PROJECT ORIGINATION AND IDENTIFICATION
STRUCTURE OF THE LESSON
1.1 INTRODUCTION
1.2 PROJECT MEANING AND DEFINITION
1.3 WHAT A PROJECT IS NOT
1.4 NEED OF THE PROJECT ACTIVITY
1.5 PROJECT OBJECTIVES
1.6 FEATURES OF THE PROJECT
ACTIVITY 1
1.7 PROJECT LIFE CYCLE
ACTIVITY 2
1.8 PROJECT IDENTIFICATION
1.9 PROJECT ORIGINATION
1.9.1 SCOUTING FOR PROJECT IDEAS
ACTIVITY 3
1.9.2 OTHER SOURCES OF PROJECT IDEAS
1.10
MODEL QUESTIONS
1.1 INTRODUCTION
To become globally competitive, Indian industry has to strive hard to induct new technology and
focus on producing cost effective, best quality, energy efficient and environment-friendly
products. As India aspires to emerge as one of the top five economies of the world within the
next two decades, there is impertinent need to leverage new technology for the innovative and
sustainable products and services. India can become global economic power, but that all depend
upon how effectively and rapidly Indian industries can compete themselves into the world-class
competitors. For making this dream come true, the need of the hour for Indian industries is to
take-up more and more new projects and complete them within the given cost and time
constraints and expected quality standards. Because of this great need, the role of project
planning has assumed greater significance. Better project planning results in profitability,
efficiency and productivity of an organization.
1.2 PROJECT MEANING AND DEFINITION
A project is a temporary venture to accomplish a need or desire. The need can be economic,
social, political, philanthropic, and environmental to name a few. Time and objective element are
central to any project that is a set of activities cannot be called as a project unless the time
element is missing out in the constraint. Objectives help in defining the project in a detailed
manner. Moreover, project is a set of activities which are interrelated to each other and though
these are independent activities, but they have precedence relationship between them. The key
concept of a project is that it is a one-time occurrence, an occurrence that will not be repeated
daily, weekly or monthly in converting organizational resources into goods or services.
Construction of a house, establishing a power plant, municipal construction of a new tennis court
at a part and initial production of a new product are all projects. Each one is a one-shot set of
activities, each has definite beginning and ending points and each has a series of activities with
precedence relationships between them.
Various scholars, practitioners and management scientists have dealt with the concept of 'project'
in their own way. According to F. L. Harrison, “A project can be defined as a non-routine, nonrepetitive, one-off undertaking, normally with discrete time, financial and technical
performance goals."
In the words of Little and Mirrlees, "We mean by a project any scheme, or part of a scheme, for
investing resources which can reasonably be analyzed and evaluated as an independent unit.”
According to the Encyclopedia of Management, project is "an organized unit dedicated to the
attainment of a goal- the successful, completion of a development project in time within budget,
in, conformance with pre-determined programme specifications.”
According to Dictionary of Management, Project is defined in the as "an investment carried out
according to a plan in order to achieve a definite objective, within a certain time 'and which will
cease when the objective is achieved.”
In words of Sinha and Sinha, “A project is not a mere action or an activity or an attempt
towards a particular aim; it is rather an integrated effort, including multifarious actions and
activities, towards that aim.”5
The report of the Economic Commission for Asia and Far East (ECAFE) describes that
"Project is a smallest unit of investment activity to be considered in the case of programming. It
will, as a rule, be a technically coherent undertaking which has to be carried out technically
speaking, independently of 'other projects.''
According to the Project Management Institute, USA, “A project is an undertaking with a
defined objective by which completion is identified. In practice;' most projects depend on finite
or limited resources by which objectives are to be accomplished."
Similarly, according to the Food and Agriculture Organization (FAD), a project is "an activity
sufficiently self-contained to permit financial and commercial analysis in most cases projects
represent the expenditure of capital funds by pre-existing entities which want to prove their
operation. It is convenient to divide all projects into two board classes: (i) those that are revenue
producing and self-financing (i.e., commercial type projects), and (ii) social projects.”
All the above definitions thus suggest that a project is an action-oriented undertaking. It is a oneshot, time-tested, goal-directed, major undertaking requiring the commitment of varied
skills and resources. In a comprehensive way a project can be defined as the following way:
1) A venture or an temporary effort to accomplish some objectives
2) A set of interrelated jobs or activities whose accomplishments in turn leads to completion
of the overall project.
3) Jobs and activities, the basic constituent of any project consume time as well as other
resources.
By concluding the above three important statements, the project can be defined as “ any
venture that is a set of interrelated ,independent as well as precedence relationship activities
for the accomplishments of some objectives demanding dedicated commitment of resources
and time.”
As every product has a different set of stages of life cycle through which it passes, similarly,
each project has a life cycle too. Life cycle of every project generally starts from conception
stage including project identification and screening followed by project planning and
formulation. The next stage in the cycle is project development stage including project
implementation and control and the last stage of the cycle is end stage in which the winding up
of the project takes place and it is handed over to the client or end user as the case may be.
1.3 WHAT A PROJECT IS NOT
Project should not be confused with everyday work activity. A project is not routine, repetitive
work. Ordinary daily work generally requires doing the same or similar work again and again,
while a project is done only once. Recognizing the difference is important because too often
resources can be used up on daily operations which may not contribute to longer range
organization strategies that require innovative new products.
The terms program and project are often used interchangeably in practice, which sometimes
causes confusion also. Programs and projects are similar in the sense that they' both are directed
toward goals and demands plans and commitment of resources to reach their goals. Both use
similar tools, methods, and policies. The differences between two lie primarily in scope and time
horizon. A program is a series of coordinated, related multiple projects that continue over
extended time intended to achieve a goal. A program is a higher level group of projects targeted
at a common goal.
1.4 NEED OF THE PROJECT ACTIVITY
We do production for two basic reasons:
1) To increase the utility of the input product
2) Some product cannot be consumed directly. There is need to convert them into some
other form to convert it directly.
Similarly, the project activity helps in fulfilling one’s need or desire by changing the current state
of the activity. The proper choice of project portfolio at national level helps nation economy to
grow like Indian Government is focusing on developing infrastructure projects for inclusive and
sustainable economic growth. In the same way, there is impertinent need to select appropriate
project portfolio at organizational as well as national level so as to fulfill and satisfy every
stakeholders.
1.5 PROJECT OBJECTIVES
Every project has its specific objectives. Basically, these are the objectives which help in
defining a project in a meaningful way. After completion of these objectives project gets over
and it is then transferred to the end-users or the client as the case may be. Once the project is
over, the outcome of the project is that either it is successful or it can be a failure. To take an
example, let us consider the case of Build- operates- Transfer (BOT) model of Public –privatepartnership (PPP) to construct a highway. According to this model, after the construction of the
highway, the construction company operates till the completion of toll collection period and then
it is transferred to the Government as it is the appropriate authority in this case.
1.6 FEATURES OF THE PROJECT
A project has several features. The main features of a project are as following:
(i)
Mission, Goals or Set of objectives: A project has a mission, goals or a set of
objectives to be achieved within a distinct time framework, cost and technical
performance constrains. Once the mission is achieved, the project is supposed to be
completed. After completion, the project is transferred to the appropriate authority,
(ii)
Well defined collection of Jobs/ activities: A project can be broken down into well
defined set of jobs/ activities. The completion of these activities or sub activities
guarantees successful completion of project.
(iii)
Ownership: Every project has an owner. The project owner can be appropriate
authority like Government in case of public projects and individual client or
organization in case of other private projects.
(iv)
Terminal or End stage: A project has fixed life span. It cannot continue forever. It
has to terminate at some time or the other. The achievement of the set of objectives of
a project indicates the terminal stage of the project.
(v)
Team-work: Every project is planned, managed and controlled by an assigned team the project team-to achieve the objectives as per specifications. The members of the
project team may be from different disciplines and different set of skills.
(vi)
Uniqueness: A project is unique and no two projects are similar, even though the
inputs, processing and results of two projects can be identical. The project can differ
in the form of the nature of an organization, available infrastructure, location of-the
project and the people associated with this project.
(vii)
Risk and uncertainty: Every project has specific risk and uncertainty associated
with it. The risk can be understood as the loss from the potential threat in the future
and can cause variability of actual returns from the estimated returns. The degree of
the risk changes with change in the stage of life cycle. A well defined project has less
degree of uncertainties and risk as comparable to ill defined project.
(viii) Sub-contracting: A substantial portion of each and every project is performed by
sub-contracting. The greater the complexity of a project, the greater will be the extent
of work performed by sub-contractors.
(ix)
Co-ordination needed between individuals, groups and organization: As project
is broken into various small activities and sub- activities. There are various members
of projects who are assigned some specific tasks and responsibilities. Hence for
project success there is need of proper communication and co-ordination between
various members of the project.
(x)
Customer-specific: A project is always customer-specific. Project is executed to
fulfill some specific need of the customers.
(xi)
Life-cycle: Every project has a start and a terminal point- a characteristic of a lifecycle represented by growth, maturity and decay. The organization of a project
changes as it passes through this life cycle span. The activities starting from the
conception stage, followed up by planning stage, mounted up to the peak during
maturity or implementation, comes to end after transfer of the project to the end user
or to the client.
(xii)
Management of change: Project can be understood as management of change of
existing state to some other better state. Change is a natural phenomenon with every
project throughout its life-cycle. Projects vary according to its requirement of various
resources like technology, equipments, materials, machinery, people, work ethics and
organizational culture during its life-span. Project success depends upon the
management of change of different variables during the life-cycle stage.
(xiii) Unity in diversity: Every project has the characteristic feature of unity in diversity.
A project is a complex set of number of different activities which remain inter-related
with each other. Although these activities differ in terms of requirement of resources
like materials, machines, equipments, technology and people to name a few, but
these are essentially inter-related during different stages of a project life span.
ACTIVITY 1
Draw up a list of features that distinguish projects from other activities like program or
other day to day activities.
1.7 THE PROJECT LIFE CYCLE
As it is discussed that a project is an undertaking or venture that demands resources to
accomplish an objective. Despite the dissimilarities between various projects, these projects
undergo similar phases as the project matures from conception to completion. Some project
managers find it useful to use the project life cycle as the cornerstone for managing projects. The
life cycle recognizes that projects have a limited life span and that there are predictable changes
in lever of effort and focus over the life of the project. The project life cycle typically passes
sequentially through four stages: Project Identification and formulation, Project planning, Project
Implementation, Project Completion and audit. These four stages are explained in detail as
follows:
1. Project Identification and formulation: project is identified. After identification Prescreening takes place. If pre-screening is satisfactory, then detailed feasibility i.e.
formulation take place.
2. Project planning: Specifications of the project are defined; project objectives are
established; project scope is defined. Teams are formed; major responsibilities are
assigned, plans are developed to determine what the project will entail, when it will be
scheduled, whom it will benefit, what quality level should be maintained and what
should be the budget and time-cost trade-off takes place.
3. Project Implementation: This stage entails lot of mental as well as physical project
work. The physical product like a bridge, a report and a software program is the outcome
after implementation of work. Time, cost and specification measures are used for control.
Proper monitoring and control measures also take care of at this stage of project.
If there is a need to have revisions/changes, then these changes are also brought into the
project.
4. Project Completion and audit: Includes the two activities: delivering the project
product to the customer and redeploying project resources. Delivery of the project might
include customer training and transferring documents. Redeployment usually involves
releasing project equipment/materials to other projects and finding new assignments for
team members.
In practice, the project life cycle is used by some project groups to depict the timing of major
tasks over the life of the project. For example, the design team might plan a major commitment
of resources in the identification and formulation stage, while the quality team would expect
their major effort to increase in the latter stages of the project life cycle. Because most
organizations have a portfolio of number of projects going on concurrently, each at a different
stage of each project's life cycle, careful planning and management of all the resources at the
organization and project levels are imperative for the better and efficient use of limited
resources.
ACTIVITY 2
How project life cycle can help in strategy formulation and implementation in an effective
way?
1.8 PROJECT IDENTIFICATION
As an old adage says that the success lies getting a robust business opportunity. Hence getting a
promising idea is first step towards getting a successful business venture. Getting a promising
idea demands creativity, imaginations, intuitional, gut feeling, sensitivity to change in the
environment and objective analysis of quantifiable factors. Thinking beyond imaginations can
bring limitless possibilities for a good business idea.
Need identification is the initial phase of the project life cycle. It starts with the recognition of a
need, problem, opportunities and possibilities. The customer identifies a need or desire for a
better way of doing something and therefore see some benefits to take a venture into new project
which will result in an improvement or advantageous to the existing conditions or the state.
Brainstorming can result in various ventures ideas. Brainstorming is a very effective technique
for developing such a promising idea in the group. Brainstorming may be structured in which
each member of the group is asked for his/her idea in a sequential manner. If one person is not
able to give the idea, he/she can pass the turn to next person. In unstructured kind of
brainstorming, the procedure is modified to proceed according to the member who gives the first
idea, followed by the member who is willing to give the next idea and so on. Structured
brainstorming ensures participation of all and unstructured one may be dominated by a few
people.
1.9 PROJECT ORIGINATION
1.9.1 SCOUTING FOR PROJECT IDEAS
How do projects originate? More often, their origin can be traced to the desire to solve an
existing problem or to satisfy an unmet societal need. Sometimes, the origin of the project can be
as a result of Government policy. Suppose Government do not allow the import of certain goods
so, that can be treated as an opportunity for capital investment to produce such kind of goods in
domestic market now. To find out the unmet need, one should do environmental scan. The
factors to be considered are political-legal factors, economic factors, Socio-demographic, factors,
technological and competition factors to name a few.
Political Legal Factors
Industry Policy of Government, its taxation regime, its programmes and export-import policy are
certain important aspects which are relevant for political-legal scanning. If these factors are
favourable for the enterprise, this can be good opportunities for the development of entrepreneur.
Economic Factors
While scanning economic factors, the important points for the consideration are the state of
economy, growth rate of the country, market conditions, natural endowment, exchange rate
fluctuations and inflation trends to name a few. The favourable factors can be a source of
enterprise development.
Socio-demographic Factors
Population trends, age distribution, income distribution, education profile of the population, the
kind of family structure and the life cycle of the families. The social change throws up
opportunities in some form or other.
Technological Factors
The rapid emergence of technology has shortened the product life cycle. An entrepreneur who
innovates products rapidly from new technologies will enjoy the fruits of being an early entrant
into the product or service. In case of technology, second most important point of consideration
is the rate of diffusion of technology in the customers. If the rate of diffusion is high that means
the new technology can be quickly accepted and absorbed in the market.
Competition Factors
If the competitive pressure from suppliers, buyers or from the competitors itself is low, then
there are more chances for the growth of new products and services. How strategically we
respond to completion from the various sources can be a source of new idea.
1.9.2 OTHER SOURCES OF PROJECT IDEAS
Analyze the Performance of Existing Industries: a study of existing industries in terms of
their profitability and capacity utilization can indicate promising investment opportunities –
opportunities which are profitable and relatively risk-free. A careful study of capacity utilization
of various industries provides information about the potential for further investment or
expansion.
Examine the Inputs and Outputs of Various Industries A careful examination of the inputs
required for various industries may throw up project ideas. Opportunities exist when materials,
purchased parts, or supplies are presently being procured from distant sources which involves
high time lag and huge transportation cost. There can be other sources of opportunities where a
single manufacturer enjoys economies of scale. Similarly, an examination of the output of the
existing industries may gave an idea for opportunities for adding value through further
processing of main outputs, by-products, as well as waste products.
Review Imports and Exports An analysis of Export-import statistics for a period can be helpful
in understanding the trend of export-imports of various goods and the potential for
import substitution and further expansion. Indigenous manufacture of goods currently imported.
Indigenous production can be good from the balance of payments situation, employment to name
a few.
Study Plan Outlays and Governmental Regulations: The government plays a very important
- role in every economy. Its proposed outlays in different sectors give indication toward
Investment opportunities. They indicate the potential demand for goods and services
required by different sectors. A valuable source of information to estimate the potential for
further investment is the Guidelines to Industries published by the Department of Industrial
Development, Government of India. This publication provides information about the structure
and location, production performance, licensed and installed capacity, exports, and future scope
of various industries.
Look at the Suggestions of Financial Institutions and Developmental banks: In a bid to
promote development of industries in their respective states financial institution and
development
banks
offer
suggestions
to
potential
entrepreneurs.
The
suggestions
of these agencies are helpful in identifying promising project ideas.
Investigate local Materials and Natural Resources: A search for project ideas may begin with
all investigation into local resources and skills. How the value addition is possible to already
existing products or services is examined. Similarly, the careful identification of skills of local
artisans may suggest idea for products that may be profitably produced and marketed. The
National Council of Applied Economic Research (NCAER) and other bodies publish
reports of surveys of various regions showing the potential for industrial development in various
regions. These surveys assess the resources, infrastructural facilities, local skills, and markets for
various products and services.
Analyze Economic and Social Trends: An examination of economic and social trends is
helpful in projecting demand for various goods and services. Changing economic conditions and
consumer demands indicate new business opportunities. To quote an example, the recent change
that can be seen is the increasing desire for leisure and recreational activities. This change has
resulted growth avenues in the market for recreational products and services.
Study New Technological Developments: New products or new processes and technologies for
existing products developed by research laboratories may be examined for profitable ventures.
Draw Clues from Consumption Abroad: Entrepreneurs who have higher risks appetite should
search projects for the manufacture of products or supply of services which are new to the
country but extensively used abroad. Automatic vending machines, mobile and internet banking
entertainment parks, and robots are examples of projects belonging to this category.
Explore the Possibility of Reviving Sick Units: Industrial sickness is rampant in the country.
There are innumerable units which have been identified as sick. These units are
on the verge of closure. A significant proportion of sick unit can be made to survive by sound
management practices, infusion of further capital, and provision of complementary inputs.
Hence, there is a good scope for investment in this area. Such investments typically have a
shorter gestation period because one does not have to begin from scratch. Indeed, in many cases
marginal efforts would suffice to revive such units.
ACTIVITY 3
Q1. Go through a brainstorming in a group of 6 to 8 people to identify list of at least 6
projects (2for each broad objectives) to achieve these following broad objectives:
1) To reduce traffic congestion in Delhi
2) To reduce poverty in India
3) To improve literacy in the country
1.10 MODEL QUESTIONS
1. What is meant by project? How you will differentiate projects from other routine works
or activities?
2. Discuss the need for projects, its objectives, its distinctive features in detail.
3. What is meant by Project Life Cycle? How Project life cycle helps in better project
management?
4. “The success lies in doing right business right time”. Elucidate the statement with
appropriate examples.
5. How do project originate? Explain in detail the various tools for identify promising ideas.