MP-505 Vardhaman Mahaveer Open University, Kota Project Management Course Development Committee Chairman Prof. (Dr.)Vinay Kumar Pathak Vice-Chancellor Vardhaman Mahaveer Open University, Kota Subject Convener and Coordinator Prof. (Dr.) P.K. Sharma Director (School of Commerce and Management), Vardhman Mahaveer Open University, Kota Editing and Course Writing Editor Prof. (Dr.) J.P. Sharma Department of Economic Administration & Financial Management, University of Rajasthan, Jaipur Unit Writers Unit No. Unit Writers Unit No. 1. Dr. Naveen Kumar Sharma (1) 4. Dr. Vinit Mathur (7, 8, 13, 14) Asst. Professor (Management Studies) Institute of Management Studies, Govt. Engineering College, Bikaner Bikaner 2. Dr. Prerna Jain (2, 3, 5, 11) 5. Ms. Jyoti Agarwal (9) Department of ABST, Research Scholar (WISDOM) Govt. College, Ajmer Banasthali Vidhyapeeth, Banasthali 3. Mr. Sandeep Sharda (4, 6, 10) 6. Dr. Prashant Kumar Guest Faculty (Management Studies) Lecturer (Business Administration), Rajasthan Technical University, Kota Government College, Ramgarh Shekhawati Academic and Administrative Management Prof. Vinay Kumar Pathak Prof. L.R.Gurjar Prof. Karan Singh Vice-Chancellor Director (Academic) Director (MPD) Vardhaman Mahaveer Open University, Vardhaman Mahaveer Open University, Vardhaman Mahaveer Open University, Kota Kota Kota Production November, 2014 ISBN- All right reserved. No part of this book may be reproduced in any form by mimeograph or any other means, without permission in writing from the V.M.Open University, Kota. MP-505 Vardhaman Mahaveer Open University, Kota 1987 CONTENTS Project Management Unit No. Unit Name Page No. Unit – 1 Project Management 1 Unit – 2 Project Life Cycle 17 Unit – 3 Project Feasibility Study 30 Unit – 4 Project Planning and Scheduling 41 Unit – 5 Project Budgeting 65 Unit – 6 Project Quality Management 90 Unit – 7 Project Performance Management 106 Unit – 8 Project Control Process 122 Unit – 9 Managing Risk 135 Unit – 10 Project Closure and Termination 152 Unit – 11 Project Evaluation 170 Unit – 12 Project Review and Reporting 186 Unit – 13 Information Technology in Projects 200 Unit – 14 Managing International Projects 214 Unit – 1 : Project Management Structure of Unit 1.0 Objectives 1.1 Introduction 1.2 Meaning 1.3 Project, Program and Plan 1.4 Project Management 1.5 Functions of Project Management 1.6 Project Classification 1.7 Success Criteria for the Project 1.8 Project Constraints 1.9 Summary 1.10 Self Assessment Questions 1.11 Reference Books 1.0 Objectives After completing this unit, you would be able to: Understand the meaning of project and project management; Know the functions of project management; Understand the classification of projects Know the attributes and responsibility of a good project manager Discuss the various aspects of a project 1.1. Introduction Project is a single shot set of activities having a definite beginning and ending points. For example, construction of a house is a project. The construction of a house consists of many activities like digging of foundation pits, construction of foundations, construction of walls, construction of roof, fixing of doors and windows, fixing of sanitary fittings, writing etc. The construction of a house is accomplished by performing the set of activities. Another aspect of project is non-routine nature of activities. Each project is unique in the sense that the activities of a project are unique and non-routine. Thus, we can define a project as an organized program of predetermined group of activities that are non-routine in nature and that must be completed using the available resources within the given limit. 1.2 Meaning Projects can be of any size and duration. They can be simple, like planning a party, or complex like launching a space shuttle. Generally projects are made up of: a defined beginning, multiple activities which are performed to a plan and a defined end. Therefore, a project may be defined as a means of moving from a problem to a solution via a series of planned activities. 1 Two essential features are present in every project no matter how simple or complicated they are. In the first place, all projects must be planned out in advance if they are to be successfully executed. Secondly, the execution of the project must be controlled to ensure that the desired results are achieved. On most projects it is possible to carry out multiple activities simultaneously. Usually it is possible to perform several activities at the same time, however there will be activities which cannot begin until a preceding activity has been completed. Such relationships are referred to as dependencies or precedence, and when planning a project it is important to establish the order of precedence of dependent activities, and to establish those activities which can be performed in parallel with other activities. Regardless of the nature or size of your project a successful outcome can only be achieved by using sound project management techniques. The most widely used and popular methods of project management are Gantt Charts, Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT). However, it is important to remember that projects are carried out by people, and the human aspects of project management are critical for the project success. According to Harison, a project can be defined as non-routine, non-repetitive, one-off undertaking, normally with discrete time, financial and technical performance goals. Project Management Institute USA defines project as ‘a system involving the co- ordination of a number of separate department entities throughout the organization and which must be completed within prescribed schedules and time constraints. According to Encyclopedia of Management a project is an organized unit dedicated to the attainment of goal –the successful completion of a development project on time, within a budget, in conformance with pre-determined program specifications. According to Little and Mirrless a project is any scheme or part of a scheme for investing resources which can be reasonably analyzed and evaluated as an independent specification. According to Dictionary of Management a project is an investment carried out according to plan in order to achieve a definite objective, within a certain time and which all cease when the objective is achieved. According to Sinha and Sinha a project is not a mere action or an activity or an attempt towards a particular aim; it is rather an integrated effort, including multifarious actions and activities, towards that aim. According to the report of the Economic Commission for Asia and Far East (ECAFE) describes that ‘Project is a smallest unit of investment activity to be considered in the case of programming. It will, as a rule, be a technically coherent undertaking which has to be carried out technically speaking, independently of other projects.’ According to Food and Agriculture Organization (FAO) a project is an activity sufficiently self contained to permit financial and commercial analysis..in most cases projects represent the expenditure of capital funds by pre-existing entities which want to 2 prove their operation. It is convenient to divide all projects into two broad classes: (i) Those that are revenue producing and self financing (i.e. commercial types of projects and profit oriented) (ii) Social projects. According to Project Management Institute, USA, a project is an undertaking with a defined objective by which completion is identified. In practice, most projects depend on finite or limited resources by which objectives are to be accomplished. According to Turner a project is an endeavor in which human (or machine), material and financial resources are organized in a novel way, to undertake a unique scope of work, of given specification, within constraints of cost and time, so as to deliver beneficial change defined by qualitative and quantitative objectives. 1.3 Project, Program and Plan From the above definitions of a project, it is observed that the term project is used in a wider sense which encompasses certain other term like Program, Plan Scheme etc. These terms are used as synonyms of a project or convey more or less similar, but it is not correct in all cases. Therefore, it is pertinent to understand the basic difference among these terms as explained, hereunder: A ‘Project’ is an activity involving large financial resources while a ‘scheme’ is a small project to involve comparatively lesser amount of funds. A ‘Program’ consists of a group of similar, related or allied projects or schemes like health program, educational program, research and development program etc. A ‘Plan’ is comprehensive view of something involving large resources and their allocation for different projects with well-identified objectives. It is a technically pre-determined set of interrelated activities involving most effective use of material, human, technological and financial resources over a given period of time to achieve pre-conceived objectives. For example, Five Year Plans in India since 1951. 1.3.1 Project Characteristics A project has several characteristics. The main characteristics of a project include the following features: 1. Objectives or Mission A project has a set of objectives or a mission. Once the objectives are achieved, the project is treated as completed. For example the objective may be constructed of a highway connecting two cities ‘X’ and ‘Y’, covering a distance of 100 kilometers. Once the construction of the highway is completed the project comes to an end. 3 2. Life cycle A project has a life cycle. The life cycle consists of the following stages: Conception stage: Where project ideas are conceived Design stage: Where detailed design of project are worked out. Implementation Stage: Where the project implemented as per the design Commissioning Stage: Where the project is commissioned after implementation. Commissioning a project indicates the end of its life cycle. 3. Definite Time Limit A project has a definite time limit. It cannot continue forever. Construction of a highway connecting two cities is a project which to be completed within a given time limit.