Chapter One: Overview of the Concept of project and project management

1.1 What is a project, program and portfolio?

1.2 Concept of project, program and portfolio management
1.3 Relationship between project, program and portfolio
1.4 Types and classifications of projects
1.5 Comparison between project and operation management
1.1 What is a project, program and portfolio?
What is a project?
A project is a
◦ One-time,
◦ Multitask job
◦ With a definite starting point,
◦ Definite ending point,
◦ A clearly defined scope of work,
◦ A budget, and
◦ Usually a temporary team.

A project is a problem scheduled for solution. - J. M. Juran

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Cont’d...
A project is defined as ‘A unique set of co-ordinated activities, with
definite starting and finishing points, undertaken by an individual or
organization to meet specific objectives within defined schedule, cost
and performance parameters.’

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Cont’d...
It is “A temporary endeavour undertaken to create a
unique product or service” (Project Management Institute,
2004, p. 5).

Projects are temporary in nature and have definitive start

dates and definitive end dates.

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Cont’d...
A project is defined as a sequence of unique, complex,
and connected activities having one goal or purpose and
that must be completed by a specific time, within
budget, and according to specification.

A project is a proposal consisting of collection of

activities performed to achieve a specific purpose so as
to get benefits that exceed costs.

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Cont’d...
The project is completed when its goals and objectives are accomplished to the satisfaction of the
stakeholders.

Sometimes projects end when it’s determined that the goals and objectives cannot be
accomplished or when the product, service, or result of the project is
no longer needed and the project is cancelled.

Projects exist to bring about a product, service, or result that didn’t exist before.

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 Features of a project
1. Specific and Unique:
• Every project is unique in that it requires doing something different than was
done previously.
• Each project is unique in the sense that the activities of a project are non
routine.
• A project is a one-time activity, never to be exactly repeated again. They do not
involve repetitive processes.
• Projects involve doing something that has not been done before in the same
environment: having different location, different design, different circumstances
and situations and so on.
No two projects, even projects with the same general objectives, are ever identical in
planning or implementation.
 Cont…

2. Temporary
A project has a definite beginning and definite end(finite duration).
Temporary does not necessarily mean the duration of the project is short.
• It refers to the project’s engagement, it can be Can be a 3month project or 25 years
project or …
Temporary does not typically apply to the product, or service created by the project;
•Most projects are undertaken to create a lasting outcome.
Projects are temporary activities as an ad hoc organization of personnel, material, and facilities
is assembled to accomplish a goal, usually within a scheduled time frame.
3. Progressive Elaboration

Continuously improving the plan as more information becomes

available as the project progresses.

The characteristics of the product/service of the project are

determined incrementally and continually refined and worked
out in detail as the project progresses or un-folds.

Planning and documentation are iterative and ongoing activities.

 Cont…

4. Requires Resources

Project have resource limits, such as a limited amount of budget,

human, equipment and materials that are dedicated to the
project.

5. Risk
Projects involve an element of risk i.e. Projects entail a level of
uncertainty regarding cost, schedule or performance outcome
and therefore carry project risk.
1.2 Concept of project, program and portfolio management
Project Management

•Project Management is the skills, tools and management processes required to

undertake a project successfully”.

•Project management is a set of principles, practices, and techniques applied to

lead project teams and control project schedule, cost, and performance risks to
result in delighted customers.

• It is a temporary endeavor that involves management functions to achieve

certain pre defined objectives.
•Project management involves a series of management
techniques and processes required to monitor and
control time, cost, quality and scope of projects.

•Project management is the discipline of planning,

organizing, securing, and controlling resources to bring
about the successful completion of specific project goals.

•All the management functions are required to

effectively and efficiently manage resources required to
complete the project. These are :
Project planning involves:
 Looking ahead and charting out future course of
operation for projects
Formulation of Objectives, policies, procedure, rules,
schedules and budgets
In the planning stage, managers establish
organizational goals and create a course of action to
achieve them.
During the planning phase, management makes
strategic decisions to set a direction for the organization
Project organizing involves
Bringing resources together and tying them together in the
pursuit of common objectives.
Enumeration and identification of activities, classification of
activities, fitting individuals into functions and assignment of
authority for action.
A project manager's organizational skills can help to ensure a
company or departmental unit runs smoothly.
Knowing which employees or teams are best suited for specific
tasks.
Organization isn't just about delegating tasks efficiently and
making sure employees have what they need to accomplish their
tasks
Project directing involves
Guiding, overseeing and leading people
Motivation, leadership, decision making.
Directing/Leading consists of motivating employees and
influencing their behavior to achieve organizational
objectives.

Though managers may direct team members by giving

orders and directing to their team, managers who are
successful leaders usually connect with their employees
by using interpersonal skills to encourage, inspire and
motivate team members to perform to the best of their
abilities.
Project Controlling
 Laying standards, comparing actual performance against
standards and correcting deviation-achieve objectives according
to plans.

To ensure all of the above functions are working toward the
success of a company, managers should consistently monitor
employee performance, quality of work, and the efficiency and
reliability of completed projects.
Controlling is the process of evaluating the execution of the plan
and making adjustments to ensure that the organizational goal is
achieved.
Project Objectives
There are three basic and common objectives of
any project:
◦ The project must meet the prescribed quality
requirements,

◦ The project must be accomplished within the

budgeted cost,

◦ The project must be completed on time.

 Cont…

Performance/quality:

The end result of the project must be fit for the purpose
for which it was intended. It should fulfill the
requirements based on the specification.

The project owner and all the other stakeholders must be

satisfied.

Development projects for consumer goods must produce

articles that satisfy the market requirements and conform
to all relevant legislation.
 Cont…

Budget:

The project must be completed without exceeding the

authorized expenditure.

Financial resources are not always inexhaustible and a

project might have to be abandoned altogether if funds run
out before completion, in which case the money and
effort already invested become forfeit and must be
written off.
 Cont…

Time of Completion:

Actual progress has to match or beat planned progress.

All significant stages of the project must take place no later

than their specified dates, to result in total completion on
or before the planned finish date.

Consistently failing to keep delivery promises can not

enhance the contractor’s market reputation and disrupt the
company’s following projects.
 Cont…

The project scope is the definition of what the project is supposed

to accomplish and the budget (of time and money) that has been
created to achieve these objectives.

Any change to the scope of the project has a matching change in

budget, either time or resources. If the project scope is to build
G+3 building with a budget of Birr 10,000,000 the project manager
is expected to do that. However, if the scope is changed to G+4,
the project manager must obtain an appropriate change in
budgeted resources. If the budget is not adjusted, the project
manager will avoid the change in scope.
 Cont…
A key point to note in relation to project goals is that they should be
stated in a way that facilitates measurement of achievements.
The general rule is that project goals should be SMART – an
acronym for:
◦ 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,
 Cont…

Reliable/achievable :
Do we have the resources (human, financial, material,
information, time) to make the goal happen? Is the
objective achievable with the available resources and
timeframe.
Time-based :
It should identify a definite target date for completion
and/or frequencies for specific action steps that are
important for achieving the goal on/within a specific
time period.
Program management is the process of managing a group of
ongoing, interdependent, related projects in a coordinated
way to achieve strategic objectives.
1.3. Portfolio Vs. Program Vs. Project
Portfolio
A collection of subsidiary portfolios, programs, projects, and operations
managed as a group to achieve strategic objectives. Or
•Portfolios are collections of work (projects, programs, or sub-portfolios) and
are a way to plan and manage the projects from an organization perspective.
The projects may or may not be related.

Investment Process:
1. Security analysis (Risk and Return)
2. Portfolio selection

“Do not put all your eggs in one basket”

 Cont…
Program
A group of related projects, subsidiary programs, and
program activities managed in a coordinated manner to
obtain benefits not available from managing them
individually.

•Programs are larger initiatives that are broken up into a set

of smaller projects and subprograms and then coordinated
centrally. The projects in a program are related to each other.

•Each project within a program has a project manager. The

major differences lie in scale and time span.
 1.4. Types of Projects
Projects are classified according to the specific character of the
project.

The principal identifying characteristic of a project is its novelty.

It is a step into the unknown, fraught with risk and uncertainty.

No two projects are ever exactly alike: even a repeated project

will differ from its predecessor in one or more
commercial, administrative or physical aspects.
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Projects can be classified based on several criteria.
1. Ownership
a) Private sector- mostly projects undertaken by business enterprises.
b) Public sector- projects undertaken by national and local government
body.
c) NGO’s – development projects undertaken by non-government and not
for profit organizations.
2. 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.
c) Political driven
3. Based on the Nature of the projects
a. civil engineering, construction, petrochemical, mining
b. Manufacturing
c. Management
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0

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Cont’d...
1. Civil engineering, construction, petrochemical, mining :
These projects incur special risks and problems of organization.
They may require massive capital investment, and they deserve
(but do not always get) rigorous management of progress, finance
and quality.
Operations are often hazardous so that health and safety aspects
demand special attention, particularly in heavy work such as
construction, tunnelling and mining.

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Cont’d...
Manufacturing:

Manufacturing projects result in the production of a piece of

mechanical or electronic equipment, a machine, ship, aircraft, land
vehicle, or some other product or item of specially designed
hardware.

The finished product might be purpose-built for a single customer

but internal research and development projects for products to be
sold in all market sectors also fall into this manufacturing category.

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Management Projects: IT projects and projects associated
with management change
This class of project proves the point that every company,
whatever its size, can expect to need project management
expertise at least once in its lifetime.
These are the projects that arise
◦ when companies relocate their headquarters,
◦ develop and introduce a new computer system,
◦ launch a marketing campaign,
◦ prepare for a trade exhibition,
◦ produce a feasibility or other study report,
◦ restructure the organization,
◦ generally engage in any operation that involves the management and coordination of activities
to produce an end result that is not identifiable principally as an item of hardware or
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 Projects for pure scientific research
Pure scientific research projects (not to be confused with research and development
projects) are truly a special case.
They occasionally result in dramatically profitable discoveries.
On the other hand, they can consume vast amounts of money over many years, yet
yield no practical or economic result.

Research projects carry the highest risk because they attempt to extend the
boundaries of current human knowledge.
The project objectives are usually difficult or impossible to define and there may be
no awareness of the possible outcome.
Therefore, pure research projects are not usually amenable to the project management
methods that can be applied to industrial, manufacturing or management projects.

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 1.5. PROJECT VS. OPERATION
Discussion activity

People get confused between Projects and Operations

because they share some characteristics, such as:
 Both are performed by people.
 Both are planned, executed and controlled.
 Both have resource limitations.

Construction of a house is a project

but
manufacturing a product is a not project. Why?
 Cont…

Operations are an ongoing execution of activities

and they follow an organization’s procedures to
produce the same result or a repetitive service.
Operations are permanent in nature.
Ordinary daily work typically requires doing the same
or similar work over and over,
while a project is done only once; a new product or
service exists when the project is completed.
◦ Projects should not be confused with everyday work.
◦ A project is not routine, repetitive work!
Comparison criteria Projects/ Operations/
(for Differences) Project Work Functional work

Type of work/product Unique The same Work/Product

Time Definite beginning and No definitive beginning

ending and ending
Occurrence Temporary in nature Ongoing, repetitive

Budgets For specific projects On-going operational

budgets

Focus Completing the project Accomplishing effective

work
Project Management
An official definition of project management, courtesy of the Project
Management Institute, defines the term as: “the application of
knowledge, skills, tools and techniques to project activities
to meet project requirements.”

Project management is the discipline of planning, organizing and

managing resources to bring about the successful completion of
specific project goals.

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Cont’d...
The PMBOK definition of project management is
“application of knowledge, skills, tools and techniques
to project activities to achieve project requirements.

Project management is accomplished through the

application and integration of the project management
processes of initiating, planning, executing, monitoring
and controlling, and closing” (PMBOK 2004, p. 8).

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Cont’d...
Project management is a set of principles, methods, and techniques
that people use to effectively plan and control project work.

It establishes a sound basis for effective planning, scheduling,

resourcing, decision-making, controlling, and re-planning.

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Cont’d...
Project management principles and techniques help complete projects on
schedule, within budget, and in full accordance with project specifications.

At the same time, they help achieve the other goals of the organization, such as
productivity, quality, and cost effectiveness.

The objective of project management is to optimize project cost, time, and

quality.

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Cont’d...
The application of modern management techniques and systems to the
execution of a project from start to finish, to achieve predetermined objectives
of scope, quality, time and cost, to the equal satisfaction of those involved.

Essentially, project management is a set of skills and tools that will help you
get the project right in every way.

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 The Balance Quadrant

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Thus, project management is:
1. Is a discipline that applies knowledge, skills, principles, methods, techniques
2. In project management processes of initiating, planning, executing, organizing, controlling,
closing
3. Project activities,
4. To achieve project requirements/specifications in time, cost, quality to the best satisfaction of
those involved.

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1.6. Project Management Body of Knowledge (PMOK)

Project Management Knowledge (PMOK) refers to knowledge standards or guides for

application in the project management environment, or

They refer to bodies of knowledge and competency standards, which project management
practitioners need to know to perform projects successfully.

The PMOK areas include the following:

 Project Scope Management
Project Quality Management
Project Cost Management
Project Time Management
Project Risk Management
Project Procurement Management
Project Communication Management
Project HR Management
Project Stakeholders Management
Project Integration Management

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1. Project Scope Management includes the processes required to ensure that the project includes
all – and only the – work needed for its successful completion. In other words, scope
management asks what is included in the project.

Completion of the project scope is measured against the project management plan where the
requirements and specifications of the project output are given.

Processes covered under Project Scope Management are:

 Plan scope management,
 Collect requirements,
 Scope definition,
 Creation of the work breakdown structure,
 Scope verification and
 Scope control.

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2. Project Quality Management includes
◦ the processes and activities of the performing organization
◦ that determine quality policies, objectives, and responsibilities
◦ so that the project will satisfy the NEEDS(time, cost, and scope, product, customer)for which it was undertaken.

Project quality management includes the process required to ensure that the
project satisfies the needs for which it is undertaken.

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3. Cost management is a process involved in the planning , estimation, budgeting and controlling
cost so that activities can be completed in estimated budget.
Cost management is the process of effectively planning and controlling the costs involved in a
business.
Project cost management includes the processes required to ensure that the project is completed
within an approved budget.

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4. Project Time Management includes the processes required to ensure the completion of the
project within the time-frame which has been allocated for it.
Processes covered under Project Time Management are planning schedule management,
activity definition, sequencing activity, estimating activity resources, activity duration
estimating, schedule development, and schedule control.
It helps to ensure timely completion of the project.
Project Schedule Management is all about making a detailed plan to tell everyone WHEN the
project will deliver what is in the requirements.

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5. Project Risk Management includes the processes needed to manage the risks on the project with a view to reducing the
likelihood of a negative impact on attainment of the project goal, the project cost and time, and the project stakeholders.

Processes covered under Project Risk Management are

Risk management planning,

risk identification,

qualitative risk analysis,

quantitative risk analysis,

risk response planning, and

risk control.

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6. Project Procurement Management includes the processes for acquiring or purchasing the
materials, products, goods and services which are needed to perform the project work to
attain project scope from outside the performing organization.
Project Procurement Management includes the contract management and change control
processes required to administer contracts or purchase orders issued by the project team.
Processes covered under Project Procurement Management are:
◦ Procurement planning,
◦ Solicitation,
◦ Source selection,
◦ Contract administration &
◦ Contract closeout.

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 End of the Chapter

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