WHAT IS A PROJECT ?

PROJECT IS

A complex
Non routine One time effort limited by time, budget resources & performance specifications

Designed to meet Customer needs

An established objective A defined life span with a beginning & and

end
Involvement of several departments &

professionals
Doing something that has never been done before
Specific time, cost & performance requirements.

Defending the product base

Strategic Goals Product Lines

Growing the base Diversifying products Product A, B, C R&D

Project Types

Capital Improvement Process Improvement Product Development

Tactical Investment
Marketing

Business Unit

Manufacturing Product Development.

Executing

Planning

Defining

Delivering

Start

Time

End

 Specifications of the project are defined

Project objectives are established

Teams are formed

Major responsibilities are assigned Permission from the authorities are

obtained.

 Level of effort increases & plans are

developed to determine What the project will entail? When it will be scheduled? Whom it will benefit? What quality level should be maintained? What the budget will be.

 A major portion of the project work takes place

physical & mental. The physical product is produced. Time, Cost & specification measures are used for control. Check if the project is on schedule, on budget & meeting specifications. What are the forecasts of each of these measures? What revision / changes are necessary.

 Includes two activities Delivering the project / product to the customer which includes customer training & transferring documents. Redeploying project resources which includes releasing project equipment / materials to the other projects & finding new assignments for team members. All deliverables are checked to ensure they meet the criteria for project success or agreed specifications.

Project is handed over to the client or the operating group.

A project idea is generated when someone with specialized

technical knowledge or marketing expertise or some other competence feels that he can offer a product or service which can:
Cater to a presently unmet need

Serve a market where demand exceeds supply

Effectively compete with similar products / services because of better quality / lower price.

1. SWOT Analysis Periodic SWOT analysis facilitates the

generation of ideas.
2. Clear Articulation of Objectives of a firm It clear

articulation & prioritization of objectives helps in channelizing the efforts of employees & prods them to

think more imaginatively.

3. Fostering a Conducive Climate to tap the creativity of

people and to harness their entrepreneurial urges.

 Analyse performance of existing industries

Examine inputs and outputs of various

industries Review Imports & Exports Study plan outlays & government guidelines Investigate local Materials & Resources Analyse Economic & Social Trends

Study New Technological Developments

Draw clues from consumption abroad

Explore the possibility of reviving sick units

Identify unfulfilled Psychological needs

Attend Trade Fairs Stimulate Creativity for generating New Product

Ideas Hope that the chance factor will favor you.

1. Compatibility with the promoter

It fits the personality of the entrepreneur

capabilities & training.

It is accessible to him. It offers him the prospect of rapid growth &

high return on invested capital.

2. Consistency with Government Priorities

Is the project consistent with national goals Are there any environmental effects contrary to governmental regulations? Can the foreign exchange requirements of the project is easily accommodated? Will there be any difficulty in obtaining the license for the project.

3. Availability of inputs
Are the capital requirements within manageable limits?
Can the technical know how be obtained.
Are raw-materials available domestically / need

they be imported and the cost for the same?

Is the power supply obtainable from external

sources & captive power sources?

4. Adequacy of Market
Total present domestic market Competitors & their market share Export Markets Quality price profile of the product vis--vis competitive

products Sales & Distribution system Projected increase in consumption Barriers to the entry of new units Economic, social & demographic trends favorable to increased consumption Patent Protection

5. Reasonableness of cost
Cost of material inputs
Labor cost Factory Overheads General administration expenses Selling & distribution costs Service Costs Economies of Scale

6. Acceptability of Risk Level

Vulnerability to business cycles

Technological changes Competition from substitutes Competition from imports Governmental control over price &

distribution Shifts in consumer preference

Non-Discounting Criteria

Discounting Criteria
Internal Rate of Return
Net Present Value

Pay Back Period

Average Rate of Return

Benefit Cost Ratio

Criterion Accept PBP PBP < target period ARR NPV IRR BCR ARR > target rate NPV > 0 IRR > cost of capital BCR > 1

Reject PBP > target period ARR < target rate NPV < 0 IRR < cost of capital BCR < 1

Collection of Secondary Information

Demand Forecasting

Situational Analysis and Specification of Objectives

Characterisation of the market

Conduct of Market Survey

Market Planning

1. What would be the aggregate demand for the proposed product / service in the future? 2. What would be the market share of the project under appraisal?

1.

2.
3. 4.

5.
6. 7. 8. 9. 10.

Consumption trends in the past & the present consumption level Past & Present supply position Production possibilities & constraints Imports & Exports Structure of Competition Cost of structure Elasticity of Demand Consumer behavior, intentions, motivations, attitudes, preferences & requirements Distribution channels & marketing policies in use Administrative, technical & legal constraints.

Qualitative Models Delphi Methods Jury of Executive Opinion Sales Force Consumer Market Survey

Time Series Methods Moving Average Exponential Smoothing Trend Projections

Causal Methods Regression Analysis Multiple Regression

This method involves soliciting the opinion of a group of managers on expected future sales and combining them into a sales estimate Pros It permits a wide range of factors to be considered It appeals to managers Cons The biases cannot be unearthed easily Its reliability is questionable

To extract the opinions of a group of experts with the help of a mail survey. The steps involved : A group of experts is sent a questionnaire by mail and asked to express their views. The responses received from the experts are summarized without disclosing the identity of the experts, and sent back to the experts, along with a questionnaire meant to probe further the reasons for extreme views expressed in the first round. The process may be continued for one or more rounds till a reasonable agreement emerges in the view of the experts

Pros

It is intelligible to users It seems to be more accurate and less expensive than the traditional face-to-face group meetings Cons There are some question marks: What is the value of the expert opinion? What is the contribution of additional rounds and feedback to accuracy?

These methods generate forecasts on the basis of an analysis of the historical time series. Moving Average Method The forecast for the next period is equal to the average of the sales for several preceding periods.

Adjusts moving average method to more closely reflect data fluctuations (weights can be used to place more emphasis on recent values)

In exponential smoothing, forecasts are modified in the light of observed errors.

The trend projection method involves (a) determining the trend of consumption by analyzing past consumption statistics (b) projecting future consumption by extrapolating the trend.

More analytical methods,

than

the

preceding

Causal methods seek to develop forecasts on the basis of cause-effect relationships specified in an quantitative manner.

 Study relationship

between two or more

variables Dependent variable(Y) depends on independent variable(x)

Technical analysis seeks to determine whether the prerequisites for the successful commissioning of the project have been considered. It needs to be done continuously when a project is being formulated.

The questions raised are: 1. Whether the preliminary tests & studies have been done or provided for? 2. Whether the availability of raw materials, power & other inputs has been established? 3. Whether the selected scale of operation is optimal?

4. 5. 6. 7. 8.

9.
10.

Whether the production process chosen is suitable? Whether the equipment & machines chosen are appropriate? Whether the auxiliary equipments & supplementary engineering works have been provided for? Whether provision has been made for the treatment of effluents? Whether the proposed layout of the site, buildings & plant is sound? Whether work schedules have been realistically drawn? Whether the technology proposed to be employed is appropriate from the social point of view?

Economic Analysis is also referred to as social cost benefit analysis, it is concerned with judging a project from the larger social point of view. Focus is on the social costs & benefits of a project which may be different from its monetary costs & benefits.

The questions to be asked are:

1.

2.
3. 4.

What are the direct economic benefits & costs of the project when measured in terms of shadow (efficiency) prices & not in terms of market prices? What would be the impact of the project on the distribution of income in the society? What would be the impact of the project on the level of savings & investment in the society? What would be the contribution of the project towards the fulfillment of certain merit wants like self sufficiency, employment & social order?

Detailed project report is a complete document for investment decisionmaking, approval and planning.
Detailed project report is base document for planning the project & implementing the project. Preparation of detailed project report is further step in firming up of the proposal.

It includes: Examination of technological parameters Description of the technology to be used Broad technical specification Evaluation of the existing resources Schedule plan General Layout Volume of work Project description. Planning & Implementation of the project Specifications Layouts & flow diagrams.

Generate a new project idea, do a demand analysis and technical analysis for the project and prepare a detailed report on the project. Date of Submission On or Before March 7th 2012.