Topic 2 - Project Identification, Formulation and Implementation

PROJECT IDENTIFICATION, FORMULATION AND IMPLEMENTATION

Success or Failure Factors – Initial Project Definition

When looking at the lifecycle of a project, students will note that the project always start with the owners or customer and always ends with the owner of customer. In between this cycle are the different levels of programs and activities a project goes through until its completion.

Lock (2007) noted that the commencement of any project will depend on the business case presented and it is during this time of the project lifecycle where the foundation for success or failure is established. Any of the following shortcomings during this early period can condemn a project to almost certain failure:

• The project scope (the extent of work required) is not clearly stated and understood.
• The technical requirements are vague.
• Estimates of cost, timescale or benefits are too optimistic.
• Risk assessment is incomplete or flawed.
• The intended project strategy is inappropriate.
• Insufficient regard is paid to cash flows and the provision of funds.
• The interests and concerns of stakeholders are not taken into account.
• Undue regard is paid to the motivation and behaviour of people who will execute the project.
• Insufficient thought is given to how all the managers and workpeople affected by the project will be motivated to adapt to the changes expected of them.
• Approval to proceed with the project is given for political, personal or intuitive reasons without due consideration to the business plan.

 

GOVERNMENT - THE REGULATOR

The Government plays important role in the development of its economy and the welfare of its citizens.

Participator – In almost all countries there are commercial activities undertaken by government especially in areas related to transport, infrastructure, defence, health, education and public welfare.

Facilitator – Government can operate as facilitator to overseas business (providing a range of concessions, tax holidays, etc.)

Regulator – Regulatory activities are often tied in with government planning activities

As the Regulator, the Government lays the framework for development and resource allocation. In Papua New Guinea, the agency of government such as the national Department of National Planning and the Department of Treasury are responsible for these areas. They set the planning framework and allocate resources through the National Budget to ensure development takes place. The implementing national departments such as the Department of Works and other departments plan their activities within these framework ensuring developmental projects are implemented.

What About Profit Oriented Organization?

Entrepreneurs and firms searching for profitable project ventures have to look at the overall development and planning framework of the government and plan their projects accordingly.

Example: In 2014, the Papua New Guinea government announced that it will make funds available to the Banks where it citizens can borrow and build homes under the home ownership scheme. Entrepreneurs and firms may look at this announcement as an opportunity to develop housing estates thus a housing project will be planned, designed and implemented and marketed to Papua New Guineans who want to own homes.

When governments’ wants to see development taking place in underdevelop areas, they normally provide some form of incentives such as financial or non-financial incentives. Such incentives can be an advantage to entrepreneurs and firms who may want to benefit from these incentives offered by the government.

Fiscal Policy

The government uses its fiscal policy to influence economic activities of a country through the medium of a budget. In Papua New Guinea, the government does that through the approval of the National Budget annually by the National Parliament.

Monetary Policy

Another policy that the government uses to have some control on inflation, foreign exchange and the regulation and quantity of money is the monetary policy. In most countries, the Monetary Policy is being administered by the Reserve Bank or the Central Bank. In Papua New Guinea, the Bank of Papua New Guinea is the entity that monitors and administers the monetary policy.

Students who want to know more about the Fiscal and Monetary policy are encouraged to read economic text books or other text books.

Other Regulatory Measures

Apart from Fiscal and Monetary policies, the government uses other control measures to direct the pattern of resource allocation. Such measures may come in the forms of;

• Industrial licences
• Export Promotions and Import Controls
• Foreign Exchange and other foreign collaboration
• Control on monopolies and trade measures
• Pricing control and distribution of commodities

PROJECT IDENTIFICATION

You may have difficulties in identifying new worthwhile projects because the process involves careful study from many different angles. As students you will learn and study some of the sources that can enable you to identify worthwhile projects. Let us look at some of these sources as stated by K.Nagarajan (2007).

Performances of Existing Industries

Studying the health of a particular industry has to be taken with careful considerations and analysis. I mentioned careful analysis because the health of a particular industry may be happening at a particular period of the industry business life cycle. For example; you may be looking at an industry that may be performing well however, this particular industry may have crossed its saturation stage and moving into the declining stage of its business life cycle. On the other end there may be an industry that is not doing so well financially however, it may yet to reach its potential to grow later in its business life cycle.

Availability of Raw Materials

Availability of raw materials may give rise to the idea for planning a project. Let us look at some example. If there are abundant lime stone in a particular location without road infrastructure, then there is this possibility of setting up a factory to process this limestone. However, to get into this particular location there need to be road access. Here you will note the possibility of planning two separate projects. Let us look at another example; if in a particular region, farmers are growing lots of fruits but are having difficulties finding markets for their produces, then there is a possibility for a food processing factory.

Availability of Skilled Labour

Some firms and entrepreneurs looked at the availability of skilled labour in a particular market and then they venture into certain projects that can utilize the skilled workforce.

Import and Export Statistics

Imports and exports statistics may provide vital information on business areas that firms or investors can tap into.

Price Trend

Prices may give an indication about the demand and supply of a particular product or service. Existing gaps following careful analysis may conceive an idea for a possible project.

Data from Various Sources

Various publications from governments, banks and other service providers may provide useful information that can indicate possible future venture.

Research Laboratories

Research laboratories may identify the need for new products, processes or systems. This can be exploited to come up with new venture.

Consumption Abroad

Increase in demand and consumption abroad may indicate the need to build a manufacturing plant or factory abroad.

Identifying Unfulfilled Psychological Needs

Consumers’ psychological needs are not met thus allowing investors to come up with a product that may meet these needs.

Plan Outlays and Government Guidelines

• Government development policies are useful pointers to investors for investment opportunities.
• Analysis of Economic and Social Trends.
• Trends and changes in any economy may be useful to investors.
• Possibility of Reviving Sick Units
• There is the possibility of reviving a unit within an organization that is dying.

PROJECT PREPARATION (OR PROJECT FORMULATION)

After having identified a worthwhile project, there are other factors that need to be considered. The promoter of a particular project has to ensure that the project is viable and they would be getting a good return on their investment.

Nagarajan (2007) stated four stages in Project Management and these are as follows;

• Pre-feasibility Study.
• A prefeasibility has the following objectives.
• Functional Studies or Support Studies.
• Feasibility Study.
• Detailed project analysis 

TAX INCENTIVES AND PROJECT INVESTMENT DECISIONS

Tax has in recent years become an effective weapon in hands of the state to induce and direct investment. Other incentives are done through the following;

• Fiscal Policies
• Monetary policies
• Commercial Policies 

Fiscal Policies

• Depreciation
• Tax Holidays
• Investment Allowance
• Amortization of expenses 

Monetary Policies

• Interest Rates concession
• Repayment moratorium
• Risk Capital
• Security margin
• Refinancing facilities 

Commercial Policies

• Subsidies
• Sales Tax incentives etc.

ZERO BASED PROJECT FORMULATION

Entrepreneurs visualize a project from a particular bench mark, example starting from zero in order not to make mistakes.

Project promoters often ask the question; Is this necessary?

Why to Invest in Fixed assets at All?

Is it necessary? – Should be applicable to all components of the project cost as a whole. Is it necessary or worthwhile to investing in fixed assets? When such questions are asked, project investors can look at other alternatives.

Consideration of Investment on Components of Project Cost

Investment in building is a major component of the project cost in many projects. Is it necessary to construct a building or is it cost effective to lease?

PROJECT OBJECTIVES

The objectives of any project are as follows;

• To complete the project within the allotted budget or funds
• To complete the project within the schedule time limit.
• To execute the project in such a way that the project meets the quality standards.
• To ensure the project is completed to the satisfaction of the end user

Social Objectives

Project objectives are to be kept in the minds of all members of the Project team throughout the period of project implementation and should be the guiding force for the team. If an Health centre is the project, who are the end users?

ESTABLISHING THE PROJECT

The processes involved in establishing a project are as follows;

• Initiating
• Planning
• Organizing
• Executing
• Directing and Controlling

All processes mentioned are applicable for all types of management activities irrespective of whether the management activity relates to project management or management of routine on-going operations.

Initiating

This is the starting phase and it involves identification of projects, generation and development of project ideas, formulating a project proposal, appraisal of the chosen project proposal and getting the organization’s commitment and authorization to commence work on the project.

Planning

Planning is the process of deciding in advance about the future course of actions to be taken. In project environment, planning consists of defining all the works required to be carried out so that all the project participants will understand their role in the project team and will able to carry out the work assigned to them.

Project planning involves the following;

• Defining the scope of the project in terms of the product/services to be delivered by the project.
• Forecasting and estimating the resources (man, materials, money, machines etc.) required for the project.
• Breaking down the project into manageable activities and arriving at the logical sequences between the different activities. The logical sequences between activities is arrived at starting from the terminal activity and working backwards towards the initial activity.
• Organizational Structure appropriate for the implementation of the project.
• Tentative project completion time.
• Scheduling the activities in such a way that the project is completed within the least possible time (CPM/PERT) Details topic 8.
• Detail Cost estimates for all activities.
• Determining the required resources.
• Contingency plans. 

Organizing

 

Organizing is the process of defining and analysing the activities of the enterprise, grouping the activities into distinct areas and establishing the authority-responsibility relationships.

Arranging financial resources – This can be arranged in such a way that financial resources is adequately provided to the project on a timely basis.

Building Project Organization – To facilitate execution of projects, responsibility must be entrusted to a project manager, who will be responsible for coordinating, directing and controlling the implementation of the project. 

Team Building – Project personnel can be drafted from within the organisation or it can be entrusted to contractors depending on the nature of the project.

Tying up material resources, service providers, contractors – The choices of resources is done by the Project Manager and relevant authority. These resources are defined in clear terms and documented for circulations to the project executives.

Dissemination of information – Effective communication of information among the members of the project executives and other stakeholders is vital for the successful execution of a project.

Executing

Executing is the process of carrying out the project activities as per the plans. Since projects are dynamic in nature, flexibility is essential in execution of projects so that the overall objectives of the projects are achieved.

Directing and Controlling

Directing is the process of guiding the subordinates towards achieving the organizational goals. It involves issuing orders, directives, instructions and commands. Controlling is the process of comparing the actual performance of the project with the planned performances.

Closing

Project are temporary endeavours, hence they have a beginning and an end. A project comes to an end when the execution is completed and the project objectives are fulfilled.

 ORGANISING HUMAN RESOURCES

A project can be successfully managed only if the project manager and his members are totally dedicated to the successful completion of the project. Managing a project contains different requirements like project planning, project direction, project execution, project control, project evaluation, project performance reporting etc. The project manager, the personnel of the project office, functional managers and staff must all work together as a team for the successful execution of the projects. The project manager should be a high-calibre person, having the following;

• Ability to evaluate risks and uncertainty

• Possess qualities of honesty and integrity
• Communication skills
• Analytical Skills
• Decision making capability
• Leadership quality
• Good interpersonal skills
• Good motivational skill etc 

Selection of Project Manager

Selection of project personals is very crucial for the success of a project. The task of identifying the right person for the post of project manager get more difficult in view of the reason that the selection is to be done on the basis of personal characteristics rather than on the basis of job descriptions. Project Managers can be selected from within an organization or from outside. Selecting a project from within an organization has certain advantages;

• Personality and character of the person will be known and it will be easier to decide.
• Leadership qualities, commitment to work, honesty, sincerity and other quality factors are known whereby easier to appoint a person.
• Internal candidates know the rules and policies of the organization and will be able to adapt well to the role of project manager.

Identification of Staff requirements for the project and their selection;

Project activities are listed down and personals needed are listed beside these activities. Once activities are made together with personal requirement, then job descriptions are prepared. Recruitment and selections takes place thereafter.

The successful implementation of a project depends upon the efficiency and effectiveness with which the project team members perform the tasks assigned to them.

Project Office

Project team is a combination of personnel attached to the project office and field-level employees attached to the project. Some of the responsibilities of personnel for project office are as follows;

• Collate project related data and information for dissemination across project team members.
• Assist the project manager and top management by providing project related information periodically.
• Monitoring the progress of the project and controlling time, cost and performance quality parameters.
• Procurements and awarding of contracts etc
• Creations of proper documentation of work carried out and executed
• To ensure authorization is in place for work etc.

Selection of Team Members

Selection can be done within or outside of the organization. Some people within an organization may refuse to work for a project within an organization for the following reasons;

• Person engaged may resist transferring to project site in another location
• Fear that once the project is completed he or she may be without a job
• Refusal to work under dual authority
• May not enjoy the full delegation authority

Team Building

A team is a collection of individuals who work towards a common goal. A project team consists of all the individuals who contribute towards the success of the project. Project leaders should have the required skills to build an effective team.

Students need to know that in a team, you are dealing with people with diverse qualification and experiences and project leader should be a person a person with good team-building skills.

Tips for Building a Successful Team

• Selecting people with the required skills and talents
• Build and maintain good Relationship
• Cordial Interpersonal Relationship
• Sharing of power and responsibility

Motivating the Project Team Members

• Job satisfaction and sense of achievement
• Training for team
• Avenues to learn more
• A good working environment

De-Motivators

• Jobs impossible to perform
• Jobs easy to perform
• Job that is routine
• Restriction on freedom to act
• Negative criticism
• Lack of recognition for good work done
• Lack of support and guidance
• Poor physical working condition
• Unsympathetic approach by managers
• Bad pay structure
• Poor and ineffective communication system

Characteristics of Good Team

• Atmosphere is pleasing, comfortable and informal
• Members are committed to task
• Members are receptive to each other
• Freedom for expression of views
• Constructive criticism acceptable
• Team leader leads by example
• Difficult situation is managed constructively

Skills Required of a Project Manager

• Leadership Skills
• Team Building Skills
• Conflict Resolution Skills
• Technical Skills
• Managerial Skills

Duties and Responsibilities of Project Manager

• To plan for all project tasks
• To plan for the allocation of resources for all project activities
• To ensure that the project activities are realistically schedule
• To ensure resources for project activities are readily available
• To motivate and direct
• To monitor project continually
• To identify any deviation between actual and projections
• To maintain effective communication
• To keep watch over any possible changes
• To maintain good liaison with project members of functional departments
• To prepare progressive reports
• To participate in contract negotiation
• To make decision as and when warranted

ORGANISING SYSTEMS AND PROCEDURES FOR IMPLEMENTATION

For realizing the objectives of the project, the execution should be done as planned and this can be better achieved if proper system and procedures are devised. Authority and responsibility should be addressed properly;

• Who can modify/change the project objectives?
• Who is responsible for the procurement of project resources?
• Who has the authority to change the project schedule and to change the activity durations?
• Who has the authority to decide upon substitutes of resources when resources are limited?
• Who has the authority to give orders for premature termination of projects?

Standards and Schedules

Before the project team members go for the execution of the project activities, necessary standards and schedules are to be prepared and communicated to them. All activities of the project should be well documented. Example of such documents are listed below;

	Recipients of Documents
	General Manager	Works Engineer	Civil Contractor	Product Manager	Legal Manager
Engineering Specification
Project Schedules
Electrical Line Drawing
Process Flow Chart

 

• Engineering Specification
• Project Schedules
• Layouts of plants and machinery
• Process flow charts
• Electrical line diagrams
• Process design
• Safety requirements and procedures
• Statutory requirements
• Detailed drawing structures
• Machinery foundation drawing/specification etc.

Activity List

Project Name:_____________________

Project Code:______________________

Activity Code	Activity Name	Schedules		Resources Estimates		Code No. Work Group

PROJECT DIRECTION

Nagarajan (2008) Directing refers to guiding people as to what to do and ensuring that they do their work to the best of their ability. Directing may involve the following;

• Assignment of jobs to individuals
• Explaining procedures and processes
• Giving guidance and correcting errors

The project organizational structure can provide a project manager with official authority and this can lead to clear directions with no confusion as to who should give directions. A project manager by virtue of the formal authority under the project organizational structure is able to direct his team.

To have a project get completed on time, Project Manager should give attention to the following aspects

• Top priority should be given to the completion of critical activities to avoid delays. A delay in one activity may cause delay to other activities
• Project Manager should carefully monitor non-critical activities that these activities do not consume expensive resources
• Monitor the trade-off between performances and costs
• Due to the dynamic nature of projects, project manager should keep watch on warning signals in any changes that is taking place and act upon it promptly.
• Directions should emanates from Project Managers office and not from someone outside the organizational structure.

PROJECT COORDINATION

Nagarajan (2008) Coordination is the process by which the efforts of the members of a team are synchronized is such a way that the desired goals are achieved easily. To coordinate means to unite all the activities. Coordinating activities of a project is highly complex in nature and the success of a project lies in proper coordination.

Students must remember that there are several components of a project and different department or agencies may be working on different activities. If coordination is not done properly there maybe wastages of resources and delays.

The first thing, top management should do for proper coordination of project activities is to appoint the project manager at the earliest, identify the project team early and assign them with clearly defined responsibilities.

Some of the activities that may be coordinated when managing a project are;

• Tying up of men and materials and making resources available at the right point of time
• Tying up of contractors
• Engagement of consultants
• Receipt and storage of materials, equipment and release of materials etc.

For coordination to be effective there need to be a clear communication structure and there should be periodical meetings to sort out problems and other issues.

Coordination also require good rapport and understanding with his project team.

Project Control

Control means verifying that the project progresses as per the plan and if there are any variation it is managed. in managing a project there are three aspects to be controlled;

• The Cost
• The Time
• The quality and technical performance

Students need to remember that control plans should be formulated well in advance and communicated to departments for implementation and corrective measures.

Control System

Control systems are designed to monitor three major factors;

• Cost
• Time
• Quality parameters

Project control system need to be reliable and be able to monitor the complexity and nature of the project.

Requirements of a Good Control System

• It must be easy to understand by those who are using it
• It must be easy to extract data/information by those who use the system
• It must be able to report ant deviation
• It must be designed to meet project control system requirements
• It can be seen and used without difficulties

We will look further into some of the issues mentioned as we progress further into the study of project appraisal and management


Sources:
Project Management 3rd Edition; Nagarajan (2008) New Age
Project Management 9th Edition Lock (2007) Gower
HBR Guide to Project Management (2013)