The application of knowledge, skills, tools, and techniques to project objectives to meet stakeholder needs and expectations.

1. Establishing An
Enterprise and Project
Management
Dr S V K

2. Project & Project Management
 A temporary endeavor undertaken to create a unique product or
service . Defined as scientifically evolved work plan devised to
achieve a specific objective with the specified period of time.
 The application of knowledge, skills, tools, and techniques to
project objectives to meet stakeholder needs and expectations.

3. Characteristics and Features
 Investment pattern.
 Benefits of gains.
 Location.
 Objectives.
Characteristic features
 Life span.
 Team work.
 Interrelated.
 Uniqueness.
 Change.
 Successive principles.
 Made to order or customer specific.
 Unity in diversity.
 High levels of sub-contracting.
 Risk and uncertainty.

4. Knowledge Areas
 Scope Management
 Time Management
 Cost Management
 Quality Management
 Human Resources Management
 Communications Management
 Risk Management
 Procurement Management
 Integration Management

5. Project Classification
1. Quantifiable and Non-Quantifiable projects
2. Sector projects
3. Techno-economic projects
4. Financial institutions classification
5. Services projects

6. Project Classification
 Quantifiable and Non-Quantifiable projects
 Quantifiable projects are those in which a reasonable quantitative assessment of benefits can be made
 Non-quantifiable projects are those where such an assessment not possible
 Sector Projects
 Agriculture Industry and mining
 Transport
 Social services
 Techno-economic projects
 Causation-oriented classification (RM based)
 Factor intensity oriented classification (LLCO)
 Magnitude oriented classification (Large /Small)
 Financial Institutions classification
 New projects
 Expansion projects
 Diversification projects
 Services Projects
 Welfare services
 Service projects
 Educational projects

7. Project Life Style Stages
 Conception Stage or Project Identification
 Idea germination
 Project identification
 Definition stage or project formulation :
 In this stage the project will develop the idea generated during the conception stage. The areas examined in
this stage are ( Eg ..cement plant) Raw materials, Plant size, Location, Technology, Project layout, Plant
layout, Electrical works, Civil works, Utilities – fuel, power, Manpower Financial Implementation schedule
 Planning and Organizing stage or project design :
 Prepare project execution. Take necessary action for realization of project like, Project Infrastructure System
design, Licensing, Identification of project manager
 Implementation:
 85% of the work done in this stage
 Project Clean-up stage:
 Drawing, documents, files, operation and maintenance manuals are catalogued and handed over to the
customer Handing over

8. Project Management and Other
Disciplines
 Finance
 HRM
 Operations
 Purchase and logistics
 R & D
 Marketing

9. Project Formulation
 Defined as “ taking a first look carefully and critically at a
project idea by an entrepreneur to build up an all round
beneficial to project after carefully weighing its various
components”

10. Phases of Project Formulation
1. Conception of an idea
2. Analysis of related aspects
3. Formulation of a project
4. Design of a project

11. Sequential Stages in Project
Formulation
 Feasibility study
 Techno-economic analysis
 Project Design and Network analysis
 Input Analysis
 Financial analysis
 Social cost benefit analysis
 Pre-investment analysis

12. Project Planning
 Project Plan “Is a formal, approved document used to manage and control project execution”
 Project Plan Development – Output of Planning processes in other knowledge areas:
 Historic Information
 Stakeholder skills and knowledge
 Organizational Policies
 Limitations and Assumptions
 Project Planning Methodology
 Project Plan
 Project Scope
 To whom the project is prepared
 The target audience
 The usefulness for the stakeholders
 Project Planning Objectives
 To satisfy the stakeholder
 To show one’s expertise
 To get the approval

13. Feasibility Study
 A feasibility study is an analysis of the viability of an idea through
a disciplined and documented process of thinking through the idea
from its logical beginning to its logical end. A feasibility study
provides an Investigating function that helps answer “Should we
proceed with the proposed project idea? Is it a viable business
venture?” A feasibility study should be conducted to determine the
viability of an idea BEFORE proceeding with the development of a
business.

14. Distinction between pre-feasibility
study and Feasibility study
Pre-Feasibility Study
 No thoughts on the
viability of the project
from economic, social,
technical, managerial,
market and financial
point of view
Feasibility Study
 Deeper knowledge on
various feasibility, such
as economic, social,
technical, managerial,
market and financial

15. Various Feasibility Studies
1. Socio-Economic Feasibility
2. Technical Feasibility
3. Managerial Feasibility
4. Market Feasibility
5. Financial Feasibility

16. Michael Porter: Aligning Strategy &
Project Management
 https://www.youtube.com/watch?v=CKcSzH1SvCk&list=WL
&index=1

17. Feasibility Reports Presentation
 A feasibility report provides primary economic
information, financial data and technical details
which serves as the basis for carrying out the
project successfully. The feasibility report should
cover the following important aspects all the
feasibilities studies such as market, financial,
economic, social etc…

18. Project Feasibility Report
Checklist
 Socio-Economic Feasibility
 Technical Feasibility
 Managerial Feasibility
 Market Feasibility
 Financial Feasibility
 HR feasibility
 Operational Feasibility

19. Sources of Finance
 Short Term
 Medium Term
 Long Term
 Bank credit
 Trade credit
 Installment credit
 Customer advances
 Issue of shares
 Issue of debentures
 Loans form banks and other financial institutions
 Public deposits (For existing concerns)
 Ploughing back of profits

20. Break Even Analysis
 Break Even Analysis
 Refers to determining the level of activity where total cost is equal to the total sale
 Break even is a point of zero profit and zero loss
 Utility of BE Analysis
 It serves as the most useful and important managerial tool to study cost-output-relationship at varying
levels of output
 It is useful in reviewing pricing policies
 It aids in planning capitalization of the enterprise
 It provides the entrepreneur to decide whether to acquire or not assets involving additional fixed costs

21. Project Design
 In project design, the entrepreneur is expected to
design prototype & test them. Design is the new
weapon and the key driver is innovation to fight out the
competition. For design to become culturally
embedded in an organization three forces have to be
considered:
 A deeper user understanding
 Multiple prototyping
 Strategic business design

22. Network Design
 Network Design is a system which plans both large and
small projects by analyzing the project activities. Projects are
broken down into simple activities, which are then arranged
in a logical sequence using network tools like PERT, CPM.

24. History of CPM/PERT
 History of Critical Path Method (CPM)
 E I Du Pont de Nemours & Co. (1957) for construction of new chemical plant and maintenance shut-down
 Deterministic task times
 Activity-on-node network construction
 Repetitive nature of jobs
 Project Evaluation and Review Technique (PERT)
 U S Navy (1958) for the POLARIS missile program
 Multiple task time estimates (probabilistic nature)
 Activity-on-arrow network construction
 Non-repetitive jobs (R & D work)

25. Project Network
 Network analysis is the general name given to certain
specific techniques which can be used for the planning,
management and control of projects
 Use of nodes and arrows
 Arrows lead from tail to head directionally
 Indicate ACTIVITY, a time consuming effort that is required to
perform a part of the work.
 A node is represented by a circle
 Indicate EVENT, a point in time where one or more activities start
and/or finish.

26. Activity & Event
 Activity
 A task or a certain amount of work required in the project
 Requires time to complete
 Represented by an arrow
 Indicates only precedence relationships.
 Event
 Signals the beginning or ending of an activity
 Designates a point in time
 Represented by a circle (node)
 Network Shows the sequential relationships among activities using nodes and arrows
 Activity-on-node (AON) nodes represent activities, and arrows show precedence relationships
 Activity-on-arrow (AOA) arrows represent activities and nodes are events for points in time

27. PERT Analysis
 https://www.youtube.com/watch?v=V5FmgNCD5Rw

28. PERT
 PERT is based on the assumption that an activity’s duration
follows a probability distribution instead of being a single
value
 Three time estimates are required to compute the
parameters of an activity’s duration distribution:
 pessimistic time (t p ) - the time the activity would take if things
did not go well
 most likely time (t m ) - the consensus best estimate of the
activity’s duration
 optimistic time (t o ) - the time the activity would take if things
did go well

29. Steps in PERT
 Development of project network
 Time estimation
 Determination of critical path, event slacks and activity floats
 Development of project schedule
 Calculation of variability duration and the probability of
completion in a given time

30. Network Diagram
 Concepts
• Activity
• Precedence relationship
• Successor
• Event

31. Guidelines for network
diagram
1. Before an activity can begin, its preceding activities must be
completed.
2. Arrows indicate logical precedence.
3. Flow of the diagram is from left to right.
4. Arrows should not intersect.
5. Dangling should be avoided.

32. A Simple Project
Activity Immediate
Predecessor
Expected
Time
A - 5
B - 6
C A 4
D A, B 2

33. Precedence Diagram

34. STEPS IN DETERMINING
CRITICAL PATH
• Specify the individual activities.
• Determine the sequence of the activities.
• Draw the network diagram.
• Estimate the activity completion time.
• Identify the critical path.
• Update the CPM diagram.

35. Activit
y
Preceden
ce
Normal time
(week)
Normal
Cost (Rs)
A - 3 300
B A 3 30
C A 7 420
D A 9 720
E D 5 250
F B,C,E 6 320
G F 4 400
H F 13 780
I G 10 1000
Total 4220

36. 1
8
7
6
3
5
4
2

37. Overhead cost as per the given data- Rs.50
Paths in the network diagram :
A-D-F-G-I = 32
A-D-F-H = 31
A-C-F-H = 29
A-C-F-G-I = 30
A-B-E-F-H = 30
A-B-E-F-G-I = 31

38. Difference between
CPM & PERT
CPM PERT
• CPM works with fixed
deterministic time
• PERT works with probabilistic
time
•CPM is useful for repetitive and
non complex projects with a
certain degree of time estimates.
•PERT is useful for non repetitive
and complex projects with
uncertain time estimates.
• CPM includes time-cost trade off. •PERT is restricted to time
variable.
• CPM- for construction projects. • PERT- used for R&D programs.

39. Location of an Enterprise
 Location considerations for the establishment of
manufacturing plants is critical to the operation of the setup
in an uninterrupted and least resistant manner.
 An ideal site is certainly contributes to the smooth and
efficient functioning of an enterprise.

40. Steps in selection of Enterprise
Location
I. Selection of region
II. Selection of the locality or Community
III. Selection of the exact site; and
IV. Selection of the optimum site

41. Factors to be consider in studying
the location for an Enterprise
 Location. . .
 Deciding a suitable area/place, etc. where the plant/factory
will start functioning.
 It involves 2 major activities:
1. To select a proper Geographic region
2. Selecting the specific site within the region.

42. 1. Nearness to raw materials
2. Transport Facilities
3. Nearness to Market
4. Availability of labour
5. Availability of Fuel and Power
6. Availability of Water
7. Climatic Conditions
8. Financial and other Aids

43. 9. Land topography
10. Community attitude
11. Presence of related industries
12. Existence of Hospitals, Schools, Banks, Clubs, Post offices
etc.
13. Local bye-laws, taxes, etc
14. Housing Facilities
15. Security
16. Facilities for Expansion

44. Thank you…