The project life cycle is a popular concept in project management.
Projects are understood as certain phases through which a certain concept passes in the process of its implementation, as well as functioning. This separation is important not only from a theoretical but also from a practical point of view because it allows for better control of the production process.
The concept of the project life cycle implies a certain sequence of stages for the implementation of an idea in terms of production or management process. Reference: “Project life cycle”, https://bvop.org/posts/projectlifecycle/
The role of this concept can be expressed in the following statements:
Determines the duration of the project, clearly indicating the dates of its start and completion;
Allows you to detail the process of implementing an idea, dividing it into specific phases;
It makes it possible to determine the number of staff involved as well as the resources required;
Facilitates the control procedure.
Stages of the project life cycle
In the process of implementing a certain idea about a production process or other activities in the enterprise, several consecutive moments can be distinguished. So, it is common to distinguish the following stages of the project life cycle:
- Initiation – the idea is presented, as well as the preparation of project documents. A detailed justification and marketing research are being carried out, which will serve to support the implementation of the next stages.
- Planning – determining the time for the implementation of the concept, dividing these processes into specific stages, as well as appointing contractors and responsible persons.
- Implementation – begins immediately after approval of the plans. This implies the full implementation of all planned actions.
- Completion – analysis of the received data and control for compliance with their plan. This obligation is in most cases the responsibility of management.
There are four main phases of the project life cycle, namely:
- the pre-investment study is the selection of the best project option, negotiations with stakeholders, as well as the issuance of securities through which capital will be attracted;
- direct investment, when through the sale of shares or other financial instruments the organization receives the funds necessary to implement the plan;
- the operation of the project is a full-scale production process, which is carried out according to a pre-developed plan;
- the post-investment study consists in assessing the effectiveness of the activities, as well as in determining the compliance of the obtained results with the expected ones.
Project life cycle characteristics
The project life cycle, as mentioned above, can be built individually, taking into account the specifics of a particular enterprise. However, they have some common characteristics, namely:
The largest number of costs and staff involved in the project implementation is in the middle of the cycle. The beginning and end of this process are characterized by low rates.
At the first stage, the highest level of risk is observed, as well as uncertainty and doubts about the successful outcome of the activity.
At the beginning of the project life cycle, the participants have great opportunities to make changes and improve the methods for achieving the goals. Over time, this becomes more difficult.
Waterfall model of the project life cycle
Although the life cycle of each project or organization can vary considerably, some generally accepted models can serve as a baseline. One of the most common is the waterfall, which involves the consistent implementation of each planned action and is characterized by the following characteristics:
preparation of a clear action plan to achieve the set goals;
for each action a certain list of tasks is determined, as well as obligatory work;
introduction of intermediate (control) stages, at which control will be performed for compliance with the previously developed plan.
Project life cycles, which are cyclical, are developed in a spiral pattern. At each stage, the effectiveness of development is determined following its price. This model differs in that during its development one of the key positions is assigned to the risk component, which most often includes the following points:
- Lack of qualified and experienced staff;
- The ability to exceed the budget or not meet the deadline;
- Loss of significance of the development during its implementation;
- The need to make changes in the production process;
- Risks related to external factors (supply disruptions, changes in the market situation, etc.);
- Failure to comply with the required level;
- Contradictions in the work of different departments.
The project life cycle is characterized by many principles, namely:
- availability of a detailed plan, which indicates all periods, deadlines, participants, as well as indicators in digital terms, which must be achieved as a result of the work;
- a reporting system must be developed according to which the compliance of the achieved results with the declared ones will be monitored at the end of each stage;
- the existence of an analysis system according to which the future situation can be predicted to make adjustments;
- the organization must have a system for responding to unforeseen situations so that work can be directed in the right direction at each stage of the life cycle. Reference: “Project Life Cycle example”, https://phron.org/project-life-cycle-example/
Example project life cycle
- Analyze the market and potential consumers
- Creating a business model
- Product prototype design
- Product design
- Technical work on its creation
- Product testing
- Possible revisions
- Delivery of the product among real customers
- Marketing activities
Activities and description of the activities for the realization of the phases
Market and consumer analysis should be based on:
Research of the current state of the market – the demand and supply of washing machines by reaching sources and official statistics, which are published by state and branch organizations and associations, by specialized publications / electronic and printed, etc.
To prepare a schedule with sales for the last 24 months / two years / – in Excel to give a visualization of market movements during the given period.
Which are the brands that sell best on the market in the expensive segment – to analyze why they are successful.
Which products would be our competitors and have similar characteristics – visualization of these products and analysis of their strengths and weaknesses.
What price niche will our product be in, given that it is innovative – we are chasing the high price range.
Analyzing our potential business partners in the realization/sale of our product – why focus on them
Who are our potential customers and how to reach them – these will be customers with financial incomes above the national average, people who want to have an innovative, economical and practical product.
Creating a business model
The business model shows how our project must realize ADDED VALUE, ie. PROFIT and is a natural continuation of item 1, ie. of Market and Consumer Analysis.
The one that has proven to be the most successful is the one set below and must be followed in the implementation of our project.
Product prototype design
For this purpose, they will be invited to preliminary talks between 3 and 5 design companies to be assigned a DESIGN for DESIGNING A MACHINE with a graphical interface, touch screen, own operating system, the ability to install additional applications to it from the App Store and the ability to the remote control.
The companies are given a period of 7 / seven / working days to provide us with a Price Offer / Offer.
After choosing a contractor, we sign a performance contract.
They will also be invited to preliminary talks between 3 and 5 of the leading companies in the design of white and black appliances to be assigned a TASK for DESIGNING A MACHINE with a graphical interface, touch screen, own operating system, the ability to install additional applications to it from the App Store and remote control.
The companies are given a period of 7 / seven / working days to provide us with a Price Offer / Offer.
After choosing a contractor, we sign a performance contract.
They are required to work closely with the Design Team.
Technical work on its creation
Before we have the design documentation and design of our product, we will study the companies that can produce it – in the country, Europe, China, and others.
We prepare assignments to 3 manufacturers that we have stopped and give the best conditions such as production time, cost of production, production capacity, warranty conditions, manufacture and delivery of spare parts, and consumables.
We sign a contract with the manufacturer who gave the best conditions and meets our vision for development.
We also specify and negotiate the LOGISTICS from the production to the trade network.
The logistics company is also selected by selecting 3 to 5 companies and the one with the best conditions is selected.
Before being placed on the market the product is subject to tests, which is part of the contract with the manufacturer.
Possible modifications – during the process from design to placing on the market it is possible to make adjustments and modifications to the product. All adjustments are ASSIGNED by the investor and agreed upon with the contractors at the individual stages.
Delivery of the product among real customers
After the analysis, we focused on our future trading partners. In parallel with the start of negotiations on design and design, we have entered into negotiations for the distribution of our product in the commercial network.
It will be carried out in parallel both through large chains and through online stores.
The logistics will be performed by the company already selected for the purpose.
Based on the fact that our product is in the high price range, we must choose a marketing consulting partner company / also after negotiations and selection of at least 3 companies / to build our marketing strategy., We will require our business partners to advertise to us. to be coordinated with our marketing partners.
The stages of the project cycle can be described as follows:
1. During the programming phase, the situation at the national and sectoral level shall be analyzed to identify problems, obstacles, and development opportunities to which cooperation may be directed. This work includes a review of socio-economic indicators, national priorities, and donor organization priorities. This phase aims to define and agree on the main objectives and sectoral priorities in such a way as to provide a program framework in which specific projects can be identified and prepared.
2. At the definition stage, project ideas are identified and carefully selected for further study. This process includes consulting with potential beneficiaries, analyzing the problems they face, and identifying possible solutions to those problems. As a result, a decision is made on the relevance and relevance of each project idea (both for the potential beneficiaries and the program framework formulated in the previous stage) and which project ideas should be further developed in the next stage of formulation. At the end of the definition phase, a decision is made to fund the programs.
3. During the formulation phase, relevant project ideas are developed in practical action plans. Beneficiaries and other stakeholders participate in the detailed development of the project idea, which is then assessed for feasibility (whether the goal can be achieved successfully) and sustainability (whether it is possible to create long-term benefits for the recipients). Based on this evaluation, a decision is made or not to decide on the preparation of a standard financial proposal and application for project financing. At the end of this stage, a decision is made to finance individual projects.
4. In the implementation phase, resources are mobilized for the implementation of the project and the project is implemented. This may require tendering and signing contracts for technical assistance or work and delivery. During the implementation process and with the direct participation of the beneficiaries and other stakeholders in the project, the project manager assesses the actual progress against the planned progress to determine whether the project is moving towards achieving its objectives. If necessary, the work of the project is adjusted or some of its objectives are changed due to any significant changes that may have occurred after the formulation of the project. Reference: “Project lifecycle – a real-life example from a project management course”, https://www.polyscm.com/project-lifecycle-a-real-life-example-from-a-project-management-course/
5. During the evaluation phase, the funding organization, and the partner country evaluate the project to determine what has been achieved and what lessons can be learned from the project in the future. The results of the evaluation are used to improve the quality of future projects and programs. Although in the overall project cycle the evaluation phase comes after the implementation phase, it is common practice to carry out a mid-term project evaluation to identify lessons that can be taken into account for the rest of the project life.
Investment project life cycle
Every individual entrepreneur, regardless of his affiliation with the industry, the complexity and scale of the work required for its implementation, passes in its development from a state when the project is not yet, to a state when the project no longer exists. In other words, the project has its beginning and end in time.
At the same time, the moments from the beginning and the end of the project are subjective and depend on the participant. For businessmen-organizers the beginning of a project is connected with the beginning of its development, for a credit institution – with the first list of the money for its implementation (the first tranche of the loan), etc.
The situation is similar with the end of the project *. An organization that starts working on IP and its partners are not interested in the project itself but in the result of its implementation,
Note that until recently in the USA, following the traditions of the administrative economy, the end of an investment project was considered to be the completion of its implementation, ie. commissioning of its facilities, start of its operation, and use of the results of the projects. In other words, the project cycle is identified with its pre-investment and investment phases. At the same time, it is clear that the total costs of the project and the total revenues from its implementation largely depend on the period of use of the results of the project implementation until the decommissioning of its facilities. And it is easier to influence the amount of future operating costs, in the first place, the volumes of products produced (extracted) and the profit derived from its sale. For other organizations participating in the project as performers of individual works, most often its end is the termination of these works.
The life cycle of a project is an important basic concept for studying the problems of financing the work on a project and making decisions about capital investments for its implementation.
The states through which the project passes, according to established practice, are called phases, stages, stages. Due to the diversity of the projects themselves, the complexity of the process of their implementation, it is almost impossible to give a universal approach to divide this process into phases. By solving such a task for themselves, the people and organizations involved in the project work can be guided by their role in the project, their experience, and the specific conditions for its implementation. Therefore, in practice, the division of the project into phases can be very diverse. One thing is important: such a division must fix the moments in which the states of the project change radically and decisions are made about the possible direction of its development.
in the early stages of project development than when the main sites are ready. In recent years, however, the point of view on this issue has changed in the country, accepted in world practice.
At the same time, the potential investor needs to be able to compare different projects. Therefore, despite the heterogeneity and diversity of IP, they need to be unified. Here again, the problem of a reasonable compromise arises between the need to take into account the uniqueness of each project and ensuring the comparability of the descriptions obtained of many projects, which can become the subject of practical implementation.
Experience has shown that this problem is solved by each major international development organization (World Bank, European Bank, Food and Agriculture Organization, etc.), international financial institution, bank, or investment corporation in its way, although their approaches are very similar.
Below is the project cycle adopted by the World Bank, an organization that has done much for the formation and practical development of the project philosophy.
The project cycle includes three main phases:
- preliminary investment;
During the first phase, the project idea is developed, a feasibility study is prepared and negotiations are held with potential investors and project participants.
The next period is determined for the stage of the actual investment. At this stage, the necessary agreements are concluded and the assets necessary for the implementation of the project (construction, equipment, staff training, etc.) are formed.
From the moment the equipment is put into operation, the third phase begins – the operational one. The duration of the operational phase has a significant impact on the overall effectiveness of the project, as at this stage practically all the benefits of the project are achieved.
It is accepted to make an even more detailed distinction of the project cycle. Each selected phase is divided into stages.
Let’s look at the content of the main stages of the project life cycle.
Project identification or formulation. This stage includes:
- defining the goals and objectives of the project;
- selection of project ideas; preliminary feasibility study of the project;
- screening of the worst options;
- checking the achievability of the project objectives;
- formation of preliminary documentation for the selected project variant.
To select projects that give sustainable positive results, it is necessary to act in two directions. First, it is necessary to analyze the interests of all those who can gain or lose in the implementation of the project. Secondly, it is necessary to choose a variant of the project that will ensure the efficient use of resources during its implementation.
Choosing the best project option requires considering a wide range of possible alternatives. It is usually recommended to include all possible options in the initial list of ideas for discussion, and then
The World Bank’s project cycle, after logical selection and discussion, rejects those options that are worse than others. As we filter out unpromising options, the details of each aspect increase. This avoids unnecessarily detailed preparatory work on options that are eventually discarded. Here it is important to keep in mind that in the formation of the initial options, none of the emerging options, especially the non-traditional ones, should be rejected before discussion and preliminary evaluations. Rejecting any option at any stage of the analysis is fraught with serious error. Conservatism or adventurism at this stage often leads analysts and organizers either to old solutions that are no longer able to give the necessary return or to choose ambitious, effective, albeit ineffective solutions.
If the project (it’s variant), according to the preliminary results of the analysis, is worthy of further consideration, it is necessary to determine what information will be required at the stage of its detailed development. This information may include, for example, detailed market analyzes, additional geological surveys or environmental assessments, details of government and local government policies, proposed technologies, and the economic, social, and cultural characteristics of the project area.
The result of the first stage is the formation of preliminary documentation for the selected project option, which sets out the nature of the project and information about its effectiveness. It must convince the client in the work of the feasibility of further costs to develop a detailed project, indicate additional research that needs to be done and estimate how much the next step will cost. This approach is typical for commercial projects. If the project is initiated by any economic development organization (national or international), then as a rule its impact on the country’s economy is considered. Thus, according to the procedure adopted by the World Bank, for each project considered for funding, a CV is prepared for the managing directors. The aim is to set out the essence of the project and to facilitate an early agreement between the bank and the potential borrower country on the following aspects:
- the economic development goals set in the project;
- main features and alternatives of the project to be further considered in the project plan;
- organizational, political, and other issues to be addressed at the project development, review, and implementation stages;
- the necessary activities for the development of the project and the necessary human and other resources.
The main thing in the process of project development is the analysis of its feasibility and effectiveness. This stage must finally justify whether the project should be implemented and which option is best for achieving its objectives. It is carried out to justify the project as a whole and according to its main parameters: the technical plan, the impact on the environment, market efficiency, organizational arrangements, social and cultural aspects, financial and economic value.
There can be no reference material when conducting a feasibility study. However, it must contain answers to the following questions.
Does the project meet the tasks and priorities of the national economy and the regional economy?
Is the project technically coherent and is it the best available technical alternative?
Is the appropriate structure compatible with the implementation of the project objectives?
Is there enough demand for the project’s products?
Is the project economically viable and financially viable?
Is the project compatible with the customs and traditions of the stakeholders?
Does the project meet the environmental requirements?
Approach for dividing the project implementation process into phases
There is no universal approach to dividing the project implementation process into phases. When solving such a task for themselves, the project participants must be guided by their role in the project, their experience, and the specific conditions of the project. Transitions from one stage to the next are rarely clearly defined unless they are formally separated by accepting the proposal or obtaining permission to continue. Therefore, in practice, the division of a project into phases can be very diverse – if only such a division reveals some important control points (“stages”), during the passage of which additional information is considered and possible directions for project development are assessed.
In turn, each selected phase (stage) can be divided into phases (stages) of the next level (subphases, substages), etc.
It is applied to very large projects, for example, the construction of the metro, the development of oil and gas fields, etc. the number of phases and stages of their implementation can be increased.
The allocation of additional stages in large projects is related not only to the duration of the construction of these facilities (10-15 years) but also to the need for deeper coordination of the actions of the organizations involved in the project.
All project activities are interdependent in time and space. However, it is almost impossible to ensure an unambiguous distribution of the phases and stages of the project in a logical and time sequence. The problems related to this are solved with the help of the experience, knowledge, and art of the specialists working on the project.
The environment in which projects are implemented and project management is broader than the environment that directly affects the project itself. The project management team must take into account this wider environment and select the phases, processes, tools, and methods that are most appropriate for the project.
The project manager or organization may divide the project into phases to ensure better management with appropriate references to the ongoing operations of the implementing organization. The combination of these phases constitutes the life cycle of the project.
The transition from one phase to another within the project life cycle usually implies some form of technology transfer or delivery of results and this often indicates a transition from phase to phase. The results of one phase are usually checked for completeness and accuracy and go through an approval process before the next phase begins. However, sometimes a phase may start before the results of the delivery from the previous phase are approved in cases where the associated risk is considered acceptable. This practice of overlapping phases, usually performed sequentially, is an example of a schedule compression technique called fast transition.
There is no one in the best way to determine the ideal life cycle of the project. Some organizations have adopted principles that all projects are expected to have the same life cycle, while other organizations allow the project management team to choose the life cycle that best suits their project. General industrial principles often dictate the industry’s preferred life cycle.
The life cycle of a project usually determines the following:
What kind of engineering work should be done in each phase (for example, in which phase should the design be done?)
At what point in each phase should the delivery results be obtained and how is each delivery result checked and confirmed?
Who participates in each phase (for example, simultaneous engineering work requires those who perform it to participate in the definition and design of requirements)