Project management MODULE III Project simply means an

Project management MODULE III

Project simply means an investment opportunity exploited for profit. It is an idea or plan which is intended to be carried out or a finite task to be completed. In the words of Gillinger “project is a whole complex of activities involved in using resources to gain benefits”.

Characteristics of a PROJECT vproject involves investment of money and money’s worth. v. The objective of a project is to earn profit. v. It is concerned with production of goods and services. v. Every project has risk and uncertainty associated with it. v It has a fixed set of objectives. v. It is subjected to a lot of change. v. It has a definite beginning and an end. v. It has a life cycle reflected by growth, maturity and decay. v. It is combination of various elements such as technology, equipment, materia machinery and people. vproject requires team work.

CLASSIFICATION OF PROJECTS • QUANTIFIABLE AND NON-QUANTIFIABLE PROJECTS • SECTORAL PROJECTS: According to planning commission of India, a project may fall in the following sectors: a) Agriculture and allied sector b) Irrigation and power sector c) Miscellaneous sector. d) Transport and communication sector. e) Industry and mining sector

• TECHNO-ECONOMIC PROJECTS: Projects may be classified into the following three groups: A) Factor Intensity Oriented Classification: Project may be classified as Capital intensive or Labour intensive. If large investment is made in plant and machinery the project will be called Capital intensive. If large investment is made in human resources, the projects will be termed as Labour-intensive. B) Causation Oriented Classification: It is classified as demand based or raw material based projects C) Magnitude Oriented Classification: The size of investment forms the basis of classification. May be classified as Large-scale, Medium-scale and Small-scale.

• FINANCIAL INSTITUTIONS CLASSIFICATION: The projects are classified according to their age and experience and the purpose for which the project is being taken up. They are as follows: A) Profit Oriented Projects: 1) New projects. 2) Expansion projects. 3) Modernization projects. 4) Diversification projects. B) Service Oriented Projects: 1) Welfare projects. 2) Service projects. 3) Research and development projects.

• ACCORDING TO THE URGENCY OF THE EXECUTION: 1. Normal Projects 2. Crash Projects 3. Disaster projects

PROJECT LIFE CYCLE The project is initiated to achieve a mission and is said to be completed when the mission is achieved. The project lives between these two cut off periods and this intermediate time is called Project Life Cycle. Project life cycle consists of the following three stages: 1) Pre-Investment Phase 2) Construction Phase 3) Normalization Phase

PROJECT MANAGEMENT Project management is the process of planning, organizing, monitoring and controlling of all aspects of a project and motivating all involved to achieve project objectives of safety and completion within a defined time, cost and performance. Harson has defined project management as, “the achievement of a project’s objectives through people, and involves organizing, planning and control of the resources assigned to the project together with the development of constructive human relations with all those involved, both in company and with the other companies involved”.

PHASES OF PROJECT MANAGEMENT • Project Identification • Project Formulation • Project Appraisal • Project Selection • Project Implementation • Project Follow Up and

Objectives Of Project Management 1 ) To achieve maximum productivity at minimum cost. 2) To maximize income and return. 3) To minimize risk and uncertainty. 4) To eliminate waste and improve efficiency. 5) To make the most efficient and

Need Of Project Management 1 ) Complexity of Project 2 ) Achievement of Objectives 3 ) Environmental Changes 4 ) Competition 5) Constraints 6) Risk and Uncertainty 7 ) Time Overrun and Cost Overrun 8 ) Project Control and Evaluation

Roles And Responsibilities Of Project Manager 1) Managing personnel. 2) Satisfy government, customer, promoters and public. 3) Coordinating and integrating activities across multiple functional lines. 4) Defining and maintaining the integrity of the project. 5) Setting targets and development of systems and procedures for accomplishment of project objectives. 6) Developing project execution plan.

GENERATION OF PROJECT IDEAS It is the process of collection, compilation and analysis of economic data for the purpose of finding out possible opportunities for investment and with the development of the characteristics of such opportunities. Emergence of project ideas from different sources is called generation of project ideas. The idea should be sound and workable, so that it may be exploited. The entrepreneur has to be imaginative and foresighted to discover a business/Project idea.

SOURCES OF THE PROJECT IDEAS • Our own needs • Market characteristics and surveys • Trade and professional journals. • Project profiles. • Trade fairs and exhibitions. • Success stories of friends and relatives. • Prospective consumers. • Research organisation.

• Govt. Organisation • Utilisation of waste materials. • Study of government policy. • Development of other nations. • Items reserved for small scale units. • Brainstorming • Hobbies

SCREENING OF PROJECT IDEAS The process of evaluating the project ideas with a view to select the best and promising idea after eliminating the unprofitable ideas is called screening of project ideas.

The following factors need to be considered: • Compatibility with the Entrepreneur • Cost of The Project • Profitability • Marketing Facilities • Availability of Inputs • Consistency with Government Regulations and Priorities. • Level of risk

PROJECT FORMULATION It is the process of examining technical, economic, financial and commercial aspects of a project. It is the process and steps through which an opportunity becomes a project in which the entrepreneur is willing to invest his time, money and other resources. This study is undertaken to find out whether the proposed project would be feasible or not.

NEED FOR PROJECT FORMULATION 1) Knowledge About Government Regulations 2) Absence of External Economies 3) Non-Availability of Technically Qualified Personnel. 4) Resource Mobilization. 5) Selection of Appropriate Technology

ELEMENTS OF PROJECT FORMULATION • Feasibility Analysis • Techno-Economic Analysis: a)Estimation Of Demand Or Market Potential b)Selection Of Technology • Project Design and Network Analysis • Input Analysis • Financial Analysis • Social Cost Benefit Analysis • Pre-Investment Appraisal

TECHNICAL ANALYSIS Technical analysis of a project is essential to ensure that necessary physical facilities required for production will be available and the best possible alternative is selected to procure them. The object of technical analysis is to assess the technical soundness of the project. This is considered essential for the long term success of the project

Scope of technical analysis • Material inputs and utilities • Manufacturing process • Plant capacity • Location and site of the project • Size of the plant • Product mix • Factory design • Machinery and equipment • Plant layout

1. Material inputs and utilities • Assess the availability throughout the project • Quality and quantity of raw materials • Factors influenced the availability of materials • Perishable time of materials • Price elasticity of materials etc.

2. Manufacturing process/technology The tools, devices and knowledge that help in the transformation of inputs into outputs. It is the application of knowledge, encompassing the related concepts of science, innovation, invention and discovery. It is the application of scientific knowledge to practical commercial purpose.

Factors Influencing the Choice of Technology 1) Plant capacity. 2) Inputs. 3) Investment outlay. 4) product mix. 5) Latest developments. 6) Cost 7)Ease of absorption 8)Use by other units

Sources of Technology To know-how can be procured from the following sources : 1) Foreign Collaboration. 2) Consultancy Organizations. 3) Machinery Suppliers. 4) Promoter’s knowledge and experience. 5) Recruitment of suitable technical personnel. 6) CSIR Laboratories and National Research and Development Corporation (NRDC). 7)Consultants ( organizations and individuals)

Acquisition of technology by different ways • Technology licensing • Purchase of technology • Joint venture arrangement

Technology transfer • The entrepreneur may opt for purchase of proposed technology or enter into a collaboration agreement with outside parties. • Wider in scope • Future development • May or may not have legal boundaries • Both formal and informal arrangements • Foreign collaborations

Appropriateness of technology • Local area • Economic • Social • Financial • Cultural • Political • Business environment • Ecology • Creativity and innovations

3. PLANT CAPACITY It refers to the volume or number of units that can be manufactured during a given period. Plant capacity is also called production capacity Considerations for Plant Capacity: 1) Technological requirement. 2) Input constraints. 3) Investment cost. 4) Market condition 5) Resources of the firm. 6) Government policy

4. PLANT LOCATION It refers to a fairly broad area where the enterprise is to be established like city, industrial zone or coastal area. Factors : 1) Proximity to raw material. 2) Nearness to market. 3) Availability of infrastructure facilities. 4) Transport and communication facilities. 5) Effluent disposal. 6) Labour. 7) Government policies. 8)Climatic conditions 9) Environment considerations etc.

Ideal location • Easy availability of raw materials and other factors of production • Minimum cost of transportation • Easy accessibility to market • Adequate space for the site • Sufficient scope for future expansion • Integration of the enterprise with the economic, social and cultural traits of the community of the region

5. SELECTION OF SITE • Stability and load bearing ability of the ground • Level of ground • Availability of land for future expansion • Drainage and sewage facilities • Accessibility of transport systems • Facilities for supply of gas, electricity etc • Postal and telegraph facilities • Facilities for dumping of waste materials • Local rates and taxes • Repair facilities • Availabilities of social amenities • Legal aspect regarding clear title of the site

6. SIZE OF THE PLANT 1) Availability of raw materials and power. 2) Technology/process to be adopted. 3) Size of the market. 4) Size of the plant and machinery. 5) The location of the project. 6) The product mix. 7) Capital investment required.

7. PRODUCT MIX Product mix or range is decided according to market requirement. It refers to the set of all the products offered by a firm for sale a) Nature of business. b) Nature of product. c) Competition. d) Tastes of consumers. e) Size of target market. f) Plant capacity

8. FACTORY DESIGN It refers to the plan for a particular type of building, arrangement of machinery and equipment and provision of service facilities, lighting, heating etc. in the building. Factory design comprises layout of building and layout of factory. Factors Affecting Factory Design 1) Location. 2) Nature of the manufacturing process. 3) Plant layout. 4) Smoothness in operation. 5) Service facilities.

6) Material handling. 7) Cost of construction of building. 8) Future expansion. 9) Nature of product. 10) Appearance.

Importance of Factory Design 1) Storage and movement of material. 2) Service facilities. 3) Supervision. 4) Employee morale. 5) Productivity.

Types of factory building • Single storey building • Multi storey building • Special types of building

Factors influencing factory building ü ü ü ü Plant location Plant layout Flexibility Product and equipment Expansibility Material handling Employee facilities Service areas ü Ventilation and lighting ü Security ü Protection ü Site ü Aesthetic consideration ü Maintenance charges

9. MACHINERIES AND EQUIPMENTS The requirement of machinery and equipment is dependent on production technology and plant capacity. To determine the kind of machinery and equipments required for manufacturing industry the following procedure may be followed. 1) Estimate the likely levels of production over time. 2) Define the various machinery and other operations. 3) Calculate the machinery hours required for each type of operation. 4) Select machineries and equipments required for each function.

Equipments classified into the following types: 1) Plant equipments. 2) Mechanical equipments. 3) Electrical equipments. 4) Instruments. 5) Controls. 6) Internal transportation system. 7) Others.

10. PLANT LAYOUT It refers to the arrangement of the machines, equipments and other physical facilities within the factory premises. It is a floor plan for determining and arranging the desired machinery and equipment in the best place to permit the quickest flow of material at the lowest cost with least mount of material handling in processing the product from the receipt of raw materials to shipment of the finished product.

Objectives/benefits of plant layout • Streamline the flow of materials through the plant. • Reduce manufacturing time • Facilitate the manufacturing process. • Minimize materials handling cost. • Effective utilization of men, equipment and space. • Flexibility of manufacturing operations and arrangements. • Provide for employee convenience, safety and comfort. • Minimize investment in equipment • Economical use of space and floor • Minimize production delays • Better supervision and production control

TYPES OF LAY OUT 1. Process layout 2. Product layout 3. Combination layout 4. Fixed position layout 5. Group layout

Process/functional layout • In the case of process lay out all the machines performing similar type of operations are grouped at one location. • In process layout the arrangement of facilities is grouped together according to their functions and operations. • The flow of material through the facilities from one functional area to another functional area varies from product to product. • Process layout is suggested for batch production. Usually the paths are long and there will be possibility of backtracking. • Process layout is normally used when the production volume is not sufficient to justify a product layout.

Product/line lay out • In product layout, machines and other supporting services are located according to the processing sequence of the product. • It implies that various operations on a product are performed in a sequence and the machines are placed along the product flow line. • In product layout machines are arranged in the sequence in which a given product will be operated upon. • This type of layout is preferred for continuous production of goods.

Combination/hybrid lay out • A combination layout combines the advantages of both types of product and process layouts. • A combination layout is possible where an item is being made in different types and sizes. • Here machinery is arranged in a process layout but the process grouping is then arranged in a sequence to produce various types and sizes of products. • It is to be noted that the sequence of operations remains same with the variety of products and sizes.

Fixed position/project layout • This is also called the project type of layout. In this type of layout, the material, or major components remain in a fixed location and tools, machinery, men and other materials are brought to this location. • This type of layout is suitable when one or a few pieces of identical heavy products are to be manufactured and when the assembly consists of large number of heavy parts, the cost of transportation of these parts is very high.

Group/cellular lay out • This type of layout brings an element of flexibility into manufacturing system as regards to variation in batch sizes and sequence of operations. • Group Technology (GT) is the analysis and comparisons of items to group them into families with similar features. GT can be used to develop a hybrid between pure process layout and pure product layout. • This technique is very useful for companies that produce variety of parts in small batches to enable them to take advantage and economics of flow line layout. • The application of group technology involves two basic steps; first step is to

FACTORS INFLUENCING PLANT LAYOUT �Nature of industry. �Volume of production. �Type of production. �Location. �Material handling �Type of equipment �Factory building. �Service facilities. �Lighting and ventilation �Future expenses �Environment aspects