Project

Areas to be Covered.
1. Definitions and key terminology

2. Project Manager, duties and responsibilities

3. five Process Groups in Projects
4. Managing a project
5. Project Appraisals Unpacked

i. Technical appraisal
ii. Social Appraisal
iii. Commercial appraisal
iv. Legal Appraisal
v. Institutional appraisal
vi. Financial appraisal
vii. Economic appraisal
6. Funding a Construction Project
i. Sources of Financing Construction projects
ii. Factors to consider before Investment in construction projects
iii. Economic life of construction plant
iv. Construction Capital budgeting
v. Scenario Analysis
vi. Simulation
vii. Breakeven analysis
viii. Discounting factors, Interest time relations, Inflation considerations
7. Project Appraisal Techniques
i. Whole-life costs
ii. Net benefits
iii. Return on investment (ROI)
iv. Payback period:
v. Discounted cash flow:
vi. Net present value:
vii. Sensitivity analysis

A project is a series of related a tasks which when they are carried in the
correct order will lead to the completion of the project.
A project is a temporary endeavour undertaken to create a unique product ,
service or result.

Temporary does not typically apply to the product, service or result created by the
project, most projects are undertaken to create a lasting outcome.

A project has a definite beginning and end. The end is reached when the project’s
objectives have been achieved or when the project is terminated because its
objectives will not or cannot be met.

(Differentiate between a programme and a project)

Examples of projects include but are not limited to:

• Developing a new product, service or result;

• Effecting a change in the structure , processes, staffing , or style of an
organisation
• Conducting a research effort whose outcome will be aptly recorded;
• Constructing a building , industrial plant, or infrastructure, etc

A project can create:

• A product that can be either a component of another item, an

enhancement of an item, or an end item in itself;
• A service or a capability to perform a service (e.g., a business function that
supports production or distribution);
• An improvement in the existing product or service lines.

Project Management

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

to project activities to meet the project requirements.

*Project management is the planning, delegating, monitoring and control of all

aspects of the project, and the motivation of those involved, to achieve the project
objectives within the expected performance targets for time, cost, quality, scope,
benefits and risk.

Project management is accomplished through the appropriate application and

integration of the 47 logically grouped project management processes, which are
categorized into five Process Groups.

These five Process Groups are:

• Initiating,- Those processes performed to define a new project or a new phase of
an existing project by obtaining authorization to start the project or phase.

• Planning, - Those processes required to establish the scope of the project, refine
the objectives, and define the course of action required to attain the objectives
that the project was undertaken to achieve.

• Executing,- Those processes performed to complete the work defined in the

project management plan to satisfy the project specifications.

• Monitoring and Controlling,- Those processes required to track, review, and

regulate the progress and performance of the project; identify any areas in which
changes to the plan are required; and initiate the corresponding changes.

• Closing,- Those processes performed to finalize all activities across all Process
Groups to formally close the project or phase.

Five Process Groups

Managing a project typically includes, but is not limited to:

• Identifying requirements;

• Addressing the various needs, concerns, and expectations of the stakeholders in

planning and executing the project;

• Setting up, maintaining, and carrying out communications among stakeholders

that are active, effective, and collaborative in nature;
• Managing stakeholders towards meeting project requirements and creating
project deliverables;

• Balancing the competing project constraints, which include, but are not limited
to:

○ Scope,

○ Quality,

○ Schedule,

○ Budget,

○ Resources, and

○ Risks

Project Manager

The project Manager is the person assigned by the performing organisation to lead
the team that is responsible for achieving the project objectives.

Project Managers’ objectives are those aligned with the strategic needs of an
organisation and project managers focus on the following;

• Specified project objectives

• Controlling the assigned project resources to best meet project objectives.
• Managing the constraints i. scope, schedule, cost, quality,etc of individual
projects.
Project Manager’ Role

Project Resource Allocation

Class Member presentation

Project and Investment Appraisal

Project appraisal is the process of analysing the technical feasibility and economic
viability of a project proposal with a view to financing their costs.

Project appraisal enables decisions to be made on investments with long term

effect.

Types of appraisals generally taken on a project:

• Technical appraisal
• Social Appraisal
• Commercial appraisal
• Legal Appraisal
• Institutional appraisal
• Financial appraisal
 • Economic appraisal

Project Appraisal Techniques

There are many investment appraisal techniques, and organizations will often have
preferences on which to adopt for specific projects. The selection of technique may
be influenced by the type of organization (e.g. public sector accounting rules) or
the organization’s own standards.

Below are examples of Investment appraisal techniques:

Whole-life costs : Analysing the total cost of implementation and any incremental
transitional, operational and maintenance costs.

● Net benefits: Analysing the total value of the benefits less the cost of
implementation, transition and ongoing operation, calculated over a defined
period.

● Return on investment (ROI): Profits or savings resulting from investments expressed

as a percentage of the initial investment.

● Payback period: A calculation of the period of time required for the ROI to repay
the sum of the original investment.

● Discounted cash flow: A means of expressing future benefits based on the current
value of money. Sometimes discounted cash flows include risk adjustments as the
business may not be confident that all the benefits will materialize.

● Net present value: The total value of discounted future cash inflows less the initial
investment. For example, if the discount rate is 6 per cent, the value of money
halves approximately every 12 years. If a project is forecasting a $500 000 benefit to
materialize in year 12, then it is only worth $250 000 in today’s money.

● Sensitivity analysis :Business cases are based on uncertain forecasts. In order to

identify how robust the business case is, it is useful to understand the relationship
between input factors (e.g. project costs, timescale, quality, scope, project risks)
and output (e.g. operations and maintenance costs, business benefits and business
risks). Sensitivity analysis involves adjusting the input factors to model the point at
which the output factors no longer justify the investment. For example, a project
might be worthwhile if it can be done in 4 months, but ceases to be worthwhile if it
were to take 6 months.
Sensitivity analysis helps to determine which risks have the most potential impact on
the project.

It helps to understand how the variations in the project’s objectives correlate with
variations in different uncertainties.

Conversely, it examines the extent to which the uncertainty of each project

element affects the objective being studied when all other uncertain elements are
held at their baseline values.

One typical display of sensitivity analysis is the Tornado diagram (Bar Chart) which is
useful for comparing relative importance and impact of variables that have a
higher degree of uncertainty to those that are more stable.

This is placed in descending order so that the project manager can take decisions
on the high impact items first.

In a tornado diagram, the Y-axis contains each type of uncertainty at base values,
and the X-axis contains the spread or correlation of the uncertainty to the studied
output. In this figure, each uncertainty contains a horizontal bar and is ordered
vertically to show uncertainties with a decreasing spread from the base values.
What-if Scenario Analysis (Class member presentation)

Is the process of evaluating scenarios in order to predict their effect, positively or

negatively , on project objectives.

This is an analysis of the question, “what if the situation represented by scenario “X”
happens?”

A schedule network analysis is performed using the schedule to compute the

different scenarios, such as delaying major component delivery, extending specific
engineering durations, or introducing external factors , such as strike or a change in
the permitting process.

The outcome of the what-if scenario analysis can be used to assess the feasibility of
the project schedule under adverse conditions, and in preparing contingency and
response plans to overcome or mitigate the impact of unexpected situations.

Simulation (Class member presentation)

Simulation involves calculating multiple project durations with different sets of
activity assumptions, usually using probability distributions constructed from the
three-point estimates to account for uncertainity.

The most common simulation technique is Monte-Carlo analysis in which a

distribution of possible activity durations is defined for each activity and used to
calculate a distribution of possible outcomes for the total project.

Break-even analysis (Class member presentation)

Break-even analysis entails calculating and examining the margin of safety for an
entity based on the revenues collected and associated costs.

Capital Budgeting (Class member presentation)

Project Valuation Methods (Class member presentation)

Class Members Presentations

• Project Manager, duties and responsibilities

• Sources of Financing Construction projects
• Factors to consider before Investment in construction projects
• Economic life of construction plant
• Construction Capital budgeting
• Sensitivity Analysis
• Scenario Analysis
• Simulation
• Breakeven analysis
• Discounting factors, Interest time relations, Inflation considerations

Submission date: …………………………………..2023