Project Analysis and

Evaluation
1
AcFn 3202

Addis Ababa University School of Commerce

2 Chapter 1: Introduction to Project
 Definition of a project
 Characteristics/features of projects
 Projects Vs Operations
 Project Stakeholders
 Project Classification
 National development planning & projects
 Project Management

Addis Ababa University School of Commerce

1.1Definition of a project
What is a “Project?”

 Project is an investment activity in which specific

resources are committed within a given time frame,
to create capital assets over an extended period of
time in expectation of benefits that exceed the
committed resource.
4 1.2 Characteristics/features of projects
• Project involves the investment of scarce resources in expectation of future
benefits
• Involves a single definable purpose or end-item
• Every project is unique
• Has a defined life span with a beginning and an end.
• A project is a temporary activity – doesn’t mean short duration
• A project utilises skills and talents from multiple organisations and
professions
• A project has a risk
• Completed by a team of people – Team spirit
• Dynamic in nature
Project analysis and evaluation 03/25/2024
5 Examples of a project
 Developing a new product or service
 Effecting a change in the structure, staffing, or style of an
organization
 Developing or acquiring a new or modified accounting
information system
 Constructing a building or infrastructure
 Building a water system for a community
 Running a campaign for political office

Project analysis and evaluation 03/25/2024

Project 1.3. Project Constraints (Project Triangle)

 Every project has to manage four

basic constraints: scope, schedule, budget and
quality.
1.3 Project Constraints (Project Triangle)
 SCOPE: all the work involved in delivering the project
outcomes and the processes used to produce them
 TIME/SCHEDULE: the time to complete the project
 BUDGET/COST: the costs approved for the project
including all necessary expenses to deliver the project
 QUALITY: delivering the project outcomes according to the
stated or implied needs and expectations of the project
beneficiaries and the donor agency in order to meet
stakeholder satisfaction.
 1.3 Project Constraints (Project Triangle)
Quality is at the center of the project triangle
because it affects every side of the triangle, any
changes made to any side of the triangle are likely to
affect the quality. Quality is not a factor of the
triangle; it is a result of what you do with the
schedule, budget, and scope.
9 1.4 Projects Vs Operations
Project
Operations
1. New process or product 1. Repeat process or product
2. One objective 2. Several objectives
3. On-going
3. One shot – limited life
4. People are homogeneous
4. More heterogeneous 5. Systems in place
5. Systems must be created 6. Performance, cost, & time known
6. Performance, cost & time less certain 7. Part of the line organization
8. Follows established practice
7. Outside of line organization
8. Violates established practice

Project analysis and evaluation 03/25/2024

10 Exercise: Project or operation?
 Writing a term paper for student
 Building a new classroom
 Taking class notes
 Cleaning classrooms
 Developing a new accounting information system
 Entering transactions in accounting ledger
 Producing automobiles
 Preparing HRM policy manual
 Monitoring service quality
 Handling client complaints
 Developing a customer handling system
Addis Ababa University School of Commerce
 1.5 Project Stakeholders
11 stakeholders

• A stakeholder is an individual, group, or organization who may affect, be affected by, or

perceive itself to be affected by a decision, activity, or outcome of a project. Stakeholders
are either directly involved in the project or have interests that may be affected by the
project’s outcome.

Internal and external stakeholders

• Internal Stakeholders are the people involved in a project from within. For example:
sponsors, internal customer or client (if project started due to internal need), project team,
management, etc.
• External Stakeholders are not directly involved but are engaged from outside and are
affected by the project outcome. For example: End users, External customer or client (if
project started due to a contract from external party), Suppliers, Government, Local
community, media, etc.
Project analysis and evaluation 03/25/2024
 1.5 Project Stakeholders
12
Primary and Secondary stakeholders
• Primary stakeholders have a major interest in the success of a project because they are
directly affected by the outcome. For example: Customers, end users, some project
sponsors, project managers, team members, local communities, suppliers, etc.
• Secondary stakeholders are those that are indirectly affected by the project, or decision,
or actions of the project. Though their role isn’t primary, they assist with administrative
processes, financial, and legalities. For example: Government, donors, media, competitors,
env’tal groups, etc.

Target group(s) & Final beneficiaries

• Targeted groups are the groups of people that cause the problem. These groups are usually
targeted due to their direct effect on final beneficiaries.
• Final beneficiaries are those who benefit from the project in the long term, at the level
of sector or community

Project analysis and evaluation 03/25/2024

13 Examples: target groups and final beneficiaries
1. Your project builds toilets for 20 individual households.
2. You give out sewing machines to 15 women and train them
in sewing.

Addis Ababa University School of Commerce

14 1.6 Project Classification
Based on Ownership

• Private sector
• Public sector
• NGO’s

Based on the Sources of Finance

• Public
• Private
• Mixed: Private and public
• Mixed: public and external sources
• External sources

Based on the Forces Behind

• Demand driven/need driven

• Donor Driven
• Political Driven

Based on purpose

• New projects
• Expansion projects
• Updating projects
Project analysis and evaluation 03/25/2024
15 1.6 Project Classification
Based on content

• Construction
• Information Technology
• Business
• Service or product production

Based on risk involved in the project

• High risks project

• Normal risks project
• Low risks project

Based on resources required by the projects

• Project with domestic resources

• Project with foreign resources

Based on speed required for execution of the project

• Normal project
• Crash project
• Disaster project
Project analysis and evaluation 03/25/2024
16 1.6 Project Classification
Based on time horizon

• Long term projects

• Medium term projects
• Short term projects

Based on locality

• Regional
• National
• International

Based on resource use

• Capital intensive projects

• Labor intensive projects
• Energy intensive projects

Project analysis and evaluation 03/25/2024

17 Exercise
How would you classify Renaissance Dam project based on the following aspects?
 Ownership ___________________________________________________
 Source of finance ___________________________________________________
 Forces behind ___________________________________________________
 Time horizon ___________________________________________________
 Locality ___________________________________________________
 Resource use ___________________________________________________
 Based on content _____________________________________________________
 Purpose ____________________________________________________________

Addis Ababa University School of Commerce

 1.7 National development planning & projects
18
Dev’t goal

Dev’t
Strategies

Dev’t plan

Program 1 Program 2 Program 3

Project 1 Project 2 Project 3 Project 1 Project 2 Project 1 Project 2

Project analysis and evaluation 03/25/2024

19 1.7 Development planning & projects
Development Goal/ objectives
• statement of intention or aspiration of a government to improve the living conditions of
its people
• It is a comprehensive statement which guides development.
• For example, growth, equity in income distribution, reduction of unemployment.

Development Strategies
• the general methods of achieving specific objectives at national or organizational levels.
• describes the essential resources which will be committed to achieve objectives & how
these resources will be organized. Example, it may ask how to organize the labor force
of the organization or the project.
• It can take different forms such as import substitution, export promotion, ALI etc,

Project analysis and evaluation 03/25/2024

 1.7 National development planning & projects
20 Plan
• a statement of anticipatory decisions, their interrelations and the criteria employed in
making them
• designed as a means to accomplish strategies
• A national plan covers an entire region, e.g a district or entire economy and it is made
up of proposed programs and projects to be implemented over a period of time

Program
• A program is open ended in nature and could be on going investment activities which
are not time bound.
• A series of coordinated, related, multiple projects that continue over an extended time
and are intended to achieve a goal.

Project
• a discrete activity aimed at specific objective with a defined budget and limited
timeframe
• Projects often constitute a clear and distinct element of a larger program.
Project analysis and evaluation 03/25/2024
21 1.7 National development planning & projects
Program Vs Project
. Differences
Program Project

Scope/Objectives Wide/diverse Narrower/limited

Location diffused/wide Specific
Life time Non-time bound Time bound
Beneficiaries Not specific Specific
Resources Larger budget Limited budget

Example:
• Project: ????
• Program: HIV Prevention Program

. similarities
Project analysis and evaluation 03/25/2024
22 1.8 Project Management
Can you think of a definition of project management?
 Project management is the practice of initiating, planning,
executing, controlling, and closing the work of a team to
achieve specific goals and meet specific success criteria at the
specified time.
 Project management is the application of knowledge, skills,
tools and techniques to project activities to meet project
requirements.

Project analysis and evaluation 03/25/2024

23 1.8 Project Management
Characteristics of project management
 A single designated person, namely the project manager, is
responsible for managing the project organization.
 The project manager acts (to some extent) independently and outside
the normal functional authority structure.
 The project manager is responsible for integrating multidisciplinary
group (different functional specialists) into a multidisciplinary
project team.
 Decision-making, accountability, outcomes and rewards are shared
among members of the project team and supporting functional units
Project analysis and evaluation 03/25/2024