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Project Formulation

Project formulation is the process of documenting the eligible facility, the eligible work and the eligible cost for projects. Formulation allows the consolidation of similar work items into projects to expedite approval and funding and to facilitate project management

Need for project Formulation : Selection of appropriate technology Influence external economies Resource mobilization Knowledge about government regulations Dearth of technically qualified people

Significance of Project Formulation :


Project formulation is the best passport for obtaining the required assistance from financial institutions It will also be great assistance for obtaining necessary government Clearance and in meeting the hurdles of procedure formalities It will pinpoint the matters for which government sanctions have obtained It will provide an independent assessment of the feasibility of obtaining sanctions based on existing government policies

Stages of Project Formulation : 1. Feasibility Analysis 2. Techno-Economic Analysis 3. Project Design and Network Analysis 4. Input Analysis 5. Financial Analysis 6. Cost-Benefit Analysis 7. Pre-Investment Analysis

Sequential Stages of Project Formulation


Project Feasibility Techno- Economic Design

Net work
Input Finance Social Cost -Benefit

Pre - Investment

Feasibility analysis : First stage in project formulation



Examination to see whether to go in a detailed investment proposal or not

Seeing for internal and external constraints

Techno Economic Analysis :


Estimate of potential of the demand for goods /services Choice of optimal technology This analysis gives the project a platform for preparation of detailed project design

Project design and network analysis : It is the heart of project entity It defines the sequence of events of the project It is presented in the form of a network drawing It helps to identify project inputs , finance needed and cost benefit profile of the project

Financial analysis : It involves estimating project costs , operating costs and fund requirements It helps in comparing various project proposals on common scale Analytical tools used are discounted cash flows . CVP analysis and ratio analysis Investment decisions Financial forecasts

Cost Benefit analysis : The overall worth of a project is considered The project design forms the basis of evaluation It considers costs that all entities have to bear and benefits connected to it

Project Design
What do you want to achieve with your project (goals, outcomes)? What kind of background information is needed/available to quantify the need (data)? How much time is available and needed to achieve these goals (time frame, project implementation phase)? What activities have to be undertaken to achieve the goals? Which partners/stakeholders are needed or need to be involved? What financial resources are necessary?

Project design
Project Planning Flow

Objectives

Results

Outputs

Activities

Implementation Flow

Project Cycle Management

Key activities: 1. Programming review of socio-economic indicators review of partners countries and donor priorities Agreement on sectoral and thematic focus for co-operation through an agreed strategy formulation 2. Identification initial formulation of project idea screening for further studies (= pre-feasibility) 3. Appraisal (formulation) Conduct of feasibility study Detailed specification of project ideas Decision on whether to draw up financing proposal

Activities within the project cycle: 1. Financing Drafting and negotiating a Fin. Prop. Examination by competent Member States committee Financing decision and agreement 2. Implementation Tendering and contract award Mobilisation and project execution 3. Evaluation Analysis of project effects and impact Recommendations on remedial action or guidance for future projects

Name of the leader 1) Sasmita Bhatta Mishra : 2) Ramachandra Gouda 3) Devabrata Maharana 4) Manashi Acharya 5) Shiv Shankar Choudary 6) Sudhir Nahak 7) Manisha patro

Name of the Project Seed processing unit Cashew processing unit Dairy Farm Poultry Industry Cold storage for Fruits and Veg Bio Disel plant Turmeric Processing unit

Project Formulation :
Points to be considered : The type and level of industrial activity To Match his financial resources with required amount Prepare a nice project report

Broad heads of the project report :


General information Project description Market potential Capital costs and sources of finance Assessment of Working Capital Other financial aspects Economic and Social Variables

General information : Name and address of the entrepreneur Qualification, Experience and other capabilities of entrepreneur Reference of industry analysis Constitution and organization structure of enterprise Registration details with Directorate of industries / Registrar of Firms Utility of the products

Project Description: Location Raw Material Skilled Labour Power Fuel Water Waste disposal Communication systems

Project description Continued : Transport Other common facilities List of Machinery Capacity of the Plant Technology Manufacturing Process Balancing of Plant Quality Control Research & Development

Market Potential :
Total Demand & Supply Estimation of Cost & Price Marketing Strategy After sales service Seasonality Transportation of Goods

Capital costs and Source of Finance : Capital Costs :


Land and Building Plant & Machinery Other Miscellaneous Assets Preliminary expenses Contingency expenses Margin on Working Capital

Assessment of Working Capital Requirement : Planning for working capital requirements


Working capital requirements

Other Financial aspects : Projected Profit and loss account Projected Balance sheet Projected Cash flow statement Break even analysis Profitability ratios Return on investment Debt : Equity Ratio Debt service Coverage ratio

Economic and Social Variables : Promoting Employment

Import Substitution
Development of the area