Project Appraisal 123

8/20/2019 Project Appraisal 123

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PROJECT APPRAISAL


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• Simply speaking, project appraisal means

assessment of a project.• Project appraisal is mae for !ot" propose

an e#ec$te projects. In case of former,project appraisal is calle %e#&ante analysis'

an in case of latter %post&ante analysis'.• (ere project appraisal relates to a propose

project.

• Project appraisal is a cost an !ene)tanalysis of i*erent aspects of proposeproject +it" an o!jectie to aj$ge itsia!ility.


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• A project inoles employment of

scarce reso$rces.• An entreprene$r nees to apprise

ario$s alternatie projects !efore

allocating t"e scarce reso$rces fort"e !est project.

• Project appraisal "elps to select t"e

!est project among aaila!lealternatie projects.


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• -or apprising a project, its economic,

)nancial, tec"nical, market,managerial an social aspects areanalye.

•

-inancial instit$tions o projectappraisal to assess its creit+ort"iness !efore e#tening )nanceto a project.


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ECO/O0IC A/AL1SIS• 2ner economic analysis, t"e aspects "ig"lig"te incl$e

Re3$irements for ra+ materialLeel of capacity $tiliation

Anticipate sales

Anticipate e#penses

Pro!a!le pro)ts

• 4$siness s"o$l "ae al+ays a ol$me of pro)t clearly inie+ +"ic" +ill goern ot"er economic aria!les like sales,p$rc"ases, e#penses an alike.

• T"e entreprene$r s"o$l calc$late "o+ m$c" sales +o$l

!e necessary to earn t"e targete pro)t.• 5eman for t"e pro$ct +ill !e estimate for anticipating

sales ol$me.

• T"erefore, eman for t"e pro$ct nees to !e caref$llyspelle o$t as it is, to a great e#tent, eciing factor of

feasi!ility of t"e project concern.


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-I/A/CIAL A/AL1SIS

•

-inance is one of t"e most importantpre&re3$isites to esta!lis" anenterprise.

•

It is )nance only t"at facilitates anentreprene$r to !ring toget"er t"ela!o$r of one, mac"ine of anot"eran ra+ material of yet anot"er tocom!ine t"em to pro$ce goos.


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• In orer aj$ge t"e )nancialia!ility of t"e project, t"e follo+ingaspects nee to !e caref$lly anlyse6

Assessment of t"e )nancialre3$irement !ot" )#e capital an

+orking capital. T"e leel of actiity of an enterprise

e#presse as capacity $tiliation

nee to !e +ell spelle o$t.


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0AR7ET A/AL1SIS• 4efore t"e pro$ction act$ally starts t"e entreprene$r nees to

anticipate t"e possi!le market for t"e pro$ct.• Ientify t"e target c$stomers.

• T"is is !eca$se pro$ction "as no al$e for pro$cer $nless itis sol.

• 7no+ing t"e anticipate market for t"e pro$ct to !e pro$ce

!ecomes an important element in eery !$siness plan.• T"e ario$s met"os $se to anticipate t"e potential market. T"e commonly $se met"os to estimate t"e eman for apro$ct are

Opinion polling met"o

Complete en$meration s$rey Sample s$rey

Sales E#perience met"o

Life cycle segmentation analysis 6 T"e sales of t"e pro$ct +ill !e anticipateon t"e !ases of t"e pro$ct at i*erent stages of a pro$ct life cycle.


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TEC(/ICAL -EASI4ILIT1•

Tec"nical feasi!ility implies to mean t"eae3$acy of t"e propose plant an e3$ipmentto pro$ce t"e pro$ct +it"in t"e prescri!enorms.

•

Aaila!ility of tec"nical kno+"o+• If project re3$ires any colla!oration, t"en t"e

terms an conitions of t"e colla!oration s"o$lalso !e spelt o$t compre"ensiely an caref$lly.

•Entreprene$r s"o$l a+are of c"anging r$lesan reg$lations regaring tec"nicalcolla!oration.


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• 8"ile assessing t"e tec"nical feasi!ility of t"eproject, t"e follo+ing inp$ts coere in t"e project

• Aaila!ility of lan• Aaila!ility of inp$ts like +ater, po+er, transport,

comm$nication facilities etc.

• Aaila!ility of sericing facilities like mac"ine

s"ops, electric repair s"op etc.• Coping +it" anti poll$tion la+.

• Aaila!ility of +orkforce as per re3$ire skill anarrangements propose for training in&plant an

o$tsie.• Aaila!ility of re3$ire ra+ material as per

3$antity an 3$ality.


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0A/A9E0E/TCO0PETE/CE

• 0anagement a!ility or competencyplays an important role in making anenterprise a s$ccess or ot"er+ise.

• Strictly speaking, in a!sence ofmanagerial competence, t"e projects+"ic" are ot"er+ise feasi!le may

fail. On t"e contrary, een a poorproject may !ecome s$ccessf$l one+it" goo managerial a!ility.


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-inancial nees of an enterprise

4ase on PermanenceLong term CapitalS"ort term Capital4ase on Perio of $seLong term CapitalS"ort term Capital


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SO2RCES O- -I/A/CE

• I/TERA/L SO2RCES6 2ner t"isso$rce f$ns are raise from +it"int"e enterprise.

O+ners capital 5eposits an loans gien !y t"e o+ner

, t"e partners, t"e irectors.

Personal loan taken !y entreprene$ron "is personal assets.

Retention of pro)ts.

Conersion of some assets in to f$ns.


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• E#ternal so$rces6 -$ns raise from

ot"er t"an internal so$rces are frome#ternal so$rces. 5eposits or !orro+ings from relaties an

friens an ot"ers.

4orro+ings from t"e !anks for +orkingcapital p$rpose.

Term loans from )nancial instit$tions.

(ire p$rc"ase or leasing facility fro /SIC

A/5 State small in$stries corporation.


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• If +e com!ine !ot" t"e so$rces

toget"er t"ese can !e !roalyclassi)e as

Personal f$ns or E3$ity capital

Loans from relaties an friens 0ortgage loans

Term loans

S$!siies


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I/52STRIAL ESTATES

• In$strial estate is a place +"ere all t"ere3$isite facilities like lan, factory s"es,electricity, transport, post o:ce, !ank etc.are proie !y t"e goernment to t"e

entreprene$rs, to esta!lis" t"eir enterprisest"ere.

• In$strial estate programme +as initiate!y t"e goernment in ;


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Project Appraisal 123