project concept and approach

8/18/2019 Project Concept and Approach

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PROJECT CONCEPTPROJECT CONCEPT

ANDAND

PROJECT APPROACH TOPROJECT APPROACH TO

LENDINGLENDING

Bankers Institute of Rural DevelopmentBankers Institute of Rural Development

LucknowLucknow


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PROJECTPROJECT

PROJECT Can Be DEFINED:

• As an Investment Activity in which

• Financial Resources are Expene

• !o "reate "apital Assets

• !hat #rouces $enefits

• %ver an Extene #erio of !ime an which

• Lo&ically lens itself to plannin&' financin& an

implementation as an unit(


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PROJECTPROJECT

ACRONYM FOR PROJECT

P - Product (production of Goods !"r#ic"s$

R - R"sourc"s % L&nd' L&our' C&pit&) &nd M&n&*"+"ntO - Or*&ni,&tion ./o is *oin* to i+p)"+"nt t/" pro0"ct

J - Justific&tion % 1"n"fits' ."&)t/' Jos' "tc2

E - Econo+ic 3i&i)it4' profits' "tc2

C - Continuit4 % P)&nnin*' R"s"&rc/ D"#")op+"ntT - Ti+" ound i+p)"+"nt&tion &nd op"r&tions


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#ro)ect "ycle#ro)ect "ycle

( Identification

Formulation

Appraisal

Implementation

Monitoring&

Follow-up

Evaluation


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• INDENTIFICATION OF PROJECT IDEA

• PROJECT FORMULATION –Preparing Project Report

• APPRAISAL OF PROJECTS

• IMPLEMENTATION OF PROJECTS

• MONITORING OF PROJECTS

• EALUATION OF PROJECTS

PROJECT CYCLEPR

OJECT CYCLE


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PROJECT !5CCE!! PHILO!PHYPROJECT !5CCE!! PHILO!PHY

• Ri&ht *in of #rouct

• Ri&ht +uality of #rouct

• In Ri&ht +uantity• At Ri&ht "ost, #rice

• At Ri&ht !ime to the "ustomers


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• T/" pro0"ct id"& is tr&ns)&t"d into & pr")i+in&r4

• DECIDE % .HAT TO PROD5CE &nd FOR .HOM TO

PROD5CE 6

• PROJECT NEED! TO 1E MAR7ET DRI3EN2 CHOO!E

PROD5CT .HICH I! IN DEMAND2

• IF CHOICE! ARE MORE % CHOO!E MO!T APPROPRIATE8

ATTRACTI3E PROJECT(

I2I2 PROJECT IDENTIFICATIONPROJECT IDENTIFICATION


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PROJECT IDENTIFICATIONPROJECT IDENTIFICATION ContdContd

• !O5RCE! OF INFORMATION 8 POINT! TO 1E

CON!IDERED:

- Existin& Inustries - #erformance

- Availa$ility of Raw .aterial

- Availa$ility of skille la$our

- #rice tren of /arious #roucts

- Availa$ility of Research La$, !echnolo&y

- 0%/!( #%LI"1 - !hrust Areas - 2uccessful Entrepreneurs

- Revival of 2ick 3nits

- District Inustries "entre

- 40%s


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II2II2 PROJECT FORM5LATIONPROJECT FORM5LATION

• Onc" pro0"ct is id"ntifi"s'• Co++"rci&)' t"c/nic&)' fin&nci&) &nd "cono+ic

f"&sii)iti"s &r" studi"s2

•T/" for+&) r"sponsii)it4 is of t/" orro9"r8"ntr"pr"n"urs &nd not t/&t of t/" 1AN7ER2

• !i," of pro0"ct is d"t"r+in"d 4

- P/4sic&) r"sourc"s

- Fin&nci&) r"sourc"s

- M&r:"t si,"' conditions &nd f&ctors

- C&p&cit4 of t/" orro9"r8 "ntr"pr"n"urs


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III2III2 APPRAI!ALAPPRAI!AL

• It is & co+pr"/"nsi#" &nd s4st"+&tic r"#i"9 of &)) &sp"ctsof & pro0"ct2

• ."&: &r"&s &r" to " /i*/)i*/t"d for str"n*t/"nin* t/"+

for t/" succ"ss of t/" pro0"ct2

• Appr&is&) /&s to " ti+" ound so t/&t t/" *roundin* oft/" pro0"cts t&:"s p)&c" in ti+" in ord"r to oid ti+" o#"r-run &nd cost "sc&)&tion(


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IMPORTANCE OF APPRAI!AL OFIMPORTANCE OF APPRAI!AL OF

PROJECT!PROJECT!

• 2toppin& $a pro)ects an #reventin& &oopro)ects from $ein& re)ecte

• Assessin& ma&nitue of pro)ect risk

• Ientifyin& ways to reuce the risk

• #rotect interest of $oth $orrower an lener


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APPRAISAL OF PROJECTS-APPRAISAL OF PROJECTS-

ASPECTSASPECTS

• MARKET/ COMMERCIAL APPRAISAL –De!an" potentia#$ a"e%&ate 'ac()ar" * +or)ar" #in(age,$ (no)#e"ge$e-perience an" co!petence o+ !ar(eting per,onne#.

• MANAGERIAL APPRAISAL –• Manageria# capa'i#itie, o+ t/o,e i!p#e!enting t/e project

• TECHNICAL APPRAISALLocation$ ra) !ateria#$ p#ant * e%&ip!ent$ !anpo)er$ project ,peci0ctec/nica# "etai#,

• FINANCIAL APPRAISALRe,o&rce Re%&ire!ent$ 1an(a'i#it2 an" 3ia'i#it2 o+ project$ Ri,(

ana#2,i,• ECONOMIC APPRAISAL• Loo( at t/e project +ro! t/e #arger ,ocia# point o+ 3ie)

• SOCIAL AND ENVIRONMENTAL• Inco!e * e!p#o2!ent genera#$ eco4+rien"#2


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Resources are l!"e#- T$ese $a%e "o &e'u" "o &es" use a("er care(ul a)al*ss+E,ce)" use o( resources $as "o &e

e)sure#+

Pro"a&l"* o( "$e .a)

.ala)ce# eco)o!c #e%elo'!e)" "ore#uce )"er-re0o)al #s'ar"*

1HY FINANCIAL/ ECONOMIC APPRAISAL1HY FINANCIAL/ ECONOMIC APPRAISAL

22


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FINANCIAL APPRAISAL 4STEPSFINANCIAL APPRAISAL 4STEPS

• Ientification of "osts an Benefits

• +uantification of "osts an Benefits

• /aluation of cost an Benefits


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• ECONOMIC ANALY!I!

- 2ociety point of view - !ax, su$siies as transfer payments

- Direct an Inirect Benefits - 2haow pricin& to reflect social or economic

values


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• !OCIAL A!PECT!•

- Income istri$ution

- 0rowth of $ackwar re&ions - Averse Impact 5for example Dams 6

su$mer&ence 7 isplacement8 - Employment &eneration


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• EN3IRONMENTAL A!PECT! %

- #ollution -effluents - 4o o$)ection from pollution control

$oar - Effect on &roun water


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!"nsiti#it4 or ./&t If Appro&c/!"nsiti#it4 or ./&t If Appro&c/

• 2ensitivity analysis is use to measurerisk( It shows how ro$ust or vulnera$le apro)ect is to chan&es in the unerlyin&

varia$les(

• It inicates likely chan&es in criterion of

merit 54#/' IRR' or any other8 ue tochan&e in 9uantity of output or price ofoutput(


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I32I32 IMPLEMENTATION OF PROJECT!IMPLEMENTATION OF PROJECT!

• !ranslatin& #ro)ect proposal into &roun levelpro)ect(

- !hree 2ta&es• 5i8 #re6Implementation - preparin& the scheule of work'

arran&ement of humanpower' inputs' etc(• 5ii8 Implementation - "onstruction an #rouction

• 5iii8 #ost6Implementation

• Revisions an aaptations are mae forunexpecte events' an finally the pro)ect is$rou&ht to completion(


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3 3I23 3I2 MONITORING &nd E3AL5ATIONMONITORING &nd E3AL5ATION

• .%4I!%RI40

- Developin& a .ana&ement information system - Review of implementation process for mi6term

corrections' if any(

- Desk as well as fiel monitorin&

• E/AL3A!I%4 - Learnin& lessons of 2uccess, Failure

- Ientifyin& factors for success , failure - Reasons of Failure to $e overcome

- 2uccess stories to $e replicate


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!A4* 1%3

project concept and approach

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