W E L C O M E

Project analysis
and evaluation
BY
ATAKELT HAILU ,
MBA,[Link] & Ph.D.
DEPT. OF MANAGEMEN
 Chapter One

Chapter Outline:
1. Overview of project analysis and evaluation
1.1 Concept of a project
1.2 Project Parameters
1.3 Characteristics of a project
1.4 Classification of project
1.5 Project analysis
1.5 Project evaluation
1.6 Project management
1.7 Project success /failure
 1.1 Definition of Project
Project is defined as an organized program of pre determined group of
activities that are non-routine in nature and that must be completed
using the available resources within the given time limit.
 Project involves a set of activities to be performed to accomplish its
objectives.
 Another aspect of project is the non-routine nature of activities.
 A project consumes resources i,e materials, human, finance/money and
time are required to complete the project
 Time limit-project typically has a distinct mission that it is designed to
achieve and a clear termination point is the achievement of the
mission”.
• It has starting and end time.
• Successful project achieve its objective within budget and time
 Definition ……..
 It is a temporary endeavour undertaken to create a unique product or
service that has:
 Specific objectives to be completed within a certain specification
 Defined start & end dates
• Temporary means that every project has a definite end.
 Funding limits and consumes resources
 Unique means that the product or service is different in some
distinguishing way from all similar products or services.
• It is different from other projects with regarded to the
financial requirements, skill requirements, users, managers,
and technology requirements. Etc
 Comprehensive definition:
• Project is a temporary endeavor involving a connected sequence of activities and a range
of resources, which is designed to achieve a specific and unique outcome, which operates
within time, scope, cost and quality constraints and which is often used to introduce
change (Lake, 1997).
• Key concepts:
• Purpose-the basic reason for the existence of a project- to solve a problem, address
a need or take the advantage of opportunity.
• Temporary: means that a project is something that has a specific start date and a
specific end date.
• Sequences of Activities: the works and the steps we perform and the methods and
knowledge we use to achieve the project objective.
• Resources: A project utilizes a variety of resources [human, financial, material,
information, etc] to carry out the activities or tasks.
• Unique Outcome: A project brings about a unique product or service - something
that has not existed in the organization here-to-fore.
• Scope- the extent of the problem or opportunity that the project needs to address.
• Time: any project should be time bounded-it has a start and end time
• Cost: activities consume human, financial and material resources.
• Quality: the project needs to produce quality products to maximize the satisfaction
of the users.
• Introduce change: A project is often used as an instrument for change - change for
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the betterment of the society.
Example of projects
• In Ethiopia, we have been investing large amount of money in projects related to
industry, minerals, power, transportation, irrigation, education etc. with a view to
improve the socio-economic conditions of the people.
1. Governmental projects –Recent Trends
 Roads Projects
• Example. Road to connect Addis to Adama
 Hydropower and Wind energy Projects
 The Grand Ethiopian Renaissance Dam Project
 Gilgel Gibe I, II, and III, Tekeze, Tana Beles, Fincha, etc.
• Wind energy (around Mekele & Adama)
 Buildings projects
 Housing projects at federal & regional state level :-Build low cost/condominium
houses
 building universities and Many health centers
• Water Supply and Irrigation projects
• Railway project
 Addis Ababa city rail ways
2. organizational projects

New business establishment,

Expansion of existing business,

Launching new product,
 A company develops a driverless car
 Cont…
• A major misconception about a project is relating it to only
construction or creation of such physical facilities as
buildings, roads and dams.
• However, project may involve intangible things such as:-
• Creation of awareness (e.g. about HIV/AIDS),
• eradication of diseases (e.g. polio vaccination),
• combating harmful practices (e.g. genital mutilation) and
• capacity building (e.g. training to enhance service
delivery capabilities of public sector employees).
• Thus, projects may range from physical or technical
(construction of physical facilities) to mixed (involving both
physical and nonphysical things) to nonphysical (dealing
purely with behavioral aspects of an organization).
A program is a group of related projects designed to accomplish a common goal over an
extended period of time.

COUNSELLING FINANCIAL
NEW SUPPORT &
VACCINE/MEDI YOUTH
CINE/DRUG EMPLOYMENT
SUPPLY
PUBLIC GYMNASTIC &
AWARENESS SPORTS
AND ADULT
EDUCATION

HIV/AIDS
MITIGATION
PROGRAM
A group of related projects managed in a coordinated fashion to satisfy the objectives of a program
1
 HOUSE
HOLD/FAMILY NATURAL
MODERN AND RESOURCE
PLANNING
SUSTAINABLE CONSERVATION
FARMING
ROAD
CONSTRUCTION & RURAL
REHABILITATION ELECTRIFICATION

RURAL
DEVELOPMENT
PROGRAM
07/25/2025 1
 ●
Some people use the term ‘project’ and ‘program’
interchangeably. However, there is a quite difference
between the two.
●
Program in general is a group of related projects that are
managed in a coordinated ways to achieve certain/group of
objectives while project is a group of activities to be
performed with in limited resource to yield specific
objective, in a specific time and in a specific locality
Project Program
Narrow in scope Wide in scope; since it involve many related
projects than single project
Differences

Specific and detail Comprehensive and general

project is time bounded program is not necessarily time
bound
Possible to calculate the costs Difficult to calculate costs and returns
and returns
require limited budget :- large budget
Beneficiaries: specific not specific
Similarities

• both Have purpose/ objectives

• both consume resource/Require input (financial, HR, material) 10
• both Generate output (goods and/or services)
 1.2 Classification of project
• Projects can be classified based on several criteria.
• It can be classified based on the following bases.
1. Based on ownership
2. Based on purpose
3. Based on locality
4. Based on resource use
5. Time horizon
1. Based on ownership
A. Private sector projects-mostly projects undertaken by business
enterprise.
• It is undertaken by investors with the main objective of earning profit
B. Public sector- project undertaken by the national and local
government body with the objective of improving the livelihood of
citizens without expecting any return from citizens consuming the
goods and services of these projects.
C. NGO’s- developmental projects are most often undertaken by non-
government and not for profit organizations.
 Types…Count.
2. Based on purpose
A. New projects: New investment is designed to establish
a new productive process independent of previous lines
of production.
• They often include a new organization financially independent
of existing organization.
B. Expansion projects: they involve repeating or
expanding an existing activities with same output,
technology and organization.
C. Updating projects: they involve replacing or changing
some element in an existing activity without a major
change of output.
• They involve some change in technology but within the
context of an existing through possibly reformulated
organization.
 Types..Continued…
3. Based on locality
A. Regional: projects undertaken in particular region and
benefit only that region.
• They are under the control of regional government.
B. National: projects undertaken by the federal
government and all or may stat/regions will get benefits
from them.
• E.g. constructing universities, dams for electric power etc.
C. International: projects that involve many countries.
• E.g. developmental projects undertaken by world bank.
 Types…Continued…
4. Based on resource use:
A. capital intensive projects: projects which largely use machinery in
the manufacturing process.
• It is highly depend on physical facilities and technology (e.g.
chemical, beer factory and steel industries)
B. Labor intensive projects: project which largely use human labor in
the production of output. E.g.
• It is highly depend on human capital (E.g. Salt production ,
service and agricultural projects in developing countries)
C. Energy intensive projects: project which consume large amount of
energy(e.g. electricity power) in the manufacturing process.
• E.g. Marble factory
 Types..contd
5. Time horizon – this is based on the time period
the project takes to become operational.
– short-term projects cover less than 5-year period of
time;
– medium-term projects cover between 5 to 10 years;
and
– long-term projects cover above 10-year period of time.
 1.3 CHARACTERISTICS OF PROJECT
1. Objectives :
 A project has a set of objectives or a mission.
 Once the objectives are achieved the project is treated as completed.
2. Life span:
 the life span representing the start and end of a project are
specified in the objectives.

It has defined start and end dates so that is why it is temporary
3. Life cycle :
 A project has a life cycle. The life cycle consists of five stages i.e.
conception stage, definition stage, planning & organizing stage,
implementation stage and commissioning stage.
 Cont……
3. Uniqueness :
●
Every project is unique and no two projects are similar.
– The input and output of one project is different from other.
●
A project is considered to be a unique endeavour
in various terms including its size, complexity,
duration, timing, location, stakeholders, design,
objective, financial requirements, skill
requirements, users, managers, technology
requirements and other several variables.
4. Consume human and nonhuman resources (i.e., money, people,
equipment)
it Involves multiple resources, both human and non
human

Resources
· Capital
· Materials
Products
· Equipment Integrated
Inputs · Facilities Processes Services Outputs
· Information Profits
· Personnel
 Count.
5. Risk / uncertainty :
 Risk/ uncertainty go hand in hand with project.
 There is risk /uncertainly associated with a given project.
 There is no risk-free project
 Risks are things that could cause the project to:
 Fail
 Be delayed
 Require additional budget
 Require additional personnel
6. Control mechanism:
 All projects will have pre designed control mechanism to ensure
completion of the project within time schedule , within
estimated cost and achieving the project specifications with
desired level of quality and reliability.
 Cont.. features of a project
7. has a long-term effect: impact extends far into the future.
• Present outlays generate benefits in the future.
8. irreversibility: a project once implemented may not be
reversed. In other words, the time and cost spent on an ill-
conceived project may not be recovered at all or without a
substantial loss.
9. substantial outlay: a project often demands a substantial
outlay implying that any fault in its design or
implementation leads to a huge loss.
 1.4 Project Parameters/constraints

• There are five parameters that constrain the operation of every

project:
• Scope
• Quality
• Cost
• Time
• Resources
• These constraints are interdependent set implying that a change in one
can cause a change in another to restore the equilibrium of the project.
Scope
– It is a statement that defines the boundaries of the project.
– It tells not only what will be done to produce the project’s end
result but also what will not be done.
 Continued…
Quality
– Two types of quality are part of every project.
– The first is product quality.
• This refers to the quality of the deliverable from the project.
– The second type of quality is process quality, which is
the quality of the project management process itself.
• The focus is on how well the project management
process works and how can it be improved.
Cost
– The money spend for doing the project is another
variable that defines the project.
– Cost is a major consideration throughout the project
management cycle.
 Continued…
Time
• The time constraint refers to the amount of time available to
complete a project.
• The objective for the project manager is to use the future time
allotted to the project in the most effective and productive ways.
Resources
• Resources are assets, such as people, equipment, physical facilities,
or inventory that have limited availabilities, can be scheduled, or
can be leased from an outside party.
• Some are fixed; others are variable only in the long term.
 Project life Cycle (discuss in ch 2)
It is the stages through which the project passes from

inception to its completion.

A cycle that shows the development of an investment project

from the stage of the initial idea until the project/plant is in

operation
 Project
Project Analysis
analysis refers to analysing a project from various
perspectives so as to determine its viability and sustainability.
 Project analysis consists of :
 Market/demand analysis: -potential market and market share
 Technical analysis :-technical viability -availability
/affordability/ appropriateness of technology, experts and
material input, suitability of production process, technology,
location,
 Financial analysis:-estimation of project cost, revenue and
funds requirement(risk and return )
 Economic Analysis:- benefit and cost- overall economic
benefits of a proposed project exceed its costs
 Environmental impact analysis (Environmental and social
cost benefit analysis)
 Risk Analysis: source of risk with its consequence will be
analysed
 Project Evaluation
• On-going and final assessment of the success of the project
against original objectives, to learn lessons to help improve
future projects.
• compare actual progress with the plans
• judge whether the decisions and actions taken were reasonable
and useful
• This is a process of determining systematically and objectively
the relevance, efficiency, effectiveness and impact of the project
in light of its objectives.
 Project evaluation
• Evaluation is a periodic assessment of an ongoing or
completed project - its design, implementation and
results.
• On-going and final assessment of the success of the
project against original objectives, to learn lessons to
help improve future projects.
– judge whether the decisions and actions taken were
reasonable and useful
 This is a process of determining systematically and
objectively the relevance, efficiency, effectiveness
and impact of the project in light of its objectives.
• Evaluation can be categorized under different headings
A) By timing (when to evaluate)
– Formative Evaluation
• Done during project Development stages
– (ex-ante evaluation(Pre-implementation Evaluation), project feasibility and appraisals,
– (Process Evaluation (ongoing evaluation(During project implementation),
– Terminal/Summative Evaluation
• At the end of or immediately after the completion of the project
• done at the completion of project implementation to assess how well the project
achieved its intended objectives
– Ex-post Project Evaluation/Final Post Evaluation (impact evaluation )- are
conducted some time after the completion of the project implementation
to assess long-term impact and sustainability
B) By Agency. Who is evaluating?
• Internal Evaluation
– It is a progress / impact Monitoring by the management it self
• External Evaluation
– Unbiased, objective detailed assessment by an outsider
 Project Management
• Project management is the process of planning, controlling
and directing a project from its inception to its completion,
in a given time, at given cost, and for a given purpose.

• Project management is the application of knowledge,

skills, tools and techniques to project activities in order to
meet project requirements [PMI, 2008].

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 1.8 Reasons for Project Failure
• These reasons seem to blame the project manager:
– Poor planning
– Insufficient risk management
– Insufficient quality assurance
– Inadequate support
– Reluctance to follow up the project
implementation
• Who is really responsible for these problems?
– The project manager
Project Success
 Project success is defined as the completion of an
activity within the constraints of time, cost, and
performance/quality.
 Therefore, Successful project management require
completion of the project :
 Within time-doing it quickly or on schedule
 Within cost-doing it cheaply or on budget
 At the desired performance/technology level
 project met scope, time, and cost goals
 And utilizing the assigned resources effectively and
efficiently
 Accepted by the customer/stakeholders(The project
satisfied the customer/sponsor)
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End of chapter one

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