KYAMBOGO UNIVERSITY

MMS 3102: PM COURSE NOTES

OVERVIEW OF PROJECT PLANNING AND MANAGEMENT (3hrs)

1. Defining projects and project management

2. Characteristics of projects
3. Importance of projects
4. Application of project management

Defining a Project.
A project is a one –shot set of activities with definite beginning and ending point.
It is an endeavor in which human, material and financial resources are organized in a particular way to
undertake a single scope of work, of a given specification, with commitment of cost and time, so as to
achieve beneficial change, defined by qualitative and quantitative objective.
A project is a unique set of coordinated activities with definite activity start and ending points undertaken by
an individual / organization to meet specific performance objectives with defined schedule, cost and
performance parameters.
Projects differ in size, scope, cost and time from mega international projects costing millions of dollars over
many years - to small domestic projects with a low budget taking just a few hours to complete.

Types of Projects:
Projects can be categorised as; economic Projects, social Projects, private Projects, public Projects, local
Projects, national Projects, international Projects, humanitarian Projects, developmental projects and
Rehabilitation projects etc as explained below
Development projects-These are projects mainly implemented by the central government or district
authorities or other institutions to add stock of value to the country’s national income. The aim is to increase
the productivity of the country or given community.
Rehabilitation projects-These are projects which aim at restoring the capacity of the country, region or
district after a disaster such as civil war has occurred. This is typical of Northern Uganda Social Action
Fund and Karamoja Development Agency.
Relief Projects-These are projects which are operated in places where people have lost the capacity to
provide for themselves. Such projects are aimed at restoring hope and enabling people to sustain a living.
They provide basic needs of life. For instance, food shelter, clothing etc
Income generating projects-These are undertaken to generate income for the community or organisation
with the view of improving on the quality of life.

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It should however, be noted that categorization of projects depend generally on ownership, purpose, source
of funds, nature of the project, size and geographical coverage.

Sources of Projects/Factors that give rise to Projects:

Projects are generated from many possible situations and a few of them can include the following.
1) Satisfying market demand. When a project or service enters a certain market, it prompts response
from market and if demand exceeds the supply capacity a project has to be planned and executed to
raise production.
2) Exploiting a new business opportunity. Business opportunities are ever emerging and those with the
ability to exploit such can realise this using project
3) Technological advancement. Technology advances day by day and established setups are often
compelled to make major changes in operations in order to cope with technological changes, for
instance machinery replacement activities will call for a project.
4) Satisfying a social need/social responsibility: many public projects are generated by social needs and
these could include education, health and sanitation and spiritual needs. Businesses are increasingly
investing in corporate social responsibilities where they undertake projects to improve the welfare of
the societies in their surroundings
5) Legal requirements; Some projects are generated by demand from government for institutions to fulfil
some legal requirements e.g. waste disposal projects in manufacturing, processing and hotel
industries.
6) Working on business sustainability. In a dynamic and competitive world, there must be continuous
improvement for sustainability therefore some projects are generated by the need to change
significantly or else risk collapse e.g. if a commercial tertiary institution is offering courses that are
facing stiff competition from other emerging institutions, some projects may have to be undertaken to
improve on the competitiveness
7) Crisis management; Many situations lead to crisis with the worst arising from natural disasters.
Projects must be set up to urgently address such crises because day today management practices
can fail to contain such crisises.

Projects as a Preferred Form of Achieving Developmental Objectives

1. Its instrumental in improving and rationalising the investment process
2. It imposes discipline in planning on decision makers
3. It helps in establishing/identifying priorities
4. It provides a logical framework and sequence in which data can be compiled
5. It’s a means of assessing the impact of a developmental initiative
6. It’s a mechanism for implementing policies
7. It increases developmental impacts on resources since results can be measured

Unique Characteristics/Features of Projects

Projects have therefore certain primary characteristics and the typical ones include the following

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a) An established objective. This means a project is goal oriented. It has a set of specific objectives which
may be commercial, social-economic, political etc
b) A defined life span with a life cycle having a beginning and an end with a number of distinct phases in
between
c) Multidisciplinary involvement; for instance, most projects require different professions to contribute
towards the success
d) Interdependence with some impact from beyond project boundaries i.e. a project doesn’t operate in
isolation, it interacts with the environment which it effects and is also affected by it. This environment
may be physical, political, economic, technological and social
e) Measurable output; this is in order to determine whenever the objective has been achieved or not
f) Uniqueness: this means that every project is unique from others
g) Resource constraints: this is in terms of money, time, people etc.
NB: for most of the good resources there is always an opportunity cost for them. Projects tap
resources that would have been beneficial to other projects or non-project work. For this reason,
resources are normally availed in a limited form.
h) Some level of conflict: This arises mainly because of the resources constraints; cross functional and
multidisciplinary involvement, individual differences.
i) A budget with an associated cash-flow.

Project Planning.
Project planning is a special case of general planning which includes all those activities that result in
developing a course of action.
It involves setting goals, definition and forecast of resources to be committed, establishment of start and
completion times, and assignment of responsibilities.
Project management is an integral part of planning which refers the process of application of knowledge,
skills, techniques and tools in project execution.

Project Management

Project management is the application of knowledge, skills, tools, and techniques to project activities in
order to meet or exceed stakeholder needs and expectations from a project.
Project Management is the discipline of Planning, organizing, and managing resources to bring about the
successful completion of specific project goals and objectives.

Project management has a primary/ unique challenge of achieving all of the project goals and objectives
while adhering to classic project constraints—-usually scope, quality, time and budget (as indicated in the
project triangle). The secondary and more ambitious challenge is to optimize the allocation and integration
of inputs necessary to meet pre-defined objectives. Projects are composed of sets of activities that use
resources (money, people, materials, energy, space, provisions, communication, motivation, etc.) to
achieve the set goals and objectives.
The essence of project management is to:

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 – Maximize chances of reaching the objectives of the project which fits with the specification,
and respect or exceed the agreed QUALITY to be delivered in TIME, SCOPE and
BUDGET
– Strive for efficiency because of limited resources which are available, and the need to
achieve the objectives of the project as earlier as possible

What project management helps you to achieve

– Plan tasks in project
– Avoid dependencies problems
– Reduce risks
– Track progress accurately
– Organize project process and timeline
– Improve stakeholder - staff communication
– Improve management of stakeholders’ expectations
– Complete within budget and on time

The project management Triangle (The Triple Constraints)

- Explains the three principal dimensions of the project
- The three dimension form the Triple constraints concept in project management
- The dimension includes: Scope, Cost and Time

Scope
(Details of activity / work)

QUALITY
Cost Time
(Resources) (Duration)

Project Management Knowledge Areas (PMKA)

The purpose of the body of knowledge is to identify and describe best practices that are applicable to most
projects most of the time.There is wide spread consensus about their value and usefulness. They are also
intended to to provide a common loxicon and terminology within the profession of project management
locally and internationally. As a relatively young international profession, there is still a need to converge on
a common set of terms. The 8 knowledge areas of project management include;

 Scope management
 Cost management
 Time management

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  Quality management. These are called ‘core functions’
 Human resource management
 Communication management
 Risk management
 Procurement management. These are called ‘facilitating functions’.

1. Project Scope management:

Scoping refers to the process of defining and setting project /programme boundaries-what is to be included
or not.
Successful scoping answers the following questions.
 What is the project/programme responsible for delivering and what is it not to deliver?
 What are the main objectives? Why are we undertaking the project?
 What needs to be done or changed in order to achieve these objectives?
 What effect will these changes have and what will stay the same?
 Which stakeholder is most likely to be affected and who will benefit? How?
This consists of authorization, scope planning, scope definition, scope change management and scope
verification

2. Project Quality management

This includes the process required to ensure that the project will satisfy the needs for which it was
undertaken. It consists of determining the required condition, quality planning, quality assurance and quality
control.
• Decision-making routes and processes are clearly defined
• Deadlines, costs and resources are controlled systematically
– All processes in the project management activity chain are coordinated to ensure they
remain in harmony with one another
• The result will help you to get:
– more speed

– greater flexibility
– improved quality

3. Project Time management

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This includes the process required to ensure timely performance of the project. It consists of activity
definition, activity sequencing, duration estimating, establishing the calendar, schedule development and
time control.

4. Project Cost management

This includes the process required to ensure that the project is completed within the approved budget. It
consists of resource planning, cost estimating, cost budgeting, cash flow and cost control.

5. Project Human resource management

This includes the process required to make the most effective use of the people involved with in the project.
It consists of organisation planning, staff acquisition and team development.

6. Project communication management

This includes the process required to ensure proper collection and dissemination of project information. It
consists of communication planning, information distribution, project meetings, progress reporting and
administrative closure.

7. Project Risk management

This includes the process concerned with identifying, analyzing and responding to project risk. It consists of
risk identification, risk quantification and impact, response development and risk control.

8. Project Procurement Management

This includes the process required to acquire goods and services from outside the performing project team
or organisation. It consists of procurement planning, solicitation planning, source selection, contract
administration and contract closeout.

Project management Environment

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The project management environment directly affects the project and how it should be managed. Projects
are not carried out in a vacuum, they are influenced by a wide range of stakeholders and issues. Consider
the following;
 Stakeholders (all interested parties)
 Client/sponsor requirements
 Your own company’s organisation structure
 Market requirements
 Competitors
 New technology
 Rules and regulations (Health and safety)
 Politics (both internal and external)

For a project management to be effective, there must be a thorough understanding of the project
environment. The project environment consists of numerous stakeholders and players that have an input
or are affected by the project. All must be managed as any one person could drail the project.

Lesson 2: PROJECT LIFE CYCLE

The project Management book of Knowledge (PMBOK) states “ Because projects are unique and involve a
certain degree of risk, companies performing projects will generally subdivide their projects into several
project phases to provide better management control. Collectively these project phases are called the
project life cycle.”

A project as an activity involves commitment of scarce resources within a time frame to achieve certain
goals and objectives. The resources can be financial, or labour and the goals may be making commodities
or providing service. Projects have to have time limit. Since resources are limited, investors must allocate
their resources in such a way that they are put to their optimal use. To do this, a process referred to as a
project life cycle is used to analyse the worth of the project to come up with the most optimal return to
investment.
The project management life cycle has four phases:
1. Initiation,
2. Planning,
3. Execution,
4. Closure.

To pass through each phase, however, several activities must be completed.

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 1. Initiation Phase

Project initiation is the committing of the organisation to begin the project.

The Initiation Phase is the first and most important phase in the project. In this phase a problem or
opportunity is identified and a case which provides various solution options is defined. A feasibility study is
then conducted to investigate the likelihood of each solution option addressing the problem and a final
recommended solution is put forward. Once the recommended solution is approved, a project is initiated to
deliver the approved solution. A ‘Project Charter’ is completed, which outlines the objectives, scope and
structure of the new project, and a Project Manager is appointed. The Project Manager begins recruiting a
project team and establishes a Project Office environment. Approval is then sought to move into the
detailed planning phase.
Questions to be answered in the initiation phase include the following:
 Why this project?
 Is it feasible?
 Who are possible partners in this project?
 What should the results be?
 What are the boundaries of this project (what is outside the scope of the project)?

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The initiation phase essentially involves the project ‘start-up’. It is the phase within which the business
problem or opportunity is identified, the solution is agreed, a project formed to produce the solution and a
project team appointed.

a) Develop a business case

A Business Case justifies the start-up of a project. It includes a description of the business problem or
opportunity, the costs and benefits of each alternative solution, and the recommended solution for approval.
Once a business problem or opportunity has been identified, a Business Case is prepared. This includes:
▪ A detailed definition of the problem or opportunity
▪ An analysis of the potential solution options available. For each option, the potential benefits, costs, risks
and issues are documented. A formal feasibility study may be commissioned if the feasibility of any solution
option is not clear
▪ The recommended solution and a generic implementation plan.
The Business Case is approved by the Project Sponsor and the required funding is allocated to proceed
with the project.

The following should be carried out in order to come up with a business case.
 Research the business problem or opportunity
 Identify the alternative solutions available
 Quantify the benefits and costs of each solution
 Recommend a preferred solution to your sponsor
 Identify any risks and issues with implementation
 Present the solution for funding approval

A Business Case Template is used whenever the expenditure on a project has to be justified. Completing a
Business Case Template is usually the first step in the Project Life Cycle. Once the Business Case
Template has been completed, it is presented to a Sponsor for approval. The Business Case is referred to
frequently during the project, to determine whether it is currently on track. And at the end of the project,
success is measured against the ability to meet the objectives defined in the Business Case. So the
completion of a Business Case is critical to the success of the project.
b) Perform a feasibility study
A Project Feasibility Study is an exercise that involves documenting each of the potential solutions to a
particular business problem or opportunity. Feasibility Studies can be undertaken by any type of business,
project or team and they are a critical part of the Project Life Cycle.
The purpose is to assess the likelihood of a particular solution option’s achieving the benefits outlined in the
Business Case. The Feasibility Study will also investigate whether the forecast costs are reasonable, the
solution is achievable, the risks are acceptable, and/or any likely issues are avoidable. It entails defining the
business problem / opportunity, the alternative solutions available and the recommended solution for
implementation.
 Research the business problem or opportunity
 Document the business requirements for a solution
 Identify all of the alternative solutions available
 Review each solution to determine its feasibility
 List any risks and issues with each solution
 Choose a preferred solution for implementation
 Document the results in a feasibility report

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The Feasibility Study is to identify the likelihood of one or more solutions meeting the stated business
requirements. In other words, if you are unsure whether your solution will deliver the outcome you want,
then a Project Feasibility Study will help gain that clarity. During the Feasibility Study, a variety of
'assessment' methods are undertaken. The outcome of the Feasibility Study is a confirmed solution for
implementation.

The feasibility study is based on extensive research on both the current practices and the proposed
project/program and its impact on the operations. The feasibility study is an integral part in developing a
business project. Whether it’s for the creation of a new project or the expansion of an existing one, the
project cycle is similar.
Why prepare feasibility
 Developing any new business venture is difficult. Taking a project from the initial idea through the
operational stage is a complex and time-consuming effort. Before the potential members invest in a
proposed business project, they must determine if it can be economically viable and then decide if
investment advantages outweigh the risks involved.
 Business project are quite expensive to conduct. The study allows groups to preview potential
project outcomes and to decide if they should continue. Although the costs of conducting a study
may seem high, they are relatively minor when compared with the total project cost. The small
initial expenditure on a feasibility study can help to protect larger capital investments later.

 Studies can help groups decide to expand existing services, build or remodel facilities, change
methods of operation, add new products, or even merge with another business. A feasibility study
assists decision makers whenever they need to consider alternative development opportunities.

 Feasibility studies permit planners to outline their ideas on paper before implementing them. This
can reveal errors in project design before their implementation negatively affects the project.

Types feasibility studies

The feasibility of a project can be ascertained in terms of technical factors, economic factors, or both. A
feasibility study is documented with a report showing all the ramifications of the project.
 Technical feasibility: refers to the ability of the process to take advantage of the current state of
technology in pursuing further improvement. The technical capability of the personnel as well as
the capability of the available technology, should be considered.

 Managerial feasibility: involves the capability of the infrastructure to achieve and sustain process
improvement. Management support, employee involvement and commitment are key elements
required to ascertain managerial feasibility.

 Economic feasibility: involves the likelihood of the proposed project to generate economic benefits.
A benefit- cost analysis and a break even analysis are important aspects of evaluating the
economic feasibility of a project. The tangible and intangible aspects of the project should be
translated into economic terms to facilitate a consistent basis for evaluation.

 Financial feasibility: involves the capability to raise the appropriate funds needed to implement the
proposed project. Project financing can be a major obstacle in development projects because of

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 the level of capital required. Loan availability, creditworthiness, equity, and loan schedules are
impotant aspects of financial feasibility analysis.

 Cultural feasibility: deals with the compatibility of the proposed project with the cultural set up of the
project environment. For example, in rural areas, industrial efforts must not violate culturally sacred
grounds that have religious implications.

 Social feasibility: addresses the influence that a proposed project may have on the social system in
the project environment. The effect of the project on the social status of the project participants
must be assessed to ensure compatibility.

 Safety feasibility: another important aspect that should be considered in project planning. It refers
to an analysis of whether the project is capable of being implemented and operated safely with
minimal adverse effects on the environment.

 Political feasibility: Political considerations often dictate the direction of a proposed project. This is
particularly true for industrial projects that may have significant government inputs and political
implications. Sometimes, worthy projects may face insurmountable opposition simply because of
political factors. Political feasibility analysis requires an evaluation of the compatibility of project
goals with the prevailing goals of the political system.

c) Establish a project charter

After the solution has been agreed and funding allocated, a project is formed.
A Project Charter outlines the purpose of the project, the way the project will be structured and how it will
be successfully implemented. The Project Charter describes the project vision, objectives, scope and
deliverables, as well as the Stakeholders, roles and responsibilities. The Project Charter is also known as a
"Terms of Reference" or "Project Definition Report".
When to use a Project Charter?
"Every time you start a new project, you should complete a Project Charter template. The Project Charter
defines the vision and boundaries for the project, as well as the high-level roadmap. In addition, the Project
Charter also defines the scope of the project, within which the deliverables are produced. With a well-
defined Project Charter, the Project Manager has a clear project roadmap for success.
A project charter template will help you to;
 Identify the project vision and objectives
 Define the complete scope of the project
 List all the critical project deliverables
 State the customers and project stakeholders
 List the key roles and their responsibilities
 Create an organizational structure for the project
 Document the overall implementation plan
 List any risks, issues and assumptions

About Project Charter Template

Project Title: This field specifies the name of the project
Project Start and End Date: This field specifies the timeline to complete the project.
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Project Manager: This field indicates the project manager who has the authority to execute the project.
Project Sponsor: This field indicates the Project Sponsors who have initiated the project
Business Need: This field captures the need for initiating the project. It helps to understand and specify
WHY the project is being undertaken.
Project Scope: This field defines activities that are in scope of the project. Items that are out of scope can
also be mentioned in this field to set clear expectations.
Deliverables: Every project undertaken will result in a tangible or intangible outcome. This field indicates the
deliverable/goals that are expected to be achieved by this project.
Risks and Issues: Very often, major risks and issues that are foreseen at the beginning of the project are
indicated in this field. For e.g. Delays due to Data Dependencies on external teams, a personnel working
on the project proceeding on planned leave resulting in delay in the project timelines
Assumptions and Dependencies: Very often, assumptions and dependencies are made at the start of the
project when certain events are expected to occur during the course of the project which may result in
delay of the project timelines. Project activities that are dependent on each other need to be clearly stated
in this field. For e.g. Data discrepancy maybe an assumption where there are large amounts of data
involved, dependencies on Infrastructure teams for the hardware
Milestones Schedule: This field indicates the major milestones the project aims to accomplish and the
target completion date for each milestone. The charter can be used to track the progress of the milestones
against the target dates mentioned in the document.
Budget/Financials: Every project has a set budget and this field specifies the cost that will be incurred to
undertake this project
Project Team: States the personnel / members required to work on the project including the sponsor,
project manager and other required resources
Approval Committee: Every project charter needs to be approved by a defined set of approvers which
includes the sponsor and other stakeholders. A project charter is considered approved once signed off by
all the approvers.
As per the Project Management guidelines, the project charter is a document that formally authorizes a
project giving the project manager the authority to execute the project and obtain the required resources.
This is a point in time document signed by all stakeholders and can be used as a baseline for any future
changes on the project. The Project Charter is the key document in the Initiation phase of a project and is
the first opportunity that the project manager has to build the right foundations for the project.

Best Practices when Writing a Project Charter

Writing a Project Charter can be time-consuming, particularly if not done properly, thus, here’s a couple of
tips to help you steer your project towards success from its very beginning:
Keep it brief: Trust me, the more pages a document contains, the less chance it will get read. Try to keep
your Project Charter simple and brief. After all, it should capture key, high-level information!
Be explicit: No one cares or is enthusiastic about a vague summary of a project. Get to the point as early as
possible and make it explicit.
Build it with your sponsor: While theory advises that the Charter should be handed-over by the project
sponsor to the project manager, in reality it is often the project manager to write the Project Charter with the
support of the Sponsor. Whatever the model, the involvement of the sponsor is fundamental.
Get it signed-off: Until you get the Charter to be signed-off by your sponsor, the project is not formally
authorized. No Charter, no project.
Share it: One of the main benefits of a Charter is that you can gain support from the project and ensure that
there is a shared understanding of what the project is about. Be proud to share your Charter with your team
and key stakeholders!
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d) Appoint a project team.
At this point the scope of the project has been defined in detail and the project team is ready to be
appointed. Although a Project Manager can be appointed at any stage of the project, s/he will need to be
appointed prior to the establishment of the project team. The Project Manager documents a detailed Job
Description for each project role and appoints a human resource to each role based on his/her relevant
skills and experience.

The Project Manager Job Description template lists all of the responsibilities of a Project Manager role
within a project.
This Job Description template will help you to:
 Define the real purpose of the role
 List the key responsibilities of the role
 Define who this role will be reporting to
 Create a detailed Organizational Chart
 List the skills and experience needed
 Define any relevant qualifications
 Set out the key performance criteria
 Identify the salary and working conditions

A Project Job Description defines the objectives and responsibilities of a particular role on a project.
Completing a Job Description Template ensures the skills, experience and qualifications needed to fulfill
the role are clearly defined. A Job Description may also be referred to as a "Position Description".
When to use a Job Description
A Project Job Description should be completed every time a new role is identified. The Project Job
Description should clearly state the objectives and responsibilities of the role and where it fits within the
organizational structure.
e) Set up Project Office
The Project Office is the physical environment within which the team will be based. Although it is usual to
have one central project office, it is possible to have a ‘virtual project office’ environment, with project team
members in various locations around the world. Regardless of the location, a successful project office
environment will comprise the following components:
▪ Location (either physical or virtual)
▪Communications (telephones, computer network, email, internet access, file storage, database storage
and backup facilities)
▪ Documentation (methodology, processes, forms and registers)
▪ Tools (for accounting, project planning and risk modelling).

A checklist lists all the business-critical tools required to run a professional and efficient Project
Management Office environment. Whether you are setting up a PMO, or you're running a PMO currently,
this checklist will help you ensure that you are providing a high level of support to projects.
The Project Office Checklist lists everything you need to do, to set up a Project Management Office. A
Project Management Office is the physical premises within which project staff (e.g. the Project Manager
and support staff) reside. The Project Office also contains the communications infrastructure and
technologies required to support the project. By using a 'Project Office Checklist' you will ensure you have
all of the tools needed to operate your Project Office.
When to use a Project Office Checklist
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A Project Office Checklist helps you to establish and operate a Project Management Office. This Project
Office Checklist contains a list of items to help you determine whether; the Project Office premises are fit
for purpose, you have sufficient equipment available and whether all of the roles, standards and processes
are in place within your Project Management Office environment.
f) Perform an initiation Phase Review

At the end of the Initiation Phase, a Phase review is performed. This is basically a checkpoint to ensure that
the project has achieved its stated objectives as planned.
A Project Review is an assessment of the status of a project, at a point in time. The first time in the project
life cycle that a project review is undertaken is at the end of the first project phase, called "Initiation". During
this project review, a decision is made as to whether the team has met the objectives and is approved to
proceed to the next project phase, being the "Planning" phase. Performing a project management review at
the end of each phase is critical to the success of the project, because it allows the Project Sponsor to
control the progress of the project and make sure that it passes through each Project Phase smoothly.
A Project Management Review is conducted to measure the deliverables produced by the project, then the
results of the review are documented on the Project Review form which is presented to the sponsor for
approval.

This phase helps you to document the results of your Project Review, by stating whether the:
 Project is currently delivering to schedule
 Budget allocated was sufficient at this point
 Deliverables have been produced and approved
 Risks have been controlled and mitigated
 Issues were identified and resolved
 Changes were properly managed
 Project is on track

When to complete a Project Review

As soon as the project team believes they have completed a particular project phase, a project review
should be undertaken. There will usually be at least three project reviews during the project life cycle: at the
end of the Initiation, Planning and Execution project phases.

Lesson 3: PROJECT APPRAISAL, SELECTION & ANALYSIS.

Investment in projects (covering short and long periods) involves capital expenditure /capital investment.
Project evaluation and Analysis involves.

- Forecasting capital (Financial) requirements

- Identifying suitable feasible projects
- Appraising potential projects /assessing costs and benefits of the project over its life.
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 - Selecting and approving the best alternative
- Making a capital expenditure.
- Comparing actual and planned spending investigating deviations and monitoring
project benefits.

Evaluation also involves other aspects ie the social and economic viability e.g. if the project’s
implementation leads to socio-economic development, it may be undertaken even if it is financially
unviable.
The process of appraising potential projects requires the planning (as stated in the proposal).
- Detailed statement of cash flow and inflows
- Assessment of tax impact.
- The discount rate to account for the time value of money.

Project evaluation Techniques include:

a) Those that don’t consider time value of money (Non-discounted cash flow methods).
b) Those that consider time value of money (Discounted cash flow methods).

A) Non Discounted cash flow methods:

1) Pay back method (Payback period).

This is the period that a project takes to pay back /return the money spent on it from the net cash flows (net
operating income after taxes and depreciation)
Decision rule:
Only projects that pay back within the specific time period are viable and should be undertaken.

i) Projects with constant annual cash flows:

When future project cash flows are expected to be constant overtime, pay back is given by:
Initial investment cost
Annual cash flow

Example:
An initial project expenditure of $2 million is expected to generate net cash flow of $500,000 for the next 7
years. What is the payback period for the project?

PBP = Initial investment

Annual cash flow
= 2,000,000
500,000
= 4 years.

ii) Projects with uneven annual cash flows

It is rare for project cash flows to be necessarily constant. Where cash flows are not constant, payback is
calculated by working out the cumulative cash flow over the life of the project.
Example:
A project is expected to generate the following cash flow

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 Year Cash flow ($000)
0 (1900)
1 300
2 500
3 600
4 800
5 500

The payback period is given by:

Year Cash flow ($000) Cumulative cash flow

1 300 300
2 500 800
3 600 1400
4 800 2200
5 500 2700

PBP = 3 years + 500

800
= 3 + (0.625) = 0.625 x 12 months
= 8 months.
PBP = 3 years, 8 months

Advantages of PBP method:

 It is a simple technique, easy to calculate and useful in rapidly
changing technologies.
 It puts emphasis on quick returns, so that they may be put in other use.
 It uses cash flows, not profits.
Disadvantages:
 It ignores reforms after the payback period (Post –pay back cash flows)
 It ignores timing of cash flows (time value of money).
 Doesn’t explicitly consider risk.
 Ignores project profitability.
 Doesn’t give good investment decision since there is no strict payback time for all projects.

2. Return on Capital Employed (ROCE) /Accounting Rate of Return (ARR).

This is a non-discounting project approach model.
Accounting Rate of Return (ROCE /ARR)= Average Annual profit after depreciation
Initial cost.

ARR = O-D
I
O= Average annual incremental cash flow from operations
D= Incremental average annual deprecation
I =Initial investment.
16
But Depreciation = Original investment – Scrap value
Useful life

Decision rule:
If the expected ROCE/ARR for the project is greater than the target/hurdle rate, the project is accepted.

Example:
A project involves the purchase of machinery costing $110,000. This project is expected to generate annual
cash flows of $ 24400 for 5 years. The machine would have a scrap value of $ 10,000 at the end of 5
years. Find its ARR /ROCE.

ROCE /ARR = Average Annual profit after depreciation

Initial cost.

Depreciation =Original investment – Srap value

Useful life

= 110,000 – 10,000
5 years.

= 100,000
5
= $ 20,000

Average Annual profit =Annual cash flows - Annual depreciation

=24400-20,000
=$ 4,400

AAR = 4,400 x 100

110,000 = 4%

Advantages of using ARR

 It is simple to calculate
 Each year is involved in calculating the profitability of the project.
 It is expressed as a %age making it easy to understand.
Disadvantages
 It ignores the timing of cash flows (Time value of money)
 Has different methods of calculation giving different figures
 There is no investment signal. Decision to invest remains subjective
B) Discounted Cash flow Methods
It is the method of evaluating projects that recognizes that a dollar received immediately is preferable to a
dollar received at future time.
In this method, the cash flows are discounted to their present values using relevant discount rate or
required rate of reforms on investment

It includes:

17
1) Net Present Value method (NPV)
2) Internal Rate of Return (IRR)
3) Profitability Index (PI)
Note: For purposes of this course, only the first and third will be considered.

1). Net present value method

Net Present Value refers to the difference between the present value of the projects cash inflows and the
PV of its cash outflows.
It represents the surplus funds that are earned on the project after funding the investment.
Formula:
n
NPV= ∑ Ai -Io , Where
I=1 (1+r) i
Ai = Net cash flow in period i
r = Required rate of return /Cost of capital
Io = Initial investment cost.
n = Number of months/years/time period

Decision Rule:
 If NPV is positive, the project is financially viable.
 If negative, the project is unviable
 If the investment has two or more mutually exclusive projects, the one with highest NPV is chosen

Example:
An organization is considering on investment in a new project. The estimated cash flows are as below:
Year Cash flow ($000)
0 (240)
1 80
2 120
3 70
4 40
5 20

The organization’s cost of capital is 9% per annum.

Calculate its NPV and advise on whether it’s is viable.

Solution:
Year Cash flow Discount factor (9%) PV
0 (240,000) 1.00 (240,000)
1 80,000 0.917 73360
2 120,000 0.841 101040
3 70,000 0.772 54040
4 40,000 0.708 28320
5 20,000 0.650 13000
NPV 29760

18
Advantages of NPV
- It considers time value of money.
- It is based on cash flow, not profit
- It considers the whole life of the project.
Disadvantages
- It is difficult to explain NPV values to managers.
- It may be hard to fore-cost or estimate future cash flows for project investment since the future is
always uncertain.
- Solutions figures not in percentage, hard to compare.

2. Profitability index (PI)

This is sometimes called the Benefit –cost ratio or the PV index.
It is reached by computing the ratio /value of cash inflows and present value of cash out flows.
Decision Rule:
Accept a project with the profitability index (P1) greater than one.

P1 = Net Present value of cash inflows

Initial cost
In using P1 it is assumed that the reforms from the project are generated in exact proportion as amount
invested i.e P1 gives returns in the present terms per unit invested.
Hence, projects will be ranked from one with highest PI to one with lowest, and projects are selected in
order of ranking up to the point where the budget is exhausted.

NB: PI method is simple

However, it cannot be used except where there are multiple constraints, not only capital.
It looks at projects individually, doesn’t take into account the overall portfolio where correlation of project’s
return is important.

Review questions
1. What do you understand by Discounted and Non discounted project evaluation techniques?
2. What is project payback period? What are the advantages and disadvantages of the payback period
method?

Capital Rationing:
Shareholders/project and company wealth is maximized where a company has undertaken all positive NPV
investment capital rationing.
This is done by specifying a limit on the total budget capital spending on projects especially where there are
insufficient funds.

Capital rationing is undertaken where an organization/company has move amounts of capital projects to
invest in with positive NPV than it has money to invest in them. Hence some projects that should have been
accepted are excluded.
This is called ‘Artificial constraint’ because the company management may decide the amount to be
invested.

Types of rationing
19
 a) Hard capital rationing: Where the limit on the amount of finance is imposed by lending institutions.
Reasons
 Industrial factors on limiting funds i.e if a project is within an industry that is taken to be highly risk.
 Company specific factors such as poor historical record on company’s performance.
b) Soft capital rationing
This is where management internally composes limits on investment expenditure.
It is however against the rational view of shareholder profit maximization, which requires shareholders to
invest in all viable projects.
Reasons
 Human resource/management skill limitation ie lack of strong middle management to handle bigger
projects.
 Desire to maximize returns of a limited range of investments.
 Divisional constraints: upper management allocates fixed amount for each division as corporate
strategy.
 Debt constraints: Earlier debt issues which prohibit increase in the firm’s debt beyond certain level.

Rationing and Divisible project

As noted earlier, divisible projects are ranked using profitability index (PI), where:

PI = Net Present Value

Initial investment out lay

Procedure for Rationing Divisible Projects.

 Calculate the PI for cash project.
 Rank the project according to PI magnitude
 Allocate funds according to the ranking until all available funds are used up and make a selection
of projects

Example:
A company has $ 100,000 available for investment and has identified the following 5 divisible projects.

Project Initial cost ($) NPV

C 40,000 20,000
D 100,000 35,000
E 50,000 24,000
F 60,000 18,000
G 50,000 (10,000)

Determine the project that should be undertaken

Solution:
NB: Project G is not viable because has negative NPV

Computation of PI
Projects NPV/IC PI Ranking
C 20,000/40,000 = 0.5 1ST
20
 D 35,000/100,000 = 0.35 3RD
E 24,000/50,000 =0.48 2ND
F 18,000/60,000 =0.3. 4TH

Rationing
Available funds ($) Project selected NPV earned ($)
100,000 C 20,000
(40,000)
60,000 E 24,000
(50,000)
10,000 10,000 of D 10% of 35,000
(10,000) (10% of D) = 3500

Project selection
C, E, and 10% of D. NPV=20,000 + 24,000 + 3500 = $ 47500.

Rationing Indivisible Projects

In this case, projects can’t be divided. It is either wholly undertaken or not.
Example:
Mwijika Ltd, a Telecom Company has $ 150,000 available for investment in 5 projects. Preliminary
evaluation indicates the following.

Project Initial cost ($) NPV ($)

C 40,000 20,000
D 100,000 35,000
E 50,000 24,000
F 60,000 18,000
G 50,000 (1,800)

Determine the optimal project selection

Solution:
Alternative investment mix Initial cost required NPV
C&F 40,000 + 60,000 = 100,000 20,000 + 18,000 =
36,000
D 100,000 35,000
C&E 40,000 + 50,000 = 90,000 20,000 + 24000 = 44000

C & E is the best investment mix because it has the highest NPV.
NB. The unused funds 10,000 (100,000-90,000) will earn a return equivalent to the cost of capital and will
not affect NPV. Ie their NPV is zero.

Rationing Mutually Exclusive Projects

Projects are said to be mutually exclusive if investment in one would mean that another can’t be
undertaken. This may be because the two require the some type of resources.

Example
21
A company has identified four divisible Projects as below:

Project Initial cost NPV

A 50,000 100,000
B 10,000 (50,000)
C 10,000 84,000
D 15000 45,000

The firm has only $ 50,000 for investment and projects C & D are mutually exclusive.
Determine the optimal project selection.

Solution:
Computation of PI
PI = NPV
Initial cost

Project
A 100,000/50,000 = 2.0 3RD
C 84,000/10,000 = 8.4 1ST
D 4,5000/15,000 =3 2ND

Rationing
Investment Alternative Initial cost NPV
C & 40,000/50,000 of A 10,000 +4/5 of A 84,000 + 80,000 =
16400
D & 3500/50,000 of A 15000 + 70% of A 45000 + 70,000 =
115,000

Therefore, the best alternative is C & 80% of A,

NPV = 84,000 + 80,000 = 164,000

Lesson 3: PROJECT APPRAISAL, SELECTION & ANALYSIS.

Investment in projects (covering short and long periods) involves capital expenditure /capital investment.
Project evaluation and Analysis involves.

22
 - Forecasting capital (Financial) requirements
- Identifying suitable feasible projects
- Appraising potential projects /assessing costs and benefits of the project over its life.
- Selecting and approving the best alternative
- Making a capital expenditure.
- Comparing actual and planned spending investigating deviations and monitoring
project benefits.

Evaluation also involves other aspects ie the social and economic viability e.g. if the project’s
implementation leads to socio-economic development, it may be undertaken even if it is financially
unviable.
The process of appraising potential projects requires;
- Detailed statement of cash flow and inflows
- Assessment of tax impact.
- The discount rate to account for the time value of money.

Investment/Project appraisal
Involves Identifying, analyzing, and selecting investments/projects that will improve the firm’s profitability or
value from the options available at any time. This stage normally involves a critical examination of the
prepared project. It is the stage at which the assumption of the project, its technical, financial, economic,
administrative and institutional aspects of the project are independently examined. It is usually done by the
interested financier.
An appraisal of a project is a detailed analysis of number of aspects that can take the following form
i. Technical aspect/appraisal
ii. Financial aspects
iii. Economic aspects
iv. Institutional aspects
v. Administrative aspects

The need for Investment/project appraisal

An appropriate appraisal must be made to ensure that the right investment decision is made. A good
decision will increase the value of the company. Projects are identified, evaluated for suitability based on
the organisation/firm’s investment evaluation criteria. The best project(s) is then chosen for implementation

Economic Appraisal

In project management the term is used synonymously with economic cost benefit analysis and social cost
benefit analysis.
It is a technique used to decide whether a project will be constructive towards reaching a country’s
objectives. It is so significant because of inadequate of developmental resources hence it is done for proper
resource allocation.
Economic analysis should take place independent of the financial analysis as follows;
1. Identification of all the costs and benefits for the project over its economic life time
2. Measurements of these costs and benefits and applying suitable practices
23
 3. Determination of suitable discount rates or social discount rates
4. Selection of the project using suitable investment criterion
However, in some cases, economic analysis is conducted after financial analysis; financial analysis
therefore becomes the starting point using financial projections from which the costs and benefit are
compared
The Institutional and Administrative Appraisal
This is done to determine the suitability of the implementing agency, its level of organization and the
mechanism for coordination need for the project. This is necessary because the outcome of the project is
highly dependent on the ability of the institutions responsible for the project management i.e. the
implementing agency.

Financial Appraisals
It’s the examination of the financial flows of a project i.e. how much financial outflows that need to be
incurred and how much are the inflows of the project over the project life.

Project Appraisal Techniques include:

c) Those that don’t consider time value of money (Non-discounted cash flow methods).
d) Those that consider time value of money (Discounted cash flow methods).

A) Non Discounted cash flow methods:

1) Payback method (Payback period).
This is the period that a project takes to payback /return the money spent on it from the net cash flows (net
operating income after taxes and depreciation)
Decision rule:
Only projects that pay back within the specific time period are viable and should be undertaken.

i) Projects with constant annual cash flows:

When future project cash flows are expected to be constant overtime, pay back is given by:
Initial investment cost
Annual cash flow

Example:
An initial project expenditure of $2 million is expected to generate net cash flow of $500,000 for the next 7
years. What is the payback period for the project?

PBP = Initial investment

Annual cash flow
= 2,000,000
500,000
= 4 years.

Alternative project
Initial investment Annual cash flow Life span Payback period
A 300,000 60,000 15 5
B 440,000 112500 22 3.9
C 10,750 900 13 11.9

24
 D 102,500 25500 10 4.02

• The project with the shortest payback period is the most viable and should be selected.
• In case it is a machinery project, if project B is selected then the investor is left with roughly 18
years to utilize the machinery and this is the longest use when compared with other projects.

ii) Projects with uneven annual cash flows

It is rare for project cash flows to be necessarily constant. Where cash flows are not constant, pay back is
calculated by working out the cumulative cash flow over the life of the project.
Example:
A project is expected to generate the following cash flow

Year Cash flow ($000)

0 (1900)
1 300
2 500
3 600
4 800
5 500

The payback period is given by:

Year Cash flow ($000) Cumulative cash flow
0 (1900) (1900)
1 300 (1600)
2 500 (1100)
3 600 (500)
4 800 300
5 500

PBP = 3 + 500
800
= 3 + (0.625) = 3.625 Years

PBP = 3.625 Years

Alternative Project

25
If we are to use pay-back period alone, then, project B would be superior to project A
However, we can evidently see that project A will generate total profits of 140 million and project B only 32
million before depreciation, after investing Ushs. 80 million.

Advantages of PBP method:

 It is a simple technique, easy to calculate and useful in rapidly
changing technologies.
 It puts emphasis on quick returns, so that they may be put in other use.

26
  It uses cash flows, not profits.
 It is suitable when there is a capital rationing scenario to identify which can quickly generate cash
flows for further investment.
 It is very useful for preliminary screening of the projects before further evaluation.
Disadvantages:
 It ignores returns after the payback period (Post –pay back cash flows)
 It ignores timing of cash flows (time value of money).
 Doesn’t explicitly consider risk.
 Ignores project profitability.
 Doesn’t give good investment decision since there is no strict payback time for all projects.
 The method doesn’t distinguish between projects with the same payback period.
 It favors only short-term projects.

2. Return on Capital Employed (ROCE) /Accounting Rate of Return (ARR).

This is a non-discounting project approach model.
Accounting Rate of Return (ROCE /ARR) = Average Annual profit after depreciation
Initial cost.

But Depreciation = Original investment – Scrap value

Useful life

And;

Average Annual profit = Annual cash flows - Annual depreciation

Return on capital employed formula is calculated by dividing net operating profit or EBIT by the employed
capital.
Decision rule:
If the expected ROCE/ARR for the project is greater than the target/hurdle rate, the project is accepted.
Say, if ARR = 7%, then it means that the project is expected to earn seven cents out of each dollar invested
(yearly). If the ARR is equal to or greater than the required rate of return, the project is acceptable. If it is
less than the desired rate, it should be rejected. When comparing investments, the higher the ARR, the
more attractive the investment. More than half of large firms calculate ARR when appraising projects.

Example:
A project involves the purchase of machinery costing $110,000. This project is expected to generate annual
cash flows of $ 24400 for 5 years. The machine would have a scrap value of $ 10,000 at the end of 5
years. Find its ARR /ROCE.

ROCE /ARR = Average Annual profit after depreciation

Initial cost.

Depreciation =Original investment – Scrap value

Useful life

27
 = 110,000 – 10,000
5 years. = 100,000
5
= $ 20,000
Average Annual profit (AAP) =Annual cash flows - Annual depreciation or AAP= T otal profit over
investment period/number of years
= 24400-20,000
= $ 4,400
AAR = 4,400 x 100
110,000 = 4%
Advantages of using ARR
 It is simple to calculate
 Each year is involved in calculating the profitability of the project.
 It is expressed as a %age making it easy to understand.
Disadvantages
 It ignores the timing of cash flows (Time value of money)
 Has different methods of calculation giving different figures
 There is no investment signal. Decision to invest remains subjective

B) Discounted Cash flow Methods

These are methods of evaluating projects that recognize that money received immediately is preferable to
money received at future time.
In these methods, the cash flows are discounted to their present values using relevant discount rate or
required rate of reforms on investment

It includes:
1) Net Present Value method (NPV)
2) Internal Rate of Return (IRR)
3) Profitability Index (PI).

1). Net present value method

Net present value (NPV) is a method of determining the current value of all future cash flows generated by
a project after accounting for the initial capital investment. It is widely used in capital budgeting to establish
which projects are likely to turn the greatest profit. NPV calculates the difference between the present value
of the cash inflows and outflows of a project or potential investment. In other words, it’s used to evaluate
the amount of money that an investment will generate compared with the cost adjusted for the time value of
money.

Formula:
n
1
NPV= ∑ (1+Ctr)t – C0 Or You can use the discount Factor Formula: f=
(1+r )
t
t =1
Where;

28
Ct = Net cash flow in period t
r = Required rate of return /Cost of capital / discount rate
Co = Initial investment cost.
n = Number of months/years
t = Time period
f = Discount factor
Decision Rule:
 If NPV is positive, the project is financially viable.
 If negative, the project is unviable
 If the investment has two or more mutually exclusive projects, the one with highest NPV is chosen

Example:
An organization is considering on investment in a new project. The estimated cash flows are as below:
Year Cash flow ($000)
0 (240)
1 80
2 120
3 70
4 40
5 20

The organization’s cost of capital is 9% per annum.

Calculate its NPV and advise on whether it is viable.
Solution:
Year Cash flow (Ct) (1+r) t Ct
(1+r) t or pv

0 (240,000) 1.00 (240,000)

1 80,000 1.09 73394
2 120,000 1.1881 101002
3 70,000 1.295 54054
4 40,000 1.4 28571
5 20,000 1.526 13106
NPV =
30127

Based on the above information, calculate the Project’s internal rate of Returns (IRR) when a discount rate
of 4% returns NPV of 20,000 for the project.

IRR = NPV1R2 – NPV2R1

NPV1 - NPV2

NPV1 = 30127 NPV2= 20,000 R1= 9 R2 = 4

IRR = 120,508 – 180,000

30,127 - 20,000

29
 = -59492
10127
IRR = -5.87%

A negative IRR (internal rate of return) means the sum of post-Investment cash flows is less than the initial
investment. It means that an investment loses money at the rate of the negative IRR. On the other hand, a
negative NPV means that means that the cost of capital or discount rate is more than the project IRR and it
further means that such an investment with will result in a net loss.

Note: Internal rate of return (IRR) is the discount rate at which the net present value of an investment
becomes zero (PV of future cash flows − Initial Investment = 0). At IRR, Net Present Value (NPV) is zero.
In other words, IRR is the discount rate which equates the present value of the future cash flows of an
investment with the initial investment. It is one of the several measures used for investment appraisal. The
decision rule is that a project should only be accepted if its IRR is NOT less than the target internal rate of
return. When comparing two or more mutually exclusive projects, the project having highest value of IRR
should be accepted.

Advantages of NPV
- It considers time value of money.
- It is based on cash flow, not profit
- It considers the whole life of the project.
Disadvantages
- It is difficult to explain NPV values to managers.
- It may be hard to fore-cost or estimate future cash flows for project investment since the future is
always uncertain.
- Solutions figures not in percentage, hard to compare.

Another example: The table below provides information for Esau’s rabbit project expected to last for 5
years.

Year 1 2 3 4 5
COSTS 19,400 15,080 7,000 6,880 6,200
BENEFITS 15,500 15,000 8,830 7,063 6,970

Suppose the discount rate for the project is 18%, by stating weather the project is viable or not,

i. Determine the Net present value.

ii Determine the Benefit-Cost ratio

30
2. Profitability index (PI)
This is sometimes called the Benefit –cost ratio or the PV index.
It is reached by computing the ratio /value of cash inflows and present value of cash out flows.
Decision Rule:
Accept a project with the profitability index (P1) greater than one.

P1 = Net Present value of cash inflows

Initial cost
In using P1 it is assumed that the reforms from the project are generated in exact proportion as amount
invested i.e P1 gives returns in the present terms per unit invested.
Hence, projects will be ranked from one with highest PI to one with lowest, and projects are selected in
order of ranking up to the point where the budget is exhausted.

NB: PI method is simple

However, it cannot be used except where there are multiple constraints, not only capital.
It looks at projects individually, doesn’t take into account the overall portfolio where correlation of project’s
return is important.

Capital Rationing:
Shareholders/project and company wealth is maximized where a company has undertaken all positive NPV
investment capital rationing.
This is done by specifying a limit on the total budget capital spending on projects especially where there are
insufficient funds.

Capital rationing is undertaken where an organization/company has more amounts of capital projects to
invest in with positive NPV than it has money to invest in them. Hence some projects that should have been
accepted are excluded.
This is called ‘Artificial constraint’ because the company management may decide the amount to be
invested.

Types of rationing
b) Hard capital rationing: Where the limit on the amount of finance is imposed by lending institutions.
Reasons
 Industrial factors on limiting funds i.e if a project is within an industry that is taken to be highly risk.
 Company specific factors such as poor historical record on company’s performance.
b) Soft capital rationing
This is where management internally composes limits on investment expenditure.
It is however against the rational view of shareholder profit maximization, which requires shareholders to
invest in all viable projects.
Reasons
 Human resource/management skill limitation ie lack of strong middle management to handle bigger
projects.
 Desire to maximize returns of a limited range of investments.
 Divisional constraints: upper management allocates fixed amount for each division as corporate
strategy.
 Debt constraints: Earlier debt issues which prohibit increase in the firm’s debt beyond certain level.

31
Rationing and Divisible project
As noted earlier, divisible projects are ranked using profitability index (PI), where:

PI = Net Present Value

Initial investment outlay

Procedure for Rationing Divisible Projects.

 Calculate the PI for cash project.
 Rank the project according to PI magnitude
 Allocate funds according to the ranking until all available funds are used up and make a selection
of projects
Example:
A company has $ 100,000 available for investment and has identified the following 5 divisible projects.

Project Initial cost ($) NPV

C 40,000 20,000
D 100,000 35,000
E 50,000 24,000
F 60,000 18,000
G 50,000 (10,000)

Determine the project that should be undertaken

Solution:
NB: Project G is not viable because has negative NPV

Computation of PI
Projects NPV/IC PI Ranking
C 20,000/40,000 = 0.5 1ST
D 35,000/100,000 = 0.35 3RD
E 24,000/50,000 =0.48 2ND
F 18,000/60,000 =0.3. 4TH

Rationing
Available funds ($) Project selected NPV earned ($)
100,000 C 20,000
(40,000)
60,000 E 24,000
(50,000)
10,000 10,000 of D 10% of 35,000
(10,000) (10% of D) = 3500

Project selection
C, E, and 10% of D. NPV=20,000 + 24,000 + 3500

32
 = $ 47500.

Rationing Indivisible Projects

In this case, projects can’t be divided. It is either wholly undertaken or not.

Example:
Mwijika Ltd, a Telecom Company has $ 100,000 available for investment in 5 projects. Preliminary
evaluation indicates the following.

Project Initial cost ($) NPV ($)

C 40,000 20,000
D 100,000 35,000
E 50,000 24,000
F 60,000 18,000
G 50,000 (1,800)

Determine the optimal project selection

Solution:
Alternative investment mix Initial cost required NPV
C&F 40,000 + 60,000 = 100,000 20,000 + 18,000 =
36,000
D 100,000 35,000
C&E 40,000 + 50,000 = 90,000 20,000 + 24000 = 44000

C & E is the best investment mix because it has the highest NPV.
NB. The unused funds 10,000 (100,000-90,000) will earn a return equivalent to the cost of capital and will
not affect NPV. Ie their NPV is zero.

Rationing Mutually Exclusive Projects

Projects are said to be mutually exclusive if investment in one would mean that another can’t be
undertaken. This may be because the two require the same type of resources.

Example
A company has identified four divisible Projects as below:

Project Initial cost NPV

A 50,000 100,000
B 10,000 (50,000)
C 10,000 84,000
D 15000 45,000

The firm has only $ 50,000 for investment and projects C & D are mutually exclusive.
Determine the optimal project selection.

Solution:
Computation of PI

33
PI = NPV
Initial cost

Project
A 100,000/50,000 = 2.0 3RD
C 84,000/10,000 = 8.4 1ST
D 4,5000/15,000 =3 2ND

Rationing
Investment Alternative Initial cost NPV
C & 40,000/50,000 of A 10,000 + 80% of A 84,000 + 80,000 =
164,000
D & 35000/50,000 of A 15000 + 70% of A 45000 + 70,000 =
115,000

Therefore, the best alternative is C & 80% of A,

NPV = 84,000 + 80,000 = 164,000

Lesson 4 : 2nd phase of the project life cycle- Planning Phase

What’s project planning about?
Project planning is about:
 Confirming the project scope and objectives-
 What do you want to achieve?
 What are the boundaries; what is to be included or excluded?
 Determining the expected outcomes/results
 Determining resources /inputs needed to deliver the outcomes
 Assessing risks
Steps to planning a project
 Break the work down into manageable tasks, according to objectives (these must
have a clear sequence)
 Set the outcome /deliverable expected from each stage
 Set milestones- key points that show whether project is going according to plan (act
as measure of progress)
 Identify the resources to be used at each level/ for each deliverable.
 Identify who will carry out the work involved/each deliverable

These resources are: Human, material, Financial and Time resources.

Achievement and realization of set objectives will depend on clear planning, management and control of
these resources.

34
By this stage, the benefits and costs of the project have been clearly documented, the objectives and scope
have been defined, the project team has been appointed and a formal project office environment
established. It is now time to undertake detailed planning to ensure that the activities performed in the
execution phase of the project are properly sequenced, resourced, executed and controlled.

The planning phase involves the creation of a:

▪ Project Plan (outlining the activities, tasks, dependencies and timeframes)
▪ Resource Plan (listing the labor, equipment and materials required)
▪ Financial Plan (identifying the labor, equipment and materials costs)
▪ Quality Plan (providing quality targets, assurance and control measures)
▪ Risk Plan (highlighting potential risks and actions taken to mitigate them)
▪ Acceptance Plan (listing the criteria to be met to gain customer acceptance)
▪ Communications Plan (listing the information needed to inform stakeholders)
▪ Procurement Plan (identifying products to be sourced from external suppliers).

1. Develop Project Plan.

The first step is to document the Project Plan.
A ‘Work Breakdown Structure’ (WBS) is identified, which includes a hierarchical set of phases, activities
and tasks to be undertaken on the project. After the WBS has been agreed, an assessment of the effort
required to undertake the activities and tasks is made. The activities and tasks are sequenced, resources
are allocated, and a detailed project schedule is formed. This project schedule will become the primary tool
for the Project Manager to assess the progress of the project.

Purpose of a project plan

A project plan is one of the most important ingredients for a successful project. It is used to document and
communicate expectations, to control schedule and delivery, and to calculate and manage risks. In general,
it acts as a roadmap for everyone involved in the project.
Here are the benefits of a project plan:
 Improves communication: By outlining your whole plan for everyone to see, stakeholders can
provide feedback early in the process if things are going in the right direction. A project plan also
helps facilitate expectation management by letting you update milestones and timelines as the
project progresses.

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  Increases transparency: With a project plan, stakeholders and team members know exactly where
to look to get information every step of the way. Expectations and the project timeline are clearly
defined, so everyone is on the same page about priorities and objectives.
 Increases organization: Many projects have dozens of tasks, dependencies, and milestones, and it
can be hard to track how everything is progressing. A project plan makes you think through the
timing of each activity and how it affects the rest of the project. You always know how much time to
spend on each task and how many things you can accomplish at the same time.

The Project Plan is the most important document in the project, as it provides the Project Manager with a
roadmap ahead, and it tells them during the journey whether they are on-track. Using this Project Plan
template, you can create a comprehensive project management plan for your project.
The Project Plan is referred to constantly throughout the project. Every day, the Project Manager will review
actual progress against that stated in the Project Plan, to ensure they are still on track. The Project Plan is
therefore the most critical tool a Manager can have to successfully deliver projects.

2. Develop Resource Plan

A Resource Plan summarizes the level of resources needed to complete a project. A properly documented
Resource Plan will specify the exact quantities of labor, equipment and materials needed to complete your
project.
Immediately after the Project Plan is formed, it is necessary to allocate the resources required to undertake
each of the activities and tasks within the Project Plan. Although general groups of resources may have
already been allocated to the Project Plan, a detailed resource assessment is required to identify the:
▪ Types of resources (labor, equipment and materials)
▪ Total quantities of each resource type
▪ Roles, responsibilities and skill-sets of all human resources
▪ Items, purposes and specifications of all equipment resource
▪ Items and quantities of material resource.
A schedule is assembled for each type of resource so that the Project Manager can assess the resource
allocation at each stage in the project
Creating a Resource Plan
The first step is to produce a detailed list of all the individual resources needed to complete the project.
Start by listing each of the major resource groups (eg: Labour, Equipment and Materials), then list the
individual components of each group.
 Labour: identify all the roles responsible for or involved with the completion of any activity specified
in the Project Plan. Remember to include any external or contract staff that will be brought in for
specific tasks.
 Equipment: identify all the equipment which will be needed to complete the project, eg: office
equipment (PCs, photocopiers, mobile phones etc.), telecommunications equipment (cabling,
switches etc.) and machinery (heavy and light machinery).
 Materials: consumables (eg: photocopy paper, stationery, ink cartridges) are often needed to
complete project activities. Other materials (eg: wood, steel and concrete) may be needed to
produce physical deliverables. Draw up a detailed list of all the materials required to complete the
project.

3. Develop a financial plan

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Like the Resource Plan, a Financial Plan is prepared to identify the quantity of money required for each
stage in the project. The total cost of labor, equipment and materials is quantified, and an expense
schedule is defined which provides the Project Manager with an understanding of the forecast spending vs.
the actual spending throughout the project. Preparing a detailed Financial Plan is extremely important as
the project’s success will depend on whether it is delivered within the ‘time, cost and quality’ estimates for
this project.
A Financial Plan identifies the Project Finance (i.e. money) needed to meet specific objectives. The
Financial Plan defines all of the various types of expenses that a project will incur (labor, equipment,
materials and administration costs) along with an estimation of the value of each expense. The Financial
Plan also summarizes the total expense to be incurred across the project and this total expense becomes
the project budget. As part of the Financial Planning exercise, a schedule is provided which states the
amount of money needed during each stage of the project.
When to use a Financial Plan
Whenever you need to ask for money, you need a sound Financial Plan showing how it will be consumed.
For a Project Manager, getting Project Finance is one of the most critical tasks in the project. Therefore,
sound Financial Planning principles must be followed to ensure a positive outcome.
A Financial Plan enables you to set a "budget", against which you measure your expenditure. To deliver
your project "within budget", you need to produce the project deliverables at a total cost which does not
exceed that stated in the budget.
4. Develop a quality plan
Meeting the quality expectations of the client is critical to the success of the project. To ensure that the
quality expectations are clearly defined and can reasonably be achieved, a Quality Plan is documented. A
Quality Plan helps you schedule all of the tasks needed to make sure that your project meets the needs of
your client. It comprises two parts; the Quality Assurance Plan lists the independent reviews needed and
the Quality Control Plan lists the internal reviews needed to meet your quality targets
The Quality Plan:
▪ Defines what quality means in terms of this project
▪ Lists clear and unambiguous quality targets for each deliverable. Each quality target provides a set of
criteria and standards which must be achieved to meet the expectations of the client.
▪ Outlines a plan of activities which will assure the client that the quality targets will be met (i.e. a Quality
Assurance Plan)
▪ Identifies the techniques used to control the actual level of quality of each deliverable as it is built (i.e. a
Quality Control Plan).
Finally, it is important to review the quality not only of the deliverables produced by the project but also of
the management processes which produce them. A summary of each of the management processes
undertaken during the execution phase is identified, including Time, Cost, Quality, Change, Risk, Issue,
Procurement, Acceptance and Communications Management.
The quality Plan helps you to set quality targets for your project to ensure that the deliverables produced,
meet the needs of your client. You can then use it to schedule quality control and quality assurance
activities, to assure your client that the quality targets will be met. . By using Quality Assurance and Quality
Control techniques, you can create a comprehensive Quality Management Plan for your project.
You can use a Quality Plan to set quality targets by:
 Identifying the client requirements
 Listing the project deliverables to be produced
 Setting quality criteria for these deliverables
 Defining quality standards for the deliverables
 Gaining your client’s agreement with the targets set

37
You can then use a quality Plan to monitor and control quality by:
 Identifying the quality control tasks needed to control quality
 Listing the quality assurance activities required to assure quality
 Building a Quality Assurance Plan, by creating an activity schedule
Quality Planning is a critical part of any project. It enables you to agree on a set of quality targets with your
client. It then helps you to monitor and control the level of quality produced by the project, to ensure that
you meet the quality targets set. By using a quality plan, you can set quality targets and ensure that your
project produces deliverables which meet your client needs, thereby ensuring your success.
When to use a Quality Plan?
Creating a Quality Plan is essential if you want to provide the client with confidence that you will produce a
solution that meets their needs. The Quality Plan states everything you're going to do, to ensure the quality
of your solution. The first section defines the Quality targets. The second section sets out a Quality
Assurance Plan. And the third section defines a Quality Control Plan. By using the quality control plan, you
can create a Quality Management Plan that gives your client a high degree of confidence that you will
succeed.
5. Develop a risk Plan
A Risk Plan helps you to foresee risks, identify actions to prevent them from occurring and reduce their
impact should they eventuate. The Risk Management Plan is created as part of the Risk Planning process.
It lists all foreseeable risks, their ranking and priority, the preventive and contingent actions, along with a
process for tracking them.
Developing a clear Risk Plan is an important activity within the planning phase as it is necessary to mitigate
all critical project risks prior to entering the Execution phase of the project. Using this risk plan, you can
monitor and control risks effectively, increasing your chances of achieving success.
This Risk Plan will help you to:
 Identify risks within your project
 Categorize and prioritize each risk
 Determine the likelihood of the risks occurring
 Identify the impact on the project if risk does occur
You can then use this Risk Plan template to:
 Identify preventative actions to prevent the risk from occurring
 List contingent actions to reduce the impact, should the risk occur
 Schedule these actions within an acceptable timeframe
 Monitor the status of each risk throughout the project
Creating a Risk Management Plan is a critical step in any project, as it helps you to reduce the likelihood of
risk from occurring. Regardless of the type of risk, you will be able to use the plan to put in place processes
and procedures for reducing the likelihood of risk occurring.
When to use a Risk Plan
A Risk Plan should be used anytime that risks need to be carefully managed. For instance, during the
startup of a project a Risk Plan is created to identify and manage the risk involved with the project delivery.
The Risk Plan is referred to frequently throughout the project, to ensure that all risks are mitigated as
quickly as possible. The Risk Plan helps you identify and manage your risks, boosting your chances of
success.
6. Develop Acceptance Plan.
The key to a successful project is gaining acceptance from the customer that each deliverable produced
meets (or exceeds) his/ her requirements. To clarify the criteria used to judge each deliverable for customer
acceptance, an Acceptance Plan is produced. The Acceptance Plan provides the criteria for obtaining
38
customer acceptance, a schedule of acceptance reviews within which customer acceptance will be sought
and a summary of the process used to gain acceptance of each deliverable from the client. Acceptance
Plan (also known as an "Acceptance Test Plan") is a schedule of tasks that are required to gain the
customers’ acceptance that what you have produced is satisfactory. It is more than just a task list though.
An Acceptance Plan is in fact an agreement between you and the customer, stating the acceptance tasks
that will be undertaken at the end of the project to get their final approval. The Acceptance Plan includes a
list of the deliverables, the acceptance test activities, the criteria and standards to be met, and the plan for
their completion.
This Acceptance Plan will help you gain acceptance, by:

 Creating a full list of all project deliverables

 Listing the criteria for gaining customer acceptance
 Putting in place, acceptance standards to be met

By creating an Acceptance Plan for your projects, you'll boost your chances of success - as you will
constantly produce deliverables which meet your customers’ requirements. The Acceptance Plan template
helps you to schedule customer acceptance tests to ensure that your deliverables meet your customers’
needs, every time.

When to use an Acceptance Plan

You should create an Acceptance Plan every time you need to produce a set of deliverables that require
the client/customer's approval before completion. If the customer/client needs to approve anything, then
you should agree upfront what actions will be taken to get their approval when the deliverables are
complete. By creating an Acceptance Plan at the start of a project, it will save you time and hassle at the
end, as the acceptance test actions will already have been pre-completed by the client.

7. Develop Communications Plan

Prior to the Execution phase, it is also necessary to identify how each of the stakeholders will be kept
informed of the progress of the project. The Communications Plan identifies the types of information to be
distributed, the methods of distributing information to stakeholders, the frequency of distribution and
responsibilities of each person in the project team for distributing information regularly to stakeholders
A Communication Plan (or Communications Plan) describes how you intend to communicate the right
messages to the right people at the right time. Within a Communication Plan, the communication goals,
stakeholders and strategies, activities and timeframes are described. A Communication Plan helps you
keep everyone informed so that you can communicate a consistent message to your target audience.
It helps you to build Communication Plans by:
 Listing your communications stakeholders
 Defining each stakeholders communication needs
 Identifying the required communications events
 Determining the method and frequency of each event
 Allocating resource to communications events
 Building a communication event schedule

You can then use the Communication Plan template for:

 Monitoring the communications events completed
 Gaining feedback on communications events

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  Improving communications processes

When to use a Communication Plan?

Whenever you have a variety of staff, external suppliers, customers and stakeholders to communicate with,
then you should record your communications formally in a Communication Plan. A clear Communications
Plan is vital to the success of an organization. It is also critical to the success of projects, as it ensures that
all of the staff and stakeholders are kept properly informed of the progress of a project.
8. Develop a procurement plan
The last planning activity within the Planning phase is to identify the elements of the Project which will be
acquired from external suppliers to the project. The Procurement Plan provides a detailed description of the
Products (i.e. goods and services) to be procured from suppliers, the justification for procuring each product
externally, as opposed to from within the business, and the schedule for procurement. It also references the
process for the selection of a preferred supplier (“Tender Process”) and the process for the actual order
and delivery of the procured products (“Procurement Process”).

A Procurement Plan defines the products and services that you will obtain from external suppliers. A good
Procurement Plan will go one step further by describing the process you will go through to appoint those
suppliers contractually. Whether you are embarking on a project procurement or organizational
procurement planning exercise, the steps will be the same. First, define the items you need to procure.
Next, define the process for acquiring those items. And finally, schedule the timeframes for delivery.

This Procurement Plan helps you:

 Define your procurement requirements
 Identify all of the items you need to procure
 Create a sound financial justification for procuring them
 List all of the tasks involved in procuring your products
 Schedule those tasks by allocating timeframes and resources
 Create a robust project procurement process for your business

When to use a Procurement Plan

It is advisable to create a Procurement Plan whenever you want to purchase items from suppliers. Using
the Procurement Plan template, you can define the procurement requirements, identify potential suppliers,
contract those suppliers and manage them to ensure delivery. Project Procurement Planning is critical to
the success of any project. This Procurement Plan template helps you to perform these steps quickly and
easily.
 Contract suppliers
Although external suppliers may be appointed at any stage of the project, it is usual to appoint suppliers
after the Project Plans have been documented but prior to the Execution phase of the project. Only at this
point will the Project Manager have a clear idea of the role of the supplier and the expectations for his/her
delivery. A formal Tender Process is invoked to identify a short-list of interested suppliers and select a
preferred supplier to meet the procurement needs of the project. The Tender Process involves creating a
Statement of Work, a Request for Information and Request for Proposal to obtain sufficient information
from each potential supplier to select a preferred supplier. Once a preferred supplier has been chosen, a
Supplier Contract is agreed for the delivery of the requisite product.
Statement of Work
A Statement of Work or SOW, defines 'what it is that you need' from an external supplier. It is a statement
of the work to be completed by a supplier. The Statement of Work also describes the materials and
40
equipment to be provided, within a defined timeframe. This will help you to manage the performance of
your supplier, ensuring that you receive exactly what it is that you're paying for.
This Statement of Work template helps you by:
 Defining the type of supplier that you wish to appoint
 Describing the materials and equipment you need
 Specifying the deliverables to be provided by the supplier
 Stating your terms and conditions for payment

When to use a Statement of Work

Every time you need to request work from an external supplier, you need to issue a Statement of Work. It
helps you clarify what it is that you want from your supplier and the timeframes in which to complete it.
Request for Proposal
A Request for Proposal (RFP) is a document that is issued to suppliers to help them provide the information
needed to make a preferred supplier decision. You need to complete a Request for Proposal to ensure that
you are provided with all of the information needed to make your preferred supplier decision
When to use a Request for Proposal
You need to create a Request for Proposal whenever you want to request a proposal from external
suppliers. The Request for Proposal describes the nature of the proposal you're seeking from them and the
timeframes for delivering it. The Request for Proposal also includes key terms and conditions you intend to
include in a supplier agreement.

Supplier Contract
A Supplier Contract or "Supply Contract" is an agreement between a business and an external supplier for
the delivery of a defined set of products and services. A Supplier Contract is a legal agreement and is used
as the basis upon which to measure the supplier's performance. In addition to listing the items to be
supplied, the Supply Contract states the timeframes, responsibilities, pricing and payment clauses needed
to administer the relationship. By putting a Supply Contract in place, it helps you to get the most out of the
supplier relationship.
This contract specifies the:
 Deliverables to be provided by the supplier
 Training, documentation and support to be provided
 Responsibilities of both parties
 Performance criteria and review process
 Pricing schedule and invoicing process
 Contractual terms and conditions

When to use a Supplier Contract

A Supplier Contract should be used whenever you need to purchase products or services from an external
supplier. By documenting a supply contract, your external suppliers will treat the relationship more
seriously. The Supply Contract defines the delivery milestones and therefore the criteria for making
payments. So by using a Supply Contract, it will make it easier to manage your suppliers today.
 Perform Phase Review
At the end of the Planning phase, a Phase review is performed. This is basically a checkpoint to ensure
that the project has achieved its stated objectives as planned.
Review Form is completed at the end of the Project Planning phase to tell the sponsor whether the project
has achieved its objectives to date.

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This Project Phase Review Form states whether the:
 Project is under schedule and within budget
 Deliverables have been produced and approved
 Risks have been controlled and mitigated
 Issues have been resolved
 Project is on track

The Phase Review Form helps you to:

 Document the results of your Project Reviews
 Clearly communicate the progress of your project to your sponsor
 List any risks or issues which have impacted the project
 Show your sponsor the deliverables produced to date
 Seek approval to proceed to the next project phase
By implementing Project Phase Reviews, you are putting in place the necessary "check-points" to monitor
and control the project, thereby ensuring its success.
When to carry out a Project Phase Review
A Project Phase Review should be undertaken at the end of each project phase. The project review may be
conducted by the Team Manager or an independent person to the project. During the project management
review, any risks and issues should also be recorded. The Project Phase Review Form is then completed,
documenting the outcome of the review, for approval.

5 Lesson
Project Control:
The processes which are required to ensure that projects are completed within the approved limits
/boundary. Involves budgeting (cost control), proper timing/ scheduling and human resource management
(performance control)
Project Control is that element of a project that keeps it on-track, on-time and within budget. To control is to
compare actual with planned achievements and take action to correct any adverse deviations. It involves:
Plans of Operation
 These are the result of the planning process of Project management.
Review and Updating
 Review is necessary to determine whether the project is proceeding according to plan or not.
Updating is recording the state of the project as shown by the reviews, or of making amendments.

Scope of project control

Consider the following knowledge areas to understand project control
Knowledge Area Control documents
Scope management. The control on scope of work  Scope Verification control
is also called configuration Management  Scope change control
 Project schedule
Time management  Progress reports (actual Vs Planned)
 Gantt Chart
Cost Management  Expenditure reports (Actual Vs Planned)
 Revised budgets

42
 Quality Management  Inspection reports
 Commissioning documents
 Data books and operation manuals
Communications Management  Meeting minutes
Risk management  Risk reports
Human Resource Management  Time sheets
 Performance evaluation
Procurement Management  Purchase orders
 Procurement schedule
 Procurement budget

The Project Planning and Control flow Chart

Project planning Project Control

Project Scheduling
 Project Definition  Review performance
 Avail resources
 Set objectives  Evaluate operations
 Direction of
 Team organization  Problem identification
operation
 Set time / schedule  Decision making
 Management
 Cost Estimation techniques  Corrective Action
 Performance -Gantt Chart  Performance
specification -PERT specification
Project Planning, Scheduling and Control- CPA
Techniques /tools
These include:
-The Gantt chart
- PERT/ CPA
- The Logical Framework.

1) The Gantt chart

The Gantt chart is one of the most widely used planning and control documents for communication
schedule information
• The Gantt chart is also referred to as the progress chart. It is a chart showing the timing of project
activities using horizontal bars.
• It is one of the techniques of project scheduling, which depicts the frequency of activities and
determines the period of time for implementation.
• Gantt Charts are useful at low levels of complexity; however, many projects have higher degrees of
sophistication and methodology which needs complex analysis methods.
How to determine a GANTT chart
• Determine the parts or implementation phases of the project and the sequence in which the
associated activities shall be carried out
• Then estimate the amount of time required for each activity
• List the activities that can be carried out at the same time and identify those to be carried out
sequentially
How to Construct a GANTT Chart
• Time represented on the horizontal axis, and activities on the vertical axis.
• Bars are entered to indicate the time period allocated for each activity and the state of progress at
any particular point in time.

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Example: A project has activities as shown below
Activity Depends on prior completion Duration (Months)
of
A - 3
B - 5
C B 3
D A,C 4
E D 8
F C 2
G F 4
H F 2
I B 5
J G,H,I 3

Activity/Months 2 4 6 8 10 12 14 16 18 20
A
B
C
D
E
F
G
H
I
J

2) Activity Network and Critical Path Analysis (CPA)

This is a technique developed to help management in project planning and control. This technique shows
the interrelationship of the various tasks of the project.
A critical Path is “the sequence of activities with the longest the duration.” It determines the shortest time to
complete a project. If there is a delay in any task on the critical path, then your whole project will be
delayed. Although many projects have only one critical path, some projects may have multiple critical
paths.
The critical path method is a step-by-step project management technique to identify activities on the critical
path. It is an approach to project scheduling that breaks the project into several work tasks, displays them
in a flow chart, and then calculates the project duration based on estimated durations for each task. It
identifies tasks that are critical, time-wise, in completing the project.
-Helps to provide planning and control information on time, cost and resource aspects of project.
Networks are important where projects are:
a) Complex ie contain many interrelated; and interdependent activities; and/ or
b) Large, ie where many types of facilities, high capital investments, many personnel are involved;
and/or
c) Where instructions exist ie where projects have to be completed within stipulated time or cost
limits, or where some or all of the resources (material, labour) are limited.

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 Terminology
 Activity: Task/job of work which takes time and resources e.g digging foundation, carrying building
materials, building walls
 Event: A specific point in time, either at the beginning or end of a given activity, i.e. it is the
beginning and end points of an activity) .

Critical path refers to the longest path along the network, indicating the shortest possible time it will take to
complete all the activities of the project

Critical activity refers to activities which lie along the critical path. They are also called bottleneck activities.
Any delay in any of the activities leads to an overall delay in project completion.
Critical path is established by the following.
 Earliest start time (EST): The earliest possible time at which an activity can start.
 Latest start time (LST): The latest possible time at which an activity can start.
 Slack/ float time: This is spare time by which an activity may be delayed without delaying project
completion. Activities with slack lie outside the critical path.
 Predecessor Activity: An activity that must be completed before another is started.

Advantages of Critical Path

 It provides a visual representation of project activities, clearly presents the time required to
complete tasks, and tracks activities so you don’t fall behind.
 The critical path method also reduces uncertainty because you must calculate the shortest and
longest time of completion of each activity. This forces you to consider unexpected factors that may
impact your tasks and reduces the likelihood that an unexpected surprise will occur during your
project.
Key Steps in the Critical Path Method
Step 1: Specify Each Activity
Using the work breakdown structure, you need to identify each activity (or task) involved in the project. This
activity specification list should only include higher-level activities. When detailed activities are used, the
critical path analysis may become too complex to manage and maintain.

45
A work breakdown structure breaks down projects into manageable sections.
The first step is to identify the main deliverables of a project. Then you can start breaking down the high-
level activities into smaller chunks of work.

Step 2: Establish Dependencies (Activity Sequence)

Some activities will depend on the completion of others. Listing the immediate predecessors of each activity
will help you identify the correct order. To correctly identify activities and their precedence, ask yourself
these three questions for each activity on your list from step one:
 Which task should take place before this task happens?
 Which tasks should be finished at the same time as this task?
 Which tasks should happen right after this task?

Step 3: Draw the Network Diagram

Once you have identified the activities and their dependencies, you can draw the critical path analysis chart
(CPA), known as the network diagram. The network diagram is a visual representation of the order of your
activities based on dependencies
Step 4: Estimate Activity Completion Time
Using past experience or the knowledge of an experienced team member, you must now estimate the time
required to complete each activity. If you are managing a smaller project, you will most likely estimate time
in days. If you are working with a complex project, you may have to measure time in weeks or months.

Step 5: Identify the Critical Path

46
Simply identify the longest path throughout the network -- the longest sequence of activities on the path. Be
sure to look for the longest path in terms of longest duration in days, not the path with the most boxes or
nodes.
Step 6: Update the Critical Path Diagram to Show Progress
As the project progresses, you will learn the actual activity completion times. The network diagram can then
be updated to include this information (rather than continuing to use estimations).
By updating the network diagram as new information emerges, you may recalculate a different critical path.
You will also have a more realistic view of the project completion due date and will be able to tell if you are
on track or falling behind.
Example:
A project consists of a series of activities as shown below
(a) Draw the project network and
b) Find the critical path

Activity Immediate predecessor Activity duration (Months)

A - 7
B - 7
C A 2
D A 3
E B 5
F B 1
G C 4
H D,E 5
I F 5

Solution:

47
(a):

C 4
2 2 G
A 4
D
7
1 3 H 7
5
5
E
B I
5 5
7 3 F
6
1

The critical path is one with biggest duration.

A-C-G: 7+2+4 =13 months.
A-D-H: 7+3+5 =15 months.
B-E-H: 7+5+5 =17 months.
B-F-I : 7+1+5 =13 months.
The critical path is B-E-H (17 months)

3) Program evaluation & review technique(PERT)

What is PERT?
Critical path method and PERT are often used in the same contexts and scenarios. Although they are
similar, you should understand each concept and their differences.
A PERT chart, or activity-on-arrow diagram, is a visual representation of your project’s schedule, showing
the sequence of tasks and which can be completed at the same time. A PERT chart is made with a lot of
the same information that is used in the critical path method, like earliest and latest start dates, earliest and
latest finish dates, and slack (or float) between activities.
But, the biggest difference between the critical path method and PERT is in time estimation. In the critical
path method, time variance is not accounted for. You’re using best-guess estimates for completion time,
and those times may change. With PERT, you’re putting more weight on the most realistic completion time.
Critical Path Method and PERT
You can use PERT in your critical path method in step four of the process, when you have to estimate
activity completion times. The purpose of using PERT is to bias time estimates toward the most likely
scenario and move away from unrealistically short timeframes.
To use PERT, you must estimate the shortest possible time each activity will take, the most likely length of
time, and the longest time it might take if the activity lasts longer than expected ( Optimistic time, Most likely
time, and Pessimistic time)
How to Find the Critical Path on a PERT Chart
You can identify the critical path on a PERT chart because the chart includes the same information needed
for the network diagram in the critical path method.

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A PERT chart is drawn with circles for each activity, with the name of the activity and estimated duration in
each circle. Arrows represent the paths that relate to dependencies.
To find the critical path on the PERT chart, first identify how many paths you can take from start to finish.
Then, add up the total duration of activities on that path. For example,
Path 1 duration: 12 days (task 1 and task 3)
Path 2 duration: 11 days (task 2 and task 3)
Path 3 duration: 10 days (task 4)
In this case, the critical path is task 1 and task 3 because it has the longest duration.
3) The Logical Framework Approach
The Log frame Matrix is a participatory Planning, Monitoring & Evaluation (and control) tool whose power
depends on the degree to which it incorporates the full range of views of intended beneficiaries and others
who have a stake in the programme design. It is a tool for summarizing the key features of a programme
and is best used to help programme designers and stakeholders realize achievement of intended
objectives.
The main concept underlying the Logical Framework is means and end. The better the means and end
linkages between each level of aims, the better the programme design.
By definition, each programme has an “if-then” or “means-and-end” logic embedded in it. If we produce
certain results under certain conditions, then we can expect to achieve

Log frame matrix serves the following functions

• A tool for planning a logical set of interventions
• A tool for appraising a programme/project
• A concise summary of the programme
• A tool for monitoring progress made with regard to delivery of outputs and activities
• A tool for evaluating impact of Programme outputs, e.g. progress in achieving purpose and goal

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The general structure of the Log Frame is given in the following table:

Narrative Objectively Means of Verification Risks and Important

Summary (NS) Verifiable (MOV) Assumptions
Indicators (OVI)
How to measure How to check the What assumptions
Goal wider objective measurement are you making
Project Purpose How to measure How to check the What assumptions
immediate objective measurement are you making
Outputs How to measure How to check the
outputs produced measurement What assumptions
are you making
Inputs/Activities How to measure How to check the What assumptions
Inputs measurement are you making

Framework Components
Rows:
• Goal The higher level objective towards which the project is expected to contribute (mention target
groups).The overall aim.
• Purpose The effect which is expected to be achieved as the result of the project.
• Outputs The results that the project management should be able to guarantee/generate (mention
target groups)
• Activities Things to be undertaken by the project in order to produce outputs.

Columns
a) Objectively Verifiable Indicators (OVI )- How you will measure the achievements.
The indicators which demonstrate the ways in which the goals, project purpose, outputs and input shall be
achieved. The indicators answer the following questions:
In what quality, in which quantity and by what time?
Indicators should be quantifiable wherever possible, but qualitative indicators may
also be used if necessary. In general, ideal indicators should be Independent, verifiable, specific, and
accessible.
• Indicators help to verify to what extant the results are achieved.
• Specify how the achievement of an objective can be verified or demonstrated
• Provide a basis for Monitoring and Evaluation
• 3 Dimensions of Indicators
– Quantity
– Quality
– Time

The process of defining indicators forces us to clarify our objectives. A good indicator is,
a. Plausible- measuring what is important in the project
b. Attributable to changes caused by the project
c. Cost-effective involving data that may be collected and analyzed inexpensively
d. Independent, not inherent to the project

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e. Targeted to how much.., what kind of.., by when
f. Verifiable to reach agreement

b) Means of verification- How you will collect the information for each indicator.
The specific sources from which the status of each of the indicators can be ascertained. Each source has a
cost, either direct and short-term or indirect and long-term
c Assumptions and risks- External conditions needed to get results.
Assumptions and risks are external conditions that are outside the control of the programme. The
achievement of aims depends on whether or not assumptions hold true and the risks do not materialize.
If cause and effect is the core concept of good programme design, necessary and sufficient conditions are
the corollary. The sufficient conditions between the levels in the hierarchy of aims are the Assumptions.
This is the external logic of the programme.

When working on a programme, we make assumptions about the degree of uncertainty between different
levels of aims. The lower the uncertainty that certain assumptions will hold true, the stronger the
programme design. Any experienced manager will agree that the assumptions - the failing assumptions -
can derail a programme as often as poorly executed outputs.

Log frame demands that all hypotheses, assumptions and risks relevant to a programme are made explicit.
By implication, this then further demands that the appropriate action is considered (and if necessary taken)
before problems materialize.
– How important are the assumptions?
– How big are the risks?
– Should the programme be redesigned?
– Should elements of the proposed programme be abandoned?

6 lesson
Leadership & Project Management
Leadership
Leadership is the ability to get things done through others.

Project Leadership
Project leadership, most simply, is the act of leading a team towards the successful completion of a project.
But of course, it is much more than that. It’s about getting something done well through others. Project
leadership is about “placing more emphasis on people” as opposed to the tactical management of tasks. In
fact, project leadership requires skills in both management and leadership.
For project managers to be effective and successful they must not only demonstrate efficient administrative
skills and technical know-how but must also practice an appropriate style of leadership. The leadership
style used can profoundly affect employee morale and productivity so that the success of the project may
be directly dependent on good leadership.
Leadership Styles

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Leadership styles may be considered as a continuum from autocratic to democratic. The leadership style
used by the project manager may depend on the type of decisions required, the pressures prevalent at the
time and the type of people they are working with.
The six stages from autocratic to democratic leadership are;
1. Autocratic: (isolated decision)
The Project manager solves the problem or makes the decision on his own using information available to
him at the time. There is no communication with the team members
2. Autocratic: (informed decision)
The project manager obtains the necessary information from the team members then decides on the
solution to the problem on his own.
3. Consultative Autocratic: (Discuss with individuals)
The project manager shares the problem with the team members individually gathering their ideas and
suggestions. The project manager then makes the decision on his own.
4. Consultative autocratic: (discuss with the team)
The project manager shares the problem with the team members as a group. Then the project manager
makes the decision on his own.
5. Democratic:
The project manager shares the problem with the team members. Then together they make the decision as
a group- majority vote.
6. Laissez -Faire:
The project manager gives the problem to the team and lets them make the decision themselves.
This is a policy of non-interference.

Project Manager
A project manager is the person who leads the project team who together accomplish the project goal.
While anyone who holds the title of manager has ongoing duties for the duration of his/her tenure at a
company, a project manager’s leadership is temporary to accomplish a distinctive purpose. For any specific
project, there will be an appointed project manager.
Functions of the Project Manager:
The functions of the manager entail the following;
a) Planning
b) Organising
c) Staffing
d) Directing
e) Controlling
Planning;
Planning is the most important managerial function. It is the process of preparing for the commitment of
resources in the most economical way. It is to decide in advance; what to do? How to do it? Who is to do it?
And when to do it? The project manager must devote a large amount of time, effort and experience to the
planning phase.
Organising;
Organising is the equipping of organisations/ project with human resources and deciding which persons will
assume the various responsibilities within the organisation/ project.
Staffing;
Staffing involves recruitment, setting job description and specification, staff welfare, training and
development, discipline etc.
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Directing;
Directing represents in a sense, the core of management dealing with the day to day responsibilities to see
that the available resources –human, financial, material are being channelled to meet the task objectives
efficiently and effectively
Controlling;
Controlling is the process of making events conform to plans, that is co-ordinating the action of all parts of
the organisation according to the plan established for attaining the objectives.

Leadership qualities of a project manager

What qualities are most important for a project manager to be an effective project leader?
1. Inspires a shared vision
An effective project leader is often described as having a vision of where to go and the ability to articulate it.
Visionaries thrive on change and being able to draw new boundaries. It was once said that a leader is
someone who "lifts us up, gives us a reason for being and gives the vision and spirit to change." Visionary
leaders enable people to feel they have a real stake in the project. They empower people to experience the
vision on their own.
2. A good communicator
The ability to communicate with people at all levels is almost always named as the second most important
skill by project managers and team members. Project leadership calls for clear communication about goals,
responsibility, performance, expectations and feedback.
There is a great deal of value placed on openness and directness. The project leader is also the team's link
to the larger organization. The leader must have the ability to effectively negotiate and use persuasion
when necessary to ensure the success of the team and project. Through effective communication, project
leaders support individual and team achievements by creating explicit guidelines for accomplishing results.
3. Integrity
One of the most important things a project leader must remember is that his or her actions, and not words,
set the modus operandi for the team. Good leadership demands commitment to, and demonstration of,
ethical practices. Creating standards for ethical behavior for oneself and living by these standards, as well
as rewarding those who exemplify these practices, are responsibilities of project leaders. Leadership
motivated by self-interest does not serve the well-being of the team. Leadership based on integrity
represents nothing less than a set of values others share, behavior consistent with values and dedication to
honesty with self and team members. In other words, the leader "walks the talk" and in the process earns
trust.
4. Enthusiasm
Plain and simple, we don't like leaders who are negative - they bring us down. We want leaders with
enthusiasm, with a bounce in their step, with a can-do attitude. We want to believe that we are part of an
invigorating journey - we want to feel alive. We tend to follow people with a can-do attitude, not those who
give us 200 reasons why something can't be done. Enthusiastic leaders are committed to their goals and
express this commitment through optimism. Leadership emerges as someone expresses such confident
commitment to a project that others want to share his or her optimistic expectations.
5. Competence
Simply put, to enlist in another's cause, we must believe that that person knows what he or she is doing.
Leadership competence does not however necessarily refer to the project leader's technical abilities in the
core technology of the business. Having a winning track record is the surest way to be considered
competent. Expertise in leadership skills is another dimension in competence.
6. Ability to delegate tasks
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Trust is an essential element in the relationship of a project leader and his or her team. You demonstrate
your trust in others through your actions - how much you check and control their work, how much you
delegate and how much you allow people to participate. Individuals who are unable to trust other people
often fail as leaders and forever remain little more that micro-managers, or end up doing all of the work
themselves.
7. Cool under pressure
In a perfect world, projects would be delivered on time, under budget and with no major problems or
obstacles to overcome. But we don't live in a perfect world - projects have problems. A leader with a hardy
attitude will take these problems in stride. When leaders encounter a stressful event, they consider it
interesting, they feel they can influence the outcome and they see it as an opportunity. "Out of the
uncertainty and chaos of change, leaders rise up and articulate a new image of the future that pulls the
project together."
8. Team-Building Skills
A team builder can best be defined as a strong person who provides the substance that holds the team
together in common purpose toward the right objective. In order for a team to progress from a group of
strangers to a single cohesive unit, the leader must understand the process and dynamics required for this
transformation. He or she must also know the appropriate leadership style to use during each stage of team
development. The leader must also have an understanding of the different team players styles and how to
capitalize on each at the proper time, for the problem at hand.
9. Problem Solving Skills
Although an effective leader is said to share problem-solving responsibilities with the team, we expect our
project leaders to have excellent problem-solving skills themselves. They have a "fresh, creative response
to here-and-now opportunities," and not much concern with how others have performed them.

Organisation structure, vertical, horizontal & matrix reporting Structures

Organizational structure refers to the way that an organization arranges people and jobs so that its work
can be performed, and its goals can be met. When a work group is very small and face-to-face
communication is frequent, formal structure may be unnecessary, but in a larger organization decisions
have to be made about the delegation of various tasks. Thus, procedures are established that assign
responsibilities for various functions. It is these decisions that determine the organizational structure.
In an organization of any size or complexity, employees' responsibilities typically are defined by what they
do, who they report to, and for managers, who reports to them. Over time these definitions are assigned to
positions in the organization rather than to specific individuals.
Horizontal and vertical organizations are two of the most common types of structures. Understanding the
benefits and drawbacks of each can help you make the right decision for your organisation

Horizontal Organization structure.

If your company culture is all about tapping into the creativity and imagination of your staff and empowering
them to do their jobs without micromanagement, then you may want to set up a horizontal organizational
structure. In this structure, you grant employees the authority to make decisions without having to obtain
executive approval. A horizontal organization has few – if any – managers because the focus is on
empowering the staff members and removing any barriers between the executive level and the staff level.
Teamwork, collaboration and the exchange of ideas are the hallmarks of a horizontal organization. A
horizontal structure is one without middle management where employees are largely allowed to make their
own day-to-day operational decisions. Large groups of employees report often to just one manager. It is
also called a "flat" organization.
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Horizontally oriented companies have relatively few layers of management between the CEO and front-line
personnel. It is thought that with fewer individuals in the chain of command, decisions can be made more
quickly.

Decision-Making
Horizontal organizations empower employees to make daily operational decisions and encourage
employees to consult with management on larger issues. The staff is driven by production goals set by the
company, and there are company policies that must be adhered to for safety and legal reasons.

Collaboration
Because employees in a horizontal organization are empowered to make their own decisions, collaboration
tends to happen more organically. Employees have open contact with each other and are more available to
create collaborative solutions.
Communication
Communication in a horizontal organization tends to be more organic and easily flows from one work group
to the next.

Advantages of Horizontal Organizations

The main advantage of a horizontal organization is that employees are free to make important decisions
without feeling as though management is second-guessing them. This empowerment can boost morale and
motivation and spur creativity in your workers. Decision-making in horizontal organizations is fast because
there are no barriers between workers and executives.
Disadvantages of Horizontal Organizations

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The main disadvantage of horizontal organizations is that employees may not always make sound
decisions without managerial supervision, and those bad decisions can impact your business. Another
disadvantage is that without managerial authority, employees may have a hard time achieving consensus
when working in teams.

Vertical Organization structure.

Businesses/Organizations with a large number of employees often choose to run a vertical organization,
which is typically structured like a pyramid with executives at the top, midlevel managers in the middle, and
low-level managers and employees at the bottom. In vertical organizations, you and other senior-level
executives make all the major decisions and communicate those decisions to midlevel managers. These
managers develop methods to implement your decisions and communicate these methods to the low-level
managers that are responsible for supervising your employees as they go about their daily tasks. This top-
down structure has a defined chain-of-command and strict protocols regarding how your employees can
make suggestions that reach the upper levels of your company.
A vertical organization is one that has a pyramid-look when charted out on paper. At the top is the company
president or chief executive officer, and then each division is made up of a series of middle management
and supervisors who are responsible for various departments. This is often referred to as a "tall"
organization.
A “vertical” company is known for having a large staff of middle managers between the CEO and the front
line.

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Decision-Making
In a vertical organization, decisions come from management down through the hierarchy to employees.
Employees are given a set of guidelines to follow and must work with the management hierarchy to make
any changes to job duties.
Collaboration
A vertical organization tends to be structured in terms of employee and management collaboration. Since
decisions must travel up and down the organizational chart, collaboration between employees and
managers on company processes or issues happens in a very structured setting that includes meetings
and constant monitoring.
Communication
The rigid structure of a vertical organization tends to slow communication between departments and from
management to employees

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 Advantages of Vertical Organizations
The primary advantage of vertical organizations is that all employees know and understand their roles and
responsibilities, which can increase productivity. Vertical organizations motivate workers to seek
management positions, which often results in them working efficiently to achieve performance standards.
Also, the longer one stays in a vertical organization the more in-depth knowledge and expertise they gain
over the course of time.
Disadvantages of Vertical Organizations
The primary disadvantage of vertical organizations is that rank-and-file employees rarely speak or meet
with executives. Decision-making can be slow because there are so many management layers. Vertical
structures take longer to make decisions and information does not always filter upward to management or
down to front-line personnel.
The major problem with vertical organizations is that bureaucracy can become rampant as individual lines
of business become isolated from each other, develop separate cultures and procedures.
A final challenge with a vertical organization is that communications with other departments can sometimes
be actively discouraged or seen as disloyalty below a “certain level”

Matrixed Organizations
A matrix organization is defined as one in which there is dual or multiple managerial accountability and
responsibility.
Ideally, matrixed organizations attempt to integrate and use the best of both horizontal and vertical
structures. The idea is this: a (typically large) company keeps its specific lines of business expertise intact
—finance, marketing, engineering, etc.—but brings together specialists from each vertical organization to
work on temporary projects. A person working in such a structure would thus have vertical lines of
accountability to the immediate line-of-business superiors and horizontal accountability to one’s project
teammates.
The Two-Boss Matrix
In a balanced matrix organization various people in the organization have two bosses. The project
manager in the matrix organization is not a staff man nor does he normally have less authority than the
functional managers reporting on the same level. Neither can the relationships shown in figure 1 be simply
described by such terms as “he reports to the functional manager only for technical direction,” or “he
reports to the project office for budgetary and schedule control.” Such descriptions are inadequate to
describe how the matrix organization really works because, not just on paper, the project personnel do
have two bosses.
Implicit in the definition of the matrix organization is the recognition that the project is temporary whereas
the functional departments are more permanent. Although all organizations are temporary in that they are
constantly changing, the matrix is designed to be temporary and a particular organizational structure lasts
only for the finite life of the project.

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Figure above. The basic unit of the matrix organization

Advantages
 Project Objectives Clear — Project objectives will not only be highly visible through the project
office, but will also be balanced with the objectives of the functional organization.
 Project Integration — There is a clear and workable mechanism for achieving project integration of
subsystems and work packages across functional departmental lines. Coordination across
functional lines can easily be achieved.
 Efficient Use of Resources — The maximum efficient utilization can be made of scarce company
resources. It is the most efficient use of manpower since personnel can be used only part-time if
desired, and can be shared between projects. It is the most efficient use of facilities, machinery,
equipment, and other resources since these resources can be shared between or among projects.
Allocation of scarce resources can be negotiated between project and functional management, or
corporate priorities may be established. The matrix is therefore less expensive than an equivalent
pure project organization.
 Information Flow — Information dissemination should be very effective since there is provision for
both horizontal and vertical flow. Horizontal flow provides for project systems information to flow
from functional unit to functional unit. Vertical flow provides for detailed disciplinary information to
flow from project to project, and to various levels of management. Information of use to other
projects is not locked up within a single project.
 Retention of Disciplinary Teams — Teams of functional experts and specialists are kept together
even though projects come and go. Therefore technology and know-how is not lost when a project
is completed. Specialists like to work with other specialists in the same discipline, and they will be
better able to continually exchange ideas and information. As a result, when teams of functional
specialists work together, a synergistic effect occurs, resulting in increased innovation even though
individually they may be working on different projects.
 Development of Project Managers — The matrix is an excellent training ground for prospective
project managers since promising candidates can easily be spotted in the multidisciplinary project
environment. A common occurrence would be the transfer of a person who had demonstrated the
ability to work across functional departmental lines to the project office as an assistant project

59
 manager. His career progression would then be to project manager, which is an excellent path
leading to top management.
Disadvantages of the Matrix
The following disadvantages are inherent in the matrix organization:
 Two Bosses — The major disadvantage is that the personnel on the project are working for two
bosses. In any type of conflict situation a person could easily become “the man in the middle.
 Complexity — The matrix organization is inherently more complex than either a functional or a pure
project organization, since it is the superimposition of one on the other. This complexity shows
itself in the following problems:
 Difficulties in Monitoring and Controlling — Complexity results from the number of managers and
personnel involved and from the number of people that must be kept informed. Fortunately,
modern computer techniques have helped to keep this problem under control, but basically it’s still
a “people” problem.
 Complex Information Flow — This is a problem only because there are so many people and
organizational units involved. Both the project and functional managers must be certain that they
have touched bases with each other for any major decisions in their areas of responsibility.
 Fast Reaction Difficult — The project manager is sometimes faced with a problem of achieving fast
reaction times, primarily since there are so many people to be consulted. The project manager in
the matrix usually does not have strong vested authority, therefore considerable negotiation is
necessary..
 Conflicting Guidance — The more complex organization with two lines of authority always
increases the possibility of conflicting instructions and guidance.
 Priorities — A matrix organization with a number of projects faces real problems with project
priorities and resource allocation. Each project manager will obviously consider his project to have
the highest priority. Similarly, each functional manager will consider that the allocation of resources
and priorities within his department is his own business. As a result, the decisions involving project
priorities and often the allocation of resources must be made at a high level. This often puts an
undue and unwelcome load on the top executive officer in the matrix. This problem has led to the
use of a manager of projects, or a super project manager in some organizations. His principal
functions would be to consult with higher levels of management to assure equitable allocation of
resources and to periodically reassess project priorities. This effort can be extremely valuable in
reducing conflict and anxiety within the matrix.
 Management Goals — There is a constant, although often unperceived, struggle in balancing the
goals and objectives of project and functional management. A strong project manager may place
undue emphasis on time and cost constraints, while a functional manager may concentrate on
technical excellence at the expense of schedules.

Team Building and group dynamics

What is a group?
To understand group dynamics, we must firstly know what a group is. A group refers to two or more people
who share a common meaning and evaluation of themselves and come together to achieve common goals.
A group is a collection of people with some common characteristics or purpose. These are two or more
people who interact with each other to accomplish certain goals or meet certain needs. At minimum, to be
considered a group, at least people must deal with one another on a continuing basis. Before they interact
with each other, they are likely to share common beliefs that impel them to band together.

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Formal vs. informal groups
Formal groups – found in organisations where people are frequently assigned to work in groups. Are task
oriented.eg. A committee, a department. Therefore, every organisation member must belong to at least one
organizational group – i.e. every employee must have at least one formal role.
Some organisation members may have more than one formal role (groups) - be member of a several
committees and still belong to a department. Such multiple members can serve as “linking pins” within the
organisation who can enhance integration by sharing information across groups and passing directives to
lower levels.
Informal groups;
 Arise from social interactions among organizational members.
 Formed for political friendship or common interest.
 Membership in such groups is voluntary and more heavily based on interpersonal attractions.
 Sometimes the activities and goals of an informal group are attractive to prospective members
– for example a group which plays games during lunch time
 Note that not all informal groups have a specific set of activities, often they are simply
composed of coworkers who share common concern – rumours, gossips etc
 Informal groups are not inherently good or bad for an organisation
 When informal groups goals are congruent with the organisation - such as when both seek to
maximize customer satisfaction and produce a high-quality products – then all is well and good
 However, an informal group may oppose the organizational goals as when employees decide
to restrict daily output, the informal groups are often sources of resistance to organizational
change
Group Dynamics.
A group of two or more people interacting with each other in a manner that each person influences and is
influenced by each other person .
Group dynamics deals with the attitudes and behavioral patterns of a group. Group dynamics is concerned
how groups are formed, what is their structure and which processes are followed in their functioning. Thus,
it is concerned with the interactions and forces operating between groups. The term "group dynamics" is
used to describe the processes that occur when people interact in a group. Being able to observe and
understanding these processes will help make the team work more effective.
Salient features of group dynamics:
Group orientation: Group Dynamics is concerned with groups. Wherever a group exists the
individuals interact and members are continuously changing and adjusting relationship with respect to each
other
Various changes: Changes go on occurring like introduction of the new members, changes in
leadership, presence of old and new members and the rate of change – fast or slow. The groups may
dissolve if the members are not enthusiastic about the goals.
Dynamic Nature: There may be rigidity or flexibility that influences a group dynamics .If the members
get along well there is smooth sailing for the group and if there is conflict it leads to problems
Group Activities: The group organization is essential. It leads to greater group effectiveness,
participation, cooperation and a constructive morale.
Adjustments: Dynamic groups are always in continuous process of restructuring, adjusting and
readjusting members to one another for the purpose of reducing the tensions, eliminating the conflicts and
solving the problems which its members have in common.
Causes of poor group dynamics

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 1. Weak leadership: when a team lacks a strong leader, it leads to a lack of direction, infighting, or a
focus on the wrong priorities.
2. Excessive deference to authority: this can happen when people want to be seen to agree with a
leader, and therefore hold back from expressing their own opinions.
3. Blocking: this happens when team members behave in a way that disrupts the flow of information
in the group. People can adopt blocking roles such as: the recognition seeker, the joker.
4. Group Think: this happens when people place a desire for consensus above their desire to reach
the right decision. This prevents people from fully exploring alternative solutions.
5. Free riding: here, some group members take it easy, and leave their colleagues to do all the work.
Free riders may work hard on their own but limit their contributions in group situations; this is
known as "social loafing.“
6. Evaluation apprehension: team members' perceptions can also create a negative group dynamic.
Evaluation apprehension happens when people feel that they are being judged excessively harshly
by other group members, and they hold back their opinions as a result.
Techniques for managing group dynamics
1. Equalizing Participation; The facilitator is responsible for the fair distribution of attention during
meetings
2. Listing: for the discussion to be smooth, those who want to speak can silently signal the facilitator,
who would add the person's name to a list and call them in that order.
3. Stacking; If many people want to speak at the same time, it is useful to ask all those who would like
to speak to raise their hands. Have them count off, and then have them speak in that order.
4. Pacing: The pace or flow of the meeting is the responsibility of the facilitator. If the atmosphere
starts to become tense, choose techniques which encourage balance and cooperation.
5. Checking the Process: If the flow of the meeting is breaking down or if one person or small group
seems to be dominating, anyone can call into question the technique being used and suggest an
alternative.
6. Silence: It is appropriate for anyone to suggest a moment of silence to calm and refocus energy.
7. Taking a Break: In the heat of discussion, people are usually resistant to interrupting the flow to
take a break, but a wise facilitator knows when to take refreshing breaks.
8. Call for Consensus: The facilitator, or any member recognized to speak by the facilitator asks if
there are any unresolved concerns, which remain unaddressed.
9. Summarizing: The facilitator might choose to focus what has been said by summarizing.
10. Fishbowl: The fishbowl is a special form of small group discussion. Several members representing
differing points of view meet in an inner circle to discuss the issue
11. Active Listening: Listen to the speaker, then acknowledge back what was heard.
12. Brainstorming: process for generating creative ideas and solutions through intensive and
freewheeling group discussion.
13. Go-rounds: This is a simple technique that encourages participation. The facilitator states a
question and then goes around the room inviting everyone to answer briefly. This isn’t like an open
discussion.
14. Identification: It is good to address each other by name. When people speak, it is useful for them
15. to identify themselves, so all can gradually learn each other’s names.

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Roles Played by group members;
Task oriented roles Relations oriented roles Self-oriented roles
Initiators: Harmonizers: Blockers:
Contributors. Recommend new Mediate group conflicts Act stubborn and resistant to the
solutions to group problems. group.
Information Seekers: Compromisers: Recognition seekers:
Attempt to obtain the necessary Shift own opinions to create Call attention to their own
facts. group harmony. achievements.
Opinion Givers: Encouragers: Dominators:
Share own opinions with others Praise & encourage others Assert authority by manipulating
the group
Energizers: Expediters: Avoiders:
Stimulate the group into action Suggest ways the group can Maintain distance, isolate
whenever interested operate more smoothly. themselves from fellow group
members.
16.

Team
Two or more people working together to achieve a shared goal
Team Building
The process of getting people to work together effectively to achieve a shared goal
 All teams are groups but not all groups are teams.
 Teams often are difficult to form. It takes time for members to learn how to work together.

Benefits of team building.

1. Improved Communication: Team building is useful for breaking down barriers between individuals
through group participation in activities. People who are not used to working together get a chance
to participate and work as a team.
2. Develop Team Roles: Team building allows each member of the team to develop and focus on
what they are best at and allow the team members to find their niche within the team so that
everyone can best contribute as an individual while still performing together.
3. Time to Develop Skills: Team-building activities can allow each member of the team a chance to
take charge and develop leadership skills, as well as skills in other areas of the business
4. Long-Term Benefits: giving everyone a greater sense of involvement and belonging; and
empowering teams to become more mission focused and to achieve more with less direction,
saving time and money.
5. Better Relationships: team building provides a chance for the team to participate together in an
experience where everyone starts with an equal level of knowledge about the given task.
6. Productivity Improvement: Learning to work together can produce more effective goal achievement
and improved output.
7. Motivation: Team building activities can drive your employees to succeed by building their
confidence and showing them that the business wants to invest in their success as an employee

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 8. Problem Solving and Creativity: working together helps increase creative skills that are developed
during team building activities can be transferred back into the workplace for improved success.

Steps in building a team.

9. Forming

Forming” is the initial stage of development, when team members may often have differing ideas about
purpose. There is relatively little trust. People tend to be careful about what they say, and how they say it.
Everyone is on his or her “best behavior.” Members get to know each other & set ground rules .Members
are very much occupied with their own emotions and doubts: uncertainty about whether they will find their
place in the group, what will the other participants be like. In their search for safety and structure, the group
members try to become oriented, look for a safe place, search for sympathetic colleagues, and expect help
from the leader.The leader must look assured and exude certainty in order to help group members find their
places. The leader should create a positive atmosphere and provide space for communication and
interaction.
2. Storming

Represents the arguing that will likely occur as the team defines itself. There may be conflict about the
purpose, leadership, and working procedures. During this stage people often feel the team will never “come
together.” This stage is similar to the human developmental stage of adolescence. Members come to
Resist Control by group Leaders & Show hostility. Participants try to find their place in the group. There are
many discussions, coalitions are made to represent one's interests, and there is lots of competition. Many
people talking at the same time and nobody listening to each other is a clear indicator that the group is in
the Storming stage. Failure or success in this stage will to a large extent determine how open or closed
participants will be later in the process and how well they deal with conflicts and emotions.
The leader can guide the group through this stage by giving the group practical tasks that help to establish
relationships and clarify roles. The leader should show confidence and leadership because this stage can
get rather emotional. All participants' contributions should be dealt with equally.
3. Norming
Norming” is the stage that occurs when the team members are developing a shared vision and are setting
goals and objectives. People are getting to know one another’s strengths and are learning how best to work
together. The team experiences more stability and productivity. Members Work Together developing Close
Relationships & feelings of Cohesiveness. Members establish principles and procedures for achieving
results and creating a positive atmosphere. Members find their place and feel safe in the group. People feel
a part of the group and It becomes easier to communicate and collaborate with each other. The leader can
entrust the group with more challenging and demanding tasks.
4. Performing
Performing” indicates that the members now have a clear, shared sense of purpose, high trust, and open
communication. This is the highest point a group can accomplish. The result is similar to two people being
in love: participants feel proud to belong to this group, they have a strong belief that nothing is too difficult
for them, and interaction is based on complete trust and openness. Objectively, such a group is also highly
productive. Most groups never reach this stage because it requires strong motivation, common goals, great
emotional input, and strong commitment from the members. If a group has reached this stage, the leader
can step aside and limit his/her role in facilitating the process, thus further strengthening the group's ability
to work autonomously. He/she might want to present the group with new perspectives in order to provide
the group with further opportunities to develop.
5. Adjourning/Reframing
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A group is established in order to accomplish certain objectives. When these tasks have been
accomplished, the group reaches a natural end to its existence or set itself new tasks - in this case, the
group development processes starts again from the start. Work and processes are reflected upon and
objectives are readjusted. If the team will stop existing after intensive cooperation, participants need time to
tie up loose ends and become familiar with the idea that the end is near. The stronger the relationships that
have developed, the more emotional this parting process will be.
The leader has to provide methods and tools for evaluating what has been done and for readjusting or
setting new aims. If the team will not continue working together he/she should help prepare the group for
the end by providing opportunities to reflect on what has been achieved and by offering a perspective for
continuing the established relationships.

PROJECT MONITORING AND EVALUATION

Monitoring- Is the systematic and continuous assessment of the progress of a project over a period of
time.Monitoring is a periodic assessment of the progress of a project towardsachievement of its planned ac
tivities and results. It starts with the implementation of the first activity and continues if all activities are
accomplished.

The objectives of project monitoring are as follows

1. Identify the actual status of long-term sustainability of the project in order

to determine if scheduled activities and expected output are being implemented (achieved as
planned.
2. Discover gaps and deficiencies in project implementation as well as current and potential issues
(problems that need to be addressed).
3. Identify factors that may affect the long-term sustainability of the project.
4. Highlight significant features that may serve as insights for the planning and implementation of
future similar projects.
5. Identify opportunities and strengths that can be tapped to ensure successful project management
and implementation.
6. Recommend policy options for effective and efficient project management and implementation.
7. Document initial success stories that may be useful for social mobilization and advocacy or
for replication in related project.
8. Immediately inform project management and administrators of the status of project implementation
so that they can apply remedial measures to solve problems.
9. Disseminate the results of the monitoring to the project managers, planners, donors and other
sponsors.

Objectives of project monitoring should be;

 Specific; help to clarify goals, provide direction to the activities, guide the selection of data and
provide a basis for assessing the overall value of evaluation.

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  Measurable; objectives help provide outcomes that are observable and demonstrable.
 Achievable; objective should be attainable on the basis of the available financial and material
resources and the technical demands of the methods to be employed, as well as staff capabilities
 Result oriented
 Time-bound and should be achieved within a specific time frame

Meaning of Evaluation
Project evaluation is the assessment at one point in time that concentrates specifically on whether the
objectives of the project have been achieved and what impact has been made. It is about judging the merit
or worth of interventions or outputs, generally focusing on the quality, quantity and/or performance of the
outputs of a piece of work. It’s an on-going activity, which is essential at every stage of the project.

Evaluation is usually undertaken as an independent examination of the background, objectives results,

activities and means deployed in order to draw lessons to guide future decision-making.
Project evaluation involves assessment of whether the project management is found the right things in the
right way. As such, project evaluation is not only concerned with project outcomes but also with the project
implementation process.

Why Monitoring and Evaluation normally go together

Monitoring and evaluation go together because while monitoring as an internal process, assesses progress
on regular basis for the sake of improved management and decision making; evaluation reflects what has
happened and is happening to improve the future. As such monitoring and evaluation are complimentary
project management functions which together ensure that the project is running on the right track.

Importance of Monitoring and Evaluation

 To establish whether the project is progressing as planned, i.e M & E establishes whether or not
the project is on schedule and within the resources, and if not what can be done to faster
improvement;
 To find out whether project output are useful and relevant to the development needs of
beneficiaries;
 To compare actual change caused by the project against set objectives.
 Assess whether effects are worth continuing with or if there is need to adjust procedures
accordingly
 To document lessons of both good and bad practices and to enable sharing of useful information.
 Specifically, monitoring and evaluation contributes to project effectiveness by;
- Enabling project participants to assess how far the activities have been carried out.
- Assisting project participants to determine how the resources are being utilized.
- Identifying problems or shortcomings in time for some remedy;
- Documenting accurate information about the project.
- Providing regular feedback on the progress of project implementation
The role of the Monitoring Unit
i. Design and implement systems for effective control of a project
ii. Prepare project staff to be ready for reviewing their performance
iii. Identify specific areas to be monitored
iv. Collect process, analyze and disseminate information
v. Detect areas that affect project progress which may have been overlooked initially

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 vi. Prepare timely and regular reports demonstrating project position

The Monitoring Process

This generally has six steps:
1. Planning which involves setting objectives of monitoring deferring technical activities involved and
scheduling them logically and systematically.
2. Allocation of resources to the monitoring team
3. Implementation i.e. carrying out the actual technical work
4. Measurement i.e. systematic watching of performance indicators
5. Assessment. This involves making decision whether actual performance is as expected or planned
6. Make adjustment of provision of relevant results to authorities for action.

Progress monitoring
Monitoring your project progress involves keeping track of lots of moving parts. Most projects involve
multiple team members handling various aspects of the project at the same time. You have to monitor
elements such as the budget, scope, schedule, resources and tasks to be completed. Accurate and
effective monitoring helps you stick to your timeline and identify problems early in the process to ensure
your project is a success. Once tasks start being worked on, the project manager needs to monitor
progress.
 There are four main types of monitoring:
1. Schedule monitoring
2. Change monitoring
3. Quality monitoring
4. Cost monitoring

a. Time /schedule monitoring

Time is monitored in relation to technical and financial performance. Time in the context of a project is
planned to inform activity schedules. Time is monitored to find out whether the project is on schedule or
not. The project manager has a plan of tasks and an estimated duration period for each. Therefore, at the
end of each day, week, or month the project manager should be able to report on whether the project is on
track or not.
In order to report in this way, the project manager needs to know from each team member:
 Which task they are currently working on.
 How many hours they have spent on this task.
 How many hours are left to complete this task.
With this information, the project manager can compare actual completion to expected completion to
determine if expectations meet reality.
It is to be expected that some tasks take less time than expected and some tasks take a little longer.A task
may be estimated at five hours but take eight. Because of this, tracking on a daily basis is useful but must
be viewed in the context of overall project progress.
While the project manager compares weekly completion of tasks to the planned completion of tasks,
stakeholders will focus on the overall project schedule and delivered milestones.
b. Cost/Budget/Cost performance/Financial monitoring
This monitors budgeted costs compared to actual costs incurred during implementation of a project. It is
important to monitor budget performance in order to detect cost deviations earlier in the process. It is also
to monitor any unusual situations or events.

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It is extremely crucial that a project operates within the approved budget. Overspending on some project
activities normally implies frustration in implementation of other activities especially those that are designed
to come later on in the project schedule.

c. Quality monitoring
It is imperative that each deliverable meets the client's expectations. It is important that quality checks are
done consistently during the executing phase. Most projects have a clearly defined set of inputs that are
needed to produce a given set of out puts within a given time. A periodic report comparing the actual and
planned progress towards each of these implementation targets is required, it’s important to monitor both
the quality and quantity of inputs and outputs.
d. Change Monitoring
But what if the actual tasks change? What if the client changes their mind and wants something completely
different? What if you discover halfway through the project that the law has changed and there are new
requirements that will require extra work?
Typically, project management is applied in context where the team can predict with accuracy what tasks
are required. If you don't know which features are required or what to do, you should do more research.
The project manager typically pushes back against a change of scope. Changing the list of outcomes,
deliverables, and mid-project tasks would require revising the project plan and acquiring new sign-offs from
the decision-makers. Therefore, change of scope and adding tasks to the project is the exception rather
than the norm.
The project manager will measure the number of change requests and additional tasks that are added to
any project. Some issues will also surface as team members discover unforeseen problems while
completing their tasks and building the solution. The project manager will track these as well. If they
require additional tasks, the project manager will investigate how they can be done while keeping milestone
commitments.

Project Audits.
The project audit is a thorough examination of the management of a project, its methodology and
procedures, its records, its properties, its budgets and expenditures and its degree of completion. This is a
quality control process of inspection.

Parts of a project audit:

1. Status of the project
2. Future status
3. Status of crucial tasks
4. Risk assessment
5. Information pertinent to other projects
6. Limitations of the audit

There are three distinct and easily recognized levels of project auditing
General audit
- Normally most constrained by time and resources and is usually a brief review of the project touching
lightly on the six parts of an audit
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Detailed audit
- Usually conducted when a follow-up to the general audit is required
Technical audit
- Generally carried out by a qualified technician under the direct guidance of the projectauditor

Benefits of a well-done Project Audit

 Identify problems earlier
 Clarify performance/cost/schedule relationships
 Improve project performance Identify future opportunities
 Evaluate performance of project team
 Reduce costs
 Inform client of project status/prospects
 Reconfirm feasibility of/commitment to project

Project Audit Components

 Review of why the project was selected.
 Reassessment of the projects role in the organization’s priorities.
 Check on the organizational culture to ensure it facilitates the type of project being implemented
 Assessment of how well the project team is functioning well and if its is appropriately staffed
 Check on external factors that might change where the project is heading or its importance
 Review of all factors relevant to the project and to managing future projects

Like the project itself, the audit has a life cycle of Six basic phases:

1. Project audit initiation; Focus and scope of audit; assess methodologies, team members required
2. Baseline Definition; Determine the standards against which performance will be measured
3. Establishment of Audit Database; Gathering/organizing pertinent data. Focus on what is necessary
4. Data Analysis: Comparison of actual to standard.
5. Audit report Preparation; Present findings to PM first and then Prepare the final report
6. Audit Termination: Review audit processes and disband the team

Types of Evaluation
There are various types of evaluation depending on the basis of categorization. The basis may include
coverage, timing who does the evaluation and a comparison input –out put relationship.
Coverage:
Partial evaluation; This exercise focuses on specific aspect of the project activities but not the entire
project. It enables evaluators to concentrate and point out more clearly critical events and come out with
more accurate results

Comprehensive evaluation; It involves collection of all information that covers overall performance of the
project i.e. the project is analyzed in totality. This is to analyze whether the project activities are in the line
with the project goal and objectives.
On-going evaluation (formative); takes place at intervals during the implementation in order to ascertain the
continuing validity of the project.
Terminal evaluation: done at the end of the project life to determine its relevance.

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Timing
Ex-ante evaluation: carried out before activities are undertaken to gauge viability and needs assessment to
justify activities.
Midterm evaluation
This is normally done to provide a signal about the direction of the project. It helps to keep the activities on
the right path so it is usually done during the course of project implementation
Ex-post evaluation: carried out when the activities have been completed so as to determine the worth of the
project in terms of the set goals and other types of evaluation include;
i. Performance appraisal reports
ii. Audit reports
iii. Cost-Benefit assessment
iv. Impact assessment
Who does the evaluation?
 Built in self-evaluation: conducted by those directly involved in the implementation
 Participatory evaluation. Staff and external evaluators consult with the beneficiaries.
 External evaluation: carried out by individuals outside the implementing team.

Key Questions in Evaluation

Evaluation is normally based on the following questions:
 Who wants the information?
 What do they want to know?
 What will the information be used for?
 When will it be needed?

Qualities of a good Evaluator

1. Administrative confidence e.g. one must have high research skills, a high level of decision making
2. Objectivity; a good evaluator must be as objective and impartial as possible i.e. there should not be
a tendency to please some elements of the stake holders for winning future contracts
3. Adequate knowledge of the project, a good evaluator should study the project’s internal
mechanism and organizational structure
4. Autonomy; a good evaluator requires a high level/degree of autonomy and independence.
Stages of Evaluation
i. Definition of the project and its objectives
ii. Analyzing the process of implementation
iii. Analyze effects and impact versus the project objectives
iv. Write report and make recommendation

Designing and carrying out an Evaluation

1. Focusing evaluation i.e. what is being evaluated, why, for whom and what are the key issues
2. Designing an evaluation i.e. select the source of information, review the existing sources, do not
collect what you cannot analyze, determine how much precision needed and supervise collection
of information.
3. Managing the evaluation; When should it be done, by who, what are the responsibilities of people
carrying out evaluation and what resources are available.

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 4. Reporting evaluation; What information should the evaluation report include, who should get the
reports and how should the reports be delivered?
.
Importance and Need for Evaluation
There are 4 major uses of evaluation;
i) Improving performance
 Findings and recommendations from an evaluation should be used to improve implementation.
 An evaluation should also be used to derive lessons from completed projects so that these
lessons may be used to guide future strategies.
 It is a management tool used to improve activities still in progress and for aiding management
in future and decision –making.
 To find out reasons for delay and to seek remedial actions.
 Enhancing Accountability

ii) Enhancing Accountability

 An evaluation can be used to improve the ways in which projects communicate the
objective ,strategies, achievements and short coming with various stakeholders;
 Evaluation justifies the allocation of scarce funds, time and efforts by all the projects
participants.
 Greater openness about the achievement and failure can help to enhance trust and reduce
criticism.
iii) Promoting communication
Evaluation should promote effective communication between the various stakeholders in the project, staff
and donors.

iv) Promoting Learning and Empowerment

 An evaluation should be a part of the learning process through which the project participants
develop new skills in planning and social and technical change.
 Involvement in an evaluation can result in increased motivation to participate in planning and
implementing of the future activities.
 By assessing achievements and problems, participants in an evaluation enhance their analytical
capacity and critical awareness.
 Project staff can develop their planning and implementation in the evaluation process.
 In evaluation we learn about the good and bad practices so that we are able to discard bad
practices and employ good ones.

Evaluation focuses on the following

Relevance: the appropriateness and importance of goals and objectives in relation to assessed needs.
Effectiveness: Performance in relation to the targets set by the original plans, is the project achieving its
objectives?
Efficiency: The cost effectiveness of the activities
Impact: the broader economic, technical, political, social consequences/ effects of the project.
Sustainability: the potential continuation of the project activities following the original withdrawal of external
support.

Need for data in project Evaluation

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Data is crucial to evaluation as it is to monitoring. An important requirement for collecting good quality and
adequate data is to choose appropriate methods and instruments. Methods of data collection commonly
used in project evaluation include interviews, observations, focus group discussions, semi-structure
interviews, and questionnaires and records review.
As such any evaluation exercise should design data collection and processing very properly. This will
involve
 The need to collect data, which will show the project’s progress;
 Record what is taking place
 Know the type of data to collect when and how
 Data collection techniques and tools to use.
Evaluation Report
Importance of evaluation reports.
 It documents the important process, which needs to be assassinated to a wide audience
 It provides a comprehensive analysis of the outcomes of the project, conclusions and
recommendations on which decision –makers base their decisions.
 It provides an important record for future reference by the different stakeholders.

Need for disseminating evaluation results

 Results of an evaluation can be used in decision-making;
 In particular an evaluation can form part of local level planning processes to meet the needs of
project participants.
 Evaluation results contribute to transparency and accountability in a project.
 Leads to information sharing among primary and secondary project stakeholders.

Evaluation Report Format

Typical format for an evaluation report is outlined here below. It would however be noted that there is no
blueprint format for presenting an evaluating report.

Executive summary
This presents an overall synopsis of the main aspects of the evaluation report, which may cover general
information on the following;
 Objectives/purpose of the evaluation exercise
 Scope of the evaluation exercise
 Main findings
 General recommendations.

Background
The background usually covers the following
 Description of the project
 Purpose of the evaluation
 Evaluation problems and questions to be answered
 Justification
Methodology
The methodology specifies in a summarized form the following aspects of the evaluation process.
 Specific information gathered

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  Sources of information
 Data collection methods/instruments
 Data analysis tools employed
 Report writing process
Presentation of results
This covers findings in accordance with each evaluation question considered
Conclusion and Recommendations
Conclusions, which are the implications of the results of the evaluations to the project
Recommendations, which are the suggested steps to be taken in light of the conclusions and findings
Responsibility centers for action i.e the different persons and agencies that are responsible for
implementing the recommendations of the evaluation.

Monitoring indicators and the role of data in project monitoring and evaluation
Meaning of Performance indicators
Indicators are variables used to measure change in phenomena or an achievement in a process. In M&E
indicators are used to trace the answers to questions
Categories of indicators: there are two categories of indicators commonly used in M&E. These are direct
and proxy indicators
Direct indicators measure the variables directly e.g numbers of boreholes, or classrooms etc constructed.

Formulation of performance indicators

Indicators should be formulated on the basis of the key project variables targeted in the project matrix or
work –plans. These variables may relate to project activities/inputs/outputs or methods of implementation
etc.
For each variable
 Define the aspects to be measured e.g classroom or training sessions, etc.
 Determine the unity carried of measure e.g numbers or sizes frequency, etc.
 State the time element e.g per week month etc.
 Determine the spatial /location aspects, e.g per sub country, or district etc (as applicable).
Factors considered when selecting indicators for monitoring and evaluating projects
In selecting which indicators to adopt, management decision are usually based on the following
considerations.
 Information that show whether or not project objectives are being achieved.
 Information required for effective management of a project (finance, staffing and logistics)
 Information that responds to the priority interest of the different groups involved in the monitoring
process.
 The data that is valuable and can be collected accurately in order to ensure that the monitoring
information is up to date, accurate timely, relevant and reliable.
 Ability to use the collected information (feed back to the user for decision making).

Types of Indicators
-Input indicators
Input indicators assess the extent to which resources are being utilized in the project to achieve the
objectives. Input indicators also measure utilization of capital and recurrent expenditure on equipment and
any schedule of activities that need to be completed before the project can begin

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-Output indicators
These show whether the outputs that were targeted are being achieved as planned and in the right quantity
and quality
-Process indicators
These show whether the activities that were planned are being carried out as effectively as planned. They
are used to show the volume, efficiency and quality of work. They reflect what is being done and how it is
carried out.

-Impact indicators
These are used to assess what progress is being made towards reaching the project objectives and what
impact the project has had on the different target communities. The project can create either a positive or
negative change.
It is hence extremely crucial that organizations develop impact indicators for all their activities. Developing
impact indicators helps organizations objectively evaluate themselves and to know which activity has been
most effective and which ones have not.
Objectively verifiable indicators (OVI)
Indicators must be objectively verifiable. A non verifiable indictor produces subjective results, which may
not be very useful to management. The verifiability of indicators is normally stated in terms of the following:
 Quality - How well?
 Time - By when?
 Quantity- How much?
 Location Where?
 Cost What amount?

Means of Verification (MOV)

There must always be ways of measuring or collecting information about each of the indicators. This is
what is called “Means of verification” it is important to state the sources from which information to verify
indicators can be gathered.

MOV informs us where to get evidence that an objectively verifiable indicator has been met and where to
find the necessary data to verify the indicator.
Issues to consider when establishing MOV
 Are the MOVs available from normal sources (Statistics, observation and records)?
 How reliable are the sources?
 Are special data gathering techniques required? If so at what cost?

Role of Data in monitoring and evaluation

Definition of Data
Data refers to basic facts from which one may easily draw meaningful conclusions. For instance a set of
observations recorded about a particular organization is called organization data.

Forms of data for monitoring and evaluation

Data for monitoring and evaluation takes two forms namely; quantitative and qualitative data.
Quantitative data: Quantitative data some times called numerical data will either be discrete or continuous.
Discrete data will take the form of whole numbers e.g number of classrooms constructed, number of health

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units constructed. Continuous data will take on any given range of values. For example distance in (Kms)
could take the form of 2.5 km, or 3.6km etc.
Qualitative data: this is used to measure social variables like poverty level education level etc.

Baseline Data
In project language baseline data normally refers to a collection of data/facts about the characteristics of a
community before a project or program is set –up. Baseline data is so crucial in project monitoring and
evaluation because it offers the basis for measurement. Without baseline data one cannot be able to
determine situational performance or trends in performance of a project. In order to make sense. Both
project monitoring and evaluation normally compares project performance data with the original situational
data in order to establish what has changed during project implementation. Baseline data can take the
form of quantitative or qualitative data.

Methods/Tools of collecting monitoring and evaluation data

Methods of data collection commonly used in evaluation include interviews, observations, focus group
discussions, semi-structure interviews and questionnaires. These are called primary sources of data.
In addition there are secondary sources, which include review of project records baseline data and any
other documentation about the place, people or problems involved in the project.

Primary sources of data

The most common primary sources of monitoring data include the following; Direct observation, this means
observing objects, events, processes and relationships or projects performance and recording these
conservations.

Holding semi-structured interviews.

Researchers should avoid being too restricted by the pre-set questions on the list
Key informant interviews: This involves interviews, which engage selected informants. The key informants
should be able to answer questions about project performance and give a good overview of the impact of
the project to the community.

Focus group discussions: A small group of people (6-12) with specialist knowledge or interest in a
particular project is invited to discuss specific topics related to project performance in detail. A facilitator is
chosen to keep the discussion on or around the original topic and to stop an individual dominating.

Project Closure

Project closure is the process of finalizing all activities across all the project management process groups to
formally complete the project. Closing a project is as important as other processes in project management.
Until and unless your project has been closed with the planned procedures, it officially provides no value to
the organization.
You might have delivered the deliverables, but this does not mean your project is complete. Ignoring this
process results in incomplete project management at the project manager’s end.

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Following the completion of all project deliverables and acceptance by the customer, a successful project
will have met its objectives and be ready for formal closure. Project Closure is the last phase in the project
and must be conducted formally so that the business benefits delivered by the project are fully realized by
the customer.

Project Closure involves undertaking a series of activities to wind up the project, including:
▪ Assessing whether the project completion criteria have been met
▪ Identifying any outstanding items (activities, risks or issues)
▪ Producing a hand-over plan to transfer the deliverables to the customer environment
▪ Listing the activities required to hand over documentation, cancel supplier contracts and release project
resources to the business
▪ Communicating closure to all stakeholders and interested parties.
A Project Closure Report is submitted to the Customer and/or Project Sponsor for approval. The Project
Manager is then responsible for undertaking each of the activities identified within the Project Closure
Report on time and according to budget. The project is closed only when all activities identified in the
Project Closure Report have been completed.
What is a Project Closure Report?
A Project Closure Report describes how you intend to close your project. The Project Closure Report
confirms that the objectives have been met, the deliverables have been handed over to the customer and
that project closure can commence. Every Project Manager needs to complete a Project Closure Report to
gain agreement from their Sponsor that the project is ready for closure. Once the Project Closure Report
has been approved, the Manager can proceed with the actions needed to close the project swiftly.

Review Project Completion

The final activity undertaken on any project is a review of its overall success by an independent resource.
Success is determined by how well it performed against the defined objectives and conformed to the
management processes outlined in the planning phase. To determine performance, a number of questions
are posed.
For example
 Did it result in the benefits defined in the Business Case?
 Did it achieve the objectives outlined in the Project Charter?
 Did it operate within the scope of the Project Charter?
 Did the deliverables meet the criteria defined in the Quality Plan?
 Was it delivered within the schedule outlined in the Project Plan?
 Was it delivered within the budget outlined in the Financial Plan?

To determine conformance, a review is undertaken of the level of conformity of the project activities to the
management processes outlined in the Quality Plan. The above results, key achievements and lessons
learnt are documented within a Post Implementation Review report and presented to the Project Sponsor
for approval.

What is a Post Implementation Review?

A Post Implementation Review, or Post Project Review, is performed after a project is complete. The
purpose of a Post Implementation Review is to determine whether the project was successful and identify
any lessons learned. A Post Implementation Review also looks at whether the project produced the
required deliverables within the agreed timeframe. The overall achievements are also documented in the
Post Implementation Review report.
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The following is considered the key steps for conducting a successful post implementation review:
 Prepare information on project input.
 Investigate the Project Charter and analyze how closely the project results match with the
expected objectives, goals and deliverables.
 Organize exercises for project closure lessons learned to capture best management
practices for inclusion in the PIR document.
 Conduct a gap analysis to evaluate how closely the planned requirements, schedule, and
budget were linked to each other and what results were actually delivered, when and for
how much.
 Use project success metrics to evaluate the efficiency of the project management
practices.
 Capture and document project closure sample practices and procedures that led the
project to success.
 Make a post implementation review report and include all appropriate documentation, such
as quality assurance reports, customer survey results, project performance reports, etc.

When to conduct a Post Implementation Review?

The best time to conduct a Post Implementation Review is between 1 and 6 months after a project has
completed. By then, the project deliverables will have been handed over to the customer and the benefits of
the project will be clear. A Post Implementation Review is a critical part in the project life cycle, as it's during
this review that the success of the project is measured. This template includes all of the content you need,
to perform a Post Implementation Review today.
Formal customer/client sign-off
You have delivered the deliverables (products, services, or result); however, this doesn’t mean your project
is over. You need to get a formal sign-off from the customer/client on the delivered deliverables. If the
customer/client signs off, the project can be declared complete.
Lessons Learned
 Definition. Conducting a lessons learned exercise refers to organizing a set of activities for
gathering, documenting and analyzing feedback received from project participants and describing
events that have happened during the project.
 Key Actions. To conduct the lessons learned exercise,
 Make an announcement of the exercise and make sure the project manager, team
members and key stakeholders are involved in conducting the exercise.
 Schedule date for the exercise (it should be a date following soon after the project closure
date).
 Consider hiring a lessons learned facilitator who will assistant you in holding the project
closure exercise.
 Use information on project closure lessons learned from previous projects to get a better
understanding of how to best organize the project closure event.
 Dedicate the session in a comfortable location.
 Make an agenda and share it with the invested people.
 During the meeting, try to focus on tactical dictions and implementations made during the
project.

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  Try to discuss lessons learned in a positive way – this will promote the best management
practices.
 Ask prompting questions and receive feedback and comments.
 Document the results of the lessons learned exercise and add them to the post
implementation review report.

Staff Transfer and Release

 Definition. During the project closure phase, staff transfer and release means a process of
accommodating staff changes or shifting employee responsibilities since the project comes to an
end and the project closure procedures are started. Because current project no longer needs staff,
employees should be released or allocated to new projects.
 Key Actions.
 Start the process for staff transfer & release following the staff management plan
developed at the beginning of project.
 Plan ahead for staff management practices and options. Be ready to care for the project
staff at the very beginning of the project closure sample phase.
 Express your honor and thanks to the staff members and project contractors.
 Do your best to release project staff and contractors in a dignified manner.
 Be ready to provide feedback on staff performance.
 Be ready to compose letters of recommendation for those staff member who’ve shown an
exemplary contribution to your project.
 Share CVs of your staff with other project managers who can give new job opportunities
for the staff.
 Collaborate with Human Resource Manager of your organization to keep employee files up
to date.
Releasing project team members is not an official process. However, it should be noted that at the
conclusion of the project, you will release your project team members, and they will go back to their
functional managers or get assigned to a new project. You will want to keep their managers, or other
project managers, informed as you get closer to project completion, so that they have time to adequately
plan for the return of their employees. Let them know a few months ahead of time what the schedule looks
like and how soon they can plan on using their employees on new projects. This gives the other managers
the ability to start planning activities and scheduling activity dates
Finance Closure
 Definition. Closing project finance means managing a process for of finalizing all project-related
financial transactions, completing accounts, transferring project assets, and releasing the work site.

 Key Actions.
 Set deadlines for the completion of all financial transactions and schedule project closure
for financial accounts. Then publish this information to all project staff and vendors.
 Make sure that all acceptance criteria listed in the Statement of Work (SOW) have been
met prior to payments to project vendors and consultants.
 Make sure that there’re no outstanding invoices, incomplete transitions and unresolved
financial obligations.
 Add the annotation “Final Payment” to all vouchers for payment.

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  Organize project closure activities for financial accounts.
 Comply with finance closure requirements for records retention and financial reporting.
 Make transfer of assets according to the project acquisition plan.
 Release the work site by using agreements with facilities management.

Project Archive
 Definition. A project archive is the systematic storing of project documents and artefacts. The
project archive is important to administrative closure. When you have historical project documents
at your disposal, this will provide valuable information for planning future projects, for on-going
product support, for maintaining the project, and for public project disclosure requests.
 Key Actions.
 Use a dedicated server to deploy a centralized database where you will keep project
artefacts.
 Use a folder structure to store project data in one database file.
 Make sure hard copy artefacts are stored safely and only authorized persons have access
to the database.
 Include a description to every artefact being stored in the database.
 Assign a maintenance team and make sure its members have authorized access to all the
project artefacts stored in the database.
 Make sure papers on project closure lessons learned are available and organized into a
library with search capabilities

The documents associated with the project must be stored in a safe location where they can be retrieved
for future reference. Signed contracts or other documents that might be used in tax reviews or lawsuits
must be stored. Organizations will have legal document storage and retrieval policies that apply to project
documents and must be followed. Some project documents can be stored electronically.
Care should be taken to store documents in a form that can be recovered easily. If the documents are
stored electronically, standard naming conventions should be used so documents can be sorted and
grouped by name. If documents are stored in paper form, the expiration date of the documents should be
determined so they can be destroyed at some point in the future. The following are documents that are
typically archived:
 Charter documents
 Signed contract
 Project models
 Scope statement
 Working papers
 Original budget
 Change documents
 Manager’s summary—lessons learned
 Project report
 Transferability of assets
 Handover procedures

PROJECT PROPOSAL WRITING

Introduction:
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Having a good project idea is one thing; presenting it to financiers for funding is another. Funding a project
depends on the proposal’s ability to adhere to requirements and standard stipulations / guidelines of the
prospective funder.
Project proposals are documents designed to present a plan of action, outline the reasons why the action is
necessary, and convince the reader to agree with and approve the implementation of the actions
recommended in the body of the document.
It is a written description of the project to be undertaken. A proposal is a request for financial assistance to
implement a project.
It is important to carefully formulate and design your project. It is equally important to write a proposal which
will attract the necessary funding. Proposal writing is a skill which requires some knowledge and practice.
Before you begin to write your proposal, keep in mind the following points:
 It is necessary to find out in advance what sources of funding are available, through governments,
United Nations agencies, some international NGOs or private foundations.
 Most donors look for the degree of local initiative in the project proposal, the utilization of the
available resources within the country itself and the plans for the project to be self-supporting once
the initial funding has been spent.
 Your project should be practical, not too costly, and have the potential for being repeated in other
situations.
 Increasingly, funding agencies are looking for integrated approaches to development projects. This
means that you will want to see to what extent your project supports and supplements existing
activities and is designed to overcome identified problems.
 Almost all UN and government agencies, foundations and private voluntary agencies have their
own proposal format that they will want you to follow. If you are not in contact with a local or
regional representative, write a letter requesting information as to proper procedures, application
format and funding requirements. While format varies, the same information is asked for by all
agencies and foundations.
 Find out the budgeting cycle of the agency, whether annual, quarterly or ongoing. Check to see if
there is a closing date for application.
Project Structure (Outline of Proposal)
These (structure) guidelines are not intended to tell you what to write, but rather how to write the proposal.
If you are responsible for writing the proposal, then it is because you are the "expert" (in the best sense of
the word). If you are responsible, then you know what you want to achieve and the best way to achieve it.
The chapters of your proposal do not necessarily have to be written in the order presented here, but what is
written in each chapter must relate in specific ways to what is written in the other chapters. Make sure that
you put the right content in the right chapter. Make sure that each topic relates to the others and to the
proposal as a whole.
A project proposal aimed at soliciting funds must follow a specific format of the prospective donor, since
preferences differ from one to another. Nonetheless, there are common elements in all, hence the
possibility for a general guideline.
1. Title Page (Cover):
This is a single page; the front cover of the proposal. It should include:
 Date;
 Project title;
 Locations of the project;
 Name of the organization; and
 Any other necessary single line information.
Using name of an organization as “Project Title” is unacceptable.
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 2. Executive Summary:
Write this part last. It is a collection of critical elements in the proposal. This is the section on which a
potential donor will read and make that vital preliminary decision: whether or not to seriously consider
assisting. The optimum size is half a page; the absolute maximum size is one page. This is a summary of
the written proposal. It must contain the salient points or critical elements in the proposal, the kind of things
which a donor selecting proposals for funding would want to know before reading the rest of the proposal if
time is available.
A good summary should answer at least the following questions:
• What project is being proposed?
• Where is it located?
• What is the duration of the project?
• What is the project supposed to achieve?
• Who are the beneficiaries?
• Who are the implementers?
• What is the total cost of implementing the project?
• What plan is in place for the sustainability of the project?

3. Background & context (Causes of the Problem):

This section is expected to answer why your project is needed. Here you will want to give a description of
the situation and focus on factors which prompted the formulation of your proposed project. Tell how the
need for this project was identified and who was involved in developing the project. Explain your project's
origin or context.
It is most advisable to involve the whole community in identifying priority problems; that is called
"participatory research."
The first thing the background does is to identify the problem. That means it must name the problem and
locate the problem. It indicates the target group (beneficiaries), the sector, the magnitude, and other actors
who are working to solve that problem. It also indicates the extent to which the problem has been solved by
the other actors, and what has been so far accomplished by your group.
While examining the problem(s) to be addressed, several questions should arise here. What is the
condition of the target group to justify the donor donating money and perhaps seconded staff? A history of
the community, your group, or the project is not essential, but a brief outline can be useful. More
importantly, what conditions, or what changes in conditions, are envisaged that would lead to any donor
agreeing to fund your project?
You may wish to include:
 Project area (Issues and problems, not descriptions);
 Reasons for making this proposal;
 Circumstances leading up to the project; and
If yours is a project that is not starting fresh, the background will also indicate any changes in your project
since it began.
Remember that the background chapter describes the factors leading to the problem that your project
intends to solve. Everything in this section should be justification to approve the project and the requested
funding assistance. Long histories and analyses would be detrimental here.
4. The Project / Organization (Profile):
This section describes the (perhaps changing) organization and management structure needed to carry out
the activities described above.
Describe briefly your organization's goals and activities. Be specific about its experience in working with
problems of a similar nature, what its capabilities and resources are in undertaking a project of this nature.
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The abilities and experience of your organization's members, your human resources, may well be your
greatest asset. Indicate the kind of assistance your organization expects to receive from possible
collaborating agencies. Attach additional organizational information, such as an annual report, if available.
Explain:
 How will it be done?
 Who is responsible for the project?
 Who will implement (who will do it)? and
 Who will direct the implementation of the project?
Who runs the project? Who is in charge of the overall organization? Who is responsible for its overall
implementation (in contrast with responsibility for its design and its monitoring, and in contrast with the
separate actors, separate agencies, and separate locations)? Will that change? These can be spelled out
in the proposal. Give a brief about the organisation, legal documents, credentials, lessons learnt.
5. Goals & Objectives
The goal of your project should be to solve the problem or problems described in the background. Goals
and objectives must relate to the previous chapter, by stating what the solution to those above problems is.
You need a set of (general) goals, and sets of (specific) objectives.
Start with "goals" which are general, long term, broad desires. From those goals generate specific
"objectives" which are verifiable, measurable, finite, and have specific dates of achievement. For example:
"To reduce illiteracy," is a goal; while "To teach basic literacy skills to 20 clients by March 2019," is an
objective.
You will want to be as specific as possible in stating the objectives of your project. They should be written in
terms of the end results you expect in the project, not how you will achieve these results. Those results
must be verifiable (i.e. you can clearly show that they have been achieved, and they can be confirmed by
outside observers).
When selecting the goals and objectives for the project, remember the nature of the donor you ask; what
kinds of solutions are sought? The donor does not want to contribute to dependency, so is not interested in
funding charitable services which may take the pressure of obligation off those authorities who should look
after the rights of the local people. Most donors are not simply a source of funds for carrying out routine
"operations." They are interested in supporting activities which highlight the needs of the most vulnerable
and distressed, and promote self-reliance, ethnic harmony and development.
Write objectives as solutions to different problems
Problems are breakdowns of the issue
For example, the unemployment rate of a particular area will be reduced by 30% by end of 2020.This
objective is a solution for a problem of high unemployment rate in that area where children’s education is
lower.
6. Beneficiaries (Target Group):
In this chapter you describe the beneficiaries or target groups in some detail. You may also add indirect or
secondary beneficiaries (e.g people trained to help the primary beneficiaries). This can be an expansion of
the topic mentioned in your background section; indicate their number, characteristics, reasons for
vulnerability, locations, and so on.
Most donor agencies will be more predisposed towards your project if you can demonstrate that the
beneficiaries have participated in the choice and design of the project. (An appendix can list meetings of
beneficiaries, listing details such as dates, locations, times, topics discussed, speakers, and lists of
beneficiary group members who attended. Refer to the appendix in this chapter; do not include it here; put
it at the end of your proposal).

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This is section is a description of who will gain from the project being formulated both directly and indirectly,
and of what the gains will be. Clearly give the numbers and quantity of beneficiaries that are going to be
addressed with your intervention.

7. Strategy/implementation plan

First, start with examining possible strategies to reach the objectives mentioned above. How are you going
to ensure the problem is addressed? Strategies should be in line with the problem identified. Strategies
should be straight forward and the donor should know the organisation has the ability and expertise to the
job.
To have X number of awareness sessions as the strategy
This section of the project proposal, the goal is to outline all procedures that are necessary to make the
project successful. Often, the strategy helps to define short term and long-term goals for the project,
explains how to systematically accomplish each step and what type of return can be expected from the
effort.
Here, the intending funder is given an idea of how important the project is and the potential it has to help
the community make better use of available resources/ change the situation at hand.
Strategy involves statement of;
What is to be done?
Who is to do it?
When it is to be started and completed?
8. Activities
Given the objectives and strategies, what activities must be implemented or started to use that strategy and
reach the objectives? “Activities are specific steps that will help achieve the objectives. Always refer to
those activities to how they will achieve the objectives mentioned above. Even the activities of the support
staff must be justified in that they must be employed so as to allow the operational staff to reach their
targets.
Community level meetings, home visits are activities in a case of sanitation improvement
9. The Schedule (Each Action When)*
In this section you describe in sequence the activities you plan in order to achieve your objectives. If you
can be so specific as to give dates, even if approximate, all the better. You may wish to use a diagram or
bar chart to mark out the calendar events. This is the time-table for the implementation of the project. It
involves giving each of the activities a detailed time-frame, i.e when to start and when to end. Usually,
some techniques of scheduling the activities, e.g Gantt Chart, are used.
10. Staffing and administration
Mention the team, clearly state the task, roles and responsibilities
Explain:
• How will it be done?
• Who is responsible for the project?
• Who will implement (who will do it)? and
• Who will direct the implementation of the project?
• Who runs the project?
• Who is in charge of the overall organization?
• Who is responsible for its overall implementation (in contrast with responsibility for its design and
its monitoring, and in contrast with the separate actors, separate agencies, and separate locations)
?

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 11. Monitoring
Mechanisms for assessing project progress must be set out .This helps to evaluate whether we are working
in line with the plan.
• How will achievements be measured?
• How will they be verified?
• Monitoring and follow-up should be built into the project activities.
• Part should be continuous self-evaluation by you (the implementing agency).
• The monitoring and receiving of reports from the project to the donor must be worked out and put
into your project proposal.
• One thing is for sure; there should be emphasis in reporting the results, or outputs, ie the effects of
the project on the target group or beneficiaries.
• The reporting of achieved results, as compared to planned objectives as defined in your project
proposal, is essential.
Monitoring and follow-up should be built into the project activities. Part should be continuous self-evaluation
by you (the implementing agency).
The monitoring and receiving of reports from the project to the donor must be worked out and put into your
project proposal. The monthly reports should be designed and reviewed as to usefulness to the donor for
its ongoing planning and programming for the whole country.
One thing is for sure; there should be emphasis in reporting the results, or outputs, ie the effects of the
project on the target group or beneficiaries. There is no harm in also reporting activities if the reports are
brief. The reporting of achieved results, as compared to planned objectives as defined in your project
proposal, is essential.
• The monitoring section should show
 How often it will be done
 By whom
 What will be monitored and why?
• Monitoring: to assess whether your project activities are on track.
12. Reporting (Communicating the Observations):
In any agency-funded project, accounting and accountability are very important. This applies to most donor
agencies, UN, governmental or NGO.
In your proposal, your reporting procedures should describe: "how often, to whom, including what?" You
may want to discuss this with the prospective funding agency since reporting and evaluation requirements
vary among agencies, and are dependent upon type of project. Careful reporting of your project in progress
is an invaluable resource for others who attempt projects of a similar nature.
Your proposal should indicate what reports will be submitted. These include regular ongoing reports, and a
final report. Short, frequent reports (eg weekly sitreps) may include only events and activities. Longer
reports should indicate the results of the project activities (not just activities) , an evaluation or assessment
of how far the objectives were reached, reasons why they were not, and the impact or effect on the
beneficiaries (target group) .
Reports should be prepared and submitted optimally every month. The proposal should indicate what
reports are to be submitted and with what frequency and content. Each project (if your group is proposing
more than one project) requires a separate report (two or three pages of text plus needed appendices).
A detailed monthly narrative report should include how far each of the intended objectives has been
reached, what were the reasons they were not fully reached, and suggestions and reasons about changing
the objectives if they were found to need changing. The narrative report can include information about
events and inputs (what actions were undertaken, see below) , but should emphasize outputs (the results
of those actions in so much as they lead to achieving the stated objectives) . Attention should be paid to the
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number and location of beneficiaries. The monthly report would best be organized into sections
corresponding to the sections of your proposal.
The final report should include the same topics as the monthly reports, plus a section called "Lessons
Learned," and a section indicating the impact of the project on the target community and surrounding
areas. The report should be concise (brief but complete).
13. Detailed Budget:
The line-by-line budget should be put in an appendix.Each line on your detailed budget should have the
total costs for one budget category. The lines should be grouped into similar kinds of costs (eg salaries,
vehicles, communications, fuels, transport).
Mention the budget line under
 Administrative cost
 Program cost
 Training cost
The budget should be a realistic estimate of all costs involved in implementing and operating the project.
Don't inflate costs and give justification for each budget line head

If possible demonstrate the potential for eventual self-support, or support from other resources other than
the one to which you are applying.
Voluntary contributions made to the project by your organization should be listed and estimated as closely
as possible in cash terms or shown as "no charge.
Specify physical facilities that are available or, are to be made available for the project.
Specify your organization's existing equipment and supplies that will be used for this project.
Often, funding agencies prefer to match grants, or assist with part of the total budget rather than give the
entire sum.

14. Sustainability Plan/ Follow-up plan

This is a statement of what you plan to do after implementing the project successfully. It should reflect
some sense or creativity and innovation that can lead to project sustainability.Sustainability plan helps
donors to make decision for permanent commitment. No funding source wants to support your project
forever. The sustainability plan should be clearly stated.
15. Appendices (Attachments):
The text of your proposal should be a single, brief yet complete argument from beginning to end –– easy to
read. Because many important details will make the text too convoluted and difficult to read, they should be
put into appendixes at the end.
Typical of documents to put in appendices are:
 lists;
 diagrams;
 detailed budget;
 job descriptions; and
 any other necessary detailed documents.
When you have written your first draft of the project proposal, go through it and look for any descriptions of
details in your text that may draw the reader away from the smooth flow of the argument. Move them to an
appendix, and in their place put a brief note about them and ask the reader to look in the appendix for the
details.

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