This action might not be possible to undo. Are you sure you want to continue?
Project Identification and Selection
Structure: 2.1 Introduction Objectives 2.2 Project Identification Process Steps in project identification Importance of project identification Sources for new project ideas 2.3 Project Initiation 2.4 Pre-Feasibility Study Elements of pre-feasibility study 2.5 Feasibility Studies Nature or project feasibility analysis Need for feasibility studies Complements of feasibility study 2.6 Project Break-even point 2.7 Summary 2.8 Glossary 2.9 Terminal Questions 2.10 Answers 2.11 Case study
In the previous unit, we dealt with the definition of project management, need for project management, project management knowledge areas and processes, the project life cycle, the project manager, phases of project management life cycle, project management processes, impact of delays in project completions, essentials of project management philosophy, and project management principles. In this unit, we will deal with project identification, project initiation, pre-feasibility study, feasibility studies, and project break-even point. Identification and selection of a project is one of the critical steps in the project management process. This is an important stage such that it can affect the whole process including that of sustainability of the project after completion and transferring to operational phase. This process is based on
Sikkim Manipal University Page No. 27
certain essential conditions, which may differ from project to project. Project ideas do not take concrete shape immediately, thus, projects should be identified from the perspective of the needs or demand whether at the community or national levels. Countries need to craft their strategic plan according to the interests of the people. Objectives: After studying this unit, you should be able to: • define project identification process • identify the project initiation stage • describe the concept of pre-feasibility study • explain the nature and significance of feasibility study • describe the project break-even points
2.2 Project Identification Process
Project Identification is a continuous and repetitive process involving screening, documentation, validation, ranking and approval of viable project ideas for an organization. “The systematic effort of screening the ideas generated through various sources and bringing out most viable and feasible alternative project ideas is the domain of Project Identification”. While examining the filtered project ideas for further approval, it is imperative to check on the availability of resources and potential skills to execute the project and make it realisable. It is futile to select such an idea for which potential skills are either unavailable and or resources are insufficient to deploy. Thus, identifying a worthy project idea is not a simple mechanism but rather calls for a conscious and robust investigation on the part of the organisation. 2.2.1 Steps in project identification Project ideas are like other ideas don’t take concrete shape immediately. An idea is first born, it is under incubation for some time, and consequently, it begins to take some definite shape. This process of project identification can be broadly divided into four stages. Figure 2.1 depicts the four stages involved in project identification.
Sikkim Manipal University
Page No. 28
In this context. 2.. evacuation from the area to other non-developed areas have to be considered. a number of project ideas are generated through interaction amongst various groups of intellectually and entrepreneurially inclined people in the organisation having good knowledge and concern about the field where contributions are sought. For example in an Aerodrome project in the vicinity of a developing city the problems that the people of that city will face due to the impact of noise pollution.e.1: Stages in Project Identification In the conceptual stage. the project ideas generated above are screened and a preliminary exercise is conducted to weed out the bad or unviable ideas. i. . In the screening stage. Such short listed ideas will be considered while promoting pre-feasibility studies. The third & fourth stages can be termed as ‘investment opportunity study’. It is a preliminary level investigation. It has a limited objective of providing planners with a choice of project alternatives from which they can make a selection. and to explore various opportunities of the project. Sikkim Manipal University Page No. 29 . the second stage. one has to examine the potentialities of development and the problems.Project Management Unit 2 Fig. needs and aspirations of the people in the concerned area. traffic. Therefore. it is understandable that all the given project ideas would not pass the screening test and only few get short listed for further examination. yet extensively conducted to analyse fundamental strengths of the project idea.
upon the satisfaction of prefeasibility report. 30 . while setting clear objectives of proposed project. should we proceed with the proposed project idea? What are the benefits and drawbacks of proposed project idea? How much time will it take to conduct the preliminary study i.2.2 Importance of project identification Project identification helps solve major problems in the planning stage and addresses to meet diverse needs. Good projects act as catalysts for economic growth and development. a detailed feasibility studies can be conducted to document a detailed project report. 2. Project identification helps the management in the following ways: • Identifies and analyses the purpose and scope of a project in the given situation of an organisation or an economy • Encourages value addition to the existing wealth and capital of an organisation or economy as the case may be through raising more funds for project execution • Encourages multi-cultural environment and gives scope of social and cultural compatibility in the organisation as well as economy • Improves and develops the specific and general infrastructure of an organisation and the economy • Determines basic benchmarks for deciding on various types and forms of project ideas to materialise • Helps to identify size of investment and indicates on the complexity of the project • Helps define the location and find appropriate technology to be used while executing the project • Helps to formulate better marketing strategies to enhance profitability Sikkim Manipal University Page No. capital. This encourages creativity and innovation so as to optimise the resources utilisation that is available in the economy viz.. Furthermore. all the organizational efforts get directed towards compiling suitable answers to those questions.Project Management Unit 2 Pre-feasibility study focuses on answering the essential questions such as. a pre-feasibility study will be commenced either by the internal sources or by outsourcing to consultants. and raw materials and so on. After gaining confidence through the answers so supplied. pre-feasibility study on the financial and other related economic aspects of the project viability. In order to support those prefeasibility studies.e. manpower. which help to streamline the fruitful ideas through appropriate actions and achieve the desired results.
31 . Easy availability of good quality raw materials at cheaper prices is a boon for any project. the telecommunications sector especially mobile communications is growing tremendously in India having a mobile market crossing 5 billion by the beginning of 2012. Availability of skilled labour Not all projects can be implemented universally. Chinese manufacturers are taking advantage of this growing market by distributing mobile sets at moderate prices to attract the consumers. Compressed natural gas engines(CNG) were innovated for the automobile sector as it was a feasible substitute for petrol. Changing profitability structure and break-even analysis of industries offer adequate information about the financial health of various industrial sectors. It is necessary to carefully analyse the changing phases of business cycles in which different industries play their respective roles from time to time. There are specific projects which need defined locations. Availability of raw materials Availability of suitable resources is a must for any project to take off.Project Management Unit 2 • • • Identifies different constraints in project environment and formulation Evaluates the potential resources to convert an idea into reality Analyse the policies of government and various legal restrictions 2. and thus a carefully forecasted trend lines help in determining the future prospects in emerging project proposals. Identifying appropriate technology and resource base will help design a good project idea and also make use of those untapped resources for the betterment of the organisation as well as economic health. Performance of Existing Industries The present trends and past experiences of industries provide a good indication about the health of a particular industry. This provides a superficial outlook on the industrial health. specified environmental conditions and Sikkim Manipal University Page No. For example. These new resources help the organisation have an edge over its competitors and also help the economy boost its GDP. For example.3 Sources for new project ideas Following are some of the sources from which new project ideas may emerge.2. This ever growing market gives the investors good chance to innovate cheap and trendy designer mobile instruments that can withstand rigorous utility.
it is found that importing costs are less than cost of indigenous development. handicrafts. all have equal opportunity to get exported as well as imported depending on the demand by the country from time to time. textile units. Sometimes. pharmaceutical units. Sikkim Manipal University Page No. Mobility of manpower and also natural environment such as water and coal is a major challenge. 32 . Fruits. For example. Gujarat state is suitable for Cement industries. cement manufacturing unit. automobile manufacturing unit. sugar factories. profit maximisation and cost minimisation. It may not be true in all cases. power plants etc. If the general price level is found to be rising over the past few years and a specific item is having a steeper rise. Import/export statistics Statistics on international trade reveals the scope to evolve good projects. All these projects need not only good infrastructure base but also to be supported by appropriate technology and availability of suitable manpower. which is why most of the cement manufacturers are situated in that area to drain out chemical waste into sea waters. For instance. 80% of the caprolactum (raw material used to manufacture Nylon filament yarn) gets imported in India and SRF thought of developing the project in the early 1990s but unable to do so due to heavy cost factors. Solar and wind power projects are developed in Rajasthan and Shimla where abundant heat is produced through sand and sun and heavy winds pass through to produce power by maintaining good environmental and duly supported by UNIDO. drugs etc. Fundamentally every organisation will have twin focus. Therefore.Project Management Unit 2 suitable manpower resources. that would indicate a huge gap in the demand-supply and can be thought as a project opportunity. From both the angles it is the price that gets determined and thereby guides the project initiator on the functionality. cereals. Price trend Price of the product is a major driving force for any project to take off. pulses. Usually any product having high imports can be thought as potential project proposal for indigenous development and vice versa. which is why power projects are developed in the areas surrounded by water facilities and coal mines. a clear understanding on the routine and specific international transactions between various segments of society will make project ideas clearer and help reveal potential areas.
You will also appoint a project team. The function of project initiation is to describe all the parameters of a project and establish the suitable project management and excellence environment necessary to complete the project. break-even level. documentation. The project charter development is a crucial initial point for the project. establishing the project definition which acts as the base for all future efforts. Project identification precedes project initiation. ranking and approval of viable project ideas for an organization. study focuses on answering the essential questions such as. For starting a new project you have to define its objectives.3 Project Initiation The Project Initiation Phase is the 1st or beginning phase in Project Management Life Cycle. Let us now discuss the concept of project initiation. Self Assessment Questions 1. The study of profitability. since it includes starting up a new project. purpose and deliverables. and international agencies contain data and statistics which may indicate prospective ventures. 3. Earnings Per Share (EPS) of various industries may indicate those industries where opportunities exist for new investments. research institutions. manufacturer's associations. 2. should we proceed with the proposed project idea? What are the benefits and drawbacks of proposed project idea? 2. financial institutions. setup the project office and evaluate the project.Project Management Unit 2 Data from various sources Various publications of government. Sikkim Manipal University Page No. validation. In the stage. export promotion councils. A study of the balance sheets of existing companies will be useful in knowing the sectors of industry that are performing well. 33 . for gaining sanction to begin the next phase. consultancy organisation. banks. is a continuous and repetitive process involving screening. scope. of project identification the project ideas generated above are screened and a preliminary exercise is conducted to weed out the bad or unviable ideas.
2. and Quality (CSSQ). purpose and participants of the project. issue an information request to the requester. Fig. Formulate a case study and assign a new project code to the nominated project.2: Process Flow Let us now discuss each of these points in detail. Scope. Schedule. A project manager is assigned at the commencement of project Initiation. Figure 2. On approval. Formulate a Case Study Evaluate all proposed projects that has been provided by the client organization or that has been gathered by technical analyst. The project manager and project sponsor work together to identify the essential resources and required team members for further development of key project parameters which are Cost.2 depicts the process flow. responsibilities and authority of the project manager. 34 .Project Management Unit 2 Project charter is a statement of the scope. A project is initiated and submitted to the competent authority for approval. which is based on the project proposal and business case. If additional information is needed. Approval of the project charter by the project sponsor authorises the designated team to begin project planning. The business case will be examined by a screening committee with help of management to decide whether to accept or reject a nominated Sikkim Manipal University Page No. The project team documents its charge in the form of a project charter. It presents an initial explanation of roles. the project is taken up for further processing.
35 . Rank Candidate Projects All databank nominated projects must be impartially ranked in order of importance. These skills inventory helps to understand the accurate capabilities and capacities of these resources. It is critical to remember that when resources are assigned from the skills inventory. the management may then authenticate the final selection of project . compiled to a single ranking which weighs each of these criteria against each other.Project Management Unit 2 project. The ranking criteria must include: • • • • • • • Target due dates Impact on the total business Impact on the technology architecture Impact on other applications Project size. Evaluate Resources For all corporate resources. When a business case is accepted. However. This ranking process is usually used for quarterly budget decisions. Approval and Selection of Proposed Project Based on the priority and rankings revealed by the expert committee. this deployment has a proportionate impact on the resource’s availability. an updated skills inventory must be maintained which is accessible for project assignment. Moreover. it may not deem to be ‘active’ project until resources are approved and deployed for initiating. When additional information is received on such proposed project. the case study may be revised based on the data and appropriate decision would be taken on the final selection. an inventory of available contract resources must be captured too. Sikkim Manipal University Page No. the proposed project is forwarded for ranking and selection. despite its selection. cost and duration Project risk Forecasted ROI Initially the projects are ranked against each of these criteria individually and subsequently.
it will save your time and money. Many project ideas gain life after such a pre-feasibility analysis. Scope. Moreover. This information will provide: • The identification of critical training needs • A basis for employment opportunities • Criteria for contract personnel This process must be reviewed on a standard basis by the organisational Resource Managers and can be applied for staff career counselling. this process will recognize the expected needs for quantities and capabilities of future resources. then certain basic issues have been resolved. Self Assessment Questions 4.4 Pre-Feasibility Study Initially. 36 . it analyses whether the information is adequate to decide that the project idea is lucrative. By focusing on the special characteristics of Sikkim Manipal University Page No. The function of project initiation is to describe all the parameters of a project and establish the suitable project management and excellence environment necessary to complete the project. but your involvement is a must. (True/False) 5. The chief objectives of conducting a pre-feasibility study are to determine whether the project is promising or not and also whether an investment decision can be taken on the basis of the information furnished at the prefeasibility stage. If your findings suggest that you to continue with the feasibility study. It provides you with an opportunity to know the issues of business development.Project Management Unit 2 Determine resource needs Through evaluation of skills inventory and the candidate project repository. a pre-feasibility study is conducted for sorting out significant scenarios. If your finding suggests that the proposed business idea is not feasible. (True/False) 2. you are required to carry out certain pre-feasibility analysis . Schedule. and Quality (CSSQ). Prior to conducting a full-blown feasibility study. The project manager works with the project sponsor to identify the necessary resources and team members needed to further develop the key project parameters – Cost. A consultant’s assistance is helpful in conducting the pre-feasibility study.
Sikkim Manipal University Page No. docks. time. proximity to markets and raw materials (distance in km). special skills). materials. fuel. a detailed study and a plan can be constructed through which an appropriate resource base such as people. should be delineated. Activity What are the Broad considerations and guidelines helpful in the generation and screening of project ideas? 2. etc). • Availability of main production factors The availability of essential production factors such as raw materials. 37 . some vital factors such as plant location must be clearly identified such as labour (quantity. a pre-feasibility study may include the following elements: Project description The nature of the project output must be clearly described stating all relevant advantages and disadvantages in comparison with all the competitive projects in the pipeline. power.1 Elements of pre-feasibility study According to Clyfton and Fyffe. and miscellaneous issues (personal preference. Description of market The present and potential market. water.4. water (quantity.Project Management Unit 2 the project. transportation facilities and costs (roads. environmental controls. etc). which can be simultaneously developed with the project under mock-up. restriction. railways. Also. allied project offers may be identified. tax considerations. quality. and labour should be examined thoroughly and compared with available alternatives. and costs can be conveniently estimated. and airways). with its competitive nature. The description of the market should include the following: • Outline of technological variants Various choices of techniques that are available for constructing and developing the project should be examined. competition. Also.
Profitability estimation The collected information should enable comparison between all competing projects that are in the pipeline. customs) vs. existing supply Gap analysis Consumer behaviour towards innovations Sikkim Manipal University Page No. These are: • General opinion and support of society towards the project or the type of proposal.1 depicts the focus of pre-feasibility studies. • Educational. determined growth rate Social behaviour (taboos. Miscellaneous In addition to the above. 38 . • Availability of any other alternative sites in the region. required facilities Present growth rate vs. the proposed project Object Scope of Marketability Existing demand vs. Table 2. infrastructure and others) Economic growth and development Standard of living of the society Economic sufficiency Regional disparities Global competition Existing facilities vs. Table: 2. The information should also help prepare under various estimated profitability statements. recreational.1: Focus of Pre-feasibility Studies Focus Consumer-oriented Projects (industrial) Competition and survival Demands and preferences quality New inventions or innovation quality Society/economicoriented (defence.Project Management Unit 2 Cost estimates Realistic estimates should be made of all cost factors so as to reflect on all relevant investments and operational costs of the project including contingencies. some more factors may be considered especially for new projects. and civic-amenities available in the region.
Project Management Unit 2 Self Assessment Questions 6. resources. 2. whether or not it is carried out in a formal manner. perhaps. Sikkim Manipal University Page No. it must be determined that the income will exceed costs by a margin sufficient to make the project financially attractive. When the project is small. there will be no formal study at all and little accumulation of actual data. and outputs) and external constraints (environment). and raw material input will be of a certain order Most importantly. Assurance is needed in the following matters: • Whether the market exists or can be developed • Whether raw materials can be obtained • Whether sufficient labour supply is available • Whether the local services vital to the project are at hand • Whether the overall costs for plant equipment. and the more formalised the investigation. the study format may be quite informal. 2. even if an informal manner before the ultimate step of actual investment is taken. Various choices of that are available for constructing and developing the project should be examined. labour.5. Nevertheless. 7. For this purpose. the feasibility calculations will have to be computed and evaluated. the greater will be the investment.1 Nature of project feasibility analysis In the broadest sense. A feasibility study focuses on the practicality of an idea by identifying possible problems and gives the answer of one main question: The purpose of the analysis is to examine the desirability of investing in preinvestment studies. 39 . every rational decision to make a new investment is preceded by an investigation of the feasibility of the project.5 Feasibility Studies Feasibility analysis is the first stage in the process of project development. it is essential to examine the project idea in the light of the available internal (inputs. The larger the project. should be made of all cost factors so as to reflect on all relevant investment and operational costs of the project including contingencies.
examining only the market. business operations are complex. which can only be revealed by a detailed objective study.2 Need for feasibility studies A company is incorporated for the purpose of setting up a project. 2. creditors. The shareholders. They make mental picture as to how the idea. Without their co-operation. It is possible that they may have overlooked the dark side of the picture.Project Management Unit 2 2. The analysis is mainly interested only in the commercial profitability and thus. and social profitability analysis. when translated into reality. it would not be possible to translate the idea into action. It is quite likely that the originators get attracted by the favourable aspects of the project known to them. and financial aspects of the project. Earnings of the project depend on the volume of sales. Commercial and economic feasibility The economic feasibility aspect of a project relates to the earning capacity of the project. 40 .3 Complements of feasibility study Project feasibility study comprises of market analysis. given the demandsupply pattern. technical. In modern times. The promoters obviously have to start with some broad idea about the proposed industrial activity. etc insist on completing the analysis of the scheme. because the investment decisions were taken without objective and in-depth technoeconomic feasibility studies. financial analysis. would result in a profitable project.5. This feasibility study helps the promoter to make the investment decisions correctly and to obtain funds without many difficulties. Here. probable cost of production. But. the following important indicators are taken into consideration: Sikkim Manipal University Page No. Too many projects have floundered at considerable loss to the investors and indeed to the national economy through waste of scarce resources. generally the gamut of feasibility of a project covers the following areas: • Commercial and economic feasibility • Technical feasibility • Financial feasibility • Managerial feasibility • Social feasibility or acceptability These areas are briefly described below.5. requiring carefully prepared plans. etc. technical analysis. term leaders.
Future demand can be estimated after taking into consideration the potentialities of the export market. The market share of the proposed project could be identified by considering the factors affecting the supply position such as competitive position of the unit. the project justifies the economic norm in the relationship between cost and demand. Deciding in what way the project under consideration will have a reasonable chance to share the market. Anticipated rate of return on investment. existing and potential competitors. market facility (or) getting a feel of the market. The period normally depends upon the scale of investment. the probable expansion of industries and the growth of new industries. In other words. This study comprises the following two aspects: • • Arriving at the physical requirement of production inputs such as raw materials. 41 . labour. the Sikkim Manipal University Page No. structural changes. the multiple uses of the product. The possibility ultimately decides whether the project will be a feasible proposition or not. Future demand of the goods. and technological innovations bringing substitute into the market. So. Technical feasibility The examination of this aspect requires a thorough assessment of the various requirements of the actual production process and includes a detailed estimate of the goods and services needed for the project. the charges in the income and prices. Matching costs with revenues with a view to estimating the profitability of the project and the break-even point.Project Management • • • • • Unit 2 Present demand of the goods produced through the project i. If it is positive. The commercial feasibility of a project involves a study of the proposed arrangements for the purchase of raw materials and sale of finished products. unit cost advantages and disadvantages. power. the extent of capacity utilisation. The technical analysis of a project feasibility study serves to establish whether or not the project is technically feasible and it also provides a basis for cost estimating. etc at various levels of output and converting them into cost. etc. A projection may be made about the future demand.e. deciding costing pattern. Determining the extent of supply to meet the expected demand and arriving at the gap.
labour. income statements. the main emphasis is on the preparation of the financial statement. power. and other inputs. effluent disposal. the technical feasibility analysis is an attempt to study the project basically from a technician’s angle. size of the plant. required collaboration agreements. The main aspects to be considered under this study are technology of the project. location of the project. fuel. 42 Sikkim Manipal University . Financial feasibility The main objectives of this feasibility study are to assess the financial viability of the project. etc. emergency or stand-by facilities required by the project sophistication such as automation. accessories. and cash flow statements. Another important feature of technical feasibility relates to the types of technology to be adopted for the project. so that the project can be evaluated in terms of various measures of commercial profitability and the magnitude of financing required can be determined. and implementation of the project. water. quantity. it may not be a practical proportion. labour.Project Management Unit 2 feasibility report should give a description of the project in terms of the technology to be used and the requirement of equipment. • If preliminary investigation indicates favourable prospects working out further details of the project. Page No. Here. The decision about the financial feasibility of the project should be arrived at based on the following considerations: • For existing companies. The exercise of technical feasibility is not done in isolation. the exercise begins with engineering and technical specifications and covers the requirements of the proposed project as to the quality. Thus. production inputs. raw materials. The promoter of the project can approach the problem of preparation of technical feasibility studies in the following order: • Undertaking a preliminary study of technical requirements to have a quick evaluation. and specification type of components of plant and machinery. technically it may be. pollution caused by the project. Location of the project should be given special attention in relevance to technical feasibility. transportation. production capacity of the project. however sound. The scheme has to be viewed also from economic considerations. strength of the project. otherwise. audited financial statements such as balance sheets. mechanical handling.
sensibility analysis to identify items that have a large impact on profitability or possibly a risk analysis. and price analysis. it should avoid all such social conflicts which will stand on the successful implementation of the project. They are: • Skill acquired through training • Skill acquired through the course of work Social Feasibility A project may cross all the above barriers mentioned above and be found very suitable but it will lose its entire creditability if it has no social acceptance. Managerial feasibility The success or failure of a project largely depends upon the ability of the project holder to manage the project. etc are creating a hindrance for the development of a project. inventory levels. For example. 43 . community. and flow relative to the projective time table. payment period of purchases and expenses.Project Management Unit 2 • For projects that involve new companies. selling administrative and financial expenses. • • A project should earn sufficient return on the investment. Sikkim Manipal University Page No. For the success of a project. and balance sheets. a project holder has to co-ordinate all the activities in such a way that the additive impact of different inputs can produce the desired results. statements. Financial analysis showing return on investment. cash flows. including income • • Supporting schedule for financial projections stating the assumptions used such as collection period of sales. initial capital requirements. A project is a bundle of activities and each activity has its own role. statement of total projects cost. and elements of production cost. If necessary. The very idea of promoting a project by an entrepreneur is to earn attractive returns on the investment on the project. return on equity. regional influence. The ability to manage and organise all such inter-related activities comes within the concept of management. Financial projections for future time periods. There are three ways to measure the managerial efficiency. Though the social customs and conventions such as caste. breakeven volume.
we can say that. break-even analysis provides information regarding whether revenue from a product or service has the ability to cover the relevant costs of production. will stimulate the small industries. In a nut shell. Self Assessment Questions 8. after judging through these indicators. Break-even analysis specifies the minimum quantity of sales that will cover both variable and fixed costs. it implies a loss on the product. Then the product may be discontinued or.It is easy to calculate it if the expenses incurred are fixed.e. preparing competitive bids.Project Management Unit 2 considering the interests of the general public. i. may Sikkim Manipal University Page No. If break-even point is above predictable demand. and applying for loans. (True/False) 2. which channelise the income from less developed areas. projects which offer large employment potential. (True/False) 9. The presence of variable expenses makes it difficult to calculate the break-even point. by contrast. The purpose of the analysis is to examine the desirability of investing in pre-investment studies. expenses do not change as revenue changes. Managers can use this information in making a wide range of business decisions. the feasibility report should highlight on these five testing stones before it can be declared as complete. (True/False) 10. This is because the variable cost will increase as the number of units sold increases. The answer can be determined by working out the total gross profit of the unit sold to be equal to the total fixed expenses. The technical feasibility aspect of a project relates to the earning capacity of the project. including setting prices. Now. 44 . The expenses are divided into fixed and variable expenses.6 Project Break-even Point Break-even is a financial term to describe a business or project where the sales revenue is equal to total expenses. Such analysis provides managers a quantity to compare to the forecast of demand. Feasibility analysis is the first stage in the process of project development. a project can be declared as viable and can be submitted for finance or any other assistance from institutions. And.
One of the most valuable uses of break-even analysis is the detection of relevant fixed and variable costs. implying a loss on the product. 12. establishing the project definition that will serve as the foundation for all future efforts. • When examining projects for approval. • The purpose of project initiation is to define the overall parameters of a project and establish the appropriate project management and quality environment required to complete the project. Activity Find out who is the project champion.Project Management Unit 2 receive additional advertising and/or be re-priced to increase demand. • The chief objectives of conducting pre-feasibility study are to determine whether the project is promising or not and whether an investment decision can be taken on the basis of the information furnished at the pre-feasibility stage. • Development of the project charter is a pivotal starting point for the project. and social profitability analysis. who is the project sponsor. If the break-even point lies anticipated demand. Sikkim Manipal University Page No. financial analysis. • The business case will be examined by a screening body with the corporate authority to accept or reject a project idea. is a financial term to describe a business or project where the sales revenue is equal to total expenses. • Project feasibility study comprises of market analysis. 45 . and who are the stakeholders? What influence do they have on a project? Self Assessment Questions 11. it is vital to examine the resource capacities and capabilities available for assignment. may receive additional advertising and/or be re-priced to increase demand.7 Summary Let us recapitulate the important concepts discussed in this unit: • The process of identifying an idea for developing into a project is called project identification. technical analysis. 2. Then the product may be discontinued or.
Describe the feasibility studies and also discuss the nature of project feasibility analysis. discuss the steps in project 2. Describe the need for feasibility studies. Explain the importance of project identification. Project identification: A repeatable process for documenting. Sikkim Manipal University Page No. validating.Project Management • Unit 2 Break-even is a financial term to describe a business or project where the sales revenue is equal to total expenses. Feasibility analysis: The first stage in the process of project development. Project initiation: To define the overall parameters of a project and establish the appropriate project management and quality environment required to complete the project. Financial feasibility: To assess the financial viability of the project. 6. 3. 5. Commercial feasibility: A study of the proposed arrangements for the purchase of raw materials and sale of finished products. Discuss the project break-even points.9 Terminal Questions 1. 46 . etc. What do you mean by the term project initiation? 4. Define project identification and identification.8 Glossary Business case: The information necessary to enable the approval and authorisation of policy making bodies to assess a project proposal and reach a reasoned decision. 2. Explain the complements of feasibility study and write short notes on: (a) Commercial and economic feasibility (b) Technical feasibility (c) Financial feasibility (d) Managerial feasibility (e) Social feasibility or acceptability 7. 2. and approving candidate projects within an organisation. ranking.
Refer to section 2. Techniques 7. False 11. A company is incorporated for the purpose of setting up a project. The promoters obviously have to start with some broad idea about the proposed industrial activity.5.5. Project identification 2.manpower.2. Feasibility analysis is the first stage in the process of project development. 2. Refer to section 2. The economic feasibility aspect of a project relates to the earning capacity of the project. Break-even 12.Project Management Unit 2 2. True 10. etc.2. capital. The purpose of the analysis is to examine the desirability of investing in pre-investment studies. 6. Screening 3.5. 4.2. Refer to section 2. Pre-feasibility 4. Sikkim Manipal University Page No. Refer to section 2. The process of identifying an idea for developing into a project is called project identification. Project identification involves creative and innovative use of resources.2. Refer to section 2. Above Terminal Questions 1. 5. True 6. The purpose of project initiation is to begin to define the overall parameters of a project and establish the appropriate project management and quality environment required to complete the project. Realistic estimates 8. 3. raw materials. True 5.3. Refer to 2.3.10 Answers Self Assessment Questions 1. True 9. 47 . This project identification may be broadly divided into four stages. It has long-term results.
The industrial plant will be completed by week 40. 48 . It is found that there is continuous outcrop of rock from chainage for 10 to 13 km. Hint: The project comprises laying two lengths of large-diameter pipelines with flexible joints for 16 km from pumping station A to reservoir B. or road crossings are to be constructed at chainages for 2. pipe laying and stringing gangs should not be operating concurrently in the same I km length. storing and stringing out. but cannot become operational until water is available. The average rate of pipe lying per gang may be taken as 300 and 75 m/week in normal ground and rock respectively. The reservoir will be commissioned during week 35. Question: Analyse the case and discuss the activity in your group. Sikkim Manipal University Page No. 18 and 22 km. 2.11 Case Study Municipal Corporation of Kanpur Municipal Corporation of Kanpur is considering to construct a water reservoir to facilitate the setting up of industries. The project comprises laying two lengths of large-diameter pipelines with flexible joints for 16 km from pumping station A to reservoir B. or road crossing is estimated to occupy a bridging gang for 4 weeks. It is advised to install isolating valves at each end point and at intervals of 3 km throughout the main. The pipes are available at a maximum rate of 1000 m/week (commencing week I). 7. 13. A river. Attention should be paid to manpower resources and continuity of work. rail. and special river. Testing and cleaning each 3 km length will take 2 weeks. Because of access problems. Each stringing gang can handle 1000 m/week. The project manager has been furnished with the following information by the concerned engineers of the department. Produce a time-location programme for the project on the assumption that one stringing gang and four separate pipe laying gangs are to be employed. providing a suitable flange and an anchor for test purposes. rail.Project Management Unit 2 7. Refer to section 2. Water for testing will be supplied free by the promoter following completion of the pumping station during week 33.6. Break-even is a financial term to describe a business or project where the sales revenue is equal to the total expenses. The contractor is responsible for off-loading from supplier's lorries.
Lock. E. Project Management. Nagarajan. retrived on 14/01/2012 www. Sixth Edition. retrived on 16/01/2012 Sikkim Manipal University Page No.C. Project Management and Control. E-References: • • • www.K. Rao. Financing. and Review.. Publication: Tata McGraw Hill. Publication: Sultan Chand & Sons.co. Publication: New Age International.projectmanagement. W. P. Publication: Gower.com. Publication: Tata McGraw Hill.com. Third Edition. Project Management. Implementation. Selection. and Larson. Chandra. Ninth Edition. D. 49 .pmearth.projectsmart. Projects-Planning. F. K. Project Management.Project Management Unit 2 References: • • • • • Gray. C. retrived on 15/01/2012 www. P.uk.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.