LECTURE HANDOUT-1

CHAPTER –INTRODUCTION
COURSE - PROJECT MANAGEMENT
MBA PROGRAM

CHAPTER OBJECTIVES:
1.1 Understanding the Concept of Project
1.2 Identifying the characteristics of a Project
1.3 Classifying Projects
1.4 Defining Project Management
1.5 Why Project Management
1.6 Functions and Skill Set in Project Management
1.7 Project Life Cycle
1.8 McKinsey 7S Framework in Project Management

DISCUSSION ON THE ISSUES:

1.1 Concept of Project
The word “Project” is derived from the Latin word “projicere” meaning “to throw
forth”. (Chadha, 1989: p. 8). The original meaning of project has been modulated over
the years. Nowadays the term ‘project’ is loosely used to express any undertaking or
assignment. But any initiative or task should not be referred to mean a project. Project
means a set of activities to be performed within a specific period of time under a
prescribed budget to achieve a specific goal or objective. Someone defines project as
the deployment of manpower, material and financial resources to achieve a preset
objective within a prescribed time period.

There are a number of widely used definitions of the term ‘project’. Project
Management Institute (PMI) is a reputed project-oriented organization in the USA
to foster the growth of project management as well as building professionalism in this
field throughout the world. PMI defines a project as a temporary endeavor undertaken to
create a unique product or service. It also describes a project as ‘a combination human
and non-human resources pooled together in a temporary organization to achieve a
specific purpose.’ United Nations Industrial Development Organization (UNIDO) in its
publication-‘Manual for Evaluation of Industrial Projects’ gives a comprehensive
definition of project. According to UNIDO a project is a proposal for an investment to
create and or develop certain facilities in order to increase the production of goods and or
services in a community during a certain period of time. (UNIDO, 1998: P.4).

The classical examples of routine projects may be as under:

 Designing a software package
 Developing a new office lay-out
 Implementing a new decision support system
 Introducing a new product to the market
 Designing an airplane or a workstation
 Opening a new store
 Publishing a book or journal

Dr. Md. Hasan Uddin, Professor, PSTU Page 1

  Constructing a bridge, dam or highway
 Relocating an office or factory
 Performing a major maintenance or repair
 Starting up a new manufacturing facility
 Producing and directing a movie
 Organizing a scientific workshop etc.

The following interventions should not be considered as projects, but these are
programs1:
 Poverty alleviation
 Food for work
 Adult literacy movement
 Islamization of knowledge
 Family planning
 Birth control
 Immunization campaign
 Quality education
 Campus development
 Social responsibility
 Maintaining law & order situation
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 National election

The following entities should not be treated as projects, rather as institutions 3 or

organizations:
 Beximco Pharma (Beximco Pharmaceutical Ltd.)
 IIUC (International Islamic University Chittagong)
 Nitol Motors (Nitol Motors Ltd.)
 Chittagong cement (Chittagong Cement Ltd)
 GSK (Glaxosmithkline Ltd.)
 Lever (Lever Brothers Ltd.)
 PHP (PHP Group)

1.2 Characteristics of a Project

A project has the following chrematistics or features by which it can be identified:

 A set of activities
 Deployment of manpower, material and financial resources
 To be performed within a prescribed timeframe
 One time activity
 Has a life cycle
 Has a beginning & end
 Flexibility in process
 An investment proposal

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Program is a set of similar projects
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Election of a particular territory is a govt. project
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Most of the projects are initiated by an institution

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  Exposed to risk & uncertainty
 Has a prescribed budget
 Two projects never be similar
 Objective oriented

1.3 Classification of Projects

Project may be classified from different points of view. It can be divided in view
of goal, phase, ownership, region, period, volume of activities, sector and professional
segmentation.

a. In terms of goal / profit generation Examples

 Commercial / profit making project Forming a partnership business
 Social / development / non-profit project Establishing hospital

b. In terms of phase:
 Greenfield project Pre-investment project
 Growing project Projects earning profit
 Sick project4 Required finance
 Closure project Lay-off project

c. In terms of ownership:
 Public project Govt. project
 Private project Project under NGOs

d. In terms of region / geographical location:

 Local project Construction of a bridge
 National project Preparation of a national budget
 International project Signing MOU between two countries

e. In terms of period:
 Short term projects (<1 yr in duration) Construction of a bridge
 Medium-term projects (<5 yr in duration) Developing computer software
 Long-term projects (>5 yr in duration) Construction a big project

f. In view of volume of activities:

 Small scale project Formation of a proprietorship firm
 Medium scale project Forming a limited company
 Large scale project Development of an airport

g. In terms of sector5:
 Agricultural project Irrigation projects
 Industrial project Development of a power plant
 Urban project Real estate project
 Rural project Sanitation project, Digging pond

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While a project incurs losses in three consecutive years or closure to lay-off
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Projects may also be originated from sectors like State, Market and Civil Society

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 h. In terms of professional segmentation:
 Engineering project Construction projects
 Health project Nutritional project, Immunization
campaign
 Education & training project Organizing a workshop
 Judicial project Filing a criminal case

1.4 Defining Project Management:

Project management (PM) is receiving much attention nowadays. Almost
everyday newspapers carry advertisements asking for project managers. It is now being
recognized as a valuable ‘career path’ in many organizations as well as a way to gain
valuable experience within the organization. The scenario was not so bright a few years
ago. However, let us know what the project management is. The notion of ‘project
management’ emerged at the beginning of 1960s with NASA 6 space program. (Coudere,
2001:p.2). This term was later used in respect of major civil engineering works, gradually
spreading over other sectors including development projects.

It is also said that project management is what a project manager does. A project
manager does many things where a big portion of total activities is not related to a
project. So it is a misleading conception about project management.

Simply project management means managing all the activities of a project from
conception to completion. It provides a manager with powerful managerial tools and
techniques in planning, directing and controlling a project in order to meet various
resource constraints. On the other hand, project management is an well established
integrated course with a number of developed techniques to ensure successful
implementation of a project through efficient control of different inputs required, which
include human resources, financial resources and material resources. These
techniques also ensure that the project achieves the specific targets set out for it. Finally,
we can say that project management is a recognized subject of managerial tools and
techniques to the deployment of human, material and financial resources and to get a
project done by others most effectively and efficiently to achieve pre-determined
objectives within an established period of time.

1.5 Why Project Management:

Project management may be treated as the best way to accomplish certain goals.
The main objective of project management is to meet specified performance within cost
and schedule. Specifically, the project form of organization allows a manager to be
responsive to: (a) the client and the environment (b) identify and correct problems at an
early time, (c) make timely decisions about trade-offs between conflicting projects goals,
and (d) ensure that project team works for total optimization of the project, not for sub-
optimization of individual tasks.

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NASA stands for National Aeronautic Space Administration.

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 A significant proportion of users report that project management is used for
shortening development times, costs, and enhancing quality, reliability, and profit
margins. Other advantages include a sharper orientation towards results, better
interdepartmental coordination, and higher worker morale. Three primary forces behind
project management are: (i) the growing demand for complex & customized goods &
services; (ii) the exponential expansion of human knowledge; and (iii) the global
production consumption environment. (Meredith et al, 2000: P.12-22)

Project can be said as a cake piece of ‘Development Cake’. Project has a diversity
effects towards economic development. The importance of project management can be
realized from the following points:

i) PM is indispensable for economic development or growth of a country or an

enterprise.
ii) It ensures effective and efficient resources utilization and management.
iii) It leads to GDP growth.
iv) It leads to increase of per capita income and enhancement of standard of
living.
v) It helps to overcome the problems of time and cost overruns.
vi) It leads to optimum use of available resources.
vii) It increases international competitiveness.
viii) It is the key to cost management of producing goods and services.
ix) It is an essential condition for getting assistance and loan.
x) It impacts have been long term and hence has a temporal spread.
xi) It helps to achieve self-reliance in the country.
xii) It is base to implementing national development strategies.
xiii) It is a precondition of transfer of technology.
xiv) It may lead to a balanced growth of agriculture and industry.
xv) It is helpful towards exploration of resources, innovations and researchers
and discoveries.
xvi) It brings not only economic prosperity but also honor and prestige to a nation
because economic prosperity means economic power.
xvii) It will lead to a capacity to render financial assistance to other poor and least
developed countries.

1.6 Functions or Skills Set in Project Management

Some researches have indicated that the following fifteen functions are essential for
effective project management which is listed below:
1. Define project scope
2. Identify stakeholders, decision makers and escalation procedures
3. Develop details of task list( Work-Break Down Structures - WBS)
4. Estimate time requirement
5. Develop initial project management flow chart
6. Identify required resources and budget
7. Evaluate project requirements
8. Identify and evaluate risk

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 9. Prepare contingency plans
10. Identify interdependencies
11. Identify and track critical milestones
12. Participate in project phase review
13. Assemble needed resources
14. Manage the change control process
15. Report project status

1.7 Project Life Cycle

A project life cycle is similar with a product life cycle. Most of the projects go
through a similar stage on the path from origin to end. A standard concept of a product or
project life cycle wherein it goes through a start-up phase, a building phase, a
maturing phase and a termination phase. The pattern slow-rapid-slow progress towards
the project goal is common. Any one who has watched the construction of a home or a
building has observed this phenomenon. For the most part, it is a result of the changing
levels of resources used during the successive stages of the life cycle.

The life cycle must not be the same for all projects. To understand the difference,
let us consider baking a cake. Once the ingredients are mixed, we are instructed to bake
the cake in a 3500 (F) for 35 minutes. At what point in the baking process do we have a
cake? Experienced bakers know that the mixture changes from ‘goop’ (a technical term
well known to bakers and cooks (to ‘cake’ quite rapidly in the last few minutes of the
baking process. A number of actual projects have a similar life cycle, for example some
computer software projects, or chemical engineering plants. However, it is necessary for
a project manager (PM) to estimate the precise shape of he life cycle curve, but the PM
must know whether the later part of the curve is concave or convex to the baseline.
Meredith et al. 2000: P.13-16).

The four phases of a project are also known as initiation, planning, executive, and
closure. Initiation involves starting up the project, by documenting a business case,
feasibility study, and terms of reference, appointing the team and setting up a Project
Office.
Planning involves setting out the roadmap for the project by creating the following
plans: project plan, resource plan, financial plan, quality plan, acceptance plan and
communications plan. Execution involves building the deliverables and controlling the
project delivery, scope, costs, quality, risks and issues. Closure involves winding-down
the project by releasing staff, handing over deliverables to the customer and completing a
post implementation review.

A more detailed description of the Project Management Methodology and Life

Cycle follows:

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Project Initiation: Project Initiation is the
first phase in the Project Life Cycle and
essentially involves starting up the
project. You initiate a project by defining its
purpose and scope, the justification for
initiating it and the solution to be
implemented. You will also need to
recruit a suitably skilled project team, set up
a Project Office and perform an end
of Phase Review. The Project Initiation phase involves the following six key steps:

Project Planning: After defining the project and appointing the project team, you're
ready to enter the detailed Project Planning phase. This involves creating a suite of
planning documents to help guide the team throughout the project delivery. The Planning
Phase involves completing the following 10 key steps:

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Project Execution: With a clear
definition of the project and a suite of
detailed project plans, you are now
ready to enter the Execution phase of
the project. This is the phase in which
the deliverables are physically built and
presented to the customer for acceptance. While each deliverable is being constructed, a
suite of management processes are undertaken to monitor and control the deliverables
being output by the project. These processes include managing time, cost, quality,
change, risks, issues, suppliers, customers and communication. Once all the deliverables
have been produced and the customer has accepted the final solution, the project is ready
for closure.

Project Closure: Project Closure involves releasing the final deliverables to the
customer, handing over project documentation to
the business, terminating supplier contracts,
releasing project resources and communicating
project closure to all stakeholders. The last
remaining step is to undertake a Post
Implementation Review to identify the level of
project success and note any lessons learned for future projects.

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1.8 McKinsey 7S Framework in Project Management
The McKinsey 7S framework developed in the early 1980s by Tom Peters and
Robert Waterman, two consultants working at the McKinsey & Company consulting
firm, the basic premise of the model is that there are seven internal aspects of an
organization that need to be united if it is to be successful.
The 7S model can be used in a wide variety of situations where an alignment perspective
is useful, for example to help you:
 Improve the performance of a project;
 Examine the likely effects of future changes within a project;
 Align departments and processes during a merger or acquisition; or
 Determine how best to implement a proposed strategy.

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The model ensures all parts of a project are working in harmony

The Seven Elements

The McKinsey 7S model involves seven interdependent factors which are
categorized as either "hard" or "soft" elements:

Hard Elements Soft Elements

Strategy Shared Values
Structure Skills
Systems Style
Staff

“Hard” elements are easier to define or identify and management can directly
influence them: These are strategy statements; organization charts and reporting lines;
and formal processes and IT systems. “Soft” elements, on the other hand, can be more
difficult to describe, and are less tangible and more influenced by culture. However, these
soft elements are as important as the hard elements if the organization is going to be
successful. The way the model is presented in Figure 1 below depicts the
interdependency of the elements and indicates how a change in one affects all the others.

Let’s look at each of the elements specifically:

 Strategy: The plan devised to maintain and build competitive advantage over the
competition.
 Structure: The way the organization is structured and who reports to whom.
 Systems: The daily activities and procedures that staff members engage in to get
the job done.

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  Shared Values: Called “superordinate goals” when the model was first
developed, these are the core values of the company that are evidenced in the
corporate culture and the general work ethic.
 Style: the style of leadership adopted.
 Staff: the employees and their general capabilities.
 Skills: the actual skills and competencies of the employees working for the
company.
Placing Shared Values in the middle of the model emphasizes that these values are
central to the development of all the other critical elements. The company’s
structure, strategy, systems, style, staff and skills all stem from why the
organization was originally created, and what it stands for. The original vision of
the company was formed from the values of the creators. As the values change, so
do all the other elements.

Key Points:
The McKinsey 7Ss model is one that can be applied to almost any organizational
or team effectiveness issue. If something within your organization or team isn’t working,
chances are there is inconsistency between some of the elements identified by this classic
model. Once these inconsistencies are revealed, you can work to align the internal
elements to make sure they are all contributing to the shared goals and values.

The process of analyzing where you are right now in terms of these elements is
worthwhile in and of itself. But by taking this analysis to the next level and determining
the ultimate state for each of the factors, you can really move your organization or team
forward.

REFERENCES:
1. Chadha, Skylark (1989), Managing Projects in Bangladesh, Dhaka.
2. Chowdhury (1998), Project Management, India.
3. Coudere, Hugo (2001), Course Materials on Management of Development
Projects, University of Antwerp (IDPM), Belgium.
4. Meredith et al (2000), Project Management – A managerial approach, USA.
5. UNIDO (1998), Manual for Evaluation of Industrial Projects, New York.
6. Chase, Aquilano and Davis, Operations Management, USA

[N. B. Students are advised to follow the deliberations in the classes for doing well in
the examinations]

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