27 Meaning and Concept of a Project

Vishal Kumar

1. Learning Outcome

After completing this module students will be able to:

Understand the concept of a project
Understand the characteristics of a project
Know the classification of a project
Understand Project Life Cycle and its phases

2. Introduction

Effective management of projects is vital for the development of an economy because it is the result of a series of projects managed successfully. This makes project management an extremely important key area for a developing economy such as India. Project management is rapidly becoming an exciting new profession. It is a specialized branch of management which makes it different from others based on a variety of factors which include the organisation structure, planning process, quality of control, human relations etc. Every project requires a professional and peculiar approach to ensure the success of the project. This peculiar approach can be termed as project management. The success of the project depends upon timely completion of the project, within the framework of allocated budget and it must perform upto the desired satisfaction. An ideal project is one which is carefully selected and prepared, thoroughly appraised/analyzed, closely supervised and consistently evaluated. Project management deals with project identification, formulation and appraisal of the project. These three aspects formulate the basic foundation for the success of projects.

3. Meaning and Definition of a Project: The PMBOK (Project Management Body of Knowledge) has defined a project as “A temporary endeavour undertaken to create a unique product, service, or result”. It is usually a one-time activity with a well defined set of desired end results. There is a rich variety of projects we used to hear like iron and steel projects, power projects, cement projects, refinery projects, fertilizers projects etc. where the term „project‟ is common to all the plants. In each case, the „project‟ is used for the plant but after becoming the plant operational, the project is said to be completed. In another case, say the project for methods of improvement. The project is deemed to be completed when methods of improvement has been achieved. Thus, it is not necessary that the term „project‟ is always specifically used as project. Take the examples of Lok Sabha/Assembly or Panchayat elections.

A project is neither a physical objective nor an end result-but one which is to do with goings. It includes:

any non repetitive activity;
a low-volume, high variety activity;
a temporary endeavour undertaken to create a unique product or service;
any activity with a start and finish;
A unique set of co-ordinated activities, with definite starting and finishing points, undertaken by an individual or organisation to meet specific performance objectives within schedule, cost and performance parameters.

To understand what a project is, let us study how a project is conceived. Project identification is the first stone to be laid down in setting up an enterprise. It is not possible for anyone to come up with an idea and at the very first time, convert it into a business opportunity and start a business on that basis. Persons who are interested to become entrepreneurs must have the ability to generate a large number of ideas so that at least one of the ideas has the potential of business opportunity and adopt a series of steps to finalize it into a profitable business. A project, in very simple words, is a plan or idea intended to be carried out. The success or failure of an enterprise depends on its identification of the project.

In today‟s competitive environment, every enterprise is looking for good business opportunities for expanding the existing business or setting up new conglomerates. Idea generation is the first step for the growth of business. The idea must be technically, economically, politically and socially feasible. Once the idea passes these tests, an investment proposal is made. When the investment proposal is approved, the project commences. The concept of term „Project‟ can be defined with the help of following definitions:

Project is a one shot, time limited, goal oriented, major undertaking, requiring commitment of varied skills and resources, a combination of human and non-human resources pooled together in a temporary organisation to achieve a specific purpose.

-Project Management Institute of America (PMIA)

A project is whole complex of activities involved in using resources to gain benefits.

-Gillinger

A project is an organised unit dedicated to the attainment of a goal, the successful completion of a development project on time, within budget, in conformance with predetermined programme specifications.

-Encyclopedia of Management

An investment project is carried out according to a plan in order to achieve a definite objective within a certain time and which will cease when the objective is achieved.

-Directory of Management

A project can be defined as a non-routine, non-repetitive one-off undertaking normally with discrete time, financial and technical performance goals.

-E.L.Hanson

On the basis of above definitions, the following are basic attributes of a project:

A course of action
Specific Objectives
Definite Time Perspective

4. Characteristics of a Project: A project is an economic activity with well defined objectives and having a specific beginning and an end. It can be defined as a scientifically evolved work plan devised to achieve a specific objective within a stipulated time. A project should be well defined and also includes the considerations of various alternative proposals, investigating, engineering and marketing considerations to predict the consequences of accepting the proposal and making economic analysis to determine the profit potential of investment proposal. A project is a big work, a one whole thing. Instead of contributions from many different people, it can still be regarded as one whole thing. The activities may be performed by different people, but all activities are interrelated and are being performed to serve a common purpose. The various characteristics of a project are discussed as under:

1) Well defined objectives: Every project must have well defined set of objectives. No project can be without set of objectives. Once these objectives are accomplished, the project ceases to exist. Needless to say that a project is deemed to be completed when the whole things are completed and performing satisfactorily.

2) Life Span of the Project: A project has a limited span of time. It cannot go on and forever. The life of the project may be a few days, a few months or a few years but it cannot continue endlessly. It has to come an end. Normally the accomplishment of given set of objectives represents the end of the project.

3) Single Entity: A project is generally treated as one single entity. Instead of contributions from many different people, it can still be regarded as one whole thing. The activities may be performed by different people, but all activities are interrelated and are being performed to serve a common purpose.

4) Team Work: A project is single entity and calls for team work. For the successful implementation of planning and strive towards achievement of common goal, the activities of different people are integrated and coordinated. Everyone should feel important and contribute towards the attainment of common goal. The spirit of oneness makes everyone feel important contributing to a big cause.

5) Life Cycle: Every project has its own life cycle which starts from growing stage, maturity stage and declining stage. All the stages are closely linked with each other and provide the logical reasoning for the beginning of next stage. The declining stage provides the basis for the renewal of the project. The principal stages of the cycle are the identification of a project, its design, preparation and appraisal, its implementation and its evaluation.

6) Uniqueness: Each project has its unique characteristics. It can be exactly similar with any other project even if the plants are exactly identical. The location of the project, its infrastructure, human resources and various other agencies make each project unique.

7) Change: A project keeps on changing throughout its life cycle i.e. at different stages of completion. Sometimes these changes are routine changes, while some changes may be major which are capable of changing the very nature or character of the project.

8) Successive Principle: There is a big gap between the dream and reality. Similarly what is going to happen in the next stage of the life cycle of the project is not known at any stage. Therefore, a project is successive in nature. Sometimes the practical challenges are known only when the project is implemented.

9) Customer Centric: A project should be customer centric. It is always made to the order of the customer. It is made to order because the requirements of each project are very much different. The customer puts their own conditions and stipulates various requirements in terms of time, cost and quality, within which the contract must be executed.

10) Unity in Diversity: A project is a unique and a complex set of incalculable varieties. These varieties may be in terms of technology, material, equipment, machinery, human resources, work culture and ethics etc. But in spite of diversities, all activities of the project are interrelated and coordinated in such a manner that it strives for the attainment of common goal of the project.

11) Risk and Uncertainty: A certain degree of risk and uncertainty associated with every project. The degree of risk and uncertainty depends on how a project has been passed through the various life cycle phases. A well defined project will have the least degree of risk and uncertainty.

12) Sub-Contracting: For the successful completion of the project, it requires the services of many specialised persons. A high percentage of work is done through sub contractors depending upon the complexity of a project.

5. Classification of Project: A project may be classified in different ways. The major categories are described as follows:

1) Income Yielding Projects: These are also called profit earning projects and refer to all those projects which enable the concern to earn profits. They lead to increase in sales volume and productivity and tend to reduce cost of production. Such projects may be sub classified as below:

a) Replacement Projects: Which involve replacement of the existing fixed assets. Replacement has to be done because the assets being used have become depreciated, worn out and out dated. Usually replacement funds are created for timely replacement of such assets.

b) Expansion Projects: Which increase the existing capacity or add a new product line. A careful estimate is to be made regarding expansion programmes.

c) Miscellaneous Projects: Which include such items of capitals expenditure as research, development and innovation projects, cost control and cost reduction schemes etc.

2) Non Profit Projects: The need may arise to incur expenditure on some permanent items, the object of which is not to earn profit. This has to be done to comply with the instructions of the government, municipal committee, labour department and other law enforcing agencies. Provision of exits, exhaust fans, fire fighting equipment, an effluent clearing plant, safely helmets for workers etc. are some of the examples of such expenditure.

3) Projects on which a Return is difficult to measure: There are certain projects which certainly affect the profitability and productivity favourably but it is difficult to assess the income yielded by them. Brown and Haward have given the following list of such projects:

a) Mandatory projects: The projects which are required to comply with some statutory requirements are called mandatory projects.

b) Service department projects: The provision of buildings or equipment for non-manufacturing departments may be essential but the return cannot be evaluated.

c) Welfare projects: Provisions of sports facilities for employees may contribute to raise employee morale, which cannot be evaluated financially.

d) Research and development (R & D) projects: The projects which may be initiated to improve company‟s methods or products. It may prove unsuccessful or may show no measurable return for a considerable time.

e) Educational projects: Provision of a company training course may be instrumental in improving the efficiency of staff but here again results would be difficult to evaluate.

4) Sectoral Projects: According to Indian Planning Commission, these projects are sector specific projects and may fall in any one of the following categories:

Agriculture and Allied Sector
Irrigation and Power Sector
Industry and Mining Sector
Transport and Communication Sector
Social Services Sector
Miscellaneous Sector

6. Project Life Cycle and its Phases: Every project has a life span which may be divided into various broad phases. The attention that a particular project receives is not uniformly distributed throughout it life span, but varies from phase to phase. It is, therefore, necessary to study the various phases in the life of a project. Each project has five stages from start to end. These stages are:

Conception Phase
Definition Phase
Planning and Organising Phase
Implementation Phase
Project Clean-up/Termination Phase

Though all projects do not follow in reality this sequence and the span of each phase is not definite which is estimated by the experts. It depends upon various factors like the location of plant, the type of product/service, layout of the project, manpower needs, financial requirements etc. Let‟s discuss these phases one by one:

1. Conception Phase: This is the phase during which the project idea is conceived. The idea may be generated in the mind of entrepreneur while tackling and solving many problems of the business. These problems may be non-utilisation of available funds, plant capacity, technology, man power, expertise or expectations of the existing customers from the enterprise. Whatever the situation, the ideas must be put in writing and given some shape before these can be considered and compared with competitive ideas. The ideas have to be examined carefully in the light of objectives and constraints. The acceptable idea will form the basis of a future project. A well conceived project has a long life after it successful implementation.

However the real life situations may be different as compared to what may have been assumed. Therefore, no original idea goes into operation in its original form. Conception is an important phase in the life cycle of a project. An entrepreneur has to analyse deeply all facts, objectives and constraints before starting of a project because an unsuccessful project may become a liability for the enterprise instead of being an asset.

2. Definition Phase: In the phase the idea generated during the conception phase is developed. Facts relating to the idea are collected and presented. A document is produced describing details of the project, necessary information relating to customers or financial institutions to make up their minds on the project idea. The following are the key areas to be examined during this phase:

Quality and quantity of raw materials
Calculations as to the size or capacity of plant o Location and the site of plant
The technology to be employed o Layout of project
Layout of plant and machinery o Civil engineering works
Manpower requirements o Financial requirements
Schedule of implementation

Further indepth studies can also be asked for. If this phase is not properly done, it will increase the risk content of the project. And sometimes hasty decisions may prove disastrous for the project. Therefore, a project is brought into existence only when its idea has been properly conceived, analysed in the definition stage for its successful implementation.

3. Planning and Organising Phase: Although this phase starts after definition phase, but in practice it starts with the conception of an idea. Planning, as it is often defined, is making the decision in advance. If planning is not properly done, it may fatal the objective of starting a project. During this phase the firm deal with the action steps to convert its ideas into reality. Some organisations also prepare „Project Execution Plan‟ for the successful implementation of the project. The important aspects cover in the plan are:

Project infrastructure and supporting services o Scheduling and Budgeting
Human Resource Planning
Licensing and governmental clearances o Financial Requirements
Systems and procedure
Identification of project manager o Site preparation and investigation
Construction resources and materials o Work packaging

Generally this phase is taken as part of the implementation phase because this phase is not confined to documentation or merely paper work but lot of other activities which are important for the project are organised under this phase. Various aspects viz. marketing, technical, financial, economic and ecological are analysed in detail.

4. Implementation Phase: This is a very important phase of the project where the people actually see the project first time. Implementation phase for a project involves setting up of manufacturing facilities. It consists of various activities:

Project and engineering design
Negotiations and contracting
Ordering of equipments
Construction o Training
Plant Commissioning
Testing and checking

Implementation phase is a very complex, time consuming and risky. It has a high need for coordination and control. All techniques of project management are applied for the successful implementation of the project.

5. Project Clean-up/Termination Phase: This is a transition phase in which projects actually starts working. This phase is considered as clean-up because the project personnel have to perform clean up task like drawings, documents, files, operation and maintenance manuals, catalogues are given to the clients or the owners of the project. To satisfy customers, clients and contractors, the experts are to undertake many test-runs. The most important task during this phase is to plan about retaining of certain employees involved in the execution of the project. All project personnel cannot be suddenly asked to go. The first among the employees to move are the design engineers. Most of them move to new project sites because the same people will never be required again at that site till a new project comes and rest are retained at field for residual engineering.

7. Summary:

Project management is rapidly becoming an exciting new profession. It is a specialized branch of management which makes it different from others based on a variety of factors which include the organisation structure, planning process, quality of control, human relations etc. The success of the project depends upon timely completion of the project, within the framework of allocated budget and it must perform upto the desired satisfaction. An ideal project is one which is carefully selected and prepared, thoroughly appraised/analyzed, closely supervised and consistently evaluated. Project identification is the first stone to be laid down in setting up an enterprise. It is not possible for anyone to come up with an idea and at the very first time, convert it into a business opportunity and start a business on that basis. A project, in very simple words, is a plan or idea intended to be carried out. The success or failure of an enterprise depends on its identification of the project. A project is an economic activity with well defined objectives and having a specific beginning and an end. It can be defined as a scientifically evolved work plan devised to achieve a specific objective within a stipulated time. There are various types of projects, some are profitable and some are non-profitable projects. Every project has a life span which may be divided into various broad phases. These phases are Conception Phase, Definition Phase, Planning and Organising Phase, Implementation Phase & Project Clean-up/Termination Phase.

Learn More

Suggested Readings:

Project Planning and Control, Mohsin M., Vikas Publishing House.
Project Management: A Development Perspective, Goyal B.B., Deep & Deep Publications.
Project Management, Chaudhary, S.,Tata Mc Graw Hill Publications.
Project Management, Maylor, Pearson Education
Projects: Planning, Analysis, Selection, Implementation & Review, Prasanna Chandra, Tata McGraw-Hill Publishing
United Nations Industrial Development Organization, Guide to Practical Project Appraisal–Social Benefit Cost Analysis in Developing Countries, Oxford & IBH.
Project Management: A Managerial Approach, Jack R. Meredith, Wiley Publications

Points to ponder:

A project is usually a one-time activity with a well defined set of desired end results.
A project is an economic activity with well defined objectives and having a specific beginning and an end.
Project identification is the first stone to be laid down in setting up an enterprise.
Idea generation is the first step for the growth of business. The idea must be technically, economically, politically and socially feasible.
The activities may be performed by different people, but all activities are interrelated and are being performed to serve a common purpose.