the

nature of the projects and their life cycle. The project classification
Definition of Project isexplained below :
The term „project‟ may be defined as a complex set of economic 1. Quantifiable and non-quantifiable projects:
activities in which scarce resources are committed in expectation of  Quantifiable projects are those in which a plausible quantitative
benefits that exceed the costs of resources consumed. It refers to an assessment of benefits can be made. Non-quantifiable projects are
investment activity in which resources are committed within a given time those where such an assessment is not possible.
framework, to create assets over an extended time in expectations of  Projects concerned with industrial development, power generation,
benefits which exceeds the committed resources. Thus, Projects require and mineral development are forming put of quantifiable projects.
resources. They are also expected to derive benefits. Projects are said  The non-quantifiable projects category comprise health, education,
to be desirable if their benefits are greater than the costs incurred on and defense.
them. A project can also be referred to as a non-repetitive activity. A
2. Sectoral Projects:
project is viewed as a conversion process. This implies that a project
involves a transformation of some form of inputs into an output. (See the According to the Indian Planning Commission, a projects may fall
following diagram). into the following sector:
 (a) Agriculture and Allied Sector
 (b) Irrigation and Power Sector
 (c) Industry and Mining Sector
 (d) Transport and Communication Sector

Project Classification  (e) Social Services Sector

 (f) Miscellaneous Sector
Meaning of Project:
3. Techno-Economic Projects:
 Gittinger defines a project “as the whole complex of activities
involved in using resources to gain benefits”.  Techno-economic projects classification includes factors intensity-
oriented classification, causation-oriented classification and
 An entrepreneur implements a project by overcoming various magnitude-oriented classification.
hurdles, to get some benefits - mainly monetary rewards.
 These three groupings are narrated as under :
 The entrepreneur originates the idea, makes a detailed study of
the various aspects of the project to be implemented estimate the (a) Factor intensity oriented classification:
profit that would accrue from the project, and finally implements it.
 The factor intensity is used as a base for classification of projects
Project classifications: such as capital-intensive or labor-intensive which depends upon
 Projects have been classified in various ways by different the large scale investments in plant and machinery or human
authorities. Little and Mirrorless divide the projects into two broad resources.
categories, viz., quantifiable projects and non-quantifiable projects.
(b) Causation oriented classification:
 The planning commission has accepted the sectoral criteria for the
 The causation-oriented projects are determined based on its causes
classification of projects. Projects can also be classified based on
namely demand-based or raw material-based projects.
techno-economic characteristics.
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 The non-availability of certain goods or services and consequent o (ii) Expansion projects
demand for such goods or services or the availability of certain raw
o (iii) Modernization projects
materials, skills or other inputs are the dominant reason for starting
the project. o (iv) Diversification projects
(c) Magnitude-oriented classification:  The projects listed above are generally profit-oriented and the
services oriented projects are classified as under:
 The size of investments forms the basis for magnitude-oriented
projects. Projects may thus be classified based on their investment o (i) Welfare Projects
such as large-scale, and medium-scale projects. o (ii) Service Projects
 Techno-economic characteristics-based classification is useful in o (iii) Research and Development Projects
facilitating the process of feasibility appraisal.
o (iv) Educational Projects
 United Nations and its specialized agencies use the International
Standard Industrial Classification of all economic activities (SIC) in Importance of Project Management
collection and compilation of economic data.
 Since this classification covers the entire field of human economic  Deliver projects on time and within budget. Project management helps
endeavor, it forms a useful basis for classification of projects. you to create a realistic plan for your project, and to track your progress
against that plan. This can help you to identify and address any potential
 Economic activities under this classification are grouped into ten problems early on, so that you can avoid delays or cost overruns.
divisions, which are subdivided into ninety sub-divisions.
 Increase efficiency and productivity. By using project management
 The divisions are: techniques, you can identify and eliminate waste in your processes. This
 Division 0 Agriculture; Forestry, Hunting, and Fishing can free up time and resources, which you can then use to focus on
more important tasks.
Division 1 Mining and Quarrying
 Improve communication and collaboration. Project management helps to
Division 2&3 Manufacturing
ensure that everyone involved in a project is on the same page. This is
Division 4 Construction essential for effective communication and collaboration, which are
essential for project success.
Division 5 Electricity, Gas, Water, and Sanitary Services,
 Reduce risks. By identifying and managing risks, you can minimize the
Division 6 Commerce
chances of your project failing. This can save you time, money, and
Division 7 Transport, Storage, and Communications stress.
Division 8 Services  Improve decision-making. Project management provides you with the
Division 9 Activities not adequately described data and insights you need to make informed decisions about your
project. This can help you to make the best possible decisions, which
4. Financial Institutions Classification: can lead to project success.
 All India and State Financial Institutions classify the projects
according to their age and experience and the the purpose for In short, project management is an essential skill for anyone who wants
which the project is being taken up. to be successful in any field. It can help you to deliver projects on time
and within budget, increase efficiency and productivity, improve
 They are as follows : communication and collaboration, reduce risks, and improve decision-
o (i) New projects making.

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 Here are some of the specific benefits of project management: 1. Meet with your clients to learn about their objectives and expectations.
Ask a lot of questions and go over all the necessary details to be sure
 Increased visibility and transparency. Project management provides a
you really understand what‟s required of you.
clear overview of the project, including its goals, scope, timeline, and
budget. This helps to ensure that everyone involved in the project is on 2. Put a business case together so you can recommend solutions.
the same page and that there are no surprises. 3. Conduct a feasibility study. Figure out if you can, and should, do the
 Improved communication and collaboration. Project management project. Determine which solution is best.
provides a framework for communication and collaboration between 4. Write your project scope and statement of work.
team members,stakeholders, and clients. This helps to ensure that
Phase #2: Planning
everyone is kept informed of the project's progress and that any issues
are identified and addressed quickly. The planning phase of the project lifecycle is when you set the goals and
 Increased efficiency and productivity. Project management helps to define the deliverables. You also take the time to figure out the what
identify and eliminate waste in processes. This frees up time and responsibilities your team will need to fulfill. It is during the project
resources, which can then be used to focus on more important tasks. planning phase that you identify what the completed project will look like.
 Reduced risks. Project management helps to identify and manage risks. Often this is called the project product.
This minimizes the chances of the project failing and helps to ensure Essentially, you identify what must be done, including the steps to take
that the project is completed on time and within budget. and their deadlines. It also includes the resources that will be used
 Improved decision-making. Project management provides data and along the way. For example, you can set S.M.A.R.T. goals that
insights that can be used to make informed decisions about the project. are specific, measurable, attainable, realistic, and time-bound. Or, you
This helps to ensure that the best possible decisions are made, which can set C.L.E.A.R. goals, which
can lead to projectsuccess. are collaborative, limited, emotional, appreciable, and refinable.
This phase, focused on the project‟s purpose, also includes risk
Project life Cycle [Conceptualization, Planning, Execution
Termination] management. You set a schedule and performance measures. Then
you estimate costs and set a budget. You also assign tasks, and sort
1: Conceptualization
out all of the requirements that need to be met.
Conceptualization, or initiation, is the first phase of the project lifecycle.
Here you determine if the ultimate goal of a project can be achieved. Various documents are put together during this phase, such as:
And you work on getting approval from stakeholders.  Work Breakdown Schedule (WBS)
In this phase, start by focusing on the problem that needs to be solved  Communication Plan
and how to solve it. Find out if you have the proper resources to do the  Gantt Chart
work necessary to solve the problem. Once you know the project can be  The Risk Management Plan
pursued, there are tools you can use to move forward. Some examples  Network Diagrams
include a project initiation document (PID), a statement of work, a  And others.
business contract, or a business case. In the world of PMI, these
documents are part of the Project Charter. Signed by the project Phase #3: Execution
sponsor, the Project Charter is the document use to formally start the After the plans are complete, it‟s time to set them in motion in the
project. execution, or implementation phase of the project lifecycle. Along the
Here are some of the main steps taken during this phase of the project way, you‟ll measure your team‟s success. Make big changes or minor
lifecycle: modifications where necessary. This will help you stay on track towards
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achieving the goals you set. PMI breaks this phase into two knowledge
areas, “Execution” and “Monitoring and Controlling”. Here you separate
the tasks of doing the work to complete the project and make sure the
project is progressing according to the project plan.

During this phase, ensure all deadlines are being met, resources are
being used appropriately, and that your team is working within budget.
It‟s also wise to hold meetings regularly. This way you and your team
can check-in. You can report on progress and performance while
managing and resolving any problems that arise.

Your deliverables are developed and completed as you move through

the execution phase. During this phase, carefully monitor progress and
quality to make adjustments as needed. After all, things don‟t always go
according to plan.

Phase #4: Termination

You‟ve finally reached the final phase of the project lifecycle! Also known
as the completion phase or project closure, this one is all about
delivering everything your team accomplished.
You do things like end contracts with suppliers and submit deliverables
to clients. Let your stakeholders know that the project is finished. At this
stage, you release resources and allow tools and team members to be
reassigned to other tasks.
Take this time to evaluate the overall project to see what worked and
where your team needed to refine the original plan. It‟s a great idea to
hold what‟s known as a post-mortem meeting to share this information
with your team. Look at project performance (were the goals of the
project met?), and your team‟s performance (how well did they meet
their goals?). This step can really help you work much more effectively in
the future.
Ultimately, be sure your project is complete and ready to release during
this phase. Create a final report, and then get ready to move on to your
next project.