INTRODUCTION TO COMMERCIAL/DEVELOPEMNET PROJECTS

Compiled by Khalid Jamil Ansari

February 6, 2012 WHAT IS A PROJECT?

A SPECIFIC PLAN A SPECIFIC DESIGN AN IDEA A PLANNED UNDERTAKING A SCHEME

An investment project is:

A proposal aiming at creation, Expansion and for development of some capabilities in order to increase the production of goods and services over a certain period, in the specific community.

CHARACTERISTICS OF A PROJECT:
IDENTIFIABLE TIME BOUND MEASURABLE IN TERMS OF CAPACITY AND COST MANAGEABLE

DESCRIPTION OF A PROJECT:
NATURE: NEW ADDITION TO EXISTING FACILITIES EXPANSION BALANCING & MODERNIZATION REHABILITATION REPLACEMENT DIVERSIFICATION

SCOPE:

PLANT

CAPACITY RANGE OF PRODUCTS

OBJECTIVES:
ACCELERATED GROWTH RATE ECONOMIC DEVELOPMENT INCREASED EMPLOYMENT FOREIGN EXCHANGE EARNINGS FOREIGN EXCHANGE SAVINGS INCREASED HUMAN RESOURCE DEVELOPMENT

The project is normally a one time arrangement and is not repetitive activity for frequent adjustments. Planners & Developers confront a situation where they have to decide -How to find and

prepare

good

and

sound

projects?

Especially in developing countries where scarcity of resources make wrong decisions very costly.

DIMENSIONS OF PROJECT EVALUATION

(Compiled by Khalid Jamil Ansari)

After the screening of the project proposal, there comes the detailed study stage of the plan which is known as the evaluation stage.

THE EVALUATION CAN COVER UP TO SEVEN ASPECTS OF A PROJECT IN DETAIL: 1. TECHNICAL 2. ECONOMIC 3. COMMERCIAL 4. FINANCIAL 5. MANAGERIAL 6. ORGANIZATIONAL 7. SOCIAL, CULTURAL & ENVIRONMENTAL TECHNICAL TECHNICAL DIMENSION OR PROJECT ENGINEERING INTO CONSIDERATION THE FOLLOWING: - PLANT SIZE - ALTERNATE PROCESSES - ALTERNATE TECHNOLOGIES - ALTERNATIVE LOCATIONS - SOURCES OF SUPPLY OF MACHINERY - QUANTITY, QUALITY AND COST OF INPUTS" - COST OF THE PROJECT TAKE

ECONOMIC ECONOMIC DIMENSION TAKES INTO CONSIDERATION THE FOLLOWING: - COST-BENEFIT ANALYSIS - DEVELOPMENT OF ECONOMY - DEVELOPMENT OF SOCIETY - DEVELOPMENT OF RELATED SECTORS - MATCHING THE REQUIREMENTS OF THE COUNTRY COMMERCIAL COMMERCIAL THE FOLLOWING: DIMENSION TAKES INTO CONSIDERATION

- REVENUE/EXPENSES RELATIONSHIP - DEMAND/SUPPLY RELATIONSHIP - ADEQUACY OF MARKETING CHANNELS - ACCEPTANCE OF PRODUCT AND ITS SUBSTITUTES - RESOURCES REQUIRED TO PROFITABLY RUN THE PROJECT.

FINANCIAL
FINANCIAL DIMENSION TAKES INTO CONSIDERATION THE FOLLOWING: - AVAILABILITY OF FUNDS FOR THE PROJECT - ABILITY TO MEET FINANCIAL OBLIGATIONS - PROPER ACCOUNTING AND COSTING SYSTEM - ADJUSTMENT OF PRICES OF PRODUCTS/SERVICES - FINANCIAL MANAGEMENT THROUGH FINANCIAL CONTROL

MANAGEMENT
MANAGEMENT FOLLOWING: DIMENSION TAKES INTO CONSIDERATION THE

- MANAGERIAL HIERARCHY PATTERN - SOUND TOP MANAGEMENT - HIRING PROFESSIONAL MANAGERS - ABILITY TO FORMULATE GOALS AND PLANS - MAKE ADJUSTMENTS ACCORDINGLY

ORGANIZATIONAL
THE ORGANIZATIONAL DIMENSION TAKES INTO CONSIDERATION THE FOLLOWING: - ADMINISTRATIVE STRUCTURE OF THE ENTERPRISE - FREE FROM POLITICAL AND PERSONNEL INFLUENCE - WELL-DEFINED SYSTEMS AND PROCEDURES - PROPER RECRUITMENT OF REQUIRED STAFF - EFFECTIVE CONTROL METHODS

SOCIAL, CULTURAL & ENVIRONMENTAL

- HUMAN DEVELOPMENT
- IMPROVED STANDARD OF LIVING - CULTURAL VALUES - HUMAN HEALTH - ENVIRONMENTAL HAZARDS

PROJECT APPRAISAL DIMENSIONS, IN NUT SHELL, CAN BE GROUPED INTO THREE MAIN ASPECTS: - ECONOMIC & COMMERCIAL
- TECHNICAL - FINANCIAL

PROJECT MONITORING
Project evaluation after passing through the process of approval from the competent authority is ready for implementation. Normally project experts are assigned the duties of project implementation. These experts may be: -Engineers -Financial experts -Consultants -Foreign donor agencies -Specialized firms PROJECT MONITORING IN THE BEGINNING HAS TWO BASICS FUNCTIONS: 1-Project is completed according to the anticipated time schedule 2-Project is completed within the cost estimates So the idea is to save on:

TIME OVER-RUNS & COST OVER-RUNS

The implementation of the project i.e civil works, installation of machinery and subsequent running of the project successfully depends upon regular, vigilant and accurate project implementation and subsequent monitoring. Sometimes the project is not based on pure donations or foreign aid and the funds are based on repayable loans. In this case project monitoring would ensure satisfactory repayment of borrowed funds. COMPARING THE ACTUAL WITH ESTIMATES Project monitoring requires that estimated projections and targets are matched with the actual results and achievements of the project and taking corrective measures to ensure safe and profitable operations of the project.

REPORTING
Types of status reports prepared during implementation and subsequent monitoring of projects: 1.Weekly Reports 2.Monthly reports 3.Quarterly Reports 4.Half-yearly Reports 5.Annual Reports 6.Completion Reports 7.Financial Reports 8.Technical Reports 9.Forecasting and Budgeting for future

WHY DO PROJECTS FAIL?

Projects fail because of: 1. Inadequate fact finding

2. Poor pre-feasibility 3. Weak appraisal 4. Poor implementation 5. Over-runs 6. Careless monitoring 7. Poor Management 8. Inadequate financial resources 9. Inadequate feedback 10. Political interference 11. General Law & order 12. Non-cooperation of related bodies 13. Obsolete technology 14. Lack of dynamism 15. Lack of R&D