Project Management Product Lfe Cycle and Types

8/12/2019 Project Management Product Lfe Cycle and Types

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OPERATION MANAGEMENT

Project life cycle and types

Project Management

1) Five steps of project life cycle, Input output / processes of each stage, CPM / PERT / Gunttchart

1) What is project2) Types of project3) Project Management4) Life cycle of the project5) Project Management tools like PERT / CPM / Guntt chart

Project Life Cycle:

1) The sequence of stages through which a project passes from conception to competition isknown as life cycle.

2) Project consists of nos of activities, each of them having work content. The various activities arespread over a period of time which is known as life cycle.

3) These activities are systematically and logically linked with each other forming a sequence.4) The stages are formed by considering the nature of activities involved in project.

The Life Cycle consists of 5 stages.

Project Conception Stage

1) Project Security and Establishment of need2) Identification of Project and preliminary screening3) Feasibility Testing

Project Definition Phase

1) Visualization of Project Features2) Preparation of Project Report

Project Planning and Organization Phase

1) Appraisal of Project - examination of Technical, Organizational, Marketing, Financial, Economicand social aspects of a project.

2) Final selection and investment decision


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Implementation Phase

1) Implementation / Execution of project consists of (a) Establishment of project organization forplanning and management. (b) Project follow-up monitoring and control.

Project clearing Phase

1) Project Frustration - Production service, Distribution and consumer service.2) Ex-post Evaluation

Establishment of Need: to prepare scope for project data can be made available from

1. Government Department of Revenue Agriculture, Industries, Trades.2. Reports of specialized agencies such as Central Bank, Geological Survey, Ministry of Finance,

Planning Commission.

Scouting for Projects: ideas for new project can come from a variety of sources.

1) Within the organization 2) Outside organization

Conception Stages

Definition Phase

Project Planning &

Organization

Project

Implementation

Project clearing


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Identification of Project

1. Adequate understanding of physical features, resource base demand base of the region, itspeople their socio economic profile.

2. Adequate knowledge of government plans, programs and development programs.3. Knowledge of fiscal policy, industrial policy, export import policy, credit policy and their

implications government laws and regulatory frame work. Foreign exchange regulation act

(FERA), MRTP companies act.

4. Performance of existing industries in terms of profitability and capacity of utilization.5. Plan out tags, priorities and programmer for different sectors and industries.6. Guide line for setting up new projects7. SWOT analysis of company

1. Internal finance resources 2) Top Management 3) Employee Morale, Market Share / Extentof competitor faces, cost structure of profitability.

Feasibility Testing

It is safety device used by the project promoter to convince themselves that they are proceeding

forward on safe assumption.

Feasibility approval is based on actual data this is generally done by a group of experts. Who are

expected to be fully conversant with various aspect of the project.

The process involves into following aspects.

1) Technical Feasibility2) Financial Feasibility3) Economic Feasibility4) Managerial Feasibility5) Social Feasibility6) Degree of Risk7) Preliminary Screening

The project which do not satisfy the minimal essential requirements of which should be eliminated.

The idea here is to focus particularly on the following features of the project.

1) Project matches with the objectives, resources available, receives clearance from topmanagement. Project is expected to generate adequate profits and gives a reasonable R.O.I.

Risk of the project is within acceptable limits. Reasonable assurance of funding for project.

2) Defining Project Phase: In the initial stage of project formulation there is some element ofuncertainty with regards to its different aspects. However before drafting the project report


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all people have to come to view which may be acceptable to all. This is considered essential

for defining project.

Detailed Project Report

1. Back ground of the project2. Objectives of the project3. Justification of the project in terms of marketing technical, financial economic and social

feasibility of the project

4. Salient features of the projecta. Project costb. Sources of fund for the project and cost of capitalc. Estimate of sales revenued. Estimation of production coste. R.O.I. and cash flow projectionsf. Social costs and benefits etc.

5. Program of activities of project which comprehendsa) Implementation requirementsb) Time schedule of then projectc) Critical activities and eventsd) Schedule of activities and drawing network / chartse) Resource requirement for different activities resource scheduling, resource balancing

and resource smoothing.

6. Organization of project giving details ofa) Organization structure and chart

b) Personnel, their qualifications and functions

c) Line of control

d) Authority, responsible and delegation

7. Implementation details of the projecta) Sequence of tasks and activitiesb) Requirement of time and resourcesc) Precautions and safety requirements at each stage of implications

8. Project Result


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PROJECT APPRAISAL

Project appraisal involves detailed and in-depth analysis of the results of the project in this

process technical, markets, financial economic social aspects of the project are examined one by

one to ensure technical, market, financial economic visibility. It is feasible i.e. WORTHWHILE

then go further.

Generally the appraisal is done by different agencies at different stages.

1. Initially it is done by promoters to satisfy about potentially of the project.2. When project is submitted for financial commitment it is done by Financial Institutions.3. Appraisal is done by investors when the company enters market for raising equity.4. Regulatory bodies also do appraisal before clearing the project from technical or

environmental angle.

Technical Feasibility: This is to examine technical feasibility. This is based on the examination of

technical parameters of project.

a. Locationb. Sitec. Technologyd. Layoute. Process of Productionf. Product Mixg. Plant Capacityh. Consultants their previous record capability.MARKET APPRAISAL

This is done to ascertain that estimates of demands have been properly worked out and with in

permissible limits.

1) Estimates existing and future demand2) Estimate of future price3) Method of sale distribution4) Expected competitors and the extend of competition5) Perspective customers their socio-economic background, consumption habits etc.6) Govt. policy the expected changes in the policy and its likely effect.


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ORGANIZED APPRAISAL

The objective of this appraisal is to test strength of the organization and its suitability for the

project. The success of a project during implementation as well as operation depends upon

suitability and compatibility of the organization with the project.

1) Type of organization2) Strength of organization in terms of background and motivation, credit, worthiness,

integrity, reliability system of accountability, leadership, personnel.

3) Personnel policies including method of recruitment, training, placement, incentives, qualityof manpower, extent of professionalization.

4) Structure of the organization.FINANCIAL APPRAISAL

The objective of this of a project is to ascertain whether adequate arrangement has been made

to meet financial requirement of project.

To ensure capital structure design is appropriate

Sources at appropriate time and minimum cost

Investment will ensure maximum return and optimum utilization of the capacity various aspects

are worked into following.

1. Proper estimation of project cost2. Designing of a suitable capital structure considering the aspects of RISK, PROFITABILITY AND

CONTROL.

3. Identification of most appropriate sources of funds.4. Sound investment decision to ensure optimum utilization and funds.5. To get maximum return on investment.Economic Appraisal

This is done to ascertain its economic viability for i.e.

1) Adequacy of R.O.I. on capital employed as well as cash flows to cover the cost of funds andprovide for the payment of dividend on share holders and also future growth of an

enterprise. This aspects of project examined are as follows.

1. Estimation of market revenue2. Exanimation of return or surplus generated from the above3. Element of risk and uncertainty involved4. Tax factor5. R.O.I and expected cash flows


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Commonly used criteria for economic appraisal

1. Pay based period 2. Accounting rate of return (ARR) 3. Internal rate of return (IRR) and net present

value.

OVERALL SOCIAL COST BENEFIT APPRAISAL

This is done to assess desirability and utility of the project from social point of view.

1. Use of scare resources (natural)2. Pollution and environmental hazards.

PROJECT SELECTION AND INVESTMENT DECISION/CLEARANCE

A project needs clearance and approval at various levels before it can be taken for implementation

1. Approval of project in total2. Approval with some changes3. Approval of the project in principle for taken up at letter date.4. Rejection of project for present but reconsidered after certain changes as suggested at latter

date

5. Rejection of project outrightSelection is based on to give higher rate of return within the resources available within the organization

with minimum risk and having intangible benefits also investment decision criteria

PROFITABLE TAX

PROFITABILITY = --------------------------------

NETWORTH

PROJECT IMPLEMENTATION

1. This requires networking with different teams2. Co-ordination with multi discipline teams3. Setting up of a suitable project organization head by project manager capable of achieving the

results from the different people.

4. Preparation of network of activities scheduling of the activities finding out critical path5. Accurate projections and estimate of resources should be prepared and made available of right

quality at right time.

6. Effective monitoring and supervision over the project completion should be ensured by settingup of project information system provides responsibility centers and responsibility reporting.

7. Delegation of authority and responsibility at various levels.8. Continuously monitor project and taking corrective action if and when needed

Project Management Product Lfe Cycle and Types

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