Chapter one

.
Introduction to project
Actually Project means –a one time job that has
 defined starting and ending dates
a clearly specified objective, or scope of work to be performed
a predefined budget

and usually Project means a temporary organization which

disappear once the project has been completed.
In other words project refers to an investment
activity where resources are used to create
capital asset that produce benefits over a long
period of time and has a beginning and an end
with specific objectives.
According to dictionary project means a piece of

work that is carefully planned to achieve a

particular aim.
Projects may be Personal, Industrial, and
In a brief statement, a project is just a proposal to invest money
in certain activities with the expectation of return in the future.
Thus, the following are typical features of a project:
A start and finish..
This shows that every project has a beginning and certain definite
end. It is not like other ordinary course of business activities
which are having an indefinite term of existence – going – concern.
phases in between.
A budget. It is unthinkable to undertake any
project without sufficient cash flows. During the
planning phase, adequate budget allocation is
mandatory for the smooth flow of all project
related activities.
Non – repetitive. All project activities are
 Use of resources. In a project undertaking, resources are quite
necessary for successful accomplishment of its activities. The resources
i.e. material, human, financial may be coordinated from various sources.
A Single Point of Responsibility. All Projects have a well defined
responsibility. In general, the head or manager of the project ultimately
takes the responsibility of the project. Therefore, in the project,
responsibility should be specifically identifiable.
 Team Roles. A project is a team work activity of different professionals.
In a project, team roles and relationships that are subject to change need
to be developed, defined and established (team building)
In general, a project is a specific activity with specific starting point and specific ending point
intended to accomplish a specific objectives and with a pre-determined input resources.
Examples of some projects:
 Developing a new product or service
 Building a bridge, road, railway, or other structure
 Writing a soft ware
 Installing a new manufacturing process
 Publishing a book
 Developing a new marketing plan
 Obtaining an MBA degree
 Planting a garden
 A wedding plan
 Constructing a house
 Establishing a plant or designing a car or new machinery etc;
There are three distinct stages through which development
planning is carried out:
A.National Planning
B.Sectorial Planning
C.Project Planning
A. National Planning: refers to the drawing of a national plan indicating
projection of the economy on a macroeconomic basis.
 It requires the formulation of overall economic and social objectives

(called development strategy) identifying the constraints such as

shortage of investment, foreign exchange or skilled labour, and
maintaining consistent inter relation between the various sectors and
regions of the economy.
Marco economic planning is concerned with the rate of economic

growth, establishing regional balance and priorities and with the

formulation of investment policies and programs, which will achieve the
target set.
The national economy is divided into sectors such as
 agriculture
 manufacturing industries
 service industries
 infrastructure
 social service
B. Sectoral, (Sub-Sectoral) Planning
 Once the national planning is done, planning will be developed on sub-

sectoral basis.
 The analysis of each sector will provide an indication for investment,

employment, export etc.

 Before embarking on an individual project, it is frequently necessary to

possess detailed knowledge of the sector concerned (e.g., chemical,

textile, engineering, and iron, these referred to as sub-sector with
manufacturing sector) especially when the project is fairly large in relation
to the sector.
 Such sectoral planning should provide area where new investment may be

made, and as such, play an essential part in project identification.

 In addition, it provides an important framework in which to analyze new

projects and to assess their ramifications.

C. Project Planning
 Once a sectoral (sub-sectoral) plan has been drawn up, the way is clear
for project planning.
This consists of two states.
A.A pre-feasibility study, which concentrates on the market identification

and on the costing of a project to satisfy the market, and a rough

financial plan and economic analysis.
B.A detailed feasibility study, it will be undertaken when the investor are

known, and the availability of finance will be discussed and will consists
of a very detailed description and analysis of the project.
 Project and program
 Policies are implemented through programs usually overall
lengthy time scale of five to ten years.
 Programs have broadly expressed development objectives.
While projects are the building blocks of programs and are
usually of shorter duration.
 A project is a means by which national, regional local, etc
plans are made operational. This means the plan has to be
elaborated into "package of action".
The package of action can be divided into two broad categories.

a. Program: which is the first step in plan elaboration and

b. Project: the second step in plan elaboration.
 Program, which is a bigger package of action is
composed of a number of projects aiming at attaining one or
more related objectives of plan.
 Project on the other hand achieve goals which lead to the

accomplishment of specific objectives within program.

The following are the basic difference between program and project.
A program is broader in scope than a project.
A program is a domain out of which project can be found.

For example, if we think of extension program under this program we could

identify different projects like irrigation, crop production, Honey production etc.
A program has general objective while projects have a specific

objectives.
For example, if the objective of the extension program is self food efficiency,
the objective of the project could be increasing crop production, milk production,
honey production etc which are more specification than being general.
Project has a specific project area while program doesn't have a

specific program area.

Projects have specific beneficiary groups.

For example, if one establishes a cattle raring project at Somalia

region, that doesn't mean that every Somalia will be willing to
buy your product rather there will be a specific client who will
purchase your product like Yemen etc.
The difference and similarities between project and program can
be summarized in the following table:
 Project Program

Differe  It is specific in  Has got general

nce objectives objectives
 Has specific areal  May not have specific
/geographic unit area
 Has clearly determined  May not have specific
and allocated fund target group
 Has specific life  May not have clear
 Types and classification of projects
 Projects can be categorized according to the type of activity,

location, time, ownership, size and need.

a. According to Type of Activity: Under this category, projects
can be classified as industrial and non-industrial projects.
Industrial projects are set up for the production of some goods.
Non-Industrial projects comprise health care projects,
educational projects, irrigation projects, soil conservation projects,
highway projects etc.
b. According to Location: Location wise,
projects can be categorized as national
and international projects.
 National projects are those set up in the
national boundaries of a country,
 international projects are set up by the
government or private sector across the
globe.
c. According to Completion Time:
d.According to Ownership: Projects under this category can
be grouped into public, private and joint sector projects.
Public sector projects are owned by the Government.
In private sector projects ownership is in the hands of the
project promoters and investors.
Joint sector projects are those in which ownership is shared
by the Government and private entrepreneurs.
.
e. According to Size: Based on size, there may be

three categories of projects- small, medium and

large.
This depends on investment on plant and machinery
requirements and the category as small, medium and
large varied from country to country.
f. According to Need: Based on the need
for the project, projects can be classified as
new balancing, expansion, modernization,
replacement, diversification, backward
integration and forward integration projects.
End!