Project Identification

Project identification is the first step for an

entrepreneurial activity. It is concerned
with collection, compilation and analysis of
economic data for the eventual purpose of
identifying possibilities of feasible and
promising investment opportunity and
developing it.

Project Identification
Project
Identification

Environmental
Assessment

based on identified
activities, goals and
time frames

(technical, social,
economic
feasibility)

Project Development

Project Choice
Theoretically infinite choices are available
Important

dimensions are;

Product/ Service
Market
Technology
Equipment
Scale of production
Location
Incentives and
Time phasing

Govt. Policies
Infrastructure
Skills

Types of Opportunities
Additive;

Least Risky
Utilize existing resources
Min. change in business character

Complementary;

Risky
Innovative ideas
Shift in business character

Breakthrough;

Most Risky
Fundamental change in structure and
Character of business

Idea Evaluation
The IdeaHow Do You Get It?
Dealing with problems yours or others
Brainstorm with friends
Mentors can help!
Ask others if they heard of any good ideas
From your travels
The engineering and other universities, etc.
Remember, a great idea does not guarantee
success

How the founders of the Inc. 500 got their ideas

While

working in the same industry 43%

Hobby or advocation 16%
Saw somebody else do it 15%
Saw an unfilled niche 11%
Did a systematic search 7%
Don't know 5%

Be the First
... Our best business missions are based
on those ideas that often emerge out of
our deepest personal motivations and
interests.
Warren Avis in "Take a Chance to Be First"

Opportunity Identification

Intelligence to Observe, Innovate & Deduct;

During routine occupational work

Identifying dearth of an article or service
Faced with un-identified situation
Availability of a particular skill
Availability of specific material
Need of improvisation in existing process

Reports & records of professional bodies

Journals & Bulletins of Research Institutions
Strategic Plan documents of the Government
Success stories of friends/ relatives/ others

Opportunity Identification
Repeat business, not one-time sell.
Business instead of a practice. Not built on a persons talent, but orgn.
Regional or national potential, rather than local.
Less labor intensive, the better
Already a market other companies doing it.
Demographics or lifestyle changes creating the need, and thus, the market.
Emotionally appealing to the customer.
The more unregulated, the better.
A proven team, not an untried idea. team is more important than idea.
Recession-proof.
Success is not built on one client, one product, or customer.
Payment at time of service or before.

Criteria for Project Selection

Investment Size - Small, Medium, Large

Location

Ease of Liaison, transport, immunities

Availability of raw material, skilled persons

Technology Proven, Indigenous

Equipment Capacity, Quality, Futuristic, Indigenous
Marketing

Retail/ industrial, import/export, ancillary/ parent

Current Demand/ Supply position
Identification of specific niches
How much competition
Frequency of consumption

Importance
Catalyst for economic development
Employment and income generation
Framework for future activities & development
Initiate infrastructure development
Development of society in long term
Accelerate socio-cultural activities

Project Feasibility
Feasibility

analysis helps to identify the

strengths and weaknesses of the project
after establishment of project objectives,
it includes;
Market

analysis
Technical analysis
Financial analysis
Social profitability analysis

Market analysis
A market

analysis is a method screening

project ideas in terms of market, it includes
Market

area, methods & cost of transportation

and channels of distribution
Analysis of past & present demand, rate of
consumption and consumers of the product
Supply position, competitors & competitive
products, prices, quality and marketing
practices

Technical analysis

Serves as basis for estimation of cost and

consideration about infrastructure demand,
employment, payment systems & Ecology.
Description of product including physical, mechanical
and chemical properties & specs.
Machinery & equipment, Manufacturing process, flow
charts etc.
Plant location, plant size, production schedule, volume
of production
Raw material, labor requirements, Waste management
Production cost

Financial analysis
Preparation

of financial statement to
evaluate measures of commercial viability
and magnitude of required finance
Statements

of total project cost, initial capital

requirements, cash flows and projections
Collection period of sales, inventory, payment
periods of purchases and expenses
ROI, break even analysis, cost benefit analysis
and price analysis

Project Formulation
Project Formulation is the step to critically examine
and make decision for choosing a project idea for
implementation.
A process whereby the entrepreneur makes an
objective and independent assessment of various
aspects of an investment proposition of a project
idea for determining its impact.
It aims at achieving the project objectives with
min. expenditure and adequate resources in a
limited time.

Sequential stages of Project Formulation

Feasibility

Analysis
Techno-Economic Analysis
Project Design & Network Analysis
Input Analysis
Financial Analysis
Social Cost-Benefit Analysis
Pre-Investment Analysis

Project Report
Prepared

by an expert / consultant
Serves as a guide to Management
Important for financial institutions & Banks
A project report give details about;
Merits

& demerits in resource allocation

Inputs & outputs of the project
Extent of opportunities available

Objectives
The objectives may be in terms of social or
economic or both;
General

Expected achievements

Operational

Expected results

These objectives help in quantifying physical,

financial, human and other resource requirements;

Project Report - Scope

Economic Aspects:
Market Analysis

Technical Aspects:
Financial Aspects:
Production Aspects:
Managerial Aspects:

Project Report - Contents

1.
2.

Objectives & scope of the project

Product Characteristics, specification etc

3.

Market position and trends

4.

Anticipated demand
Production capacity
Price structure
Import/ Export prospects

Raw Material requirements

5.

Application/ Use of product

Standards & Quality

Availability, Sources, Price

Properties of raw material

Manufacturing Process

Process selection
Production schedule

Project Report - Contents

6.

Plant & Machinery

7.

Land & Building

8.

10.

Area, Building & Location etc.

Construction schedule

Financial implications

9.

Equipment/ Instrument requirements

Power, Water & other infrastructure

Fixed & working capital investment

Project cost & Profitability

Marketing strategy
Personnel Requirements

Staff requirements & availability

Labor & wages provisions