Risk can be defined as uncertainty of outcome, whether positive opportunity or negative impact. Some amount of risk-taking is inevitable, whatever the project. There has to be a deliberate acceptance of some degree of risk because the value to the business makes it worthwhile. Project risk management includes the processes concerned about conducting risk management planning, identification, analysis (both qualitative and quantitative), responses, and monitoring and control on a project; most of these processes are updated throughout the project.
Risk management in projects involves identifying and assessing the risks in terms of impact and probability, establishing and maintaining a joint risk register, agreed by the integrated project team, establishing procedures for actively managing and monitoring risks throughout the project and during occupation on completion, ensuring that members of the team have the opportunity to engage in a dialogue that will promote agreement of an appropriate allocation of risk, updating risk information throughout the life of the project, ensuring control of risks by planning how risks are to be managed through the life of the project to contain them within acceptable limits, allocating responsibility for managing each risk with the party best able to do so. Management of risk is an ongoing process throughout the life of the project, as risks will be constantly changing. Risk management plans should be in place to deal quickly and effectively with risks if they arise.
Risks should be allocated to individual risk owners within the integrated project team, who should fully understand the risks for which they are responsible.… Read the rest
Project Planning is foreseeing with blue print towards some predicted goals or ends. Project plan is a skeleton which consists of bundle of activities with its future prospects; it is a guided activity. It is a plan for which resources are allocated and efforts are being made to commence the project with great amount of pre-planning, project is a way of defining what we are hoping to do about certain issue. The project alone is not responsible for what happens during the course of a planning. Project is a final form of written documents that guides us as to what steps need to be taken next.
Nature of Project Planning
One cannot conceive a project in a linear manner. It involves few activities, resources, constrains and interrelationships which can be visualized easily by the human mind and planned informally. However, when a project crosses a certain threshold level of size and complexities, informal planning has to be substituted by formal planning. Besides that it is an open system oriented planned change attempt which has certain parameters and dimension. So that, the need for formal planning is indeed much greater for project work than for normal operations. The pre-defined and outlined in detail plan of action helps than managers to perform their task more effectively and efficiently.
There are always competing demands on the resources available in a region or a country because of the limited availability and ever expanding human needs. Planning for the optimum utilization of available resources becomes a pre-requisite for rapid economic development of a country or a region.… Read the rest
The foremost aim of all the individual firm or a company is to earn maximum possible return from the investment on their project. In this aspect project promoters are interested in wealth maximization. Hence the project promoters tend to evaluate only the commercial profitability of a project. There are some projects that may not offer attractive returns as for as commercial profitability is concerned but still such projects are undertaken since they have social implications. Such projects are public projects like road, railway, bridge and other transport projects, irrigation projects, power projects etc. for which socio-economic considerations play a significant part rather than mere commercial profitability. Such projects are analysed for their net socio economic benefits and the profitability analysis which is nothing but the socio-economic cost benefit analysis done at the national level.
All the projects imposes certain costs to the nation and produces certain benefits to the nation. The cost may be of two types i.e. direct cost and indirect cost. In this respect the benefit derived from any project will also be of two types i.e. direct benefits and indirect benefits.
The social cost benefit analysis is a tool for evaluating the value of money, particularly of public investments in many economies. It aids in decision making with respect to the various aspects of a project and the design programmes of closely interrelated project. Social cost benefit analysis has become important among economists and consultants in recent years.
Features of Social Cost Benefit Analysis
- Assessing the desirability of projects in the public as opposed to the private sector
- Identification of costs and benefits
- Measurement of costs and benefits
- The effect of (risk and uncertainty) time in investment appraisal
- Presentation of results – the investment criterion.
… Read the rest
A feasibility study is an important tool for decision-making in project management. Accurate and adequate information about the project like technology, location, production capacity, demand, and impact on existing operations, cost and benefits to the company, time span for execution, resources needed should be included in the report. Alternatives if any should also be suggested.
Feasibility Study in Project Management can be defined as: “A tool for transforming the initial project- A tool for transforming the initial project-idea into a idea into a specific hypothesis of intervention, through the identification, the specification and the comparison of two or more alternatives directed to achieve the defined objectives, by producing a set of information helping the Project manager to take the final decision”
Market research or demand analysis, technical viability studies, financial or commercial feasibility studies are other wise known as functional or support studies to aid the decision-making. A preliminary feasibility study and the detailed project report later prepared would aid the management to appraise the project in different aspects. Project is appraised generally in the following areas. If one can remember the acronym METRE, then he can remember the various aspects of project appraisal easily. METRE stands for
- M – Management
- E – Economic viability (this includes market, commercial and financial aspects)
- T – Technical feasibility
- R – Risk and returns
- E – Environment
1. Management Appraisal
A project may be acceptable in terms of the market potential, technical feasibility, financial viability and returns. The risks associated with the project may be acceptable. … Read the rest
An issue is something that has happened and either threatens or enhances the success of a project. Issue management is the process for recording and handling any event or problem. Some of the issues can be dealt within the project. However strategic issues may require a change in order to keep the project viable. The concept of “strategic issues” has emerged as a way to identify and manage factors and forces that can significantly affect an organization’s future strategies and tactics. Project owners need to be aware of the possible and probable impacts of strategic issues. The project team leader has the primary responsibility to focus the owner’s resources to deal with project strategic issues. In a project, a strategic issue is a condition of pressure, either internal or external, that will have a significant effect on one or more factors of the project, such as its financing, design, engineering, construction, and operation.
One of the basic steps in deciding about a project is to confirm that it is driven by benefits, which support strategy. Strategic fit should be assessable from the beginning. The less clear the strategy, the more likely projects are to pass the initial screening; so there will be more projects competing for scarce resources resulting in the company losing focus and harming overall performance. In this regard the types of strategies that are implemented through project management are required to be understood.
Managing Project Strategic Issues
Project strategic issues often are nebulous, defying management in the literal sense of the word.… Read the rest
Projects have a distinct life cycle, starting with an idea and progressing through design, engineering and manufacturing or construction, through use by a project owner. Project life cycle is a collection of generally sequential project phases, whose name and number are determined by the control needs of organization or organizations involved in the project. A project phase is collection of logically related project activities usually culminating in the completion of major deliverable i.e. any measurable, tangible, verifiable outcome, result or item that must be produced to complete a project or part of project.
The project originates as an idea in someone’s mind, takes a conceptual form and eventually has enough substance that key decision-makers in the organization select the project as a means of executing elements of strategy in the organization. In practice, the project manager must learn to deal with a wide range of problems and opportunities, each in a different stage of evolution, and each having different relationships with the evolving project. Thus a project manager can effectively and efficiently plan and execute his decisions if he were able to identify these stages in the evolution of a project which is called life cycle of a project.
Read More: Project Life Cycle
A product grows through several phases in its life cycle, starting with an idea, progressing throughout production or construction and passing on to sales and distribution and through to after-sales logistic support. In the same way a project passes through the following stages:
- Develop an idea something which is something new.
… Read the rest