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Preparation of Project
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´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
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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.
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The process of setting up a business is preceded by thedecision to choose entrepreneurship as a career andidentification of promising business ideas examining thedifferent opportunities.
Generation of ideas is not enough, the business ideas muststand the scrutiny from techno-economic, financial and legalperspectives.
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 itsimplementation, the project report is formulated afterexamining various relevant aspects
Introduction
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Any undertaking with a definite starting point anddefined objectives by which completion isdefined.
Projects by definition includes all types of undertaking- construction, manufacturing, newproduct or process development, new businessdevelopment and so on
What is a project ?
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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
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Time-time required to complete the project.
Cost- calculated from the time variable andresources
Quality- the amount of time put into individualtasks determines the overall quality
Scope- requirements specified for the end result.
Risk- potential points of failure
Control variables in a project
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Life cycle has identifiable start and end pointwhich 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 sequenceof activities to accomplish the project goals or
objectives.
Project life cycle
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Initiation or birth phase- the output and criticalsuccess 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
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Project management is the discipline of planning,organizing, and managing resources to bringabout successful completion of specific project
goals and objectives.Project management is composed of severaldifferent types of activities such as:
Project management
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´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.
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´Tracking and reporting process
´
Analyzing the result based on the facts achieved´Defining the products of the project.
´Forecasting future trends in the project.
´Quality management.
´Issue management
´Issue solving
´Identifying managing and controlling changes
´Project closure
´Communicating to stakeholders
´Increasing/ decreasing a companys workforce.
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Project report is a written document prepared byentrepreneur that describes all the relevantexternal and internal elements involved in
starting a new venture.It is an integration of all functional plans likemarketing, finance, manufacturing and humanresources which are required for successful
implementation of a project.
Project report
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If an entrepreneur wants to manage and organize thebusiness effectively he or she needs a project plan in theform 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 organizingand even in identifying possible roadblocks.
It is a pre-requisite to obtain finance.
Need of a project report
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´The target audience- while working on project plan
keep in mind the intended audience and why you arewriting plan.
´Busin
ess strateg
y- the plan should explain the market
the industry, target customers and competitors. Secondlythe plan should explain how to execute your businessstrategy.
´Competition- focus your plan on being different thanyour competitors, think over the point- can you make
unique strategy? can you position your productsdifferently? And so on.
While making a project report keep following
points in mind
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Be realisticInvolvement of people for creating project plan.
Keep your project plan in brief .
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Project identification is the first and most importantstep in starting a new business.
The success of an entrepreneur depends on
identification of right project which can be successfullylaunched.
Project identification deals with collection, compilationand analysis of economic data for the purpose of
locating possible opportunities for investment, basedopportunities in the market.
Project identification
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Consumers: potential customers are the sources for anybusiness and understanding their exact needs is the keyfor the success of business.
Existing products and services: existing products andservices in the market can also throw certaininformation to entrepreneurs and this information canbe more relevant for identifying a project in the form of
improving the products and services
Sources of information for project
identification
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D
istribution channels: members of distribution aremore familiar about the markets and hence they canalso provide potential information about the needsof the customers.
Government sources: many department of bothcentral and state govts publish some usefulinformation which helps entrepreneurs inidentifying new projects.
Observation: observation of existing markets, scanof environment.
Trade and professional journals: provide potentialinformation on investment opportunities. demandand supply, availability of raw materials, availabilityof facilities.
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After identifying potential projectsentrepreneur has to select the bestproject among them, so that it can beimplemented.
Selection of a project is based on several
factors. Some of the important issuesrelated to selection of a project arediscussed below:
Project selection
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Investment size: the amount of money required forinvestment 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 capitalhe needs to raise and from which resources.
Growth of sales: growth of sales from start up phase isanother critical factor in project selection.
Equipment: availability of equipment which is required forproject implementation is another important factor to beconsidered. 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, localgovernment support, nearness to market and rawmaterials etc. need to be considered.
Market: ability to market the product or service is veryimportant.
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The components of a good project report are discussed
below:
Summary- a brief overview of plans
Business description- what the company doesMarket 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 isbetter
Objectives- quantifiable targets
Components of project report
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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 clippingetc.
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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
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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 theirgeographic 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
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This is the section where you need to prove that there
is really a need for your product or services- and thatthere is a sufficient demand to support the businessyou have proposed.
This section must first identify the need for yourproduct or service, second show how your product orservice meets that need, and third show how you cansell your products or service at a profit.
Market analysis
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Describe the companies and products that are or will be
your competitors and dont forget to include imports if they are a factor in your market.
Look into following factors:
How many companies you will be competing against? Whereare they located, how long have they been in business?
How do they distribute the product or service? What is thererespective 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 competitionor will you be creating new, niche market?
competition
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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 towhat extent you will have a competitive advantage
over similar or existing products and how long will thatadvantage last
Product description
Proprietary position
Other barriers to competition
Regulatory requirements
Product extension
5. Product or service advantage
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This describes marketing objectives- where will your product
be and when example how many will you will sell, at whatprice, what will your market penetration rate be and when willeach target happen?
Target markets: identify the specific target market
Estimated sales and market share- estimate the sales youthink you can achieve over the next three years starting withquarterly 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
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7. Marketing strategythis is the section in which you assess the market , the
competition, your capabilities and how you will set yourproduct 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 andservice. And also following includes:
Product features, pricing, and distribution.
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8. operations
How you will obtain or produce your products or provideyour services.
Location and space requirements- if your business exists,where is it, if proposed where are you planning to put itand 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 youneed or need to avoid like parking, truck traffic, pollutioncontrol board etc
Equipment requirements- what type of equipment doyou need for manufacturing or service provision, howmuch does it cost, is special operator training is necessaryand so on
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Personnel requirements: this is about human resourcesrequirement. 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 arethe privilege wages, are unions a factor and so on.
Production or service operations- describe the processof manufacturing or providing services and include theadvantages of your process, capacity, quality control
systems, potential suppliers, secondary sources for rawmaterials or subcontract services and so on.
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9. Organization and management
Organization
Key managers
Management weakness
Compensation
Ownership
Board membership
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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 chartand brief explanations.
You should address planned product introductions,changes in workforce or management, noteworthy salesevents and significant changes to your customer base.
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11. Financial informationUse the sales and cost information developed in the
preceding sections to prepare projected financialstatements.
Unless you have a financial background you may need helpwith this section.
Sources and use of proceeds- if you are seeking a lender orinvestors, you need to indicate in a summary table howmuch money you are seeking, where you anticipate it willcome from, how it will be paid back, and most importantlyand specifically how it will be used.
Flow projection- this statement identifies sources of cashin, categories for cash paid out and operating expensecategories. This essential statement will help you to planyour cash requirements in both short and long terms views.
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Income statements and balance sheets- all plannersshould provide quarterly projections for the next two
years, and annual projections for years 3 through 5.
Break-even analysis- this analysis will help you tounderstand the specific relationships between your costsand sales. At what volume do your profits start? and so on
Spread sheets- computer spread sheets are sometimesvery useful for asking what if questions and looking at theresults under different conditions or scenarios.
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12. Exhibits/appendices
Provide supportive details for your plan.
Include resumes all key managers, brouchers to furtherexplain products and services, maps showing location of business, tax returns, prior period statements,
accountants, compilation reports, and so on