PROJECT IDENTIFICATION

SYNOPSIS

INTRODUCTION

MEANING OF PROJECT

PROJECT CLASSIFICATION

PROJECT IDENTIFICATION

IDEA GENERATION

PROJECT SELECTION

FORMULATION OF PROJECT
REPORT

CONCLUSION

INTRODUCTION:

An entrepreneur takes numerous decisions to convert his business idea into a

running concern. His/ Her decision making process starts with project/product
selection. The project selection is the first corner stone to be laid down in setting up
an enterprise. The success or failure of an enterprise largely depends upon the
project. The popular English proverb well began is half done applies to project
selection also indicates the significant of good beginning.

MEANING OF PROJECT:

The dictionary meaning of project is that is a scheme, design a proposal of

something intended or devised to be achieved. Newman and his associates define
that a project has typically has a distinct mission that it is designed to achieve and
clear termination point, the achievement of the mission. Gillinger defines project
as a whole complex of activities involved in using resources to gain benefits.
According to Encyclopedia of management, a project is an organized unit
dedicated to the attainment of goalthe successful completion of a development
project on time, within budget, in conformance with predetermined programme
specifications. Now, a project can be defined as a scientifically evolved work plan
devised to achieve a specific objective within a specified period of time.
Project can differ in their size, nature of objectives, time duration and complexity.
However projects partake of the following three basic attributes:

A course of action
Specific objectives and
Definite time perspectives.

Every project has starting point, an end point with specific objectives.

PROJECT CLASSIFICATION:
Project classification helps in expressing and highlighting the essential features of
project. Different authorities have classified projects differently. The following are
some of the important classification of projects.

(1) Quantifiable and Non-Quantifiable Projects

Quantifiable projects are those in which possible quantitative assessment of benefits

can be made. Non-quantifiable projects are those where such assessment is not
possible. Projects concerned with industrial development, power generation,
mineral development fall in the first category while projects involving health,
education and defense fall in the second category.
(2) Sectional Projects
Here the classification is based on various sectors like
Agriculture and allied sector
Irrigation and power sector
Industry and mining sector
Transport and communication sector
Information technology sector
Miscellaneous
This system of classification has been found useful in resource allocation at macro
level.

(3) Techno-Economic Projects

Classification of projects based on techno-economic characteristic fall in this
category.
This type of classification includes factors
Intensity-oriented classification,
Causation oriented classification
Magnitude-oriented classification as discussed below.

(a) Factor intensity-oriented classification: Based on this projects may be

classified as capital intensive or labor intensive if large investment is made in plant
and machinery the project will be termed as capital intensive. On the other hand
project involving large number of human resources will be termed as labor
intensive.
(b) Causation-oriented classification: On the basis of causation, projects can be
classified as demand based and raw material based projects. The availability of
certain raw materials, skills or other inputs makes the project raw-material based
and the very existence of demand for certain goods or services make the project
demand-based.

(c) Magnitude-oriented classification: This is based on the size of investment

involved in the projects, accordingly project are classified into large scale, medium-
scale or small-scale projects. The selection of a project consists of two main steps:
Project identification and project selection.

PROJECT IDENTIFICATION:
Often indenting entrepreneurs always are in search of project having a good market
but how without knowing the product coat they determine market whose market
they find out without knowing the item i.e. product? Idea generation about a few
projects provides a way to come out of the above tangle.

IDEA GENERATION:
The process of project selection starts with idea generation. In order to select most
promising and profitable project, the entrepreneur has to generate large number of
ideas about the possible projects he can take. The project ideas can be discovered
from various internal and external sources. These may include:

Knowledge of potential customer needs.

Personal observation of emerging trends in demand for certain products.
Scope for producing substitute product.
Trade and professional magazines which provide a very fertile source of
project ideas.
Departmental publications of various departments of the government.
Success stories of known entrepreneurs or friends or relatives.
A new product introduced by the competitor.
Ideas given by knowledgeable persons.
All these sources putting together may give few ideas about the possible projects to
be examined among which the project must be selected. After going through these
sources if an entrepreneur has been able to get six project ideas, one project idea
will be finally selected going through the following selection process.

PROJECT SELECTION:

Project selection starts once the entrepreneur has generated few ideas of project.
After having some ideas, these project ideas are analyzed in the light of existing
economic conditions, market conditions, and the government policy and so on. For
this purpose a tool is generated used what is called SWOT analysis. The intending
entrepreneur analyses his strengths and weaknesses as well as
opportunities/competitive advantages and threats/challenges offered by each of the
project ideas. In addition the entrepreneur needs to analyze other related aspects
also like raw material, potential market, labor, capital, location and forms of
ownerships etc. Each of these aspects has to be evaluated independently and in
relation to each of these aspects.

On the basis of this analysis, the most suitable idea is finally selected to convert it
into an enterprise. The process involved in selecting a project out of few projects is
also termed as Zeroing in Process.

Interdependent aspects of projects

FORMULATION OF PROJECT REPORT:

A project report is like a road map. It is an operating document. What information

and how much information it contain depends upon the size of the enterprise, as
well as nature of production. For example small-scale enterprises do not include
technology which is used for preparing project reports of large-scale enterprises.
Within small-scale enterprises too, all information may not be homogeneous for all
units. Vinod Gupta has given a general set of information in his study Formation
of a project report.

According to Gupta, project formulation divides the process of project development

into eight distinct and sequential stages as below:
(1) General information
(2) Project description
(3) Market potential
(4) Capital costs and sources of finance
(5) Assessment of working capital requirements
(6) Economical and social variables
(7) Project implementation
The nature of formation to be collected and furnished under each of these stages has
been given below.

(1) GENERAL INFORMATION:

The information of general nature given in the project report includes the following:
A. Bio-data of promoter: Name and address, qualifications, experience and other
capabilities of the entrepreneur. Similar information of each partner if any.
B. Industry profile: A reference analysis of industry to which the project belongs,
e.g., past performance; present status, its organization, its problems etc.
C. Constitution and organization: The constitution and organization structure of
the enterprise; in case of partnership firm its registration with registrar of firms,
certification from the directorate of industries district industry centre.
D. Product details: Product utility, product range, product design, advantage to be
offered by the product over its substitutes if any.

(2) PROJECT DESCRIPTION:

A brief description of the project covering the following aspects should be made in
the project report. Site: Location of the unit; owned, rented or leasehold land;
industrial area; no objection certificate from municipal authorities if the enterprise
location falls in the residential area. Physical Infrastructure: Availability of the
following items of infrastructure should be mentioned in the project report.
(a) Raw material: Requirement of raw material, whether inland or imported,
sources of raw material supply.
(b) Skilled labour: Availability of skilled labour in the area i.e., arrangements for
training labourers in various skills.

(c) Utilities: These include:

1. Power: Requirement of power, load sanctioned, availability of power
2. Fuel: Requirement of fuel items such as coal, coke, oil or gas, state of their
availability and supply position.
3. Water: The sources of water, quality and quantity available.
(d) Pollution control: The aspects like scope of dumps, sewage system, sewage
treatment plant, infiltration facility etc., should be mentioned.

(e) Communication and transportation facility: The availability of

communication facilities, e.g., telephone, fax, telex, internet etc., should be
indicated. Requirements for transport, mode of transport, potential means of
transport, approximate distance to be covered, bottlenecks etc., should be stated in
the business plan.

(f) Production process: A mention should be made for process involved in

production and period of conversion from raw material into finished goods.
(g) Machinery and equipment: A complete list of machines and equipments
required indicating their size, type, cost and sources of their supply should be
enclosed with the project report.

(h) Capacity of the plant: The installed licensed capacity of the plant along with
the shifts should also be mentioned in the project report.

(i) Technology selected: The selection of technology, arrangements made for

acquiring it should be mentioned in the business plan.

(j) Other common facilities: Availability of common facilities like machine shops,
welding shops and electrical repair shops etc should be stated in the project report.

(k) Research and development: A mention should be made in the project report
regarding proposed research and development activities to be undertaken in future.

(3) MARKET POTENTIAL:

While preparing a project report, the following aspects relating to market potential
of the product of the product should be stated in the report.

1. Demand and supply position: State the total expected demand for the product
and present supply position, what is the gap between demand and supply and
how much gap will fill up by the proposed unit.
2. Expected price: Expected price of the product to be realized should also be
mentioned.
3. Marketing strategy: Arrangements made for selling the product should be
clearly stated in the project report.
4. After sales service: Depending upon the nature of the product, provisions made
for after-sales should normally be stated in the project report.

(4) CAPITAL COSTS AND SOURCES OF FINANCE:

An estimate of the various components of capital items like land and buildings,
plant and machinery, installation costs, preliminary expenses, margin of working
capital should be given in the project report. The sources should indicate the owners
funds together with funds raised from financial institutions and banks.

(5) ASSESSMENT OF WORKING CAPITAL:

The requirement for working capital and its sources of supply should clearly be
mentioned. It is preferred to prepare working capital requirements in the prescribed
formats designed by limits of requirement. It will reduce the objections from
bankers side.

(6) ECONOMICAL AND SOCIAL VARIABLES:

Every enterprise has social responsibility. In view of the social responsibility of
business, the abatement costs, i.e., the costs for controlling the environmental
damage should be stated in the project. Arrangements made for treating the
effluents and emissions should also be mentioned in the report. In addition the
following socio-economic benefits should also be stated in the report.
Employment Generation
Import Substitution
Ancillaration
Exports
Local Resource Utilization
Development of the Area
(7) PROJECT IMPLEMENTATION:

Every entrepreneur should draw an implementation scheme or a time-table for his

project to the timely completion of all activities involved in setting up an enterprise.
If there is delay in implementation project cost overrun. Delay in project
implementation jeopardizes the financial viability of the project, on one hand, and
props up the entrepreneur to drop the idea to set up an enterprise, on the other.
Hence there is need to draw up an implementation schedule for the project and then
to adhere to it. PERT and CPM discussed later in this chapter can be used to get
better insight into all activities related to implementation of the project.

CONCLUSION:
Finally, the development of partnerships and consideration of funding opportunities
are also important steps in planning. This chapter introduces the steps and tools
needed to identify tidal hydrology restoration sites and to conduct initial feasibility
analysis and project planning.