stages in setting of project

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A Presentation On STAGES IN SETTING UP OF A PROJECT Prepared by:- Vala mahesh

(1) Initial Selection Of Project Ideas:

(1) Initial Selection Of Project Ideas Project must match the promoters profile of qualifications, experience, interest etc. Rough estimate of project cost and promoters capability to mobilize the necessary resources to the proposed project. Clear idea about market size and growth potential. The availability of inputs and proximity of market for final products. Costs involved in production administration and marketing. Availability of technology and plant and machinery.

(2) Selection of project location:

(2) Selection of project location Proximity of inputs Proximity of market Availability of power Availability of water Availability of transportation Communication facility Government policy Manpower availability Weather and climatic condition

(3) Selection of Project site:

(3) Selection of Project site Project site refers to a specific piece of land where project would be set up. Proper layout of plant and equipment must be possible. Land should be for industrial use. Getting utility connection like power, water etc.

(4) Soil and Topography:

(4) Soil and Topography The soil and topography of the location will have greater impact on selection of location for the project. If topography is much undulating ,it needs big quantity to cutting of earth and filling of earth and also dressing. if soil of topography is not favorable, the project cost may go up and also may delay the project to make it set right.

(5) Choice of technology:

(5) Choice of technology Plant capacity- Principal input Investment out-lay and production cost Way by other units Product mix Latest development Ease of absorption

(6) SWOT analysis:

(6) SWOT analysis Internal financial resources Extent of support from banks and financial institutions Brand loyalty of existing product Sources of raw material and other infrastructure facilities Market share distribution network Cost of production and managerial competence Cost of capital

(7) Zero date:

(7) Zero date Zero date of project means a date is fixed up from which the implementation of the projects begins. Activities generally taken up before zero date are as follow: Identification of project/product Determination of plant capacity Selection of collaborators/sourcing of technology Selection of site Soil survey and plot plans Manpower planning, recruiting key personnel

(8) Financial closure:

(8) Financial closure The entrepreneur obtain the all government clearances, statutory permissions, term loans for project financing. after into the loan agreements, the project in all aspect is ready for implementation and thie state of readiness for monetary support of project is called ‘Financial closer’.

(9) Project Visibility:

(9) Project Visibility A project becomes visible slowly as it grows, bringing the idea into reality, by using men, machines, money and managerial skill. For an out sider, a project has got zero value during its implementation ,and gets full value only on successful implementation of the project. A project which is abandoned in the middle of implementation has nil value.

(10) Work breakdown structure:

(10) Work breakdown structure In the work breakdown structure the project work is divided into individual systems and in turn into subsystems..the lower level of the accumulated progressively upwards for each subsystem and individual system. the work breakdown structure helps in construction of network diagrams under PERT and CPM .the development of work breakdown structure consists of: Establishing the framework for integrated cost, schedule planning and control. Establishing a framework for summarizing the cost schedule of status of the project for progressively higher level of management.

(11) Brown field project:

(11) Brown field project A project implemented in the precincts of a working plant/working facility is known as ‘brown field project’ revamping, replacements, rehabilitation, modernization projects comes under this category of of a BFP within the precincts of an operating plant calls for much more imagination, detailed planning meticulous schedule control and an integrated team work from all the concerned departments like, department etc.

(12) Resource levelling:

(12) Resource levelling Resource levelling is usage of resources during the project duration with minimum variation in sources requirements without extending the project completion time. the central ideas of resource levelling about the rescheduling of activities within the limits of available slack to achieve better distribution of resource usage. The slack available in each activity is determined from the basic scheduling computations, without consideration of resource requirements or availabilities.

(13) Project Execution Plan:

(13) Project Execution Plan PEP includes the following sub-plans: Contracting plan Work packaging plan Organization plan Systems and procedure plan the execution plan which consist of the first three sub plans will be reduced o a project procedure manual.PEP is a strategic plan and it does not deal with the operational details of building a project.

(14) CAT and RAT schedule:

(14) CAT and RAT schedule CAT schedule stands for ‘ committed activity target schedule’ RAT schedule stands for ‘reserved activity target schedule’ CAT schedule is used for progressing of the executing agencies whereas the RAT schedule are those that are to be achieved. The RAT schedule is based on some in built allowances for delays. this allowance is not to be disclosed to execution agencies. the cushion is kept in RAT schedule for taking care of all uncertainties of project.

(15) Line of Balance:

(15) Line of Balance Line of balance is a device for planning and monitoring the progress of an order, project or program to be completed by a target-date LOB chart shows in a comparative picture of committed and actual of different phases of activities in a project, thereby highlighting areas beyond schedule. key milestone events, cumulative time schedule and upper and lower control limits are imposed where variation are anticipated.LOBconcept is used with advantage for performance control.

(16) Risk aware culture:

(16) Risk aware culture The awareness of risk is to be developed at all levels of project management team to fight against any adversaries occur in implementation of the project. the project estimates are depends on so many assumption as to sales , profitability,costs,investment,technical estimates, work performance project implementatation schedules etc

(17) Project procedure manual:

(17) Project procedure manual A project procedure manual is required to coordinate the various subsystems like contract management, configuration management, time management,cost,fund,materials,men and communications management. The manual is prepared in such a way that the interacting agencies are able to see their roles and mutual relationships in pursuance of the common goal.

(18) Time and cost trade-off:

(18) Time and cost trade-off The three time cost option s are as follow: Most efficient plan -It is a network plan that would meet the technical plan requirement of the project through the most efficient vies of available resources. this network plan is selected when there is no constraint of funds and time, it involves least risk of technical risk. Scheduled plan – under this plan the scheduled dates for the project implementation are fixed up through a network plan. Shorter duration plan – under this plan the technical requirement of the project are met within shortest possible time by modifying the original time frame of different activities.

(19)Variance and Performance Analysis:

(19)Variance and Performance Analysis Variance analysis -This approach is in adequate for project control, because it tells only what happened in the past and does not answer what will happen in future and does not give any indication s about the rate of work. The traditional also does not indicate the value of work done. Performance Analysis - this is the modern approach where analysis is done for the project as a whole projects on shedule,behind and ahead of schedule .it also indicates whether cost of a project as a hole it as per budget the trend of performance and the likely final cost and completion date of project as a whole and its individual parts would also emerge from the analysis

(20) Network Analysis:

(20) Network Analysis Network analysis is a technique for planning and controlling large projects, such as construction work, research and development projects or the computerization of system. Network analysis helps managers to plan when to start various tasks, to allocate resources so that the tasks can be carried out within schedule, to monitor actual progress and to find out when control action is needed to prevent a dalay in completion of the project.

(21) Feasibility study report:

(21) Feasibility study report Before a project investment is finalized, the entrepreneur will conduct a feasibility study to confirm about the techno-commercial strengh of project nd prepares a report called feasibility study report. The report normally contains the following details: Study of configuration of the project idea in aspects Identifying the type and size of the project wih justification Study of location Study of demand of product Survey of material requirement project source and sources of finance profitability and cash flow analysis Study of economic, political and legal environment

(22) Market survey:

(22) Market survey The market survey may be used for a wide range of other purpose as well, including testing buyers reactions to different product configuration and packaging, and identifying link’s between purchasing behavior and other variables like buyers sex, social status. and income. market survey may also useful for new products where there is no past data on sales ,so that time series analysis or estimation is not possible. project investment decision is made only if economical feasibility report suggests that basing on market survey.

(23) Invisible walls in project estimating:

(23) Invisible walls in project estimating Some of the invisible walls are as follow: Delays in governmental clearances Delays in obtaining of loans Reliability of contractors Political disturbance foreign exchange rate variation Location disadvantages Lack of reliable technology Unforeseen competitors etc.

(24) Reasons for project failure:

(24) Reasons for project failure Substantial overrun of the project which makes the project not feasible to implement further Changes in technology during the implementation of the project Wrongful estimation of cost of project and its profitability Lack of experienced mgt team Lack of delegation of authority of responsibility Failure to obtain government clearances and permission Lack of sufficient knowledge about the project to promotors .

(25) Techniques for project control:

(25) Techniques for project control Watch and measure the Achievement at short intervals Ascertain current variances and predict future variances Ascertain root cause of variances Take actions to offset the ill-effects of past variances Prevent future potential variances Evaluate targets, output and input in financial terms Introduction of incentives for good performance Periodic review meeting and taking appropriate action.


Bibliography Book :- Strategic financial mgt. ravi.m kishore

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