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Project is the foundation for any company. It is a technical document which approves the activities of a company. It indicates the unit product intermediate or end products to be sold in the market. It has to be planned carefully based on the market fore cast. It helps an entrepreneur to apply for loan.
· Project is defined as a non-routine, non-repetitive, one-off undertaking normally with discrete time, financial and technical performance goals–Harrison.
· A project is a scientifically evolved work plan devised to achieve a specific objective within a specified period of time. The project may differ in size, nature, objectives and complexity.
· A project is an approval for a capital investment to develop facilities to provide goods and services defines World Bank.
· Projects are classified as quantifiable and non-quantifiable projects, sectoral projects, techno-economic projects and financial projects.
The project life cycle consists of three main stages as shown below :
The Pre-Investment Phase
The first phase of the project is pre-investment. It is concerned with objective formulation, demand forecasting, selection of optimal strategy, evaluation of input characteristics, projections of the financial profile, cost benefit analysis and pre investment appraisal. The project idea is developed into an investment proposition during this phase.
The Construction Phase
The construction phase begins after the investment decision is done. The assets like land, buildings, machinery, communication services, control systems etc. are purchased by investing the resources. The development of the infrastructure for the project is the main concern in this phase.
Normalisation Phase starts after the trial is made during the construction phase. The primary objective of this phase is to produce the goods and services for which the project was established. The assets created during the construction phase are utilised during the normalisation phase.
The criteria used for project selection are;
· Investment size
· Power and water
· Working capital requirements
· Labour component
· Economic viability
Project formulation is the systematic development of a project idea. It involves the joint efforts of a team of experts. It would be helpful if government clearance is obtained. It is an analytical management aid. It can be shown to the bankers or other institutions to acquire financial assistance. It is prepared by an expert after detailed study and analysis of the various aspects of a project.
The major steps involved in project report preparation are;
Step 1: Choose an idea for the enterprise. The idea selected should be viable, profitable and socially good. These ideas can be acquired from various sources such as magazines, journals, competitors, employees, distributors, customers and through research.
Step 2: Observations have to be made with regard to the availability of raw material, labour, machinery, technology and demand in the market.
Step 3: Scanning of business environment is the next step. The amount of money required for investment is scanned thoroughly, location of enterprise, labour availability and the extent of marketing are also scanned.
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