Project Planning

Planning An overview
 As we have seen earlier the project comes from the national /
organizational plan (program).

 Where as project planning is one element of the project

management.
 One of the major function of project management is Project
planning.
 Thus, planning is a broader concept and its basic concepts are
summarize as follows
Planning An overview

 A nation or institution or business organization can succeed

when it determines in advanced. Its objectives, and Methods
and resource for achieving them So planning involves:
 Determination of objective,
 Formulations of programs and courses of actions for their
attainment,
 Development of schedules and time of action,
 And assignment of responsibilities for their implementation.
 Planning An overview
Planning is a process through which one attempts to
determine;
 What will be done?
 What are the objectives of things in short run and long
run? What resources will be required?
 This involves assessing the available resources,
estimating resources required to achievement the
objectives, and filling the gap between them.
Planning An overview
 How it will be done? This involves two things:
 Determination of tasks, activities, projects, programs etc
required for attainments of objectivities an and
 Formulations of:
• Structures,
• Policies,
• Procedures
• Methods,
• Standards and budgets for attainment of the
above purpose.
Planning An overview
 Who will do it? It involves assignments of responsibilities to
parties involved.

 When it will be done? It involves determination of the time

and sequence, for each activity planned to be carried out

 Planning is also essential pre requisite for the performance

control as it provides base line for evaluating performance.
Steps in planning
 The planning process comprises of a number of steps.

 There are:
 Forecasting
 Determination of objective
 Determinations of means
 Determination of resources
 Implementation plan
Forecasting.
 It is an intelligent estimation and prediction of the future
internal and external environment.
 These forecasts is relate to aspects like,
 Economic condition,
 Technology,
 Population structure and growth,
 Social norms and value,
 Political and legal conditions etc.
 Forecast only provide data for planning, and do not
produce any plan.
Determination of objectives
 Any plan starts with clearly defined objective

 Objectives are broad statements that an organization or

country wants to attaining in the future.
 Objective provides the basis and direction for the
performances of all other management functions:
 Objective serves as criteria for evaluating decisions
 Objective provides a basis for control and evaluating
performances against predetermined standards.
Establishing Means

 Establishing Means for attainments of planned objectives. The

instruments of planning are
 strategies,
 policies,
 rules,
 procedures,
 Budget
Determination of resources
 The next step in the planning process is the determination of
resources that would be required for their implementations.
 The types of resource includes:
Implementation of plans
 Plans will not produce any results if not implemented
effectively.

 Strategies, policies, programs, project, and budget, constituting

the instruments of planning, should be implemented effectively
in order to ensure the maximum utilization of resources for the
achievement of predetermined objectives.
An Overview of Project cycle
Identify the stages of project life cycle.

 A project passes through a number of life cycles called project

cycle.

 What is project cycle?

 Project Cycle: Is the various stage through which project
proceed from inception to implementation.
 It is a stage in which a project advance from inception to
maturity stage.
Identify the major sources of project idea.

 Some authors (Choudhury, 2005) presents the projects life cycle in to the life cycle curve
 Inception (concept, definition, organizing etc) (12%)
 Maturity ( implementation ) (85%)
 Decay (clean up) (3%)

Level
Of effort inception decay (clean up)

maturity (implementation)

time
 Explain what issues should be considered in each stage
 Each stage follows the proceeding one and leads to the next.
 These different phases are identified by different institutions
and authors.
 Some of the phases as identified by different authors are:
 The Baum cycle
The Baum Cycle (World Bank Procedures)

 Baum (1970) model is the first basic model of a project cycle

which has been adopted by the World Bank.
 According to this model a project cycle consists of the following
five stages
 Identification
 Preparation
 Appraisal and Selection
 Implementation
 Evaluation
 The European Commission/Europe Aid Approach

 This approach consists of six phases and has been considered as

the most recent approach developed as guidelines for development
projects
 Programming
 Identification
 Appraisal
 Financing
 Implementation
 Evaluation
The common books steps
 However, in most literature and guide books the stages or
phases of projects are divided into six phases and this approach
are preferred in this discussion:
o Identification
o Pre-feasibility study.
o Feasibility study
o Selection and project design
o Implementation.
o Ex-post evaluation
I. Identification
 Project starts by generating potential idea that can be
converted into a meaningful project.

 Project identification involves finding project’s idea, which

could contribute towards achieving specified
business/development objectives

 In many cases many projects start as a simple idea and later on

it may grown up into a full-fledged project
Identification...
 Identification of promising investment opportunities (projects)
requires
Imagination,
Sensitivity to environmental changes,and
A realistic assessment of what the firm can do
Identification...
 If the project is a private project the initiating entity will define
the
 Concept,
 Expectation and
 Objectives of the project.

 But, if the project is a public project, scrotal information is an

important source to define the concept, expectation and
objective of the project.
Identification...
 Generally, the idea for project may come from the following
sources:
 From the need to make profitable use of available resources
( this is for resources based projects)
 Market based projects arise from an identified demand in
home or overseas market
 Need based project may arise from the need of community
(company) to make available some basic materials (services)
requirements.
 Project ideas can also emanate from government policy and
plans
 From technical specialists like, entrepreneurs and local
leaders are also common sources of projects.
Identification...
 In general, the sources of project ideas can be broadly classified into,

 MACRO-LEVEL
 National policies, strategies, sectoral, sub – sectoral or regional plans
 General surveys,
 Resource potential surveys,
 Regional studies,
 Master plan and
 Statistical publications, which indicate directly or indirectly investment
opportunities.
 Constraints on the development process due to shortage of essential
infrastructure facilities
 Unusual events such as, Droughts, Floods, Earth – quakes, hostilities, etc
Identification...
 Micro level
 The identification of unsatisfied demand or needs
 The need to remove shortages in
 Essential materials,
 Services or
 Facilities that constrain development efforts;
 The initiative of private or public enterprises in response
to incentives provided by the government;
Identification...
 The necessity to complement or expand
investments previously undertaken.

 The suggestions of financial institutions

and development agencies

 Study of new Technological Development

Pre feasibility study
 After we have identified project ideas the next step is project
preparation and analysis.

 Project preparation includes both Pre-feasibility and Feasibility

studies.

 Once a project idea is identified a preliminary project analysis

will be done ( i.e., pre-feasibility study).

 Which means the project idea must be elaborated in sort of

study.
Why pre-feasibility study?

 Because, undertaking a feasibility study that enables a definite

decision to be made on the project is a costly and time
consuming task.

 Therefore, before assigning larger funds for such a study,

preliminary assessment of the project idea might be made in a
pre-feasibility study.

 In the pre-feasibility study stage the analyst obtains rough

estimation of the major components of the project’s costs and
benefits.
Why pre-feasibility study?
 Some of the main components examined during the
pre-feasibility study include:
 Availability of adequate market (or beneficiaries)
 project growth potential
 investment costs, operational cost and distribution
costs
 demand and supply factors; and
 social and environmental considerations
 If the project is appeared to be sound the next sages is
a feasibility stage.
Feasibility study
 Pre – feasibility study should be viewed as an intermediate
stage.
 A feasibility study should provide all data necessary for an
investment decision.
 The commercial,
 Technical,
 Financial,
 Economic and
 Environment
 For an investment decision project should be defined and
critically examined.
Feasibility study
 Therefore, the structure of a pre – feasibility study should be the
same as that of a detailed feasibility study.

 The major difference between them lies on the amount of work

required in order to determine whether a project is likely to be
viable or not.

 Once the project is decided as viable using pre-feasibility study,

a detailed analysis is required.
Feasibility study
 This includes:
 Marketing,
 Technical,
 Financial,
 Economic, and
 Ecological aspects is undertaken in the feasibility stage.
 Feasibility study provides a comprehensive review of all aspects
of the project and lays the foundation for implementing of the
project and evaluating it when completed.
 Feasibility study
In the feasibility study, a team of  Finally, the feasibility report
specialists, like should include (but not limited)
 Scientists, the following analysis:
 Engineers,  Market analysis

 Economists,  Technical analysis

 Sociologists,  Organizational analysis

 Environmentalists etc are  Financial analysis

needed to work together  Social – economic analysis,
and
 Environmental analysis
Selection (project appraisal)
 The feasibility study would enable the project analyst to select
the most likely project out of several alternative projects.

 Selection follows, and often overlaps with the feasibility

analysis.

 A wide range of appraisal criteria have been developed to judge

the benefits of a project.
 The criteria are divided into two broad categories.
 Non-discounting criteria and
 Discounting criteria.
Selection (project appraisal)
 After a project has been prepared, it is appropriate to forward
for a critical review (external review).

 This provides an opportunity to re-examine every aspect of

the project plan to assess whether the proposal is appropriate
and sound before large sums are committed
Selection (project appraisal)
 Projects, appraisals cover the following aspects,
 Technical
 Financial
 Commercial
 Incentive
 Economic
 Managerial
 Organizational
 These issues are the subjects of specialized appraisal report.
 And on the basis of this report, financial decisions are made –
whether to go ahead with the project or not.
Implementation
 The objective of any effort in project planning and analysis is to have
a project that can be implemented to the benefit of the society.
 Implementation is the most important part of the project cycle.
 In this stage,
 Funds are actually disbursed to start the project and keep
running
 Contracts are signed
 A major priority during this stage is to ensure that the project is
carried out in the way and within the period that was planned
Implementation…
 During the project implementation stage, the following important
points should be considered:

 All the stages of implementation should be completed with in the

time schedule allotted.

 The physical targets are to be realized with in the financial allocation.

Project analysts (manager) must keep an eye over changes in
 Technology,
 Taste,
 Price,
 Profitability etc.
Ex-post evaluation
The final phase in the project cycle is evaluation.

 Once a project has been carried out the actual progress with the
plans should be evaluated in order to judge whether the
decisions and actions taken were responsible and useful.

However, evaluation is not limited only to completed projects.

Ex-post evaluation
 Ongoing projects could also be evaluated to find solutions for
problems when the project is in trouble.

 The evaluation may be done by ,

 The project management,
 The sponsoring agency,
 Or other bodies.
 Moreover, evaluation should be undertaken when a project is
terminated or is well into routine operation.
 Ex-post evaluation

 Some of the benefits which can be obtained from evaluation are,

The reality of the assumptions that were made will be evaluated;
It provides an experience that is highly valuable in future decision
making;
It suggests corrective action to be taken in the light of actual
performance;
It helps in uncovering judgment biases.
 Generally, weakness and strengths should carefully be noted.
LOOKING AHEAD TO UNIT -3-PROJECTS COST
MANAGEMENT