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Project is a collection of build configurations. The project has a name (usually corresponds to the name of a real project) and can have some meaningful description.
TeamCity uses project level for managing security. In TeamCity Enterprise Edition is it is possible to assign per-project roles to users. This makes it possible to assign users different permissions for each project. TeamCity Professional Edition doesn't provide this feature and permissions are assigned to users globally, regardless of the projects.
Projects can be created/edited from the Administration page. To create new project you need only to specify its name and, additionally, description. Then you can create as many build configurations within the project as you need.
Build Configuration describes a class of builds of a particular type, or a procedure used to create builds. Examples of build configurations are integration builds, release builds, nightly builds, and others.. For more details, please refer to the Build Configuration concept page.