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Project Appraisal Outline

Project Appraisal Outline

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Published by Muazzam Mughal
This is an easy to remember outline of Project Appraisal. I use to make such outline for exams and it helps to perform better.
This is an easy to remember outline of Project Appraisal. I use to make such outline for exams and it helps to perform better.

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Published by: Muazzam Mughal on Jul 06, 2010
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10/31/2012

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Project Appraisal
Project:
A project is an investment activity in which resources are expanded or invested to create benefit over anextended time period. OR Any economic activity which is related to future benefits.
Project vs. ongoing activityProject
y
 
D
efinite beginning and ending
y
 
T
emporary in nature
y
 
P
roduces a unique product or service
y
 
Resources are dedicated to project
y
 
E
nding is determined by specific criteria
O
ngoing Activity
y
 
N
o definite beginning or ending
y
 
Ongoing nature
y
 
P
roduces same product over and over
y
 
Resources are dedicated to operations
y
 
P
rocesses are not completed
T
ypes of 
O
rganizations1. Functional
O
rganization:
Functional organization is structure in which authority rests with the functional heads; the structure issectioned by departmental groups.
2. Projectized
O
rganization:
Any organizational structure in which the project manager has full authority to assign priorities, applyresources, and direct the work of persons assigned to the project.Advantages-
P
roject managers have ultimate authority-
P
roject managers are primary decision makers- Focus of organization is project work
D
isadvantages- Re-assignment of team members- Idle time- Competition among team members
3. Matrix
O
rganization:
In matrix organization resources a project requires are not permanently assigned but are obtained from thedepartments which are controlled and monitored by functional managers.Matrix is an organization structure where employees report to multiple managers including one functionaland at least one project manager.Advantages- Focus of organization is project work- Specialty skills can flourish- Opportunities for growth
D
isadvantages- More than one boss- Confusing duties- Conflicts between managers
T
ypes of Projects1. New Project
T
he project activity is taken for the very first time.
2. Extension Project
When you extend your existing setup that is extension project.
3. Rehabilitation Project
T
he process of covering weak aspects of a project is rehabilitation.
4. Balancing Modernization & Replacement Projects (BM&RP)
Balancing
P
rojects: Balance the capacity of the gap between production and supplies.Modernization
P
rojects: Replace the obsolete technology with modern technology.Replacement
P
rojects: A project or plant which needs to be replaced to continue the operations.
Project Lifecycle
1.
P
re-Investment
P
hase
y
 
Opportunity Study
y
 
P
re-feasibility Study
y
 
Support Study
y
 
Feasibility Study2. Investment
P
hase3. Implementation
P
hase4. Operational
P
hase
 
O
pportunity Studies
1.
N
atural Resources2.
E
xisting Agriculture pattern3. Future demand for products4. Import pattern to identify import substitutes5. Manufacturing sector successful in other countries similar development levels6.
P
ossible inter-linkage with other industries national or international7.
P
ossible extension (backward or forward)8.
P
ossibilities for diversification9.
P
ossible extension to enhance capacity in order to achieve economies of scales10. General Investment Climate11. Industrial policies of country12. Cost and availability of Factors of 
P
roduction13.
E
xport possibilitiesOpportunity study is of two types
1. General
O
pportunity Studies
Area study: Select a particular areaSubsectoral study: select a particular sectorResource based study: check the availability of materials
2. Specific
O
pportunity Studies
-
T
ransformation of project idea into broad investment proposition- Include certain basic info-
T
o stimulate investor response-
E
conomic indicators findings
PREFEASIBLI
TY
S
TUDY
 
Objectives- Investment decision should be taken on the basis of provided information-
E
ither to go for feasibility study first-
E
ither to go for support or functional study-
T
he information is adequate to decide
E
xamine Broadlya. Market and plant capacity
D
emand and market study, sales and marketing, production program, plant capacityb. Material inputsc. Location and sited.
P
roject engineering
T
echnologies and equipments, civil engineering workse. Overheads, factory and administrationf. Man power, labor and staff g.
P
roject Implementationh. Financial analysis, investment cost, project financing, production, cost and profitability
 
Structure of prefeasibility study is same as feasibility study.
 
It can be occasionally bypassed
Sources of Information
1. Opportunity machinery supplier2.
E
xisting Units
 
Source of detailed information
 
Source to identify problems
 
Source of getting new ideas3.
T
rade Associations
P
rovide different type of information and publish data time to time.
 
Industrial Associations and Sectoral Associations4. Chamber of Commerce- In a particular geographical area- All business persons are members- Maintain a library and supporting material5. Government bodies/institutions-provide advisory and information services-Investment
P
romotion Bureau- Industrial Investment Schedule (discontinued)6. ConsultantsCollect information, prepare reports against their fees7. Financial Institutions8. Government
D
epartments9.
P
ublications; news papers, journals, websites, blogs
S
U
PP
O
R
T
/ F
U
NC
T
I
O
NAL S
TUDY
 
1. Market study of the product to be manufacture2. Raw materials and input study3. Laboratory and pilot plant study4. Location studies5.
E
conomies of scale studies6.
E
quipment selection studies
INVES
T
MEN
T
PHASE
-
D
ecisions for financing project in taken- Financial institutions review feasibility report
y
 
Financial Institution
o
 
D
eputy Managing
D
irector
 
Appraisal
y
 
P
reliminary Appraisal Committee
y
 
D
etailed Appraisal Committee
 
Implementation
 
Recovery
IMPLEMEN
T
A
T
I
O
N PHASEa. Project
D
esign
-
T
ime scheduling- Site preparation and probing-
E
laboration of sketches- Final selection of technology- Civil work plan
b. Negotiation and Contracting
-
N
egotiation- Contracting
o
 
E
ngineers
o
 
Suppliers of raw material of civil works
o
 
Suppliers of raw material
o
 
Suppliers of technology and equipment
o
 
Consultants
o
 
Finance
P
roviders
c. Construction
- Site development- Civil works-
P
roviding Utilities

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