PROJECT FORMULATION STAGES

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DHANYA MARIAM BENJAMIN 1 ST YR MBA A SEMINAR ON PROJECT FORMULATION- STAGES

PROJECT FORMULATION:

It is a process whereby the entrepreneur makes an objective and assessment of various aspects of an investment proposition of a project idea for determining its total impact and also its liability. PROJECT FORMULATION

AIMS OF PROJECT FORMULATION:

To achieve the project objectives with minimum expenditure and adequate resources. AIMS OF PROJECT FORMULATION

OBJECTIVES OF PROJECT FORMULATION:

General objectives: States in broad terms the achievement expected out of a project. Operational objectives: Specifically mentions the results expected from the implementation of the project. OBJECTIVES OF PROJECT FORMULATION

7 STAGES OF PROJECT FORMULATION:

Feasibility analysis Techno-economic analysis Project design & network analysis Input analysis Financial analysis Social cost benefit analysis Project appraisal/Pre-investment analysis 7 STAGES OF PROJECT FORMULATION

FEASIBILITY ANALYSIS:

The project idea is examined whether to go for detailed investment proposal or not. It is done in the context of internal & external constraints. A market analysis is done. If the project idea is feasible, we go for second step or else abandon the idea. FEASIBILITY ANALYSIS

TECHNO-ECONOMIC ANALYSIS:

Estimation of project demand potential & choice of optimal technology are made. Market analysis is in-built in this step. This stage gives the project a unique individuality & sets the stage for detailed design development. TECHNO-ECONOMIC ANALYSIS

PROJECT DESIGN & NETWORK ANALYSIS:

Heart of the project. Defines individual activities and their inter relationship with each other. The sequence of events of project is presented. Detailed work plan of the project is prepared with time allocation for each activity and presented in a network drawing. PROJECT DESIGN & NETWORK ANALYSIS

PROJECT DESIGN & NETWORK ANALYSIS (Contd.):

PROJECT DESIGN & NETWORK ANALYSIS (Contd.)

INPUT ANALYSIS:

Assesses the input requirement during the construction & operation of the project. Quantitative & qualitative assessment. Determines project feasibility from the point of view of resource requirements. It helps in financial & cost benefit analysis. INPUT ANALYSIS

FINANCIAL ANALYSIS:

Estimates project cost, operating cost and fund requirements. Aids the decision maker by comparing various project proposals. It is necessary to exercise due care and foresight in financial forecasts. FINANCIAL ANALYSIS

SOCIAL COST BENEFIT ANALYSIS:

Overall worth of the project is the main consideration. Three categories: (a)Primary: From the point of view of project implementing body. (b)Secondary: Apart from the project implementing body [spill-over/multiplier effect]. (c)Tertiary: Non-quantifiable spill-over. SOCIAL COST BENEFIT ANALYSIS

SOCIAL COST BENEFIT ANALYSIS (Contd.):

SOCIAL COST BENEFIT ANALYSIS (Contd.)

PRE-INVESTMENT ANALYSIS/ PROJECT APPRAISAL:

The project proposal gets a formal and final shape at this stage. All results obtained in the above steps are consolidated and arrived at various conclusions. Project sponsoring body, implementing body and external consulting agencies decide whether to accept the project or not. Investment decision is taken. PRE-INVESTMENT ANALYSIS/ PROJECT APPRAISAL

WHY IS IT NEEDED?:

It is the best passport to obtain the required assistance from financial institutions. Aids in government clearances and other procedure formalities. Provides an independent assessment of the feasibility based on existing government policies. WHY IS IT NEEDED?

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