Two things that set projects apart from other commercial and industrial activities are:
1. a project is new, usually having no exact precedent, and carrying all the risks that stepping into the unknown can bring;
2. projects have finite life cycles. Every successful project progresses through several life cycle phases from birth to death.
LIFE CYCLE PHASES
Phase 1 concept or recognition of a need for a project
Now the project is merely a gleam in someoneās eye. An idea has occurred for a venture that could bring benefit to an entrepreneur, an organization or a community. All that is known at this embryo stage is that something could and should be done to improve an existing situation, make a profit or produce some other kind of benefit. So far, no money has been spent on the project.
Phase 2 project definition or business plan
Now is the time for the initial project idea to be developed into a project definition or business plan. A person wanting a new home built can specify many things that an architect can later develop into a design scheme. A company wishing to expand its production facility can specify what new machinery it needs, so that a detailed order can be sent to a manufacturer. A person contemplating a business change must prepare a business plan that sets out what must be done, how long the project would take, how much it would cost and what the expected benefits should be.
Even at this early stage some money must be spent. How much money depends on the complexity of the proposed project. A straightforward machine replacement for a factory can be specified relatively easily. But developing a new oilfield or mining operation can require a feasibility study project costing millions of pounds.
Every business plan or study should look at how the main project activities will be funded. Possible sources of finance for a commercial project include:
ā¢ cash reserves (funds saved from previous company profits);
ā¢ revenue from current company operations;
ā¢ an issue of ordinary or preference shares;
ā¢ loans from banks or other financial institutions;
ā¢ an investment from a specialist investor company;
ā¢ a government grant or loan;
ā¢ a grant from the National Lottery.
ā¢ a public appeal campaign (particularly for a charitable project or a venture deemed to appeal to the general public for any reason).
The successful output of this project definition or business proposal stage is a management instruction for the project to go ahead. That will mean the issue of a contract or a purchase order when the project is to be purchased from a contractor or supplier of goods and services. If the project is an internal management change initiative, then senior management approval will be needed to launch the project.
Phase 3 design
Now the project has been approved it is time to establish the organization, appoint the project manager, carry out detailed planning, and produce drawings and specifications that will enable the project to be carried out. Iām sorry, but I did not have room in Figure 1.1 to list all these things, so I have lumped them all together as ādesignā, which is what many people do. Now the serious expenditure begins as people join the project organization to start work.
Phase 4 contracts and purchases
As design progresses, specifications can be drawn up for materials purchases and for contracted-out services. Now the bulk of the project expenditure must be committed when the purchase orders are released and contracts are signed. You will find some basic advice on contracts in Chapter 5.
Phase 5 fulfilment (which means doing the work)
This is the most active part of the project when the number of people engaged is at its peak. The project manager must exercise control over the progress and quality of the work.
Apart from possible technical difficulties and design errors, a well-known risk during this phase is that changes will be allowed which cause the project (and its costs) to expand beyond the original business plan. Project managers call this danger āscope creepā.
Phase 6 commissioning and implementation
If the initial design was reasonably free from mistakes, and all the fulfilment work has been done successfully, the project should now be finished and fit for purpose. But, of course, there will often be some teething problems. So the active phases of most projects end with a period of trial, testing and adjustment to find and correct all the snags. Some project budgets become overspent and run late because this phase was not taken into account during cost estimating.
This phase is particularly important for management change projects, when all the people involved have to accept the change and learn to work with the new procedures and conditions.
Phase 7 useful working life
The project manager usually has no direct involvement in this phase, and should by now have moved on to another project or other things. However the project manager might be asked to sort out queries and snags during the first few months as defects and problems become apparent when the project is first put to use.
It is to be hoped that the project will have a long, profitable and trouble-free working life. But this lifespan might be brief for a project where the technology is moving fast (think of anything to do with computers). A new building might last for many hundreds of years.
Phase 8 disposal
For many projects this final phase lies well into the future, when the original project manager has long since lost interest. He or she might be retired or dead. However, project designers often have to take the environment into account when considering the original project design. Choices between recyclable materials or substances that could pose a threat to the environment upon disposal are considerations that have to be taken seriously. By far the most obvious example would be a project to build a nuclear-powered electricity generation plant. The time required for safe disposal can be very great, and the disposal costs might be greater even than those for the original project.