PROJECT MANAGEMENT (21ME651)

MODULE-1: INTRODUCTION

Module-01: Contents
1. Definition of project, 2. Characteristics of projects, 3. Understand projects,
4. Types of projects, 5. Scalability of project tools, 6. Project roles, 7. Project
Selection and Prioritization, 8. Strategic planning process, 9. Strategic analysis,
10. Strategic objectives, 11. Portfolio alignment – identifying potential projects,
12. Methods of selecting projects, 13. Financial mode / scoring models to select
projects, 14. Prioritizing projects, 15. Securing and negotiating projects.

DEFINITION OF PROJECT
Project management is the application of knowledge, skills, tools and techniques to a
broad range of activities in order to meet the requirements of the particular project. A
project is a temporary endeavor undertaken to achieve a particular aim. Project management
knowledge and practices are best described in terms of their component processes. These
processes can be placed into five Process Groups: Initiating, Planning, Executing,
Controlling and Closing.

Project management is the discipline of organizing and managing resources in such a way that
these resources deliver all the work required to complete a project within defined scope, time,
and cost constraints.

CHARACTERISTICS OF PROJECTS
• Temporary: Projects are temporary in nature. Every project has a beginning and end.
The word ‘temporary’ here may refer to an hour, a day or a year. Operational work is
an ongoing effort which is executed to sustain the business. But projects are not ongoing
efforts. A project is considered to end when the project’s objectives have been achieved
or the project is completed or discontinued.
• Definite Beginning and Completion: Project is said to be completed when the
project’s objectives have been achieved. When it is clear that the project objectives will

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 not or cannot be met the need for the project no longer exists and the project is
terminated. Thus, projects are not ongoing efforts. Thus, every project has a definite
beginning and end.
• Definite Objective/Scope and Unique: All the projects have their own defined
scopes/objectives for which they are carried out. Every Project is undertaken to create
a unique product, service, or result. E.g. Hundreds of house buildings may have been
built by a builder, but each individual building is unique in itself like they have different
owner, different design, different structure, different location, different sub-contractors,
and so on. Thus, each house building is to be considered as a Project and each Project
produces unique outcome.
• Defined Time and Resources: As the projects have definite beginning and end, they
are to be carried out within the time and resources constraints. Each project will have
defined time and resources for its execution.
• Multiple Talents: As projects involve many interrelated tasks done by many specialists,
the involvement of people from several departments is very much essential. Thus, the
use of multiple talents from various departments (sometimes from different
organizations and across multiple geographies) becomes the key for successful project
management. For example, take the construction of house building; the expertise of
very many professionals and skills of various people from various fields like architect,
engineers, carpenters, painters, plumber, electrician, interior decorator, etc, are being
coordinated to complete the house project.

UNDERSTAND PROJECTS
The Project Management Body of Knowledge (PMBOK);
Initiating defines a project or a new phase by obtaining authorization.
Planning establishes the project scope, refine objectives, and define plans and actions to attain
objectives.
Executing complete the work defined to satisfy project specifications.
Monitoring and controlling track, review, and regulate progress and performance, identify
changes required, and initiate changes.
Closing formally complete or close project or phase.
Integration management processes and activities to identify, define, combine, unify, and
coordinate the various processes and project management activities.

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Scope management processes to ensure that the project includes all the work required, and
only the work required, to complete the project successfully.
Schedule management processes to manage timely completion of the project.
Cost management processes involved in planning, estimating, budgeting, financing, funding,
managing, and controlling costs so that the project can be completed within the approved
budget.
Quality management processes to incorporate the organizations quality policy regarding
planning, managing, and controlling quality requirements to meet stakeholder expectations
Resource management processes to identify, acquire, and manage resources needed to
successfully complete the project.
Communications management processes to ensure timely and appropriate planning,
collection, creation, distribution, storage, retrieval, management, control, monitoring, and
ultimate disposition of project information.
Risk management processes of conducting risk management planning, identification,
analysis, response planning, response implementation, and monitoring risk on a project.
Procurement management processes to purchase or acquire products, services, or results
from outside the project team.
Stakeholder management processes to identify the people, groups, or organizations, that
could impact or be impacted by the project, analyze their expectations and impact, and develop
strategies for engaging them in project decisions and execution.

TYPES OF PROJECTS
1) Based on Ownership
a) Public Projects: These are the projects which are done by public projects. E.g. Construction
of Roads & Bridges, Adult Education Programmed, etc.
b) Private Projects: These are the projects which are undertaken by private enterprises. E.g.
Any business-related projects such as a construction of houses by real estate builders, software
development, marriage contracts, etc.
c) Public Private Partnerships: These projects which are undertaken by both government and
private enterprises together. E.g., Generation of Electricity by Windmill, Garbage Collection,
etc.

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2) Based on Investment
a) Large Scale Project: These projects involve a huge outlay or investments, say, crores. E.g.
Real Estate Projects, Road Construction of manufacturing facilities, Satellite sending projects
of ISRO, Unique Identification Number project of India, etc.
b) Medium Scale Project: These projects involve medium level investment and are technology
oriented. Example: Computer industry and electronic industry.
c) Small Scale Project: These projects involve only a lesser investment. E.g., agricultural
projects, manufacturing projects.

3) Based on Research in Academia

a) Major Projects: In academia, the major projects are those projects which involve more than
one year to 3 or 5 years and minimum funding of 3 lakhs in case of social sciences and 5 lakhs
in case of sciences.
b) Minor Projects: The minor projects in academia are those projects which will be completed
within a year and have a maximum funding of 1 lakh in social science and 3 lakhs in case of
sciences.

4) Based on Sector
a) Agricultural Projects: These are the projects which are related to agricultural sector like
irrigation projects, well digging projects, manuring projects, soil upgrading project, etc.
b) Industrial Projects: These are the projects which are related to the industrial manufacturing
sectors like cement industry, steel industry, textile industry, etc. For example, technology
transfer project, marketing project, capital issue project like IPO, etc.
c) Service Projects: These are the projects which are related to the services sectors like
education, tourism, health, public utilities, etc. For example, adult literacy project, medical
camp, general health checkup camp, etc.

5) Based on Nature
a) Conventional Projects: These projects are traditional projects which do not apply any
innovative ideas or technology or method. For example, conventional irrigational projects,
handicraft projects, etc.
b) Innovative Projects: These projects involve the use of technology, high R&D, development
of new products and services. These innovative projects can be further classified into

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6) Based on Objective
a) Commercial Projects
b) Social Projects

7) Based on Time
a) Long term projects:
b) Short term projects
c) Very short-term projects
8) Based on Risk
a) High Risk Projects
b) Low Risk Projects

Types of Projects
• Construction Projects
• Research Projects
• Reengineering projects
• Procurement projects
• Business improvement projects
• Miscellaneous types

SCALABILITY OF PROJECT TOOLS

Projects range tremendously in size and complexity. In considering construction projects, think
of the range from building a simple carport to building an office tower.
In both cases, one would need to determine the wants and needs of the customer(s), understand
the amount of work involved, determine a budget and schedule, decide what workers are
available and who will do which tasks, and then manage the construction until the owner
accepts the project results.
It should be easy to see that while both projects require planning and control, the level of detail
for the carport is a tiny fraction of that for the office tower. In this book, we first demonstrate
concepts and techniques at a middle level and then use a variety of project examples to
demonstrate how to scale the complexity of the techniques up or down.

PROJECT ROLES

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To successfully initiate, plan, and execute projects, a variety of executive, management, and
associate roles must be accomplished. In a large organization, a person often fills only one of
these roles; sometimes, more than one person fills a particular role. In small organizations, the
same person may fill more than one role. The names of the roles also vary by organization. The
work of each role must be accomplished by someone. Project managers are successful when
they build strong working relationships with the individuals who execute each of these roles.

a. Project Executive-Level Roles

The four-project executive-level roles are the steering team, sponsor, customer, and the chief
projects officer. A steering or leadership team for an organization is often the top leader (CEO
or other officer) and his or her direct reports. From a project standpoint, the important role for
this team is to select, prioritize, and resource projects in accordance with the organization’s
strategic planning and to ensure that accurate progress is reported and necessary adjustments
are made.
The second executive-level project role is that of sponsor. PMI’s official definition of a sponsor
is “the person or group that provides resources and support for the project and is accountable
for enabling success.”25 This textbook expands the sponsor’s role to include taking an active
role in chartering the project, reviewing progress reports, playing a behind-the-scenes role in
mentoring, and assisting the project manager throughout the project life.
The third executive-level project role is that of the senior customer representative. This person
ensures that the needs and wants of the various constituents in the customer’s organization are
identified and prioritized and that project progress and decisions continually support the
customer’s desires.

b. Project Management-Level Roles

The most obvious management-level role is the project manager. The project manager is “the
person assigned by the performing organization to lead the team that is responsible for
achieving the project objectives.” The project manager is normally directly accountable for the
project results, schedule, and budget.
This person is the main communicator, is responsible for the planning and execution of the
project, and works on the project from start to finish. The project manager often must get things
done through the power of influence since his or her formal power may be limited.
Another key management role is the functional manager. Functional managers are the
department heads the ongoing managers of the organization. They normally determine how the
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work of the project is to be accomplished, often supervise that work, and often negotiate with
the project manager regarding which workers are assigned to the project.
The third managerial role is that of facilitator. If the project is complex and/or controversial, it
sometimes makes sense to have another person help the project manager with the process of
running meetings and making decisions.
c. Scrum Master
In agile projects, a new title is introduced the scrum master. In effect, this is a project manager
who serves and leads in a collaborative, facilitating manner.

d. Project Associate-Level Roles

The project management team is composed of “members who are directly involved in project
management activities.” In this book, these individuals are called core team members. The core
team, with the project manager, does most of the planning and makes most of the project-level
decisions. The temporary members that are brought on board are called subject matter experts.
These people are used on an as-needed basis.

PROJECT SELECTION AND PRIORITIZATION:

STRATEGIC PLANNING PROCESS
One of the tasks of a company’s senior leadership is to set the firm’s strategic direction. Some
of this direction setting occurs when an organization is young or is being revamped, but some
needs to occur repeatedly. The steps in strategic planning and how portfolio management
should be an integral part.

STRATEGIC ANALYSIS
The first part of setting strategic direction is to analyze both the external and internal
environments and determine how they will enhance or limit the organization’s ability to
perform. This strategic analysis is often called strengths, weaknesses, opportunities, and threats
(SWOT).

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The internal analysis (elements within the project team’s control) consists of asking what
strengths and weaknesses the organization possesses in itself. The external analysis (elements
over which the project team has little or no control) consists of asking what opportunities and
threats are posed by competitors, suppliers, customers, regulatory agencies, technologies, and
so on. The leaders of an organization often need to be humble and open to ideas that are
unpleasant when conducting this analysis. Performed correctly, a strategic analysis can be very
illuminating and can suggest direction for an organization.

STRATEGIC OBJECTIVES
With the strategic analysis, mission, and vision in place, leaders turn to setting strategic
objectives, which should be means of achieving the mission and vision.
For most organizations, this strategic alignment of objective setting occurs annually, but some
organizations may review objectives and make minor revisions at three- or six-month intervals.
While the planning is normally performed annually, many of the strategic objectives identified
will take well over one year to achieve. The objectives describe both short- and long-term
results that are desired along with measures to determine achievement.
These objectives should provide focus on decisions regarding which projects to select and how
to prioritize them, since they are an expression of the organizational focus. Many writers have
stated that for objectives to be effective, they should be “SMART that is specific, measurable,
achievable, results-based, and time-specific.”

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PORTFOLIO ALIGNMENT
Companies that use a strategic project selection process to carefully align projects with their
organizational goals will find they tend to be more successful at completing their projects and
deriving the expected benefits from them.
Portfolio management “aligns with organizational strategies by selecting the right projects,
prioritizing work, and providing needed resources. “The goal of portfolio management is to
achieve the maximum benefit toward the strategic goals of the company. To accomplish this,
executives need to identify, select, prioritize, resource, and govern an appropriate portfolio of
projects and other work.

Project success at these companies is measured by how much the project contributes to the
organization’s objectives (business needs) as well as the traditional measures of staying within
budget and schedule and achieving the specific technical goals promised at the start of the
project so as to obtain a desired return on investment. For ease of understanding how various
work is related, many organizations utilize an approach of classifying portfolios, programs,
projects, and subprojects. Not all companies use all four classifications, but understanding how
they are related helps one sees where any particular portion of work fits in the organization.

Organizations require many work activities to be performed, including both ongoing

operational work and temporary project work. Large organizations often have many projects
underway at the same time. A portfolio is “projects, programs, sub portfolios, and operations
managed as a group to achieve strategic business objectives.” Project portfolios are similar to
financial portfolios.

In a financial portfolio, efforts are made to diversify investments as a means of limiting risk.
However, every investment is selected with the hope that it will yield a positive return. The
returns on each investment are evaluated individually, and the entire portfolio is evaluated as a
whole. Each project in the portfolio should have a direct impact.

Each project in the portfolio should have a direct impact on the organization. Put another way,
an organization’s leaders should identify the organization’s future direction through strategic
planning. Then multiple possible initiatives (or projects) can be identified that might help
further the organization’s goals.

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The leaders need to sort through the various possible projects and prioritize them. Projects with
the highest priority should be undertaken first. Organizations typically try to have a sense of
balance in their portfolios. That is, an organization includes in its portfolio;
• Some large and some small projects.
• Some high-risk, high-reward projects, and some low-risk projects.
• Some projects that can be completed quickly and some that take substantial time to
finish.

IDENTIFYING POTENTIAL PROJECTS

The second part of aligning projects with the firm’s goals is to identify potential projects. These
potential projects can be in response to a market demand, strategic opportunity, social need,
environmental consideration, customer request, legal requirement, or technological advance.
Ideally, this is accomplished in a systematic manner—not just by chance. Some opportunities
will present themselves to the organization. Other good opportunities will need to be
discovered. All parts of the organization should be involved. This means people at all levels,
from front-line workers to senior executives, and people from all functional areas need to help
identify potential projects.
For example, salespeople can uncover many opportunities by maintaining open discussions
with existing and potential customers, and operations staff may identify potential productivity-
enhancing projects. Everyone in the firm should be aware of industry trends. Many industries
have trade journals such as Elevator World or Aviation Week and Space Technology that can
be read regularly for potential project ideas
Once potential projects are identified, the next step is to develop a brief description of each.
The leadership team that will select and prioritize projects needs to understand the nature of
the projects they are considering. While the level of documentation different firms require
varies greatly, a bare minimum can be called the elevator pitch.

METHODS OF SELECTING PROJECTS

The people in charge of selecting projects need to ensure overall organizational priorities are
understood, agreed upon, and communicated. Once this common understanding is in place, it
is much easier to prioritize potential projects. The degree of formality used in selecting projects
varies widely. In a small company, it can be straightforward. The prioritization should include
asking questions such as these:
• What value does each potential project bring to the organization?
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 • Are the demands of performing each project understood?
• Are the resources needed to perform the project available?
• Is there enthusiastic support both from external customers and from one or more
internal champions?
• Which projects will best help the organization achieve its goals?
There are several different methods of systematically selecting projects. The methods include
both financial and scoring models. The primary reason for including financial analysis either
to make the project selection decisions directly or to at least assist in the decision making is
that, from management’s perspective, projects are investments. Therefore, proper selection
should yield a portfolio of projects that collectively contribute to organizational success.

FINANCIAL MODE/SCORING MODEL TO SELECT PROJECTS

In addition to ensuring that selected projects make sense financially, other criteria often need
to be considered. A tool called a scoring model helps to select and prioritize potential projects.
It is useful whenever there are multiple projects and several criteria to be considered.
• IDENTIFYING POTENTIAL CRITERIA
• DETERMINING MANDATORY CRITERIA
• WEIGHTING CRITERIA
• EVALUATING PROJECTS BASED ON CRITERIA
• SENSITIVITY ANALYSES

IDENTIFYING POTENTIAL CRITERIA

These criteria should include how well each potential project fits with the organization’s
strategic planning. The criteria may also include such items as risk, timing, resources needed,
and so on. A normal practice is for the company’s leadership team to jointly determine what
criteria will be used to select projects. A list of questions executives may use to develop their
list of criteria is shown in below

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DETERMINING MANDATORY CRITERIA
Once the leadership team agrees on a list of criteria that are important, the next step is to
determine whether any of the criteria are mandatory. That is, are there any situations that dictate
a project must be chosen regardless of any other considerations? Examples of this include
government mandates and clear safety or security situations. This list of “must do” projects
should be kept as small as possible since these projects automatically get selected and can
crowd out other worthwhile projects.

WEIGHTING CRITERIA
Next, the leadership team determines the relative importance or weight of each decision
criteria. While more complex methods of determining criteria weights and project evaluations
have been used in the past, many firms now use the simple methods described here for
determining criteria weights.

EVALUATING PROJECTS BASED ON CRITERIA

Now the leadership team evaluates each project on each criterion. The most efficient and
accurate method is to concentrate on one criterion at a time, going down each column in turn.
An easy method for this is to rate each project on that particular criterion with scores ranging
from 1 (potential project has very little or even negative impact on this criterion) to 5 (project
has excellent impact on this criterion). The upper left portion of each cell in the matrix can
display the rating, representing how well that project satisfies that criterion.

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SENSITIVITY ANALYSES
Scoring models allow leadership teams to perform sensitivity analyses that is, to examine what
would happen to the decision if factors affecting it were to change. Selection criteria may be
added or altered. Participants may decide that some criteria are more important than others and
weight them accordingly. Missing criteria or new alternatives can be added and the decision
revisited.

PRIORITIZING PROJECTS
Once all projects have been selected, they will need to be prioritized—that is, the decision
makers will need to determine which ones will get assigned resources and be scheduled to
begin first. If a company selects a number of projects for a year (or even for a fiscal quarter),
it cannot expect to start all of them at the same time. The scoring models are useful in providing
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input into the starting order of projects. Most leadership teams will consider the weighted
scores of each project as a starting point in assigning resources to projects and determining
their start dates. The leadership team members, however, also generally discuss other issues
such as:
• The urgency of each project
• The cost of delaying the expected benefits from various projects
• Practical details concerning the timing

SECURING AND NEGOTIATING PROJECTS

The discussion above pertains to projects that are internal to an organization. This section deals
with projects a company (called the client) wants performed, but for which it may hire external
resources (called contractors) to execute significant parts or all of the work. External projects
can be viewed either from the perspective of the client company that wants the project to be
executed or from the perspective of the contractor company that wants to perform the work.
Client companies may first put prospective external projects through a selection and
prioritization process as described above and, if selected, then decide whether to perform the
work internally (make) or hire the project to be performed by others (buy). If the decision is to
buy, then the client company needs to plan and conduct the procurement.

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