3

Defining the Project Task

Copyright

2007 Dennis Lock and his licensors. All rights reserved.

This presentation describes an aspect of project

management which, although not the most
exciting, is extremely important.
Good project definition is the essential starting
point if a project is to be managed successfully.

Project definition
Describes the project
Specifies the project deliverables
Sets out the scope of what we have to do
Provides the basis for our business plan.

Project definition
So, take a little time out to consider project definition.
What is project definition?
What has to be defined?
Why?
Discuss or jot down your thoughts before moving on.

Project definition
Have you had enough time for thought?
Here are a few of the many possible answers

1 An investor or customer needs to be

clear on what to expect in return for the
investment.
2 Before a contractor can offer to carry
out the project, it must know its total
commitment.
How much work and materials will be
needed?
What are the risks?
How much of the project shall we have
3 If you've just been appointed project
to do?
manager, you will need answers to the
above questions.

Some reasons for defining a

project

 General project description: what's it all

about?
What is the required performance
specification?
Scope of supply: how much shall we have
to do?
What are the contract conditions?
What will be our project strategy?
How much will it cost?
How long will it take?
Where is the project to be done?
Typical definition requirements
Whats that location like?

Project definition
Begins before the project starts . . .
. . . and ends when the project is finished

Project phase
1 Original concept
2 Feasibility study
3 Business plan
4 Risk assessment
5 Public enquiry
6 Authorization
7 Organization
8 Planning
9 Design
10 Procurement
11 Fulfilment
12 Test/commission
13 Handover
14 Economic life
15 Disposal

Five-year periods

Here is the project life cycle again . . .

. . . to show the various stages of project definition

Project phase
1 Original concept
2 Feasibility study
3 Business plan
4 Risk assessment
5 Public enquiry
6 Authorization
7 Organization
8 Planning
9 Design
10 Procurement
11 Fulfilment
12 Test/commission
13 Handover
14 Economic life
15 Disposal

Five-year periods

This vital part of project definition takes place before

any work can begin. This is when the scene is set and
the die is cast. Most of this presentation deals with
project definition during these early phases.

Project phase
1 Original concept
2 Feasibility study
3 Business plan
4 Risk assessment
5 Public enquiry
6 Authorization
7 Organization
8 Planning
9 Design
10 Procurement
11 Fulfilment
12 Test/commission
13 Handover
14 Economic life
15 Disposal

Five-year periods

Inevitably more will be learned about the project as

work progresses, and the definition will become more
detailed.

Project phase
1 Original concept
2 Feasibility study
3 Business plan
4 Risk assessment
5 Public enquiry
6 Authorization
7 Organization
8 Planning
9 Design
10 Procurement
11 Fulfilment
12 Test/commission
13 Handover
14 Economic life
15 Disposal

Five-year periods

Project definition ends only when the project has been

handed over to its customer. Then it can be defined in
its final, finished, as-built condition.

The customer or client

Original
objectives
Sales
engineering

Changes

Design and
purchasing

Sales

Manufacture or
construction

Final testing or
commissioning

As-built

Increasing accuracy of definition

records

specification

Equipment
vendors

Subcontractors

Handover to the
customer or
client

The definition of an industrial project

Project strategy
Deciding the project strategy is part of
project definition.
Strategic decisions greatly affect project
costs and outcomes.

Some examples of strategic questions:

Shall we bid for all the project or only a part of it?
What manufacturing or building processes do we
prefer to use on this project?
Shall we use our UK factory or the Far East?
Are we going to build and test before shipping or
erect, test and debug on site?
Can we accept the risks that we have assessed?
Do we need a joint venture partner?

Or, for a business change project:

Do we really need to move our head office away
from London?
If we do move, should we stay in Britain?
Which city looks most promising?
Do we need to keep a small office in London or
must the move be complete?
What kind of compensation do we envisage
paying staff who decide to leave?
What kind of compensation do we envisage
paying staff who decide to move with us?
and so on

The following is a more high-level case

example to demonstrate strategic project
problems.

Global Mines Inc is an international mining

company that specializes in producing
copper and other non-ferrous metals.

A new mine project can include

The deep mine or open pit from which copper ore

is extracted

The associated infrastructure (roads, airstrip, rail

link, township, and so on)

A processing plant where the ore is:

- crushed
- concentrated
- smelted
- and then refined to produce pure copper.

Some Global Inc. mines do not have their own

processing plant.
Those mines transport their ore to a mine (not too far
away) that has processing plant with spare capacity.
This companys biggest operations are in South
Africa and South America.

Global Mines Inc:

Principal
operations

Key

Mine

Processing
plant

The company has recently discovered new copper

deposits in Australia.
Investigations and calculations reveal that the ore
quality and the size of the ore body will justify
building a new mine, with at least one deep shaft.

Global Mines Inc:

Principal
operations

Key

Mine

Processing
plant

The processing plants in South America and South

Africa all have spare capacity.
Both the South African plants are old, relatively
inefficient and costly to operate.
One of the South American plants is new, has spare
capacity and is highly efficient and environmentally
green.

Now Global Mines Inc now has to make a strategic

decision.
1. Should it build a new processing plant for the
Australian mine, at a cost of hundreds of millions
of pounds?
2. Or, ship the Australian ore to the nearest (but old)
processing plant in South Africa?
3. Or, ship the Australian ore to the highly efficient
plant in South America, but accept the higher
transport costs?

Global Mines Inc:

Principal
operations

Key

Mine

Processing
plant

These are just three of the many possible strategic

options that could be proposed for this project.
In this complex case many other options could be
considered.
For just one example, a plant could be built in
Australia to smelt the ore. Then only copper (not
tonnes of ore) need to be shipped for refining.
Each of these many options will lead to a different
business case for cost estimating, and financial and
risk appraisal.

A long and expensive feasibility study might be

necessary before a strategic decision can be taken.
When compiling the business case, it is essential to
define the strategic option to which it refers.
That means giving each different option a case
number, so that we can be sure which option we are
dealing with when carrying out cost estimating and
subsequent financial appraisal.

It is apparent that there is much to consider when

first defining a new project.
There is also much to remember or, worse, to forget.
Companies with long experience of projects in a
particular industry will develop checklists over the
years in an attempt to avoid errors of omission.
Companies about to embark upon a project where
they have no experience often do well to engage a
consulting company that does have that experience.

If we spend too long considering too many options,

and carrying out one feasibility study after another,
we can spend the entire project budget before real
work begins. The new Wembley Stadium project was
beset by such definition problems long before it got
into construction difficulties.
Even when we get our business case right, a big
project can fail because market conditions change.
For example, a 10 per cent fall in the price of copper
could make nonsense of the mining project just
described.
Big projects are not for the faint hearted.

End of Presentation 3