Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
-
Project Planning & Evaluation
BBA-304 : VI-Semester
Indra-Prastha University, Delhi
Planning
Analysis
Selection
Financing
Implementation
Review
Phases of capital budgeting
Planning
It involves the following steps:
Analysis
The focus of this phase is to gather,
prepare and summarize relevant
information about various project
proposals.
Detailed analysis to be undertaken, if
the project is prima-facie acceptable :
Marketing
Technical
Financial
Economic
Ecological
Selection
There are two main techniques of
selecting a project:
1.Discounting techniques : NPV, IRR,
Benefit-Cost ratio, etc.
2.Non discounting techniques : Pay-back
period, Accounting rate of return, etc.
Financing
Once a project is selected, suitable
financing arrangements have to be
made.
Flexibility, risk, income, control, and
taxes(FRICT) are the key considerations
Market analysis
Consumption trends in the past
Consumption trends in the present
Supply
Production possibilities
Imports and exports
Structure of competition
Elasticity of demand
Consumer behavior, attitude etc.
Distribution channel
Administration and legal constraints
Technical analysis
Preliminary studies have been done
Availability of raw material, power,
infrastructure, etc.
Selected scale of operation is
optimal
Production process chosen is
suitable
Equipment and machines chosen are
suitable
Provision for treatment of effluents
Work schedule to be realistic
Financial analysis
Investment outlay and cost of project
Means of financing
Cost of capital
Projected profitability
Break even point
Projected financial position
Level of risk
Economic analysis
Claim on income(last)
Claim on assets(last)
Limited liability
Advantages
Maturity(fixed)
Sinking fund
ownership)
No dilution of control
sources.
finance.
--- People opposing it say that its a provision
(expense) and cannot be treated as funds.
Lack of liquidity
High risk
Equity participation
Participation in management
Advantages of Venture Capital
in similar situations.
Advantages of Venture Capital (Continued)
Pre-operative expenses
Expenses till the commencement of
commercial production starts
Rent, rates and taxes
Travelling expenses
Interest charges on borrowings
Start up expenses
Continued
Other publication
domestic sources?
What quantity can be produced from
foreign sources?
How dependable are the supplies?
What has been the past trend in
prices?
What is the likely future behavior of
prices?
Auxiliary Materials
Utilities
A broad assessment of utilities like power, water,
steam, fuel may be made at the time of technical
analysis.
What quantities are required?
What are the sources of supply?
What would be the potential availability?
What are the likely shortages?
What measures may be taken to augment supplies?
4. Product mix
The choice of product mix is guided by
market requirements.
In the production of most of the items,
variations of size and quality are
aimed at satisfying a broad range of
customers.
During technical analysis some
flexibility with respect to product mix
must be sought.
5. Plant capacity
It refers to the volume or number of units that
can be manufactured during a given period.
It depends on various factors that need to be
studied during technical analysis:
Technological requirement minimum
economic size
Input constraints raw materials, utilities like
power, water, etc.
Investment cost
Market conditions (demand)
Resources of the firm managerial & financial
Government policy
6. Location and site
The choice of location is influenced by a variety of
considerations:
Proximity to raw material and markets
A perfect location model is the one where the total
cost i.e. raw material transportation cost,
production cost and distribution cost for the final
product is minimized.
Availability of infrastructure
Availability of power, transportation, water and
communications should be carefully assessed.
Labor situation
Availability of labor
Prevailing labor rates
Labor productivity
Degree of unionization
Government policies
In case of public sector projects, location is
directly decided by the govt..
In case of private sector, location is
influenced by certain govt. restrictions and
inducements.
Other factors
Climate conditions
General living conditions
Ease in coping with pollution
7. Machinery & Equipments
The requirements of Machinery & Equipments
are influenced by the production technology and
plant capacity. It is also influenced by the type of
project.
main equipment.
4. Utility consumption X
This shows the principle consumption points of utilities
8. Transport layout
This shows the distances and means of transport
11. Schedule of project implementation
Project implementation schedule is made and it
requires the following information:
1.List of all possible activities from project
planning to commencement of production.
2.The sequence in which various activities
have to be performed
3.The time required for performing various
activities
4.The resources normally required for
performing the various activities
5.The implications of putting more resources or
less resources than are normally required.
UNIT III
Basic Characteristic of a Project
A Start & a Finish
A Time Frame of Completion
Continuity Sequencing of Activities
Involvement of Several People
A Limited Source of Resources
A Limited Source of Resources
Non-repetitive & Non-routine Undertaking
often Associated with Many Uncertainties
Relationships are Dynamic, Temporary &
Flexible
Project Management:
Traditional form of organization is appropriate for handling established
operations with relatively stable activities. However, traditional form is
not suitable for project management due to the reasons
1) A project is a non-routine, non-repetitive undertaking often plagued
with many uncertainties.
2) The relationships in a project setting are dynamic, temporary &
flexible.
3) A project requires a coordination of the efforts of persons drawn from
Form of Project Organization
Generation of Ideas
Monitoring the Environment
Corporate Appraisal
Profit Potential of Industries
Scouting for project Ideas
Preliminary Screening
Project Rating Index
Sources of positive Net Present Value
On being an Entrepreneur
UNIT IV
Risk Analysis: Sources
Stand-alone Risk
Corporate Risk
Project Specific
Competitive Risk
Industry Specific Risk
Market Risk
International Risk
Managing Risk
o Sensitivity Analysis
o Simulation
o Decision Tree
o Portfolio Related Risk Measure
o Capital Asset Pricing Model
RISK ANALYSIS X
Portfolio related Risk Measures
Mean-variance Portfolio Construction
Portfolio Theory & Capital Budgeting
Capital Asset Pricing Model (CAPM)
Developing Inputs required for applying
CAPM
Capital Asset Pricing Model & Capital
Budgeting