PROJECT

MANAGEMENT

UNIT - III
Project Management: Project management: meaning, scope &
importance, role of
project manager; project life-cycle Project appraisal: Preparation of a
real time
project feasibility report containing Technical appraisal,;
Environmental appraisal,
Market appraisal (including market survey for forecasting future
demand and sales)
and Managerial appraisal.
1
Unit I – Basic Concept

THE PROJECT
• A project is a unique endeavor to produce a set of
deliverables within clearly specified time, cost and
quality constraints.

• Projects are different from standard business

operational activities as they:

– Are unique in nature.

– Have a defined timescale.
– Have an approved budget.
– Have limited resources.
– Involve an element of risk.
– Achieve beneficial change.

PROJECT MANAGEMENT
Unit I – Basic Concept

THE PROJECT: Definition

Project can be defined as a temporary

endeavor undertaken to accomplish a unique
objective or goal.
- Project Management Institute (PMI)

PROJECT MANAGEMENT
Unit I – Basic Concept

THE PROJECT
A project is accomplished by performing a set of activities.

Ex:- Construction of a House

Activities involved:-

– Digging of foundation pits,

– Construction of Foundation,
– Construction of walls,
– Construction of roof,
– Fixing of doors and windows,
– Fixing of sanitary, fittings, wiring, fuel and power etc.

Other Examples: Writing a Book, building a dam etc.

PROJECT MANAGEMENT
Unit I – Basic Concept

Characteristics of Project
• Temporariness
• Uniqueness (Non-routine Activities)
• Complexity (Require Team Work due to set of activities)
• Life Cycle (Conceptualization, Design, Implementation, commissioning)
• Risk an Uncertainty
• Ready to Change in response to change in environment
• Involve resources (Financial, Human, Management)
• Optimality (Aim to optimum utilization of resources)
• Multidisciplinary (Knowledge and expertise of different people)
• Involve conflicts
• Forecasting based
• Definite Time limit

PROJECT MANAGEMENT By:

Unit I – Basic Concept

Categories of Project
Based on the type of Activity:

• Industrial Projects
Production of Source Goods (generally time limited)

• Non-Industrial Projects
Generally made by the Government for societal benefits like (generally on going
process)

– health care project,

– educational project,
– irrigation project,
– soil conservation project,
– soil conservation project,
– highway project,
– water supply project etc.

PROJECT MANAGEMENT By:

Unit I – Basic Concept

Categories of Project
Based on the location of the Project:

• National Projects
With in the national boundaries.

• International Projects
Beyond the national boundaries, Generally made by both the Government and
private sector

– Fully owned abroad

– Joint Venture abroad
– Merger & Acquisition abroad

PROJECT MANAGEMENT By:

Unit I – Basic Concept

Categories of Project
Based on the Completion (Time) of the Project:

• Normal Projects
No Constraints on time.

• Crash Projects
To be completed with in the stipulated time (ex: Canal Lining before monsoon)

PROJECT MANAGEMENT By:

Unit I – Basic Concept

Categories of Project
Based on Ownership of the Project:

• Private Sector Projects

with objectives of profit maximization

• Public Sector Projects

with objectives of development of the country

• Joint Sector Projects

with objectives of both

PROJECT MANAGEMENT By:

Unit I – Basic Concept

Categories of Project
Based on Size of the Project:

• Small Projects
up to Rs. 1 crore

• Medium Projects
In between Rs. 1 crore – Rs. 100 crore

• Large Projects
above Rs. 100 crore

(As per the directives of the Govt. of India)

PROJECT MANAGEMENT By:

Unit I – Basic Concept

Categories of Project
Based on Need of the Project:

• New Project
• Balancing Project
• Expansion Project
• Modernization Project
• Replacement Project
• Diversification Project
• Backward integration Project
• Forward Integration Project

PROJECT MANAGEMENT By:

 What is project management?
• Project management can be defined as the discipline of
applying specific processes and principles to initiate, plan,
execute and manage the way that new initiatives or
changes are implemented within an organization.
• Project management is different to management
of business as usual activity, which is an ongoing process,
as it involves creating new work packages to
achieve agreed ends or goals.
• Project management is the use of specific knowledge,
skills, tools and techniques to deliver something of value to
people.
 Key components of project management
are:
• Time – the intended duration of the work
• Cost – the budget allocated for the work
• Scope – what innovations or changes will be delivered by
the project
• Quality – the standard of the outcome of the project.
• Increasing or decreasing any one of these components will
affect the others.
For example, reducing the time allocated to complete the
project will also reduce the amount of work that can be done
(scope), which may then affect the quality and the cost of the
project.
The above points can be related and demonstrated through
house construction example.
 Project management stages

• Initiating the project – the project manager defines what the

project will achieve and realize, working with the project sponsor
and stakeholders to agree deliverables.
• Planning – the project manager records all the tasks and assigns
deadlines for each as well as stating the relationships and
dependencies between each activity.
• Execution – the project manager builds the project team and also
collects and allocates the resources and budget available to specific
tasks.
• Monitoring – the project manager oversees the progress of project
work and updates the project plans to reflect actual performance.
• Closing – the project manager ensures the outputs delivered by the
project are accepted by the business and closes down the project
team.
Unit I – Basic Concept

Project Management Importance

PROJECT MANAGEMENT
Unit I – Basic Concept

Why Projects Fail???

• Failure to align project with organizational

objectives
• Poor scope
• Unrealistic expectations
• Lack of executive sponsorship
• Lack of project management
• Inability to move beyond individual and
personality conflicts
• Politics

PROJECT MANAGEMENT
Unit I – Basic Concept

Why Projects Succeed!!!

• Project Sponsorship at executive level

• Good project charter (deed)
• Strong project management
• The right mix of team players
• Good decision-making structure
• Good communication
• Team members are working towards common
goals

PROJECT MANAGEMENT
Unit I – Basic Concept

Is Project Management required???

• Projects often involve multiple tasks, resources,
and stakeholders. Project management provides a
structured framework to plan, execute, monitor,
and control these activities effectively.
• Project management is a method and mindset and
a disciplined approach to managing chaos
• Project management provides a framework for
working amidst persistent change.
• It helps in defining project scope, setting realistic
timelines, and allocating resources efficiently to
achieve desired outcomes.
PROJECT MANAGEMENT
 What is project scope
management?
• Determining and controlling what work is required to
complete the project successfully.
• Project scope management is a process that helps in
determining and documenting the list of all the
project goals, tasks, deliverables and budgets as a
part of the planning process.
• With the scope in the project management defined
right in the beginning, it becomes much easier for
teams to manage and make the required changes.
 Importance of project scope
management
•Effective project scope management gives a
clear idea about the time, labor, and cost
involved in the project.
•It helps to distinguish between what is
needed and what isn’t needed for
accomplishing the project.
•Scope in project management also
establishes the control factors of the project
to address elements that might change during
the project lifecycle.
Unit I – Basic Concept

Planning the Project

• The Project Life Cycle

• Organizing the Project Team
• Project Plans

PROJECT MANAGEMENT
Unit I – Basic Concept

Planning the project:

PROJECT DEVELOPMENT CYCLE
The Project Life Cycle refers to a logical sequence of activities to
accomplish the project’s goals or objectives.

Closure
Execution
&
Planning
Controlling

Initiation

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

1) Initiation

In this first stage, the scope of the project is defined along with the approach
to be taken to deliver the desired outputs. The project manager is appointed
and in turn, he selects the team members based on their skills and
experience. The most common tools or methodologies used in the initiation
stage are:

• Project Charter,
• Business Plan,
• Project Framework (or Overview),
• Business Case Justification, and
• Milestones Reviews.

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

1. Initiation

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

2) Planning

The second phase should include a detailed identification and assignment of

each task until the end of the project. It should also include a risk analysis
and a definition of a criteria for the successful completion of each
deliverable.

The governance process is defined, stake holders identified and reporting

frequency and channels agreed. The most common tools or methodologies
used in the planning stage are Business Plan and Milestones Reviews.

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

2. Planning

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

3) Execution and controlling

The most important issue in this phase is to ensure project activities are
properly executed and controlled. During the execution phase, the planned
solution is implemented to solve the problem specified in the project's
requirements.

In product and system development, a design resulting in a specific set of

product requirements is created. This convergence is measured by
prototypes, testing, and reviews. As the execution phase progresses, groups
across the organization become more deeply involved in planning for the
final testing, production, and support. The most common tools or
methodologies used in the execution phase are an update of Risk Analysis
and Score Cards, in addition to Business Plan and Milestones Reviews.

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

3. Execution and Controlling

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

4) Closure

In this last stage, the project manager must ensure that the project is
brought to its proper completion. The closure phase is characterized by a
written formal project review report containing the following components: a
formal acceptance of the final product by the client, Weighted Critical
Measurements (matching the initial requirements specified by the client with
the final delivered product), rewarding the team, a list of lessons learned,
releasing project resources, and a formal project closure notification to
higher management.

No special tool or methodology is needed during the closure phase.

PROJECT MANAGEMENT
Unit I – Basic Concept

PROJECT DEVELOPMENT CYCLE

4. Closure

PROJECT MANAGEMENT
Unit I – Basic Concept

Planning the project:

Project Plans

PROJECT MANAGEMENT
Unit I – Basic Concept

Planning the project:

Project Plans
• Estimating Time Accurately
• Scheduling Simple Projects
• Gantt Charts – Scheduling Projects with Dependent
Stages ( Throuh Bar Graph)
• Critical Path Analysis and PERT – Scheduling Complex
Projects ( Showing dependency through network)
• The Planning Cycle – A Planning Process for Middle-
Sized Projects

PROJECT MANAGEMENT
Unit I – Basic Concept

Planning the project:

Organizing the Project Team

• Project Leader
• The Team
• Work Methods and Procedures
• Work Plan

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal

• Meaning and definition

• Various aspects of project appraisal

PROJECT MANAGEMENT
Unit III – Project Appraisal

Appraisal or Pressure???

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Meaning and definition
• Assessment of a project in terms of its economic, social and financial
viability

• A lending financial institution makes an independent and objective

assessment of various aspects of an investment proposition

• It is defined as taking a second look critically and carefully at a project

by a person who is in no way involved or connected with its
preparation. He is able to take independent, dispassionate and
objective view of the project in totality, along with its various
components

It is a detailed study of several aspects of a given project before recommending it.

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Steps for project appraisal/Aspects of project appraisal

• Economic Aspects

• Technical Aspects

• Organizational Aspects

• Managerial Aspects

• Financial Aspects

• Market/Commercial Aspects

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Steps for project appraisal/Aspects of project appraisal

Step Aspects Process of security

1 Economic Indicate priority use

2 Technical Involves scale of the project and the process

adopted

3 Organizational Suitability is examined

4 Managerial Adequacy and competency are critically

important

5 Operational Capacity of the project

6 Financial Determines the financial viability.

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Economic Aspects

It measures the effect of the project on the whole economy.

• Analyses if the benefits will justify the project cost/investment done

• A successful project gives following benefits:

– Increased output
– Enhanced services
– Increased employment
– Larger government revenue
– Higher earnings
– Higher standard of living
– Increased national income
– Improved income distribution
PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Technical Aspects

It measures the effect of the project on the basis of techniques used as:

• Site and Location: RM supply, proximity to markets, transportation

facility, power supply, manpower, water, government policies, labour
laws, climate, taxes

• Plant layout/scale of operations: Technological capacity is

standardised for achieving economies of scale, low demand or less
resource availability result in economies of scale

• Technical feasibility: Technology selected, availability of

infrastructure, plant layout, project implementation schedules etc

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Technical Aspects

It measures the effect of the project on the basis of techniques used as:

• Factors affecting Site Selection of plant:

Location of raw material
Labour
Site
Industrial fuel
Transportation facilities
Markets
Distribution Facilities
Power, Water, Living Condition, climate
Laws and Regulation
Tax Structure

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Technical Aspects

It measures the effect of the project on the basis of techniques used as:
• Factors affecting Project Location:
Availability of raw material
Availability of skilled and unskilled labour
Nearness to the source of Motive Power
Nearness to the market
Availability of Transport Facilities
Topography
Soil Condition
Waste disposal
Power and Water supply
Tax Concession
Living conditions for labour and management
PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Technical Aspects

Plant Layout : Objectives

• Minimum material handling
• Reduced manufacturing cost
• Ensured output in quality and quantity
• Flexibility to meet changing needs
• High turnover of work-in process
• Low investment in equipment
• Effective use of floor space
• Best utilization of equipment and facilities
• Reduced work delays and stoppages
• Effective utilization of manpower

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Technical Aspects

Factors affecting Plant Layout

• Plant Location
• Plant Environment
• Product
• Production system
• Space requirements
• Repair and maintenance
• Balancing of Machine Capacity
• Management Policy

PROJECT MANAGEMENT
Unit III – Project Appraisal

Technical Aspect
Various aspects are measured under this head as:

• Selection of appropriate Technology (This must satisfy the following questions)

• Does the Technology make use of the locally available Raw Material?
• Can the technology implement and maintained by the locally available man power?
• Is the technology in tune with the local social and cultural conditions?
• Does the technology protects ecological balance etc?

Example:
As cement can be manufactured wither by wet process or by the dry process.

PROJECT MANAGEMENT
Unit III – Project Appraisal

Technical Aspect
Contd:

• Scale of Operations (signified by the size of the plant)

• Raw Material (may be replaced by alternative Raw Material, hence alternative process
may be required)
• Technical Know-How (expert consultant must have knowledge and experience and
such project earlier successfully)
• Collaboration Agreements (the agreement should be specified as to the part played
by know-how supplier)
• Product Mix (Variation in product according to the customers)
• Selection and Procurement of Plant and Machinery
• Plant layout (For steady flow of production and minimizing overall cost)
• Location of Project (regional Factor, Site Factor)
• Project Scheduling (Scheduling of activities)

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Organizational Aspects

• Organization structure, recruitment and training aspects are studied

• Appraisal done to see if project is adequately staffed, initial

recruitment is done

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Managerial Aspects

• Financial institutions check if promoters are competent and have

business sense

• They can appoint nominee directors on board

• The Companies Act and Industries Act empower government to

exercise control over management

• They can also take over the management in case it is needed

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Managerial Appraisal Scope

• Integrity
• Foresightedness
• Leadership Qualities
• Inter-personnel Relationship
• Technical and Financial skills
• Commitment
• Perseverance

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Financial Aspects

• Cost analysis: Finding out the cost of production

• Pricing: Deciding price of the product after considering demand,

profit and competition

• Financing: Raising funds and efficient use of the same

• Income and Expenditure: Concerned with predicting profit and costs

involved

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Financial Appraisal Objectives

• Financial Soundness
• Efficient operation
• Cost of Project
• Return on Investment
• Prospects of Marketing
• Profitability
• Effective Control
• Budgeting
• Pricing

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Financial Appraisal Scope

• Cost Analysis
• Pricing
• Financing
• Income and Expenditure

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Market / Commercial Aspects

• Analysis of market opportunities

• Specification of marketing objectives

• Planning and organizing of marketing process

• Controlling of implementation of marketing plan

PROJECT MANAGEMENT
Unit III – Project Appraisal

Project Appraisal
Market Techniques

• Marketing involves following activities:

• Research
• Planning
• Branding
• Pricing (Value, Status, Quality, Durability)
• Distribution
• Selling
• Packaging
• Warehousing
• Sales promotion
• Advertising
• Credit Control
PROJECT MANAGEMENT
 Types of project appraisal
• Appraisal of projects can be done by many ways, but the
most common of them are financial and economic
appraisal. In case of financial project appraisal, the
company reviews the cost of the project and the expected
revenues that will be generated by the project. This type of
appraisal helps the company to prevent overspending on a
project. It also helps in finding certain areas where
alterations can be done for generating higher revenues.
Under economic appraisal, the company mainly focuses on
the total benefit of the project and less on the costs spent
on the project. Other than these two types of appraisal,
there are also other types of project appraisal which
include technical appraisal, management or organizational
appraisal and marketing and commercial appraisal.
 Technical Appraisal
• Technical Appraisal. Determines whether the technical
parameters are soundly conceived, realistic and technically
feasible. Technical feasibility analysis is the systematic
gathering and analysis of the data pertaining to the
technical inputs required and formation of conclusion
there from.
• The availability of the raw materials, equipment,
hard/software, power, and sewerage services,
transportation facility, skilled man power, engineering
facilities, maintenance, local people etc., depending on the
type of project are coming under technical analysis.
• This feasibility analysis is very important since its
significance lies in planning the exercises, documentation
process, risk minimization process and to get approval.
 Technical Feasibility
• While making project appraisal, the technical feasibility of the project
also needs to be taken into consideration. In the simplest sense,
technical feasibility implies to mean the adequacy of the proposed
plant and equipment to produce the product within the prescribed
norms.
• It should be ensured whether that know-how is available with the
entrepreneur or is to be procured from elsewhere. In the latter case,
arrangement made to procure it should be clearly checked up. If
project requires any collaboration, then, the terms and conditions of
the collaboration should also be spelt out comprehensively and
carefully.
• In case of foreign technical collaboration, one needs to be aware of the
legal provisions in force from time to time specifying the list of
products for which only such collaboration is allowed under specific
terms and conditions.
• The entrepreneur, therefore, contemplating for foreign collaboration
should check these legal provisions with reference to their projects.
 Technical Appraisal
Technical appraisal broadly involves a critical study of the
following aspect.
• Selection of process/technology
• Scale of operations
• Raw material
• Technical know-how
• Collaboration agreements
• Product mix
• Selection and procurement of plant and machinery
• Plant layout
• Location of the project
• Project scheduling and implementation
  Selection of process/technology
• Selection of processes or technology refers to a situation
where one or more process or technologies are available
for use. For example; in the process of manufacturing
cement, there is the possibilities of manufacturing cement
either by dry process or wet process.
• The choice of technology also depends upon the quality
and quantity of the product proposed to be manufactured.
If the quantity to be produced is large, mass production
techniques should be followed and the relevant technology
is to be adopted. The quality of the product depends upon
the use to which it is meant.
• When it comes to technology there are options of whether
to purchase a certain technology outright if costs are
affordable or resort to some other arrangements.
 Appropriate Technology

When considering whether a technology is appropriate or not, the

following questions
may be able to guide you in your selection;
•Does the technology make use of the available raw materials
produce locally?
•Can the technology be implemented and maintained locally?
•Is the technology in tune with the local social and cultural
conditions?
•Is the technology safe for use within the environment?

Appropriate care must be given when considering what type of

technology is appropriate
 Scale of Operations
• Scale of operations refers to the size of a
particular project, in term of plant size and
market for project outputs
 Raw Material
Selection of Raw Materials: Depending on the different type of
projects investors can get involved in, the selection of raw
materials is important due to the fact
that a product can be manufactured using alternative materials
and alternative processes. Raw materials can be accessed locally
or imported from another location however, it is important that
there is continuous supply of the required raw materials.
When considering raw materials, project managers have to
ensure that they have the right equipment, plant and machinery
is chosen and this is factored into the costs for the project.
 Technical Know-how
• There are technical experts in different fields and professions
that is why we see consultancy companies and businesses
that are offering this type of service. When it comes to
technical know-how, projects managers in most cases require
the advice of experts. Care should be exercised so that the
right expert is being engaged.
• Project managers need to check the expert’s background from
other sources such as professional associations or from other
referees or from past and current work that has been carried
out by the expert. Also care should be exercised to avoid self-
styled, inexperienced consultants.
 Collaboration Agreement
Careful considerations have to be given to instances where project promoters
have entered into agreement with foreign collaborators. The word
collaborator refers to a person who works with another person to create or
produce a product. When project managers enter into such an arrangement
or agreement, there need to be conditions stipulated in the agreement such
as penalty clause, clause for non-performances etc.
Following points need careful considerations when projects enter into such an
agreement;
• The competence and reputation of the collaborators need to be
ascertained. This can be ascertained through foreign embassies or banks.
• Technology proposed to be imported should suit local conditions.
Example: In Papua New Guinea, there are a lot of challenges when it
comes to technology given the geographical nature of this country and
infrastructural issues such as connectivity etc.
 Collaboration Agreement
• Collaborative Agreement need to include laws and
regulations of the host country so as to ensure projects
are protected under the necessary laws of the country.
• The agreement should ensure that Training and
technical know-how are part of the agreement.
• The collaborative agreement should ensure the
agreement does not infringe on any patent rights.
• Any financial participation by the collaborators must be
clearly understood by all parties and adhere to laws.
• Agreement should include any back-up arrangements
from the collaborators to ensure quality of output
 Product Mix
• Consumers differs in taste and preferences and these
differences should be taken into considerations when
planning the manufacturing line of a manufacturing project so
that there is flexibility to modify or change when necessary or
when requested by customers.
 Selection and Procurement of Plant
and Machinery
Selection of Machinery: The selection of machinery would
depend on the project requirements, size and capacity of the
plant or factory being proposed. The following factors need to be
considered;
• Planned Output
• Operations and Machine hours
• Machine Capacity and allowances for maintenance, break-
down, and rest-time for workers
• Once the above factors have been taken into considerations,
the project managers can then survey the market and search
if the type of machine required is available.
 Selection and Procurement of Plant
and Machinery
Processes - When there are many different processes involved in a
particular plant of factory, then the project managers have to ensure
that the right type of machine are selected for the different process
requirements. The following points should be considered;
• The machine can do the processing and it is of quality. It can be
easily be handled by the workers. Parts and accessories is easily be
purchased and stocked and the machine can easily be disposed.
• Stand by arrangement in place for any critical situation.
• Supplier is able to provide training and technical back up services if
and when required.
• The machine is in good and workable condition.
 Selection and Procurement of
Plant and Machinery
Procurement of Machinery – All project whether large or small
require some form
machineries and equipment to carry out work on the project. It is
therefore important
to remember that machine and equipment are needed and they
form the backbone for
any project. Project managers should remember that the quality
of output depends upon the quality of the machine used in the
processing of the raw materials. We also must remember that
interruption in production can cause delays and affect other
component of the project thus procurement of the right
equipment is very important.
How can you know if the supplier of the equipment and machine
 Plant Layout
Efficiency of a manufacturing plant or factory operation depends
upon the layout of the equipment and machinery and therefore
it is important as to how and where the machine and equipment
are installed. Plant layout arrangements normally take into
account easy accessibility, safety requirement for the plant and
workers, ventilations and movement of materials in and out of
the plant. There need to be easy access in and out of the plant
etc. When deciding on plant layout the following factors need to
be considered;
• Future expansion can be done without much alteration.
• Layout should facilitate effective supervision of work.
• Noisy equipment should be located away from the plant site
 Plant Layout

•Adequate clearances between adjacent machines

•Ensure there is smooth flow of men and materials from one stage to
•Ensure maximum safety to workers within the plant site.
•Proper lighting and ventilations
•Smooth flow of electricity and water supply
 Location of Projects
• Many factors are taken into account when
deciding on location for new projects and
there are two major factors; Regional factors
and Site factors
• Regional factors – Raw Materials constitute a
huge component of the cost for a product
therefore it is important to minimize cost
when it comes to raw materials. When you
look at minimizing costs, you would normally
look at transport costs, locations of where the
 Location of Projects

Power – For any intensive industry, there need to be reliable and reg
and whether this can be made available through the feeder lines or w
the project need to access power through other sources.
Water – Water is necessary in any plant or factory site therefore, wat
quality and regular supply must be guaranteed and taken into consid
There are other ways of accessing water and these can be done by u
water source, from rivers or from the sea.
Transport facilities – Transport costs can be divided into two categor
is the transportation of raw materials and fuel into the plant site and
is for the movement of finished products outside the plant site.
 Location of Projects

Site Factors – Site factors have to be advantageous for the location of

considerations have to be given to the following factors;
•Cost and availability of land
•Availability and suitability of water source
•Facilities for affluent disposals
 Project Appraisal
Steps of Project appraisal/ Aspects of project appraisal
• Economic Aspects

• Technical Aspects

• Organizational Aspects

• Managerial Aspects

• Financial Aspects

• Market/Commercial Aspects
 Economic Aspects
• Analyses if the benefits will justify the project cost/investment done

• A successful project gives following benefits:

– Increased output
– Enhanced services
– Increased employment
– Larger government revenue
– Higher earnings
– Higher standard of living
– Increased national income
– Improved income distribution
 Technical Aspects
• Site and Location: RM supply, proximity to
markets, transportation facility, power supply,
manpower, water, government policies, labour
laws, climate, taxes

• Size of plant/scale of operations:

Technological capacity is standardized for
achieving economies of scale, low demand or
less resource availability result in economies
of scale
 Organizational Aspects

• Organization structure, recruitment and

training aspects are studied

• Appraisal done to see if project is adequately

staffed, initial recruitment is done
 Managerial Aspects
• Financial institutions check if promoters are
competent and have business sense

• They can appoint nominee directors on board

• The Companies Act and Industries Act

empower government to exercise control over
management
 Financial Aspects
• Cost analysis: Finding out the cost of
production

• Pricing: Deciding price of the product after

considering demand, profit and competition

• Financing: Raising funds and efficient use of

the same
 Market/ Commercial Aspects

• Analysis of market opportunities

• Specification of marketing objectives

• Planning and organizing of marketing process

• Controlling of implementation of marketing

plan
Environment Appraisal
ENVIRONMENT APPRAISAL TYPES