According to Project Management Institute (PMI), Project can be defined as a temporary endeavor undertaken to accomplish a unique objective at goal.

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1 Meaning of Project: A project may be called upon as a task or activity which has a definite beginning and a definite end, comprises of separate and inter- related activities for which resources are required to be allocated, activities are to be performed to accomplish the desired objective which was conceived and instituted. According to Project Management Institute (PMI), Project can be defined as a temporary endeavor undertaken to accomplish a unique objective at goal. EXAMPLES OF PROJECT Construction of a house. Writing a book. Building a dam. A project bears different meaning for different people such as: For the planner (dreamer): It s a vision, a dream or a hope, a way to solve the problem. For the construction company: A specific task to be completed within a specific time. A way to make money through construction. For the owner: Expected benefits over the life of the project. It is a way to make money through operations. For others: Potential improvement in opportunities, environment, etc. Characteristics of a project : o Objectivity : The project must have a definite objective for which it is being undertaken for eg: A research project where objectives are clearly defined. o Uniqueness: The project is a non routine activity as, is being undertaken for accomplishment of a definite objective. (Non-routine activity) o Complexity : As it includes collection of resources and their utilization in an effective and efficient manner.(demands team work) o Optimal Forecasting o Definite time limit (the time to complete a project is already defined) o Life cycle Risk and uncertainty in environment(in response to environment): uncertainity occurs as the environment in which the project is to be undertaken is dynamic in nature.

2 Types of Projects: Construction projects for eg: construction of a dam. Research projects for eg: research project taken by a research scholar. Reengineering projects Procurement projects Business implementation projects for eg: initiating a new business. *************************************************************************** *************************************************************************** Project Appraisal Meaning: It is a method of assessing a project. It can be done for existing projects and for new projects which are likely to be undertaken. Methods of project appraisal are as follows: 1. Economic Analysis: Under economic analysis, the following aspects related to project are considered: requirements for raw material level of capacity utilization anticipated sales anticipated expenses probable profits. location of the enterprise Government policies Government offers specific incentives and concessions for setting up industries in notified backward areas. 2. Financial Analysis: Finance act as life blood of an enterprise. It is one of the most important pre-requisites to set up an organization. Finance helps an entrepreneur to arrange all the other M s for starting up the production process. To calculate the financial viability of the project, the following aspects are needed to be considered: 1. Assessment of the fixed capital and working capital requirement. 2. Fixed capital represents the capital spent for the purpose of buying fixed assets of an organization in general.in accounting terms, working capital means excess of current assets over current liabilities. Generally, 2: 1 is considered as the optimum current ratio. Break-even analysis (BEP) is also given importance in order to judge the level of production beyond which the enterprise will start earning profits.

3 3. Market Analysis: Due to ever changing demand of the customers and increased expectations of customers, the job of the marketer is becoming tougher day by day. The market is required to be properly analyzed if you want to take a new project. The work of a marketer starts before the production actually starts, the entrepreneur needs to analyze the possible market for the product. The following questions are needed to be answered such as: Who will be the possible customers? Where and when the product will be sold? What is the level of competition in the market? How much amount is required to be spent on advertisement of the product? What is the level of demand for the product produced? The entrepreneur requires to forecast demand for the product. It can be done by using various forecasting techniques such as: 1. Opinion Polling Method: In this method, the opinions of the ultimate users, i.e. customers of the product are estimated. It can be done in two ways: 1. A complete survey of all customers (called, complete enumeration) 2. Sample survey: by selecting sample out of the given population Survey method is less costly and tedious than the complete enumeration method. 3. Sales Executive s Experience Method: a sample market is surveyed before the new product is offered for sale. 4. Vicarious Method or dealer s opinion method: Under this method, the consumers of the product are not approached directly but indirectly through some dealers who are in direct contact with the customers. 2. Life Cycle Segmentation Analysis: Every product has its own stages in its life like a human being it is born and it dies too. In general, a product sells slowly in the beginning, then sales increases and after a point, the sales begin to decline and finally after some time, the product loses its demand and dies. Due to this firms go for innovating new products,to keep themselves alive. The product life cycle can be divided into the following five stages: 1. Introduction 2. Growth 3. Maturity 4. Saturation 5. Decline

4 The sales at different stages can be anticipated by taking into consideration various stages of Product life cycle. 4. Technical Feasibility: The technical feasibility of the project also needs to be taken into consideration. For assessing the technical feasibility of the project, the following points must be covered: (i) Availability of land and site. (ii) Availability of other inputs like water, power, transport, communication facilities. (iii) Availability of servicing facilities like machine shops, electric repair shop, etc. (iv) Compilation of environment laws. (v) Availability of work force as per required skill and arrangements proposed for training-inplant and outside. (vi) Availability of required raw material as per quantity and quality. 5. Managerial Competence: A good manager plays an important role in making an enterprise a success or failure. The projects which are feasible enough may fail in the absence of managerial competence and a poor project may become a successful one with good managerial ability. Hence, the managerial competence should be taken into consideration. ****************************************************************************** ****************************************************************************** Market Demand Analysis For the purpose of analyzing the demand in the market we need to study the market first, steps are taken to conduct various market surveys to anticipate the demand for the product. Market Survey Market Survey is a technique that is aimed at gathering all possible information (primary data) by conducting interviews. Steps under Market Survey : Step1: Defining the Target Market Step2: Selecting the Sample Step3: Developing the Questionnaire

5 Step4: Training the Surveyors Step4: Recording the Information Step 5: Data analysis Step6: Interpreting the Information Demand Analysis: Demand Forecasting is the art of predicting demand for a product or a service at some future date on the basis of certain present and past behaviour patterns of some related events. Methods of Demand Forecasting : Buyer s survey Collective opinion method Expert opinion method Controlled experiments Study of general economic environment Trend Projection Method Graphical Method Regression Analysis Technical Analysis: The objective of technical analysis is to see whether the project idea is feasible or not from technical point of view. It includes analysing the following points for technical viability of the project: Plant Capacity Material and utilities input requirements Investment Outlay and production costs Use by other units in the organization. Flexibility in Product mix Latest Developments Appropriateness of technology. Economical Analysis: The aim is to check whether the project is economically viable. The various aspects which are considered under it are:

6 Requirements for raw material Level of capacity utilization Anticipated sales Anticipated expenses Anticipated profits Forecasted demand ************************************************************************ ************************************************************************ Sources of Financing a project 1. External Sources:- for eg: funding from banks, and international agencies. 2. Local 3. Foreign 4. Internal for eg:-retained earnings, rights issue from shareholders. 5. Debt 6. Equity 7. Personal resources, 8. Company resources, 9. Equity from non-owners, 10. Banks:- Commercial Banks,Development Banks, Universal Banks, Merchant Banks 11. Leasing and other private sources. 12. Finance houses 13. Insurance companies 14. Bond issues 15. Mutual funds. 1.