ME-353

Project Management and

Economics
Lecture-6
Title: Concept of Project Management

Delivered by: Dr. Zulkarnain Abbas

Assistant Professor

Mechanical Engineering Department

NFC IET Multan
 Self Introduction
PhD, Shanghai Jiaotong University , China (2020)
Mechanical Engineering (SJTU World QS Ranking 47)

Master, UET Taxila, Pakistan (2016)

Mechanical Engineering,

Bachelor, UET Taxila, Pakistan (2014)

Mechanical Engineering
 Research Experience
Worked as Research Scholar (2016-2020) in Institute of
Refrigeration and Cryogenics, Shanghai Jiaotong University,
Minhang District, Shanghai , China

Research project in Doctoral Summer School on Energy

Systems in Cities of Sino European Engineering Education
platform” SINO-EU Engineering education platform (SEEEP,
2017 China, Norway).

Research Interests:
• Renewable Energy systems
• Heat and mass transfer analysis
• Piezoelectric materials and their applications
• Thermal energy storage equipment and its applications
 Assessment Criteria
Quizzes 3 15%

Assignments 2 10%

Mid Term Paper ---- 25%

Management 1 10%
Project
Final Paper ----- 40%
Concept of Project Management
Overview:
Concept of Project
Project Planning
 Project classifications
Project constraint
Project management
Project management components
Project management approaches
Project life cycle
Project environment
Roles and Responsibilities of Project
Manager
Unit 1 Project planning
1.1 Concept of Project
 Project

A project is a temporary endeavor

undertaken to create a unique product,
service or result.
 One time
 Limited funds/time
 Specific resources utilized
 Performed by people - Single or multi-
person team
 Planned, controlled
 Specific Deliverables
 Contd.
Projects are the specific schemes or action
units designated for the investment of given
resources and skills with an aim of attaining
some predetermined objectives.

A project starts from the scratch. It has a specific

objective. It has a well- defined life span divided
into a lifecycle. It involves a set of activities
within a schedule and budget. It integrates
human and nonhuman resources.
 Contd.

‘An endeavor in which human material and

financial resources are organized in a novel way
to deliver a unique scope of work of given
specification often within constraints of cost and
time to achieve beneficial changes defined by
quantitative and qualitative objectives.’
According to Harold Kerzner:
A project is any series of activities and
tasks that:
 have a specific objective to be completed
within certain specifications
 have defined start and end dates
 have funding limits, and
 consume resources
Plan, Programme and Project are
different concepts yet complementary
to one another.
 Plan
A plan is an image, map or vision to represent the
forms and/or features of desired situation(s). It is a
process of setting future goals for country or
organization and choosing the actions to achieve
these goals.
A Plan is a set of Programmes.
 Programme
A programme is the extensive and consistent set
of action units stating the needs
of interrelated activities to achieve the plan’s
objectives and goal.
A programme comprises several projects. It is
an integrated package of a group of similar
projects.
All projects in the programme together
contribute to the achievement of overall
sectoral objectives.
There could be several programmes with in a
plan.
Program has no fixed life span. It can be
continued over various plan periods.

For example, poverty reduction programme in

in developing countries of the world
subsequent various plan periods.
 Project
A project is a unique group of tasks designed to
attain a specific objective within the constraints
of time, cost and quality based on planning and
control through the use of a variety of resources
in a dynamic environment.
 There could be several projects within a
programme. l
 Characteristics of a Project
A project has the following
characteristics:
Objective: Each and every
project needs to be guided to
achieve an objective or a set of
objectives. It ceases to exist when
the objective is achieved.
Life Span: A project has
beginning and end. It cannot
continue forever. Its life span can
be short or long depending on its
nature and scope. It has a life
cycle consisting of formulation,
Characteristics of a Project…Contd.
Constraints: A project has a schedule. It
operates within the constraints of time, cost and
quality. Every project requires certain
investment of resources.

Unique: Every project is unique. No two

projects are exactly similar. It consists of
customized non-repetitive activities.
 Teamwork

A project has many participants. It requires

teamwork under the leadership of the Project
Manager. Team members are temporarily
assigned from other functional departments.
Flexibility:
Projects have flexibility. They are not rigid.
A project operates in a dynamic
environment. It needs flexibility to provide
rapid response to changing environmental
forces.
Project risks can be related to time, costs,
technology, and performance. Political risks
can also pose serious challenges.
Resource integration:
Projects consume and coordinate
resources. It competes with other projects
and functional departments.
Planning and control:
Projects work to a plan.
A project requires effective and efficient planning
and control systems. They serve as yardsticks for
measuring project performance.
Contracting and subcontracting: most
projects are contract-based.
Complexity increases the need for
subcontracting.
Beneficiaries:
All projects have beneficiaries. Beneficiaries are
the ultimate users of the project outputs. They are
the client of the project.
 Project manager vs Program manager

Project managers: work with project

sponsors, project teams, and other people
involved in projects to meet project goals.
Program managers: oversee programs and
often act as bosses for project managers.
 Project Classification

 Projects have been classified in various ways by different

authorities:

1. Quantifiable and Non-Quantifiable Projects:

 Little and Mirrless have divided projects into broad categories, viz.
quantifiable projects and non-quantifiable projects.

 Quantifiable projects are those in which a reasonable quantitative

assessment of benefits can be made.

 Non-quantifiable projects are those where such an assessment is not possible.

 Projects concerned with industrial development, power generation, mineral

development fall in the first category while projects involving health,
education and defense fall in the second category.
2. Sectoral Projects:

A project may, under this classification, fall into

anyone of the following sectors:
 Agriculture & Allied sector
 Health sector
 Irrigation and Power sector
 Industry and Mining sector
 Transport and Communication sector
 Social Service sector
 Miscellaneous.

This system of classification has been found useful

in resource allocation at macro level.
3. Techno- Economic Projects
 Projects are sometimes classified on the basis
of their techno-economic characteristics. Three
main groups of classification can be identified
here:
a. Factor Intensity-oriented classification:
On the basis of this classification, projects
may be classified as capital-intensive or
labour-intensive depending upon whether
large-scale investment in plant and
machinery or human resources is involved.
 b. Causation-oriented classification:
Here projects are classified as demand-based or raw
materials based projects – depending on the non-
availability of certain goods or services and consequent
demand for such goods or services or the availability of
certain raw materials, skills or other inputs as the
dominant reason for starting the project.

c. Magnitude – oriented classification-

In this the size of investment forms the
basis of classification. Projects may thus be
classified as large-scale, medium-scale, or small
- scale projects depending upon the total project
investment.
4.Service Projects
The services oriented projects are
classified as under:
Welfare Projects
Service Projects
Research and Development Projects
Educational Projects
To create a successful project, project managers must
consider balance these three often-competing goals:

Scope:
 What work will be done as part of the project?
 What unique product, service, or result does the
customer or sponsor expect from the project?
Time:
 How long should it take to complete the project?
 What is the project’s schedule?
Cost:
 What should it cost to complete the project?
 What is the project’s budget?
 What resources are needed?
 Other people focus on the quadruple
constraint, which adds quality as a
fourth constraint.
Quality:
How good does the quality of the
products or services need to be?
What do we need to do to satisfy the
customer?
The Triple Constraint of Project
Management

Successful project
management
means meeting all
three goals (scope,
time, and cost) –
and satisfying the
project’s sponsor!
 Besides the triple constraints, don't
overlook constraints like these that can
cause problems on your project:
Lack of commitment from the executive
management team or project sponsor.
The sponsor may lose interest because
other things have come along that seize the
priority of this project and so on.
Business interruptions or
reorganizations in the midst of the
project.
This could potentially realign your
project resources, leaving you empty-
handed.
 Stakeholders who have unrealistic
expectations of project outcomes.
 This one is overcome through good project
communications and requiring sign-off of the
project charter and scope statement documents.

Stakeholders' unrealistic expectations of

the project schedule.
 This is also overcome through good
project communications early in the
project.

Lack of skilled resources.

 This could cause project delays or unfilled
deliverables. And customer satisfaction could
take a huge hit on this one as well as their anxiety
 Poor communications.
 This is a potential project killer.
Misunderstandings regarding scope, activity
assignments, project schedules, risks, or a long
list of other project essentials could cause
uncorrectable problems.

Uncertain economic times or business

conditions.
 Difficulty obtaining funding for projects, resources for
projects, and general economic disturbances could
restrict the project team.

Technology.
 Advances in technology can cause project delays due
to lack of knowledge of the new technology, training
 Project Stakeholders
Stakeholders are the people involved
in or affected by project activities.
Stakeholders include:
◦ Project sponsor
◦ Project manager
◦ Project team
◦ Support staff
◦ Customers
◦ Users
◦ Suppliers
◦ Opponents to the project
Organizational Environment
 Organizational Environment

 A project/Organization is environment specific.

 Environment consists of forces that influence the
project’s ability to achieve its objective.

 Projects operate in a dynamic environment.

 It should continually adapt to environmental
changes.

 Project environment can be classified into:

1. Internal environment
2. Task environment
3. External environment
1. Internal Environment
Internal environment is located within the
project.
It is Controllable by the project.
It provides strengths and weaknesses to the
project. The forces in the internal
environment consists of:
 Project Objective
 Constraints
 Structure
 Resources
 2. Task Environment
 The task environment of a project is made up of
stakeholders. They are either involved in the project or
their interests are affected by the project. The elements of
task environment are:

 Customer
 Contractor
 Consultants
 Suppliers
 Government
 Financiers
 Competitors
 Labour Unions

41
 3. External Environment
It is located outside the project.
It cannot be controlled by the project.
It provides opportunities and threats to the
project.
The forces in the external environment
are:
 Economic
 Technological
 Political-Legal
 Socio-cultural
43
Project Life-cycle
 The generic project life cycle has four phases:
initiating (definition), planning, performing
(execution) , and closing (Termination) the project.
 The time span of each phase and the associated
level of effort will vary depending on the specific
project.
 Project life cycles vary in length from a few weeks
to several years, depending on the content,
complexity, and magnitude of the project.
Projects Life Cycle and Project Phases

 A project is time bound. It has beginning and end.

 The life of a project is divided into several phases to

provide better management control and appropriate links to
the ongoing operation of the performing organization.

 Each phase defines the work outcomes or deliverables of

the project. The phases are arranged in a sequence.
Collectively, the project phases are known as Project Life
Cycle.

 Project life cycle generally defines:

 What technical work should be done in each phase?
 Who should be involved in each phase?

46
 Project Life Cycle

Above figure shows the four phases and the relative level of effort and time
devoted to each phase.
Projects Life Cycle and Project Phases

 Costand staffing levels are low at the start, higher

towards the end, and drop rapidly as the project
draws to the Conclusion.

 The probability of successfully completing the

project is Lowest, and hence risk and uncertainty
are highest at the start of the project.

 Theprobability of successful completion generally

gets progressively higher as the project continues.
Projects Life Cycle and Project Phase s

 The ability of the stakeholders to influence the final

characteristics of the project product and the final
cost of the project is highest at the start and gets
progressively lower as the project continues.

49
Projects Life Cycle and Project Phases
Project life cycle

 The breakdown and terminology of project phases

differ; depending upon whether we are discussing
products or projects. The life cycle phases of a product
are:

 Research & Development

 Market Introduction
 Growth
 Maturity
 Deterioration
 Death

 Today, there is no general agreement about the life

cycle phases of a project. This is understandable
because of the complex nature and diversity of projects.
The Life cycle of a Project

The various phases in the life cycle of a project are:

 Formulation Phase
 Planning Phase
 Implementation
 Termination Phase
 1. Formulation Phase (Identification)
 This is the conception phase. It identifies the project.
 It involves preliminary planning of the project.
 This first phase of the project life cycle involves the identification
of a need, problem, or opportunity and can result in the sponsor
authorizing a project to address the identified need or solve the
problem.
 Projects are initiated when a need is identified by a sponsor—the
people or the organization willing to provide funds to have the need
satisfied.
 In some cases, it could take several months to clearly define a
need, gather data, and define the project objective.
 It is important to define the right need.
 organizations must employ a process to select which projects to
pursue. Once projects are selected, they are
formally authorized using a document referred to as a project charter.
 Contd
.
 The charter may include the rationale or justification for the
project; project objective and expected benefits; general
requirements and conditions such as amount of funds authorized,
required completion date, major deliver- ables, and required
reviews and approvals; and key assumptions.

 If the organization decides to use external resources (a contractor) to

perform the project, the organization will prepare a document called a
request for proposal (RFP). Through the RFP, the sponsor or customer
asks contractors to submit proposals on how they might address the
need and the associated costs and schedule to complete.
 An individual who needs a new house may spend time identi- fying
requirements for the house—size, style, number of rooms, location,
maxi- mum amount he wants to spend, and date by which she would
like to move in. He may then write down these requirements and ask
several contractors to provide house plans and cost estimates.
 A company that has identified a need to develop a multifaceted
advertising campaign for a new food product might doc- ument its
requirements in an RFP and send it to several advertising firms. The
advertising firms would submit proposals to the company.
 The company would then evaluate the competing proposals and
select an advertising firm (the con- tractor) to do the advertising
campaign (the project) and sign an agreement or contract with that
firm.
The main tasks in the
formulation phase are:
Project Identification
 A situation survey is done.
 The project idea is born.
 The project is conceptualized.
 The sources of project ideas are
internal (Strategies, Plans,
Programmes, R&D Dept.,Quality
Circle) or external (Customer needs,
Donors, Experts, Politicians,
LegalProvisions, Technological
Development).
 Conts
1. .Project Formulation task defines the
parameters of the identified project. It
is concerned with statement of work
and project proposal. It develops:
i. Objectives and outputs of the project
ii. Preliminary estimates of schedule, costs
and other resources required.

57
Major tasks for Project Formulation

 Defines the parameters of the

identified project.
 Broad statement defining the objective
and outputs
 Preliminary statement of schedule and
resources required.
 Preparation of Project Proposal based
on pre feasibility study and
preliminary design
58
 Assignment # 01

Prepare a concept based report of sustainable project

management and a uniform framework proposal for
engineering management studies

Last Date to submit: OCTOBER 05,2022

 Planning
Once a project is authorized and/or a contract is
signed with an external contractor, the next
phase of the project life cycle is to do detailed
planning for how to accomplish the project. The
planning involves determining what needs to be
done (scope, deliverables), how it will get done
(activities, sequence), who will do it (resources,
responsibility), how long it will take (durations,
schedule), how much it will cost (budget), and
what the risks are.
 Contd.
 Before jumping in and starting the project, the
project team or contractor must take sufficient
time to properly plan the project. It is necessary to
lay out a roadmap, or game plan, that shows how
the project scope will be accomplished within
budget and on schedule.
 Itis important to plan the work and then work the
plan.
 This plan will also be used as a benchmark to
which actual progress can be compared.
 Contd.
 Taking the time to develop a well-thought-out plan is critical to
the successful accomplishment of any project.
 Many projects have overrun their budgets, missed their
completion dates, or only partially satisfied their technical
specifications because there was no viable baseline plan in
place before they were started.
 It is important that the people who will be involved in performing
the project also participate in planning the work.
 They are usually the most knowledgeable about which
detailed activities need to be done.
 Also, by participating in the planning of the work, these
individuals become committed to accomplishing it according to
the plan.
 Participation builds commitment.
 Planning Phase consist 3
activities
The basic tasks in the planning phase of the project are:
1. Feasibility study
2. Appraisal
3. Detailed design
 Feasibility Study
 Determines the implement ability of the
projects. The areas for which analysis is done
are –

 Technical analysis
– Studies the feasibility of meeting technical
specifications and examines the availability of alternative
technical solutions.

 Financial analysis
 –Studies the financial sustainability of the project in terms
of capital requirements and capacity for meeting of
financial obligations.

 Management analysis –
- Studies the adequacy of management system to direct
and control the project.
64
Contd.
 Marketing analysis-
Studies project capacity, market demand and sales
forecast.

 Economic analysis –
 Studies net contribution of the project to the
economy and to the society.
 Benefit/Cost analysis is done for this
purpose.

 Environmental analysis-
 Studies the impact of the project on the
environment.
 Feasibility study should be based on accurate
information. 65
 Appraisal
 It is the Evaluation of the project’s ability to succeed.
Appraisal is based on the findings of the feasibility
analysis. It addresses -

 Ability of the project to achieve its objectives

 Comparability of the project with other projects (in
terms
of investment, cost/benefits, job creation, profit etc.)

 The competent authorities appraise the project against a

list of criteria (policy, technical, economic, financial,
social, etc.) before giving approval and formally approve
the project selected through appraisal.

 Approval involves finalization of funding proposals and

agreements and allocation of resources to the project.
 Detailed design
 It is concerned with-
 Preparation of blueprints of engineering design and
specifications for construction, facilities,
equipments etc.-
 Preparation of detail implementation plans and
work schedules.

 The design task establishes:

 Operating plans and performance standards
 Allocates responsibilities
 Determines activities and resources
 Sets down work schedules

71
 Planning Process
 Planning process includes the following steps:
 1. Establish project objective. The objective must be agreed upon
by the sponsor or customer and the organization that will perform
the project.
 2. Define scope. A project scope document must be prepared. It
should include customer requirements, define the major work tasks or
elements, as well as provide a list of deliverables and associated
acceptance criteria that can be used to verify that the work and
deliverables meet specifications.
 3. Create a work breakdown structure. Subdivide the project scope
into pieces or work packages. Although projects may seem
overwhelming when viewed as a whole, one way to conquer even the
most monumental endeavor is to break it down into smaller
components. A work breakdown structure (WBS) is a hierarchical
decomposition of the project scope into work elements or items to be
executed by the project team that will produce the project
deliverables. Figure 1.3 is an example of a work breakdown structure.
 Contd
.
 4. Assign responsibility. The person or organization
responsible for each work item in the work breakdown
structure must be identified in order to inform the project
team of who is responsible and accountable for the
performance of each work package and any associated
deliverables.
 5. Define specific activities. Review each work
package in the work breakdown structure and develop a
list of the detailed activities that need to be performed
for each work package and to produce any required
deliverables.
 6. Sequence activities. Create a network diagram that
shows the necessary sequence and dependent
relationships of the detailed activities that need to be
performed to achieve the project objective.
 Contd.
 7. Estimate activity resources. Determine the
types of resources, such as the skills or expertise
required to perform each activity, as well as the
quantity of each resource that may be needed.
Resources include people, materials, equipment,
etc., that may be required to perform each
activity. Resource estimates must consider the
availability of each type of resource, whether it is
internal or external (such as subcontractors), and
the quantity available over the duration of the
project. Designate a specific individual to be
responsible for each activity.
 8. Estimate activity durations. Make a time
estimate for how long it will take to complete
each activity, based on the estimate of the
resources that will be applied.
 9. Develop project schedule. Based on the
estimated duration for each activity and the
logical relationships of the sequence of
activities in the network diagram, develop the
overall project schedule, including when
each activity is expected to start and finish,
as well as the latest times that each activity
must start and finish in order to complete the
project by the project required completion
date.
 10.Estimate activity costs. Activity costs
should be based on the types and quantities
of resources estimated for each activity as
well as the appropriate labor cost rate or unit
cost for each type of resource.
 Contd
Once the
.
project schedule and budget are
developed, it must be determined whether the
project can be completed within the required
time, with the allotted funds, and with the
available resources.
If not, adjustments must be made to the project
scope, activity resource or duration estimates,
or resource assignments until an achievable,
realistic baseline plan, the roadmap for
accomplishing the project scope on time and
within budget, can be
established.
 Implementation Phase
 Implementation is concerned with mobilization.
 The third phase of the project life cycle is performing the
project. Once the base- line plan has been developed,
work can proceed. The project team, led by the project
manager, will execute the plan and perform the activities to
produce all the deliverables and to accomplish the project
objective.
 The pace of project activity will increase as more and
various resources become involved in performing
the project tasks.
 During the course of performing the project, different types
of resources will be utilized.
 This phase results in the accomplishment of the project
objective, leaving the customer satisfied that the full scope
of the work and deliverables were completed according to
specifications, within budget, and on time.
 Implementation involves-

 Setting up of project organization

 Allocation of tasks and responsibilities
 Getting together project team
 Preparation of tender documents
 Other pre-construction activities like land acquisition and
coordination with other infrastructure
 Tendering, Construction and/or installation of equipment
 Project management, quality assurance, progress
reporting and the participation of target groups and project
affected groups.

74
 Control is an inevitable task during
implementation
 It involves supervision and control of project
performance to provide feedback.
 Monitoring of project performance is done.
 Itis a means to improve implementation
identification
through theof problems and the possible corrective
actions.
 Various techniques like CPM,PERT and other network
analysis techniques are used for control purpose.
 If a project gets too far out of control, it may be difficult to
accomplish the project objective without sacrificing the
scope, budget, schedule, or quality. The key to effective
project control is measuring actual progress and
comparing it to planned progress on a timely and regular
basis throughout the performing phase and taking any
needed corrective action immediately.
75
 The Control comprises the following
activities:
 Setting of standards
 Measuring outputs
 Verifying the output with pre set standards
 Finding deviations, if any.
 Correcting the process/output to the pre
set standards if required
The performing phase of the project life cycle ends when
the sponsor or customer is satisfied that the project
objective has been accomplished and that the
requirements have been met, and
accepts the project deliverables.
80
 Termination phase (closing)
 The final phase of the project life cycle is closing the project.
The process of closing the project involves various actions,
including collecting and making final payments, evaluating
and recognizing staff, conducting a post-project evaluation,
documenting lessons learned, and archiving project
documents.
 The project organization should ensure that copies of
appropriate project doc- umentation are properly organized,
filed and archived so that they can be readily retrieved for use
in the future.
The project team should identify lessons
learned and make recommendations for
improving performance on future projects.
Feedback should also be obtained from the
sponsor or customer to determine whether the
anticipated benefits from the project were
achieved, assess the level of customer
satisfaction, and obtain any feedback that
would be helpful in future business
relationships with this customer or other
customers.
 The basic tasks in this phase are:

Project Evaluation:
 Evaluation measures the effects and impacts of
the project.
 It can be carried out during the project implementation to
improve implementation or can also be carried out after
project completion to improve future project planning and
management.
Project Handover:
 Handover begins when the project work is finished.
 Resources are then reallocated to other projects.
 Project accounts are closed.
 Project is terminated.
Most project life cycles tend to progress slowly at the
start, quicken their momentum towards the middle
and drop their momentum towards the end.:

Fig. Efforts and tasks during project life cycle phages

Thanks