PE L1 Project Management

8/12/2019 PE L1 Project Management

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PROJECT EVALUATION ANDIMPLEMENTATION

COURSE CODE: 401


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L1: INTRODUCTION

1. What is a Project?2. Characteristics of a Project3. Classification of Projects

a. Taxonomy of projects

b. Variety of Projects4. Sources of Project Ideas5. Project Selection Stages

a. Project Identification

b. Project Appraisalc. Project Selection making a choice- Preliminary Considerations- Project Rating Index


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Project

The PMI defines a project as: a temporary endeavour

undertaken to create a unique product, service orresult

A project is a complex, non-routine, one-time effortlimited by time, budget, resources and performancespecifications designed to meet the customer needs.

A project is a one shot, time tested, goal directed,major undertaking requiring the commitment of

varied skills and resources. A project is for setting up a plant and when the plant

becomes operational, the project is treated ascompleted.


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Characteristics of a Project Mission / Set of Objectives A fixed beginning and a termination point Team work

Life cycle Uniqueness Customer specific Greater the complexity of the project, greater the

extent of sub contract work and A well defined project has lesser risk &uncertainty


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RememberThe objectives of projects and operations are fundamentally different.

The purpose of a project is to attain its objectives and then terminate.Conversely, the objective of an ongoing operation is to sustain the business.

Projects are different because the project concludes when its specificobjectives have been attained, while operations adopt a new set ofobjectives and the work continues.

Projects are undertaken at all levels of the organization and they caninvolve a single person or many thousands. Their duration ranges from afew weeks to several years. Projects can involve one or manyorganizational units, such as joint ventures and partnerships.


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Taxonomy of Projects

1. National & International Projects2. Industrial & Non industrial Projects3. Level of Technology based Projects4. Based upon Size

5. Based upon Ownership: Pvt., Public, Joint6. According to Purpose B M R E D,

Rehabilitation of Sick Units, MaintenanceProjects, Technology Up gradation Projects,

Merger & Acquisition Projects, Innovation &Invention Projects, Consultancy Projects and 7. Function Based Projects Construction ,

Fabrication, Textile, Chemical, Soft wareProjects, Dairy Projects etc.


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VARIETY OF PROJECTS

Projects at personal level Projects in local neighbourhood

Organisational projects National projects and Global projects


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PERSONAL PROJECTS

Preparing for an examination Writing a book

Getting dressed Wedding in the house A birthday function

A family vacation etc.


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PROJECTS IN LOCALNEIGHBOURHOOD

A school function

Cleanliness drive Construction of clubs Tree plantation exercise

Establishment of a park Welcoming a dignitary to the colony etc.


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ORGANISATIONAL

PROJECTS Construction of building, highway

Planning & launching a new product A turnaround in a refinery A training for managers in the

organization Conducting a marketing survey Completing a financial audit Disposal of dead stock etc.


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NATIONAL PROJECTS

Launching a new satellite

Literacy campaign

Poverty removal drive

Organizing general elections

Preparation of annual budget etc.


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GLOBAL PROJECTS

Organising peace missions (UN)

Space exploration

Conducting World Trade

Environment protection

Combating terrorism etc.


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Sources of Project Ideas

1. Analysis of existing industries basedupon perform anc e, inp uts , ou tpu ts ,imp or t s and expo r t s

2. Five year plans3. Government policies4. Financial institutions5. Survey reports6. Consultancy organizations contd.


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Sources of Project Ideas contd .

7. Trade fairs8. Embassies9. Sick units10.New technologies developed by CSIR,

NPL11.News papers, magazines, trade

journals an d 12.Needs of unsatisfied customers


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PROJECT SELECTION - stages

Project Identification

Project Appraisal

Project Selection making a choice


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1. PROJECT IDENTIFICATION - stage

Receptive to new ideas

Vision of future growth

Long term objectives SWOT analysis and

Preliminary project analysis


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PROJECT IDENTIFICATION

ObjectivesInternal

SWOT BrainstormingExternal

Project possibilitiesCriteria ScreeningProject proposals


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2. PROJECT APPRAISAL - stage

Market Appraisal Technical Appraisal

Financial Appraisal Economic Appraisal and Ecological Appraisal

Remember: A Feasibility Report considersall these issues prior to project adoption.


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MARKET APPRAISAL

Aggregate future demand Market share

Current and future competition Location and accessibility of consumers Technological scenario /Obsolescence

Possible pricing options


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TECHNICAL APPRAISAL

Engineering aspects Locations

Size Production process


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FINANCIAL APPRAISAL

Cash flows over time Profitability

Break even point Net present value Internal rate of return

Payback period and Risk Analysis


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ECONOMIC APPRAISAL

Benefits and costs (in shadow prices) Distribution of income in society

Level of savings & investment in society Self sufficiency and employment


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ECOLOGICAL APPRAISAL

Environmental damage

Air Water Noise

Other Restoration measures and cost


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3. Project Selection PreliminaryConsiderations

Criteria to be used in selecting projects: Profile matching with entrepreneur To fit in with national objectives

Profitability Availability of inputs Market size, growth potential, competitors Risk factors: technological changes,

competition, government regulations,vulnerability to business cycles Comparative Score of alternative Projects i.e.

Project Rating Index.


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Project Rating Index (PRI) A preliminary evaluation may be translated into a project

rating index. Steps involved in determining PRI-

Identify factors relevant for project ratingAssign weights to these factorsRate the project proposal on a scale of 1 to 5 foreach of the factorMultiply the factor rating with the factor weight toget the factor score.Add all the factor scores to get the value of thePRIChoose the project alternative with highest PRI


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Determination of a Project rating index

FactorFactorWeight

VG(5)

G(4)

A(3)

P(2)

VP(1)

FactorScore

Input Availability 0.25 0.75Technical Know how 0.10 0.40Reasonableness ofcost 0.05 0.20

Adequacy ofMarkets 0.15 0.75

ComplimentaryRelationship withOther Products

0.05 0.20

Stability 0.10 0.40Dependence onfirm's strength

0.20 1.00

Consistency withGovt. Priorities 0.10 0.30


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Choice of a Project based upon PRI

FactorFactor Score

PI PII PIII

Input Availability 0.75 1.00 0.75Technical Know how 0.40 0.30 0.40

Reasonableness of cost 0.20 0.25 0.40

Adequacy of Markets 0.75 0.60 0.60ComplimentaryRelationship with OtherProducts

0.20 0.40 0.10

Stability 0.40 0.20 0.30Dependence on firm'sstrength

1.00 1.50 1.00

Consistency withGovt. Priorities

0.30 0.10 0.20

Project PRI

PI 4.00

PII 4.35

PIII 3.70


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Request for Proposal (RFP)


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Assignment No. 1

Prepare a Request for Proposal for aproject of your choice.

Discuss the : Attributes of a Project Manager Skills Required for a Successful Project

Manager

Duties of a Project Manager of a large project Scope of Project Management


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PROJECT SELECTIONCRITERIA

Investment Rate of return Risk Likely profit Payback

Similarity to existingbusiness

Expected life

Flexibility Environmental impact Competition


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Documents

PE L1 Project Management