PROJECT ANALYSIS &
PROJECT MANAGEMENT
Introduction
Project management is concerned with the overall planning and
co-ordination of a project from conception to completion aimed
at meeting the stated requirements and ensuring completion on
time, within cost and to required quality standards.
Project management is normally reserved for focused, non-
repetitive, time-limited activities with some degree of risk and
that are beyond the usual scope of operational activities for
which the organization is responsible.
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Project Analysis
If the preliminary screening suggests that the project is
suitable, a detailed analysis of the project is done. It includes:
1. Marketing Analysis
2. Technical Analysis
3. Financial Analysis
4. Economic Analysis
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Market and Demand Analysis
In most cases, the first step in project analysis is to estimate
the potential size of the market for the product proposed to be
manufactured and get an idea about the market share that is
likely to be captured.
Given the importance of market and demand analysis, it
should be carried out in an orderly and systematic manner.
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The key steps involved in market and demand analysis are:
1. Situational Analysis and Specification of Objectives.
2. Collection of Secondary Information.
3. Conduct of Market Survey.
4. Characterization of the market.
5. Demand forecasting.
6. Market Planning.
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Technical Analysis
Analysis of technical and engineering aspects is done
continually when a project is examined and formulated. Other
types of analyses are closely intertwined with technical
analysis. The various steps included in technical analysis are:
1. Manufacturing Process/ Technology
2. Technical Arrangements
3. Materials and Inputs
4. Product Mix
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1. Plant Capacity
2. Location and site
3. Machineries and equipments
4. Structures and civil works
5. Environmental aspects
6. Project charts and layouts
7. Project implementation and schedule
8. Need for considering alternatives
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Financial Analysis
Financial Analysis discuss the estimates and projections
required for financial appraisal. It includes eight factors as
follows:
1. Cost of Project
2. Means of Financing
3. Estimates of Sales and Production
4. Cost of Production
5. Working Capital Requirements and its financing.
6. Projected Profitability Statements.
7. Projected Cash Flow Statements.
8. Projected Balance Sheets.
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Steps in Project Management
The various steps in a project management are:
1. Project Definition and Scope
2. Technical Design
3. Financing
4. Contracting
5. Implementation
6. Performance Monitoring
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Project Definition and Scope
What is a Project?
"A project is a one-shot, time-limited, goal-directed, major
undertaking, requiring the commitment of varied skills and
resources".
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Four Basic Elements of Project Management
Resources
Time
Cost and
Scope
Each element must be managed effectively. All these elements
are interrelated and must be managed together if the project,
and the project manager, is to be a success.
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Project Management Life Cycle
The process flow of Project management processes is shown
in Figure 7.1. The various elements of project management life
cycle are
a) Need identification
b) Initiation
c) Planning
d) Executing
e) Controlling
f) Closing out
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Technical Design
For a project to be taken up for investment, its proponent must
present a sound technical feasibility study that identifies the
following components:
The proposed new technologies, process modifications,
equipment replacements and other measures included in the
project.
Product/technology/material
supply
chain
available, imported, reliability of supply)
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(e.g.,
locally
Commercial viability of the complete package of measures
(internal rate of return, net present value, cash flow, average
payback).
Any special technical complexities (installation, maintenance,
repair), associated skills required.
Preliminary designs, including schematics, for all major
equipment needed, along with design requirements,
manufacturer's name and contact details, and capital cost
estimate.
Organizational and management plan for implementation,
including timetable, personnel requirements, staff training,
project engineering, and other logistical issues.
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Financing
When considering a new project, it should be remembered that
other departments in the organization would be competing for
capital for their projects.
Internal sources include:
Direct cash provision from company reserves
From revenue budget (if payback is less than one year)
New share capital
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External sources of funds include:
Bank loans
Leasing arrangement
Payment by savings i.e. A deal arranged with equipment
supplier
Energy services contract
Private finance initiative
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Contracting
Since a substantial portion of a project is typically executed through
contracts, the proper management of contracts is critical to the
successful implementation of the project.
The competence and capability of all the contractors must be
ensured. One weak link can affect the timely performance of the
contract.
Proper discipline must be enforced among contractors and suppliers
by insisting that they should develop realistic and detailed resource
and time plans that are matching with the project plan.
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Penalties may be imposed for failure to meet
contractual obligations. Likewise, incentives may be
offered for good performance.
Help should be extended to contractors and suppliers
when they have genuine problems.
Project authorities must retain independence to offload contracts (partially or wholly) to other parties
where delays are anticipated.
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Implementation
The main problems faced by project manager during
implementation are
Poor monitoring of progress,
Not handling risks and
Poor cost management.
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Project Planning Techniques
The three basic project planning techniques are Gantt chart,
CPM and PERT. All monitor progress and costs against
resource budgets.
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Gantt Chart
Gantt chart is now commonly used for scheduling the tasks
and tracking the progress of energy management projects.
Gantt charts are developed using bars to represent each task.
The length of the bar shows how long the task is expected to
take to complete. Duration is easily shown on Gantt charts.
Sequence is not well shown on Gantt Charts
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CPM - Critical Path Method
Complex project require a series of activities, some of which
must be performed sequentially and others that can be
performed in parallel with other activities. This collection of
series and parallel tasks can be modeled as a network. CPM
models the activities and events of a project as a network.
Activities are shown as nodes on the network and events that
signify the beginning or ending of activities are shown as arcs
or lines between the nodes.
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PERT
The Program Evaluation and Review Technique (PERT) is a
network model that allows for randomness in activity
completion times. PERT was developed in the late 1950's for
the U.S. Navy's Polaris project having thousands of
contractors. It has the potential to reduce both the time and
cost required to complete a project.
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The Network Diagram
In a project, an activity is a task that must be performed and an
event is a milestone marking the completion of one or more
activities. Before an activity can begin, all of its predecessor
activities must be completed. Project network models
represent activities and milestones by arcs and nodes.
PERT is typically represented as an activity on arc network, in
which the activities are represented on the lines and milestones
on the nodes.
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