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Project Classification

The document discusses the meaning and classification of projects. It defines a project as a scientifically evolved work plan to achieve a specific objective within a set time period. Projects are classified based on whether benefits can be quantified, the sector they fall under (e.g. agriculture, industry), their economic characteristics (e.g. capital intensive, labor intensive), and magnitude of investment. The identification process for projects involves generating ideas from various sources and selecting the most promising project.

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Kalaivani Srinivasan
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4K views3 pages

Project Classification

The document discusses the meaning and classification of projects. It defines a project as a scientifically evolved work plan to achieve a specific objective within a set time period. Projects are classified based on whether benefits can be quantified, the sector they fall under (e.g. agriculture, industry), their economic characteristics (e.g. capital intensive, labor intensive), and magnitude of investment. The identification process for projects involves generating ideas from various sources and selecting the most promising project.

Uploaded by

Kalaivani Srinivasan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Learning Objectives:

❒ To understand the meaning of project.


❒ Present the classification of project.
❒ Discuss the steps in project selection.
❒ Present the meaning and contents of project report.
❒ Present guidelines by Planning Commission for project report.
❒ Discuss network analysis.
❒ Present errors of project report.
❒ Understand project appraisal.
❒ Discuss identification of opprtunity and feasibility study.

8.1 MEANING OF PROJECT


An entrepreneur takes numerous decisions to convert his business idea into a running
concern. His/Her decision making process starts with project/product selection. The
project selection is the first corner stone to be laid down in setting up an enterprise.
The success or failure of an enterprise largely depends upon the project. The popular
English proverb “well began is half done” applies to project selection also indicates the
significant of good beginning.
The dictionary meaning of project is that is a scheme, design a proposal of something
intended or devised to be achieved. Newman and his associates define that “a project
has typically has a distinct mission that it is designed to achieve and clear termination
point, the achievement of the mission. Gillinger defines project “as a whole complex of
activities involved in using resources to gain benefits”. According to Encyclopedia of
management, “a project is an organized unit dedicated to the attainment of goal—the
successful completion of a development project on time, within budget, in conformance
with predetermined programme specifications.” Now, a project can be defined as a
156 // Management and Entrepreneurship

scientifically evolved work plan devised to achieve a specific objective within a specified
period of time.
Project can differ in their size, nature of objectives, time duration and complexity.
However projects partake of the following three basic attributes:
(i) A course of action
(ii) Specific objectives and
(iii) Definite time perspectives.
Every project has starting point, an end point with specific objectives.

8.2 PROJECT CLASSIFICATION


Project classification helps in expressing and highlighting the essential features of project.
Different authorities have classified projects differently. The following are some of the
important classification of projects.

(1) Quantifiable and Non-Quantifiable Projects


Quantifiable projects are those in which possible quantitative assessment of benefits can
be made. Non-quantifiable projects are those where such assessment is not possible.
Projects concerned with industrial development, power generation, mineral development
fall in the first category while projects involving health, education and defense fall in
the second category.

(2) Sectional Projects


Here the classification is based on various sectors like
● Agriculture and allied sector
● Irrigation and power sector
● Industry and mining sector
● Transport and com munication sector
● Information technology sector
● Miscellaneous
This system of classification has been found useful in resource allocation at macro
level.

(3) Techno-Economic Projects


Classification of projects based on techno-economic characteristic fall in this category.
This type of classification includes factors intensity-oriented classification, causation
oriented classification as discussed below.
(a) Factor intensity-oriented classification: Based on this projects may be classified
as capital intensive or labor intensive if large investment is made in plant and
Preparation of Project // 157

machinery the project will be termed as capital intensive. On the other hand
project involving large number of human resources will be termed as “labor
intensive”.
(b) Causation-oriented classification: On the basis of causation, projects can be
classified as demand based and raw material based projects. The availability of
certain raw materials, skills or other inputs makes the project raw-material based
and the very existence of demand for certain goods or services make the project
demand-based.
(c) Magnitude-oriented classification: This is based on the size of investment
involved in the projects, accordingly project are classified into large scale,
medium-scale or small-scale projects.
The selection of a project consists of two main steps: Project identification and
project selection.

8.3 PROJECT IDENTIFICATION


Often indenting entrepreneurs always are in search of project having a good market
but how without knowing the product coat they determine market whose market they
find out without knowing the item i.e. product? Idea generation about a few projects
provides a way to come out of the above tangle.

IDEA GENERATION
The process of project selection starts with idea generation. In order to select most
promising and profitable project, the entrepreneur has to generate large number of ideas
about the possible projects he can take. The project ideas can be discovered from various
internal and external sources. These may include:
(i) Knowledge of potential customer needs.
(ii) Personal observation of emerging trends in demand for certain products.
(iii) Scope for producing substitute product.
(iv) Trade and professional magazines which provide a very fertile source of project
ideas.
(v) Departmental publications of various departments of the government.
(vi) Success stories of known entrepreneurs or friends or relatives.
(vii) A new product introduced by the competitor.
(viii) Ideas given by knowledgeable persons.
All these sources putting together may give few ideas about the possible projects to
be examined among which the project must be selected. After going through these
sources if an entrepreneur has been able to get six project ideas, one project idea will
be finally selected going through the following selection process.

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