RIFT VALLEY UNIVERSITY

COLLEGE OF BUSINESS AND SOCIAL SCIENCE

POST GRADUATE PROGRAM (MBA)

COURSE: PROJECT MANAGEMENT

By: Dagnu L., PhD

Academic year 2021/22

01/17/2022 INstructor: Dagnu L., PhD 1
CHAPTER 1: Introduction to project

 After studying this unit, you are able to

understand the:
Concept of a Project and its management
Characteristics of Project
Classification of project
Project Vs program
An overview of project Cycle

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1.1. Concept of a Project and project management
 Projects have a major role to play in the economic development
of a country.
 Since the introduction of planning in a economy, It has been
investing large amount of money in projects related to industry,
minerals, power, transportation, irrigation, education etc. with a
view to improve the socio-economic conditions of the people.
 These projects are designed with the aim of efficient
management, earning adequate return to provide for future
development with their own resources.
 But experience shows that there are several shortcomings in the
ultimate success of achieving the objectives of the proposed
project.

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 The term project has a wider meaning since different
scholars have defined in different ways.
 A set of proposals for investment of resources into a clearly
defined set of actions that are expected to produce future
benefits that exceeds costs.
 A one time set of activities involving the use of human,
material and financial resources to achieve a given result in a
specific period of time.
 A combination of human and non – human resources pooled
together in a temporary organization to achieve a specific
purpose.

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 A set of activities, which aim at achieving specific objectives within a
stipulated period of time and budget.
 According to the British Standard 6079 of 1996, a project is defined as: a
unique set of coordinated activities, with definite starting and
finishing points, undertaken by an individual or organization to
meet specific objectives within defined schedule, cost, and
performance parameters.
 The Project Management Institute (2004) has also defined a project as a
temporary endeavors undertaken to create a unique product or
service.

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 Project Management

 Project management is an organized venture for managing

projects.
 It involves scientific application of modern tools and
techniques in planning, financing, implementing,
monitoring, controlling and coordinating unique activities or
tasks or produce desirable outputs in accordance with the pre-
determined objectives within the constraints of time and
cost.
 “Project management is the skills, tools and management
processes required to undertake a project successfully”.
 Project management comprises:
A set of Skills. Specialist skills and experience are
required to reduce the level of risk within a project
and thereby enhance its likelihood of success.
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 Project Mgt…
 A Suit of Tools. Various types of tools are used by project managers to
improve their chances of success. Examples include registers, planning
software, modelling software, audit checklist and review forms
 A Series of Processes. Various management techniques and processes are
required to monitor and control time, cost, quality and scope of projects.
Examples include time management, quality management, change
management, risk management, etc.
 Every person, every organization and every nation is concerned
with project management.
◦ An individual builds a house. It is a project to him.
◦ An organization sets up new factory. It is a project for the organization.
◦ The government of a country builds high ways, dams, thermal power
plants, hydropower plants, airports, etc. These are all projects that a
country undertakes
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Project Mgt…
 Successful project management can then be defined as having
achieved the project objectives:
◦ Within time
◦ Within cost
◦ At the desired performance/technology level
◦ While utilizing the assigned resources effectively and
efficiently
◦ Accepted by the customer

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1.2. Characteristics of Project
Objectives:
 A project has a set of objectives or a mission.
 Once the objectives are achieved the project is treated as completed.
Project Objectives should be SMART

Specific – well defined and clear to anyone that has a basic knowledge
   of the     project,

Measurable – how do we know how far away completion is and when  it
has been     achieved?

Action-oriented – indicate what should be done to achieve the

   objective,

Reliable/achievable – do we have the resources

Time-based – it should identify a definite target date for completion

   and/or  frequencies for specific action

The objective of a project is usually defined in terms of

scope, schedule, and cost.
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Life span/temporary:
 A project has a specific time frame, or finite life span.

every
 project has a definite beginning and a definite end time.

The
 end is reached when the project's objectives have been achieved, or when it

becomes clear that the project objectives will not or cannot be met, or the need

for the project no longer exists and the project is terminated.

Temporary
 does not necessarily mean short in duration; many projects last for

several years. In every case, however, the duration of a project is finite; projects

are not ongoing efforts

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 Uniqueness:
 Every project is unique and no two projects are similar.
 Setting up a cement plant and construction of a
highway are two different projects having unique
features.

 Projects are multidisciplinary

They require input from people with
different kinds of knowledge and expertise.

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 Customer specific nature:
A project is always customer specific.
It is the customer who decides upon the product to be
produced or services to be offered and hence it is the
responsibility of any organization to go for
projects/services that are suited to customer needs.
 Optimality:
A project is always aimed at optimum utilization of
resources for the overall development of the economy.

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 Unity in diversity:
 A project is a complex set of thousands of varieties.
 The varieties are in terms of technology, equipment and
materials, machinery and people, work, culture and others.
 Sub-contracting:
 A high level of work in a project is done through
contractors.
 The more the complexity of the project, the more will be
the extent of contracting.

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 Risk and uncertainty:
Risk and uncertainty go hand in hand with project.
A risk-free, it only means that the element is not
apparently visible on the surface and it will be hidden
underneath.
 Complexity:
A project is a complex set of activities relating to
diverse areas.
A project requires a budget to plan for cost and
resource allocations.

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 Types of Projects
 One can identify four major types of projects;
1. Experimental project
2. Pilot project
3. Demonstration project and
4. Production project
1. Experimental project: attempt to address a problem in an innovative
manner using the alternative approaches. E.g., crop innovation.
2. Pilot project: the pilot project strengths the applicability of the
experience derived from experimental project to local level
 It can highlight the problem of implementation: test the effectiveness
of the approach adopted and can provide valuable training experiences
for personnel.
 An important function of a pilot project is to test the replicability of the
project to other areas and to other beneficiaries.

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Types of Projects…
3. Demonstration project: it's basically a form to exhibit new
techniques or approaches of a pre-tested experiment.
 E.g., Demonstration farms used to disseminate new crop
varieties among farmers.
4. Production project: the production project has the role of
increasing productivity, adjusting to scale requirements and a
high degree of replicability.

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 CLASSIFICATION OF PROJECTS:

Based on
 ownership,
 source of finance, and
 forces behind the projects.
1. Based on ownership:
 Private sector- mostly projects undertaken by business
enterprises.
 Public sector- projects undertaken by national and local
government bodies.
 NGOs- development projects are most often undertaken
by non-government and non-for profit organizations

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 Cont’d
2. Based on the Sources of Finance:
• Government treasury- projects may be entirely financed
by government budget as per its priority. For instance,
construction of regional airport.
• Government treasury and external sources- most projects
are financed by the joint partnership of the government
and donor groups. For example, a road project may be
financed 50% by the government and 50% by a foreign
donor.
• External sources of Finance- projects may be financed
totally by parties other than the government but established
for the well being of the citizens and the ownership may be
for the government or the public.

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Cont’d
3. Based on the forces Behind:
• Demand driven/need driven- based on identified
unsatisfied demand project can be created or on unsatisfied
basic needs like food, water and shelter.
• Donor driven- the force behind the financing organization.
• Donors will have their own say and influence on the types
of projects to be established.
• Political Driven- Projects may be established in response to
some political situation such as for example because of
national elections, projects by religious organizations.

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 Cont’d
4. Based on their nature:
• Civil engineering, construction, petrochemical, mining, quarrying,
projects far away from the contractor’s home office, and involve
special risk as well as problems of organizational communication.
• Manufacturing projects- conducted in a factory or other home
based environment and enable exercising on the spot management.
• Research projects- established for pure research consuming large
sum of money and lasting over years resulting in dramatic profitable
discovery or proving waste of money.
• Management projects- projects that require the employment of an
external project manager or managing contractor for issues such as
relocating head quarters, developing and introducing a new computer
system, preparing for a trade exhibition, producing a feasibility or
other study report, restructuring the organization etc.
5. Based on Complexity

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01/17/2022 INstructor: Dagnu L., PhD 21
 Projects and Program
 Policies are implemented through programs usually overall lengthy
time scale of five to ten years.
 Programs have broadly expressed development objectives. while
projects are the building blocks of programs and are usually of shorter
duration.
 A project is a means by which national, regional local, etc plans are
made operational.
 This means the plan has to be elaborated into "package of action".
 The package of action can be divided into two broad categories. These
are:
A. Program: which is the first step in plan elaboration and
B. Project: the second step in plan elaboration.
 Program, which is a bigger package of action is composed of a number
of projects aiming at attaining one or more related objectives of plan.
 Project on the other hand achieve goals which lead to the
accomplishment of specific objectives within program.
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 Projects and Program……

 The following are the basic difference between program and project.
 A program is broader in scope than a project.
 A program is a domain out of which project can be found.
 For example, if we think of extension program under Food program we
could identify different projects like irrigation, crop production, Honey
production etc.
 A program has general objective while projects have a specific objectives.
For example, if the objective of the extension program is self food
efficiency, the objective of the project could be increasing crop production,
milk production, honey production etc which are more specification than
being general.
 Project has a specific project area while program don't have a specific
program area.
 Projects have specific beneficiary groups. For example, if one establishes a
cattle raring project at Somali region, that doesn't mean that every Somali
will be willing to buy your product rather there will be a specific client
who will purchase your product like Yemen etc.
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 The difference and similarities between project and program can
be summarized in the following table:
Project Program
- It is specific in objectives - Has got general objectives
Difference
- Has specific areal/ - May not have specific area
geographic unit - May not have specific target
- Has clearly determined and group
allocated fund - May not have clear and
- Has specific life detailed financial allocation
- May not have specific time of
ending

- Has purpose/objectives
Similaritie
- Require input (financial, manpower, material)
s
- Generate output (goods or services)
- Operate over space and time

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 The Project Cycle
 Projects usually go through a series of identifiable stages.
 The various stages through which project planning proceeds from
inception to implementation are often called "the project cycle."
 It is the project's life cycle through which the project advances from
infancy to maturity. There are a number of models of the project
cycle.
 One of the most known models of project is developed by Mr. W.C.
Baum of the world Bank has coined the term "project cycle" in 1970,
and his model of project cycle refer Baum's model of project cycle.
 However it is naïve to think that a project cycle as a successive stages
overtime.
 There are in fact, much feedback between the project cycle stages, and
sometimes, some stages have to be undertaken simultaneously.
 It is preferable, therefore, to think of the project cycle in the form a
computer program, which describes the process more accurately.
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The Project Cycle
The separate stage of project planning are:
Identification
Preparation
Appraisal
Implementation and
Evaluation
Let see each in the following slides:

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 Project identification
 Project identification is the basic phase of the project
development cycle.
It begins with the conceiving of ideas or intentions to
set up a project.
This phase involves collecting, processing and
analyzing data on problem/needs of the
areas/community/organization.
The data/ information generated during this stage
provides a basis for the next or second stage of the
project cycle.

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 Sources of Project Ideas

 Sources of project ideas can be categorized into two

as:
◦ Macro sources

◦ micro sources.

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 Macro sources
Macro Environment Analysis

 Environmental analysis can be done for ongoing

business or new one using PEST/STEP Model.

 STEP analysis can be an effective strategic instrument

for realizing market growth, decline and the potential

of the business.

 By looking into the outside environment , the company

can frame strategic planning process for the future out

of its present situation. 01/17/2022 Instructor: Dagnu L., PhD 29

Tools for identifying project opportunities
A study of STEP factors is helpful in projecting demand for various

goods /services. Ideas can be generated from analysis of the STEP factors.

1.Sociological factors, e.g. values , life styles, demographics ,culture,

education trends, immigration & emigration, family size

2. Technological factors e.g. R&D, new products & processes,

advancement in manufacturing process,

3. Economic factors, e.g. government policies, disposal income,

unemployment rate, economic growth, inflation, interest rates, demand

and supply of the commodity

4. Political factors, e.g. policy , legislation, political parties, relationship

with neighboring countries, tax structure, environmental regulation, stability

of the government, world political trends

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 Micro- Analysis
A realistic appraisal of corporate strengths and
weaknesses is essential for identifying investment
opportunities which can be profitably exploited.
To fulfill needs and improve shortages of
products/services project ideas can be emerge.
◦ Porter five forces model is useful to understand the
competition for company’s competitive advantage: Supplier
power, buyer power, threat of new entry, threat of substitutes,
Competitive rivalry

◦ SWOT Analysis are also used at this Instructor:

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 2. Project Preparation
 If the pre-feasibility study indicates that the projects is, prima
facie, promising and further work is justified, the project enter the
stage of preparation.
 The project is now being seriously considered as a definite
investment action and detailed planning of the idea can begin
project preparation (sometimes called project formulation)
covers the establishment of technical, economical and financial
feasibility.
 Decision have to be made on the scope of the project, location,
and site etc.
 Complete technical specifications of distinct proposals
accompanied by full details of financial and economic costs
and benefits are the outcomes of the project preparation
stage.
 The project now exists as a set tangible proposals.
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Project Preparation
 Project preparation is probably the most important stage in
project planning.
 Crucial choices relating to the structure of the project are made
at this stage and some of them are virtually irreversible.
 Crucial choices at the stage of preparation should be made

properly by employing the right criteria.

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Project Preparation
 Project preparation is probably the most important stage in
project planning.
 Crucial choices relating to the structure of the project are made
at this stage and some of them are virtually irreversible.
 Crucial choices at the stage of preparation should be made

properly by employing the right criteria.

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3 Project Appraisal
 Project appraisal can be defined as second look at a project
report by a person or an institution that is in no way involved in
its preparation.
 It helps in taking an entirely independent view of the project.
 Appraisal is the comprehensive and systematic assessment of
all aspects of the proposed projects.
 Appraisal highlights wide area in the project with the ultimate
objective of strengthening them adequately so as to ensure final
success of the project.
 The main objective of the appraisal is to improve and renovate
the project with the cooperation of the promoter (financing
agencies).
 It's in this stage that the bank will judge whether the project
is acceptable or unacceptable.
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 Appraisals should cover at least seven aspects of a project, each
of which must have been given special consideration during the
project preparation phase:
1. Technical: does the proposed project work in the way suggested?
2. Financial: have the financial requirement of the project been
properly calculated, their sources identified and reasonable plans
made for their repayment? Where this is necessary?
3. Commercial: how will the necessary inputs for the project be
supplied and are the arrangements for the disposal of the product
satisfactory?
4.Incentives: does things go as they are planned?
5. Economic: does the proposed project consistent from the view
point of national development?

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 Performance Appraisal…
6. Managerial: does their exist capable manager to run the
planned project successfully and are they given sufficient
power and scope to do what is required?
7.Organizational: is the project organized internally and
externally into units, etc so as to allow the proposals to be
carried out properly, and to allow for change as the project
develops?
 Frequently these questions are the subjects of a specialized
appraised report.
 On the basis of this report, final decisions are made about
whether to go ahead with the project or not.
 Following appraisal, some projects may be discarded.

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 4 Project Implementation
 In this stage, funds are actually disbursed to get the project set
up and running.
 Translating project plan into actual investment and operation is one
of the most critical and difficult task.
 No matter how sophisticated or detail the project preparation work,
it has no value unless it is transformed into action or implemented.
 Implementation can be defined as a project stage which covers the
actual development or construction of the project up to the point at
which it becomes fully operational.
 It includes monitoring of all aspects of the work or activity as it
proceeds. It's where the earlier preparations and designs, plans and
analysis are tested in the highlight of reality.
 The project's objectives are realized only when it is successfully
implemented

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4 Project Implementation…
 Implementation stages begins immediately after the final
decision on the project and ends when it starts rendering the
benefit envisaged.
 While in earlier stages of project planning there was more
thinking and less action, in this stage more actions and less
thinking is needed.
 Project implementation, even though it may involve complex
decisions, is essentially a logical and systematic approach.
 Now a days planning the implementation stage of a project
explicitly is one of the activity in project preparation.
 The better and more realistic a project implementation plan is,
the more likely it is that the plan can be carried out effectively
and the expected output or benefit realized.

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4 Project Implementation…
 Project analysts generally divide the implementation phase
into three different time periods. These are:
 The investment period: when the major project investments
are undertaken.
 The development period: when the project's production builds
up.
 The life of a project: when full development is reached.

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 5 Project Evaluation
 Once a project has been carried out, it is often useful (but not
always done) to look back over what took place, to compare
actual progress with the plans, and to judge whether the decisions
and actions taken were reasonable and useful. we call this
evaluation.
 Evaluation can be defined as a systematic and periodical
gathering, analyzing and interpreting of inputs, information to see
the effects and impacts of a development programme/project in
order it may be adjusted where necessary
 Generally evaluation of a project helps to determine whether the
objectives sets were realistic, given the capacities with which and
the circumstances in which they had to be fulfilled, to assess the
impact of the project activities

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Thanks !!
!
01/17/2022 INstructor: Dagnu L., PhD 42