An Evaluation of Agricultural Project (317 AEC)

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Course Outline Types of Analysis Standards of Comparison Measures of Profitability Measures of Size Efficiency Measures Financial Measures Enterprise Analysis Discounting factor Compounding factor

Course Objectives:
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Explain the time value of money and its use Illustrate the process of compounding Demonstrate the process of discounting Discuss the payback period, simple rate of return, Benefit cost ratio, net present value and internal rate of return Show how to apply these measures Explain how income taxes, inflation, and risk affect investment analysis

7- To show how farm business analysis

contributes to the control function of management 8- To suggest standards of comparison to use 9- To outline a procedure for locating economic or financial problem areas 10- To review measures that can be used to analyze solvency, liquidity, and profitability 11- To identify measures of business size 12- To illustrate the concept of economic efficiency

Chapter (1) Feasibility Study of Financial Projects

Projects are the cutting edge of development Project concept: Project is the whole complex of activities in the undertaking that uses resources to gain benefits. Also project is defined as a set or group of activities which include using specific amount of resources to achieve specific goals.

The agricultural project is an investment activity where we expenditure the financial resources to create capital assets that produce benefits over extended periods of time in agricultural. The project is just a sacrifice by direct resources today to get benefits over an extend periods of time

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constructing houses, factories, shopping malls, developing military weapons systems, new ships launching satellite systems developing and implementing new computer systems Planning concert, football games, or basketball introducing new products into market.

Elements of Project Management

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Project team Individuals from different departments within company Matrix organization Team structure with members from different functional areas depending on skills needed Project manager Leader of project team Project Planning

Types of projects:

There are two major types: 1) Products (goods) projects. 2) Services projects. 1) Products (goods) projects: Represent the units of production of: -Agricultural projects. Animal products. -Extractive products. Manufactured products.

2) The services project: can be classified to: Commercial services projects: which includes (banks, hotel, tourism companies, private health and education), Non commercial projects: include free education and health, social, religious and cultural services also irrigation, drainage, electricity generation, defense and security. The projects differ in their types, goals and sizes

They are classified to:

1) Public projects or private projects or both (Mixed). 2) Agricultural, industrial and services projects. 3) Small, medium and large size projects. 4) Projects that aim to profit and others that not. 5) Intensive labor projects and intensive capital projects

Project Management Process

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Project planning Project scheduling Project control Project team

The importance of feasibility study of projects:

1) It is a practical and logical way to construct a project 2) It is a group of complementary studies for different aspects related to the project without ignorance of any aspect. 3) The feasibility study is a way for getting benefits from scarce resources. 4) It encourages the team work group. 5) It helps in the detection of available opportunities.

6) It helps in the recovery of the problems which may arise during project operation. 7) It helps in getting loans and licenses. 8) Helps in prediction for extended periods of time. The economical and financial evaluation is done at the end of the feasibility study where the actual evaluation is done after the project implementation, if performance is good, the actual evaluation & the forecast evaluation are equal.

Definition of cost

Is anything that reduces an objective. - For a farmer: The major objective is to maximize the amount of satisfaction for his family and increase his income over time. - For the governmental cooperation: The major objective is to maximize net income and making the highest profit possible and reduce risks. - For a society as general: major objective is to increase their national income and this can be achieved by Income distribution, increasing the number of productive job opportunities.

Components of the costs for Agricultural Projects

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Physical goods. Labor. Land. Contingency allowance. Taxes. Debt services.

Or include Irrigation cannels, fertilizers and pesticides, Labor, Land, Taxes, Debt services.

Definition of benefits:
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anything that contributes to an objective or is anything that increases the national income. Conclusion: Anything that reduces the national income is a cost, which led to increase the benefit.

Components of benefits for Agricultural Projects:

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Increased value of production. Quality improvement. Change in time of sale. Change in product, throughout grading and processing, which lead to increase in sales of production. Change in location of sale.

Thank You