Project formulation and appraisal

PROJECT FORMULATION

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Generation & screening of project ideas

Presented by : Surya C.D

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INTRODUCTION

A project is accomplished by performing asset of activities

The project ideas as a process of identification of process begins with an analytical survey of the economy.

The surveys & studies will give us ideas.

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GENERATION OF IDEAS

The project selection starts with generation of project ideas.

The ideas are based on existing field of technology to offer various present product of syllabus

To stimulate the flow ideas the following are helpful

1) SWOT analysis Strengths Weakness Opportunities & Threats

2) Clear Articulation of objectives

3) Fostering a conducive climate

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MONITORING THE ENVIRONMENT

Competitive abilities of a firm depends on its environment

The firm must systematically monitor the environment and assess its competitive abilities

For purpose monitoring divided into six sectors

Economic sectorGovernmental sectorTechnological sectorSocio-demographic sectorCompetition sectorSupplier sector.

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CORPORATE APPRAISEL

Realistic appraisal of corporate strengths & weakness is essential for identifying investment opportunities

Marketing & distributionProduction & operationsR &DCorporate resource and personnelFinance and accounting

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TOOLS FOR IDENTIFYING INVESTMENT OPPORTUNITY

•Several useful tools that are helpful in identifying promising investment opportunities.

a) Life cycle approachb) Porter modelc) Experience Curve

a) Life cycle approach

Pioneering stageRapid growth stageMaturity and stabilisation stageDecline stage

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b) Porter Model

Profit potential of an industry depends on the combined strength of the following five basic competitive forces:

Threat of new entrants

Rivalry among existing firs

Pressure from substitute products

Bargaining power of buyers

Bargaining power of sellers

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c) The Experience Curve

Accumulated volume of production

Cost

per

un

it (

pre

sen

t v

alu

e)

Experience curve is used to find long term investments aimed at reducing costs

It shows how the cost per unit behaves w.r.t the accumulated volume of production

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SCOUTING OF PROJECT IDEAS

Analyse the performance of existing industries

Examine the inputs and outputs of various industries

Review imports and exports

Study plan outlays and governmental guidelines

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PRELIMINARY SCREENING

By using the suggestions in the preceding section ,it is possible to develop a long list of project ideas

Compatibility with the promoter

Consistency with government priorities

Availability of inputs

Adequacy of market

Reasonableness of cost

Acceptability of risk level

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PROJECT RATING INDEX

Preliminary evaluation may be translated into a Project rating index

STEPS

1. Identify factors relevant for project rating2. Assign weights to these factors3. Rate the project proposal on various factors4. For each factor multiply the factor rating with the factor

weight to get the factor score5. Add all the factor scores to get the overall project rating

index

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SOURCES OF POSITIVE NET PRESENT VALUE (NPV)

There are six main entry barriers that result in positive NPV projects

Economies of scale

Product differentiation

Cost advantage

Marketing reach

Technology edge

Government policy

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BEING AN ENTREPRENEUR

Qualities and traits of a successful entrpreneur

Willingness to make sacrificesLeadershipDecisivenessConfidence in the projectMarketing orientationStrong ego

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CONCLUSION

Thus the main objective of the generation and screening of project ideas is to identify investment opportunities which are feasible and promising and which merit further examination and appraisal

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Query

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