Chapt 1-Introduction to Project accounting

Chapt 1-Introduction to Project...pptx accounting and financeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

1. Project Analysis and Management By Dr.Dejen D. Email: [email protected] 1 10/27/2023

2. Issues to be discussed in this course: Chapter 1: The Concept of project Chapter 2: Project cycle Chapter 3: Project Identification /idea generation Chapter 4: Technical Analysis of Project Chapter 5: Financial Analysis of Project Chapter 6: Economic Analysis of Project Chapter 7: Project Planning, Organizing, and Implementation 2 10/27/2023

3. Chapter One Introduction to Project 3 10/27/2023

4. Outline: Definition of a Project Characteristics/Features of a Project Importance/Objectives of a Project Plans, Programs and Projects Classification of a Project 4 10/27/2023

5. 1.1 Definition of a Project 5 10/27/2023 Project is an investment activity in which specific resources are committed within a given time frame, to create capital assets over an extended period of time in expectation of benefits that exceed the committed resources. It is very difficult to find a single comprehensive definition of project because projects are different in terms of their nature and objectives. Some of its definitions are:

6. Cont… 10/27/2023 6 Project is a unique set of coordinated and controlled activities, with definite starting and finishing points , undertaken by an individual or organization to meet specific objectives within defined schedule, cost and performance parameters . A project is a problem scheduled for solution.

7. 1.2. Primary Features of a Project Projects from mega international projects to small domestic projects. To mention few examples: Designing and constructing a building, a house or a yacht. Going on holiday (a domestic project). Building a bridge, road, runway, or other structure Writing a software Obtaining an MBA degree Planting a garden A wedding plan Constructing a house, etc; 7 10/27/2023

8. Cont… A start and finish. Involve an element of risk. A life cycle (are multifunctional). Achieve beneficial change. Create capital assets: A budget. Non-repetitive (are Unique in nature). Use of resources. A Single Point of Responsibility. Team Roles. 8 10/27/2023

9. 1.3. Benefits of Projects 9 10/27/2023 Why projects are undertaken? Development or growth of a nation, region, city, etc. To increased welfare of employees Improvement of income distribution Solving immediate problems Providing employment and transport facilities Other social benefits like elimination of poverty, etc.

10. 1.4. Plans, Programs and Projects 1.4.1. Plans and Projects Planning is a means (guide) to an end. Plans are designed as a means to accomplish development strategies (project). Planning is necessary because: it helps an organization to think ahead and anticipate future events it gives clear picture of future events to measure and control actual activities, etc. 10 10/27/2023

11. Cont… Most commonly, for the purpose of easy understanding, project plan can be portrayed by the way of visual form (two visual forms): Bar chart/Gantt chart Network model 1. Bar chart/Gantt chart Developed by Henry Gantt (1861 – 1919). Time scale = Horizontal time scale Activities = Vertical 11 10/27/2023

12. Cont… 12 10/27/2023 2. Network model Shows the activities and events of the project and their logical relationships. A simplified network diagram for a dinner project:

13. Cont… 1.4.2. Programs and Projects 13 10/27/2023

14. 1.5. Classification of Projects Project can be classified based on several criteria. Some of them are: 1. Based on Ownership Private Sector- Mostly projects undertaken by business enterprises . Public Sector- project undertaken by national and local government NGO’s - development projects are most often undertaken by non-government and non-profit organizations. 10/27/2023 14

15. Cont… 2. Based on the Sources of finance Government treasury-projects may be entirely financed by government budget. For example: construction of regional airport. Government treasury and external sources- most projects are financed by the joint partnership of the government and donor groups External Sources of finance- projects may be financed totally by parties other than the government. 10/27/2023 15

16. Cont… 3. Based on purpose New projects- New investment is designed to establish a new productive process independent of previous lines of production. Expansion projects – They involve repeating or expanding an existing activity. Updating projects – They involves replacing or changing some elements in an existing activity without a major change of output. 10/27/2023 16

17. Cont… 4. Based on time horizon Long term projects: Involve higher risk and require large amounts of resources. Their major impact is over long period of time. Example: power construction Medium term projects – Involve moderate risk and require fair amounts of resources. Example: Factory construction. Short term projects – are completed within one year. They are less rigorous require fewer resources and involves less or no risk. Example: exhibitions and bazaars. 10/27/2023 17

18. Cont… 5. Based on locality Regional – Projects undertaken in particular region and benefit only that region. E.g. construction of elementary schools. National – projects undertaken by federal government and all or many states/regions will get benefits from them. E.g. Construction of universities, dams for electric power, etc. International – projects that involve many countries. E.g. Development projects under taken by world bank. 10/27/2023 18

19. Cont… 6. Based on resource use Capital intensive projects- projects which largely use machinery in the manufacturing process. E.g. Beer factory Labor intensive projects – projects which largely use human labor in the production of output. E.g. Salt production. Energy intensive projects – project which consume large amount of energy (e.g. electricity power) in the manufacturing process. E.g . Marble factory. 10/27/2023 19

20. Exercise The Canadian International Donor Agency ( CIDA ) has donated $7.5 million to provide Condominium houses to 50 families living in the Merketo informal settlement. On 6 February 2013, the agency signed a contract with the Department of Housing to implement the project. The following requirements, amongst others were set in the contract: The Condo houses must meet specifications in line with government policy. 10/27/2023 20

21. Exercise b. In order to ensure sustainability and affordability for the 50 families, the head of each of the 50 families must be given skills development training in small business development and small business start-up. This is to ensure that the families will be able to afford rentals, maintenance of the homes and to expand their homes to accommodate the growth of the families in the future. c. The project must be completed within three years and the handover of the homes to the 50 families must be a high profile public event. Required: Identify the following elements in the project: Task, Project time , Project budget, performance specifications , Beneficiaries , and stakeholders. 10/27/2023 21

22. 10/27/2023 22 Thank You!!! Last, but not Least about Chapter-1