project formulation
TRANSCRIPT
Project Formulation
• Project formulation is the process of documenting the eligible facility, the eligible work and the eligible cost for projects. Formulation allows the consolidation of similar work items into projects to expedite approval and funding and to facilitate project management
• Need for project Formulation :
Selection of appropriate technology
Influence external economies
Resource mobilization
Knowledge about government regulations
Dearth of technically qualified people
Significance of Project Formulation :• Project formulation is the best passport for obtaining the
required assistance from financial institutions • It will also be great assistance for obtaining necessary
government Clearance and in meeting the hurdles of procedure formalities
• It will pinpoint the matters for which government sanctions have obtained
• It will provide an independent assessment of the feasibility of obtaining sanctions based on existing government policies
Stages of Project Formulation :
1. Feasibility Analysis
2. Techno-Economic Analysis3. Project Design and Network Analysis4. Input Analysis5. Financial Analysis6. Cost-Benefit Analysis7. Pre-Investment Analysis
Sequential Stages of Project Formulation Project
Feasibility
Techno- Economic
Design
Net work
Input
Finance
Social
Cost -Benefit
Pre - Investment
Feasibility analysis :• First stage in project formulation • Examination to see whether to go in a detailed investment
proposal or not
• Seeing for internal and external constraints
Techno – Economic Analysis :
• Estimate of potential of the demand for goods /services • Choice of optimal technology • This analysis gives the project a platform for preparation of
detailed project design
Project design and network analysis :• It is the heart of project entity • It defines the sequence of events of the project• It is presented in the form of a network drawing • It helps to identify project inputs , finance needed and
cost benefit profile of the project
Financial analysis :• It involves estimating project costs , operating costs and
fund requirements • It helps in comparing various project proposals on
common scale • Analytical tools used are discounted cash flows . CVP
analysis and ratio analysis • Investment decisions • Financial forecasts
• Cost – Benefit analysis :• The overall worth of a project is considered • The project design forms the basis of
evaluation • It considers costs that all entities have to bear
and benefits connected to it
Project Design
• What do you want to achieve with your project (goals, outcomes)?
• What kind of background information is needed/available to quantify the need (data)?
• How much time is available and needed to achieve these goals (time frame, project implementation phase)?
• What activities have to be undertaken to achieve the goals?
• Which partners/stakeholders are needed or need to be involved?
• What financial resources are necessary?
Project design
Objectives Results Outputs Activities
Project Planning Flow
Implementation Flow
Project Cycle Management
Key activities:
1. Programming
review of socio-economic indicators
review of partners countries and donor priorities
Agreement on sectoral and thematic focus for co-operation through an agreed strategy formulation
2. Identification
initial formulation of project idea
screening for further studies (= pre-feasibility)
3. Appraisal (formulation)
Conduct of feasibility study
Detailed specification of project ideas
Decision on whether to draw up financing proposal
Activities within the project cycle:
1. Financing
Drafting and negotiating a Fin. Prop.
Examination by competent Member States committee
Financing decision and agreement
2. Implementation
Tendering and contract award
Mobilisation and project execution
3. Evaluation
Analysis of project effects and impact
Recommendations on remedial action or guidance for future projects
Name of the leader Name of the Project 1) Sasmita Bhatta Mishra : Seed processing unit 2) Ramachandra Gouda Cashew processing unit 3) Devabrata Maharana Dairy Farm 4) Manashi Acharya Poultry Industry5) Shiv Shankar Choudary Cold storage for Fruits and Veg6) Sudhir Nahak Bio – Disel plant7) Manisha patro Turmeric Processing unit
Project Formulation : Points to be considered :• The type and level of industrial activity• To Match his financial resources with required
amount• Prepare a nice project report
Broad heads of the project report : • General information • Project description • Market potential • Capital costs and sources of finance • Assessment of Working Capital • Other financial aspects • Economic and Social Variables
General information :• Name and address of the entrepreneur• Qualification, Experience and other capabilities of entrepreneur• Reference of industry analysis• Constitution and organization structure of enterprise • Registration details with Directorate of industries / Registrar of Firms• Utility of the products
Project Description:• Location• Raw Material• Skilled Labour• Power• Fuel• Water• Waste disposal• Communication systems
Project description Continued :• Transport• Other common facilities• List of Machinery• Capacity of the Plant• Technology• Manufacturing Process• Balancing of Plant• Quality Control• Research & Development
Market Potential :• Total Demand & Supply• Estimation of Cost & Price • Marketing Strategy• After sales service• Seasonality• Transportation of Goods
Capital costs and Source of Finance :Capital Costs : • Land and Building• Plant & Machinery• Other Miscellaneous Assets• Preliminary expenses• Contingency expenses• Margin on Working Capital
Assessment of Working Capital Requirement :• Planning for working capital requirements
• Working capital requirements
Other Financial aspects :• Projected Profit and loss account • Projected Balance sheet • Projected Cash flow statement • Break even analysis • Profitability ratios • Return on investment • Debt : Equity Ratio• Debt service Coverage ratio
Economic and Social Variables :• Promoting Employment
• Import Substitution
• Development of the area