MODULE 1

 Project Finance- Concept, Scope

 Project Finance-Effects & Features
 Strategic Uses of Project management done
 Project Planning
 Project monitoring
 Types and selection of project (written in class properly, please check your class notes)
 Project evaluation & control

WHAT IS THE DEFINITION OF A PROJECT

A project is a sequence of tasks you complete to obtain a specific result. According to
the Project Management Institute (PMI), it's a temporary endeavour completed to create a
unique product, service or result. For example, building a house is a project because it's a
temporary collection of construction activities to create a unique home. Other examples of
projects include expanding a tour guide service, merging organisations, exploring for oil in a
geographical region, researching new manufacturing processes and creating product updates.

a) Projects may involve individuals, teams, departments or organisations, and they

typically have the following:
b) clear objectives and deliverables
c) a start and end date
d) resources and constraints, such as time, money and quality

WHY ARE PROJECTS IMPORTANT

Projects can be large-scale or small-scale and can involve a core team of staff coordinating
every project element, or a larger team dispersed over several geographic locations.
Completing projects are vital for the following reasons:
Lead to change
Initiating projects typically results in workplace changes. These temporary activities can help
organisations progress from current to future states described by the organisation's objectives.
Depending on the project, transitions may involve multiple steps. For example, developing a
new product typically involves concept generation, screening and testing stages. You may
also initiate projects to handle important work changes before they become urgent.
Enable value creation
Value refers to the benefits from specific activities. Creating and completing projects can
help individuals, departments and organisations create value, especially in business settings.
For example, working on a business expansion project may provide tangible benefits, such as
income and stockholder equity. You may also receive intangible benefits, such as workplace
recognition.
PROJECT FINANCE----Concepts, Scope, Effects and Features
Introduction
Project finance refers to the funding of long-term projects, such as public infrastructure or
services, industrial projects, and others through a specific financial structure. Finances can
consist of a mix of debt and equity. The cash flows from the project enable servicing of the
debt and repayment of debt and equity.

Understanding Project Finance

The structure of project financing relies on future cash flows for repayment of the project
finances. The assets or rights held under the project act as collateral for the

finance. Governments or companies prefer project finance for long gestation projects or for
joint venture arrangements or collaboration arrangements.

Project finance model adopted in BOT (build, operate, and transfer) model contains multiple
key elements. The funds are arranged through a special purpose vehicle (SPV).
A company may carry the project themselves or subcontract a portion of the project. In the
absence of revenues during the construction phase, the interest on debt capital is paid after the
commencement of operations.

Project financing is for projects which carry high risks on the capital employed. There is
no revenue for the companies participating until the commencement of operations. During the
construction phase, there may be one or two offtake agreements, but no revenue streams.
There is no recourse available to the parties funding the projects.

The project generally remains off the balance sheet for the financing parties and the
government. Companies typically hold the project debt in a subsidiary with a minority
holding. This helps in maintaining the debt ratios of the company. For the government, they
may wish to keep the project off their balance sheet to have more fiscal room.

Conclusion
In project financing, the lenders have limited recourse. This means that in the case of a
default, the lenders have recourse to the assets under the project, securing completion and
using performance guarantees under the project.

The project financing is contrary to recourse financing, where the lenders get a full claim to
the owner’s assets or cash flows. Hence, project financing requires sound financial and
relevant technical knowledge.

What are project management strategies?

Project management strategies are methods of leadership that project managers use to
unite their teams and address specific challenges. These strategies help everyone
understand the needs of the project and how the manager wants each phase to progress.
Why use project management strategies?
Project management strategies help teams to address project challenges, increase
productivity and reach specific goals. A project management strategy provides the
framework for better teamwork, higher production and more efficient projects. Efficient
projects can cost less time and money and increase the overall profitability of the project.
Here are 12 project management strategies for increasing project efficiency:
1. Define your goals early and keep them adaptable
Defining goals is part of the project planning phase that carries through the entire
project as per the needs change. Clearly defined goals help the team focus on a
common outcome and provide direction for the project. Managers can set goals early
and use these techniques to encourage adaptability during production:
Identify incoming changes
The sooner project manager identify incoming changes to the project scope or
timeline, the easier it is to modify the project's goals in time to maximize efficiency.
For example, if a client is deciding between pricing, there's a good chance the price
changes soon. He can adjust goals to meet the potential change in price by providing a
plan for both an increase or decrease in price.

Keep the team informed

Changes that occur suddenly can affect a project if everyone isn't aware of them as
soon as possible. Keeping the team adaptable means relying on frequent, clear
communication about expectations, project scope and proposed changes. Consider
using a professional team management platform to enhance and maintain good
communication between team members and leadership.

Plan for challenges

Projects can experience setbacks and surges, so it's important to plan for changes in
goals early. While the team is planning the project goals, consider putting contingency
plans in place for potential changes. For example, if a project's deadline can change
because of material availability, accounting for that in initial plan can help to adapt
quickly once the project begins.

2. Understand the project scope

Project scope is the size of the project, which can affect the budget, labor needs and
overall efficiency of the project. Larger projects require more labor and materials,
which can increase the budget and require stronger leadership.Understanding the
project scope helps project managers allocate resources to the right places and
provides a more realistic outlook of the project's timeline. Research the project's
needs, the client's needs and the team's needs in order to meet project goals.

3. Communicate with clients and team members

Communication is essential to project progression because it helps everyone
understand the project's needs and the potential challenges they can encounter.
Communication is also important to understanding client expectations and adapting as
the project changes. Good communication includes clear, concise conversation and
 honest feedback. Nonverbal communication can enhance verbal communication by
reinforcing the words you're saying with positive gestures.

4. Encourage teamwork
Teamwork is important to the project because many projects require the efforts of
multiple people or departments working together. Encouraging teamwork helps keep
employees focused on the power of working together. As a leader, it will encourage
teamwork by participating in the project to set an example, providing the right tools
for the project and communicating with team members about changes, progress and
scope creep.
5. Set clear expectations
Clear expectations minimize the margin for error because they unite everyone under
the same guidelines. For example, an expectation that a project ends in the next two
weeks keeps everyone focused on the deadline and provides a mutual understanding
for the client, team and leadership. Setting clear expectations means frequently
communicating with teams and clients, sending expectation reminders and accepting
feedback.
6. Manage project risks
Some projects come with risks or financial implications, which can affect the overall
outcome of the project. Consider performing a risk analysis before the project's
initiation to identify risks, create potential solutions and understand the potential
damage that risks can create. The more a project manager understands the project's
risks, the less surprising they are during each phase of the project.

7. Use a work breakdown structure

A work breakdown structure, or WBS, is a tool that project managers use to break
down projects into manageable tasks for the team. This helps break up larger projects
into smaller goals which can sometimes be easier to reach. The WSB model typically
consists of three levels:
WSB level one: The project's primary goal. For example, the team needs to complete
800 orders by the fifth of the month.
WSB level two: You break the main goal down into five to 10 parts. The project
manager assigns resources and deadlines to each part and decides on risk tolerance.
WSB level three: You break each of the five to 10 parts into smaller pieces to define
specific needs or goals.

8. Document the process

One of the most important parts of a successful project is the documentation phase
because it provides the team with a written guide to how the project progressed. After
a successful project, the project manager can review the documents with the team to
determine where they met goals, where they excelled and any challenges they faced.
This is an excellent resource for planning future projects because it provides a
template for success and written verification of the team's abilities.

9. Allow for feedback

 Feedback from teams and stakeholders can help a project manager identify key
project factors that they might have missed during the project. The team and
stakeholders often hold a different perspective than the project manager, helping you
get a better idea of how the project is going. You can facilitate feedback by asking
directly or sending follow-up emails and surveys.
10. Celebrate milestones
Milestones are important goals the team reaches during the project. Milestones can act as
a rallying point for team members and inspire motivation. Project managers celebrate
milestones with team members to encourage teamwork and communication.
Encourage employees with positive feedback for reaching important milestones. You can
say things like "I'm really proud of your progress" or "Your hard work has inspired me,
keep it up."

11. Reinvest savings

When a project is efficient, it saves both money and time, which you can reinvest into
the team or business. Consider reallocating funds or resources to new projects that
help develop the team's skills or the business's expansion.For example, if you
complete a project under budget, you can reinvest those funds into an employee
development program like communication or software training.
12. Recruit better candidates
A team's skills can have a positive impact on the efficiency of the project, which
makes the recruitment process crucial to your projects.Finding the right candidates
can provide the team with valuable skills and help projects progress quickly. Consider
using a recruitment service or job application website to overhaul your recruitment
process and ask more advanced interview questions, such as:
What is your greatest skill?
How do you perform under pressure?
How do you communicate challenges to the leadership team?
How do you handle sudden changes to a project?

What is Project Evaluation?

Project evaluation is the systematic assessment of a project’s worth or merit, usually

intending to determine whether it was successful. This can be done during or after the project
is completed, and it involves looking at different factors such as time, cost, and resources
used.

Reviewing techniques are important for three main reasons:

1. It can help in tracking the progress and make sure that project is on track to achieve
the goals.
 2. It can help to identify areas where problems can occur and stay agile enough to
improve future projects.
3. It will allow to easily communicate plans to streamline the process and move forward.

There are other benefits as well but by proactively keeping those key directives in mind,
project evaluation can become a useful tool in any project management process.

Factors on the basis of which Project Performance will be evaluated

As referenced above, several key factors should be reviewed. Let’s take a look at some of the
most important, and examine some ways in which they can be evaluated.

Time

Not every project has a clear timeline before it begins but also without proper time
management, it can quickly get out of hand thus it’s important to have some way of
determining whether or not the project is on track.
You can use a variety of tools for this, such as Gantt charts or the Critical Path Method
(CPM).

Once a project is started, evaluating the time that each process is taking is important. This
will help to identify any bottlenecks and see if the team is on track to meet the deadline. As
the project gets closer to completion, final review should be done to make sure that
everything is on track.

At the end of a project, once all of the deliverables have been produced, it’s important to
compare the actual time it took to complete the project with the original estimate. This will
help to determine if there were any delays or unexpected problems that arose.

For example, if the project was estimated to take two months but ended up taking four, you
would want to investigate what caused the delay and put in place measures to prevent it from
falling behind schedule again.

Cost

One of the most important factors in any business is profit, and that’s no different when it
comes to projects. It is important to to measure how much money was spent on the project
and compare it to how much money was made. This will help to determine whether or not the
project was successful and, if not, where the money was lost during the project.
There are a few ways to track cost:

 Actual cost: This is the amount of money that was spent on the project. It includes
material costs, labor costs, and any other associated expenses.
 Budgeted cost: This is the amount of money that was planned to be spent on the
project. It may not reflect the actual cost, especially if the project went over budget.
  Actual vs. budgeted cost: This compares the actual cost to the budgeted cost and
shows how much (if any) money was overspent or underspent.

Sometimes, it’s not as simple as comparing against a direct revenue source. For example, a
project may be targeted to increase brand awareness or company culture instead of direct
sales, which may not be easily reflected in the immediate financial reports.
In these cases, it is needed to use a metric that can reflect the long-term value of the project.
Either way, evaluating the cost of a project and comparing it to those predetermined value
metrics is crucial to understanding whether or not it was a success, failure, or if it is even
worth repeating.

Resources Used

When someone mentions resources, the focus often goes to physical materials that may be
consumed in the process of creating something new. In business, resources don’t just
mean physical inventory though, and can instead refer to things like time, energy, and
workforce.

Evaluating how resources are used can helps to answer important questions such as:

 Did we use more or fewer resources than we estimated?

 What were the most and least resource-heavy aspects of the project?
 Which tasks took the longest to complete?
 Did we use the optimal resources for the job?

All of this information can help to make better decisions for future projects.
For example, if burnout employee slowed down a project because there weren’t enough
workers, and may want to consider making new hires or expanding the budget of a certain
department to avoid any future disruptions.

The Best Project Evaluation Methods

You may still feel like you’re in the dark on how to best start evaluating your projects.
Luckily, we have a handy guide for some of the most common techniques and methods used
today.

1. Return on Investment (ROI)

The most popular and common way to evaluate a project is through its return on investment
(ROI). This approach calculates the amount of money gained or lost as a result of the project.
The calculation compares the initial investment with the final revenue generated by the
project. A positive ROI means that the benefits are greater than the costs, while a negative
ROI indicates that the costs outweighed any benefits.

2. Cost-Benefit Analysis (CBA)

A cost-benefit analysis is another one of the most popular and successful techniques for
evaluating projects. It takes into account the costs associated with a project and compares
them to the benefits that are expected to be gained.

Importantly, this does not necessarily need to be measured in revenue, and can instead take
into account other things such as environmental or social benefits.
3. Net Present Value (NPV)

The NPV measures the present value of all cash flows associated with a project — both
benefits and costs. This approach is often used for long-term projects where some cash flows
are received in the future.

NPV takes into account both the time value of money (the fact that money today is worth
more than money tomorrow) and the risks associated with future cash flows. A positive NPV
means that the present value of all benefits exceeds the present value of all costs, while a
negative NPV means the opposite.

4. Internal Rate of Return (IRR)

An IRR is used to determine how profitable a project is. It calculates the rate of return that
would make the net present value of all cash flows from the project equal to zero. This can
help you decide if a project is worth doing, and whether or not it’s worth borrowing money to
finance it. Generally, the higher the IRR, the better the investment.

5. The Payback Period

The payback period method measures how long it will take for a project to generate enough
cash flow to cover its initial costs. It ignores cash flows after the payback period has been
reached. This method is often used when there is uncertainty about future cash flows.

6. Benefit-Cost Ratio (BCR)

Related but slightly different than a CBA, the benefit-cost ratio is an individual number that
can be an easy way to tell if a project is going to provide positive value. A ratio greater than
1.0 would mean that it is expected to provide value, and could then be applied to several
other analysis techniques to determine if the project is worthwhile.

Again, this can include benefits that are not directly tied to revenue, though a value will need
to be assigned. In today’s market, for instance, corporate social responsibility and
sustainability can be just as important as anything else.
7. Risk-Adjusted Discount Rate (RADR)

Instead of just looking at straight costs and benefits, a RADR takes into account the risk
associated with a project and adjusts the discount rate accordingly. This can help you make
better decisions about whether or not to undertake a risky project, giving you a more accurate
estimate of future returns.
Each of these methods has its strengths and weaknesses, and you may find that one works
better for your particular project than another. It’s important to tailor the evaluation method
to the project at hand so that you can get the most accurate results.

PROJECT PLANNING

Project planning includes the following 10 steps:

1. Define stakeholders. Stakeholders include anyone with an interest in

the project. They can include the customer or end user, members
of the project team, other people in the organization the project
will affect and outside organizations or individuals with an interest.

2. Define roles. Each stakeholder's role should be clearly defined.

Some people will fill multiple roles, however.

3. Introduce stakeholders. Hold a meeting to bring stakeholders

together and unify the vision behind the project. The topics
covered should include scope, goals, budget, schedule and roles.

4. Set goals. Take what is gleaned from the meeting and refine it into
a project plan. It should include goals and deliverables that define
what the product or service will result in.

5. Prioritize tasks. List tasks necessary to meet goals and prioritize

them based on importance and interdependencies. A Gantt chart
can be helpful for mapping project dependencies.

6. Create a schedule. Establish a timeline that considers the resources

needed for all the tasks.

7. Assess risks. Identify project risks and develop strategies for

mitigating them.

8. Communicate. Share the plan with all stakeholders and provide

communications updates in the format and frequency
stakeholders expect.
 9. Reassess. As milestones are met, revisit the project plan and revise
any areas that are not meeting expectations.

10. Final evaluation. Once the project is completed, performance

should be evaluated to learn from the experience and identify
areas to improve.

Throu
gh these steps, an organization can ensure that a project plan is reliable and well-
communicated.

5 phases of a project
Projects typically pass through five phases. The project lifecycle includes
the following:

 Initiationdefines project goals and objectives. It also is when

feasibility is considered, along with how to measure project
objectives.
  Planning sets out the project scope. It establishes what tasks need
to get done and who will do them.

 is when the deliverables are created. This is the longest

Execution
phase of a project. During execution, the plan is set into motion
and augmented, if necessary.

 Monitoring and management occur during the execution phase and

may be considered part of the same step. This phase ensures that
the project is going according to plan.

 Closing and review is

the final Contracts are closed out and the final
deliverables are given to the client. Successes and failures are
evaluated.

Planni
ng is the second step in the project lifecycle, but it affects all of the phases of the project
lifecycle.

PROJECT MONITORING

When considering the project management process, project monitoring

(also referred to as “project monitoring and control”) comes as step four —
following initiation, planning, and the beginning of execution. Once the
project execution begins, project monitoring also commences. But, what
exactly is project monitoring?

Project monitoring involves tracking a project’s metrics, progress, and

associated tasks to ensure everything is completed on time, on budget, and
according to project requirements and standards. Project monitoring also
includes recognizing and identifying roadblocks or issues that might arise
during the project’s execution, and taking action to rectify these problems.

Why is project monitoring important?

To put it simply, the success of a project relies on complete and dynamic

project monitoring. Careful project monitoring empowers project managers
to gather valuable data regarding how a project is going — and to use this
data to make intelligent decisions.

Some other key benefits of the project monitoring phase include:

 Ensuring that tasks are being carried out according to project

requirements (quality control)
 Letting the project manager to make sure important deadlines are
met
 Providing a thorough perspective on employee workload and
capacity
 Allowing for project changes or remedies in case of problems
 Offering clear budget tracking and adherence
 Encouraging accountability from both team members and stake
 holders

How to monitor projects

In order to implement the project monitoring and control process effectively
and efficiently, there are a number of commonly accepted elements
involved.

Project baseline confirmation

Before the project actually get started with any active monitoring, the
project manager wants to understand the project’s scope, budget, and
timeline. This helps provide a benchmark for success throughout the
completion of the project.

Work monitoring and control

This involves keeping stakeholders up to date as well as regularly

assessing the status of the project, the quality of the deliverables, and
measuring these against baseline goals and metrics.

Change control integration

Even the most organized projects can require changes now and then. It is
must to keep track of resource considerations (budget, timeline, etc.)
throughout the monitoring process. It should be ensured that creating and
recording ongoing documentation and if require follow-ups must be done
regarding project changes.

Scope verification

In order to keep a record and ensure stakeholders and team are on the
same page, it’s important to secure documentation related to each phase of
the project’s completion. This shows that the project is accepted at each
stage of execution.

Schedule and cost control

This is where schedules and costs are monitored closely. Deadlines are
tracked and followed-up on if necessary, and budgets are consistently
watched. Updates to cost and timeline estimates are made here.

Quality control

A project can be done on-time and on-budget, but if it’s not what the
stakeholder wants or the quality of the work is poor, it’s of little value to
anyone. Quality control is an essential part of the project monitoring
process. This is where specific project results and deliverables are looked
at in comparison to established quality standards. If issues are found,
changes are requested and made.

Performance reporting

This is like a report card for the project. Performance reporting consists of
collecting and sharing any data related to project performance in relation to
baseline goals and standards. At this stage it is important to create and find
status reports, progress notes, and future forecasts (using collected data).