Chapter One

Chapter One
Introduction
1.1. What is a project?
Organizations perform work. Work generally could be classified into either
operations or projects, although in some cases both of them may overlap. Both
operations and projects share many characteristics in common like:
 People perform both the activities.
 Both are constrained by limited resources.
 Both are planned, executed, and controlled.
However, operations and projects differ primarily in their repeatability. Operations
are ongoing and repetitive whereas projects are temporary and unique.
A project is a unique endeavor to produce a set of deliverables within clearly
specified time, cost and quality constraints.
Projects are different from standard business operational activities as they:
 Are unique in nature: They don’t involve repetitive processes. Every project
undertaken is different from the last, whereas operational activities often
involve undertaking repetitive (identical) process.
 Have a defined timescale: projects have a clearly specified start and end
date within which the deliverables must be produced to meet specified
customer requirement.
 Have an approved budget: projects are allocated a level of financial
expenditure within which the deliverables must be produced to meet
specified customer requirement.
 Have limited resources: at the start of a project an agreed amount of labor,
equipment and materials is allocated to the project.
 Involve an element of risk: projects entail a level of uncertainty and
therefore carry business risk.
 Achieve beneficial change: the purpose of a project, typically, is to improve
an organization through the implementation of business change.
For many organizations, projects are a means to respond to requests that cannot be
addressed within the organization’s normal operational limits.
Projects are undertaken at all levels of the organization. They may involve a single
person or many thousands. Their duration ranges from a few weeks to a few years.
Projects may involve a single unit of one organization or may cross-organizational
boundaries. As projects are often implemented as a means of achieving an
organization’s strategic plan they are critical for the organizations growth.
Examples of projects could include:
 Developing a new product or service.
 Effecting a change in structure, staffing, or style of an organization.
 Developing a new or modified information system.
 Implementing a new business procedure or process.
Project management is the application of knowledge, skills, tools, and techniques

to project activities to meet project requirements. Project management is
accomplished through the use of the following 5 processes:
 Initiation
 Planning
 Execution
 Controlling and
 Closure
1.2. Features of a project
Projects are classified based on several criteria, including: ownership, source
of finance, and forces behind the projects.
1. Based on ownership:
a. Private sector- mostly projects undertaken by business enterprises.
b. Public sector- projects undertaken by national and local government
bodies.
c. NGOs- development projects are most often undertaken by non-
government and non-for profit organizations.
2. Based on the Sources of Finance:
a. Government treasury- projects may be entirely financed by government
budget as per its priority. For instance, construction of regional airport.
b. Government treasury and external sources- most projects are financed
by the joint partnership of the government and donor groups. For
example, a road project may be financed 50% by the government and
50% by a foreign donor.
c. External sources of Finance- projects may be financed totally by parties
other than the government but established for the well being of the
citizens and the ownership may be for the government or the public.
3. Based on the forces Behind:
a. Demand driven/need driven- based on identified unsatisfied demand
project can be created or on unsatisfied basic needs like food, water and
shelter.
b. Donor driven- the force behind the financing organization. Donors will
have their own say and influence the types of projects to be established.
c. Political Driven- Projects may be established in response to some
political situation such as for example because of national elections,
projects by religious organizations.
4. Based on their nature:
a. Civil engineering, construction, petrochemical, mining, quarrying,
projects far away from the contractor’s home office, and involve special
risk as well as problems of organizational communication.
b. Manufacturing projects- conducted in a factory or other home based
environment and enable exercising on the spot management.
c. Research projects- established for pure research consuming large sum
of money and lasting over years resulting in dramatic profitable
discovery or proving waste of money.
d. Management projects- projects that require the employment of an
external project manager or managing contractor for issues such as
relocating head quarters, developing and introducing a new computer
system, preparing for a trade exhibition, producing a feasibility or other
study report, restructuring the organization etc.
Project exhibits the following basic characteristics.
1. A project involves the investment of scarce resources in the expectation of

future benefits;
2. The project will have a measurable Objectives. Projects have specific of
benefits that can be identified, quantified and valued, either socially or
monetarily/commercially/.
3. Related to the specificity of objectives, the projects have specific beneficiaries
or clientele group, which needs to be specifically spelt out during project
planning studies.
4. A project is the smallest operational element unit. A project can be planned,
financed and implemented as a unit. Often projects are the subject of special
financial arrangements and have their own management.
5. The boundaries of projects make them distinguishable from each other.
 Projects are conceptually bounded. The problem and specific objective
(need) that justify the project involves conceptual delimitations.
 Projects are geographically bounded. Projects exist in space and we say
that projects are geographically (locationally) bounded.
6.
 Projects are organizationally bounded. Projects require the establishment
of a special organization or the crossing of traditional organizational
boundaries, meaning there should be certain organizational unit responsible
for project implementation.
 Projects are time bounded. One factor that makes projects bounded is the
time (life cycle) of a project. Projects have specific lifetime, with a specific
start and end time in which a clearly defined set of objectives are expected to
be achieved.
7. Uncertainty and risks is inherent in any project. Achieving project objectives
cannot be predicted in advance with accuracy. The factors that make project
risk are:
 Significant and multiple types of scarce resources
committed today expecting outcome in the future;
 Benefits are expected to be generated in the future, which is
less predictable;
 Capital investments are irreversible; therefore, perfect exit
assumption of the perfect competition model is refuted.
8. It has a scope that can be categorized into definable tasks. Projects usually
have well defined sequence of investment and production activities
9. It may require the use of multiple resources. This has an implication on
management of project implementation. The more diverse the types of
resources are mobilized the more complex will the management. The outcome
of project and hence development endeavor is sensitive to the management of
each type of resources. Managed resource can contribute more to cost than to
benefit.
1.3. Project and Plan

Planning can be defined as a “continuous process that involves decisions or
choices about alternative ways of using available resources with the aim of
achieving a particular goal or set of goals at some time in the future.”
The rationale for planning is that it serves as a tool that enhances the effectiveness
in mobilizing resources and enables allocation of resources into priority areas of
development. In this regard, development planning can be regarded as an attempt
to raise the rationality of decision-making. The hierarchical relationship among
development plans, programs, tasks, and work packages is depicted below:
Development Plans
Programs
Projects
Tasks
Work Packages
Figure: Hierarchical Relationships

It is necessary to distinguish between projects and programs because there is
sometimes a tendency to use them interchangeably. A project refers to an
investment activity where resources are used to create capital assets, which
produce benefits over time and has a beginning and an end with specific
objectives, while a program is an ongoing development effort (plan) involving a
number of projects. Programs may or may not necessarily be time bounded. Yet
programs cannot live forever, they have limited life cycle, which however, may or
may not be explicitly stated. So in effect in terms of time delimitation, there is only
relative difference between programs and projects. For instance, a health program
may include a water project as well as construction of a health center; both aimed
at improving the health of a given community that previously lacked easy access to
these essential facilities.
Note that projects can stand alone without being part of certain program. So, one
can visualize that the linkage of policies, development plans, and projects. Projects,
which are not linked with others to form a program, are sometimes referred to as
“stand alone” projects.
Development plans:
 Most forward looking (futuristic)

 Broad and require systematic thinking, preparation and appraisal
 Attempts to bring welfare in the society
Programs:
 Derived from development plans

 Exceptionally large with long term objectives
 Explores specific area with broader scope
Projects:
 Derived from a program

 Unique investigative tool
 A development activity with specific objectives
 Funded by a program
 An implementation element (entity)
Tasks:
 Work elements under a project

 Specific approaches for doing things
 Set of activities comprising a project
Work packages:
 Sub elements of a given task (or undertaking)

 Something accomplished stage by stage
 Collection of work packages defines a given task
As it can be observed from the above framework, in general, the essence of

development planning is futuristic, i.e., it is most forward looking and involves
systematic thought and preparation. Virtually, every nation, be it developed or
developing, should have a systematically elaborated national plan to hasten
economic growth and further a range of social objectives. Therefore:
1. Projects provide an important means by which investment and other

development expenditures foreseen in plans can be clarified and realized.
Sound development plans require good projects, just as good projects require
sound planning. The two are interdependent.
2. A sound plan requires a great deal of knowledge about existing and potential
projects. Sound planning rests on the availability of a wide range of
information about existing and potential investments and their likely effects
on growth and other national objectives. Thus, plans require projects.
Realistic planning involves knowing the amount that can be spent on
development activities each year and the resources that will be required for
particular kind of project.
3. Effective project preparation and analysis must be set in the framework of a
broader development plan. Projects are part of an overall development
strategy and a broader planning process.
4. The more elaborated the plans and policies of the governments are, the
easier becomes the work of the project planner. For example, the project
planner will have to refer to such plans and policies to see whether the
project being considered fits well in the plan and contributes most to the
fundamental objectives of the government. These objectives can include
self-sustaining growth, promotion of employment, income distribution, etc.
5. As projects rightly called the “Cutting Edge” of development, they are
powerful means to achieve the development objectives; they are the crucial
building blocks of a development structure.
6. Projects aim mainly at increasing the production of goods and services,
which are fundamental components of people’s welfare, and the main
objective of any development effort is, of course, to advance social well-
being.
Differences:
PROJECTS PROGRAMS
specific objectives General objectives
Specific project areas No specific project areas
Specific beneficiaries group No Specific beneficiaries group
Clearly determined and allocated No clear and detailed financial resource

funds allocation
Specific lifetime No specific lifetime
Similarities:
Projects and programs have similar characteristics in a way that both are:
 Having objectives;
 Requiring financial, human, material, etc inputs (or resources);
 Generating outputs, (goods/services), of value;
 Serving as instruments for the execution of development plans in order to
boost the national economy.

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Chapter One

Project management is the application of knowledge, skills, tools, and techniques

Project exhibits the following basic characteristics.

1. A project involves the investment of scarce resources in the expectation of

1.3. Project and Plan

Figure: Hierarchical Relationships

 Most forward looking (futuristic)

 Derived from development plans

 Derived from a program

 Work elements under a project

 Sub elements of a given task (or undertaking)

As it can be observed from the above framework, in general, the essence of

1. Projects provide an important means by which investment and other

specific objectives General objectives

Specific project areas No specific project areas

Specific beneficiaries group No Specific beneficiaries group

Clearly determined and allocated No clear and detailed financial resource

Specific lifetime No specific lifetime

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