By

Elements of Project Proposal

&

its Preparation

Invisible threads have the strongest possibilities.

What is Project Formulation?

Who formulates the project?

What is project?

Why do we need project approach?

प्रोजेक्ट कौन तैयार करता है ?

Who formulates the project ?

• लाभग्रहिता उद्यमी or संस्थान

• Beneficiary Cooperative

• हिशेषज्ञ की सिायता से या

उसके हिना

• With/without consultant

• Project formulation is the

systematic development of a

project idea.

• Basically, a planning for arriving

at an investment decision.

• It has the inbuilt warning

mechanism which works at the

earliest possible stage of

mistakes.

• It is a formal document that gives

a distinctive identity & precise

meaning to the project work. Also

known as DPR/FR.

Project Formulation

Why project approach?

Project approach leads to following advantages by

answering 5 Ws (What, Why, When, Where and Who) & How.

• Best use of the available resources

• Adoption of the best technology

• Ensure smooth operations through warning

system

• Provide the viable solution to

issues/challenges

Project - Meaning

• Various dimensions are:o Series of Activities

o Process i.e. a systematic approach

o A progressive elaboration

o Beginning & Ending

o Fixed Time

o Need Resources

o Fixed tangible results

o Risks

• Project meaning - A specific & finite series ofactivities those produce observable &measurable results under given conditions.

Project Phases

Identification

Preparation

Appraisal

PresentationImplementat

ion

Monitoring

Evaluation

Identification: stage where one project-idea out ofseveral alternatives is chosen and defined

Preparation: identified idea is carefully developedto the proposal stage

Presentation: detailed plan is submitted forapproval to the appropriate authority

Monitoring: at every stage the progress of theproject is assessed against the plan

Evaluation: upon completion the project is reassessedin terms of its efficiency and performance. Also calledproject life cycle

Appraisal: every aspect of the proposal is subjectedto systematic and comprehensive evaluation, and aproject plan is prepared

Implementation: with necessary approvals andfinancing in place, the project plan isimplemented

Key Elements in Project Formulation

• Aim & Objectives of the Project

• About Implementing Agency

• Costing

• Feasibility & Viability of the Project

• Resources Analysis

• Risk Analysis

• Conditions, if any.

• Justifications

• Summery

Aims & Objectives of the Project?

Aims are statements of

intent. They are usually

written in broad terms.

They set out what we

hope to achieve at the

end of the project.

Objectives, on the other

hand, are specific

statements that define

measurable outcomes, e.g.

what steps will be taken to

achieve the desired

outcome.

Profile of Beneficiary Society

Name, location & background

Composition of membership (big, medium, small farmers, rural

artisans, landless labourers etc.)

Financial Position

• Paid up Share capital

• Reserve & other funds

• Accumulated Profit or loss

• Net worth

• Current Assets

• Current Liabilities

• Net Working capital

• Net Fixed assets

CONTD…

Activity-wise business turnover

- Agril. advances

- Non-agril. advances

- Sales of agril. Inputs

- Marketing of agril. produce

- Sales of consumer goods

Collection/recovery of loans

Managerial information

Existing infrastructural facilities and their utilization – Godown,

processing unit, working shed, shop etc.

Main challenges of the society, if any.

Costing – Key Features

Investment costs/Capital

costs:

• Land & Land Development

• Civil Works,

• P&M, Other Equipments

• Capacity BuildingPrograms

• Pre-operative expenses

• M&E of Project

Expenses:

Variable expenses:

• Labor, electricity,chemicals, materials,overheads, raw watercharges, insurance etc.

Fixed expenses:• Rent, Telephone and

internet charges, Insurance, Salaries, Loan Payments etc.

Project Feasibility & Viability

•Schedule Analysis

•Social & Stakeholders Analysis

•Environmental Analysis

• Institutional Analysis

Technical Analysis

Market Analysis

Economic Analysis

Financial Analysis

Technical Analysis:

Purpose –

• Technically feasibility ensure that:

o what is proposed is also delivered;o all technical inputs required to set

up the project are available; ando selection of the optimal formation

of the project in terms oftechnology, capacity and location.

• Technical analysis is concerned primarilywith: Manufacturing process, Input-Output Analysis, Plant Capacity, Location,site, machineries and equipment,Building & civil works, Work schedule.

Economic & Financial Analysis:

Purpose -• EFA – is all about achieving the

desired economic goals andself sustained economicbenefits of a project.

• Economic goals – security ofinvestment, adequate returns,investing in best availableoption, benefits to allstakeholders etc.

(ROR/IRR/DSCR/BEP/BCR etc.)

• Self sustainability – ability tocontinue without externalsupport.

Market Analysis

Purpose -

• A market analysis studies attractiveness

and the dynamics of available market

the within the industry.

• And according to market requirements,

plan/ policies are formulated about

inventory, purchases, work force

management, facility expansion,

promotional activities, and many other

aspects of business development.

Schedule Analysis

• A schedule is a time-model of

how you as the manager plan

on executing the project work.

• Like a cost model, an ideal

time model or schedule should

respond to changes.

Resource Analysis

Resources Strengths Weakness

Money

Materials

Machines

Methods

Manpower

Management

Moment (time)

Other resources

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Environmental Analysis

• Environmental Analysis givesan indication whether thebusiness can survive or not inexisting Political, Economic,Social, Technologicalconditions (PEST) in the areaof operation.

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1.Political factors– Political stability

– Law and order

– Environmental rules &regulations

2. Economic factors– Tax policy

– Trade restrictions and tariffs

– Economic growth

– Interest rates

– Exchange rates

– Inflation rates

3. Social factors Health awareness

Population growth rates

Age distribution

Carrier attitudes

Emphasis on safety

4. Technological factors R&D activities

Pace of technological changes

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• Represent promotor’sphilosophy, guidingprinciples, outlook,attitude and aspirations fortheir business. (Have nomonetary value butimportant)

Personal Values

Analysis

(HRM)

Sensitivity and Risk Analysis

• A technique forinvestigating theimpact of changes inkey project variables

• Identify key variableswhich influenceproject costs andbenefits

• Investigate theconsequences oflikely adversechanges

• Manage risk

Risk acceptance or risk retention - when we accept the identified risk and do

not take any other action in order to reduce the risk because we can accept its

impact.

Risk reduction - when we take some measures (countermeasure) to reduce

the risk to an acceptable level.

Risk transfer - when we transfer the risk to another person or entity. In

practice, companies can get an insurance (transfer of risk to an insurance

company) or can transfer the risk to another company by means of

outsourcing.

Risk Spreading: This is simply spreading the amount of risk over a larger

number of participants

Risk avoidance - This is the process by which you reduce the risk exposure by

avoiding or eliminating the activities.

JUSTIFICATIONS

Categorical comments on:

Technical feasibility and financially viability

Value addition by the project.

Employment generated by the project.

Assured repayment of loan & payment of interest.

Adequacy of securities, if required.

Summary

Project formulation is a planning where art,

science and craft work together for convertingintangible into tangible.

5. Funding pattern

6. Loan amount

7. Rate of Interest

8. Period of loan

9. Condition, if any

1. Project

2. Location

3. Implementing agency

4. Cost

THANK YOU

Ashwani KumarConsultant

Phone No. –

0124-4387029

ashwani@ncdc.in