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PROJECT EVALUATION AND

IMPLEMENTATION
COURSE CODE: 401
L1: INTRODUCTION
1. What is a Project?
2. Characteristics of a Project
3. Classification of Projects
a. Taxonomy of projects
b. Variety of Projects
4. Sources of Project Ideas
5. Project Selection Stages
a. Project Identification
b. Project Appraisal
c. Project Selection making a choice
- Preliminary Considerations
- Project Rating Index


Project
The PMI defines a project as: a temporary endeavour
undertaken to create a unique product, service or
result
A project is a complex, non-routine, one-time effort
limited by time, budget, resources and performance
specifications designed to meet the customer needs.
A project is a one shot, time tested, goal directed,
major undertaking requiring the commitment of
varied skills and resources.
A project is for setting up a plant and when the plant
becomes operational, the project is treated as
completed.
Characteristics of a Project
Mission / Set of Objectives
A fixed beginning and a termination point
Team work
Life cycle
Uniqueness
Customer specific
Greater the complexity of the project, greater the
extent of sub contract work and
A well defined project has lesser risk &
uncertainty
Remember
The objectives of projects and operations are fundamentally different.

The purpose of a project is to attain its objectives and then terminate.
Conversely, the objective of an ongoing operation is to sustain the business.

Projects are different because the project concludes when its specific
objectives have been attained, while operations adopt a new set of
objectives and the work continues.

Projects are undertaken at all levels of the organization and they can
involve a single person or many thousands. Their duration ranges from a
few weeks to several years. Projects can involve one or many
organizational units, such as joint ventures and partnerships.
Taxonomy of Projects
1. National & International Projects
2. Industrial & Non industrial Projects
3. Level of Technology based Projects
4. Based upon Size
5. Based upon Ownership: Pvt., Public, Joint
6. According to Purpose B M R E D,
Rehabilitation of Sick Units, Maintenance
Projects, Technology Up gradation Projects,
Merger & Acquisition Projects, Innovation &
Invention Projects, Consultancy Projects and
7. Function Based Projects Construction ,
Fabrication, Textile, Chemical, Soft ware
Projects, Dairy Projects etc.
VARIETY OF PROJECTS
Projects at personal level
Projects in local neighbourhood
Organisational projects
National projects and
Global projects
PERSONAL PROJECTS
Preparing for an examination
Writing a book
Getting dressed
Wedding in the house
A birthday function
A family vacation etc.
PROJECTS IN LOCAL
NEIGHBOURHOOD
A school function
Cleanliness drive
Construction of clubs
Tree plantation exercise
Establishment of a park
Welcoming a dignitary to the colony etc.
ORGANISATIONAL
PROJECTS
Construction of building, highway
Planning & launching a new product
A turnaround in a refinery
A training for managers in the
organization
Conducting a marketing survey
Completing a financial audit
Disposal of dead stock etc.
NATIONAL PROJECTS
Launching a new satellite
Literacy campaign
Poverty removal drive
Organizing general elections
Preparation of annual budget etc.
GLOBAL PROJECTS
Organising peace missions (UN)
Space exploration
Conducting World Trade
Environment protection
Combating terrorism etc.
Sources of Project Ideas
1. Analysis of existing industries based
upon performance, inputs, outputs,
imports and exports
2. Five year plans
3. Government policies
4. Financial institutions
5. Survey reports
6. Consultancy organizations contd.
Sources of Project Ideas contd.
7. Trade fairs
8. Embassies
9. Sick units
10. New technologies developed by CSIR,
NPL
11. News papers, magazines, trade
journals and
12. Needs of unsatisfied customers
PROJECT SELECTION - stages
Project Identification
Project Appraisal
Project Selection making a choice
1. PROJECT IDENTIFICATION - stage
Receptive to new ideas

Vision of future growth

Long term objectives

SWOT analysis and

Preliminary project analysis

PROJECT IDENTIFICATION
Objectives
Internal
SWOT Brainstorming
External
Project possibilities
Criteria Screening
Project proposals
2. PROJECT APPRAISAL - stage
Market Appraisal
Technical Appraisal
Financial Appraisal
Economic Appraisal and
Ecological Appraisal
Remember: A Feasibility Report considers
all these issues prior to project adoption.
MARKET APPRAISAL
Aggregate future demand
Market share
Current and future competition
Location and accessibility of consumers
Technological scenario /Obsolescence
Possible pricing options
TECHNICAL APPRAISAL
Engineering aspects
Locations
Size
Production process
FINANCIAL APPRAISAL
Cash flows over time
Profitability
Break even point
Net present value
Internal rate of return
Payback period and
Risk Analysis

ECONOMIC APPRAISAL
Benefits and costs (in shadow prices)
Distribution of income in society
Level of savings & investment in society
Self sufficiency and employment
ECOLOGICAL APPRAISAL
Environmental damage
Air
Water
Noise
Other
Restoration measures and cost
3. Project Selection Preliminary
Considerations
Criteria to be used in selecting projects:
Profile matching with entrepreneur
To fit in with national objectives
Profitability
Availability of inputs
Market size, growth potential, competitors
Risk factors: technological changes,
competition, government regulations,
vulnerability to business cycles
Comparative Score of alternative Projects i.e.
Project Rating Index.
Project Rating Index (PRI)
A preliminary evaluation may be translated into a project
rating index.
Steps involved in determining PRI-
Identify factors relevant for project rating
Assign weights to these factors
Rate the project proposal on a scale of 1 to 5 for
each of the factor
Multiply the factor rating with the factor weight to
get the factor score.
Add all the factor scores to get the value of the
PRI
Choose the project alternative with highest PRI
Determination of a Project rating index
Factor
Factor
Weight
VG
(5)
G
(4)
A
(3)
P
(2)
VP
(1)
Factor
Score
Input Availability
0.25 0.75
Technical Know how
0.10 0.40
Reasonableness of
cost
0.05 0.20
Adequacy of
Markets
0.15 0.75
Complimentary
Relationship with
Other Products
0.05 0.20
Stability 0.10 0.40
Dependence on
firm's strength
0.20 1.00
Consistency with
Govt. Priorities
0.10 0.30
Choice of a Project based upon PRI
Factor
Factor Score
PI PII PIII
Input Availability
0.75 1.00 0.75
Technical Know how
0.40 0.30 0.40
Reasonableness of cost
0.20 0.25 0.40
Adequacy of Markets
0.75 0.60 0.60
Complimentary
Relationship with Other
Products
0.20 0.40 0.10
Stability 0.40 0.20 0.30
Dependence on firm's
strength
1.00 1.50 1.00
Consistency with
Govt. Priorities
0.30 0.10 0.20
Project PRI
PI 4.00
PII 4.35
PIII 3.70
Request for Proposal (RFP)

Assignment No. 1
Prepare a Request for Proposal for a
project of your choice.
Discuss the :
Attributes of a Project Manager
Skills Required for a Successful Project
Manager
Duties of a Project Manager of a large project
Scope of Project Management

PROJECT SELECTION
CRITERIA
Investment
Rate of return
Risk
Likely profit
Payback





Similarity to existing
business
Expected life
Flexibility
Environmental impact
Competition

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