PROJECT ENGINEERING

ISHWAR ADHIKARI
 CHAPTER CONTENT
CHAPTER 1: Introduction to Project & Project Mgmt.

• Definition of Project, Characteristics, Example.

• Classification of project.

• Project Objective and Goal.

• Project Life Cycle Phases.

• Project Environment.

• Introduction to Project Management.

CHAPTER 2: PROJECT APPRASIAL &FORMULATION

• Concept of Project Appraisal

• Project Proposal (Technical and Financial)

• Developing Project Proposal

• Techniques of Project Formulation

- Feasibility Study
- Cost Benefit Analysis
- Input Analysis
- Environmental Analysis
CHAPTER 3: PROJECT PLANNING & SCHEDULING
• Project Planning and Its Importance.

• Project Planning Process.

• Work Breakdown Structure (WBS).

• Project scheduling with CPM and PERT.

• Project Scheduling with Limited Resources.

- Resource Leveling

- Resource Smoothing

• Introduction to MS-Project.
CHAPTER 4: PROJECT IMPLEMENTATION
& CONTROLLING

• Introduction to Monitoring and Controlling.

• Project Control Cycle.

• Project Cost Control: Earned Value Analysis

• Project Quality Control.

• PMIS
CHAPTER 5: PROJECT RISK ANALYSIS AND
MANAGEMENT
• Introduction to Project Risk
• Types of Project Risk

• Analysis of Major Sources of Risk

• Risk management
➢ Risk Management Planning
➢ Risk Identification
➢ Qualitative and Quantitative Risk Analysis
➢ Risk Response Planning
➢ Risk Monitoring and Controlling
CHAPTER 6: INTRODUCTION TO PROJECT
FINANCING
• Project Finance

• Capital Structure Planning

• Capital Budgeting Decision

 TEXTBOOK REFERENCE
 A Text Book of Project Engineering (2nd edition)
( Adhikari and Shrestha)
 Project Planning and Control with CPM and PERT (B.C.
Punima & K.K. Khandelwal).
 Fundamental Of PERT/ CPM & Project (S.K.
Bhattacharjee)
 Project Management Body of Knowledge (PMBOK)
“Available in Internet”
 Project Management In Nepal (Dr. Govinda Ram
Agrawal)
 CHAPTER 1
INTRODUCTION
What is a Project?
• A project can be defined as an unique task
(however large or small) with defined goal,
limited in cost and time and giving some benefits
to the users. (S.K. Bhattacharjee)
• A project is defined as a temporary endeavor
undertaken to create a unique products or
services. (Project management Body of
Knowledge)
 A project is a one-shot, time-limited, goal
directed, major undertaking requiring the
commitment of varied skills and resources.”
 Resources of project

Generally Denoted by 5M

 Money
 Manpower
 Material
 Machine
 Minute/ Management
Fig1.1 Building Project
Fig1.2 Hydropower dam
Fig1.3 Communication Project
 Examples of Project
 Construction project (building, road,
hydropower, etc)
 Research and development project
 Introducing new products in market
 Developing new information system
 Running a campaign for political office.
 Producing movie or serial.
 Performing marriage for children
 Writing a book, thesis etc.
 Characteristics of Project
1. A defined goal or objective.
For example, The goal of a construction
project is to build something
2. Limited set of resources (manpower, money,
machine and material)
3. Specific task, not routinely performed
4. Temporary (definite beginning i.e. start date
and definite end i.e. finish date)
5. Unique: No project is absolutely similar to
another . There is only one Taj mahal, Eiffel
Tower, Panama Canal etc.
6. Rapid expenditure (level of expenditure is high
as compared to other permanent program)
7. Participation /Involvement of different peoples
i.e. stakeholders.
Major stake holders in project are:
(a) Client/ Owner
(b) Contractor
(c) Consultant
(d) Project Manager
8. Constraints (all the project have major
constraints i.e. time, cost and performance
(quality)
9. Defined deliverables : it should be clearly defined
what the project will deliver after its completion.
10. Progressive Elaboration
(Progressive means working in step by step and
Elaboration means to develop thoroughly:
working with care and detail)
 Classification of project
According to funding (source of fund)
 Private sector project
➢ These projects are the basis of private investment.
➢ The private sector bodies are responsible for the
development and sponsor of the project.
➢ Example- Civil homes, Kathmandu Mall, Apartments
etc
 Government sector project
➢ These projects are the basis of government
development plans.
➢ Government is the major sponsor of projects in
developing countries.
➢ Example- water supply project, hospitals, schools etc.
 Grant projects
➢ These are those projects where the investment in
project is not repaid by the government to the
donor agencies.
 Loan projects
➢ These are those projects where the investment in
project is repaid by the government to the donor
agencies.
According to the Foreign aided project:
 Joint venture project
This project is funded through collaboration of foreign and local
investors. They involve transferring of capital, technology,
management. They are based on the ownership sharing. Example
– Maruti- Suzuki.

 Bilateral project
This project is funded from the financial resources of a friendly
donor country, generally through grants under an agreement.
Example – JICA, KOIKA etc.

 Multilateral project
This project is funded from the financial resources of
multilateral donors such as World Bank and Asian development
bank.They are generally funded through loans.
According to Techniques:
 Labor intensive project
This project is labor based. Human labors are
extensively used for implementation of the project.

 Capital intensive project

This project is technology based. Technology
represented by machinery, automation, and
computerization is used to implement the project.
According to Functions:
 Disaster prevention projects
 Development projects
 Service sector projects
 Environment friendly projects etc.
According to Scale and Size:
 Mega
It is a big size complex project for 5 to 10 years involving
huge investment and high technology. Upper Karnali
hydropower project is the example of mega project of
Nepal.
 Major
It is smaller in size than mega project. Middle
Marshyangdi hydropower project is the example of
major project in Nepal.
 Medium
It is small in size than major project.
Khimti/Bhotekoshi/Jhimruk hydropower project is an
example.
 Small
It is the smallest project of short duration. Manang
hydropower is the example.
According to Time frame and speed:
 Normal
Normal time allowed for project implementation.
 Crash
Saving in time is achieved by spending extra money
and compromising quality. Overlapping of project
phases is encouraged.
According to Nature of project:
 Simple
 Complex
 Innovative
 Emergency
 Project Cash Flow
Cost

Appraisal Implementation Operation

Time

Commission

Cost Sanction

Investment Return
Setting Project Objective and Goal

 Goals are purpose and mission for initiating a

project which is set at the start of project.
 It is the specification of what is hoped to be
achieved at the end of the project.
 It allows stakeholders to specify the target then
work towards their own objectives.
 Goal should clearly state what the project will
deliver.
 Goal setting takes time, energy and dialogue.
 Objectives are the ends towards which the
activities of a project are directed.
 A project has clearly defined (specific objectives).
It is focused on end result.
 Project exists when the objectives have been
achieved.
 Hence the first step in any project is to define the
objective. We define the project objective in order
to:
1. Make sure that we have identified the right
target.
2. Create team commitment and involve all
interested parties in achieving the successful
project outcome.
Goals are to be SMART
S = Specific (well clear and defined)
M = Measurable (define a method of
measuring project goal)
A = Agreed to Achievable (all the
members need to agree goal and must be
achievable)
R = Realistic (Possible under limited
set of resources)
T = Timeframe (definite start and end
date)
Examples of SMART goal
 Bad example of a SMART goal: “I want to write a
book”.
 Good example of a SMART goal:
“I want to write a work book on “How to add 10
years to your life” that is at least 150 pages in
length and get it completed by June 30th 2022. I
will write at least 4 pages every weekday until I
complete the book.”
 Bad example of a SMART goal: “I want to have a
lot of money”.
 Good example of a SMART goal:
“I want to make one million within 10 years by
starting an internet marketing business selling
personal development products all over the
world and by providing life coaching
consultancy and conducting live seminars.”
 1.3 Project Phases and Life Cycle
 A project depending upon its nature, size and
type, undergoes through different well defined
phases right from its inception to successful
completion project phases are known as project
life cycle.
 The project life cycle refers to a logical sequence
of activities to accomplish the project goal or
objective.
 The breakdown and terminology of these phases
differs depending upon the nature of the project
or organization.
 Five basic phases contribute to develop a project from
an idea to reality:
1. Initiation Phase
Conceptual study:
 Projects are born with creative ideas.
 It includes preliminary evaluation of ideas, such as
project identification, project formulation.
Feasibility study:
 The objective of the feasibility study is to have more
detailed information about the location, nature,
dimensions, raw material needed, equipments, cost-
benefit analysis, and the detail about the users who
will be benefitted from the project.
Market study:
 It includes the study of the marketing prospects
and demand of the product, considering
(a) potential size and composition of the market
(b) present and projected demand of the
product/services.

After the completion of this phase, a go/no-go

decision is made.
2. Planning phase
Work breakdown structure:
 The project is broken down into small elements
so that all the activities to be performed in the
project are included.
Cost and Schedule Planning:
 After breaking down the project, the time and
cost of each activity is determined and overall
time and cost of the project is determined.
Contract terms and condition:
 The contract terms in which the project
activities are to accomplish is determined in this
phase. The contract may be lump-sum, fixed
price, unit rate etc.

After the end of this phase time and cost

estimate of the project is made and major
contracts are let
3. Engineering and Design
Preliminary engineering and design
 It stresses architectural concepts, evaluation of
technological process alternatives, size and
capacity decisions, and comparative economic
studies.
Detailed engineering and design
 It involves the process of successively breaking
down, analyzing and designing the structure
and its elements.
 This detailed phase include architects, interior
designers, landscape architects, and several
engineering disciplines including chemical,
civil, electrical, mechanical etc.
4. Implementation and Controlling Phase
 Application of the paper work physically in the
real field.
 Manufacturing, installation of machines and
testing and civil works.
 Controlling is performed to check project
performance at any point of time during
implementation.
 The facility is substantially completed at this
phase.
5. Divestment/ Phase out/ Termination
 This phase is the end of project and project is
brought to its completion.
 The final testing and maintenance of the project
is done and handed over to the customer and
resources are released to other projects.
 The basic tasks in this phase are evaluation and
handover of the project output to the
beneficiaries.
 Project life cycle in terms of
resources/risk and time
Resources /Risk
Resources

Risk

Start End
Initiation Planning Engineering and Implementati Termination
design on
 Cost and staffing levels are low at the start,
higher towards the end, and drop rapidly as
project draws to a conclusion as shown in fig:
 The probability of successfully completing the
project is lowest, and hence risk and
uncertainties are higher at the start. The
probability of successful completion gets
progressively higher as the project continues.
 PROJECT ENVIRONMENT
 The project management performance largely
depends on the environment which differs from
country to country.
 In order to achieve the goal, it must continually
adapt to its environment, which is constantly
changing.
 Failure to adequately adapt to the environment is a
major cause due to which project fails.
 The environment consists of forces that influence the
project and its ability to achieve the mission.
 Projects are becoming increasingly complex with
their technical, economic, social and political
influences raising new project management issues.
 Project Environment can be analyzed at different
levels as follows.

1. External Environment
2. Operating Environment
3. Internal Environment
 Economic Environment

EXTERNAL ENVIRONMENT
Consultants
OPERATING ENVIRONMENT
Technological Suppliers
INTERNAL Political Legal
Environment Governm
Media ENVIRONMENT Environment
ent
• Objective
Contractors • Resources
• Structure Competit
Customers • Constraints ors

Financial
Institutions

Socio Cultural
Environment
EXTERNAL ENVIRONMENT
 It consists of all those forces outside a project that are
relevant to its operation.
 It implies all the conditions circumstances and
influences surrounding and affecting the total project
or any part of it.
 It includes all the factors, which are external and
beyond the control of an individual project and its
management.
 It provides the framework within which a project has to
operate.
 It is classified into four categories:
Economic Environment
 Includes the economics system, national income,
distribution of income, market factors, product market,
infrastructure facilities, inflation, fiscal policies, etc.
 It affects the cost of inputs and demand of project
products.
Political legal Environment
 Includes constitution, political parties, political stability,
national and international government, administrative law
etc.
 These components either restrains or facilitates the
functioning of the project.
Socio cultural Environment
 It consists of population trends, caste structure,
education system, social values, life style etc.
 It can have major influence on project and its
functioning.
Technological Environment
 It consists of stare of technology, rate of technological
change etc.
 Project manager should be concerned with the
components of technological environment, i.e. Process
of innovation (Research and Development) and Process
of Technology Transfer ( taking technology from
laboratory to the project )
Operating Environment
 It consists of media, customers, consultants,
competitors, financial institutions, suppliers,
contractors and government.
 They are called stakeholders and influence the
project in direct or indirect manner.
 It is not within the control of project but directly
influence the performance of the project.
Internal Environment
 It is located within the project and can be
controlled by it
 It consists of the following:
 Objective, Resources, Structure, constraints,
 Project Management
 Projectmanagement is the application of
Knowledge, skills, tools and techniques to
project activities to meet the project
requirements.

 Project management is accomplished through

the use of planning, executing, controlling and
closing processes.
Basically nine managerial functions are involved in
managing the project.

1.Project Integration Management (plan

development)
2. Project Scope Management
3. Project Time Management
4. Project Cost Management
5. Project Risk Management
6. Project Human Resource Management
7. Project Quality Management
8. Project Communication Management
9. Project Procurement Management
 Project Management Concept
 All work is a process and processes combine to
create a phase
 Various phases with well defined milestone
make up a project.
 Uncertainty is inevitable in each phase.
 Inability to measure and manage uncertainty is
worst enemy.
 By using specific tools and systematic
application, project can be effectively managed.