Basic Misconceptions in Projects

Abstract

The chapter begins by questioning the fundamental distinctions between projects and operations. While there are significant differences between the two faculties, the reader is also made aware of the marked similarities between them. This helps the reader align better in using the literature and management developments in other areas that are in the other knowledge faculties. The chapter then covers the basics of the interface between the project and the business viz. the project feasibility study (PFS). We then try to understand the common problems of the PFS from the perspective of the project manager (who is subsequently responsible for the success of the project). In doing so, we identify the areas of improvement of PFS analyses in practice. An overview of the financial perspectives of the PFS is then presented. This is followed by a cursory treatment of financial appraisal methods. As a commonly observed conceptual gap in project management, the chapter then goes on to explain the basic accounting principles in deriving cash flows. The chapter concludes with an integrated model to evaluate projects using a multiperspective criteria.