Dr. Raghu Bista Nepal Adm. Staff College Project Planning Dr. Raghu Bista Nepal Adm. Staff College

Projects as… Projects are one of the principle means by which we change our world. Whether the goal is to split the atom, tunnel under the English channel, introduce Windows XP, or plan the Olympic games in Beijing, the means to achieve all these tasks remain the same: through project management. Projects are the basic building blocks of development. Without successful project identification, preparation and implementation, developments plans are no more than wishes (Dennis A. Rondineli (1976), Project Management Quarterly, Vol VII (1), Projects have also been the primary instruments for grant, credit, loan and technical aid to developing countries by international agencies

Projects as… Project provides the means for mobilizing resources and allocating them to the production of new economic goods and social services Then, What is Project?

Project Definition Project is a specific activity with a specific starting point and a specific ending point intended to accomplish specific objectives. It may range from small infrastructure project to more complex multipart project such as integrated hydroelectric project with irrigation, power and tourism as its components.

China's Three George Hydro Electric Dam Begun in 1994, the dam is massive in scale. It stretch 1.5 mile and rise to a height of over 600 feet. It is expected to store 51.4 billion cubic yards of water and raise the current level of the Yangtze River above the dam site over 570 feet. The dam was build to generate 18,200 megawatts of electricity. It is the world's largest hydroelectric dam.

General Project Characteristics Projects are temporary activities with a clear life cycle Projects are building blocks in the design and execution of organizational strategies Projects are responsible for the newest and most improved products, services and organizational processes Projects provide a philosophy and strategy for the management of change Projects are terminated upon successful completion of performance objectives.

Project vs Process Process Project Ongoing Repeat process or product People are homogeneous Greater certainty of performance, cost, schedule Project One shot New process or product People are heterogeneous Greater uncertainty of performance, cost, schedule

Project Cycle Projects go through similar stage on the path from origin to completion These stages are generally expressed in terms of cycles and known as project cycle There are some popular cycle practiced by Donor Agencies. World bank Project Cycle, UNIDO Project Cycle, ADB Project Cycle etc. are some examples of project cycle.

World Bank Project Cycle Identification Preparation Appraisal Negotiation Implementation and Supervision Evaluation

Project Planning Project planning decides in advance the scope and activities, design and technological aspects, environmental aspects, financing plan for the project, time planning and resource planning of project

Civil Home Phase IV Master Plan Civil HOMES bring its latest project Civil Homes Phase IV located at Dhapakhel - V.D.C., Lalitpur. Far from the madding crowd yet just a 5 minutes drive from Satdobato Chowk, at Dhapakhel - V.D.C., Lalitpur. Near GEMS School, Civil Homes Phase IV is an ideal place to live in surrounding natural beauties and vistas with clean, healthy, pollution free and peaceful environment. Civil Homes Phase IV, spread over a land area 115 ropanies (www.civilhomes.com)

Project Planning Process Planning for project begins with identifying project ideas to solve some problems/needs/demands of societies/regions/countries.

Project Identification Initial phase of the project is to find out potential project ideas. An entrepreneur is always looking for new business opportunities that can be materialized or a development related organisation is looking problems/needs of people that a project can address. Project identification stage is also called project conception stage

Sources of Project ideas Needs/problems of society Availability of local material Study of available skills Evaluation of development plan/program Review of import and export Review of old projects Observe experience elsewhere

Crossing River Through Wire Rope Sources: Er Bhim Upadhyaya DDG DoLIDAR 2068.10.9

Wire Rope Across Trishuli River Sources: Er Bhim Upadhyaya DDG DoLIDAR 2068.10.9

Dhading Gajuri Twin Sources: Er Bhim Upadhyaya DDG DoLIDAR 2068.10.9

Sources of Project Ideas Continue suggestions of financial institutions/donors Economic and social trends Study of new technical development Trade fair participation Leaders/social workers

Sources of Project Ideas Continue SWOT Analysis of nation - Strength - weakness - Opportunities - Threats Study of Related and supporting industries

Preliminary Screening After identifying long lists of project ideas, some kind of preliminary screening is required to eliminate ideas which are not promising

The aspects to be considered for formulation of projects Market and Demand Aspects: The objectives of organisation is to generate profits from sale of products/services. Market and demand analysis explore the future market and look at the need of the project It is the key activity for determining the scope of an investment, the possible production programs, the technology required and often the choice of location.

Market and demand Study How much is the demand size, demand growth, number of populations/ number of organisations that can be customers are to be analyzed . Is the demand expressed a real need or only demanded for particular benefits of certain group? How much is the unfulfilled demand? What sources of data were used in analysisng market.

Market and Demand Study What price of product/service will be charged? How it was analyzed? Analysis of competitors, their strength, weakness Distribution mechanism etc.

Free Services Free services also have demand. Production units including schools, roads, hospital without having any market price must not be interpreted to mean that there is no demand

Technical Aspects Every project must be technically feasible. Technical analysis is related to examine whether the project under study is technically feasible to setup and operate to produce service/product. For example, in agriculture project of Apple farming, types of field, soil test, temperature required in selected location, location selection, plantation distance of between plants, variety etc needs to be analyzed.

Technical Aspects to be Considered Choice of technological process and/ or appropriate technology, Is the technology proven or tested? Does the technology/ process/ equipment technically fit with the facility’s existing technology/process/ equipment & machinery? Equipment capacity & whether it is as per requirement List of recommended equipment suppliers. Reputation of the suppliers and performance guarantees

Technical Aspects to be considered Cont. Investment cost and operational cost of different technology/process Environmental aspects of different technology Size and scale of operations Locational aspects of the project and availability of infrastructural facilities with probable alternative locations

Management Aspects - User’s role in case of development projects - If the management is incompetent, even a good project may fail. Background of the promoters Their academic qualification, and experience Their past performance Assessment of other specific skills required for the project What about training arrangement? - User’s role in case of development projects

Environmental Aspects A project may causes environmental impacts in many ways Will the project have any adverse effects on the environment? Has the analysis Identified positive and negative impacts of projects? Required Mitigation measures are recommended Is there environmental management plan Is there adequate fund for environment management plan the Environment

Case III: Delhi Metro Project’s Environment Friendliness According to Delhi Metro Corporation, in the survey and construction stage of Delhi Metro Project, all efforts are being made by the Corporation to save trees. For every tree cut during construction the DMRC is planting 10 trees as compensatory afforestation. Around 26000 trees have been planted at Najafgard, Isapur and Rebla Khanpur. (website Delhi metro)

Environment Friendliness Cont.. The Delhi Metro Rail Corporation has been certified by the United Nations as the first metro rail and rail-based system in the world to get “carbon credits for reducing greenhouse gas emissions” and helping in reducing pollution levels in the city by 630,000 tons (630 Gg) every year. (http://en.wikipedia.org/wiki/Delhi_Metro, 2012 Aug)

Environmental Aspects Main acts/guidelines in Nepal are Environment Protection Act 1996, the Environment Protection Regulation 1997, National Environmental Impact Assessment Guidelines, 1993

Financial Aspects Cost of the project Cost of production and operation Working capital requirement Estimation of sales and sales revenue Source of finance Calculation of Net Present Value (NPV), Internal Rate of Return (IRR) and Benefit Cost Ratio (B/C Ratio) Decision: - If NPV > 0, accept, if NPV < 0, reject - If IRR > discount rate (cost of capital), accept project - If B/C ratio > 1 accept project

Economic Analysis Economic analysis appraises the project’s contribution to the whole economy of the region or country. It helps determine whether the project increases the net wealth of a region or country as a whole or not. The main advantage of economic evaluation as compared to financial evaluation techniques is that externalities and observed price distortions are considered.

Project Selection Resources are scarce and limited. Selecting too many projects and allocating little funds will hamper project implementation and success. The evaluated projects are to be prioritized based on economic Net Present Value and Cost Benefit Analysis (Public sector projects). Based on prioritization, good project should be selected and proposed for financed first.

Budgeting Project in Terms of Time To determine completion date for any project, it is necessary to timetable all the activities that make up the project.

Work Breakdown Structure Work Breakdown Structure (WBS) is a hierarchical structure to logically sub-divide all the work elements of the project into graphical presentation This is similar in structure to an organisation structure, also called organisation breakdown structure A project can be logically sub-divided by project phases, location, tasks, sub-contractors etc.

Uses of WBS It helps to visualize the scope of project clearly It helps to develop a complete lists of activities of the project It helps to estimate budget for the project

Work Breakdown Structure and Description Foundations 1.1.1 Wall/Roofs 1.1.2 Piping 1.2.1 H/C Water 1.2.2 Wiring 1.3.1 Fitting 1.3.2

Gantt Chart One of the oldest and still one of the useful methods of presenting information The purpose of the Gantt Chart is to aid the time scale planning and sequencing of tasks in a visual form that can be grasped easily by the manager

Network Techniques 1. Program Evaluation and Review Technique (PERT) 2. Critical Path Method (CPM) Both methods are developed in late 1950s CPM uses a deterministic approach which suits a project whose time duration can be accurately predicted. PERT uses a probabilistic approach Expected time of activity in PERT = a+4m+b 6 Where, a = most optimistic (shortest) time, m = most likely time, b = pessimistic (longest) time

Determination of Critical Paths Network diagram helps to identify critical and non critical activities To know the duration of the project, we have to find critical path from the network diagram The critical path is the sequence of activities between a project’s starting and finishing time that takes the longest time to complete projects

Gantt chart showing critical activities B C Activities D E F G 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Weeks (Activities shown with dotted lines are non critical activities)

Resource Planning To complete project in time with minimum resource, careful planning of resource is necessary to identify the required resources Resource requirement should match with resource supply So resource planning not just means estimating resource requirements but also matching with supply, getting resource at minimum possible price and meeting quality requirement

Resource Estimation Estimate resource requirements of each activity of the project (Material, labour, machines) Compile resource requirement for each activity on early start bar chart Compile the resource availability

Resource Estimation Cont…. Compile the resource availability Draw the resource histogram Compare resource forecast with resource availability and report overloads and underloads. Smooth resources by moving activities with in their slack Re-schedule the planning bar chart

Prepare Procurement and Cash Requirement Plan To match the resource requirement schedule, necessary procurement plan needs to be prepared Cash requirement planning can be made with outflow of cash schedule

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