Financing and Managing Projects, Volume I

Nand L. Dhameja, Ashok Panjwani

• Publisher: Business Expert Press
• Year: 2017
• Print ISBN: 9781606496688
• eBook ISBN: 9781606496695
• Topic: Business
• Subtopic: Project Management
• Index: Business

Project is an instrument of change and no project is complete unless its objective is achieved. Every project is specific and unique and the term ÒprojectÓ is constantly expanding and ever changing. This first volume deals with the managerial aspects of a project, i.e., project phases; its formulation and appraisal techniques; there is no single best technique and executive judgment is essential. Every chapter outlines the objectives to be delivered and includes project instances, brief case examples, and case studies that provide an analytical kit for executives and professionals. The book makes for a lucid reading and serves as a guide for the reader. It has been written based on our experiences gained and feedback collected from teaching, training, and delivering various consultancy projects..

CHAPTER 1

Project Management

An Overview

After having gone through this chapter, you should be able to

• Oversee project examples

• Understand the meaning of a project and its distinct characteristics

• Appreciate project significance

• Understand project categorization

• Identify stakeholders of a project and their interest therein

• Oversee project instances, examples, and project management practice

Key Terms: Project, Program, Task, Work Package, Project Significance, Mutually Exclusive Project, Independent Project, Contingent Project, Agencies Interested

Projects: Examples

We come across projects which range in size, cost, time frame, and dimension—local, domestic and international. Some examples are

• Planning for higher education for your son

• Setting up of educational institution—a school or a college

• Replacement of machinery by an industrial house

• Oil refinery construction

• Paltana power project in Tripura in India

• Construction of bridge across river

• Launching of a new product—an advertising and marketing project

• Adoption of six villages in Tripura by ONGC Ltd

• Construction of a charitable hospital by R K Mission

• Wind farm in the middle of ocean

• Construction of Eiffel Tower in Paris

• Construction of Suez Canal

• Arctic Highway: between Tibbit and Contway in Canada

• Setting up of a dairy unit for Rs. 140 crores in Thane district of Maharashtra by milk giant Amul in India

• Acquisition of 100 percent stake in Houghton International Corp. Inc. by Gulf Oil Corporation Ltd, HindujaGroup Co. for $1.04 billion to have larger geographical reach and access to new technologies used in production of highly technical and customized chemical formulation

Project: Meaning

What do we mean by a project and how does it differ from the similar terms program, task, an activity, or work package?

A project is defined as an activity or set of activities which

• is specific and unique

• seeks to achieve defined objectives with given resources in a given time

• involves investment which creates assets whose benefits will be available over time

• has a cycle: a definite beginning and an end

• is an instrument of change

• involves allocation of resources—scarce ones

• has capital cost, annual cost, and annual benefits

One change always leaves the way open for the establishment of others

Niccolo Machiavelli

Distinct features of a project as indicated above in italics include: it is specific and unique; it serves some objectives and requires resources, output or assets it creates, costs involved, time frame, and stakeholders interested. Project Management Institute’s (PMI) Project Management Body of Knowledge (PMBOK) has defined a project as “a temporary endeavor undertaken to create a unique product, service or result.”¹ On the other hand, jobs or activities which are of routine nature are non-projects, though such distinction between a project and a non-project gets blurred in many cases.

The term “project” is similar to terms “program,” “task,” and “work package”; program is a broader term; it refers to an exceptionally large or voluminous work which encompasses a set of projects. Projects are further divided into tasks or activities which can be combined or put together into work packages. In other words, the terms program, projects, tasks, and work packages indicate the hierarchy of a job in view and have the features of a project. For example, development of a new engine and development of suspension system are parts of the program to develop a new automobile. Similarly, literacy program would involve setting of education institutes, construction of buildings, acquisition of furniture, preparation of books, and training of teachers. Further, urban development program would entail construction of roads or houses or development of civic facilities like water and sewerage system.

Project Management

Project management refers to the collective steps to make the project happen, that is, to take the project to final end to achieve the desired objective. PMBOK defines project management as “the application of knowledge, skill, tools and techniques to project activities in order to meet stakeholder’s needs and expectations from a project.” Project management is similar to an investment decision or a capital budgeting exercise; it involves investment in long-term assets with the expectation of benefits in coming years. The investment has long-term implications and is a decision-making process to evaluate a proposal to set up a project, or for expansion, or acquisition or replacement of fixed assets, or amalgamation or merger decisions.

A project manager is responsible for the success of the project and is expected to have knowledge of different functions of management, namely, technical, sales and marketing, human resources, production management, and so on. As such, there is an overlap between project management, production management, and technical management. However, project management is multi-disciplinary, normally unique, and non-repetitive, while production management and technical management are not multi-disciplinary and often are repetitive.

Every project has two sides, namely,

• To forecast its expected return

• To evaluate and determine rate of return for the project

Every project involves finances as outflows and inflows. Outflows may be Capital Cost or Operating Costs. Capital cost is one time cost and usually nonrecurring, while operating costs are operation and maintenance costs, relate to normal business operations, and are recurring in nature. Similarly, inflows are n...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• Chapter 1 Project Management: An Overview
• Chapter 2 Project Life Cycle
• Chapter 3 Project Formulation
• Chapter 4 Project Appraisal
• Chapter 5 Project Appraisal, Price-Level Changes, Social Cost–Benefit Analysis
• Annexure I: Present Value Table of Rs.
• Index