Preparation of Project

Understand the meaning of Project

Describe the project identification process

Explain the project selection phase

Describe project report and needs

Explain components of project report

Describe the steps in formulation of project report

Explain guidelines of planning commission on project report

Describe the use of network analysis in project management

Explain the errors in project report

Learning Objectives

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.

The 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

Introduction

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

What is a project ?

It has definite objectives

It consist of interrelated activities

It requires multiple skills

It has constraint of time, resources and budgets

It is unique

Project features

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

Control variables in a project

Life cycle has identifiable start and end point which can be associated with a time scale.

The life cycle includes all phases from point of inception to final termination of the project.

The project life cycle refers to a logical sequence of activities to accomplish the project goals or objectives.

Project life cycle

Initiation or birth phase- the output and critical success factors are defined

Planning phase- characterized by breaking down the project into smaller parts/tasks

Execution phase- the project plans are executed

Closure or exit phase- that marks the completion of project.

phases

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:

Project management

Analysis and design of objectives and events

Planning the work according to the objectives.

Assessing and controlling risk.

Estimating resources

Allocation of resources

Organizing the work

Acquiring human and material resources

Assigning tasks

Directing activities.

Controlling project execution.

Tracking and reporting processAnalyzing the result based on the facts achievedDefining the products of the project.Forecasting future trends in the project.Quality management.Issue managementIssue solvingIdentifying managing and controlling changesProject closureCommunicating to stakeholdersIncreasing/ decreasing a company’s workforce.

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.

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.

Need of a project report

The target audience- while working on project plan keep in mind the intended audience and why you are writing plan.

Business strategy- the plan should explain the market the industry, target customers and competitors. Secondly the plan should explain how to execute your business strategy.

Competition- 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.

While making a project report keep following points in mind

Be realistic

Involvement of people for creating project plan.

Keep your project plan in brief.

Project identification is the first and most important step in starting a new business.

The 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.

Project identification

Consumers: potential customers are the sources for any business and understanding their exact needs is the key for the success of business.

Existing products and services: 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

Sources of information for project identification

Distribution channels: members of distribution are more familiar about the markets and hence they can also provide potential information about the needs of the customers.

Government sources: many department of both central and state govts publish some useful information which helps entrepreneurs in identifying new projects.

Observation: observation of existing markets, scan of environment.

Trade and professional journals: provide potential information on investment opportunities. demand and supply, availability of raw materials, availability of facilities.

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:

Project selection

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. The 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.

The 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

Components of project report

Market strategy- how to reach those targets

Operations- how will the company produce

Organization and management- who will run it

Timing- when will things happen

Financial information- historical, actual, projected

Exhibits/appendices- brouchers, photos, news clipping etc.

• 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

1. summary

• The legal form of the business

• Your specific product or service

• The 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

2. Business description

• This 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.

• This 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.

Market analysis

• Describe the companies and products that are or will be your competitors and don’t forget to include imports if they are a factor in your market.

• Look into following factors:• How many companies you will be competing

against? Where are they located, how long have they been in business?

• How do they distribute the product or service? What is there respective market share?

• What are their strengths and weakness in marketing, operations and finance, what are there strategies?

• How does your product compare in terms of price, quality, service, design. Delivery or other features.?

• Do you intend to take market share away from the competition or will you be creating new, niche market?

competition

• Investors or lenders want to know how your product or service compares to the competition.

• They 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 description• Proprietary position• Other barriers to competition• Regulatory requirements• Product extension

5. Product or service advantage

•This 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?

•Target markets: identify the specific target market

•Estimated sales and 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

6. objectives

7. 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.

•The 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.

8. 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.

9. 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.

•This 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. This 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 5.

•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