Project Concepts and Characteristics in Development Planning

Chapter 1: Introduction

Chapter 1: Introduction

o

The main content of the chapter are:

The main content of the chapter are:



The Project concepts

The Project concepts



The project Cycle

The project Cycle

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Course title: Development planning and project analysis II             BY: Solomon k .       Academic Year, 2012

Course title: Development planning and project analysis II             BY: Solomon k .       Academic Year, 2012

Cont…,

Cont…,



The objectives of this chapter is to familiarizes the students

The objectives of this chapter is to familiarizes the students

with:

with:



D/t concepts of the Project

D/t concepts of the Project



The project Cycle

The project Cycle

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Course title: Development planning and project analysis II             BY: Solomon k.        Academic Year, 2012



The Project concepts

The Project concepts



Project is 

Project is 

the group of activities that are planned and executed in

the group of activities that are planned and executed in

a 

a 

certain sequence 

certain sequence 

to create a unique product and services. Or

to create a unique product and services. Or



It is a 

It is a 

complex

complex

 set of economic activities in which scarce

 set of economic activities in which scarce

resources are committed in expectation of benefits that

resources are committed in expectation of benefits that

exceed the costs of resources consumed

exceed the costs of resources consumed

.

.

3

Course title: Development planning and project analysis II             BY: s olomon k        Academic Year, 2012

       Cont...,

       Cont...,



A project is also defined as 

A project is also defined as 

“a 

“a 

temporary

temporary

 endeavor undertaken to

 endeavor undertaken to

create or provide a 

create or provide a 

unique

unique

 Goods or Services.

 Goods or Services.



A project involves 

A project involves 

the 

the 

investment

investment

 of scarce resources 

 of scarce resources 

(physical,

(physical,

financial, and human) in the expectation of 

financial, and human) in the expectation of 

future

future

benefits

benefits

.

.



It is a 

It is a 

group of tasks performed in a definable time period in order

group of tasks performed in a definable time period in order

to meet a specific set of objectives.

to meet a specific set of objectives.

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Course title: Development planning and project analysis II             BY: s k        Academic Year, 2012

Cont...,

Cont...,



Projects are said to be desirable if their 

Projects are said to be desirable if their 

benefits are greater than

benefits are greater than

the costs incurred on them.

the costs incurred on them.



Projects can be: 

Projects can be: 

public, private, small, large, agricultural,

public, private, small, large, agricultural,

industrial,

industrial,

 etc.

 etc.

5

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont.…,

Cont.…,

•

Project is a 

Project is a 

conversion process which serves in transforming

conversion process which serves in transforming

inputs into outputs.

inputs into outputs.

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Course title: Development planning and project analysis II             BY: s k        Academic Year, 2012



Basic characteristics of a project

Basic characteristics of a project



Regardless of the size of a project, projects have common

Regardless of the size of a project, projects have common

characteristics

characteristics

.

.



Some of these characteristics are:

Some of these characteristics are:



A project has a unique purpose

A project has a unique purpose



A project is temporary.

A project is temporary.



A project is developed using progressive elaboration.

A project is developed using progressive elaboration.

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont.…,

Cont.…,



A project requires 

A project requires 

resources,

resources,

 often from various areas.

 often from various areas.



A project should have a primary customer or sponsor.

A project should have a primary customer or sponsor.



Have definite location and target group (beneficiaries).

Have definite location and target group (beneficiaries).



 A project involves uncertainty.

 A project involves uncertainty.

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Course title: Development planning and project analysis II             BY: s k         Academic Year, 2012



Classification of project /capital investment/

Classification of project /capital investment/



Projects may be classified into:

Projects may be classified into:



Development projects

Development projects



Business projects

Business projects

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Course title: Development planning and project analysis II             BY: s k        Academic Year, 2012



Difficulties of capital investment

Difficulties of capital investment



Although capital investments are so important, they are not

Although capital investments are so important, they are not

without difficulties.

without difficulties.



These difficulties may arise from two major sources; namely,

These difficulties may arise from two major sources; namely,



Measurement problems

Measurement problems



Uncertainty :

Uncertainty :

It is impossible to predict exactly what will

It is impossible to predict exactly what will

happen in the future.

happen in the future.

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Course title: Development planning and project analysis II             BY: s k         Academic Year, 2012



Project success criteria (Parameters)

Project success criteria (Parameters)

•

During a project’s life, project management should give attention

During a project’s life, project management should give attention

to three basic parameters: quality, cost and time.

to three basic parameters: quality, cost and time.

•

 A successfully managed project is one that is completed at the

 A successfully managed project is one that is completed at the

specified level of 

specified level of 

quality

quality

; 

; 

on or before the deadline

on or before the deadline

; and

; and

within the 

within the 

budget

budget

.

.



Whatever  its size, a project’s success is based on these three

Whatever  its size, a project’s success is based on these three

main criteria.

main criteria.

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Course title: Development planning and project analysis II             BY:          Academic Year, 2012

Cont...,

Cont...,

12

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont...,

Cont...,



Therefore, project will suppose to be successful if it:

Therefore, project will suppose to be successful if it:



Delivers the outcome with an agreed upon quality.

Delivers the outcome with an agreed upon quality.



Does not overrun its end date.

Does not overrun its end date.



Remains within budget (cost of resources).

Remains within budget (cost of resources).

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont...,

Cont...,

•

In addition, 

In addition, 

client satisfaction 

client satisfaction 

will indicate success and

will indicate success and

possibility for replication or sustainability.

possibility for replication or sustainability.

•

Generally, to create a successful project, a project manager must

Generally, to create a successful project, a project manager must

consider;

consider;

•

Scope

Scope

: What work will be done or what unique product, service?

: What work will be done or what unique product, service?

•

Time

Time

: How long should it take to complete the project?

: How long should it take to complete the project?

            What is the project’s schedule?

            What is the project’s schedule?

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Course title: Development planning and project analysis II             BY:s k        Academic Year, 2012

Cont...,

Cont...,



Cost:

Cost:

 What should it cost to complete the project? Or

 What should it cost to complete the project? Or

What is the project’s budget?

What is the project’s budget?



Quality

Quality

: How good does the quality of the products or services

: How good does the quality of the products or services

need to be?

need to be?

             What do we need to do to satisfy the customer?

             What do we need to do to satisfy the customer?



Risk:

Risk:

 How much risks are we willing to accept on the project?

 How much risks are we willing to accept on the project?

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012



Project and Program

Project and Program

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

1.2 The project Cycle

1.2 The project Cycle



Project cycle refers to the various stages through which project

Project cycle refers to the various stages through which project

planning proceeds from the 

planning proceeds from the 

inception to implementation

inception to implementation

. Or,

. Or,



 it is the life cycle through which a project advances from

 it is the life cycle through which a project advances from

infancy to maturity.

infancy to maturity.



The main features of this cycle are 

The main features of this cycle are 

information gathering,

information gathering,

analysis, and decision–making.

analysis, and decision–making.

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012



See the following diagram:

See the following diagram:

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

18

1. Project identification

1. Project identification



In this stage, projects that can contribute towards achieving the

In this stage, projects that can contribute towards achieving the

specified objectives are identified (listed).

specified objectives are identified (listed).



Project ideas may come from:

Project ideas may come from:



Local leaders

Local leaders



Entrepreneurs

Entrepreneurs



Government policy and plans

Government policy and plans



Replication of successful project tested elsewhere

Replication of successful project tested elsewhere



Other sources

Other sources

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

2. Project preparation and analysis

2. Project preparation and analysis



Once project ideas have been identified the process of project

Once project ideas have been identified the process of project

preparation and analysis starts.

preparation and analysis starts.

•

Project preparation must cover the full range of technical,

Project preparation must cover the full range of technical,

institutional, economic, and financial conditions necessary to

institutional, economic, and financial conditions necessary to

achieve the project’s objective.

achieve the project’s objective.

•

Critical element of project preparation is identifying and

Critical element of project preparation is identifying and

comparing technical and institutional alternatives for achieving

comparing technical and institutional alternatives for achieving

the project’s objectives.

the project’s objectives.

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Course title: Development planning and project analysis II             BY: s k         Academic Year, 2012

Cont…,

Cont…,



D/t alternatives may be available and therefore, resource

D/t alternatives may be available and therefore, resource

endowment (labor or capital) would have to be considered in the

endowment (labor or capital) would have to be considered in the

preparation of projects.

preparation of projects.



It involves generally two steps:

It involves generally two steps:



Pre-feasibility studies

Pre-feasibility studies



Feasibility studies

Feasibility studies

21

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont…,

Cont…,



Pre-feasibility Study

Pre-feasibility Study



At the pre-feasibility study stage the analyst obtains approximate

At the pre-feasibility study stage the analyst obtains approximate

valuation of the major 

valuation of the major 

components of the projects

components of the projects

costs

costs

 and

 and

benefits.

benefits.



Using this preliminary data a preliminary financial and economic

Using this preliminary data a preliminary financial and economic

analysis will be conducted.

analysis will be conducted.

22

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont…,

Cont…,



If the project appear viable form in this preliminary assessment,

If the project appear viable form in this preliminary assessment,

the analysis will be carried to the feasibly stage.

the analysis will be carried to the feasibly stage.



Feasibility Study

Feasibility Study



The major d/ce b/n the pre-feasibility and feasibility studies is

The major d/ce b/n the pre-feasibility and feasibility studies is

the 

the 

amount of work 

amount of work 

required in order to determine whether a

required in order to determine whether a

project is likely to be 

project is likely to be 

viable or not.

viable or not.

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cost…,

Cost…,



If the preliminary screening suggests that the project is 

If the preliminary screening suggests that the project is 

prima

prima

facie

facie

 worthwhile, a detailed analysis of the 

 worthwhile, a detailed analysis of the 

marketing,

marketing,

technical, financial, economic, and ecological aspects

technical, financial, economic, and ecological aspects

 will

 will

undertaken.

undertaken.



The focus of this phase of capital budgeting is on gathering,

The focus of this phase of capital budgeting is on gathering,

preparing, and summarizing 

preparing, and summarizing 

relevant information 

relevant information 

about

about

various project proposals, which are being considered for

various project proposals, which are being considered for

inclusion in the capital investment.

inclusion in the capital investment.

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont…,

Cont…,



At this stage a team of specialists (i.e. engineers, economists,

At this stage a team of specialists (i.e. engineers, economists,

scientists, sociologists & etc.) will need to work together.

scientists, sociologists & etc.) will need to work together.



At this stage more accurate data need to be obtained and the

At this stage more accurate data need to be obtained and the

final product of this stage is a feasibility report.

final product of this stage is a feasibility report.



The feasibility report should contain the following elements/

The feasibility report should contain the following elements/

aspect:

aspect:

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Course title: Development planning and project analysis II             BY: s k         Academic Year, 2012

1.

Technical Aspects

Technical Aspects



This may include the works 

This may include the works 

of engineers

of engineers

, 

, 

soil scientists 

soil scientists 

and

and

agronomists

agronomists

 in case of, say, 

 in case of, say, 

agricultural projects.

agricultural projects.



Is concerned with the technology of production and processing.

Is concerned with the technology of production and processing.



Poor technical analysis would eventually 

Poor technical analysis would eventually 

lead to spurious 

lead to spurious 

cost

cost

and 

and 

benefit estimates.

benefit estimates.



Therefore, coordination of 

Therefore, coordination of 

creative,

creative,

committed

committed

 and competent

 and competent

specialists from d/t fields are needed.

specialists from d/t fields are needed.

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Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

2.  

2.  

Market Aspects

Market Aspects



This aspect analysis needs to ensure the existence of effective

This aspect analysis needs to ensure the existence of effective

demand at 

demand at 

remunerative price.

remunerative price.



Similar arrangements need to be done on the input side too

Similar arrangements need to be done on the input side too

(

(

input supplies).

input supplies).

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

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3.  

3.  

Institutional-Organizational-Managerial Aspects

Institutional-Organizational-Managerial Aspects



This is about detail analysis of project organization and

This is about detail analysis of project organization and

management.

management.



The project should be implemented by competent, responsible

The project should be implemented by competent, responsible

and committed 

and committed 

managers.

managers.

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

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4.

4.

Financial Aspects

Financial Aspects



Financial analysis seeks to determine whether the proposed

Financial analysis seeks to determine whether the proposed

project will 

project will 

be financially 

be financially 

viable or 

viable or 

not.

not.



This analysis will be the basis for evaluating the project

This analysis will be the basis for evaluating the project

profitability.

profitability.



Project profitability depends on a 

Project profitability depends on a 

comparison of 

comparison of 

costs 

costs 

versus

versus

revenues.

revenues.

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

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5

5

. Economic Aspects

. Economic Aspects



This is about the 

This is about the 

social costs 

social costs 

and 

and 

benefits

benefits

 of a project, which

 of a project, which

may often be different from its monetary or financial costs, and

may often be different from its monetary or financial costs, and

benefits. The financial analysis views

benefits. The financial analysis views



the project from the participants 

the project from the participants 

(or owners) point of view, while

(or owners) point of view, while

the economic analysis form 

the economic analysis form 

the society’s point of view.

the society’s point of view.

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

30

6. 

6. 

Social Aspects

Social Aspects



This is about 

This is about 

examine t

examine t

he broader 

he broader 

social implications 

social implications 

of the

of the

proposed project.

proposed project.



The social aspect analysis should address 

The social aspect analysis should address 

the income distribution

the income distribution

implications of a project and aspect of 

implications of a project and aspect of 

employment opportunities

employment opportunities

& etc.

& etc.

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

31

7. 

7. 

Environmental aspect analysis

Environmental aspect analysis



In recent years environmental concerns have assumed a great

In recent years environmental concerns have assumed a great

deal of significance.

deal of significance.



This assessment is about effect of a project on the world of

This assessment is about effect of a project on the world of

animals,

animals,

plants,

plants,

water,

water,

air,

air,

 and 

 and 

humans

humans

 existing in the project

 existing in the project

area.

area.

Course title: Development planning and project analysis II

BY: s k.         Academic Year, 2012

32

3. 

3. 

Project Appraisal

Project Appraisal



A 

A 

The prime objective of project appraisal should be to 

The prime objective of project appraisal should be to 

identify

identify

the 

the 

weaknesses

weaknesses

and identify means of 

and identify means of 

strengthening

strengthening

 it

 it

adequately to ensure final success of the project.

adequately to ensure final success of the project.



The main objective is then to 

The main objective is then to 

improve the project

improve the project

.

.

33

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

4.  

4.  

Project implementation

Project implementation



It is the stage at which the conclusions are reached & decisions

It is the stage at which the conclusions are reached & decisions

made are put into action.

made are put into action.



Some of the major activities in during project implementation

Some of the major activities in during project implementation

phase include:

phase include:



Detailed designs;

Detailed designs;



Tender documents are prepared;

Tender documents are prepared;



Bids are  evaluated,

Bids are  evaluated,

34

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont…,

Cont…,



Contracts are signed; workers are hired, training;

Contracts are signed; workers are hired, training;



Materials are moved to sites & etc.

Materials are moved to sites & etc.

5. 

5. 

Project Evaluation

Project Evaluation



Implementation phase is followed by supervision and follow up.

Implementation phase is followed by supervision and follow up.



The execution of the project should be 

The execution of the project should be 

supervised closely 

supervised closely 

and

and

progress should be 

progress should be 

reported regularly

reported regularly

.

.

35

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont…,

Cont…,



Project evaluation 

Project evaluation 

is a monitoring (checking) activity in order to:

is a monitoring (checking) activity in order to:



Find out how things 

Find out how things 

are going

are going



Encourage the 

Encourage the 

project team

project team



Check that promised resources are in fact working on project

Check that promised resources are in fact working on project

tasks

tasks



Rapidly learn about concerns and difficulties

Rapidly learn about concerns and difficulties

36

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012

Cont…,

Cont…,



Show concern for the success of the project

Show concern for the success of the project



Take corrective action if things go wrong

Take corrective action if things go wrong



The project management, the sponsoring agency, or other bodies

The project management, the sponsoring agency, or other bodies

may do the evaluation.

may do the evaluation.

37

Course title: Development planning and project analysis II             BY: s k.         Academic Year, 2012