Project Management Module 1

Introduction:

Definition:

A project is a collection of 'works' or 'activities' which are expected or planned to be

completed in a predetermined period of time and within an acceptable budget. A project
is characterized by a work or job content, also called scope, an expected completion time, and
a budget (in terms of money) allocated for its successful completion.

Project management is the application of specific knowledge, skills, methodologies, and

techniques aimed at achieving specific and measurable project goals including,
ultimately, successful project completion.
Some common examples of projects are as follows:

 Dismantling and auctioning of a decommissioned cargo vessel

 Computerization of the entire operations of a major cargo handling seaport

It can be seen that in each one of the above examples, there are smaller individual activities to
be executed in a particular sequence to obtain the end result. Irrespective of the duration, each
project has to begin and come to an end. Writing a simple C-language program may take a few
minutes but the computerization of a cargo handling seaport may take several years. But they
are, by definition, projects with a definite life cycle.

All the examples mentioned above are closed-end projects with more or less a distinct time
frame for completion. Totally new and innovative projects, such as research projects, the
completion of which cannot be easily foreseen are called open-ended projects.

CHARACTERISTICS OF A PROJECT
The size or scope of a project depends first on the total number of tasks, jobs and works
involved, and second, on the size and nature including quality of each task, job and work. These
factors decide the scope of the total project. A project proposal has to be discussed in a group,
described in definitive terms and a proposal outline has to be drawn. Based on this outline, the
project has to be broken down into various deliverables or definable end products, or at the
lowest level of detail, into 'activities which, when completed, will complete the project. From
these details, a rough estimate of time and cost can be made. A cumulative addition of these
values will give the total scope of the project in terms of cost and time duration for completion.
After formal approval of the project proposal, the detailed planning and implementation or
execution begins and is completed more or less over the stipulated period of time. This is the
long and short of a project life cycle consisting of concept, design, execution and
implementation and commissioning or handing over.

ELEMENTS OF A PROJECT

As seen from the above, a project consists of the following elements:

1. Scope of work

2. Cost and time estimates

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3. Approvals

4. Location and allocation of resources

5. Mobilization

6. Implementation or execution

7. Procurement

8. Risk management

9. Subcontracting

10. Regular review

11. Feedback

12. Control or correction

13. Completion and commissioning or launching and

14. Final handing-over to the client.

Generally, a project is said to be successful if it is completed within budget, within the time
schedule and can perform as per the stipulated quality and operating specifications.

A project big or small must have the following general characteristics:

1. A well-defined objective tangible or intangible

2. Distinct activities for its completion--unique and non-repetitive

3. A life cycle which consists of the concept or idea, design and planning, execution or
implementation, and, finally, commissioning and handing-over

4. Specific duration for each activity and total completion time and target date

5. Cost of completion a budget

6. Means of finance

7. Assigned resources and responsibilities

8. Point of ultimate accountability-a person in charge of the entire project, generally designated
as project manager

9. Well-defined organization structure to work with the Project Manager.

10. Well-organized information or reporting system for communication, periodic reviews,

feedback, control and correction.

A project is conceived, planned and implemented within an environment. The type of

environment depends on the mission, vision and goals of the parent organization which
sponsors and supports the project.

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SOME MORE CHARACTERISTICS

1. Projects are time-bound

All projects have a scope or content and are temporary or, in other words, they have a beginning
and an end, and are therefore time-bound. A project begun must come to an end, sooner or later.
Even R&D projects, which are open-ended and continue for relatively longer periods, must be
completed successfully with the desired results or may be given an unceremonious end. Any
extension or improvement of a completed project should be considered as a new project.

2. Projects need resources

They require resources-men, materials and money. There is no project without a cost factor or
a budget. A project has to be meticulously planned for the resources, and should be properly
approved and sanctioned, without which a project cannot move an inch.

3. Projects must give quality products

A project introduces a change for the better, by way of comfort, convenience, facility of
operation, productivity, innovation, safety and/or financial advantage. A project must give a
quality product or service Gone are the days when planning was meant just for production and
productivity. In today's cut-throat competitive world, quality is the sustaining fodder.

TYPES OF PROJECTS:
An organization cannot afford to stagnate. It has to maintain, renovate, improve, expand and
diversify its present equipment and facilities to sustain itself in this ever-changing competitive
world. These are all sequential developmental steps or measures to be taken by any progressive
organization which wants positive growth, positive in the sense of making profit or drawing a
benefit from the measures.

Projects can be classified according to the following criteria.

1. Different Sectors
Government (Central or State) or public sector, joint sector, private sector

2. Industrial
With the noble objectives of national industrialization and global participation, governments
may award licenses for production of industrial goods such as steel, cement, mining etc.

3. Non-industrial
These are undertaken primarily for social welfare in the fields of health, education, agriculture,
etc. These are generally projects undertaken by national or provincial governments of a country
for the welfare of the society and the public.

4. Infrastructure
These projects play a key role in the economic development of a nation. Infrastructure
development involves enormous outlays, extra-heavy equipment, large manpower

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requirements and very long completion times. These projects are for highways, railways, and
airports, developments of seaports, transportation facilities for water, ores, minerals, oil, gas
and other energy-bearing materials and the like Urban and rural development is part of
infrastructure development

5. Construction
These are housing projects for building high-rise residential accommodation, hotels, parks,
clinics, nursing homes and hospitals, educational institutions, religious establishments, gyms,
shopping complexes, warehouses, cinemas, auditoria, film studios and film cities

6. Modernization
Modernization projects are meant for upgrading the technology or the existing equipment for
improving productivity, Renovation can also be used with the same connotation. It may be
selective modernization, owing to ageing and technological obsolescence of machinery and
process. Obsolescence is the major reason for modernization.

7. Maintenance and Replacement

Major replacement of machinery may be required in large industrial plants. Replacement could
be a part of modernization or renovation

8. Plant Shutdown and Turnaround

These activities are highly demanding in large processing plants like refineries, textile plants,
paints manufacture etc.

9. Expansion
Any firm has to grow to sustain in the market, Inflation and escalation make a unit grow in
size, at least phase-wise in the same product line. These are called expansion projects and each
expansion phase has to be treated as a separate project since the scenario changes constantly
with time.

10. Diversification
A firm may like to venture unto a new product line, keeping the old line of production intact or
by abandoning st. Froda cosmetics, hospitality sector can be tried, from oil refineries, textiles
can be tried, from mining, metal processing can be tried, from general consultancy, information
technology can be tried, and so on. Diversification a meant for having a heterogeneous product
mix for hedging against adversity in any of the venture fields.

11. Integration
This term means keeping products downstream or upstream in a firm's production purview.
This may also result in the acquisition of facilities belonging to the supplier or the customer or
both. Integration may be of three types.
1.Forward integration: A manufacturing unit may plan to further process part or whole of its
own finished goods instead of selling them out in the market. This may sometimes be necessary

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to take care of variations in exports and imports and market conditions. The forward or
downstream goods are integrated into the firm's throughput.

2. Backward integration: The supply of inputs to a manufacturing unit may be erratic and
may cause disruptions in its production lines. To overcome such situations and gain a better
control over input supplies, the main unit may acquire the supplier's unit or units or set up its
own facility to fill the gaps in the required supplies. Here, the upstream materials or
components are integrated into the unit.

3. Vertical integration: This term is in connection with the entire value chain of a product.
Here, not only the production is under consideration but the entire chain of business activities
or operations for converting inputs into the desired outputs is considered. The chain or sequence
starting with the concept to sales, and ending with service to customer is called the value chain.
Figure shows the various links in the value chain. The extent to which the organization wields
control over the value chain is termed as vertical integration.

Idea or Idea
Concept Development

Design

Process

Procurement

Manufacture Sales Distribution Customer Marketing

service
12. Acquisition
One company may take over or acquire another company by outright purchase. These
acquisitions are also considered as major projects as they involve many constitutional,
technical, commercial, financial and legal implications which have to be handled by experts.
Analytical studies are necessary before any decision could be taken.

13. Rehabilitation
Manufacturing units may become defunct or sick due to many reasons. Such units are declared
as non-performing assets or NPAs. In such cases, a rehabilitating agency with new willing
entrepreneurs may take it over and try to rehabilitate or reconstruct it, make it operative (with
or without addition of equipment) by injecting financial resources and infusing better
managerial skills. These projects are normally taken up by rehabilitation banks subject to some
rules and regulations

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14.Research and Development

These projects belong to innovations, new products and processes in engineering, science,
technology, defence, medicine, air, sea and space. They arvelve enormous outlays and are
called open-ended projects because of the uncertainty of their completion and success. R&D
projects may initially involve building of research laboratories and testing pads and other such
facilities, both indoor and outdoor

15. Software Projects

Software projects have many things, including the life cycle, common with other engineering
projects. But some of the criteria in software projects are very different.

Projects can also be categorised as the following types

Mutually independent project: Implementation of such projects will not favourably or

adversely affect the other projects which may be accepted or rejected. Such project can be
selected without any reservations about its influence on the other listed projects. For example,
if a company thinks of setting up four sales outlets in four different cities for its products, the
four projects are independent of each other.

Mutually dependent or interdependent projects: If there are two projects and if the
acceptance or rejection of one project affects the benefit from the other project, the two projects
are said to be interdependent or mutually dependent projects.

Mutually exclusive projects:

If the implementation of one project results in the total elimination of benefits from the other,
then the two projects are said to be mutually exclusive. For example, on a particular available
site, alternative projects of different sizes or capacities are being considered and selection of
the one leads to the rejection of the other, then such projects are said to be mutually exclusive.

An organization has to list out the various project proposals for the future. They are listed in
the order of merit and only the most suitable one is selected for implementation. The selection
of a project proposal from a given list is not possible unless it is independent. The feasibility
and profitability of a project cannot be taken as realistic unless its non-dependence on the other
project or projects is firmly established. For example, if the selection of Project A totally
excludes the necessity or eliminates the feasibility of Project B, only then Project A can be
considered in isolation and its profitability wall be realistic. It is therefore necessary to list out
projects which are independent or mutually exclusive for any study

PROJECT MANAGEMENT BODY OF KNOWLEDGE (PМВОК)

PMBOK the information database developed over the past several years on project
management. It establishes nine areas of specialized knowledge for integrated project
management. These are management of:

1. Scope

2. Cost

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3. Time

4. Quality

5. Procurement

6. Human resources

7. Communication

8. Risk

9. Integration

Each of the above-mentioned areas is important. Moreover, these areas are inter-dependent and
cannot be dealt with in isolation. This is the reason why a Project Manager should possess an
integrated knowledge. Let us discuss these areas of management in brief

Management of Scope:

The scope tells us about the magnitude of the work involved in the particular project. Since
many individuals are involved in determining the contents of a project, there is bound to be
difference of opinion about what is required and what is not. The differences have to be
smoothed out and only those activities which are essential for the successful completion of the
project have only to be included in the scope. Non-essentials should be identified and weeded
out. At the same time, the needs of the stakeholders have to be properly and justifiably
addressed. An unwarranted reduction of the scope which would be inadequate for achieving
the ultimate objective of the project should be discouraged. Conversely, there should not be
any room for individual fancy which might make the project too bulky, over expensive and
difficult to handle Nevertheless, during the course of the project, occasional needs may arise
for modifying or changing the scope depending on the prevailing conditions-technical,
commercial, administrative, regulatory, statutory or otherwise

Management of Cost:
There is no project without a budget or, in other words, a cost element In the beginning, after
defining the scope of the project, the total cost to be incurred for successfully completing the
project is estimated. This depends on the resources required for the project. The accuracy of
the budget depends on details of the scope. The budget is affected when the scope is revised
for any reason. This area of knowledge includes management of resources, cash and funds flow,
budgeting and control. The objective is completion of the project within the approved budget
without cost overrun but at the same time maintaining the agreed quality

Management of Time:
It is well known that time is money. The longer the project duration, the more expensive would
the project be at the point of completion. The total time estimated in days, weeks, months or
years to complete a project depends on the number of activities and their individual duration
and the sequence in which they are related. By a judicious definition of each activity, estimation
of its duration, sequencing and overlapping of the activities, the overall project time can be

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considerably reduced. This process can take place in the beginning or at any phase or stage of
the project. A word of caution is needed: the quality of the project should in no way be
compromised.

Management of Quality:
As mentioned above, the quality of the project or the standards to which the project components
or services have been agreed to be designed should be maintained at any cost and should never
be allowed to be diluted. The acceptable quality norms and specifications as laid down in the
contract or tender document should be strictly followed. After all, the prestige of any
organization is directly related to the quality assurance it offers for its products or projects. The
Project Manager should provide for proper quality planning, inspection quality control at every
stage of the project. Quality components make a quality end product

Management of Procurement:
All materials required for the project cannot be supplied by the contracting firm. Many
materials and components have to be procured from others called suppliers, vendors or sub-
contractors. Sometimes, quality components can be purchased at lower cost to the overall
benefit of the project. A process for bringing in quality products from the suppliers and vendors
has to be laid down to avoid mismatching, rework, cost and time overruns. Formal procedures
for outsourcing, vendor development, and preparation of sub-contracting documents and
quality control of vendors’ products should be followed regularly and uniformly.

Management of Human Resources:

The Project Manager is not working alone on the project. He has several people working with
him and reporting to him directly and indirectly. The Project Manager should know the
personnel requirements of the project and plan the recruitment, staffing and organize the
structure for proper administration during the course of the project. He should be able to
motivate the people for better performance and develop team spirit among them. He should
also be able to address the occasional grievances of his staff for amicable settlement. These
skills of the Project Manager greatly contribute to the health of the project during execution
and also after completion

Management of Communication:
Project information must be regularly gathered, documented and distributed to the concerned
people at all stages of the project. Review meetings and presentations have to be held
periodically to control the course and expedite the progress of the project. Timely detection of
a flaw or delay or critical items at all-party meetings will prevent the project from going off the
track

Management of Risk:
For doing something, a decision has to be taken and decision-making is perhaps the most
difficult job in project management Why is it so? A decision is based on information and the
correctness of the decision is directly proportional to the accuracy of the available information.

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But adequate information is seldom available and the Project Manager is often confronted with
the risk of taking a decision to maintain the onward flow of work. He has to deal with
uncertainties throughout the life cycle of the project. Risk management consists in anticipating
and identifying risk(s), quantifying their effect and developing judicious and adaptable
solutions to minimize their impact on the project.

Management of Integration:
The major processes in project management are planning, implementation, monitoring and
control. The flow of information to the Project Manager's desk never stops. Be it formal or
informal, information comes in fragments. These inputs from the various departments and areas
must be properly analysed, coordinated, disseminated and utilized for taking timely decisions.
As there is always a common thread running through all these areas, an integrated approach is
mandatory in place of a piecemeal treatment of individual inputs

Of the above-mentioned nine areas of specialized knowledge, the first four areas, that is, the
management of scope, cost, time and quality, form the core of any project, particularly at the
planning stage and the remaining five areas, namely, procurement, human resources,
communication, risk and integration, assist in realizing the objectives of the project during the
execution stage.

ROLE OF A PROJECT MANAGER:

A Project Manager need not be a specialist in any discipline but he should possess a fairly good
knowledge of at least some of the areas of specialization in his project for exercising better
control over men and matters. He has to combine a variety of skills to address and tackle
different issues and problems that are encountered in the project life cycle. Figure shows the
different skills that a Project Manager should possess to be able to manage the work entrusted
to him

Clearly, these skills are varied and call for versatility on the part of the Project Manager. He
has to utilize each one or a combination of these skills to his advantage and to the advantage
of the project, the organization and the society, of in the reverse order.

Technical skills Administrative

skills
Project
Manager
Interpersonal and Strategic
leadership skills and business
skills
Different skills needed for a Project Manager

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QUALITIES OF A PROJECT MANAGER:

A project manager should be able to plan, organize, direct, implement, monitor and control the
entire course of the project. It is only then that he is rated as a good performer. If we take a
closer look at the above attributes, we would realize that a Project Manager should be an
introvert as well as an extrovert. In the initial stages of the project, he has to interact
predominantly with himself for proper planning and organizing ideas, matter and men. In the
later stages, he has to effectively deal with his staff, customers, suppliers, subcontractors,
approving authorities, his peers and all other stakeholders of the project. He needs to be a good
extrovert for proper communication with all these parties for giving directions and receiving
instructions or just information. He should be a person endowed with a knack for conceiving,
perceiving, and balancing diverse issues in the proper perspective with the objective of
successfully completing the project. A Project Manager is not just a manager but a leader well
equipped to take his or her tram towards success. He or she should be a leader with the
following capabilities.

1. Anticipation: Every person has some amount of common sense which guides his or her
decisions in life. A Project Manager should have a good amount of common sense or intuition
which gives a clue to what is going to happen in a particular situation. Experience also
contributes to this quality of anticipation. People with common sense and anticipation are
looked up to for guidance of advice by sub-ordinates or even superiors

2. Persuasive capacity: This attribute enables a person to bring people round to his line of
thinking, of course for the good of the project and not for any personal gratification

3. Confidence: Knowledge makes a person confident. If the Project Manager lacks confidence,
it must be due to lack of knowledge. It should be the constant endeavour of the Project Manager
to acquire working knowledge, not necessarily expertise, in the diverse areas of his operation

4. Friendly nature: A Project Manager has to deal and interact with so many individuals and
parties or agencies during the course of his project. Therefore, the need for an amiable
disposition or a friendly frame of mind in a Project Manager cannot be overemphasized.

5. Flexibility: A Project Manager has to become assertive when the situation calls for it. But in
general he should be open-minded and flexible in his attitude, or adopt a give-and-take policy.
Obstinacy or stubbornness may serve the purpose of self-gratification in the short term but does
not yield positive results in the long run.

6. Delegation: As already said, a Project Manager should acquire knowledge in diverse areas.
But for doing the actual hands-on job, his knowledge is always inadequate. Therefore, for
getting the jobs done, he should delegate many responsibilities to his staff in a well-defined
way although he is answerable for all the jobs or tasks of the project. Proper delegation does
away with unwarranted interference in the actual jobs and prevents interpersonal relations from
running sour.

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7. Broad perspective: A Project Manager must have a bird's eye view of the entire project. He
should have the breadth of knowledge rather than the depth. Only then he will be in a position
to analyse the inputs in a proper perspective and draw conclusions for positive results.

8. Objective approach and comprehension: A Project Manager should always be interested

in resolving issues or problems keeping in view the overall benefit of the project, and should
not try to satisfy the needs of individuals, which run counter to the goals of the project. He or
she should develop internally an automatic relay or signalling system to safeguard against
pressures or compulsions.
9. Communication and interpersonal skills: A Project Manager has to interact with diverse
people both verbally and in writing during the course of the project. He has to conduct regular
meetings, make presentations at various venues to inform and educate the concerned people
about the merits, issues, problems and progress of the project. To be able to do all this clearly
and convincingly, the Project Manager should possess good or even excellent communication
and interpersonal skills
10. Accommodative capability: The Project Manager has to work in new and sometimes even
adverse environments. He is often confronted by new circumstances, hostile people and
contradictory proposals which might smack of vested interests. To cope with all these, he
should have the capacity to accommodate the best interests of the project.

11. Adaptability to change: Change is a permanent feature of life. The Project Manager should
be amenable to change as the situation demands

12. Capacity to work with tight schedules: The Project Manager is constantly under pressure
to complete the project on schedule or even ahead of schedule. It is not that all people can do
this. Efficiency of work generally drops with increasing work pressure. A Project Manager
should keep his work efficiency from falling when running against time and tightening
schedules.

15. Coping with stress: Work pressure introduces high levels of physical, mental and
psychological stress. A competent Project Manager is one who can keep himself cool and does
not break down under high levels of stress.

It can be argued that the Project Manager, who manages or is in-charge of the entire project
from start to finish with all the above-mentioned attributes, is in effect a General Manager who
controls an integrated manufacturing unit. But there is a basic difference.

BENEFITS OF PROJECT MANAGEMENT

Project management is being practiced in view of its special benefits as compared to traditional
general management. Project management offers the following benefits in course of time after
adoption

1. Training and orientation of the available human resources for better skills and versatility
2. Aptitude for better and more objective estimation methods and optimization

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3. Opportunities for mingling with diverse groups and development by exposure

4. Possibilities for understanding the others' problems

5. Ability to sense risk and devise methods to tackle it

6. Streamlining of existing communication and reporting systems

7. Capacity for overcoming contingencies

8. Enlightenment about one's own inherent strengths and capabilities

PROJECT ORGANIZATION
Project organization structures are similar to an erection site equipment, eg, a derrick crane, an
excavator or a dumper. They can be put to use in one project site and when the job is finished,
they can be dismantled and transferred to another project site. They do not have a permanent
location. Similar is the case with the project management structures. They are not expected to
suffer from red tape and bureaucracy. They should be nurtured to generate and foster loyalty
and commitment in a different way without undue focus on the levels and designations within
and outside the structure

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Idea Generation:
Anything starts with an idea, So also a project. An idea forming the base for a project must be
able to address and satisfy a need. Figure shows a schematic approach to convert a need into a
viable product or a service.

Following are the sources of information for project ideas:

 Annual publications
 Information about sick units
 Existing scenario
 Import of ideas from abroad
 Availability of skills and talent

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 Needs of the society

 Import substitution
 Export potential

Needs of the society

The needs of the society can never be completely satisfied. There are always gaps between
needs and available products, and between demand and supply. If these needs and demand
could be identified and addressed properly, viable project proposals can be developed for the
desired products and to ensure adequate supplies.

Import Substitution
It is possible to indigenously develop a product which has long been imported into the country.
The Government may also encourage such ideas for the benefit of saving of valuable foreign
currency, and encouraging the local and national industry. However, the quality standards of
the product have to be borne in mind before attempting any import substitution by indigenous
development. Alternatively, agreements can be reached with the present exporter for local
manufacture by technology transfer maintaining the same quality norms and standards.

Project Life cycle :

Introduction:
A project which is finite in its scope has a life span called project life cycle. The
project is expected to pass through all the phases or stages of its life cycle. The difference
between the life cycle of a human being and that of a project is that the passage from one phase
to the other in the former is gradual, continuous and automatic without any external control
over the transformation. But in the latter case, all the four phases are discrete and the transition
from one phase to the other can be made to pause, be suspended for a period before the next
phase for changes or approvals, or totally abandoned, as the case may be. We can control the
features, content and duration, that is, the very existence of each phase, if the situation so
demands.

Phases of a project life cycle:

A project life cycle can be divided into four phases as follows:

1. Concept Phase:

In this first phase, we put down our idea(s) about what we need or desire, whether an
equipment, device, establishment, facility or service generally called the end product. Then the
practical aspects of the idea(s) are deliberated. This is called the feasibility study which is
normally done by person(s) familiar with the idea, available within the organization or engaged
from external sources. They establish the feasibility of the project or otherwise. If we want to
take only one project, the best one as established in the feasibility study or report is selected.
Based on these recommendations, we can then proceed to the next step. If the answer is no, we

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can explore the feasibility of another concept or idea. Here, we select projects for further
development.

2. Development Phase:
For this phase, the facts and figures of the first phase form the basis. Details of the end product
are developed, estimates of cost and time are made and detailed schedules prepared for taking
up the implementation of the plans. Of course, this baseline plan is subject to approval by the
higher authorities before the next phase is given the green signal.

3. Construction or Execution Phase:

This is the longest phase in the life cycle of project where major efforts and outlays are called
for. In this phase, the project personnel have to put in their best efforts to convert the baseline
plan of the project into reality within the constraints of cost and time. All the equipment and
subsystems of the entire project are assembled and interconnected to function as a whole
system. This phase also includes constant monitoring and control of the project parameters to
keep the project on the right course with permissible deviations.

4. Commissioning Phase:

This is the final phase of a project. Here, the system is checked in individual parts as well as in
its entirety for proper functioning and for the specified throughput or service. For example, a
newly developed software must function as specified. The output from the cement plant or the
steel plant must match the inputs. A power plant must generate the stipulated power.
Corrections are made if need be and the project is finally certified as completed. After mutual
agreement, the project, or precisely the end product of the project, is formally laid in the hands
of the customer by the Project Manager on behalf of the contracting organization. This is called
handing over and it puts a full stop to the project.

Concept Phase:
As already discussed, during the concept phase we generate ideas and examine them in some
detail with respect to the possibility of converting them into reality. In other words, we examine
their feasibility in a systematic way and prepare a feasibility report for considering the project.
we have seen that the duration of this phase is relatively short. However, despite its short
duration, this is the most important phase and it should be viewed as a distinct project with its
own phases. The feasibility study can again have the C-D-E-F phases as shown

In this phase, the concept of the project is discussed and put down as a problem, in its positive
connotation. The organization conceives an opportunity in the project. At the outset, the
problem or the opportunity is written down in a few words to define the project or state the
problem. Then a project brief is written which gives the details of the project. The mission,
goals and objectives of the proposed project must be clearly understood and stated in these
documents. This step is very important because all the next stages in the project life cycle are
based on these documents, and owe their authenticity and accuracy to them.

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At this juncture, the Project Manager may not have been named. A person is now formally or
officially authorized as the Project Manager as the single point of authority or accountability
for the project. This authorization document is issued from the office of a senior executive,
external to the project team, and it gives the green signal to the project with the official seal of
power. This authorization document is called the project charter.

Project Charter
An official document, called the project charter, is prepared and signed by the appropriate
authority in the organization. It designates a person as the Project Manager for the particular
project, and lists brief project details, the completion date, the milestones, the name, the duties,
responsibilities and authority of the Project Manager in conducting the project through its
various phases. Copies of the project charter are distributed to all the parties concerned in the
very beginning.

A project charter should also include brief but clear details of the project. It is issued and
circulated from the office of a senior manager of the parent company to line managers for
enlisting their support and cooperation to the Project Manager for completing the project as
detailed. It can be viewed as an agreement among the Project Manager, the higher management,
and the functional managers for a smooth and trouble-free progress of the project in all its
phases. The line managers should not shirk their prime responsibility of providing to the Project
Manager the requisite resources as and when necessary for planning and implementing the
project Sometimes, the project brief is also included in the project charter. An example of a
project charter is shown in Box.

Project Sponsor:
The project charter can be issued from the office of the project sponsor. He could be the Vice-
President (Projects) or the General Manager (Projects) of the firm.Now, the responsibility of
examining the project proposal is transferred to the shoulders of the Project Manager. The job
can be done entirely by the Project Manager's team, he can also seek external help, as the case
may be.

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Project Management Module 1

A project charter is drawn up for internal projects, whereas for external projects, a project
proposal is prepared for discussions with customers and for converting the same document into
a plan with modifications and other details. The Project Manager has to base his further work
on either the project charter or the project proposal, as the case may be.

The project charter or the project proposal is prepared by the sponsor's office. In some cases,
the document may be drafted by the Project Manager himself and signed by the sponsor or his
concerned superior.

However, some companies do not follow the practice of issuing project charters for their
projects. Such companies make the customer's final tender documents the basis for work details
and prepare their own internal documents. The Project Manager is nominated by an
announcement at a formal meeting after getting the project order ratified, in writing, with an
official letter from a senior manager of the company

Stake holders:
At the outset, we must say that though the idea or the concept of a project is put forth by a
single individual or a small group, those affected by the benefits or the consequences of the
project are many and each of them has a stake in the project and its implementation. In other
words, he or she has a vested interest in the project. All such people with a vested interest in a
project are called the stakeholders to the project. Therefore, the examination of the feasibility
of a project proposal must take into account the needs, legitimate desires, if not fancies, and
expectations of the stakeholders. It is now the first duty or responsibility of the Project Manager
to identify and list out all the stakeholders of the project. A typical list of stakeholders can be
drawn as follows:

1. Sensor of corporate management

2. Shareholders
3. Idea generator(s)
4. Client
5. Vendors
6. Consultants
7. Collaborators
8. Partners
9. Financing organizations, banks
10. Insurance companies
11. Approving authorities
12. Inspection agencies
13. Providers of services such as water, electricity, postal services and telephone,
conveyance, transport
14. Environment bodies or groups
15. Customers or end-users
16. Agencies like the police, healthcare and security personnel

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Project Management Module 1

17. Workers ‘Unions

18. Elected government representatives
19. Any other citizen’s group or NGOs.

In addition to these, other important stakeholders are the Project Manager's immediate
superior, his team, colleagues, functional managers of other specialist departments, and
mentors.
STAKEHOLDER ANALYSIS

Stakeholders, whether they are inside or outside the project team, have varying degrees of
influence on the project. It is said that the very definition of a problem points at the approach
route to its solution. It is, thus, essential that an analysis be done before we attempt any solution
to the project or problem. Proper weightage should be accorded to the needs and priorities of
the individual stakeholders keeping in view the project requirements, resources, procedures
and corporate needs. These details can be put down in a format suitable for the particular project
and the organization, and should be modified from time to time during the course of the project.
The total number of points against each stakeholder in the format would show his significance
in the decision-making process of the Project Manager. This is called the stakeholder analysis.

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Project Management Module 1

PROJECT SCOPE
Project scope refers to the detailed description of the deliverables, objectives, tasks, and goals
that need to be achieved within a project. It describes the project's parameters, restrictions, and
roles, outlining what is and isn't part of the project's work.
Another important point to be borne in mind is that resources of even a cash-rich
company are scarce and have to be put to prudent use. If there are four or five proposals for the
future, a company would never have adequate resources at its disposal for pursuing all the
proposals at a time. It has to make a choice. But how is the choice made? The obvious answer
to this pertinent question is. Choose the project which would give the best results. The meaning
of best results' in a private company may be different from that in a public sector company. A
private company aims at profit or surplus generation, whereas in a government-run company,
a project should primarily yield the best social benefit and then generate a profit in terms of
cash. But even here the emphasis may shift from the first criterion to the second depending on
the overall economic condition of the country and the policies of the ruling government. As a
general rule, we can say that in the developing countries state-run companies lay more
emphasis on social benefits while in the developed countries such companies aim at surplus
generation. In both cases, and whatever be the method of selection, the first step in project
selection is to arrange the project proposals in the order of magnitude of benefit to the company

KNOWING THE NEEDS OF THE CUSTOMER

What are the points to be considered for transforming the idea or the need of the customer into
a finite proposal?
The needs of the customers have to be understood clearly and a rough framework of the work
to be done for delivering the end product or service with which the customer would be happy
and satisfied has to be prepared. The first step for doing this would be to list out the job or work
content of the project in at least a sketchy form. We presume that this has already been done in
the form of a project brief or a project charter. But to proceed with the preparation of a more
accurate budget and estimation of completion time, the information in these documents may
not be adequate. For this, we have to understand the details. In other words, we have to get at
the scope of the project.

Ascertaining the scope of the project

The scope of a project can be obtained and understood in varying degrees of detail from the
following:

 Project brief
 Project charter
 SWOT analysis
 Scope statement
 Work Breakdown Structure (WBS)
As already discussed, the project brief or the project charter mentions the mission, goals,
objectives, name, and brief details of the project such as the deliverables or definable end

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Project Management Module 1

products or services, milestones, the allocated budget, the key players in the project team, and
the name of the Project Manager, his duties, responsibilities and extent of authority. The project
charter is a sketchy description of the project which shows the direction in which the project
should proceed. It forms the basis for elaboration of the contents of the project and preparation
of the scope statement. The scope statement forms a firm base for establishing whether a project
is feasible or worth execution, or in other words, whether there will be any substantial return
on the project after execution. This study or analysis is a significant part of project life cycle.
A project cannot be considered for selection without a good feasibility recommendation, and
subsequently, cannot be properly planned without a proper base of the content of work or
project scope.

Feasibility Study
The project proposal can be analysed in greater detail with the help of the scope statement to
verify its technical and commercial feasibility: This exercise is called the feasibility study

The scope and the feasibility of the project should be based on the following details:
1. What is the project going to create

2. Marketability of the end product-demand and supply conditions

5. Broad specifications like capacity, throughput or service

4. Anticipated service of operating ide

5. Budget allocation and limitations

6. Means of finance and capital structure

7. Production facility available and quality standards

8. External sources for production and procurement, and quality standards

9. Availability of spares and maintenance services

10. Availability of site for project location

11. Availability of water, power, transport, communication and medical facilities

12. Proximity to town heads, railhead, seaport and airport

13.Sales outlets, dealers, distributors

14. Foreign markets

15. Necessity for import and source of foreign exchange

16. Need of a collaborator or a consultant

17. Level of automation and manpower requirements

18. Governmental and other statutory regulations and approvals

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Project Management Module 1

19. Any other problems pertaining to the parent organization

Feasibility study and feasibility report:

Feasibility study consists of two distinct parts: feasibility analysis and appraisal. For the
feasibility study to be meaningful and the feasibility report to be accurate and realistic, the
preliminary design details of the project have to be developed or worked out. Based on these,
one should be in a position to arrive at fairly accurate cost and time estimates Feasibility
analysis determines whether the project is worth implementing. Appraisal is the process of
evaluation of the project for its success, that is, even if a project is implemented, it may not be
successful. Appraisal is also done by the company for borrowing funds from financial
institutions showing justifications for the funds sought. After a careful scrutiny of the feasibility
report and the project appraisal submitted by the project owners or the contract-ing firms, the
financial institutions may themselves make an independent appraisal of the project proposal
and arrive at decisions with or without modification of the details or terms.

There are two important aspects to any feasibility study economic aspect and the financial
aspect. The former looks at the project from the economic angle for determining
competitiveness of the product, market share, demand and output, cost, pricing and viability.
The latter examines the budget requirements, cash flow profiles, and self-sustaining capacity
of the project and working capital needs.

Many management executives are prone to think that the feasibility reports must be ready in
the least possible time. They go even to the extent of pushing the study teams entrusted with
the job of preparing the feasibility reports. Feasibility study is a part of planning, and time spent
on meticulous planning saves a lot of time and money during the implementation phase.

Each of these factors directly or indirectly affects the overall cost of the project and its
profitability. The impact of each of these must be studied in the feasibility study, and it should
be ascertained whether the project is technically and commercially feasible. The document

which compiles these details is called the feasibility report and it is an important step in project
management. The study should be done by the project team itself or assistance from external
sources can be sought to make it a joint effort.

It must be emphasized here that the preparation of the feasibility report is in itself a mini-project
and forms the basis for the remaining phases of the project. A feasibility study consists of the
following four phases:

Plan

This phase decides how to go about preparing the report. It lays down the procedures for
conducting the study. The inputs required for the study are all listed out for examining their
impact on the proposal.

Implementation
Information is gathered on all aspects of the projects proposed, for example, stakeholder
analysts, customer needs, and profitability analysis. Further, product can be broken down into

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Project Management Module 1

different parts, and different methods of making and assembling those products in the most
cost-effective way are studied. The impact of emerging technology on the outcome of the actual
project dining its estimated implementation period must also be studied and included in the
report. This is because, by the time the proposed project is complirted, technology would have
advanced, thereby, creating a gap The technology adopted in the project may result in an end
product which would not be saleable any more owing to its obsolescence. The influence of
market trends, such as demand and supply, prevailing and future selling price of the end
product, and customer expectations call for verious consideration during the preparation of the
feasibility report. Cost-benefit analysis, that is, how much we spend and how much we get in
return, is an important

Commissioning or Confirmation

The draft feasibility report prepared in the implementation phase is now finalized for
presentation or submission to the concemed authorities. It is now the turn of the higher
authorities to decide for or against the next step in the project life cycle. It is the prerogative of
the corporate management, all other things being equal or in order, to decide to go ahead or
shelve the project proposal.

The feasibility report is a very important document and can be called the backbone of any
project proposal. The inputs for the report should be gathered from authentic sources. Market
surveys, technical and journal reports, reputed publications, advice from experts in the field,
experience and expertise gained from similar projects already executed by others in the field,
project audits and interviews, seminars and conferences give a focused insight into the nature
and characteristics of the proposed project and the end product or service. At the same time, it
should also be borne in mind that the extent of detail for study should be agreed upon at the
outset. This will help in deciding the target completion date for the report and the budget
allocation.

The feasibility report should not be a lengthy document running into several pages. It should
be easily readable, and should present the facts and figures in a clear and lucid style. Ideally, it
should consist of a couple of pages with the salient features like the cost-benefit analysis,
payback period, return on investment among others which talk of the viability or otherwise of
the project.

The feasibility report brings out the major components of the proposed project like project
scope, resources, facilities, time and technology, and shows their impact on the overall project
cost and arrives at a decision on the viability of the project for the organization in terms of
short-term and long-range benefits or profitability. It must be understood here that there is a
difference between feasibility and viability of a project. A project which is feasible may not be
viable. For example, it is possible to build a manufacturing und or in construction in technically
feasible but the unit after completion may not be viable on commercial grounds. The project
after completion may not being in any tangible or intangible benefit. In such a case, it may not
be viable and need not be taken up unless otherwise decided

A Sample feasibility report

Pelletizing and Smelting Plant

22
for

Chromite Ores
Project Management Module 1

Introduction
Pinnacle Ferro-alloys Ltd. plans to establish a Ferro-chrome production facility with an annual
capacity of 30000 tonnes exclusively for export as a 100% EOU (export-oriented unit). The
proposed plant is planned to come in the vicinity of their existing Ferro-alloys plant at
Visakhapatnam, Andhra Pradesh, India Pinnacle Ferro-alloys Ltd. is already a leader in the
production of Ferro-silicon and Ferro-manganese and has a fairly large market share.

Pinnacle Ferro-alloys Ltd. already owns 300 acres of land without any litigation near its
existing facility. This land can be readily prepared for the new plant which will greatly reduce
the project duration. Charge chrome is in great demand abroad and at home as well owing to
the increasing industrial demand for various grades of stainless steel in which chromium is an
important alloying element.

Raw Material and Production Process

Abundant chromite ore at a very favourable price is available indigenously about 100 kilo-
metres from the proposed site. The estimated ore deposits are about 200 million tonnes

The ore contains lot of fines which cannot be directly processed by the reduction furnace owing
to choking problems. The ore fines are separated from lump ore, and are converted into pellets
or shots to prevent clogging and choking during the reduction process from the chrome oxide
to chromium metal The plant shall consist of two main sections, namely, the palletisation plant
and the smelting (reduction furnace) plant. Other auxiliaries will be the raw material storage,
finished product storage, storage bunkers, the captive power plant, etc.

Collaboration and Consultancy

M/s Willhelm Schmidt GmbH of Germany has agreed in principle to provide the know-how
for the palletisation and the smelting processes, and has quoted a budgetary price for the same.
The company will

give engineering support in the form of basic layouts, basic equipment specifications and also
supply some critical components which cannot be procured or manufactured in India. Detail
engineering and drawing can be developed in-house or sub-contracted, where necessary.

Power Requirement
Informal enquiries at the higher levels in the State Electricity Board have revealed that nearly
uninterrupted power would be made available to the new plant though the requirements are
high because of the high capacity electric smelting furnace to guard against emergency, we
propose self-sufficient captive diesel generator sets synchronized with the main supply grad

Feasibility and Viability

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Project Management Module 1

The estimated completion time for the entire project is 20 months, with a possibility of
shortening the period by three months. Since the plant can be built in two sections, pellets plant
can be made ready in 12 months and can start the production of pellets for sale before the
smelting furnace can be commissioned This will greatly relieve the cash flow pattern of the
project. The plant is estimated to break even about 10 months after commissioning of the
smelter plant based on the present day selling price of pellets and chromium metal. The forecast
is that the international prices are bound to rise due to short supply of the end product, while
the raw material price is expected to be stable due to abundant supply. These factors will be
very favourable to the viability of the project. The expected payback period for the plant is 40
months The return on investment (Rol) is estimated as 34%. The project is techno-
commercially very sound and promising. The preliminary facts and figures are based on
budgetary offers and can be further refined during the planning phase

Competition and Marketability

The technology is new to India and the existing plants in the West are already saturated and the
unit cost of production of chromium metal is comparatively very high. No new ventures are
expected abroad to create new competition and pull the prices down. The proposed
collaborators themselves are selling their know-how to us since no new plants are expected to
come up in Germany and other El countries.
ANNEXURE
(Confidential and only for the Board Members)
1. Flow sheet and plant sections
2. Estimated outlay including collaborators' fee
3. Means of finance
4. Import content
5. Approvals and sanctions required
6. Project bar chart
7. Miscellaneous
Put up for preliminary approval
Signed by project manager

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Project Management Module 1

SCOPE OF A PROJECT AND SCOPE VERIFICATION

Introduction
The scope of a project contains the details of the project, namely, the job content, processes,
goals and objectives, and the details of the end product or the service. These details are called
the deliverables of the project. In other words, deliverables are what the project is going to or
is expected to deliver as end product of service. The project charter mentions these very briefly.
The charter shows the direction in which the project team has to move for achieving the goals.
At this stage, it is not yet known whether the project is feasible of viable. It is now the job of
the project team to take up the feasibility study with or without help from external sources.
Since this study is very crucial for the next phase of the project life cycle, which is the
implementation or execution phase, the scope of the project has to be studied and prepared in
greater detail with meticulous planning

We have already seen that the scope, cost, time and performance or quality form the core
elements of a project and they are interrelated.

The scope of a project defines what is required and what is not required for its successful
completion Since any process in the project entails cost and time as well as quality and
integration in its execution, all redundant processes have to be judiciously excluded from the
scope of the project to bring out a cost-effective, competitive, and quality product or service in
optimum time. This is possible only with small projects

It is anybody's guess what happens when the project scope bulges! Mega projects may not be
accepted at the outset, if accepted unwittingly, they become more and more failure-prone
during the implementation owing to their burgeoning size!

The draft of the scope of work has to be accepted and formally approved by the stake-holders
to avoid controversies at a later stage. The process of getting this final approval is called scope
verification.

BASELINE PLAN

Baseline plan is the scope of work or activities of the proposed project, which have been
included and accepted in scope verification, and have been estimated and approved by the
stakeholders in the form of the feasibility study and report. It is called baseline plan because it
contains the bare minimum or optimum requirements as envisaged at the beginning of the
implementation phase. Since the feasibility study and report are based on inadequate
information put together by the project team within a time period specified by the higher
authorities, it is understandable that the details embodied in the report are not sacrosanct They
are subject to changes, if not major, and corrections as the project progresses through the
implementation phase. Now, any changes which are necessary and justifiable have to be
notified in a formal way to the stakeholders and be approved. There is hardly any project, minor
or major, which never requires any modification due to scope changes during its execution

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Project Management Module 1

SWOT ANALYSIS

Introduction:

SWOT analysis is the study or assessment of our strengths, weaknesses, opportunities and
threats. Strengths and opportunities are positive assets, whereas weaknesses and threats are
negative points.

Moreover, the strengths and weaknesses are internal attributes of an individual or an

organization, while the other two-opportunities and threats have their origin outside of the
individual or organization. Exhibit gives a chart showing all these four attributes at the four
quarters of a card. This is called the SWOT profile.

The strength of an individual can be sound technical knowledge, his weakness can be poor
communication skills, opportunity can be scope for improvement by intensive training. The
threat can arise from outsourcing of technical consultancy or import of know-how and
engineering from a collaborator.
Similarly, the SWOT analysis of an organization can show its high market reputation as
strength, high employee turnover and low retention of talent as weakness, gaps in supply and
good demand for the product as opportunity, and increasing competition from other firms with
high quality goods at lower prices as threat.

SWOT Profile
Strengths Weaknesses
1. 1.
2. 2.
3. 3.
4.
Opportunities Threats
1. 1.
2. 2.
3. 3.
4. 4.
5.

THE IGIG PROCESSES

Any individual should make an honest assessment about himself or herself and list his/her
strengths, weaknesses, opportunities and threats so as to

1. improve his/her strengths

2. gradually eliminate his/her weaknesses,

3. Identify opportunities, and
4. Locate and guard against any threats.

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Project Management Module 1

This may be called the IGIG process, it could be a wonderful practice for individuals, groups
and organizations for constantly and consistently upgrading their quality for better
performances, and identifying avenues for growth and development. Since the whole depends
on the part, the individual is important in a project. Thus, the individual should be motivated
and induced to do his/her SWOT analysis regularly, and develop a positive attitude towards
weaknesses and threats and rise without sinking into desperation and frustration

SWOT ANALYSIS AND CORPORATE PLANNING

Attempts should always be made for converting weaknesses into strengths, and threats to
opportunities Similarly, efforts should be directed towards transforming strengths to
opportunities in the best possible way. However, situations arise when the thin dividing lines
between strengths, weaknesses, opportunities, threats are blurred, and a special interpretation
might be required to segregate them, depending on the environment of the organization.

The SWOT analysis and report can be used as a starting point for the scope statement. This
statement of scope shows us all the major activities that have to be carried out for completing
a project. It also shows us what we can do by ourselves and what we have to do to get the work
done by others such as collaborators, consultants or sub-contractors. The scope statement
enables us to examine our strengths and weaknesses, look for threats and identify opportunities
in a new business proposal. In short, we are in position to conduct a SWOT analysis of the
proposal. While doing this analysis, we should not only locate the shortcomings in our
knowledge, strengths, skills and talents, but also assess the magnitude of these gaps. With a
little more effort and analysis, we can also establish if we could bridge these gaps by ourselves
or we should enlist external help. The combined expertise-internal and external-must be
adequate for completing the project in all respects to the entire satisfaction of the customer

An offshoot of SWOT analysis is corporate planning, a very important branch in corporate

management Planning strategies and horizons can be decided and fixed based on corporate
planning for future projects and operations of an organization

The SWOT analysis of a project can be based on the project charter of the scope statement. The
time required for the analysis depends on the magnitude and the size of the project SWOT
analysis of large projects may take considerable time. This is because generally all the
stakeholders are involved in the SWOT analysis meetings and it is a known fact that meetings
and their coordination consume valuable time. But it is worthwhile to conduct this analysis as
it firms up the scope and prepares a safe starting point for the feasibility study. If the SWOT
analysis is meticulously carried out, the unforeseen are minimized, if not eliminated, and
contingency costs are considerably reduced. Also, dead ends on the roadmap can be avoided.
A quantitative analysis can be undertaken by assigning weights based on the importance of the
various strengths, weaknesses, opportunities and threats. Then they can be given evaluation
grades on a 1-5 scale or on a 1-10 scale. Considerable experience and expertise is required for
calculating the overall grades of individual projects and listing them accordingly Overall grades
are obtained by multiplying the weight factors by the corresponding evaluation grades

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Project Management Module 1

The additional time and money spent in SWOT analysis at the beginning would definitely be
less than the extra cost of modifications and corrections at a later date during the
implementation of the project, which will cost the project dear.

Project Organisation structure

Projects are conceived, planned, executed and commissioned by personnel at various levels in
the hierarchy of an organization. The right man should be at the right place and he should be
able to bring out the best from himself and from others for the successful completion of the
project. Since a major project involves many disciplines, both technical and non-technical,
operating under the Project Manager, an organization structure showing the various disciplines
and the designations of the operating levels in each discipline must be carefully prepared and
documented.

HIERARCHY

It is very well understood that an organized structure of personnel is necessary for executing
any job smoothly. This structure should be clearly outlined on paper with designations, names,
responsibilities, domains of operations, and so on. This chart graphically shows all the major
disciplines, functional areas and specialties of the entire project. At the same time, it should
show the in-house skills, talents and details of outsourcing, namely, subcontractors and their
duties, responsibilities and the extent of authority.

The corporate management and senior executives of an organization make future plans for the
organization and study the feasibility of such ideas. This activity can be undertaken by an
individual or a group of specialists within the organization or by external resource personnel,
generally called consultants. After this, an individual can be nominated for heading the group
in the organization as the Project Manager and from within the organization or with external
consultants as the coordinator. There are also cases where the Project Manager is appointed
from outside the organization after the feasibility has been established and approved for the
project proposal. Since project management is a team work, the Project Manager must have
assistants and other personnel as his team members at subordinate levels to help him in
achieving the desired goals. And the project team must have an integral identity and an
organized structure of its own, instead of being a loose collection of people drawn from various
sources and disciplines.

PROJECT SPONSOR

The Project Manager and the main members of his project team are formally designated and
authorized by a senior executive in the organization. This senior executive, called the sponsor
of the project, issues the project charter which we have already discussed. Though the sponsor
of a project is not directly involved in the day-to-day activities of the project, he is the
figurehead whom the Project Manager can approach for advice and guidance on major issues
which might have implications at the corporate level. The Project Manager is expected to
present overall periodic reviews of the project to the sponsor
The following are the functions of a sponsor. The sponsor

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Project Management Module 1

1. May be selected for more than one project.

2. Can be a senior-level executive or an executive at lower levels depending on the size and
complexity of the project.
3. Nominates and empowers the Project Manager and his team by releasing the project charter

4. Is expected to explain to the Project Manager all the critical administrative, political and
even informal aspects of the project as soon as the project manager assumes his designation
and office

5. Can provide help in deploying or recruiting other project team members in a regular manner
or as a crisis measure

6. By virtue of his seniority and closeness to the corporate management, is in a position to

address crucial issues and unravel the shots within much lesser time than the Project Manager
(The services of the sponsor are very valuable in surmounting unforeseen hindrances to the
progress of the project. However, the sponsor is not expected to mingle and interfere with minor
issues of the project. He tackles only problems which are beyond the brief of the Project

7. Plays a major role in developing and maintaining good relations with the customers and
institutional authorities or agencies, and averting controversies over approvals and consequent
slippages in scope, schedules and budget

8. Assists the Project Manager in resolving interdepartmental or interdisciplinary disputes and

defusing tensions

9. Provides guidance to the Project Manager in change management and changing priorities
during the execution phase

10. Should be an impartial judge in conflict management.

11. Should provide moral support to the Project Manager and his team wherever necessary, in
the best interests of the project.

It must be mentioned here that some organizations do not nominate a sponsor for their projects.
The senior executive, to whom the Project Manager functionally and administratively reports,
acts as the sponsor in such cases and is supposed to render all help to the Project Manager as
explained above.

In actual practice and in the majority of organizations, the Project Manager is not given full
authority commensurate with his duties and responsibilities. There is always a gap between his
authority and responsibility. This has to be bridged by the personal skills and tactfulness of the
Project Manager in his dealings with his peers, colleagues or departmental heads and even his
own team members. The Project Manager can also greatly benefit by developing and nurturing
amicable relations with the project sponsor This would be a much better course for the Project
Manager rather than fretting and fuming over impediments and roadblocks during the course
of the project.

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Project Management Module 1

PROJECT ORGANIZATION

At the beginning itself, it should be made very clear that there is no hard and fast rule about the
type of organization structure a project should have or should be given The type of structure
chosen depends on various factors like the size of the company, the size and the urgency of the
project, availability of suitable manpower and other resources within the organization, the
orientation of the project involving new technology, new infrastructural facilities, etc. Also,
The organizational structure for the project is predominantly decided by the culture and general
practice in an organization
The organization structure for project management is discussed in the following section
TYPES OF PROJECT ORGANIZATIΟΝ

Pure Project Structure:

Pure project structure depicts a self-contained organization and is similar to the functional
organization traditionally followed in manufacturing concerns
At the highest point of the structure of the chart is the Project Manager (or General Manager)
with all his team members of various disciplines arranged at appropriate levels corresponding
to their positions and responsibilities. The Project Manager need not depend on other
departments in the organization for technical and other functional help as his own project
department comprises all the requisite skills for multidisciplinary projects. Any sub-contracted
skills can also be shown on the chart. All the departments or skill sets report directly to the
Project Manager, both functionally and administratively. The apex authority controls all
projects.

Pure Project Structure

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Project Management Module 1

Functional Organisational Structure

Advantages:

1. It is flexible as far as disciplines and skills are concerned.

2. There is no intermingling of major departments outside the structure
3. Duties and responsibilities are well-defined without any scope for controversy
4. Administration is easy as there is only one highest authority for assignment and
appraisal of work and performance
5. This type of project organization offers technical experts and specialists a high level
of job satisfaction with recognition and potential reward
6. The structure fosters a feeling of self-advancement and provides a better career
development than in other types of structure
7. There is little scope for communication gaps and missing links
8. Project work becomes more proactive than reactive in this type of structure

Disadvantages:

1. There is no single point of responsibility assigned to each project, which may lead to
confusion

2. The highest authority of project structure becomes the place of appeal for major and minor
issues of all projects leading to overload, stress, slow and poor decisions, bottlenecks, work
stoppages, and ultimately slippages of all kinds

3. The Project Manager is usually a generalist or a specialist in one area. As such, he might not
properly assign and assess the work allotted to each member of his team

4. All members of the project department cannot be evenly loaded with work at all times as the
nature, size and scope of projects are dynamic and keep changing. At times, some members
may be overloaded while others may be fiddling with their thumbs.

5. In long-term projects extending for years together, specjalists run the risk of weakening their
skills.

6. The structure gives birth to generalists rather than specialists

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Matrix Organization Structure

As the name indicates, matrix organization structure represents a matrix of intersecting vertical
and horizontal lines. The vertical lines show the responsibilities of the functional departments,
while the horizontal lines represent the duties and responsibilities of the different projects on
hand.

Matrix organization structure is not a permanent structure, and is created for a particular project
and terminated for a new project. To assist the Project Manager, skilled personnel are picked
up from different functional departments and brought together for the project along with the
Project Manager. Functionally, these personnel report to the Project Manager, but
administratively, they are under the control of the respective line managers or functional
managers in the organization. The subcontractors appointed to execute some project jobs are
also part of the matrix organization structure.

With such a structure in place, the Project Manager is called upon to do a lot of coordination
with the functional managers for proper allocation of resources from their departments and
organizing these skills effectively to his advantage. The Project Manager does not exercise
direct control over his team. In other words, each team member has two bosses, one is the
functional manager and the other is the Project Manager. Depending on his requirement in
terms of man-hours, each member selected from the functional department may be assigned to
more than one project and he may have more than two bosses at any pointof time. The team
member may be working simultaneously in the concept phase of one project, the planning
phase of another project, and the execution phase of yet another project. In spite of these diverse
activities, the team members continue to sit in their own functional departments and render
their services to the assigned Project Managers.

Advantages:

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1. The personnel of the functional departments have optimum work load. There are practically
no idle hours as there is no lack of work in the parent department. This is because some projects
cannot keep the team members fully occupied, and only the parent department can utilize their
time fully Otherwise, the project has to be accountable for the cumulative dead time of its team
members.

2. The appraisal of these personnel continues to be done by their respective functional bosses
who know their work and can assess their performance in a better way than the temporary
Project Manager. This generates a sense of security, better job satisfaction, and a congenial
working environment in the organization.

3. Normally, Project Managers are generalists and could be specialists in just one field, which
may not be useful for a particular project. The Project Manager in such cases is not equipped
to solve or resolve any project issues involving specialist domain knowledge. The matrix
structure allows ample scope for addressing such problems. Seniors in the functional
departments such as those in the design department, electrical controls, software, procurement
and finance can provide expert advice and consultation directly to the team members and
indirectly to the Project Manager

Disadvantages

1. When the organization is large and the number of on-going projects is large, the matrix
structure becomes complicated.

2. Allocation of limited manpower from functional departments becomes difficult and even
impossible when the number of projects is large. This may even lead to conflicts due to
conflicting objectives and priorities and loss of valuable time.

3. Each functional manager has to deal with more than one project manager for allocation of
resources from his department. This adds to the normal departmental workload of the functional
managers.

4. A project team member does not have full-time involvement in a project and often tends to
follow the dictates of his primary boss, namely, the functional manager who is authorized to
write his annual appraisal report and reward him for his performance

5. Communication becomes cumbersome and valuable time is lost in coordination meetings

6. The concerned team members may not be available at crucial progress and review meetings
for projects due to functional duality of the team members. This causes ill-will, and even
frustration in the working environment of the organization as a whole
7. Longer time is required in reaching consensus on issues as the members involved have
diverse goals and objectives

8. There is a tendency on the part of the functional managers not to assign the best people from
their departments for project work. This may lead to dilution of talent in the project teams. The
project teams may develop a feeling of discrimination dregs thrown out from the cream

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In regular manufacturing concerns, the departments and the manpower resources are well
established and sufficient for regular operations. Their workload is routine and continual
Projects, on the contrary, involve diverse disciplines, skills and expertise which keep changing
from one project to another. Establishment of separate self-contained project departments may
not be economically feasible. Even many of the large organizations cannot afford this luxury.
A via media is, therefore, a matrix structure with all its merits and is created by concerted
efforts of the peers and the corporate management, of a culture which fosters goodwill,
commonality of goals and cordial relations between the functional and the Project Managers.
It is after all a power game between functional and Project Managers. Many functional
managers may entertain a superiority complex over Project Managers and may tend to treat
them as generalists. They fail to appreciate the virtues, talents and the different working style
of Project Managers. It is up to the corporate management to create an environment włuch does
not allow any scope for such petry feelings which run counter to the ultimate goals of any
progressive organization. The environment and the culture of the organization should
encourage trust, free communication, open-mindedness and cooperation Project Managers
must be treated on par with functional managers

The Project Managers, in tum, should cultivate effective communication and adminis-trative
skills for enlisting well-balanced support and cooperation from their functional colleagues and
the desired performance from their team members. They should orient and school themselves
in such a way that they command respect and not demand it.

Pure project management structure is recommended for high-end technology and research
projects with high budgets in which fast results are required, which is possible only with self-
contained and full-time project teams without any administrative conflicts and glitches.

PROJECT TEAMS

A project team is a group of people selected specifically for taking up various duties and
responsibilities, and endowed with some measured share of authority for bringing the project
to a successful close without creep or slippage of any kind.

This is the basic objective of any project team. Simply put, the objective can be achieved by
team spirit, a sense of togetherness, and a firm belief in and practice of the noble concept of
give-and-take in an informal atmosphere devoid of red-tape and bureaucracy.

Attitude and Aptitude

Here, we will discuss two other characteristic qualities in individuals’ attitude and aptitude. A
person must have the right attitude towards project work. Then he can develop the aptitude
which makes him learn more and more of the jobs on hand and the related complexities. These
two terms relate not just to project personnel, but to life as well. In fact, to come up in life in
any field, these two attributes are essential. The golden rule should be one's attitude and
aptitude decide one's altitude.

How are project teams formed?

What should be the size of a project team?

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What type of personnel should comprise a team?

What are their age groups?

How good is the involvement of each member in the project on hand?

A project team or, for that matter, every team member is expected to be efficient as well as
effective. Efficiency consists in doing a thing right and effectiveness is displayed in doing the
right thing right. For a project to be successful, each team must possess these two qualities in
the first place

Efficiency
To be able to do a job efficiently, one must have an appropriate qualification, and adequate
experience coupled with commensurate skill. For example, a mechanical engineer is not
qualified to do an electrical engineering job-either hands-on or supervisory. The person should
not only be experienced in the his or her job, but also must have a proven record of job expertise
corresponding to the job specifications. Almost all companies advertise positions for Project
Managers and officers through the media, such as daily newspapers, Sunday supplements,
technical journals and company websites. In the advertisements, they spell out the job
specification and job description required of the position. Some illustrative examples of job
specifications and job descriptions of a Project Manager are mentioned in the following
sections

Effectiveness

To be effective in doing a job and to play an effective role in a particular position, one must
have not only the knowledge of the job but also the capacity to distinguish between the right
and the wrong sides of things. When a manager has to take decisions about a particular matter,
the available alternatives may all look alike. Effectiveness consists in discriminating the right
alternative against the wrong alternative and taking a decision for doing the right thing right at
the right time for obtaining the desired result. Effectiveness may not be a permanent feature in
any individual Only, there are highly effective people and not very effective people. Depending
on the percentage of the right, effective decisions taken by them overa period of time. Some
start slow but may become effective in course of time with experience and right guidance from
peers. Some may be inherently effective, and good and fast decision-makers

Job Description

A job description should contain the job title, supervisor's name, a job summary, duties,
responsibilities and authority. Details of the job must be made as detailed as possible. It should
also indicate job location, working conditions and relationship with other positions and jobs in
the project or organization.

EXAMPLE : Functions of a Senior Project Manager

Working as part of a team for oil and gas development. He will be involved in developing and
organizing sophisticated project strategies

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His role will be varied, and will include effective planning and management of resources, skills
and budget for timely delivery of all projects.

He will also manage and be accountable for one or several packages within a construction
project.

He will be responsible for his own team, building strong relationships with a diverse range of
people, motivating individuals, setting goals and inculcating team spirit.

He will also be required to oversee a wide range of contractors and suppliers for meeting all
contractual commitments in all respects.

He will play a key role in setting up the company supervision, and will manage interfaces
between all project parties and disciplines.

Location: Anywhere in the Middle East

Reports to the Vice-President (Projects) at the headquarters of the company, ie London

Job Specification
It is a specification of the suitable candidate for the position to be filled or required. It
states the minimum acceptable qualifications, skills, experience and special qualities
required of the incumbent for matching the job requirements (see Example 11 2). It is
believed that the incumbent with all these qualities will be able to perform satisfactorily
in the new job
EXAMPLE : Required Skills

Education: The candidate should

Hold good is the involvement of each member in the project on hand?

These are some major issues which affect the efficiency and effectiveness of a project team,
and which we will discuss in the following sections.

Team Size
The size of a project team depends on the size of the concerned project. If the project is very
large and consists of many important sections, there can be several Project Managers
controlling each section which in itself is a project to complete and to integrate with the other
sections. All these smaller project groups with their group leaders or Project Managers, report
in turn to the senior Project Manager who holds the charge for the entire project. Holding all
these project teams together is the responsibility of the senior Project Manager who is given
different designations in different organizations, such as Senior Project Manager, Manager
(projects), Chief Project Manager, General Manager (projects) or even Vice-President
(projects)

The project sponsor, by definition, cannot play the role of the Senior Project Manager because
the Senior Project Manager should be more involved in the projects than the project sponsor

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who normally gets involved in the projects only when there are major issues requiring decisions
or actions at the corporate level

The following important points should be borne in mind by the selectors while deciding the
project team size

First, the number of team members depends on the different skills required, such as mechanical
engineering, electrical controls, civil engineering, procurement, erection, piping, accounting,
planning, computer systems, secretarial services, etc. The various skills, talents and even
personalities for a team should be well balanced for forming a homogeneous and congruous
team

2. A project may be large in terms of investment but may not be complex in scope. Such projects
may not require large teams. However, when both size and complexity are higher, the team size
is justified to be relatively large.

3. Restricting the size of the team on the basis of cost rather than technical requirements will
reduce the efficiency and effectiveness of the team, which will defeat the very purpose of
forming the team. Small groups suffer from paucity of skills and adequate job knowledge
hampering decision-making and progress of the project. But at the same time, too large groups,
though affordable by the organization, tend to become crowds instead of organized groups and
will have a more adverse impact on the project than the inadequate small groups. Also, it
becomes difficult to organize meetings with all the members.

4. Large groups tend to become playgrounds for politicking and may give rise to cliques with
vested interests. With large groups, the Project Manager may not have enough time for
individual and group interaction and communication. This may lead to unwarranted
misapprehensions, conflicts, and even estrangement

5. Combination of one or more skills in an individual member can be considered for deciding
the overall size of the team. He can effectively divide his time between the two jobs and
contribute to the operating efficiency of the team. However, care should be taken that he or she
is not overloaded with work which may have negative effects
Formation of a Project Team

Project team' and 'project team members these two terms in their broader meaning can be
understood as the total number of stakeholders of the project. But as far as the daily routines
are concerned, the project team means the Project Manager and his team members or the
personnel assisting and working with him on a permanent, part-time or temporary basis on a
particular project.

When the project charter is prepared, the Project Manager and his key assistants as team mates
are mentioned in the project charter issued by the project sponsor. The sponsor should make
the selection carefully after consulting the respective functional or line managers and give a
fair measure of liberty to the Project Manager in the selection process. When the Project
Manager is also selected from the same organization, he would be familiar with the proposed

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team members and does not face any difficulty in selecting and accommodating the internal
resources in his team.

Sometimes, it so happens that the Project Manager has to be brought into the organization from
another organization by virtue of his technical or project knowledge and expertise. In such
cases, the organization has to be careful in recruiting the Project Manager since the new
appointee has to conform to the prevailing culture in the organization and adapt himself to the
working and reporting styles in the new environment. Further, he should have the maturity and
the capacity to handle the natural human feelings of ill-will and envy among his new colleagues
and even some of his own assistants who could have been aspiring for the coveted Project
Manager's position

The initial stages of the so-called 'running-in' of the project team, as in mechanical equipment,
are crucial before understanding and trust are developed between the Project Manager and the
individual team General Manager

Developing (Growth) stage

In this phase, almost all members have been identified and formally inducted into the team.
They are all in the process of getting to know one another personally and professionally at the
formal project meetings and other informal get-togethers arranged by the Project Manager, the
sponsor or the Corporate Managers and senior executives of the company Trust, friendship,
mutual faith and understanding are built up in this stage. Dovetailing of objectives begins to
take place, and a sense of oneness and togetherness starts to grow

Developed (Crystallization) stage

This is a crucial stage during which the team reaches a point of internal strength through
resolving the various internal stresses of the early stages. Confidence, mental comfort, a high
degree of commitment, and an eagerness to pursue the objectives of the project rather than

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personal objectives have already been established in the team members. Decision-making also
becomes fast-paced.

Consolidation stage
This is a fully-formed and crystallized stage. Leadership qualities and discipline are well-
developed in each member of the team as they get more involved in their individual positions
with a sense of direction, security and self-confidence. The team members are self-disciplined
and fully trust their seniors and the higher management. It is the responsibility of both the
Project Manager and the sponsor to ensure the continuance of this healthy environment and
utilize it for the best benefit of the project.

The above four stages are only illustrative of the gradual development of the ethos of the project
team The stages can be analysed by breaking them further depending on the size of the project
and the team itself. The time of development depends on the number of heterogeneous
elements, their age groups and location. These four stages can overlap with the four phases of
project life cycle. The Project Manager should always try to compress these stages of team
formation into the planning stage of the life cycle. If proper care is not taken and the team-
formation stages are allowed to drift, there is the risk of the initial stages moving to the
implementation phase of the project. Such situation could be disastrous as conflicts may
become unwieldy in a time-constrained situation

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