A project is an investment activity where we expend capital resources to create a producing asset from which we can expect to realize benefits over an extended period of time. Or a project is an activity on which we will spend money in expectation of returns and which logically seems to lend itself to planning, financing and implementation as a unit. A project should have the following characteristics.
2. Its major costs and returns are measurable
3. It should have a specific geographic location
4. It should have a specific clientele group
The methods/criteria more often used for evaluating a project are
(1) Simple rate of return (SRR)
(2) Payback Period (PBP)
(3) Benefit Cost Ratio (BCR)
(4) Net present Value (NVP) or Net Present Worth (NPW) and
(5) Internal Rate of Return (IRR).
The SRR and the PBP are the undiscounted measures while BCR, NPV and IRR are the discounted measures of project worth of Investment.
4. Effects on waste & rejects.
5. Energy requirements.
6. Facility & other equipment
7. Safety of process.
8. Other applications of technology.
9. Change in cost to produce until output.
10. Change in raw materials usage.
11. Availability of raw materials.
12. Required development time & cost.
13. Impact on current suppliers.
14. Change in quality of quality.
1. Size of potential market for output.
2. Probable market share of output.
3. Time until market share is acquired.
4. Impact on current product line.
5. Consumer acceptance.
6. Impact on consumer safety.
7. Estimated life of output.
8. Spin-off project possibilities.
3. Payout period.
4. Cash requirements.
5. Time until break- even.
6. Size of investment required.
1. Training requirements.
2. Labor skill requirements.
3. Availability of required labor skills.
v. Administrative & Miscellaneous Factors
1. Meet govt. safety standards.
2. Meet govt. environment standards.
3. Impact on information system.
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