Chapter-One

Introduction to Project
1.1 Projects vs. Operational Work
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Organizations perform work to achieve a set of objectives. Generally, work can be
categorized as either projects or operations, although the two sometimes overlap.
They share many of the following characteristics:
 Performed by people
 Constrained by limited resources
 Planned, executed, and controlled.

Projects and operations differ primarily in that operations are ongoing and
repetitive, while projects are temporary and unique. The objectives of projects
and operations are fundamentally different. The purpose of a project is to attain
its objective and then terminate. Conversely, the objective of an ongoing operation
is to sustain the business. Projects are different because the project concludes
when its specific objectives have been attained, while operations adopt a new set
of objectives and the work continues.

Projects are undertaken at all levels of the organization and they can involve a
single person or many thousands. Their duration ranges from a few weeks to
several years. Projects can involve one or many organizational units, such as joint
ventures and partnerships.

The difference and common feature that characterizes both operation works and
project works can be summarized as follows by using the figure 1.1 below:

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Figure 1.1: Differences and common features of operational and project
works

1.2 Definition of Project

It is very difficult to find a single comprehensive definition of project because

projects are different in terms of their nature and objectives. Some of its
definitions are:

According to Gittinger (1982), a project is defined as a complex set of activities

where resources are used in expectation of returns and that lead itself to
planning, financing, and implementation as a separate unit.
A project usually has a specific starting point and a specific ending
point, intending to achieve specific objectives.
It usually has a well-defined sequence of investment and production
activities and a specific group of beneficiaries that can be identified,
quantified, and valued, either socially or monetarily.

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  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 to the committed resource.
 Project- is a task of considerable magnitude that must be completed within
a budget and by a specific time; usually but not always carried out at once.
 Project- is a non repetitive activity that is goal oriented, that has a
particular set of constraints, the output of which is measurable, and that
changes something when carried out.
 Project- is a set of proposal for investment of resources in to a clearly
defined set of actions that are expected to produce future benefits of a fairly
specific kind, the whole series of actions being the subject of individual
planning and examination before being adapted and implemented within a
single overall financial and managerial framework.

1.3 Common Characteristics of projects.

Though project can be defined in various ways and they differ in many respects,
the following are common features of projects. These are:

 Project involves the investment of scarce resources in expectation of future

benefits,
 Project is an activity that is capable of being planned, financed and
implemented as a unit,
 Project has a defined set of objectives and specific start and end dates,
 Project has geographical or organizational boundaries.
 It is an activity around which conceptual boundaries can be ascribed,
 A project can be seen as an activity which is likely to have a partially or
wholly independent administration.

1.4 Classification of Projects

Projects can be classified based on several criteria, including: ownership,
sources of finance, and forces behind the projects.

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1. Based on Ownership:
a. Private sector- mostly projects undertaken by business enterprise.
b. Public sector- projects undertaken by national and local
government body.
c. NGO’s – development projects are most often undertaken by non-
government and not for profit organizations
2. Based on the Sources of Finances:
a. Government treasury- projects may be entirely financed by
government budget as per its priority. For instance, construction of
regional airport.
b. 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
government and 50% by foreign donors.
c. External Sources of Finance- Projects may be financed totally by
parties other than the government but established for the wellbeing
of the citizens and the ownership may be for the government or the
public.
3. Based on the Forces Behind;
a. Demand driven/need driven- based on identified unsatisfied
demand project can be created or on unsatisfied basic needs like
food, water and shelter.
b. Donor Driven- the force behind the financing organization. Donors
will have their own say and influence the types of projects to be
established.
c. Political Driven- Projects may be established in response to some
political situation such as for example because of National
Elections, projects by religious organizations, etc.
4. Based on their Nature:
a. Civil engineering, Construction, petrochemical, mining,
quarrying projects- projects far away from the contractors’ home

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 office, and involve especial risk as well as problems organizational
communication.
b. Manufacturing projects- conducted in a factory or other home
based environment and enable exercising on the spot management.
c. 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.
d. 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, restructuri9ng the organization,
etc.

Projects can also be differentiated by the following:

 Long-term Vs short term projects

 Regional, national, international projects
 Agricultural Vs industrial projects.
 Capital, labor or energy intensive projects.

1.5 Project Management

Project management can be defined as the set of concepts involved in the
realization of goals through efficient, effective, transparent and responsible
administration of a given set of activities, with associated accountability for the
outcomes in the process, so as to meet basic objectives and enhance the
satisfaction of stakeholders. In this process, all stakeholders should be consulted
in matters affecting a project to ensure co-ordination in project activities.

Project, Plan and Program

There are some degree of relationships between projects, plans and programs.
There are also significant differences. Their hierarchical relationship is given
based on the following chart.
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 Development goals/Objectives

Development Strategy

Developmental Plans
 Most forward looking (futuristic)
 Broad and require systematic thinking, preparation,
and appraisal
 Attempts to bring welfare in the society

Programs
 Derived from developmental plans
 Exceptionally large with long term objectives
 Explores specific area with broader scope

Projects
 Derived from a program
 A development activity with specific objectives
 A tool for realization of a given set of objectives
 Funded by a program
 A unique implementation entity

Tasks
 Work elements under a project
 Specific approaches for doing things
 Set of activities comprising a project

Work Packages
 Sub-elements of a given task (or undertaking)
 Something accomplished stage by stage
 The collection of work packages define a given task

Exhibit 1.2 Hierarchical Relationships

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Development Goal/Objectives

A development goal or objective is a statement of intension or aspiration of a

government to improve living conditions of its people – Vision of the government.
For example, growth, equity in income distribution, reduction of unemployment.
It is a comprehensive statement which guides development. It determines the
environment or framework within which development is expected to take place.

Development Strategy

A strategy is defined in various ways by different authors. But in general it refers

to the general methods of achieving specific objectives at national or
organizational levels.

It mainly describes the essential resources which will be committed to achieve

objectives. It also explains how these resources will be organized. Example, it
may ask how to organize the labor force of organization or the object. It can take
different forms such as import substitute, export promotion, ADLI, etc.

Development strategy is likely to involve:

 Establishment of sector goals- for example, what is the goal of

agriculture sector in the next 5 years, 10 years; the industry sector in
the coming 10 years.
 Defining of the means to achieve the sector goals.
 Determining of the feasibility of achieving the stated goals from the
political, technical, organizational and resource point of view.
 Preliminary assessment of costs and benefits of goals and objectives.
 Setting priorities- which sub-sector should be provided more attention
in each sector.

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 Plans and Projects

Planning can be defined as a “continuous process that involves

decisions or choices about alternative ways of using available
resources with the aim of attaining a particular goal or set of goals at
some time in the future.”

 Planning serves as a tool for enhancing the effectiveness in mobilizing

resources and as well enables allocation of resources into priority areas
of development.
 In this regard, development planning can be regarded as an attempt to

raise the rationality of decision- making.

Plans are designed as a means to accomplish development strategies; National

Plan should identify priority areas and set a specific objective. The specific
objective can be achieved through various means (fiscal policies and development
projects).

As it can be observed from Exhibit 1.2, the essence of development planning is

futuristic, i.e., it is most forward looking and involves systematic thought and
preparation.

Virtually, every nation, be it developed or developing, should have a

systematically elaborated national plan to hasten economic growth and further
a range of social objectives.

In this regard, we can explain the relationships between development plans and
projects as follows:

1. Projects provide an important means by which investment and other

development expenditures foreseen in plans can be clarified and
realized.
 Sound development plans require good projects, just as good
projects require sound planning.
 The two are interdependent.
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2. A sound plan requires a great deal of knowledge about existing and
potential projects.
 Sound planning rests on the availability of a wide range of
information about existing and potential investments and their
likely effects on growth and other national objectives.
 It is project analysis that provides this information, and the
projects selected for implementation become the vehicles for using
resources.
 Thus, plans require projects. Realistic planning involves knowing
the amount that can be spent on development activities each year
and the resources that will be required for particular kind of project
3. Since projects commit scare resources, project selection is
meaningful only when it is placed within a broader development
framework.
 This framework could be medium or long-term development
plans and policy statements issued by the government.
 The best economic appraisal of projects cannot be made
without referring to such plans and policies.
4. Effective project preparation and analysis must be set in the framework
of a broader development plan.
 Projects are part of an overall development strategy and a broader
planning process.

5. Governments must allocate their available financial and administrative

resources among many sectors and many competing programs.
 Project analysis can help improve this allocation.
 Within the broad strategy, planners have to identify potential
projects that address the policy of production targets and
priorities.
6. The more elaborated the plans and policies of the governments are,
the easier becomes the work of the project planner.
 For example, the project planner will have to refer to such plans
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 and policies to see whether the project being considered fits well
in the plan and contributes most to the fundamental objectives of
the government.
 These objectives can include self-sustaining growth,
promotion of employment, income distribution, etc.
7. National plans and elaborated sectoral programs are of great help in
identifying development projects.
 A realistic plan should be prepared by assessing the
development potentials in the various sections of the economy.
 It is, therefore, obvious that the successful formulation
and implementation of a national development plan
depends on the proper selection of projects and the
associated sectoral programs.
 Thus, project formulation and evaluation, being a continuous
and integrated process, is one of the basic components of
economic planning.
In order to ensure realistic planning, an iterative process with a
sufficient flow of information, suggestion, and guidance between
decision makers at the macro levels are essential.

8. As projects rightly called the “Cutting Edge” of development, they

are powerful means to achieve the development objectives; they are the
crucial building blocks of a development structure.

9. Projects aim mainly at increasing the production of goods and services,

which are fundamental components of people’s welfare, and the main
objective of any development effort is, of course, to advance social well-
being.

Projects and Programs

It is necessary to distinguish and/or understand the difference between
projects and programs because there is sometimes a tendency to use them
interchangeably.
A project, in this regard, refers to an investment activity where

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 resources are used to create capital assets that produce benefits over
time, having a beginning and an end, and specific objectives pursued;
Whereas a program is an on-going development effort or plan. A
program is, therefore, a wider concept than a project.

A program may include one or several projects at various times whose

specific objectives are linked to the achievement of higher level of common
objectives.
For instance, a health program may include

 A water project as well as construction of a health center;

 Both are aimed at improving the health of a given community that
previously lacked easy access to these essential facilities.

Projects that are not linked with others to form a program, however, are
sometimes referred to as ―Stand-Alone" projects.

 Said differently, a program is a definite plan or scheme of any

sequence of operations aimed at the attainment of the planned
objectives.
 This explanation, however, assumes that a program is a plan of
activities with general objectives that would be derived from the
development plan.

In general, programs and projects have got their own differences and
similarities. For purpose of clarity, it is important to outline the major
differences and similarities between the two concepts.

In this regard, the following table depicts, comparatively the differences

between projects and programs.

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 Differences
Projects Have: Programs Have:

 Specific objectives  General objectives/wide/diverse

 Specific projects area  No specific area (location)/diffused
(location)
 Specific beneficiaries group  No specific beneficiaries group
 Clearly determined and  No clear and detailed financial
allocated funds resource allocation
 Specific lifetime  No specific lifetime

Similarities
Projects and programs have similar characteristics in that both are:
 Having objectives;
 Requiring financial, human, material, and other inputs (or resources)
 Generating outputs of value (i.e. goods/services);
 Serving as instruments for the execution of development plans and
attain national goals.

1.6 Project Environment

All projects are planned and implemented in a social, economic, environmental,

political and international context.

o Cultural and Social Environment is that how a project affects the people
and how they affect the project. This requires understanding of economic,
demographic, ethical, ethnic, religious and cultural sensitivity issues.
o International and Political Environment refers to the knowledge of
international, national, regional or local laws and customs, time zone
differences, teleconferencing facilities, level of use of technology, national
holidays, travel means and logistic requirements.
o Physical Environment is the knowledge about local ecology and physical
geography that could affect the project, or be affected by the project.

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1.7 Project manager

Who is a Project Manager?

A project manager is a professional in the field of project management. They

have the responsibility of the planning and execution of any project. A project
manager's central duty is to ensure the success of a project by minimizing risk
throughout the lifetime of the project. This is done through a variety of methods,
both formal and informal. A project manager usually has to ask penetrating
questions, detect unstated assumptions, and resolve interpersonal conflicts, as
well as use more systematic management skills.

In whatever field, a successful project manager must be able to envisage the

entire project from start to finish and should have the ability to ensure that this
vision is realized.

1.8 Project Planning

To be effective, the project planning should be approached systematically. Some
activities to be done and questions that need to be asked at planning stage of a
project may include the following:

1. Situational analysis- is identification of the current situations and

assessing the factors that leads to current position. This involves
answering questions such as:
 Where are we now?
 How we reached to this point?
 Why and how we reached to the current position?
 Is this where we want to be?
2. Setting Objective- This involves answering questions such as Where
should we find ourselves in 5 to 10 years time from now?
3. Identification of alternatives and strategies- How can we reach to
the place that we want to go in the indicated time limit?

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 4. Identification of strengths, weakness, opportunities and threats-
what might prevent us from getting there and what might help us to get
there? (SWOT analysis).
5. Action plans and implementation- What do we need to do, where do
we need to do it, how will we do it and who will do it?
6. Monitoring and evaluation- What do we need to do to be on course,
can we do it, and how do we know when we have arrived?
7. Budgeting- Involves quantification of the costs involved.

1.9 Why projects are Undertaken

The principal purposes or goals of undertaking projects depend on the nature of

the project:

 Development Project (usually undertaken by government or NGOs) – May

have the following objectives:
Projects are very powerful and efficient means to achieve development
or growth. They are said to be cutting edge of development.
They are mechanisms for improving income distribution. For example,
implementing a project that enhance the income of the poor people or
that benefit the majority poor.
They are mechanisms to solve immediate problems. For example,
implementing a project to solve specific problem in the society such as
projects to eradicate malaria such as Anti-Malaria Association, projects
to prevent the spreading of HIV/AIDS such as Tesfa Goh Ethiopia,
project to eliminate poverty.
 Project undertaken by Business Organizations- have a primary objective
of maximizing the wealth of current shareholders. Other objectives may
include maximization of profit, maximization of earning per share or
maximization of return on equity. They will also have indirect objectives of
creating employment opportunities, and other social benefits.

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1.10 Project Parameters
The following five constraints operate on every project:
 Scope
 Quality
 Cost
 Time
 Resources
These constraints form an interdependent set— a change in one constraint can
require a change in another constraint in order to restore the equilibrium of the
project. In this context, the set of five parameters form a system that must
remain in balance for the project to be in balance. Because they are so important
to the success or failure of the project, each parameter is discussed individually
in this section.
Scope
Scope is a statement that defines the boundaries of the project. It tells not only
what will be done but also what will not be done. In the information systems
industry, scope is often referred to as a functional specification. In the
engineering profession, it is generally called a statement of work. Scope may also
be referred to as a document of understanding, a scoping statement, a project
initiation document, or a project request form. Whatever its name, this document
is the foundation for all project work to follow. It is critical that the scope be
correct.
Quality
The following two types of quality are part of every project:
 Product quality— The quality of the deliverable from the project. The
traditional tools of quality control are used tonsure product quality.
 Process quality— The quality of the project management process itself. The
focus is on how well the project management process works and how can it
be improved. Continuous quality improvement and process quality
management are the tools used to measure process quality..
Cost
The birr cost of doing the project is another variable that defines the project. It is
best thought of as the budget that has been established for the project. This is
particularly important for projects that create deliverables that are sold either
commercially or to an external customer.
Time
The client specifies a time frame or deadline date within which the project must
be completed. To a certain extent, cost and time are inversely related tone
another. The time a project takes to be completed can be reduced, but costs
increase as a result.

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Resources
Resources are assets such as people, equipment, physical facilities, or inventory
that have limited availabilities, can be scheduled, or can be leased from an
outside party. Some are fixed; others are variable only in the long term. In any
case, they are central to the scheduling of project activities and the orderly
completion of the project.
Figure 1-3 illustrates the dynamics of the situation

It is evident that any change in any one of dimensions would affect the other. For
example, if the scope is enlarged, project would require more time for completion
and the cost would also go up. If time is reduced the scope and cost would also
be required to be reduced. Similarly any change in cost would be reflected in
scope and time. Successful completion of the project would require
accomplishment of specified goals within scheduled time and budget.

1.11 Project Life Cycle

Every project, from conception to completion, passes through various phases of a
life cycle synonym to life cycle of living beings. There is no universal consensus
on the number of phases in a project cycle. An understanding of the life cycle is
important to successful completion of the project as it facilitates to understand
the logical sequence of events in the continuum of progress from start to finish.
Typical project consists of four phases- Conceptualization, Planning, Execution
and Termination. Each phase is marked by one or more deliverables such as
Concept note, Feasibility report, Implementation Plan, HRD plan, Resource
allocation plan, Evaluation report etc.

Conceptualization Phase
Conception phase, starting with the seed of an idea, it covers identification of the
product or service, Pre-feasibility, Feasibility studies and Appraisal and Approval.
The project idea is conceptualized with initial considerations of all possible
alternatives for achieving the project objectives. As the idea becomes established
a proposal is developed setting out rationale, method, estimated costs, benefits
and other details for appraisal of the stakeholders. After reaching a broad
consensus on the proposal the feasibility dimensions are analyzed in detail.

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Planning Phase
In this phase the project structure is planned based on project appraisal and
approvals. Detailed plans for activity, finance, and resources are developed and
integrated to the quality parameters. In the process major tasks need to be
performed in this phase are
 Identification of activities and their sequencing
 Time frame for execution
 Estimation and budgeting
 Staffing
A Detailed Project Report (DPR) specifying various aspects of the project is
finalized to facilitate execution in this phase.

Execution Phase
This phase of the project witnesses the concentrated activity where the plans are
put into operation. Each activity is monitored, controlled and coordinated to
achieve project objectives. Important activities in this phase are
 Communicating with stakeholders
 Reviewing progress
 Monitoring cost and time
 Controlling quality
 Managing changes

Termination Phase
This phase marks the completion of the project wherein the agreed deliverables
are installed and project is put in to operation with arrangements for follow-up
and evaluation.

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