PROJECT DEFINITION

 

In this article, we will discuss project definition which is a very important aspect of our study as it begins to sharpen our focus on the core study of projects. Project definition is very important since it helps us to define a project under discussion.

 Meaning of Project Definition

Project definition is a process which seeks to describe a project from the idea stage to the stage when the project has been completed.

All information about the project is usually embodied in the definition of the project. Usually, before a project starts, it must be properly defined so that the parties involved properly understand their clear roles.

Discussion Case: Rehabilitation of Lagos-Ibadan Expressway

Let us use a familiar case as a discussion case. In 2015, the federal government decided to rehabilitate the Lagos-Ibadan expressway which was in a terrible state. The engineering firm of Julius Berger Nigeria PLC was chosen as the competent firm to carry out the rehabilitation work. We can describe the project by considering the various processes involved before the project was commissioned.

The Process of Project Definition for the Rehabilitation of the Lagos- Ibadan Expressway

We have looked at a simple case of a road rehabilitation project. We will now deepen our knowledge by discussing the project cycle.

1.2  The Project Cycle

The project cycle tries to describe the various stages that are involved from the conception of a project idea to when the project is executed or

Discussions between Federal Government of Nigeria and Julius Berger Plc

- Engineering designs - Engineering calculations - Purchase schedules - Purchase orders - Material receipts

Actual Construction

Commissioning and Handover actually takes off. Understanding of a project cycle is really very important as it enables us to get the total picture of a project. Let us now examine the various stages of a project cycle.

Fig. 2: The Project Cycle

 

The Project Cycle

1.2.1        The Project Idea Stage

The project idea stage is the first stage of a project cycle. The idea about a project arises from a variety of sources within the market place or macroeconomic environment. New project ideas could originate from within an organisation or from outside it. In a public sector organisation, it emanates mainly from the assigned roles of the relevant body. For example, a rural farmers’ fertiliser distribution project is most likely to emanate from a state ministry of agriculture and natural resources. The idea of a rural medical clinic is also likely to emanate from a health ministry.

In the private sector, project ideas could emanate from within an organisation or from outside. From within, it could arise out of contacts between salesmen and customers. It could also arise from outside if customers specifically request for possible bigger or better products.

Project idea stage

Project identification stage

Project evaluation stage

Project selection stage

Project execution stage

New project ideas may fall into any of the following categories:

a. A proposal to build a community health centre in a very remote village in Kwara State. b. A proposal to upgrade a rural medical clinic to a general hospital. c. A proposal to conduct a population census in Nigeria prior to an election. d. A proposal to build a mega railway line that will link the western part of Nigeria with the eastern part.

Project Identification Stage

After the project idea stage, the next stage is the project identification stage. The project identification stage consolidates the project idea stage. Project ideas are not actually useful except if they are clearly identified and put down in a systematic manner for further processing.

A government agency may conceive the idea of poverty alleviation in a particular local government area of Bauchi State. But you will realise that the concept of poverty alleviation covers a very vast area of possible interventions. So apart from simply coming up with the poverty alleviation, the government agency should go ahead to identify the mode of intervention. The poverty alleviation project could be any of the following: a. a rural women kunu making seminar/workshop b. a rural women micro­credit scheme c. a millet planting project.

Project Evaluation Stage

When a project has been identified, the next step is to evaluate the project. Project evaluation involves the estimation of the costs and benefits of a project. Costs and benefits should be measured in terms of cash flows. It will be important here for us to understand that the estimation of cash flows of a project is a very difficult task. It is difficult in the sense that cash flows which are likely to arise in the future may be difficult to estimate.

In a public sector set up, other factors come into play when evaluating a project. For example, the employment generation potentials of a project may be taken into consideration when estimating the benefits of a project. Besides, political considerations may also come into play.

Project Selection Stage

After the project evaluation stage, the next stage is the project selection stage. Faced with an array of projects with different values and worth, there is need to select which projects will be embarked upon. Besides, budgetary considerations will also come into play since the resources for projects are limited. Project selection is a top management responsibility. In the selection of projects, top management usually considers the financial cost outlays involved and match them with the benefits to be derived from a project. Projects that add positive benefits to the community should be selected.

Project Execution Stage

The project execution stage is the final stage in the project cycle. After a project has been selected, it moves on to the execution stage. In most organisations, the responsibility for execution of projects is vested on a project management team raised by management or government. The function of the project management team is to ensure that the budget for the project is actually spent on the project and that the project is completed on schedule. In an ideal organisation, the project management team usually prepares a monthly or quarterly budget report on projects. This is important for project monitoring and control.

 Defining a Project for Financial Appraisal

Virtually all projects involve financial expenditures but at different levels. Some aspects of a project may be ignored but there is no way that we may be able to ignore the financial aspects of a project.

Before a project is embarked upon, all aspects of financial appraisal must be conducted so that the total expenditures and inflows/benefits of the project can be estimated well in advance.

To guide us in defining a project for financial appraisal, let us draw up a checklist.

Table 1: Checklist for Defining a Project for Financial Appraisal

ITEMS	YES OR NO
Cost of land and land acquisition
Construction of building offices, etc.
Drainage
Perimeter fence
Electrical Power
Water
Sewage
Roads
Cost of equipments/machinery
Materials costs
Skilled labour
Unskilled labour
Operating/maintenance costs
Local government rates and taxes
Vehicles
Professional fees
Communication
Revenue/benefits
Projected income statement
Projected cash flow statement
Payback period estimation

CONCLUSION

In this article, we have discussed the concept of project definition. We also discussed the concept of the project cycle which runs from the project to the project execution stage.

ASSIGNMENT QUESTIONS

Discuss fully the concept of a project cycle.

REFERENCES AND FURTHER READING

Association of Cost Engineers. (1991). Estimating Checklist for Capital Projects. (2nd Ed). London: Spon.

Klien, R.L., and Ludin, I.S. (1997). Reducing Project Risk. Aldershot: Gower