Chapter One

Overview of Project and Project

Management
 Course Objective
This course is designed to enable students to:
 Know basic concepts of project analysis and
planning,
 Understand sources of project ideas and project
identification,
 Explain feasibility study from different analyses
perspective,
 Know mechanisms of project financing,
 Prepare project documentation & project
appraisal,
 Appreciate project implementation, controlling
& evaluation techniques
Course outline
CHAPTER I - GENERAL CHAPTER IV - PROJECT
INTRODUCTION PREPARATION
Meaning and definition of project
Features of a project Markets and Demand Analysis
Projects and Plans Raw Materials and Supplies
Overview of Project Planning in Study
Ethiopia (Reading assignment) Location, Site and Environment
CHAPTER II - PROJECT CYCLE Impact Assessment (EIA)
Production Program and Plant
Meaning and Definition of Project Capacity
Cycle Technology Selection
World Bank Project Cycle Organizational and Human
UNIDO Project Cycle Resource
CHAPTER III - PROJECT Financial Analysis
IDENTIFICATION
Project Idea – meaning
Sources of Project Ideas
Macro sources
Course outline
CHAPTER V - PROJECT IMPLEMENTATION, MONITORING AND
EVLAUATION
Organization
Project Planning
Project Control
Human Aspects of Project Management
Pre – requisites for Successful Project Implementation
CHAPTER VI - SOCIAL COST BENEFIT ANALYSIS (SCBA)
Rationale for SCBA
UNIDO Approach
Net Benefit in Terms of Economic Prices
Savings Impact
CHAPTER VII - PROJECT FINANCING
Source of Project Finance
Cost of Capital
Public Policy and Regulations on Financing
Financing Institutions
Course outline
EVALUATION:
 Individual Assignment One (project proposal ----30%
 Individual assignment Two ---20%
 Final examination ----50%
References:
 Prasanna Chandra, Projects – Planning Analysis,
Financing, Implementation, and Review
 UNIDO, A Manual for the Preparations of Industrial
Feasibility Studies
 UNIDO, A Guide to Practical Project Appraisal
 Harold Kerzner, Project Management
 Rory Burke, Project Management
 Trevor Tong, Planning Projects
What exactly is a project?

You hear the word used all the

time at work, as well as at
home.
Defining a Project?
• An intervention that consists of a set of planned,
interrelated activities designed to achieve defined
objectives within a given budget and a specified
period of time.
• A series of activities aimed at bringing about clearly
specified objectives within a defined time-period and
with a defined budget.
• Projects can be viewed as having four essential
elements: a specified timeframe, an orchestrated
approach to co-dependent events, a desired outcome,
and unique characteristics.
 WHAT IS A PROJECT?

 A project is an interrelated set of activities that has a

definite starting and ending point and results in the
accomplishment of a unique, often major outcome.
 A project is a series of activities aimed at bringing
about clearly specified objectives within a defined
time-period and with a defined budget. [Aid Delivery
Methods, Project Cycle Managreement Guidelines
Volume 1, March 2004]
 WHAT IS A PROJECT?

 A project is a proposal for an investment to create, expand

and/or develop certain facilities in order to increase the
production of goods and/or services in a community during
a certain period of time (World Bank)
 A project is unique set of coordinated activities, with
definite starting and finishing points, undertaken by an
individual or organization to meet specific objectives
within defined schedule, cost and performance
parameters.’
What is a Project?
• A project is a complex set of activities where resources are
used in expectation of returns and which lends it to planning,
financing and implementing as a unit.
• It usually has a well defined sequence of investment and
production activities and a specific group of benefits that can
be identified, quantified and valued either socially or
monetarily.
• A project also has boundaries which make it to be
distinguishable from another project. In addition to its time
sequence of investments, production and benefits, the project
normally has a specific geographical location, with
identifiable targets and beneficiaries.
Defining a Project?...
1. A project is an exception. Unlike routines, projects involve
investigation, compilation, arrangement, and reporting of
findings in some way that provides value. The answers to the
basic project questions cannot be found in the routines of
your department, which is what makes it exceptional. The
processes involved with the project fall outside your
department’s ‘‘normal’’ range of activities and functions.

2. Unique Activities
• The activities in a project must be unique. A project has
never happened before, and it will never happen again
under the same conditions. Something is always different
each time the activities of a project are repeated. No two
projects are the same. Projects differ from each other with
regard to time and space, deliverables or outputs as well as
other characteristics of the projects.
 Defining a Project?...

3 . Project goals and deadlines are specific. Recurring tasks

invariably are developed with departmental goals in mind.
• Projects have identifiable starting and stopping points.
Whereas departmental routines are general in nature,
project activities are clearly specific.
• Projects have a specified completion date. This date can be
self-imposed by management or externally specified by a
customer or government agency.
• All projects have start-up and close-down stages.
• However, projects may often have intended and
unintended social, economic and environmental impacts
that far outlast the projects themselves.
4. The desired result is identified. A project is well defined only
when a specific result is known.
• By comparison, departmental routines involve functions that
may be called ‘‘process maintenance.’’
• That means that rather than producing a specific outcome, a
series of recurring routines are aimed at ensuring the flow of
outcomes (e.g., reports) from one period to another.
 Defining a Project?...
Connected Activities/Interdependencies.
• Connectedness implies that there is a logical or technical
relationship between pairs of activities.
• There is an order to the sequence in which the activities that
make up the project must be completed.
• They are considered connected because the output from one
activity is the input to another.
• A project consists of a number of interrelated activities that
are performed sequentially or in parallel.
• What is needed as input in order to begin working on this
activity?
• What activities produce those as output?
 Defining a Project?...
• The output of one activity or set of activities becomes the
input to another activity or set of activities.
• Specifying sequence based on resource constraints or
statements such as “Abebe will work on activity B as soon as
he finishes working on activity A” should be avoided because
they establish an artificial relationship between activities.
What if Abebe wasn’t available at all? Resource constraints
aren’t ignored when you actually schedule activities.
• The decision of what resources to use and when to use them
comes later in the project planning process.
 Defining a Project?...
Complex Activities
• The activities that make up the project are not simple,
repetitive acts, such as mowing the lawn, painting the house,
washing the car, or loading the delivery truck. They are
complex. For example, designing an intuitive user interface to
an application system is a complex activity.
Sequence of Activities
• A project comprises a number of activities that must be
completed in some specified order, or sequence.
• An activity is a defined chunk of work.
• The sequence of the activities is based on technical
requirements, not on management prerogatives. To
determine the sequence, it is helpful to think in terms of
inputs and outputs.
 Defining a Project?...
Progressive Elaboration
• Projects are developed in steps.
• This means that the project scope will be broadly described
early in the project and becomes more explicit and detailed
as the project team develops better and more complete
understanding of the objectives and deliverables.
• We learn more and more about the project as it goes on.
 Defining a Project?...

One Goal or Purpose

• Projects must have a single goal, for example, to design an

inner-city playground for ADC (Aid to Dependent Children)
families. However, very large or complex projects may be
divided into several subprojects, each of which is a project in
its own right. This division makes for better management
control.
• A project has a purpose and all aspects of the project
articulation must support that purpose.
•
 Defining a Project?...
Within Budget
• Projects also have resource limits, such as a limited amount of
people, money, or machines that are dedicated to the project.
• While these resources can be adjusted up or down by
management, they are considered fixed resources to the
project manager.
According to Specification
• The customer, or the recipient of the project’s deliverables,
expects a certain level of functionality and quality from the
project.
• These expectations can be self-imposed, such as the
specification of the project completion date, or customer-
specified, such as producing the sales report on a weekly
basis.
 Defining a Project?...
• High Degree of Activity
– Especially during the execution stage, a project involves
several hectic activities.
• Conflict
– A project may be impacted by competing activities with
respect to resource needs or management focus.
• Life Cycle
– A project has different phases and is completed in stages
 Defining a Project?...
High level of uncertainty & risk
– As a result of its uniqueness, dependency on other
agencies and its relatively long-term nature; a project is
faced with a lot of uncertainty and risk
Teamwork/multi-skill
– Projects require a team of people with different skills to
get the job done
 Project Vs program
• A project is normally originated from a plan which
can be a national plan or corporate plan.

• In many cases the term project is used for what

should be termed as program or work package.

• Some people use the term ‘project’ and ‘program’

interchangeably. However, there is a quite
difference between the two.

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 Program
Program in general is a groups of related
projects that are managed in a coordinated
ways to achieve certain objective. Any
development plan can be considered as a
program

A program is thus,
• larger in scope,
• activity oriented
• not necessarily time bound and
• its objectives are broader
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 Program (Cont …)
Example,
• The national goal: Poverty Eradication
• Strategy: Increase productivity ( in all sectors)
• Development program: Increase agricultural
productivity

This may result in a number of projects like,

• Construction of dams ( irrigation infrastructure)
• Upgrading the skill of agricultural practices
• Construction of training centers
Health program may have a number of projects like,
• Construction of hospitals
• Training of health officers
• Expansion of health centres
26
 Program and Projects hierarchy
Plan : National, Regional or company plan with development target

Program: Specific program within the frame of national or regional

plan (health, education)

Project: School project, Power plant or housing project

Work Package : Water supply and distribution package, Power

supply and distribution package

Task: Award of water supply contract, Construction of foundation

Activity
27
 Types of Projects
• Basically three types of projects can be identified depending
upon how new resources committed to them relate to
existing economic activities.
• First the largest type of project, around which project
analysis grew up, involves new investment
• New investments are designed to establish a new productive
process independent of previous lines of production.
• They often include a new organization, financially
independent of existing organizations.
• Secondly there are expansion projects which involve
repeating or extending an existing economic activity with
the same output, technology and organization.
 Types of Projects…
• Thirdly there are updating projects which involve
replacing or changing some elements in an existing
activity without major change of output.
• Updating projects involve some change in technology but
within the context of an existing, though possibly
reformulated organization.
• With changing economic circumstances the balance
between these types of projects may change.
• Whatever type of project is being analyzed, the effect
of using new resources has to be distinguished from the
effect of existing operations.
• The incremental resource cost has to be identified, that
is that will be committed in a project over and above
what would otherwise have been used.
• Similarly the incremental benefits, the additional
benefits over and above what would otherwise have
occurred, have to be identified.
• Both incremental costs and incremental benefits have
to be valued.
 Classification of Project (further
classifications)
Revenue Vs capital project

Project can come in many size and form. They may be very
simple or complex. Major project types are two. These
are,

• Revenue project: Are those which can be carried out within

the normal organizational structure and normally will be
completed within the a single accounting period.

• Capital Project: Are those which can not be carried out

within the normal organizational structure and are normally
stretched over a number of accounting periods.
In practice many projects fall between these two broad
categories
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 Classification of Project (cont …)
• Capital project always require considerable capital
investment. The main feature of capital projects are,
 They usually occupy considerable time
 They usually employ huge capital investment

As a result they do not fit readily into conventional

organizational structure but cut across functional and
time boundaries and thus, require an organizational
structure particular to themselves.

• When we say project we are mainly referring to the

capital projects.

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Classification of Project (cont …)

• In general projects be it revenue or

capital can be classified from different
perspectives.
a) On the basis of time horizon
project can be
Long term projects : Power plant project
Medium term projects : Construction of a
factory
Short term project: Exhibition, trade fair

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Classification of Project (cont …)

b) On the basis of the type of output:

Project producing tangible Products : Oil mill
Project providing services: Telecom project,
Education
etc.
c) On the basis of the scope of the project:
International project : Euro tunnel project
National Project: Eth Hydro power project
Regional Project: Elementary school project
d) Based on the economic sector:
Agricultural project: Irrigation project
Industry project : Cement Project
Service sector project : Bank projects
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 Classification of Project (cont …)

e) On the basis of technology:

Capital intensive project : Brewery project
Labour intensive project : Textile industry
project
f) Based on location :
Rural Projects
Urban project
g) On the basis of the nature of the project
Independent project : Hospital, Hydroelectric
power
Complementary project : Airport project, Run Way
and airport services are different projects which
are complementary to each other.
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 Project Parameters
• Five constraints operate on every project:
■ Scope
■ Quality
■ Cost/ budget
■ Time
■ Resources
• These constraints form an interdependent set; a change in
one can require a change in another constraint in order to
restore the equilibrium of the project.
• In this context, the set of five parameters form a system that
must remain in balance for the project to be in balance.
• They are so important to the success or failure of the project.
 Examples of Projects
• Constructing a road, building or facility
• The expansion of primary education in a given region/locality
or reforming school curriculum,
• Organising an event, like a wedding or a party
• Case management, like social work or legal issue
• Working on solving organisational problems like inefficiency
• Renovating an old house
• Restructuring a system
• Developing a new software application
• Creating a new radio/ media advertisement
• Conducting marketing research, etc.
• Running a campaigning for political office
• Building a water system for a community
 Reflection
• What do you think are the major causes of project failure?
Illustrate your discussion by citing an incident from your
professional experience.
 Examples showing lack of Planning
1. A sanitation project is started because people are dying of
diarrhea. But people believe that diarrhea is caused by evil
spirits. Why does the project fail?
2. An agricultural project wants to help very poor people. An
agriculturalist starts a program of vegetable growing. While
the project is technically very successful, very poor people
do not benefit because they have no land. Why does the
project fail?
3. A fisheries project digs ponds, but they do not hold enough
water because the soil does not contain enough clay. Why
does the project fail?
4. A microfinance project is launched to help women engage
in IGAs by giving access to credit without detailed analysis
of the intra-household power relations. What may cause
such projects to fail?
 Causes of Project Failure
Projects often fail for the following reasons:
1. Only the project team is interested in the end result.
2. No one is in charge.
3. The project plan lacks structure.
4. The project plan lacks detail with respect to all the
management functions and tools.
5. The project is under-budgeted.
6. Insufficient resources are allocated.
7. The project is not tracked against its plan.
8. The project team is not communicating.
9. The project strays from its original goals.
 Most large-scale programs or projects do not succeed, mainly driven
by inadequate governance and poor planning

Large Programs/Projects Success Rates

Successful

16%

53%
31%

Cancelled

Under Perform

Source: Standish Group International, Survey from 2500 personnel attending project management training
 Why Projects / Programs Fail
Others
Poor Organization
Technical Problems and Project
11% Management
4%
Problems with Suppliers Practices
4%
36%
Insufficient Project Personnel
Resources 10%

15%
20%
Ineffective Project Planning

Poorly Defined or Missing

Project Objectives
Source: Standish Group International, Survey from 2500 personnel attending project management
training
Why Conduct project analysis
• To stop bad projects
• To prevent good projects from being destroyed
• To determine if components of projects are consistent
• To assess the sources and magnitudes of risks
• To determine how to reduce risks and efficiently share risks
Impact
• A proper analysis will cause the project to be redesigned so
that it is less likely to fail
• World Bank experience shows that the probability of failure
for poorly prepared projects within 3 years of a project’s life
is 7 times that of well-prepared projects
• Poorly prepared projects have 16 times as high a probability
of failure within 5 years as compared to well-prepared
projects
 Who should plan? Reflection
A key question in the process of planning is ‘who should be
involved?
• Think through the following situations in terms of time,
decision-making, conflict, responsibility, knowledge,
ownership, resources and motivation
1. Imagine a manager in a relief and development organization.
What are the advantages of the manager planning a project
alone? What are the disadvantages?
2. Imagine a few members of staff of a relief and development
organization planning a project together. What are the
advantages? What are the disadvantages?
3. Imagine members of staff of a relief and development
organization planning a project with community members.
What are the advantages? What are the disadvantages?
Which of the above situations is best? Why?
 What is Project Management?
It is the application of knowledge, skills, tools
and techniques to project activities to meet
project requirements.

It’s a process of managing resources in such a

way that a project is completed within defined
scope, quality, time, and cost constraints.

Applying both the science and art to planning,

organising, implementing, leading and
controlling the work of a project to meet the
goals and objectives of an organisation.
The process of defining a project, developing a plan,
executing the plan, monitoring the progress against
the plan, overcoming obstacles, managing risks, and
taking corrective actions.

The process of managing the competing demands

and trade-offs between the desired results of the
project (scope, performance, quality) and the natural
constraints of the project (time and cost ).

The process of leading a team that has never worked

together before to accomplish something that has
never been done before in a given amount of time
with a limited amount of money.
 Project Management
In general, project management refers to:

• Identifying requirements: the issues the project is

attempting to address
• Establishing clear and achievable objectives
• Balancing the competing demands for quality, scope,
resources, time and cost
• Adapting the specification, plans, and approach to
the different concerns and expectations of the
various stakeholders.
End//