Project Management and Finance

Course Code 19ES7HSPMF

Credits 3 L-T-P 3:0:0
 PMF Syllabus
UNIT-1
Concepts of Project Management - Project Leadership and Ethics:
Introduction to project leadership, ethics in projects, Multicultural and
virtual projects, Concepts of project , Categories of project , Project
life cycle phases, Project management concepts, Tools and techniques
for project management, The project manager, Basic education for a
project manager, Roles and responsibilities of project manager
,Project manager as profession, Summary 8hrs

UNIT-2
Establishing the Project - Scope, Time , Cost and performance goals,
Feasibility report, Financing Arrangements, Preparation of cost
estimates, Finalization of project implementation schedule,
Evaluation of the project profitability, Appointing a project manager,
Fixing the Zero date, Summary 8hrs
 PMF Syllabus
UNIT-3
Organizing Human Resources and Contracting - Delegation ,
Project managers authority, Project organization , Accountability in
Project Execution , Contracts , R‘s of contracting, Tendering and
Selection of Contractors, Team building, Summary 8hrs

UNIT-4
Organizing Systems and Procedures for Project Implementation -
Working of systems, Design of Systems, Project work system design ,
Work breakdown structure, Project execution plan, Project procedure
manual, Project control system, Planning, Scheduling and
Monitoring, Monitoring contracts, Project diary , Summary 8hrs
 PMF Syllabus
UNIT-5
Financing of Projects - Capital structure, Menu of financing , Internal
accruals , Equity capital, Preference capital , Debentures (or bonds) ,
Methods of offering term loans , Working capital advances,
Miscellaneous sources , Raising venture capital, Project financing
structures, Financial closure , Financial institutions ,Summary. 8hrs

Choice: Unit-III and Unit-IV

 PMF Text Books
1. Project Management – S Choudary, Tata McGRAW
Hill Publishing Company Limited

2. Projects- Planning , Analysis , Selection, Financing

,Implementation and Review –Dr.Prasanna Chandra
McGRAW Hill Publishing Company Limited

3. Project Management Institute A Guide to the

Project Management Body of Knowledge PMBOK Guide
(Sixth Edition), Sept 2017
 PMF Reference books
1. Fundamentals of Project Management by Dr.Vijay Kanabar
2. Project Management – David I Cleland – Mcgraw Hill
International edition
3. Project Management – Gopalakrishnan – Mcmillan India Ltd
4. Project Management – harry – Maylor- Peason Publication

E Books:
1. https://www.youtube.com/watch?v=5d16JwWwjKo
2. Nptel lecture on Introduction to project management by prof.
Arun Kanda
https://www.youtube.com/watch?v=5pwc2DYlKQU
 Introduction - Project
• A project as an organized programme of pre determined
group of activities that are non-routine in nature & that
must be completed using the available resources within
the given time limit
• Newman et. al define that “a project typically has a
distinct mission that it is designed to achieve & a clear
termination point the achievement of the mission”
• Gillinger defines “project” as the whole complex of
activities involved in using resources to gain benefits
• Project management institute, USA defined project as “a
system involving the co-ordination of a number of
separate department entities throughout organization, in a
way it must be completed with prescribed schedules &
time constraints”
 Introduction - Project
• A project is a specific activity on which investment is
done & return is expected
• A project contains a well defined objective , but not
physical objective but going on from start to end with lot
of processes. Ex Metro, chemical Plant
• Project can create Productor Service
• It is a complex, non routine ,one time effort limited by
time, budget, resources & performance specifications
designed to meet customer goals
• Objective is based on business setting in public or private
for growth
• Ideas has to be economical providing cost effectiveness
, politically suitable, geographically & socially viable
 Introduction - Project
• Project has
• Input characteristics –Human resource, Finance,
technology, Organizational setup
• Output characteristics –outcome of project

• Social cost benefits- involve entire society

• It is customer specific

• It is unique

• Calls for coordination from different domains

 Project
•A project is carried out via a set of interdependent
tasks ,uses various resources -work with
contributions from various teams that are inter-
related
•It has location constraint
•It needs to be monitored & controlled
•Actual completion date may not always be the
same as the expected date
• When mission of project is achieved , project life
cycle is complete
•A project always has risk & uncertainty
 Characteristics of Project
• Objectives : A project has a set of objectives or a mission.
Once the objectives are achieved the project is treated as
completed
• Life cycle : A project has a life cycle consists of five stages
i.e. conception stage, definition stage, planning & organizing
stage, implementation stage & commissioning stage
• Uniqueness : Every project is unique & no two projects are
similar. Setting up a cement plant & construction of a
highway are two different projects having unique features
• Team Work : Project is a team work & it normally consists of
diverse areas. There will be personnel specialized in their
respective areas & co-ordination among the diverse areas
calls for team work
• Complexity : A project is a complex set of activities relating
to diverse areas
• Risk & uncertainty : Risk & uncertainty go hand in hand
with project. A risk-free, it only means that the element is not
apparently visible on the surface & it will be hidden
underneath
 Cont… Characteristics of Project
• Customer specific nature : A project is always customer
specific. It is the customer who decides upon the product to
be produced or services to be offered and hence it is the
responsibility of any organization to go for projects/services
that are suited to customer needs
• Change : Changes occur through out the life span of a project
as a natural outcome of many environmental factors. The
changes may very from minor changes, which may have
very little impact on the project, to major changes which may
have a big impact or even may change the very nature of the
project
• Optimality : A project is always aimed at optimum utilization
of resources for the overall development of the economy
• Sub-contracting : A high level of work in a project is done
through contractors. The more the complexity of the project,
the more will be the extent of contracting
• Unity in diversity : A project is a complex set of thousands of
varieties. The varieties are in terms of technology, equipment
and materials, machinery and people, work, culture &others
 PROJECT FAMILY TREE
project normally originates from a plan, national plan or corporate plan. In normal
scheme of things, the family tree for a project would be as given below
 CLASSIFICATION OF PROJECTS
Location, type, technology, size, scope & speed are normally the factors which determine the
effort needed in executing a project. Project can be classified under different heads
 PROJECT LIFE CYCLE
 Project lifecycle is spread over a period of time
 There is an unavoidable gestation period for the
complex of activities involved to attain the objectives
in view - varies from project to project but it is
possible to describe, in general term, the time
phasing of project planning activities common to
most projects.
 PROJECT LIFE CYCLE
 Principal stages in the life of a project are :
• Identification
• Initial formulation
• Evaluation (selection or rejection)
• Final formulation (or selection)
• Implementation
• Completion and operation
 PROJECT LIFE CYCLE- Identification
 Development projects - surveys or in depth studies
would locate the problems & project planner will
have to identify the projects that would solve the
problems most effectively
 Surveys & studies will give us ideas & throw up
suggestions which would be worked out in detail
later & then evaluated objectively before being
accepted for implementation
 Current sociopolitical economic situation has to be
critically assessed
 On the basis of past trends, extrapolation may be
made of future possible trends & tendencies, short &
long term
 There are scientific techniques for doing so which
can be broadly grouped as forecasting methodology -
however not sufficient
 PROJECT LIFE CYCLE- Initial Formulation
 Having identified the prospective projects, the
details of each project will have to be worked out
& analyzed in order to determine which of them
could be reckoned as suitable for inclusion in the
plan, allocate funds & put into execution

 As a follow up to the finding of techno-economic

surveys, & number of feasibility study group are set
up - examine the possibility of formulating suitable
projects & to put concrete proposals in sufficient
detail to enable authorities concerned to consider
the feasibility of the proposal submitted
 PROJECT LIFE CYCLE- Evaluation or Project Appraisal
 After the socio-economic problems of an economy have been
determined & developments objectives & strategies agreed,
concrete steps have to be taken
 The main form this takes is that of formulating appropriate
development projects to achieve plan objectives & meet the
development needs of the economy. Proposals relating to them
are then put to the plan authorities for consideration &
inclusion in the plan
 These proposals as pointed out above take the following
forms of feasibility studies :
• Commercial viability
• Economic feasibility
• Financial feasibility
• Technical feasibility
• Management
The process almost invariably involves making decision relating
to technology, scale, location, costs & benefits, time of completion
(gestation period), degree of risk & uncertainty, financial viability,
organisation and management, availability of inputs, know-how,
labour etc. The detailed analysis is set down in what is called a
feasibility report.
 PROJECT LIFE CYCLE- Final formulation (or selection)
Once a project has been appraised & approved, next step
would logically, appear to that of implementation- not
necessarily true, if approval is conditional to certain
modifications being affected or for other reasons, such as
availability of funds, etc
Implementation stage will be reached only after these pre-
conditions have been fulfilled
Project formulation divides the process of project
development into 8 distinct & sequential stages
• General information
• Project description
• Market potential
• Capital costs & sources of finance
• Assessment of working capital requirement
• Other financial aspect
• Economic & social variables
 PROJECT LIFE CYCLE- Project Implementation
Every entrepreneur should draw an implementation time
table for his project
Successful implementation will depend on how well the
network has been designed
During the course of implementation, many factors arise
which cannot be anticipated or adequately taken note of
in advance & built into the initial network
A number of network techniques have been developed for
project implementation
Some of them are PERT, CPM, Graphical Evaluation and
Review Technique (GERT), Workshop Analysis
Scheduling Programme (WRSP) and Line of Balance
(LOB)
 PROJECT LIFE CYCLE- Project Completion

The cycle is completed only when the development

objectives are realized
Project life cycle
Project phases
 Exercise - Defining phase
• Assume you are PM & need to provide idea of major
socio economical project. What are things you need
to focus in starting ???

• Geographical area & site analysis

• Project layout, size, capacity
• Technology needed
• Finance,
• Timelines
• Civil work, utilities-water, fuel, power, electrical works
• Plant & machinery
• Man power
 Project Management
• Management is a practice of consciously &
continually shaping the organizations to achieve
goals specified
• PM is managing all aspects of the project to achieve the
set objective, acting predetermined quality specifications
agreed upon & keeping ethics in mind
• Management is the process of planning, organizing,
staffing, directing & controlling
• Projects are formed to solve a problem or take advantage
of an opportunity
• Managers are people are responsible for achieving
organizational goals , building up commitment through
negotiation , coordinating & directing
• Supporting & servicing with proper coordination
with vendors & contractors
 Tools and techniques for PM
 There are several tools and techniques which would
contribute significantly towards effective project
management -these can be broadly grouped under the
following heads :

 1. Project selection techniques

 2. Project execution planning techniques
 3. Project scheduling and coordinating techniques
 4. Project monitoring and progressing techniques
 5. Project cost and productivity control techniques
 6. Project communication and clean-up techniques
 Tools and techniques for PM
1. Project selection techniques
(a) Cost benefit analysis and
(b) Risk and sensitivity analysis
2. Project execution planning techniques
(a) Work breakdown structure (WBS)
(b) project execution plan (PEP)
(c) Project responsibility matrix and
(d) Project management manual
3. Project scheduling and coordinating techniques
(a) Bar charts
(b) Life cycle curves
(c) Line of balance (LOB) and
(d) Networking techniques (PERT/CPM)
 Tools and techniques for PM
4. Project monitoring and progressing techniques
(a) Progress measurement technique (PROMPT)
(b) Performance monitoring technique (PERMIT) and
(c) Updating, reviewing and reporting technique (URT)

5. Project cost and productivity control techniques

(a) Productivity budgeting techniques
(b) Value engineering (VE) and
(c) COST/WBS

6. Project communication and clean-up techniques

(a) Control room and
(b) Computerized information systems
THE PROJECT MANAGER’S ROLES & RESPONSIBILITIES
1. Defining & maintaining the integrity of a project
2. Development of project execution plan
3. Organization for execution of the plan
4. Setting of targets & development of systems & procedures
for accomplishment of project objectives & targets
5. Negotiation for commitments
6. Direction, coordination & control of project activities
7. Contract management
8. Non-human resource management including fiscal matters
9. Problem-solving
10. Man management
11. Satisfaction of customer, Government & the public
12. Achievement of project objectives, cash surplus & higher
productivity
 Project Leadership and Ethics-Ethics in Leadership:
 Ethical leadership is based on ethical behavior-Ethics is doing the
right thing
 Leaders should know what they stand for & understand their own
values lest their organizations become headline news in the next
corporate scandal.
 Ethical leadership, however, consistently demonstrates &
promotes behavior that respects the rights of others within the
values-based boundaries
 Ethical leadership is not a mutually exclusive style
 There are many people who lead & manage governed by ethical
principles integrated within another management framework
 Ethical leadership theory, in contrast, is keenly focused on setting
ethical direction within the organization & directing the
organization accordingly
 Ethics refer to the desirable & appropriate values & morals
according to an individual or the society at large
 Ethics deal with the purity of individuals & their intentions. Ethics
serve as guidelines for analyzing “what is good or bad” in a
specific scenario
 Correlating ethics with leadership, we find that ethics is all about
the leader’s identity the leader’s role.
 Project Leadership and Ethics-Ethics in Leadership:
Ethical theories on leadership talk about two main things:
(a) The actions & behavior of leaders;
(b) the personality & character of leaders.
It is essential to note that “Ethics are an essential to
leadership”
A leader drives & influences the subordinates / followers to
achieve a common goal, be it in case of team work,
organizational quest, or any project
It is an ethical job of the leader to treat his subordinates
with respect as each of them has unique personality
The ethical environment in an organization is built and
developed by a leader as they have an influential role in the
organization and due to the fact that leaders have an
influence in developing the organizational values.
 Project Leadership and Ethics-Ethics in Leadership:
 An effective and ethical leader has the following traits / characteristics:
 Dignity and respectfulness: He respects others. An ethical leader should
not use his followers as a medium to achieve his personal goals. He should
respect their feelings, decision & values. Respecting the followers implies
listening effectively to them, being compassionate to them, as well as
being liberal in hearing opposing viewpoints. In short, it implies treating
the followers in a manner that authenticate their values and beliefs.
 Serving others: He serves others. An ethical leader should place his
follower’s interests ahead of his interests. He should be humane. He must
act in a manner that is always fruitful for his followers.
 Justice: He is fair and just. An ethical leader must treat all his followers
equally. There should be no personal bias. Wherever some followers are
treated differently, the ground for differential treatment should be fair,
clear, and built on morality.
 Community building: He develops community. An ethical leader considers
his own purpose as well as his followers’ purpose, while making efforts to
achieve the goals suitable to both of them. He is considerate to the
community interests. He does not overlook the followers’ intentions. He
works harder for the community goals.
 Honesty: He is loyal and honest. Honesty is essential to be an ethical and
effective leader. Honest leaders can be always relied upon & depended
upon. They always earn respect of their followers. An honest leader
presents the fact and circumstances truly and completely, no matter how
critical and harmful the fact may be. He does not misrepresent any fact.
 Case study
• Design a role of managers in planning in Electronics
manufacturing industry. prepare a comprehensive list of
all the generic responsibilities.
• How do you formulate project?
 Exercise

• What are roles and responsibility of project manager?

• Write your opinion on PM as profession