Project Environment and Introduction to Project Management

1.5. Project Environment

Project environment can be defined as the surrounding on which project operates. Projects operate in a rapidly changing dynamic environment. The environment has the serious influence on the implementation and cost of the project. Environmental influence in project occurs through complexity, uncertainty, competition for resources, flexibility, and rapid technological changes. In order to achieve the goal, the project 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.

Project environment is mainly grouped into

i. Internal environment

ii. Task environment

iii. External environment

i. Internal environment

It is located within the project and can be controlled by it. Internal environment dictates what project can do. It consists of following:

a) Project objectives: Objectives or goal is the end results. It paves the path to the project team. Every effort of stakeholders and project team should be towards achievement project objectives.

b) Constraints: a project operates within the constraints of time, cost, and quality of performance. The time, cost and quality are guiding parameters and effective balance between these parameters is necessary.

c) Structure: A project is temporary organization. The team is headed by the project manager. Team members come from various discipline with varied experience.

d) Resources: a project consists of human and non-human resources. It usually has its own budget and human resources include experts and managerial personnel. Resources availability sets limit on project activities.

ii. Task environment

It refers to a group of stakeholders, participants or interest groups who benefit from the project or get affected by it. It consists of:

a) Client: the project should satisfy the need of the client. The client specifies the projects terms of reference (TOR).

b) Contractor: Most civil engineering projects are implemented through the contractor. Its main objectives are to maximize profit and influence the project.

c) Consultants: they exert the important influence on project activities in all phases.

d) Suppliers: equipment, materials, and labors are supplied by suppliers. The affect quality and schedule through delivery timing.

e) Government: Policies, attitudes, and facilities by government help or constrain the project.

f) Competitors: Competitors action also affect the project.

g) Financiers: They provide fund and they affect fund mobilization.

h) Labor unions

iii. External Environment

The external environment is the set of broad forces in projects surrounding that are relevant to its operation. It includes all the factors outside the project which affects climate in which project operates and beyond the control of project management team. The component of external environment are:

a) Political-legal environment

Political environment includes political institutions, political parties, political stability, political philosophy and legal environments such as laws, regulations, and court decisions. These components either restrain or facilitate the functioning of the project.

b) Economic environment

It includes economic policies, economic system, national income, distribution of income, market factors, product market, inflation, fiscal policies, and economic conditions. The economic environment is a major factor that influences the investment climate in the country.

c) Socio-cultural environment

Social environment includes social structure, demography, social values, lifestyle, belief, and expectation in a particular society. The Cultural environment includes values, norms, belief, and behavior of people. It can have the major influence on the project as projects are operated in a society for the benefit of the society.

d) Technological environment

It consists of skill, methods, system, equipment, and rate of change of technology. It influences on the project by bringing changes in skills required, job prospects, and production process. Components of the technological environment are the level of technology, the pace of technology change, technology transfer etc.

1.6. Introduction to Project Management

• Project management is the discipline of planning, organizing, securing, managing, leading, and controlling resources to achieve specific goals i.e. project objectives. In other words, project management is the application of knowledge, skill, tool, and techniques to a range of activities in order to meet the requirements of a particular project.
• Project management begins with proper planning of project activities before the project begins. The project team needed by a project manager has total responsibility for project deliverables. Resources are allocated to various activities performance is monitored for feedback and correction purpose. Team members are motivated to achieve higher performance. Project management constantly adopts to changing project environment.
• Basically, nine managerial functions are involved in managing the project.

1. Project integration management.
2. Project scope management.
3. Project time management.
4. Project cost management.
5. Project risk management.
6. Project human resources management.
7. Project quality management.
8. Project communication management.
9. Project procurement management.

Bibliography:

IshwarAdhikari and Santosh Kr. Shrestha, “A text book of Project Engineering” 2011, Chandeshwori Publication, First Edition.

K. Nagarajan, “Project Management”, ISBN: 81-224-1340-4, New Age International (P) Limited, New Delhi, India, 2001.

E.R. Yescombe, “Principles of Project Finance” 2002, Yescombe-Consulting Limited.