Project formulation and appraisal
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The document discusses the process of project formulation, which begins with generating and screening project ideas. Ideas are generated through analyzing the economy, conducting surveys and studies, and using tools like SWOT analysis. The environment is also monitored across sectors like economic, governmental, and competition. Corporate strengths and weaknesses are appraised to identify opportunities. Several tools can help identify promising opportunities, such as the life cycle approach and Porter's five forces model. Project ideas are scouted, preliminarily screened based on factors like compatibility and costs, and rated using a project rating index to evaluate their feasibility. Successful entrepreneurs exhibit qualities like leadership, decisiveness, and marketing orientation.
Project formulation and appraisal
- 1. PROJECT FORMULATION 1 Generation & screening of project ideas Presented by : Surya C.D
- 2. Generation & screening of project ide 2 INTRODUCTION A project is accomplished by performing asset of activities The project ideas as a process of identification of process begins with an analytical survey of the economy. The surveys & studies will give us ideas.
- 3. Generation & screening of project ideas 3 GENERATION OF IDEAS The project selection starts with generation of project ideas. The ideas are based on existing field of technology to offer various present product of syllabus To stimulate the flow ideas the following are helpful 1) SWOT analysis Strengths Weakness Opportunities & Threats 2) Clear Articulation of objectives 3) Fostering a conducive climate
- 4. Generation & screening of project i4 MONITORING THE ENVIRONMENT Competitive abilities of a firm depends on its environment The firm must systematically monitor the environment and assess its competitive abilities For purpose monitoring divided into six sectors Economic sector Governmental sector Technological sector Socio-demographic sector Competition sector Supplier sector.
- 5. Generation & screening of projec 5 CORPORATE APPRAISEL Realistic appraisal of corporate strengths & weakness is essential for identifying investment opportunities Marketing & distribution Production & operations R &D Corporate resource and personnel Finance and accounting
- 6. Generation & screening of proje6 TOOLS FOR IDENTIFYING INVESTMENT OPPORTUNITY •Several useful tools that are helpful in identifying promising investment opportunities. a) Life cycle approach b) Porter model c) Experience Curve a) Life cycle approach Pioneering stage Rapid growth stage Maturity and stabilisation stage Decline stage
- 7. Generation & screening of projec7 b) Porter Model Profit potential of an industry depends on the combined strength of the following five basic competitive forces: Threat of new entrants Rivalry among existing firs Pressure from substitute products Bargaining power of buyers Bargaining power of sellers
- 8. Generation & screening of project ide 8 c) The Experience Curve Accumulated volume of production Costperunit(presentvalue) Experience curve is used to find long term investments aimed at reducing costs It shows how the cost per unit behaves w.r.t the accumulated volume of production
- 9. Generation & screening of proje 9 SCOUTING OF PROJECT IDEAS Analyse the performance of existing industries Examine the inputs and outputs of various industries Review imports and exports Study plan outlays and governmental guidelines
- 10. Generation & screening of project ide 10 PRELIMINARY SCREENING By using the suggestions in the preceding section ,it is possible to develop a long list of project ideas Compatibility with the promoter Consistency with government priorities Availability of inputs Adequacy of market Reasonableness of cost Acceptability of risk level
- 11. Generation & screening of projec11 PROJECT RATING INDEX Preliminary evaluation may be translated into a Project rating index STEPS 1. Identify factors relevant for project rating 2. Assign weights to these factors 3. Rate the project proposal on various factors 4. For each factor multiply the factor rating with the factor weight to get the factor score 5. Add all the factor scores to get the overall project rating index
- 12. Generation & screening of project ide12 SOURCES OF POSITIVE NET PRESENT VALUE (NPV) There are six main entry barriers that result in positive NPV projects Economies of scale Product differentiation Cost advantage Marketing reach Technology edge Government policy
- 13. Generation & screening of project id 13 BEING AN ENTREPRENEUR Qualities and traits of a successful entrpreneur Willingness to make sacrifices Leadership Decisiveness Confidence in the project Marketing orientation Strong ego
- 14. Generation & screening of project ide 14 CONCLUSION Thus the main objective of the generation and screening of project ideas is to identify investment opportunities which are feasible and promising and which merit further examination and appraisal
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