Define the term ‘Project’. Discuss the process of generating and screening the project ideas


Define the term ‘Project’. Discuss the process of generating and screening the project ideas

Ans.     Projects have a major role to play in the economic development of a country.Since the introduction of planning in our economy, we have been investing large amount of money in projects related to industry, minerals, power, transportation, irrigation, education etc. with a view to improve the socio-economic conditions of the people.These projects are designed with the aim of efficient management, earning adequate return to provide for future development with their own resources. But experience shows that there are several shortcomings in the ultimate success of achieving the objectives of the proposed project. The term project has a wider meaning. A project is accomplished by performing a set of activities. For example, construction of a house is a project. The construction of a house consists of many activities like digging of foundation pits, construction of foundation, construction of walls, construction of roof, fixing of doors and windows, fixing of sanitary fitting, wiring etc. Another aspect of project is the non-routine nature of activities. Each project is unique in the sense that the activities of a project are unique and non routine. A project consumes resources. The resources required for completing a project are men, material, money and time. Thus, we can define a project as an organized programme of pre determined group of activities that are non-routine in nature and that must be completed using the available resources within the given time limit. Let us now consider some definitions of ‘project’. Newman et. al define that “a project typically has a distinct mission that it is designed to achieve and a clear termination point the achievement of the mission”.  Gillinger defines “project” as the whole complex of activities involved in using resources to gain benefits. Project management institute, USA defined project as “a system involving the co-ordination of a number of separate department entities throughout organization, in a way it must be completed with prescribed schedules and time constraints”.
 Identification of a new project is a complex problem. Project selection process starts with the generation of project ideas. In order to select the most promising project, the entrepreneur needs to generate a few ideas about the possible project one can undertake. The project ideas as a process of identification of a project begins with an analytical survey of the economy (also known as pre-investment surveys). The surveys and studies will give us ideas. The process of project selection consists of following stages :
  • Idea generation
  • Environment appraisal.
  • Corporate appraisal
  • Scouting for project ideas.
  • Preliminary screening.
  • Project rating index
  • Sources of positive Net Present Value.
  • Entrepreneur qualities.
Idea Generation :- Project selection process starts with the generation of a project idea. Ideas are based on technological breakthroughs and most of the project ideas are variants of present products or services. To stimulate the flow of ideas, the following are helpful:
SWOT Analysis :- SWOT is an acronym for strengths, weaknesses, opportunities and threats. SWOT analysis represents conscious, deliberate and systematic effort by an organization to identify opportunities that can be profitably exploited by it. Periodic  SWOT analysis facilitates the generation of ideas.
Operational objectives of a firm may be one or more of the following.
Cost reduction.
Productivity improvement.
Increase in capacity utilisation.
Improvement in contribution margin.
Fostering a conducive climate :- To tap the creativity of people and to harness their entrepreneurial skills, a conducive organisation climate has to be fostered. Two conspicuous examples of organisation which have been exceptionally successful in tapping the creativity of employees are the Bell Telephone Laboratory and the 3M Corporation. While the former has succeeded in harnessing creativity by providing an unconstrained environment, the latter has effectively nurtured the entrepreneurial skills of its employees as sources of idea generation. The project ideas can be generated from various internal and external sources. These are :-
Knowledge of market, products, and services.
Knowledge of potential customer choice.
Emerging trends in demand for particular product.
Scope for producing substitute product.
Market survey & research.
Going through Professional magazines.
Making visits to trade and exhibitions.
Government guidelines & policy.
Ideas given by the experienced person.
Ideas by own experience.
SWOT analysis.
Environment appraisal :- An entrepreneur or a firm systematically appraise the environment and assess its competitive abilities. For the purposes of monitoring, the business environment may be divided into six broad sectors.
The key elements of the environment are as follow:
Economic Sector
State of the economy
Overall rate of growth
Cyclical fluctuations
Inflation rate
Growth rate of primary, secondary and territory sector
Growth rate of world economy
Trade surplus and deficits
Balance of Payment
Government Sector
Industrial policy
Government programmes and projects
Tax structure
EXIM policy
Financing norms
Subsidies incentives and concessions
Monetary policy
Technological Sector
Emergence of new technologies
Access to technical know-how, foreign as well as indigenous
Socio-demographic Sector
Population trends
Age shifts in population
Income distribution
Educational profile
Employment of women
Attitudes toward consumption and investment
Competition Sector
Number of firms in the industry and the market share of the top few
Degree of homogeneity and differentiation among the products
Entry barrier
Comparison with substitutes in term of quality and price
Marketing polices and practices
Supplier Sector
Availability and cost of raw material
Availability and cost of energy
Availability and cost of capital

Business Environment
Corporate Appraisal :- A realistic appraisal of corporate strengths and weaknesses is essential for identifying investment opportunities which can be profitably exploited.
The broad areas of corporate appraisal and the important aspects to be considered under them are as follow :
Marketing and Distribution
Market Image
Product Line
Product Mix
Distribution Channels
Customer loyalty
Marketing & distribution costs
Production and Operations
Condition and capacity of plant and machinery
Availability of raw material and power
Degree of vertical integration
Locational advantage
Cost structure
Research and Development
Research capabilities of the firm
Track record of new product developments
Laboratories and testing facilities
Coordination between research and operations
Corporate Resources and Personnel
Corporate image
Dynamism of top management
Relation with government and regulatory agencies
State of industry relations
Finance and Accounting
Financial leverage and borrowing capacity
Cost of capital
Tax structure
Relation with share holders and creditors
Accounting & control system
Cash flow and liquidity.


Comments

Post a Comment

Popular posts from this blog

Discuss and illustrate the issues involved in the assessment of environmental feasibility of a project

Discuss and illustrate the issues involved in the assessment of environmental feasibility of a project. Ans. The effects of actions that are not accounted for in the normal market transactions need to be considered explicitly in the decision making process on projects. These effects are to be identified, assessed, and evaluated against the economic advantages arising out of a given action. In this context, the environmental impact appraisals are considered the first step in the process because they give an opportunity to man to consider the effects of his actions on the environment. Economic development is the result of the interaction between natural resources and technology supported by and designed for people. People are the centre for development. Therefore, it is rightly said that all human activity, be it economic, social or anything else is essentially directed at satisfying “needs” and “wants” of man through “altering” and “using” environmental resources. Types an...
Read more

What is risk management? List and explain the risk management tools?

Q7 What is risk management? List and explain the risk management tools? Ans. Risk is the exposure to the consequence of uncertainty. Project risk is the chance of something happening that will have an impact on achieving project objective Risk management: is the culture, processes and structure directed towards the effective management of potential opportunities and adverse effects Risk management process: it involves the systematic application of management processes and procedures to the tasks of establishing the context, identifying, and analysing, assessing, treating, monitoring and communicating risk .Risk identification is the process of determining what, how, why and where things may happen. Risk analysis is the systematic use of available information to determine how often specified events may occur and the magnitude of their consequences . Risk evaluation determines whether the risk is tolerable or not and identifies the risk that should be accorded the highest prior...
Read more

Situational analysis

Image
Situational analysis Once you have evaluated the status of your conservation targets and identified critical threats you see the recurring and most serious threats at play across your system, it is time to drill further down into the “situation” at hand. It is through this process you gain a fuller understanding of what and who is really driving those critical threats, what would motivate these conditions to change, and who your allies might be in your efforts to change the trajectory you have defined so far.A complete situation analysis involves assessing the key factors affecting your targets including direct threats, indirect threats and opportunities. Each factor can typically be linked to one or more stakeholders, those individuals, groups, or institutions that have an interest in or will be affected by your project's activities. Completing a situation analysis is a process that will help you and the other members of your project team work together to create a common...
Read more