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Learning Objectives
uUnderstand the meaning of Project
uDescribe the project identification process
uExplain the project selection phase
uDescribe project report and needs
uExplain components of project report
uDescribe the steps in formulation of project report
uExplain guidelines of planning commission on project report
uDescribe the use of network analysis in project management
uExplain the errors in project report
Understand the process of project appraisal
Explain market feasibility study
Explain technical feasibility study
Describe financial feasibility study
Understand the meaning of social feasibility study.
Introduction

he process of setting up a business is preceded by the


decision to choose entrepreneurship as a career and
identification of promising business ideas examining the
different opportunities.
Generation of ideas is not enough, the business ideas must
stand the scrutiny from techno-economic, financial and legal
perspectives.
After screening the ideas it is required to prepare a project
report that will serve as the road map for effective venturing.
Soon after the identification of a project and its
implementation, the project report is formulated after
examining various relevant aspects
What is a project ?
Any undertaking with a definite starting point and
defined objectives by which completion is
defined.
Projects by definition includes all types of
undertaking- construction, manufacturing, new
product or process development, new business
development and so on
Project features
It has definite objectives
It consist of interrelated activities
It requires multiple skills
It has constraint of time, resources and budgets
It is unique
Control variables in a project
Time-time required to complete the project.
Cost- calculated from the time variable and
resources
Quality- the amount of time put into individual
tasks determines the overall quality
Scope- requirements specified for the end result.
Risk- potential points of failure
Project life cycle
Life cycle has identifiable start and end point
which can be associated with a time scale.

he life cycle includes all phases from point of


inception to final termination of the project.

he project life cycle refers to a logical sequence


of activities to accomplish the project goals or
objectives.
phases
r itiatio or birth phase- the output and critical
success factors are defined
Pla i  phase- characterized by breaking down
the project into smaller parts/tasks
Executio phase- the project plans are executed
Closure or exit phase- that marks the completion
of project.
Project management
Project management is the discipline of planning,
organizing, and managing resources to bring
about successful completion of specific project
goals and objectives.
Project management is composed of several
different types of activities such as:
uAnalysis and design of objectives and events
uPlanning the work according to the objectives.
uAssessing and controlling risk.
uEstimating resources
uAllocation of resources
uOrganizing the work
uAcquiring human and material resources
uAssigning tasks
uDirecting activities.
uControlling project execution.
u
racking and reporting process
uAnalyzing the result based on the facts achieved
uDefining the products of the project.
uForecasting future trends in the project.
uQuality management.
uIssue management
uIssue solving
uIdentifying managing and controlling changes
uProject closure
uCommunicating to stakeholders
uIncreasing/ decreasing a companyǯs workforce.
Project report
Project report is a written document prepared by
entrepreneur that describes all the relevant
external and internal elements involved in
starting a new venture.
It is an integration of all functional plans like
marketing, finance, manufacturing and human
resources which are required for successful
implementation of a project.
Need of a project report
= If an entrepreneur wants to manage and organize the
business effectively he or she needs a project plan in the
form of a project report.
= Project report is very important due to the following
reasons:
= It helps the entrepreneur to decide where he
wants to go
= It helps him to determine the viability of the
venture.
= It provides guidance to the entrepreneur in
planning realistic goals and targets in organizing
and even in identifying possible roadblocks.
= It is a pre-requisite to obtain finance.
While making a project report keep following
points in mind
uThe taret audie ce- while working on project plan
keep in mind the intended audience and why you are
writing plan.
uuusi ess stratey- the plan should explain the market
the industry, target customers and competitors. Secondly
the plan should explain how to execute your business
strategy.
uCompetitio - focus your plan on being different than
your competitors, think over the point- can you make
unique strategy? can you position your products
differently? And so on.
ue realistic
r oleme t of people for creati  project pla 
eep your project pla i brief
Project identification
Project identification is the first and most important
step in starting a new business.

he success of an entrepreneur depends on


identification of right project which can be successfully
launched.
Project identification deals with collection, compilation
and analysis of economic data for the purpose of
locating possible opportunities for investment, based
opportunities in the market.
Sources of information for project
identification
Co sumers: potential customers are the sources for any
business and understanding their exact needs is the key
for the success of business.
Existi  products a d serices: existing products and
services in the market can also throw certain
information to entrepreneurs and this information can
be more relevant for identifying a project in the form of
improving the products and services
6istributio cha els: members of distribution are
more familiar about the markets and hence they can
also provide potential information about the needs
of the customers.
Goer me t sources: many department of both
central and state govts publish some useful
information which helps entrepreneurs in
identifying new projects.
Obseratio : observation of existing markets, scan
of environment.
Trade a d professio al jour als: provide potential
information on investment opportunities. demand
and supply, availability of raw materials, availability
of facilities.
Project selection

After identifying potential projects


entrepreneur has to select the best
project among them, so that it can be
implemented.
Selection of a project is based on several
factors. Some of the important issues
related to selection of a project are
discussed below:
Investment size: the amount of money required for
investment to start the new business venture is a major
factor which influences the selection of the project.
Entrepreneur should have an idea about how much capital
he needs to raise and from which resources.
Growth of sales: growth of sales from start up phase is
another critical factor in project selection.
Equipment: availability of equipment which is required for
project implementation is another important factor to be
considered.
he cost and timely availability of equipment,
quality of equipment etc. are to be evaluated.
Location: entrepreneurs should also consider good
location for the project. Infrastructure available, local
government support, nearness to market and raw
materials etc. need to be considered.
Market: ability to market the product or service is very
important.
Components of project report

he components of a good project report are discussed


below:
Summary- a brief overview of plans
Business description- what the company does
Market analysis- who is the customer, market size, trends
Competitive analysis- who else is out there, local,
domestic, foreign
Product/service advantages- why product of yours is
better
Objectives- quantifiable targets
Market strategy- how to reach those targets
Operations- how will the company produce
Organization and management- who will run it

iming- when will things happen


Financial information- historical, actual, projected
Exhibits/appendices- brouchers, photos, news clipping
etc.
1. summary
= A brief description of the business
= Estimated market potential and competitive assessment
= Your products advantages and market need it will meet
= Your objectives for the business
= Your market strategies.
= How you will make the product or service on industry
= Projected sales and profits
= How much you have or will invest in the project
= How much financing is needed?
= Where it is coming from and what it will be used for
= How and when the financing will be repaid
2. Business description
=
he legal form of the business
= Your specific product or service
=
he present or proposed location of the business
= Your existing or potential customers and their
geographic area, domestic, international
= A brief history of the business , how did you get here?
= How was the business financed till now
= Who are you or who will be the owners
Market analysis
=
his is the section where you need to prove that there
is really a need for your product or services- and that
there is a sufficient demand to support the business
you have proposed.
=
his section must first identify the need for your
product or service, second show how your product or
service meets that need, and third show how you can
sell your products or service at a profit.
competition
= 6escribe the compa ies a d products that are or will be
your competitors a d do t foret to i clude imports if
they are a factor i your market
= ook i to followi  factors:
= How ma y compa ies you will be competi  aai st? Where
are they located, how lo  hae they bee i busi ess?
= How do they distribute the product or serice? What is there
respectie market share?
= What are their stre ths a d weak ess i marketi ,
operatio s a d fi a ce, what are there strateies?
= How does your product compare i terms of price, quality,
serice, desi  6eliery or other features?
= 6o you i te d to take market share away from the competitio
or will you be creati  ew, iche market?
è. Product or service advantage
= Investors or lenders want to know how your product or
service compares to the competition.
=
hey want to know what is unique about yours and to
what extent you will have a competitive advantage
over similar or existing products and how long will that
advantage last
= Product descriptio
= Proprietary positio
= Other barriers to competitio
= Reulatory requireme ts
= Product exte sio
6. objectives
=
his describes marketing objectives- where will your product
be and when example how many will you will sell, at what
price, what will your market penetration rate be and when will
each target happen?
=Taret markets: identify the specific target market
=Estimated sales a d market share- estimate the sales you
think you can achieve over the next three years starting with
quarterly estimates in years 1 and 2. calculate the market share
that these sales represent. Market share is that percentage of
total market represented by your sales
-. Marketing strategy
=this is the section in which you assess the market , the
competition, your capabilities and how you will set your
product or service apart from others.
=
he following are important elements to consider when
developing your strategy: trends in the market,
competitive strengths and weakness, voids in the market,
advertising, public relations, promotions, quality and
service. And also following includes:
=Product features, pricing, and distribution.
D. operations
=How you will obtain or produce your products or provide
your services.
=Location and space requirements- if your business exists,
where is it, if proposed where are you planning to put it
and why? What type of space you need, how much space,
what will it cost, what may be unique or special about it.
=Regulatory- what is the regulatory environment that you
need or need to avoid like parking, truck traffic, pollution
control board etc
=Equipment requirements- what type of equipment do
you need for manufacturing or service provision, how
much does it cost, is special operator training is necessary
and so on
= Personnel requirements: this is about human resources
requirement. how many people you need and what
skills do they need, what kind of experience is needed,
are the people available, is training required, what are
the privilege wages, are unions a factor and so on.
= Production or service operations- describe the process
of manufacturing or providing services and include the
advantages of your process, capacity, quality control
systems, potential suppliers, secondary sources for raw
materials or subcontract services and so on.
ÿ. Organization and management
=Organization
=Key managers
=Management weakness
=Compensation
=Ownership
=Board membership
10. timing
=Prepare a schedule that reflects major milestones in your
business plan for the next three to five years.
=
his can be very effectively presented by using a chart
and brief explanations.
=You should address planned product introductions,
changes in workforce or management, noteworthy sales
events and significant changes to your customer base.
11. Financial information
=Use the sales and cost information developed in the
preceding sections to prepare projected financial
statements.
=Unless you have a financial background you may need help
with this section.
=Sources and use of proceeds- if you are seeking a lender or
investors, you need to indicate in a summary table how
much money you are seeking, where you anticipate it will
come from, how it will be paid back, and most importantly
and specifically how it will be used.
=Flow projection- this statement identifies sources of cash
in, categories for cash paid out and operating expense
categories.
his essential statement will help you to plan
your cash requirements in both short and long terms views.
=Income statements and balance sheets- all planners
should provide quarterly projections for the next two
years, and annual projections for years 3 through è.
=Break-even analysis- this analysis will help you to
understand the specific relationships between your costs
and sales. At what volume do your profits start? and so on
=Spread sheets- computer spread sheets are sometimes
very useful for asking what if questions and looking at the
results under different conditions or scenarios.
12. Exhibits/appendices
=Provide supportive details for your plan.
=Include resumes all key managers, brouchers to further
explain products and services, maps showing location of
business, tax returns, prior period statements,
accountants, compilation reports, and so on