CONCEPTS, DEFINITIONS AND NATURE OF PROJECTS

Broad Contents

2.1 What is a Project?

endeavour employed to create a unique product, service or results. Projects are an

investment on which resources are used to create assets that will produce benefits over an

expanded period of time. It is a unique process, consisting of a set of coordinated and controlled

activities with start and finish dates, undertaken to achieve an objective conforming to specific

requirements, including the constraints of time, cost and resources.

They are completed within one year, and are focused towards achieving the tactical

objectives. They are less rigorous; require less or no risk. They are not cross functional.

These projects require limited Project Management tools, and have low level of

sophistication. It is easy to obtain approval, funding and organizational support for short

range projects. For example, reduce defect in shop number two from 6 to 4 percent.

These projects involve higher risk and a proper feasibility analysis is essential before

starting such projects. They are most often cross functional. Their major impact is over

long period of time, on internal as well as external organization. Large numbers of

resources are required to undertake long range projects and they require breakthrough

initiatives from the members.

Projects are initiated in the following scenarios:

• When starting a new business.
• In order to develop/ modify a product or service.
• For relocating and/or closing a facility.
• For regulatory mandate.
• For some community issues.
• In order to re-engineer the process so as to reduce complaints, reduce cycle time, and eliminate errors.
• For implementing a new system or process.
• To introduce new equipment, tools or techniques.

affected by the end results. They have to be completed within specified time frame (completion

date), within budget (limited resources including, people, money, machines) and should be

according to the specifications (with a certain level of functionality and quality).

In brief projects are:

• Directed towards achieving a specific result.
• Coordination of undertaking of interrelated activities.
• Of limited duration, a beginning and an end.
• Prone to risks, that is, every project has a certain amount of risk.

• As already mentioned projects are temporary with a definite beginning and a definite end.
• They also have temporary opportunities and temporary teams.
• Projects are terminated when the objectives are achieved, or conversely, if the objectives cannot be met.
• Most of the projects last for several years. However, they have a finite duration.
• They involve multiple resources (human and non-human) and require close coordination.
• They are composed of interdependent activities.
• At the end of the project, a unique product, service or result is created. Some degree of customization is also a characteristic of projects.
• Projects encompass complex activities that are not simple, and may require repetitive acts.
• They also include some connected activities. Some order and sequence is required in project activities. The output from one activity is an input to another.
• Project Management lives in the world of conflict. The management has to compete with
• functional departments for “resources and personnel”.
• There exists a constant conflict for project resources and for leadership roles in solving project problems.
• In every project, clients want changes, and the parent organization aims at maximization of profits.
• There can be two bosses at a time and that too with different priorities and objectives.

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

international context.

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.

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.

Physical Environment is the knowledge about local ecology and physical geography that

could affect the project, or be affected by the project.

Stakeholders are the ones who have a share, or an interest in an enterprise. Stakeholders

in a company may include shareholders, directors, management, suppliers, government,

employees, customers, and the community. Stakeholders are influenced by the

outcomes and objectives. They have varying level of responsibility and authority. Thus,

they should not be ignored. A project manager should try to manage and fulfill the

expectations of the stakeholders. There are both positive and negative stakeholders. In

some cases, stake holder’s roles and responsibilities are overlapping. For example, an

engineering firm also provides financing.

Project stakeholders are individuals and organizations that are actively involved in the

project, or whose interests may be affected as a result of project execution or project

completion. They may also exert influence over the project’s objectives and outcomes.

The project management team must identify the stakeholders, determine their

requirements and expectations, and, to the extent possible, manage their influence in

relation to the requirements to ensure a successful project.

As already mentioned, stakeholders have varying levels of responsibility and authority

when participating on a project and these can change over the course of the project’s

life cycle. Their responsibility and authority range from occasional contributions in

surveys and focus groups to full project sponsorship, which includes providing financial

and political support. Stakeholders who ignore this responsibility can have a damaging

impact on the project objectives. Likewise, project managers who ignore stakeholders

can expect a damaging impact on project outcomes.

Sometimes, stakeholder identification can be difficult. For example, some would argue

that an assembly-line worker, whose future employment depends on the outcome of a

new product-design project, is a stakeholder. Failure to identify a key stakeholder can

cause major problems for a project.

Stakeholders may have a positive or negative influence on a project. Positive

stakeholders are those who would normally benefit from a successful outcome from the

project, while negative stakeholders are those who see negative outcomes from the

project’s success. For example, business leaders from a community that will benefit

from an industrial expansion project may be positive stakeholders because they see

economic benefit to the community from the project’s success. Conversely,

environmental groups could be negative stakeholders if they view the project as doing

harm to the environment. In the case of positive stakeholders, their interests are best

served by helping the project succeed, for example, helping the project obtains the

needed permits to proceed. The negative stakeholders’ interests would be better served

by impeding the project’s progress by demanding more extensive environmental

reviews. Negative stakeholders are often overlooked by the project team at the risk of

failing to bring their projects to a successful end.

Key stakeholders include the following:

The person, who is responsible for managing the project.

The person or organization that will use the project’s product. These may be

multiple layers of customers. For example, the customer for a new pharmaceutical

product can include the doctors who prescribe it, the patient who take it and the

insurers who pay for it. In some application areas, customers and user are

synonymous, while in others, customer refers to the entity acquiring the project’s

product and users are those who will directly utilizes the project’s product.

The enterprise whose employees are most directly involved in doing the work of

project.

The members of the team who are directly involved in project management

activities.

The group that is performing the work of the project. It includes the members who

are directly involved in the project activities.

The person or group that provides financial resources, in cash, or kind, for the

project.

People or groups that are not directly related to the acquisition or use of the

project’s product, but due to an individual’s position in the customer organization

or performing organization, can influence, positively or negatively, the course of

the project.

If it exists in performing organization, the Project Management Organization can be

a stakeholder if it has direct responsibility for the outcomes of the project.

In addition to these key stakeholders, there are many different names and categories of

project stakeholders, influencing internal or external, owners and investors, sellers and

contractors, team members and their families, government agencies and media outlets,

individual citizens, temporary or permanent lobbing organizations, and society-at-large.

The naming or grouping of stakeholders is primarily an aid to identifying which

individuals and organizations view themselves as stakeholders. Project Managers must

manage stakeholder expectations, which can be difficult because stakeholders often

have very different or conflicting objectives.

For example:

• The manager of a department that has requested a new management information

system may desire low cost, the system architect may emphasize technical

excellence, and the programming contractor may be most interested in maximizing

its profit.

• The vice president of research at an electronics firm may define new product

success as state-of-the-art technology, the vice president of manufacturing may

define it as world-class practices, and the vice president of marketing may be

primarily concerned with the number of new features.

• The owner of a real estate development project may be focused on timely

performance, the local governing body may desire to maximize tax revenue, an

environmental group may wish to minimize adverse environmental impacts, and

nearby residents may hope to relocate the project.

Projects are the means of achieving organization’s strategic plans. Following are the strategic

considerations that have to be kept in mind while planning for projects:

• The market demand (e.g. a new refinery).
• Organizational needs (e.g. a university offers new courses for revenue generation).
• Customer’s requests (e.g. an Internet Service Provider ISP provider lunches DSL).
• Technological demand (e.g. new video games, new cell phones with advance features).
• Legal requirements (e.g. child labor control project, toxic waste disposal center).

Projects are frequently divided into more manageable components or sub projects. Individual

sub projects are also a project and are managed as such. They can be sub contracted or out

sourced.

Meeting stakeholder needs and expectations involves balancing competing demands among

cost, quality, scope, and time.

• Where Q is Quality, S is Scope and T is Time.
• Project quality is affected by balancing these three factors.
• Projects fail when:

a) Estimates are faulty

b) Time, talent and resources are insufficient or incorrectly applied

Figure 2.4 is a pictorial representation of project management. The objective of the figure is to

show that project management is designed to manage or control company resources on a given

activity, within time, within cost, and within performance expectations. Time, cost, and

performance are the constraints on the project. If the project is to be accomplished for an

outside customer, then the project has a fourth constraint: that is good customer relations.

• Designing and implementing an auto tax filing system in a revenue collection organization.
• Hosting a web site of your department.
• Executing an environmental clean-up of a contaminated site.
• Holding a University alumni reunion.
• Provision of clean water to Pakistani nation by 2008.
• Developing a new product or service.
• Effecting a change in structure, staffing, or style of an organization.
• Developing or acquiring a new or modified information system.

2.11 Operations and Projects: