Fpm4dev chapter 1

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Chapter One - Development Project Management www.pm4dev.com

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Definition of Project Management What is a Project?

Before one can effectively manage a project, there needs to be a shared understanding of what makes a project. A project manager needs to be able to answers questions about a project's purpose, objectives, scope, sponsorship, funding and mandate. There are many definitions for what constitutes a project, and some of these definitions describe the nature of a project and how it differs from other type of work. The descriptions used to define a project include the following:  A temporary process, which has a clearly defined start and end time, a set of tasks, and a budget, that is developed to accomplish a welldefined goal or objective.  A temporary effort of sequential activities designed to accomplish a unique purpose.  A group of inter-related activities, constrained by time, cost and scope, designed to deliver a unique purpose.  A temporary endeavor undertaken to create a unique product or service.  An undertaking that encompasses a set of tasks or activities having a definable starting point and well defined objectives.  A clear set of activities with related inputs and outputs aimed at achieving objectives and goals linked to anticipated (desired) effects and impacts in a target population.

From all these descriptions, one can see specific attributes that define a project and separate it from most ordinary work:  A project has a beginning and an end.  A project has limited resources.

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 A project follows a planned, organized method to meet its objectives, with specific goals of quality and performance.  Every project is unique.  A project has constraints and a unique reason.

For the purpose of this book, we will use the following definition of a project: A project is a temporary effort made up of a set of related activities undertaken to achieve a unique goal or objective within specified constraints.

Definition of Management We need to have a good understanding of what is management within the realm of a project. Management is defined as the achievement of project or organizational objectives through people and other resources. Management is a process of setting and achieving goals through the execution of the four basic functions of management: planning, organizing, directing and controlling, by utilizing human, financial and material resources.

Management has also been defined as “the art of getting things done through other people.”2 This definition highlights the fact that managers achieve organizational goals by developing an environment where others can perform the tasks, and not themselves.

There are four basic functions in management, often classified as planning, organizing, leading and controlling:  Planning involves defining organizational goals and proposing ways to reach them. Managers plan with the objective of achieving a desired future by committing resources and deciding which tasks must be done to reach the intended goals.  Organizing is the process of creating organizational structures that will enable employees to carry out the manager’s plans. It is about

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J. Stoner, Management, 4th Ed., (Prentice Hall 1989)

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making optimum use of the resources required to enable the successful implementation of plans.  Leading involves getting others to perform the tasks by direct influence, and by applying communication skills that will build the right atmosphere to help employees do their work.  Controlling is the process by which the organization monitors performance and takes corrective action, checking progress against plans and making the necessary modifications to keep the plans on track.

Not all management activities are projects, but all projects are management endeavors.

Project Management Definitions  According to “A Guide to the Project Management Body of Knowledge, PMI, Fourth Edition,”3 “Project management is the application of knowledge, skills, tools, and techniques to a broad range of activities in order to meet the requirements of a particular project.” In addition to this definition, other leading organizations in project management offer the following definitions:  The ISO 25000, International Standard Organization, defines project management as: “A unique set of processes consisting of coordinated and controlled activities with start and finish dates, undertaken to achieve an objective.”  PRINCE2, the UK standard for project management, says: “a temporary organization that is needed to produce a unique and predefined outcome or result at a pre-specified time using predetermined resources.”  IPMA, the International Project Management Association, defines a project as “a time and cost constrained operation to realize a set of defined deliverables up to quality standards and requirements.” 4 In other words, project management is the planning, implementing and monitoring of project activities to meet project objectives, achieved by 3 4

www.pmi.org www.ipma.ch

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effectively controlling and balancing the constraint of scope, schedule and budget in producing quality deliverables that meet or exceed the expectations of the project stakeholders. The temporary nature of projects contrasts with processes, or operations, which are permanent or semipermanent ongoing functional work to create the same product or service over and over again. For the purposes of this book we will use the following definition: Project management is the process of combining systems, techniques and knowledge to complete a project within established goals of time, budget, scope and quality

Definition of Development Project Development projects in developing countries are financed by bilateral and multi-lateral government agencies, nonprofit organizations (NGOs), private institutions, or government agencies (within the developing countries). A development project is designed to deliver a specific output aimed at improving the economic and social conditions of a group of people.

Examples of the type of objectives of development projects are: reduction in child mortality, improvement in maternal health, or combating HIV/AIDS, malaria and other diseases.

A development project is a set of related activities or tasks settled upon to achieve the economic, political and social goals of a development policy.

Development projects are managed by development organizations that have long-term strategies to achieve goals in order to contribute to the reduction of poverty. Development organizations, for the most part, fund their projects from grants or contracts that come from competitive bidding processes, or from international funding agencies such as the World Bank and USAID.

Characteristics of Development Projects Development organizations vary in size and orientation, though most share the common goal of helping people and benefiting society. These organizations include multilateral development banks, such as the Inter-

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American Development Bank (IADB); United Nations Associated Agencies, such as UNDP and UNICEF; bilateral and multilateral government agencies, such as USAID and DFID; International non-governmental organizations (INGOs), such as CARE, CRS and Save the Children; and government agencies in developing countries that support development activities including water and sanitation, agriculture, welfare support, health, education, small-financial loans, and protection of the environment.

The goal of all development projects is to help improve people's lives through skills training and other livelihood programs. Development organizations prepare and implement development projects, and work to strengthen the capabilities of local institutional and promote community selfreliance through sustainable strategies. Funding for projects comes through private and public donations, government assistance, and a variety of other sources. Development projects may consist of a single, transformative project to address a specific problem, or series of projects addressing several problems.

Although, development projects make significant contributions to the socioeconomic development of the communities they work with, they have certain limitations. A larger number of national NGOs are small in both size and scope of operations, and their impact sometimes is limited. NGOs can suffer from financial and technical constraints, often focused on a specific concern or a specific location; many lack a broader economic and social perspective; some are loosely structured and may have limited accountability; and their management and planning methods may be weak or too flexible.

One of the key success factors of development projects is when their planning processes involve people who will benefit or be affected by the project. Beneficiaries need to play a larger role in the planning and implementation of development efforts that will reshape their lives. This is one of the reasons why development projects are gradually moving away from traditional projects that rely on delivering direct services, and are now geared more toward promoting active participation of community based organizations to deliver the services that will benefit the poor and other intended beneficiaries more directly.

Involvement of beneficiaries also increases the likelihood that the development efforts will realize their intended benefits and can help avoid implementation problems. The concept of participation is concerned with

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ensuring that the intended beneficiaries of development projects are involved in the planning and implementation of those projects. This is considered important, as it empowers the recipients of development projects to influence and manage their own development and helps remove any type of dependency after the project is completed. Beneficiary participation is widely considered to be one of the most important factors for project success.

Characteristics of Development Projects:5  The financing or donor agency leads the development of the initial stages of the project.  Financing could be via loan or grant.  The role of the project sponsor is usually unclear; at times it seems it is the financing agency which acts as the sponsor rather that the domestic party.  Developing-country environments are difficult environments: there is often a lack of infrastructure and all resources are in short supply, especially human resources such as trained project managers.  Implementing agencies are short of resources and have difficulties in meeting the project requirements.  Involvement of different project stakeholders, each with their own interests, whose views must be considered.

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Robert Youker, The nature of development Projects, World Bank

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Project Management Constraints Every project has to manage four basic constraints: scope, schedule, budget and quality. The success of a project depends on the skills and knowledge of a project manager to take into consideration these constraints, and develop the plans and processes to keep them in balance. It is not enough for a project to meet the budget targets or to show to the donor that all activities have been completed on time. Development projects need to balance all four constraints if they want to realize the full benefits of a project.

Project management is the discipline of planning, organizing and managing resources, to deliver all the work required to complete a project within defined scope, time and cost constraints.

Classic project management usually considers three constraints on a project: scope, schedule and budget (known as the project triangle).6 This book includes a fourth constraint: quality. In development projects, it is not enough to meet the goals of scope, schedule and budget. The project must also meet the needs and expectation of the beneficiaries who are the ultimate judges of project quality.

Managing these constrains requires careful analysis, and an agreement on the priorities by the organization, the donors, and the stakeholders.

Depending on those factors, a project may assign more importance to the budget and quality than to the schedule or scope. These types of decisions, early in the project, have a fundamental impact on all the project plans that will need to be designed to ensure that the project is able to manage the four constraints. Failure to do so may result in the use of resources in areas that do not contribute to the ultimate success of the project.

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The Project Management Life Cycle, Jason Westland, 2006, Kogan Page Limited

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The definition of project management implies that projects have specific limits in scope, schedule, budget and quality.

Understanding the combination of these elements provides opportunities to make better choices when tradeoffs are needed. The use of a triangle helps us understand these relationships: adjust any one of these sides and the other two are affected.

For example, a change in the project plan to shorten the schedule might result in an increase in costs or require a decrease in scope.

The diagram below helps us visualize the close relationship amongst these four constraints:

Figure 1. The Four Constraints of Project Management

Scope Constraint Scope is what the project is trying to achieve. It entails all the work involved in delivering the project outcomes, and the processes used to produce them; it is the reason and the purpose of the project. One of the leading causes for project failures is poor management of the project scope.

Problems with scope can occur when the project manager does not spend enough time defining the work, or when there is no agreement on the scope by the different stakeholders. Another common problem is the lack of scopechange control leading to incurring additional work that was not authorized

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or budgeted. This is known as "scope creep." Scope creep, or uncontrolled changes in a project's scope, is the tendency of a project to include more tasks than originally specified, which often leads to higher project costs than planned and an extension of the initial completion date.

Schedule Constraint Schedule is defined as the agreed amount of time needed to complete the project. The schedule is often the most frequent project oversight in developing projects, which is reflected in missed deadlines, incomplete activities, and late management reports. Proper control of time requires the careful identification of tasks to be performed, an accurate estimation of their durations, the sequence in which they are done, and how people and resources are allocated.

The schedule approximates the duration of all activities in the project, and it is quite common to find that the original estimates were off-target once the project makes progress when there is an increased understanding of its environment. The schedule also uses critical information from key project stakeholders about their availability to participate in the project; for instance, beneficiaries who have limited time to commit to the project due to other priorities. The project team should verify any time constraints or requirements for a specific date or period that comes from beneficiaries or other key stakeholders.

Budget Constraint Budget is a list of all planned expenses in the budget. The project must include all the required expenses needed in order to deliver the project within scope and schedule. In development projects, managers have to balance between not running out of money and not under-spending, because many projects receive funds or grants that have contract clauses with a "use it or lose it" approach to project funds. Poorly executed budget plans can result in a last-minute rush to spend the allocated funds. The project budget is the constraint that receives the most scrutiny and control to ensure the

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project is using the finds according to the plans, contract clauses, and local regulations A number of constraints, financial, political and organizational, may dictate the methods by which resources such as personnel, equipment, services and materials are acquired. The project manager needs to know any existing resource-acquisition policies, guidelines, and procedures. Moreover, the preferences of the beneficiaries and/or the donor’s agreement may influence purchasing decisions. Information from similar or past projects can be used to gain a better understanding of budgeting strategies.

Quality Constraint Quality is the fourth constraint, defined as delivering the project outcomes according to the stated or implied needs and expectations of the project beneficiaries and the funding agency. Quality is all about achieving stakeholder’s satisfaction. It also means complying with quality standards that are either mandated by the local government (such as laws and regulations), or by professional standards (such as health).

Quality is also defined as the “Conformance to requirements or fitness for use,”7 which means that the product or services must meet the intended objectives of the project, and that the beneficiaries can use or benefit from the project deliverables as it was originally intended.

Managing the Project Constraints Managing these constraints is the main responsibility of the project manager.

Each constraint has a specific goal and a project is deemed successful when it achieves all four. Failure in any of the four has an impact in the other three. For instance, a project delay has an impact on its cost, and an increase in scope has an impact in both time and budget. Managing the constraints also involves making trade-offs with the project scope, schedule, budget and quality. All projects are implemented using estimates to establish the time 7

Joseph M. Duran , Quality Control Handbook (1951)

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and cost to deliver specific objectives of a certain level of quality; therefore, projects are implemented with many uncertainties and exposed to many risks, which requires revisions to the original plans along with negotiations with the different stakeholders.

Changes in the social and natural environment can delay a project, increase its costs, or reduce its scope, forcing the project manager to evaluate alternatives and negotiate with the stakeholders and beneficiaries for modifications. Project management is in essence the art, science and craft required to balance the scope, schedule, budget and quality constraints of the project. The project triangle illustrates the process of balancing constraints, because the three sides of the triangle are connected, changing one side of a triangle affects at least one other side, and all sides affect the center of the triangle, which is quality.

Here are some examples of balancing project constraints:  When the schedule of a project needs to be tightened, the project might need to increase the budget because more resources are needed to do the same work in less time. If the budget cannot be increased (the donor doesn’t approve the increase), then scope might need to be reduced because the available resources will not be sufficient to do all the planned work in less time.  When the budget of the project decreases, the schedule might need to be stretched out because budget is not available to pay for the staff as originally planned. If time cannot be increased, the other alternative is to reduce the project scope because fewer staff will not be able to do all of the planned work in the time available.  When the project scope increases, there is a need for more time or more resources (budget) to complete the additional work. When the project adds more work than was originally budgeted, it is important that before the new work is started, there is an approval from the donor for additional funds. Otherwise the project will end up with a budget shortfall that could have an impact on the expectations of quality from the beneficiaries.  Quality is at the center of the project triangle because it affects every side of the triangle: any changes made to any side of the triangle are likely to affect quality. For example, a need to cut activities to meet

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the budget might result in a decreased scope, which reduces the opportunities to achieve an acceptable level of quality.

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A Systemic Approach To be effective at managing complex situations, project managers need to take a holistic view of a project and understand how it is situated within the larger environment. By taking this holistic view of projects, project managers are better prepared to understand the external factors that will impact the project. Using a systemic approach for project management provides a holistic and analytical method to solve the complex problems a project will face. As such, the project is a system that has a set of interdependent and temporarily interacting phases, all working within an environment to fulfill a purpose.

A project-management methodology uses system analysis as a problemsolving approach; it looks at the project as the sum of different phases and that facilitates the identification and evaluation of problems, opportunities, constraints and needs. The analysis looks at the possible solutions for improving the current situation; identifies an optimum solution and an action plan; and finally, it continuously examines the plan against any changes in the environment to make the corresponding adjustments to keep the project on track. Traditional methods involve a linear cause-and-effect relationship.

By taking a systems approach, projects can see the whole network of bidirectional interrelationships. Instead of analyzing a problem in terms of input and output, we look at the whole system of inputs, processes, outputs, feedback, and controls. This larger picture provides more useful results than traditional methods, and allows the project to see change as a continuous process. Using a system approach is critical for successful project management; project managers need to identify all the issues and components of a project and its relationship with the internal and external environment.

Projects by definition are temporary endeavors, but they cannot stay isolated from the rest of their environment. If they are run in isolation, the projects face the risk of not serving the needs of those who really need it.

Development projects must operate in a broader environment, and project managers need to consider projects within this greater context.

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The Project Management Ecosystem As a system, a project depends on three basic components: processes, people and tools, all integrated and influenced by the internal environment (the organization) and an external environment (the world). This is the project ecosystem.

Process Component Process consists of all a systematic series of actions directed to some end.

These include the activities defined in the project plan, and the actions to comply with policies and procedures, including government and donor regulations. Processes determine the work that needs to be accomplished, which defines the requirements for people skills and use of tools. Following processes ensures the quality of the project outputs meet quality standards, reduces duplication of efforts, and makes the best use of people’s skills.

Skills Component This area defines the set of skills and capabilities of the people in charge of managing the project, who follow the processes and procedures geared to control the quality of services provided by the organization. The people component is influenced by the compensation and values of the organization, and by the external labor market that sets conditions to find qualified staff for the project. People are a critical part of every project, because of the unique abilities they bring.

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Tools Component Tools are the techniques and devices selected by the organization with the purpose of facilitating the management of the project, meeting its objectives and facilitating its contractual obligations. Tools include the technology available to manage the information the project generates and improve its analysis to allow the project to make decisions.

As a system, these three components are influenced by both internal and external environments. A change in one of the components can have a significant impact on the other components. Modifications to policies and procedures can influence the skills required in the team. Changes in tools will require a modification of processes and skills to use them properly.

Projects do not exist in isolation tProject hey are influenced by two strong factors: the internal and external environment. The graphic below shows the tight interdependency amongst these elements in the system:

Figure 2. The Project Management Ecosystem

The external environment is made of conditions that the project has little or no influence to change. These conditions include: donor and government

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requirements, legal regulations, general practices, and standards imposed by international or local regulations. Additional external factors include limitations on the availability of communications technology and local infrastructure, limited availability of people with the required skills, a competitive labor market, and poor or inadequate training facilities.

The internal environment includes the policies, procedures and standards the organization has established for all projects, including compensation, benefits and other Human Resource practices. The internal environment can also include the standardization of project-management tools and methods.

The success of project management depends on the equilibrium of the process, skills and tools components; when one of them fails or doesn’t receive adequate funding or support, the whole system fails. Projects operate as part of a system that involves a high degree of uncertainty. By using a holistic approach, project managers can integrate all the internal and external components into their planning. It also helps them see a project as a series of interrelated phases. By doing this, project managers have a better job of ensuring project success.

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Chapter 1 Summary  A project is defined as a temporary effort made up of a set of related activities undertaken to achieve a unique goal or objective within specified constraints.  Managing involves the actions of planning, organizing, directing and controlling.  Development projects make significant contributions to the socioeconomic development of the communities within which they are located.  Scope, schedule, budget and quality are the four project-management constraints, and managing these constraints requires careful analysis and an agreement on the priorities by the organization, the donors and the stakeholders.  Managing the four constraints is the main responsibility of the project manager. Each constraint has a specific goal, and a project is deemed successful when it achieves all four. Failure in any of the four has an impact in the other three.  A project is a system, and is dynamic and complex, constantly interacting with the internal and external environment with information flowing between the different elements that compose the system. Projects operate as part of a system that involves a high degree of uncertainty. By using a holistic approach, project managers can integrate all the internal and external components into their planning.  As a system, the project relies on three basic components: processes, people and tools. These components are closely integrated and influenced by the internal environment and external environment.