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Preparation of Project
Dr .V . S.Krushnasamy M.Tech ., Ph.D (Engg..)
Associate Professor
Department of EIE

Topics going to be

Meaning of Project
Project Identification
Project Selection
Project Report
Need and Significance
of Report
Guidelines by Planning
Commission for Project

Errors of Project
Project Appraisal.
Identification of
business opportunities
Market Feasibility
Technical Feasibility
Financial Feasibility
Social Feasibility


An Entrepreneur , before he sets up an enterprise , wants

to satisfy himself that it is a Profitable proposition.
He wants to gather critical information & take decisions
pertaining to various Aspects Technical arrangement ,
Plant & Machinery, Market, Financial Arrangement,
Location, Statutory Clearances, in order that the tasks
of establishing the project, & to some extent
managing it later, becomes easy.
One of the most needed skills for any entrepreneurs
would be documentation skills.
Before starting any business a detailed project report has
to prepared and submitted to banks and other boards
without which no loans are given nor any licenses will be
The entrepreneur should either be able to prepare project
report himself or get it prepared in such a way that it best
suits his business plan.

Meaning of Project
A Project is an idea or a plan that is intended to be carried
Project is that it is a scheme of something intended to be
done ; a Proposal for an undertaking, design, speculative
imagination etc.
Project is a scheme for investing resources which can be
reasonably analyzed & evaluated as independent unit.
The world bank has defined project as an approval for a
capital investment to develop facilities to provide goods &
A Project is an appraisal for investment with the definite aim
of producing a flow of output over a specified period of time.
A Project is defined as the whole complex of activities
involved in using resources to gain benefits.
A Project can be defined as a scientifically evolved work plan
devised to achieve a specific objective within a specified
period of time etc .

Meaning Project

The very foundation of an enterprise is the project.

The success or failure of an enterprise largely
depend upon the project.
A project is an organized unit dedicated to the
attainment of goal the successful completion of
development project on time within budget, in
conformance with predetermined programme
The three basic attributes of the project are
A course of action
Specific objectives
Definite time perspective
Every project has starting point and end point with
specific objectives.

To develop & strengthen their entrepreneur quality
To analyze environmental set up relating to small
industry & business
To select product
To formulate project report for a product
Good and bad about the entrepreneurship
To understand the process ,procedures and
formalities involved in setting up enterprise
To give knowledge of sources of help concessions.
To acquire basic skills
To enable them to communicate regularly
Develop broad vision of business passion for integrity
& unity

Classifications of project
They are classified on the following basis : (Major

Quantifiable & Non Quantifiable Projects.

Sectoral Projects.
Techno Economic Projects

Quantifiable & Non Quantifiable

Projects for which a right quantitative assessment of
benefits can be made are called as Quantifiable
Examples of this category are projects concerned with
Industrial Development, Power Generation, Mineral
Development etc.
Non Quantifiable
Non Quantifiable Projects are those in which a
quantitative assessment of benefits cannot be made.
Examples of non quantifiable projects are projects
involving health, education, & defense.

Sectoral Projects
The planning commission of India has accepted
sectoral base as the criterion for classification of
According to this classification, projects may be
classified as :
a) Agriculture & Allied Sector.
b) Irrigation & Power Sector.
Industry & Mining Sector.
d) Transport & Communication Sector.
Social Services Sector.
Miscellaneous Sector.

Techno Economic Projects

Projects are also classified on the basis of their Techno
Economic Characteristics
Three Main Groups of Classification in this Category
(i) Factor Intensity Oriented Classification :
On the basis of this classification, projects may be
classified as capital intensive or labor Intensive or
power intensive depending upon large scale Investment
in plant & machinery or human resources or high power
input is involved.
(ii)Causation Oriented Classification :
In this category, projects may be classified as
demand based or raw material based projects. The very
existence of demand for certain goods or services makes
the project demand based & the availability of certain raw
materials , skills or other inputs makes the project raw
material based.

Techno Economic Projects

Magnitude Oriented Classification :
The Classification of Projects is based on the size
of the capital involved in the projects.
Depending on the total project investment, may
be projects may be classified as Large Scale,
Medium Scale & Small Scale Projects.
It is to be noted that, Techno Economic
Classification is
facilitating the process of feasibility appraisal.

Sources of Project
PI concerned with the of economic data, compilation and
analysis it to identify the possibility of investment to
produce goods or services for making profit observing.
There an element of risk also involved. We have to select
such projects as to minimize both resource consumption
and risk and to optimize the returns or gains.
Human mind has an infinite capacity to observe, to deduct
and to innovate. Observation is one of the most important
sources for project ideas.

The process of deduction is used to supplement and

rationalize the project ideas based on pure

Sources of Project
Trade and professional magazines provide a very fertile


of project ideas.
It is very necessary for the entrepreneur is to keep in touch
with the latest developments in his own field as well as other
fields which may be H/V linked with his own line of
Bulletins of research institutes are fertile source of information
for the development of new ideas.
These bulletins generally give the broad outlines of the new
processes developed by research institutions and are useful in
identification of new opportunities.
The important source of project identification is the plan
document published by government.
The plan document generally analyzes the existing economic
situation and also pinpoints the investment opportunities which
is fit into the overall planning effort. Considerable information
can , t therefore be gathered from plan document.

Sources of Project
Departmental publications
of various departments of government
also provide useful information
development of new project ideas.






Some more sources

Knowledge of potential customer need.

Watching emerging trends in demands for certain products.
Scope for producing substitute product
Through professional magazines
Knowledge about government policy, concessions & Incentives
Ideas generated by concerned people.
Visits to trade fairs, exhibitions of new products etc..
Meeting with government agencies
Observation of market and similar products
A new product introduced by the competitors
Ideas given by success entrepreneurs, knowledgeable persons,
friends & relatives.

Project Selection
After deciding on a few project ideas, the entrepreneur has to
finally select, one project Idea most suited depending on the
following criteria.
A tool generally used for this purpose is called as SWOT analysis
is done. The intending entrepreneur analysis his Strengths &
Weaknesses, as well as Opportunities / Competitive Advantages &
Threats / Challenges offered by each of the project ideas.
On the basis of this Analysis, the most suitable project Idea is
finally selected to convert it into an enterprise. This process is also
called as a Zeroing In Process.

A few Important Criteria for selecting a particular project are

given below

Investment Size



Plant & Machineries


Project Selection
Investment Size
This is a very important criterion to decide success or
failure of the Project.
Entrepreneur should select only such projects which
are within his financial resources.
You cannot establish an Enterprise only on borrowed
funds & this may lead to severe financial problems in the
initial stages of the project implementation itself.
A new entrepreneur should locate his project to the
extent possible, in and around a state head quarters.
Location chosen should have good infrastructural facilities
like good approach road , transportation facilities,
communication facilities, availability of power, water &
required Labor.
It is necessary to have
such a location to attract
competent managers.

Project Selection
The project chosen should not be for a product which
requires sophisticated technology, necessitating foreign
technical collaboration.
It is better to go in for a product with a proven technology
that is naturally available & where the entrepreneur
himself is well versed with the required technology.
Plant & Machineries :
The entrepreneur should select the best equipment based
on the advise of experienced technical consultants.
One should remember that one should not compromise
on the quality of the equipment even if there are little
expensive in the beginning , as they will pay back in the
long Run due to uninterrupted working. Cheap poor quality
equipment leads to frequent breakdowns.

Project Selection
The success of any enterprise finally depends on
marketing capability of ones goods / products
Direct Selling to a large number of Ultimate
One should go in for Products with a Limited
Number (say 10 or 15) of established Industrial

Does the company have the necessary skills in-house?
Has a budget been assigned to the project?
What are the business benefits of completing the
Will the project require new technology or equipment?
How experienced is the project team on similar

Is there a reliable estimate of costs available?
Does the company have the budget to provide contingency
What are the drawbacks of the project?
Will parts of the project need to be outsourced?
Is the proposed schedule realistic?



Can a local project be leveraged nationally or

Do the competitors have any weaknesses?
What are the latest industry trends?
Are there any new, or imminent, technology

Is there well-established competition already in the
Are experienced staff difficult to replace?
Has new technology been fully tested?
Could national or global economic conditions affect
the project?

The list of questions to use in a SWOT analysis could,
obviously, be much longer than the basic questions
listed above, but using these in your own particular
project will provide a good starting point.
Performing a thorough SWOT analysis at the
beginning, or any stage, of a project will provide you
with detailed information to help you in the planning
and decision-making processes of a project.