Preparation of Project

Preparation of Project
Presented By: Prakhyath Rai

Introduction
“A project is a whole complex of activities involved in using resources to gain
benefits”
“A project is an organized unit dedicated to the attainment of a goal and the successful
completion of project on time, within budget, in conformance with predetermined
program specification”
Prakhyath Rai, Asst. Professor, Department of ISE, SCEM, Mangaluru-575007

Project Identification

Project Selection
“Zeroing-in-process” of the final product/project idea.
SWOT analysis is carried out for before stepping-in or final selection of project.

Strengt Weaknes Opportuni
!
Threats
SWOT Analysis

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O T
SWOT Analysis Cont..
SWOT Analysis is a technique founded by Albert Humphrey who led a research
project at Stanford University in the 1960s and 1970s.

What is SWOT Analysis?
SWOT Analysis enables a
group/individual to handle
everyday problems and
look at traditional
strategies from a new
perspective.
It is used as
framework for
organizing and using
data and information
gained from situation
analysis of internal
and external
environment.
SWOT Analysis is a
planning tool used to
understand Strengths,
Weaknesses,
Opportunities and
Threats involved in a
project/business.
SWOT

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O T
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O T
Strengths are:
• Characteristics of the business or team
that give it an advantage over others in the
industry.
• Positive, tangible and intangible attributes,
internal to an organization.
• Beneficial aspects of the organization or
the capabilities of an organization, which
includes human competencies, process
capabilities, financial resources, products
and services, customer goodwill and brand
loyalty.
Strengths

W
O
T
W
O
T
SS Some of the examples of organizational
strengths are as follows:
• Abundant financial resources
• Established brand name
• Economies of scale
• Lower production costs
• Superior management
• Excellent marketing skills
• Good supply chain distribution
• Great Employee commitment
Strengths

S W
O T
S
O T
Weaknesses are:
• Characteristics that place the organization
at a disadvantage relative to others.
• Detract the organization from its ability to
attain the core goal and influence its
growth.
• Factors which do not meet the standards
set in the organization.
Weaknesses

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W
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Examples of organizational weaknesses are as follows:
• Limited financial resources
• Low R & D Budget
• Narrow product line
• Weak supply chain distribution
• Higher production costs
• Obsolete or Out-of-date products/technology
• Poor market image and Poor marketing skills
• Weak management skills
• Under-trained employees
Weaknesses

S W
O T
S W
T
Opportunities are:
• Chances to make greater profits in the
environment.
• External attractive factors that represent the
reason for an organization to exist and develop.
• Condition of the environment that benefits the
organization in planning and executing
strategies that enable it to become more
profitable.
Organization should be careful and recognize the
opportunities and grasp them whenever they arise.
Opportunities may arise from market, competition,
industry/government and technology.
Opportunities

S W
O T
S W
O
!
Threats are:
• External elements in the environment that
could cause trouble for the business.
• External factors, beyond an organization’s
control, which could place the organization’s
mission or operation at risk.
• Conditions in external environment that
jeopardize the reliability and profitability of
the organization’s business.
Threats compound the vulnerability when they
relate to the weaknesses. Threats are
uncontrollable. When a threat comes, the stability
and survival can be at stake.
Threats

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T
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T
Some of the examples of threats for an
organization are as follows:
• Entry of foreign competitors
• Introduction of new substitute products
• Decline in product life cycle
• Changing customer needs/tastes
• New strategies adopted by rival firms
• Increased government regulation
• Economic slowdown
Threats

S W
O T
Strengths
(based on
analysis of):
• Strategies
• Restriction &
Control
• Performance
Weaknesses
(based on
analysis of):
• Strategies
• Restriction &
Control
• Performance
Opportunities
(based on
analysis of):
• General Environment
• Industry Environment
• Main Competitors
Threats
(based on
analysis of):
• General Environment
• Industry Environment
• Main Competitors
Objectives of SWOT Analysis

Project Report – Need and Significance
1he
2at
nd
3he

Project Report – Need and Significance Cont..
4al
5m
6re

Project Formulation

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Some of the examples of opportunities for an
organization are as follows:
• Rapid market growth
• Complacent rival firms
• Changing customer needs/tastes
• New uses discovered for existing product
• Economic boom,
• Government deregulation
• Decline in demand for a substitute product
Opportunities

Project Formulation Cont..
Financial Analysis
Techno-Economic Analysis
Social Cost-Benefit Analysis
Project Design
Network Analysis
Analysis of Inputs
Project Appraisal
Feasibility Study

Guidelines by Planning Commission for Project Report
A project report should first of all include an analysis of the industry to which the
project belongs. Example: Tourism industry, Infrastructure, Electric motors etc.
A project report should contain information of the promoting company with respect
to its history, board of directors, key executives, details of division etc.
A project report should contain information of the promoting company with respect
to its history, board of directors, key executives, details of division etc.
1. General Information

Guidelines by Planning Commission for Project Report Cont..
A project report should contain current data available on the gap between demand
and supply for the product to be produced.
A project report should contain information on the production capacity, list of
existing and proposed plants/projects, location of plant and its implication.
It should also contain information on calculation on the rate of return on
investment, account of the foreign exchange requirement and alternative cost
calculation vis-à-vis revenues.
2. Preliminary Analysis of Alternatives

Project report should contain brief description of technology chosen, information
regarding basis of selection of location.
A project report should contain information on assessment of environmental effects
of project such as on water, air, land, population, pollution, flora and fauna etc.
It should also contain a list of operational requirements to start the plant, such as
water, power, labour, transport etc.
3. Project Description

Project report should contain data on the marketing plan, demand data and
prospective supply.
A project report should contain information on forecasting techniques employed to
determine demand data and basis for selecting particular market areas.
It should also contain data on price sensitivity of the product and analysis of past
trends in prices.
4. Marketing Plan

The project report has to be as precise as possible with respect to financial
requirements and costs incurred. Information on all cost components should be
carefully collected and presented.
5. Capital Requirements and Costs
Operating costs are those costs that are incurred after the commencement of actual
production, such as raw materials, utilities, labour, transport, maintenance etc.
6. Operating Requirements and Costs

Financial availability of the project should be reported .
Depreciation calculation must be shown as specified by Bureau of Public Enterprises.
Foreign exchange requirements must be specified.
A balance sheet for the project data should be presented.
A report on tax matters must be enclosed.
7. Financial Analysis

Social profitability analysis has to be made.
Indirect cost and benefits have to be listed.
Impact on society have to be specified..
Impact of operation on foreign trade has to be reported.
Non-quantifiable things have to analyzed and their importance has to be highlighted.
8. Economic Analysis

Additional information appropriate to the project have to be included, such as level
of technology, cash flow diagram, future expansion plans, diversification plans,
scale-up plans etc.
9. Miscellaneous Aspects

Errors in Project Report

Project Appraisal
 Project appraisal is basically the assessment of a project. It is the analysis of costs
and benefits of a proposed project.
 Project appraisal can be carried out for both proposed as well as already-executed
projects. Appraisal of a proposed project is called ‘ex-ante analysis’ while
appraisal of a executed project is called ‘post-ante analysis’.
 Project appraisal is a cost-benefit analysis of different aspects of a proposed project
with the objective of judging its viability.

Methods of Project Appraisal

Methods of Project Appraisal Cont..
Techniques for analyzing various issues in the process of project appraisal are as follows,
1. Demand Forecasting Techniques
a. Judgmental Methods
i. Opinion polls
ii. Market Trials
iii. Delphi Technique
iv. Nominal Group Technique
b. Analytical Methods
i. Time series methods
ii. Exponential smoothing
iii. Regression method

Methods of Project Appraisal Cont..
2. Life cycle segmentation analysis

Preparation of Project

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