PREPARATION OF

PROJECT

MODULE-5
Mr. Mahesh M
Assistant Prof, Dept. E&EE
NIE IT Mysuru
Topics to be covered
 Preparation of Project – Meaning of Project, Project
Identification
 Project selection, Project Report, Need and significance of
Report, Contents, Formulation Guidelines by Planning
Commission for Project Report
 Network analysis, Errors of Project Report, Project appraisal
 Identification of Business Opportunities, Market Feasibility
study
 Technical feasibility, Financial Feasibility Study & Social
Feasibility Study
Project - Meaning
 A project is a venture undertaken by a person for a specified
period of time for some specific result or outcome.
 STEPS TO START SSI IN INDIA
1. 1. Genesis of business idea : First step in the process of
entrepreneurship involves critical thinking about business idea,
that is to select viable option among the available alternatives.
It requires detailed analysis of merits and demerits of
innovative products, services created by entrepreneur and
SWOT analysis about present resources of company.
2. Conduct preliminary feasibility : preliminary feasibility
involves quick assessment about the potential of business idea
and screening out the option with highest potential. This step is
conducted to choose one single idea among available options. It
generally follows four criteria : market and market related
issues, competitive advantage, value creation and realization
issues, over all potential of the plan.
3.Detailed feasibility analysis : detailed feasibility analysis is
done for the option choose by the company. Detailed analysis is
helpful in making suitable modification for present business plan.
It comprises of following components :
a. Product/ service feasibility : is conducted by showing
concept or idea to sample group of potential customers and their
reactions towards the product is taken as feedback. Data obtained
through feedback is taken into consideration for further
development of product.
b. Industry / market feasibility : it involves detailed study of
market condition where company have to see the customer
demand for similar product as offered by the company, try to
analyze as products of company will be offered to which segment
of customer in the market, basically tries to analyze taste and
preference and effect of other environment in company. It also
involves making study on existing business cycle.
c. Organizational feasibility : it includes analysis of two aspects
they are 1 ) assessment of organizational capability to start up
business 2) availability of non financial resources such as office
space, talent pool etc required to set up business.
d. Financial feasibility : it refers to assessing the financial
capability of firm in terms of initial capital investment required
for starting the venture and overall financial attractiveness in
term of expected returns in the form of profit.
4. Write business plan : business plan is a written document
containing the details about every aspect of proposed business
venture. It serves as roadmap for internal parties of organization
and helps in convincing potential investors and financial
institutions lending capital to company.
5. Arrange for finance : SSI borrow required finance from three
different sources namely lenders, angels and venture capitalist.
o Lenders are financial institution who provide debt to
entrepreneurs on the basis of collateral security.
o Angels refer to group of people who are financially sound and
they personally render help to SSI in form of capital, expertise,
experience and money.
o Venture capitalist are individuals who invest in start up
companies with expectation of profitability from firm they
invested.
o Loan borrowed by entrepreneur may be for long or short period
of time.
6. Take necessary clearance : entrepreneur has to obtain
clearance or permission depending on the nature of his unit and
products manufactured :
o Regulatory or taxation clearance :
1. Registration under sales tax act – commercial tax officer of
area concerned.
2. Registration under central excise tax act – collector of central
excise or his nominee for area.
3. Payment of income tax – ITO of the area concerned.
o Environmental and pollution related clearance should be
obtained by SSI for consent on issues related to air and water.
o Product specific clearance : when SSI is going in for business
such as printing press, licence for cold storage construction.
7. Construct building : once plot area required for setting up
industry is decided, then entrepreneur has to contact
architecture for design of building. Design of building should be
suitable for product and nature of industry and should have
appropriate plant layout. Architecture estimate of building is
essential for loan application.
8. Get utility connections : among various facilities water and
power are two important aspects to be taken into consideration.
Formal application is to be given in specified format to state
electricity board. An electrical inspector will be deputed who
will come for site evaluation, if he find that all formalities are
being fulfilled, after that load will be sanctioned to company.
10. Recruit employees : project report prepared in initial stage
states about manpower requirements in company. Recruitment
and selection of staff should be done in planned manner as per
priority of starting activity in company.
11. Procure and install machineries : machineries and
equipment to be used in production and service process are to be
analyzed extensively during technical feasibility study and same
should be revised again in terms of their suitability and
importance in terms of company operations. Opinion of hired
engineers, external experts and government agencies like DIC
should be consulted before making final choice.
12. File entrepreneur memorandum : entrepreneur form for
the same are available with district industry centre and given
form are to be submitted at DIC. The form is divided in two
parts where first part is to be filled by entrepreneur whose
venture are in planning stage and second part is to be filled when
they start the enterprise. Forms submitted are evaluated by DIC
on following basis :
o Units has obtained all necessary clearance for statutory and
administrative related issues.
o Unit does not violate any vocational restrictions in force, at the
time of evaluation.
o Value of plant and machinery is within prescribed limits.
o Units is not owned, controlled, or subsidiary of any other
industrial undertaking as per notification.
13. Start operations : after fulfilling all the formalities the
entrepreneur should start up with their operations. The initial
production/ operations should be done on the basis of demand
projection arrived at earlier in the business plan.
 NEED AND SIGNIFICANCE OF PROJECT REPORT
1. For refining the business idea and to eliminate
shortcomings : project report is means to put business idea
in form of document, evaluate various aspects of the plan and
eliminate shortcomings existing in plan.
2. For justifying viability of the venture : it serves as
powerful mechanism to evaluate viability of report for
investors to check as to what extent the investment can yield
profit.
3. For securing the equity venture capital : the investors
and silent partners require business plan in form of a project
report before considering the sanction of equity venture capital
for the project.
4. For securing bank finance : SSI go in for borrowing
required finance from banking institution for which it is
mandatory on the part of SSI to submit copy of project
report to get required loan sanctioned.
5. For attracting joint venture partner : in certain
circumstances some existing firms may be willing to be
partner with SSI as joint venture for which again they
require project report for the purpose of reference.
6. For obtaining clearance and approvals from
governmental agencies : in certain set of industries
depending on nature of business they are bound to get
clearance from government for which they have to submit
project report for evidence.
7. For securing orders from key potential customers : risk
involved in the new business can be reduced to larger extent by
having some regular customers for which customer loyalty is
important and this can be done only when project report of
company is transparent in terms of clarity about business.
8. For providing a road map and direction during
implementation : project report serves as road map for
company activities during implementation as main project serves
as standard with which present activities of company can be
compared with.
9. For seducing the best talent to join as employees in
start up ventures : as attracting candidates towards new
organization is difficult task, entrepreneur by presenting
potential project report can make candidate realize opportunity
vested for him after joining the company.
 CONTENTS OF PROJECT REPORT
1. Cover page : page of the project report should contain the
title of the project, name, address so that the readers of the
report can easily contact entrepreneur relating to queries of
report.
2. Table of contents : table of content are compiled after the
main body of the project report is finalized. Topics covered in
the project report along with the page number should be
mentioned in the project report.
3. Executive summary : should be written after the completion
of project report as it gives brief gist of project. Length of the
executive summary should not exceed more than two pages.
4. Company information and industry : here they should
explain the ownership form of the company, which should
contain the reason for venturing into the proposed business plan,
how do you plan to satisfy the needs and expectation of the
potential customers and existing competitors in industry. It
should also include SWOT analysis of company.
5. Technical plan : in this part of the report the key aspect
analyzed during the technical feasibility of the report should be
highlighted. The choice of the product and service to be offered
should be justified. Report should be able to explain how the
product of the company is creative and innovative as compared to
the existing product in the market.
6. Marketing plan : this aspect of the product should focus on
the industry and market feasibility conducted at earlier stage. It
should describe about the pricing policy, findings of market
research, how large is the market for the product to be offered
by the company, details about marketing strategy adopted by the
company to promote the product, target customers company is
focusing on.
7. Operations plan : it describes about the manufacturing and
service delivery process to be utilized for production of chosen
product and service. It should explain about the innovation
brought in the process of production which makes it better when
compared to existing competitors. It should also focus on the
location, availability of resources required for production.
8. Organizational plan : it gives information about the
management team who are part of the company. It focuses on the
management and technical skills possessed by the employees in
company and how it will prove to be beneficial for the work
process to be carried in the company. It should highlight as
though why even after possessing such efficient skills they prefer
joining your organization.
9. Project timeline : this chapter explain about the network
diagram which explains about the time duration required for the
project. Diagram explains about the various activities in the
project, which are sequentially organized and the time duration
required for the execution of the project is arrived by estimating
time required for completion of every activity for the formation
and later process of the company.
10. Critical risk and assumption : it explain about the various
assumption made during the formation of the company E.g.
rather than considering the previous sales forecast for similar
product to be offered by the company, the organization may have
gone in for expert advise, there may be various risks related to
the product and kind of service company is planning to offer in
the market all these details should be highlighted in this part of
the report.
11. Social plan : it explains about how company project will
benefit the society. It should highlight how company will
generate employment opportunities, lead to skill development of
local people, provision of goods and services to be provided to
the local people, utilization of local resources etc. It should also
include various helps provided by the financial agencies and
government to start SSI in country.
12. Exit strategy : this is the negative aspect of the business but
the company should explain how they would close down the
business if the company is not able to earn the expected
profitability, the investors will be keen to know as though how
their investment can be recovered in such situation.
13. Financial plan : it is important part of the report which will
contain brief content of all the sections with numbers in
monetary terms. It explain about the financial composition of the
company, various sources through which company has raised
required finance, total expenditure incurred by the company
which will be effectively explained through the means of break
even analysis and ratio analysis in the company financial report.
14. Conclusion : this summarizes the key aspect of the report in
concise manner. It should end the report on a positive note so
that the readers develop positive image about the report.
15. Appendices : it contains conclusion part of the report and
supplement data which is important part for the report but
cannot be included in the initial topics of the report.
 Gather data and Finalize the
information Perform data analysis business plan

Get report reviewed

Put thoughts on paper Prepare rough draft by experts

Submit final report to

relevant people
 FORMULATION OF PROJECT REPORT
1. Identify the objectives of the project report : project report
can have multiple objectives. Objectives of the project report will
give clarity to the investors reason for establishment of the company
and as though why they should invest in the company. The objective
of the report should be identified at the initial stage of formulating
project report.
2. Gather data and information : entrepreneur should do the
required detailed study before starting the company, relating to
market trends, pricing policies, customers preference, competitors
information etc.
3. Put thoughts on the paper : after gathering all the required
information the entrepreneur should put the tentative thoughts in
the paper and structure ideas present in his mind. The details put in
the paper in this stage should be positioned to be critically evaluated
at later stage.
4. Perform data analysis : the data incorporated in the report
has to be analyzed using appropriate tools to convert it into
useful information. Break even analysis, revenue projections, pro
forma financial statement, should be done and suitably
summarized in the report.
5. Finalize the business plan : in this stage of formulation all
the calculation done relating to financial analysis, details about
various contents of the project should be finalized and put up in
the report. Report should be cross checked for any grammatical
mistakes and various chart and diagrams relating to formation of
the project which could not be included in the body of the report
should be included here. At this stage executive summary, table
of content and the cover page of the project should be added.
6. Get the report reviewed by the expert : project report
before its submission for approval should be reviewed by the
expert, their suggestion should be taken into consideration and
required changes in the report should be made accordingly.
7. Submit the final report for relevant people : the report
should be submitted to the relevant people whose interest is
vested in company such as potential investors, customers,
government agencies etc.
 GUIDELINES FOR PROJECT REPORT
1. Highlight how you would satisfy the customers needs
rather then the techno gadgets you deploy : while
presenting the project report entrepreneur should be clear about
the target audience who are your potential investors, rather than
latest technology implemented in the company, investors will be
interested to know how company will go about satisfying the
needs of customers in the market.
2. Keep it to point and concise : report should be neither too
short nor long, it should be ideally framed and should suffice
required information by the interested parties. Potential
investors are busy people and may not have patience to go
through the whole report, properly drafted report will give
them better clarity in short period of time.
3. Exude professional look and feel : the appearance of the
project report should be professional with proper binding where
vibrant colours should not be used. As binding and cover page of
the report appears first, if it is framed properly it will create
better image about project in eyes of reader, making the reader
feel to go through the whole project.
4. Project a dispassionate point of view : it refers to framing
of the sentence and grammatical error should be taken into
consideration and also alignment of the project report also
should be taken care before final drafting of report.
5. Write report yourself, while taking help from others :
there may be number of questions that investors may ask during
presentation of the report for which it is better that person
presenting the report should draft the same by which he will be
able to answer any type of queries asked by interested parties.
 ERRORS OF PROJECT REPORT
1. shabby, underdeveloped, full of typos : as outer look of
the report creates first impression about the report, in case if
the report is shabby with stains on it, spelling mistake, ink spots
on the report will create bad image about the project in eyes of
potential investors.
2. No personal equity in the venture : if the entrepreneur
poses that he has got no equity investment in the company
investors have mindset that entrepreneur is not bearing any risk
related to business which makes investors to give second
thought to invest in business on personal risk.
3. Outdated financial report and industry comparison :
some project report consist of outdated financial data, and industry
information in terms of companies whose products are no way
related to present products to be offered by the company.
4. Excessive technical terminology : entrepreneurs with
technical background make use of more technical words which may
be difficult for investors to understand for which entrepreneur
before coming up with his presentation should take knowledge
level of target audience into consideration.
5. Undue optimistic projections : projections relating to sales
and revenue may be inflated in the report which may not match
with any of data relating to present market situation again creating
ambiguous image about company's report in eyes of investors.
6. Avoiding the mention of potential threats and internal
weakness : a feel good report may not always work in eyes of
investors as they like to evaluate critically in terms of its threats
and weakness, so rather than giving more scope for investors to
evaluate on the same it is better for the entrepreneur to mention
about weakness and threats in report on his own.
7. Incorporating financial information without knowing
its full implication : while including financial information in
the report entrepreneur takes help of experts after understanding
all its implications, if the entrepreneur just includes the
information and not in position to explain relevance of these
concept then it creates doubt in the minds of investors about
entrepreneur understanding about the report.
8. Absence of what if scenarios : as business environment is
dynamic in nature, company in future may have to face unstable
conditions and the same has to be included by the entrepreneur
during time of presentation.
1. Network analysis : diagram presents various activities of
project. An event or node marks the beginning or end of activity
and is represented by small circles in network diagram. An
activity is represented by straight line arrows. There can be only
one activity taking place between nodes at a time. This diagram is
usually used to depict information relating to construction
activity during process of formation of business.
2. Critical path method : it is method through which
entrepreneur can evaluate time period required for completion
of activity depending on their past experience. Critical path is
defined as longest duration path between the first and last nodes
of the project.