CHAPTER 1

INTRODUCTION
Projects are the building blocks to meet the enterprise objectives. Project
management is essentially involved in executing the projects. It is recognized as a
management philosophy in the recent past in addition to that of discipline. Project
management has always been central to the existence of industries like
construction, aerospace and defense, where schedule and cost goals are contract
fundamentals.
The new design of maruti zen, concord supersonic jet aircraft, ship
vasundhara, Godrej puff refrigerator, compaque computer, L&T crane steel
rolling mill of the Tatas, New oil base for the ESSAR refinery, new production
line of J.K cement, highway roads of the country’s capital city, new fly over in
metropolitan cites etc have one thing common; indeed they are all purposefully
unique and they are project. The basis logic behind on the these projects are; a.
Investment of resources for a specific objective and b. a cause of irreversible
change
Meaning of a Project:

Project starts from scratch with a definite mission, generates activities involving a variety of

human and non-human resources, all directed towards fulfillment of the mission and stops once

the mission is fulfilled.

According to the Project Management Institute, USA, “a project is a one-set, time-limited,

goal-directed, major undertaking requiring the commitment of varied skills and

resources”.

It also describes a project as “a combination of human and non-human resources pooled

together in a temporary organisation to achieve a specific purpose”. The purpose and the

set of activities which can achieve that purpose distinguish one project from another.
Characteristic Features of a Project:

The characteristic features of a project are as follows:

1. Objectives:

A project has a fixed set of objectives. Once the objectives have been achieved, the project ceases

to exist.

2. Life Span:
A project cannot continue endlessly. It has to come to an end. What represents the end would

normally be spell out in the set of objectives.

3. Single entity:

A project is one entity and is normally entrusted to one responsibility centre while the

participants in the project arc many.

4. Team-work:

A project calls for team-work. The team again is constituted of members belonging to different

disciplines, organisations and even countries.

5. Life-cycle:

A project has a life cycle reflected by growth, maturity and decay. It has naturally a learning

component.

6. Uniqueness:

No two projects are exactly similar even if Die plants are exactly identical or are merely

duplicated. The location, the infra-structure, the agencies and the people make each project

unique.

7. Change:

A project sees many changes throughout its life while some of these changes may not have any

major impact; then- can be some changes which will change the entire character of course of the

project.

8. Successive principle:

What is going to happen during the life cycle of a project is not fully known at any stage. The

details get finalised successively with the passage of time. More is known about a project when it

enters the construction phase than what was known say, during the detailed engineering phase.

9. Made to order:

A project is always made to the order of its customer. The customer stipulates various

requirements and puts constraints within which the project must be executed.

10. Unity in diversity:

A project is a complex set of thousands of varieties. The varieties are in terms of technology,

equipment and materials, machinery and people, work culture and ethics. But they remain

inter-related and unless this is so, they either do not belong to the project or will never allow the

project to be completed.

11. High level of sub-contracting:

A high percentage of the work in a project is done through contractors. The more the complexity

of the project, the more will be the extent of contracting. Normally around 80% of the work in a

project is done through sub-contractors.

12. Risk and uncertainty:

Every project has risk and uncertainty associated with it. The degree of risk and uncertainty will

depend on how a project has passed through its various life-cycle phases. An ill-defined project

will have extremely high degree of risk and uncertainly Risk and uncertainty are not part and

parcel of only R and h projects—there simply cannot be a project without any risk and

uncertainty.

Classification of Project:

There are endless variety of projects.

These projects are classified according to the specific character of the project:

1. Projects of Different Sectors:

The projects can be classified according to the sector to which the project owner belongs:

(i) Projects for the public sector are undertaken by Public Sector Enterprises/Undertakings (PSE

or PSU) which are owned by the government—Central or State—or both. Projects which normally

involve largest volume including funds and cover the largest sector of people—e.g. projects under

Railways, Airlines, Banks, Steel &c. belong to public sector.

The State Government undertakings though comparatively smaller in volume are, nevertheless,

public sector and projects for such organisation, e.g. State Transport Corporation etc., are also

public sector projects. In such projects, the profit-motive plays a secondary role as the primary

cause is to serve the people, create employment etc.

(ii) Projects of private sectors:

The owners of such projects are individuals or company (private or public but not PSU),

partnership firm, where profit-motive against investment plays an important role.

(iii) Projects in the joint sector:

Where the ownership belongs to a partnership between government undertaking and the private

sector.

The recent project planned to develop the minor port at Gopalpur to a major all-season port at

an estimated project cost of Rs. 1,800 crore is envisaged by the government to be launched by

forming a joint venture between the State Government, Mineral and Metal Trading Corporation

(MMTC) and from the private sector TISCO.

In projects under this sector normally the management expertise is from the private sector and

the partner representing the government helps in liaison with various government authorities

including large-scale funding.

2. Industrial and Non-Industrial Projects:

Projects which are undertaken without money-making mission and are primarily with social

objectives e.g. projects for health care, public education, irrigation etc. These are classified as

non-industrial projects mainly undertaken by the government.

Most of the other projects are classified as industrial projects belonging to organisations with

commercial objectives.

An industrial organisation can stand on its own for longer period when the economy generated

by it can sustain the organisation. Projects belonging to business organisation are undertaken to

ensure generation of wealth (during the second part of the project, as mentioned earlier) and are

classified as industrial projects.

3. Projects Belonging to Core Sector:

There are complex mega-projects undertaken by the government which, in turn, help to generate

commercial activities and, also, many other industrial projects. These are power projects, port

facilities, highways, mining, steel, etc.

4. Need-Based Projects:
Project grows out of needs or opportunities. Accordingly, there are different types of needs

leading to different types of projects. Now we deal with the different considerations for projects

under different sectors.

Introductory Observations of Project Organisation:

Traditional organisational structures are unsuitable for undertaking big projects of a technical

nature, under the present-day volatile and turbulent external environmental conditions.

Hence, the need for a project organisational structure.

Project Organisation Defined:

Project organisation might be defined as follows:

A project organisation is one, in which a project structure is created as a separate unit or

division within a permanent functional structure; drawing specialists and workers from various

functional departments who work under the overall leadership, control and co-ordination of a

project manager to complete projects of a technical and costly nature.

George R. Terry defines a project organisation as follows:

“A project organisation is a preferred means whenever a well defined project must be dealt with

or the task is bigger than anything, the organisation is accustomed to.”

Functioning of Project Organization:

Under a project organisation, a team of specialists and workers is drawn from various functional

areas, out of the permanent functional structure of the organisation – to work on a project. The

project manager may taker assistance from outside sources also.

The project team functions under the overall control and leadership of the project manager.

During the continuance of the project, functional managers renounce their authority over

subordinates (comprised in the project team) in favour of the project manager.

Point of comment:

When the project completion is over; the project team is disbanded and team personnel go back

to their respective functional department. In fact, a project organisational system is a permanent

feature with many functional organisations. As such, after completion of one project, the old

project team members may be assigned roles towards softie new project.

Conditions Requiring a Project Organization:

Conditions requiring the creation of a project organisation are as follows:

(i) Project is of a technical nature, requiring utmost precision and accuracy e.g. ship-building,

designing and launching of satellites, aircraft manufacture etc.

(ii) Project completion requires huge cost.

(iii) Time factor is a critical factor; requiring project-completion within a limited prescribed time.

Any delays in completion of project within time may tell upon the reputation of the organisation.

Chart of Project Organization:

The following chart depicts a typical project organisational structure:

The chart illustrates the permanent functional structure of the organisation, consisting of

production, finance, marketing, engineering and research departments. There are two project

managers for project I and II. Each project manager has a project team consisting of personnel

drawn from various functional departments; and working under the leadership and control of

their project managers.