Project Management

Project Appraisal

Phases of Project Management

Planning
Generation of Ideas
Preliminary Screening
Feasibility Study

Analysis/ Appraisal

Market and Demand Analysis

Technical Analysis
Legal Aspect Analysis
Economic Analysis
Ecological Analysis
Md. Shehub Bin Hasan, Lecturer
Department of Finance

Selection
Financing
Implementation
Review

Planning
Generation of Ideas
SWOT Analysis
Clear Articulation of
Objectives
Fostering a Conducive
Climate

Preliminary Screening
Compatibility with the
promoter
Consistency with
governmental priorities
Availability of Inputs
Adequacy of Market
Reasonableness of Cost
Acceptability of Risk Level
Sources of Positive NPV

Clear Articulation of
Objectives
Productivity Improvement
Cost Reduction
Expansion

Sources of Positive NPV

Economies of Scale
Product Differentiation
Cost Advantage
Marketing Reach
Technological Edge
Government Policy

Md. Shehub Bin Hasan, Lecturer

Department of Finance

Planning
Feasibility Study
Evaluation and analysis of the potential of the
proposed project.
Two criteria to judge feasibility are cost required
and value to be attained.
It encompasses the first four phases of project
management.
Special emphasis is given on the Project Analysis
segment.
Market research studies to gauge the product
demand is also a major part.
Md. Shehub Bin Hasan, Lecturer
Department of Finance

Analysis
Market and Demand Analysis Situational Analysis &
Specification of Objectives
Potential size of the market,

Porters Five Forces

and
model
Market share that the
proposed product is likely to Conducting Market Survey
Define Population
capture.
Develop Questionnaire
Situational
Analysis
&
Specification of objectives
Data Collection
Collection of Secondary
Scrutinizing
&
Interpreting
Information

Conducting Market Survey

Characterization of Market
Demand Forecasting
Market Planning

Characterization
Market

Effective Demand
Breakdown of Demand
Consumer Groups
Md. Shehub Bin Hasan, Lecturer
Department of Finance

of

Steps in Market & Demand Analysis

2.
COLLECTION
OF SECONDARY
INFORMATION

1.
SITUATIONAL
ANALYSIS AND
SPECIFICATION
OF OBJECTIVE

4.
CHARACTERIZATION OF THE
MARKET

3. CONDUCT
OF MARKET
SURVEY

Md. Shehub Bin Hasan, Lecturer

Department of Finance

5.DEMAND
FORECASTING

6. UNCERTAINTIES
IN DEMAND
FORECASTING

7. MARKET
PLANNING

Porters Five Forces Model

THREATS OF
POTENTIAL
ENTRANTS

BARGAINING
POWER OF
SUPPLIERS

INDUSTRY
RIVALRY

THREATS OF
SUBSTITUTES

Md. Shehub Bin Hasan, Lecturer

Department of Finance

BARGAINING
POWER OF
BUYER

Analysis
Choice & Appropriateness of
Technology
Ensure that the project is

Technical Analysis

technically feasible and

Facilitate the most
optimal formulation of
the project in terms of
technology, size,
location, and so on.
Manufacturing
Process/Technology
Choice &
Appropriateness of
Technology
Scheduling
Alternatives

Plant capacity

The feasible normal capacity

(FNC) refers to the capacity
attainable under normal
working conditions.
The nominal maximum
capacity (NMC) refers to the
capacity technically attainable
(also known as installed
capacity) guaranteed by the
supplier of the plant.

Principal Inputs
Investment Outlay
Use by Other units
Ease of Adsorption
Technological Risk

Md. Shehub Bin Hasan, Lecturer

Department of Finance

Selection

Cash Flow Projection

Cost of Capital Determination
Risk Analysis
Social Cost Benefit Analysis (SCBA)
Real Options
Capital Budgeting Techniques Adoption

Financing

Cost of Project
Means of Finance
Pro-forma Statements

Md. Shehub Bin Hasan, Lecturer

Department of Finance

Implementation
The implementation phase for an industrial project
would involve

Project and engineering designs

Negotiations and contracting
Construction
Training

Delays in implementation, which are common, can

lead to substantial cost overruns. Following
measures can help check delays in implementation:
Adequate formulation of projects
Use of the Principle of Responsibility Accounting
Use of Network techniques
Md. Shehub Bin Hasan, Lecturer
Department of Finance

Review
Performance review should be done periodically to
compare actual performance with project
performance.
Review process basically is a feedback device and
helps in several ways:
It reveals how realistic the assumptions were.
Provides a documented log of experiences which is
valuable in future decision making.
Suggest corrective action to be taken in light of
actual performance.
Helps in uncovering judgmental biases.
Induces a desired caution among project sponsors.
Md. Shehub Bin Hasan, Lecturer
Department of Finance