A 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”
The World Bank defines a project as ‘an approval for a capitalinvestment develops facilities to provide goods and services’.
CHARACTERISTICS OF A PROJECT
A project is undertaken to achieve a purpose. The following are the characteristics of a project.
• A project involves investment of money and money’s worth.
• The objective of a project is to earn profit.
• It is concerned with production of goods and services.
• Every project has risk and uncertainty associated with it.
• It has a fixed set of objectives.
• It is subjected to a lot of change.
• It has a definite beginning and an end.
• It has a life cycle reflected by growth, maturity and decay.
• It is combination of various elements such as technology, equipment, materials, machinery and people.
• A project requires team work.
CLASSIFICATION OF PROJECTS
The different classifications are explained below:
1) QUANTIFIABLE AND NON-QUANTIFIABLE PROJECTS:
Quantifiable projects are those in which quantitative assessment of benefits can be made. Projects for industrial development, power generation, mineral development etc. fall under this category.
Non quantifiable projects are those in which the benefits cannot be measured quantitatively.
Projects involving health, education and defence fall under this category.
2) 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.
This classification is useful for resources allocation at macro levels.
3) 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. If a project is started by an entrepreneur due to non-availability of certain goods or services and consequent demand for such goods or services the project is said to be based on demand. If project is started by an entrepreneur simply because of the availability of certain raw
materials, skills or other imputs, the project is said to be based on raw material.
C) Magnitude Oriented Classification: The size of investment forms the basis of classification.
May be classified as Large-scale, Medium-scale and Small-scale.
4) 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.
5) ACCORDING TO THE URGENCY OF THE EXECUTION:
It is classified into three. They are as follows:
A) Normal Projects: In this type of project adequate time is allowed for implementation. This type of project will require minimum capital cost.
B) Crash Projects: Additional capital costs are incurred to save time. It is normally achieved in procurement and construction where time is brought from vendors and contractors by paying extra money to them
C) Disaster Projects: Vendors who can supply within a very short time are selected irrespective of the cost. Naturally capital cost will go up very high but projects time will get muchreduced.
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: It is concerned with formulation of objectives, demand forecasting, evaluation of imputcharacteristics, selection of strategy, projections of financial profile, cost benefit analysis and finally pre-investment appraisal. Some expenditure has to be incurred in the form of conducting surveys, feasibility studies etc.
2) Construction Phase: This stage consumes maximum expenditure. Construction phase consists of developing the infrastructure for the project. The capital requirement includescost on land, buildings, civil works, machinery equipment, ancillaries etc.
3) Normalization Phase: The primary objective of this stage is to produce the goods and services for which the project was established. The expenditure has to be incurred on rawmaterials, fuel, utilities, and administration and operation maintenance et.
According to Cleland and King a project passes through the following phases:
1) Conception phase.
2) Definition phase.
3) Production.
4) Observation.
5) Divestment.
6) Post-Mortem.
The following figure model of the project life cycle that is suitable for any type of project.
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
It consists of the following stages:
1. Project Identification: It refers to identification of business/investment opportunities. It involves scanning of the environment to find out investment opportunities.
2. Project Formulation: It is the translation of the idea into concrete project with scrutiny of its
important preliminary aspects.
3. Project Appraisal: It involves searching, scrutiny, analysis and evaluation of market, technical, financial and economic variables. It examines the viability of the project.
4. Project Selection: It is the process of choosing a project rationally in the light of objectives
and inherent constraints on the basis of appraisal.
5. Project Implementation: It is the stage of birth of an enterprise. At the end of this stage, the
idea becomes a reality.
6. Project Follow Up and Evaluation: It is the process of assessing the performance of the project after it started functioning. Project evaluation simply means assessing the progress of the project.
