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PREPARATION OF PROJECT
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Unit-8: Preparation Of Project
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Few other definitions of “Project.”
Definition 3 :
A Project is defined as the whole complex of activities involved in using
resources to gain benefits.
Definition 4 :
A Project can be defined as a Scientifically evolved work plan devised to
achieve a specific objective within a specified period of time etc etc.
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After examining all the above definitions of a Project, it is
important to note that while projects can differ in their size,
nature, objectives, time duration & complexity , yet they have
the following Three Attributes :
1) A Course of Action.
2) Specific Objective.
3) Defined Time perspective (period).
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PROJECT
IDENTIFICATION
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Clear project identification allows you to answers
questions like:
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◦ Objectives
◦ Expected outputs
◦ Planned lifespan
◦ Extended outcome of the project
◦ Principle stakeholders
◦ Financial plan and source of financing
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◦ Individuals
◦ Groups of individuals (community)
◦ Local leaders
◦ Policy makers
◦ Planners
◦ International development agencies
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Identification of projects or search for Project ideas is a
beginning.
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Establishing yourself as a successful entrepreneur
depends to a great extent upon choosing a Good
Project or Idea.
That idea must not only be good for the Market but
also be good for the Project & good for the
Entrepreneur. Most important, the idea should give
satisfying results.
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The Project Ideas can be discovered from various
internal & external sources. These may include :
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All of these Sources put together may give a few Ideas
about the possible projects to be examined as the Final Project.
This Process of identifying Project Ideas is referred to as
“Opportunity Scanning & Identification.”
After going thro the above process, assume that you have
been able to get Seven Project Ideas as a result of the above
analysis.
From the Seven Project Ideas you have in mind, finally you
have to decide & choose the One Most Appropriate & Potential
Project idea going thro the following Selection Process :
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Project Selection
Project selection is the process of evaluating individual
projects or groups of projects, and then choosing to
implement some set of them so that the objectives of
the parent organization will be achieved.
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A few Important Criteria are listed below for project selection
process :
Investment Size :
This is a very important criterion to decide success or failure
of the Project.
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Location :
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Technology :
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Plant & Machineries :
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Marketing :
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Project Report :
The Project Report serves like a Road Map to reach the Destination
determined by the Entrepreneur. Thus, a Project Report can best be
defined as a well evolved course of action devised to achieve the
Specified Objectives within a specified period of time.
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“An Objective without a Plan is a Dream”
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These purposes of report are as follows :
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A Project Report needs to be done / prepared with great
care & consideration. The Important Contents of a Good
Project Report are given below :
a) General Information :
Information on Product Profile & Product Details.
b) Promoter(s) :
His / Her / Their Educational Qualification , Work
Experience , Project related experience, special achievements.
c) Location :
Exact proposed location of the Project, lease or freehold,
locational advantages.
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Contents of a Project Report :
f) Production Process :
Description of Production Process , Process Chart, Technical Know
How, Technology Alternatives Available, Production Programme etc.
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g) Utilities :
Water , Power, Steam, Compressed Air Requirements, Fuel,
Coal / Oil etc., Cost Estimates, Sources of Utilities.
i) Raw Material :
List of Raw Materials reqd by Quality & Quantity , Sources of
Procurement, Cost of Raw Materials, Tie Up Arrangements, if any ,
for Procurement of Raw Materials, Alternative Raw Materials , if
any.
Contents of a Project Report :
j) Man Power :
The Requirement such as Skilled, Semi Skilled, & Un Skilled
(Helpers), Places of Manpower Availability, requirement of Training & its
Cost.
k) Products :
Product Mix, Product Standard, Estimated Production & Sales Figures,
Alternative Product Substitutes , if any.
l) Market :
End – Users of Products, Distribution of Market as Local, National,
International, Trade Practices, Sales Promotion devices etc..
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Contents of a Project Report :
n) Requirement of Funds :
Break up of Total Project Cost in terms of Costs of Land,
Building, Plant & Machinery, Misc. Fixed Assets, Preliminary &
Pre -Operative Expenses, Contingencies & Margin Money for
Working Capital, Financial Arrangements for meeting the Cost of
Setting up of the Project.
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It is a process whereby the entrepreneur makes an
objective and assessment of various aspects of an
investment proposition of a project idea for
determining its total impact and also its liability.
To achieve the project objectives with minimum
expenditure and adequate resources.
General objectives: States in broad terms the
achievement expected out of a project.
Three categories:
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When is it done:
◦ After preparation and design of the project
What is project appraisal:
◦ Provides a comprehensive and systematic review of all
aspects of the project
Why the project Appraisal is Needed:
◦ To development and successful completion of projects
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Practical
• Appraise your identified projects in terms of the following:
– Technical analysis
– Economic Analysis
– Financial Analysis
– Environmental Analysis, and
– Social Analysis
– Gender Analysis
– Ecological Analysis
– Political
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Will the project Work?
Availability of the required quality and quantity of
raw material.
Availability of utilities like power and water etc
Follows anti pollution laws
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Can the project be financed properly?
Will there be sufficient funds to cover the expenditure
requirements during the life of the project?
Means of financing
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What will be the effect of the project on different groups?
At
◦ Individual
◦ Household and
◦ Community levels
How will the project impact on women and men?
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Will the project have any adverse effect on the
environment?
Have remedial measures been included the project
design?
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Environmental Damage.
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Any successful project, company, factory, individual
based on three main factors
Technical
Finance
Marketing
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A feasibility study is the process that every person or
company should do before starting any project.
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It helps avoid risk and answers questions, like:
Will it work ?
How will it work ?
What is needed ?
When is the best time ?
How much investment is needed ?
What will the return be ?
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A feasibility study is a study looks at the viability of an
idea with an emphasis on identifying potential
problems and attempts to answer one main question:
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The Components of a Feasibility Study
Market Feasibility:
Includes a description of the industry, current market,
anticipated future market potential, competition, selling
price, sales projections, potential buyers, Demand,
Market Share etc.
Financial Feasibility:
Projects how much start-up capital is needed, sources of
capital, returns on investment, Break even analysis, Cost
of manpower & technology, proposed balanced sheet etc.
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Social Feasibility:
Defines the study of social environment like Location,
Social problems and Pollution.
Technical Feasibility:
Details how you will deliver a product or service (i.e.,
materials, labor, transportation, Staff requirement,
where your business will be located, technology
needed, etc.). Production process includes input,
processing and output.
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Describe how CPM/PERT have developed
and merged together to provide a useful
technique for managing projects.
Gain a better understanding of simple
CPM/PERT diagrams and calculations.
To be able to use POM for Windows, for
quicker more accurate calculations.
Developed in
1950’s
CPM by DuPont for
chemical plants
PERT by U.S. Navy
for Polaris missile
Definition: In CPM activities are shown as a
network of precedence relationships using
activity-on-node network construction
◦ Single estimate of activity time
◦ Deterministic activity times
Definition: In PERT activities are shown as a
network of precedence relationships using
activity-on-arrow network construction
◦ Multiple time estimates
◦ Probabilistic activity times
Overtime CPM and PERT became one
technique
ADVANTAGES:
◦ precedence relationships
◦ large projects
◦ more efficient
Use of nodes and arrows
Arrows
◦ An arrow leads from tail to head directionally
Nodes
◦ A node is represented by a circle
Activity on Node Activity on Arrow
A completion of an An arrow
activity is represents a task,
represented by a while a node is the
node completion of a
Arrows represent task
order of events
Shows precedence relationships
represented by dashed arrows
no passage of time
Diagram on page 817 of the text
Longest path through a network
minimum project completion time
Earliest start time Latest start time
Earliest finish time Latest finish time
Formulas Formulas
Definition: Slack is the amount of time an
activity can be delayed without delaying the
project
Formula
Useful at many stages of project management
Mathematically simple
Give critical path and slack time
Provide project documentation
Useful in monitoring costs
Clearly defined, independent and stable
activities
Specified precedence relationships
Subjective time estimates
Over emphasis on critical paths
Completion date?
On Schedule?
Within Budget?
Critical Activities?
How can the project be finished early at the
least cost?