Project formulation and appaisal Unit3b B Com VI

Project formulation and appaisal Unit-3(b) B. Com VI sem Entrepreneurship (CMB-656)

MEANING OF PROJECT REPORT: �A Project Report is a written document pertaining to any investment proposal. It contains relevant data, on the basis of which the project has been appraised and found relevant to the entrepreneur. A project Report is prepared by the expert after detailed study & analysis of the various aspects of a project. FEATURES OF THE PROJECT REPORT: �It is basically a business plan. It outlines the desired goals. It describes all the necessary inputs to the enterprises. It explains the mode of utilization of the resources. It details the strategies for the execution of the project.

OBJECTIVES OF PROJECT REPORT: � To identify the requirement of the resources (technical, financial, commercial, managerial and operational) � To find out the critical components of the project idea. � To obtain the opinions of experts from various fields. � To facilitates financial appraisal of the project by financial institutions, banks, insurance companies, etc USES OF PROJECT REPORT: The information contained in the project report is very useful for: � ENTREPRENEUR � FINANCIAL INSTITUTIONS � GOVERNMENT

ELEMENTS OF PROJECT REPORT: �Description of the entrepreneur �Description of the enterprise & brief summary of the project. � Inputs for the proposed project Financial Aspects Economic Viability Total income, operative net profit, etc. Profitability Information regarding technical feasibility, marketing present demand, etc.

STEPS IN THE PREPARATION OF A PROJECT REPORT: �General Information �Preliminary analysis of alternatives � Project Description like Marketing Plan, Capital Requirement & Costs � Operating Requirement & Costs �Financial Analysis �Economic Analysis �Miscellaneous analysis

Significance of a project formulation: �Significance of a project formulation Project formulation is the best passport for obtaining the required assistance from financial institutions. �It will also be of great assistance for obtaining necessary Government clearances and in meeting the hurdles of procedure formalities. � It will pinpoint the matters for which government sanctions have to be obtained. It will provide an independent assessment of the feasibility of obtaining the sanctions based on the existing government policies.

� Elements of Project Formulation: � Feasibility analysis � Techno-economic analysis � Project design and network analysis � Input analysis � Financial analysis � Social cost benefit analysis Project selection: � Economic size � Status of industry or scope � Raw material availability � Cost of production � Capital cost � Utility requirements � Infrastructure facilities needed � Profitability � government policy

Prepare project report � Prepare primary data � Phase 1 Marketing Demand forecast � Estimate of product price � Estimate product mix � Personnel Identification / man power requirement � Decide organization Plan � Technical Estimate Cost of assets � Estimate cost of inputs � Prepare flow chart � Prepare time Estimates � Draw network diagram

� Financial projections: � Cost of project � Means of finance � Estimate of working results � Balance sheet and cash flow Economic analysis: � Compute payback period � Internal rate of return � Compute break oven analysis � Sensitivity analysis � Debt service Coverage ratio

Obtain government clearance: �Obtain government clearance , Industrial license , Capital goods Controller of capital issues , Foreign collaboration approval MRTP clearance, S. G. clearance Submit the application to financial institutions: �Procure sanction Comply with terms and conditions �Create security Obtain funds