PROJECT CLASSIFICATION, IDENTIFICATION, FORMULATION

THIS PRESENTATION CONTAINS BROAD COVERAGE OF PROJECT IDENTIFICATION, CLASSIFICATION AND IMPLEMENTATION.

1. CLASSIFICATION, IDENTIFICATION, FORMULATION DR. RICHA SINGHAL ASSOCIATE PROFESSOR DEPT. OF EAFM S.S.JAIN SUBODH P.G COLLEGE

2. WHAT IS PROJECT ? A Project is a temporary, unique and progressive attempt or endeavour made o produce some kind of tangible or intangible result (unique product, service, benefit, competitive advantage, etc.). It usually includes a series of interrelated tasks that are planned for execution over a fixed period of time and within certain requirements and limitations such as cost, quality, performance, others. A Project is a combination of interrelated activities or individual tasks with well defined objectives to be completed in a specific time period. Project is something special which is different from routine and regular activities.

3. FEATURES OF PROJECT

4. CLASSIFICATION OF PROJECT New project Expansion Project Modernisation Project Replacement Project Diversification Project Rehabilitation Project Plant Relocation Project Infrastructure Projects Welfare Projects Educational Projects

5. PROJECT IDENTIFICATION A process to assess each project idea and select the project with the highest priority. Concerned with collection, compilation and analysis of economic data for the eventual purpose of locating possible opportunities for investment.

6. BUSINESS OPPORTUNITIES

7. BASES OF PROJECT IDENTIFICATION OBJECT AVAILABILITY OF RESOURCES TECHNICAL FACTORS CREDITWORTHINESS AND GOODWILL COMPETITION GOVERNMENT POLICIES SUCCESFULL ENTERPRENEUR TRUST IN PROJECT

8. STEPS IN PROJECT IDENTIFICATION

9. GENERATION OR SCROUTING OF IDEAS OBSERVATION ANALYSIS OF PERFORMANCE OF EXISTING INDUSTRIES EXAMINATION OF INPUTS AND OUTPUTS OF VARIOUS INDUSTRIES ANALYSIS OF INPUTS AND EXPORTS EXPLORING THE POSSIBILITY OF REVIVING SICK-UNITS TRADE AND PROFESSIONAL JOURNALS BULLETINS OF RESEARCH INSTITUTES THE PLAN DOCUMENT TRADE FAIRS AND EXHIBITIONS SUGGESTIONS OF FINANCIAL INSTITUTIONS AND DEVELOPMENT AGENCIES INVESTIGATION OF LOCAL MATERIAL AND RESOURCES ANALYSIS OF ECONOMIC AND SOCIAL TRENDS

10. STRENGTHS – resources and capabilities (strong brand name, good reputation, favourable networks, high grade natural resources, strong financial position etc. WEAKNESSES- lack of patent protection, weal brand name, poor reputation, high cost structure, lack of best natural resources etc OPPORTUNITIES- unfulfilled customer need, arrival of new technologies, loosening of regulations, removal of international trade barriers. THREATS- substitute products, new regulations, increased trade barriers, high competition, shifts in consumer tastes, high rate of inflation etc.

11. MONITORING OF ENVIRONMENT ECONOMIC SECTOR- state of economy, growth rate, cyclical fluctuations, rate of inflation, balance of payment. GOVERNMENT SECTOR- industrial policy, govt. programs and projects, tax designs, import and export policy. TECHNOLOGICAL SECTOR- present and emerging new technologies, foreign as well as domestic. SOCIO- DEMOGRAPHIC SECTOR- population trend, age of population, income distribution, educational profile, employment, consumption, investments etc. COMPETITION SECTOR- number of firms in market, their products, comparison in terms of quality, price, performance, marketing policies and practices.

12. CORPORATE APPRAISAL Marketing and distribution area Production and operations area Research and development area Corporate resources and personnel area Finance and accounting area

13. PRELIMINARY SCREENING Compatibility with the Entrepreneur Compatible with Government Regulations and Priorities Availability of Inputs Adequacy of Market Project Cost Justification Risk involved in the project

14. SELECTING THE BEST PROJECT IDEA Identification of factors relevant for project rating Assigning of weights to these factors Rating the project proposal Multiply each factor with the weightage to get factor score Adding all the factor scores to get overall project rating index .

15. PROJECT FORMULATION

16. DEFINITION: Project formulation  is the systematic development of a  project  idea for arriving at an investment decision. It has the built-in mechanism of ringing the danger bell at the earliest possible stage of resource utilization.  Project formulation  is a process involving the joint efforts of a team of experts. It involves systematic examination of technical, economic, managerial, financial, commercial, organisational and legal aspects of a project. Project formulation is a step-by-step investigation of resources and development of project idea for achieving the objective of taking an investment decision  

17. STAGES/ ASPECTS OF PROJECT FORMULATION Feasibility Analysis Pre-feasibility analysis Preparation of detailed project report Market and Demand Analysis Techno Economic Analysis Project design and network analysis Input Analysis Financial Analysis Socio-cost benefit Analysis Pre-investment Analysis Managerial analysis Environment appraisal

18. PRELIMINARY OR PRE-FEASIBILITY ANALYSIS Preliminary analysis is essential to examine the project idea in the light of the available internal and external constraints. Internal constraints arise due to the limitations of project sponsoring and implementing body. External constraints are due to the characteristics of the environment. The pre-feasibility study can be reviewed as a series of steps resulting in a document called ‘Project Feasibility Report (PFR) or Preliminary Project Report (PPR). PFR- an overview of the Project’s proposal , to provide a basic guideline on technical, economic and commercial parameters of a project.

19. FEASIBILITY STUDY OR PREPARATION OF DETAILED PROJECT REPORT : The technical, economic and commercial justification has to be provided in comprehensive and authentic terms before the final decision is taken to commit resources. At this stage, the project is presented in such a way that the project sponsoring body, the project implementing body and the external consulting agencies are able to decide whether to accept the proposal or not. DPR- It is a precious formal document of commitment prepared and presented by sponsors of a project. The preparation of DPR is undertaken only after the investment decision is made on the basis of technical, commercial, economic and financial feasibility studies so that the expensive efforts involved in the preparation of DPR are not wasted.

20. Market and Demand Analysis- Market Structure; Price Competition; Quality maintenance; Communication facilities; Transportation facilities; P resent and future demand, sale and distribution, consumers background, government policy Techno Economic Analysis- location; present and emerging new technology; layout; process of production; product mix; plant capacity; Tax factor; market revenue; risk and uncertainty state of economy; growth rate; cyclical fluctuations; rate of inflation; balance of payment. Project design and network analysis- Defines individual activities comprising a project; Identifies the flow of events; product scheduling; PERT; CPM.

21. Input Analysis- Concerned with identification and evaluation of project inputs; Raw material; indirect material; finished and semi finished material, electricity; nature and scope of available resources; continuous and adequate supply of inputs. Financial Analysis- A detailed coverage of financial aspects such as cost estimation, profit analysis, production cost; profitability; sources of funds; optimum utilization of funds; Financial statements; Financial forecasting; Cash flows; Cost- benefit Analysis; Rate of returns. Socio-cost benefit Analysis- Developed for evaluating investment projects from the point of view of society as a whole; Maximum benefit at minimum cost.

22. Pre-investment Analysis- At this stage the project is presented in such a way that the project promoters, project implementation and project advisory agencies are able to decide whether the project should be accepted or not. The whole essence of an appropriation analysis is to present the project idea in such a format that the project originator and the implementing body can make an appropriation decision regarding the project. This phrase may be called as Detailed Project Report. Managerial analysis - Talent of promoter is taken into consideration; Also includes assessment of technical and managerial personnel working, their training etc.  Environment appraisal- Refers to environment planning, protection, monitoring, research, education, conservation of resources etc.

23. THANKS