[INDFEAS] Quiz 1 Notes (1).pdf

Project Planning (1st PPT) Project A project is defined as a scheme or part of a scheme a)​ for investing resources b)​ which can be evaluated as an independent unit Reasons for To determine the scope of the project. Defining...

Project Planning (1st PPT) Project A project is defined as a scheme or part of a scheme a)​ for investing resources b)​ which can be evaluated as an independent unit Reasons for To determine the scope of the project. Defining a Project 2. To determine the required investments/sources of funding and implementation period. 3. To be able to analyze and evaluate its investment merits. Project Cycle Series of activities or steps that a project take from conceptualization to operation Project Cycle 1.)​ Project Identification Phases 2.)​ Project Preparation 3.)​ Project Appraisal 4.)​ Documentation 5.)​ Project Supervision Project Process of seeking out possible investment projects Identification Project Preliminary assessment of the project through a study if initial designs, Preparation alternative technical processes and initial calculations of financial and  market aspects. Project Appraisal comprehensive and systematic review of the technical, market, financial, managerial, and economic aspects of the project to ensure its viability Documentation translation of all the findings made during the project appraisal stage into formal records. Project follow-up and management of the project through its implementation, Supervision construction, and operation stages to ensure that the project is executed as planned. Functions in the 1.)​ Market/Commercial Project Cycle 2.)​ Technical 3.)​ Financial 4.)​ Economic 5.)​ Managerial Why Identify scarcity of resources (i.e., capital, labor, raw materials, land, etc.). The Project? usage of these scarce inputs must be maximized based on the objectives of the investing entity. 11 Guides to 1. Study Imports/Exports Identify Project 2. Investigate Local Materials and Resources Opportunities 3. Study Available Skills 4. Monitor Economic Indicators 5. Make Industry Studies 6. Originate or Apply Technology 7. Examine Inter-Industry Relationship 8. Evaluate Development Plans 9. Review Old Projects 10. Observe Experience Elsewhere 11. Use Standard Industry Classification Lists Importance of 1.)​ Provide investors with the viability and all the vital information Feasibility Studies they need in deciding the extent of their exposure to certain business proposals. 2.)​ Financial institutions normally require feasibility studies from loan applicants borrowing beyond a certain loan ceiling. Scope Pre-operating, Management, Marketing, Production/Technical, Financial, and Socio-Economic feasibilities. Nature 1.)​ The best way of gauging the correctness is the practicality of being implemented in a specified future time.  2.)​ Data inputs must be carefully studied and selected and should contain allowances for future inflationary considerations Project Cost approximate investment requirements of a particular project from the time it was conceived to the start of commercial operations. Factors Affecting ​ Size Project Feasibility ​ Nature Cost ​ Depth ​ Availability of Data ​ Length of the Project Pre-Operating and Based on the actual and projected expenditures from the project inception Organizational state until the start of commercial operations Expenses Ex. 1.​ Initial Investigations 2.​ Research and Technical Analysis 3.​ Design studies 4.​ Legal advice 5.​ Incorporation papers, issuance of shares 6.​ Initial advertisement 7.​ Establishment of a sales network Land The cost of land should be the amount invested by the proponent in land for the project. The cost should likewise include notarial and registration fees Machinery and ​ Should cover main process equipment and auxiliary equipment Equipment ​ The basis for costing: Quotations, past experience with similar equipment used in other projects, machinery dealers and suppliers, and rapid cost estimate Marine Insurance -​ based on the arrangement with the equipment supplier, but should and Freight basically include inland freight, ocean freight, and handling expenses up to the port of destination. -​ past experience in identical or similar equipment from insurance firms/shipping companies/freight forwarders with whom the necessary details of the equipment to be insured/delivered should be provided Customs Duties For most countries, all articles, when imported from another foreign and Taxes country, are subject to customs duties and taxes, except those exempted by virtue of government decree, special arrangement, or government incentives. Bank Charges Bank charges are incurred when imported equipment is acquired. These consist of fees incurred during the opening of the letter of credit for the  equipment Process This is based on the actual contract with the process supplier or process Acquisition/Patent owner. Some patents and licenses are charged based on a percentage of s/Licenses sales or profits of the company. Only the portion which is payable prior to commercial operations, if any, shall form part of the project cost Technical Basis is on actual expenditures which includes board and lodging, Assistance stipends and lodging, stipends and transportation expenses for technician which are sent to the proponent compan. For the majority of cases, installation and start-up assistance are given free and form part of the machinery and equipment cost. Financial Charges usually left out by most proponents in their estimate of the project cost. During This is a real cost and must be taken into account and paid specifically for Construction or projects with large loan requirements and long gestation periods Pre-Operating Period Working Capital fund required for day-to-day operations which is tied up in raw materials, work-in process, finished goods, accounts receivables and operating cash to ensure an uninterrupted flow of operations Components of ​ Raw Material Inventory Working Capital ​ Work-in Process ​ Finished Goods ​ Account Receivables ​ Operating Cash ​ Other working capital requirements Provision for -​ Accidental events Contingencies -​ Changes in general conditions -​ Imperfections in estimates -​ Oversights -​ Arithmetic Errors Rapid Cost -​ Unit Price Estimate Methods -​ Six-tenths Factor -​ Capacity Adjustment by Exponential Method Project Timetable -​ lists down the individual events or activities of a project from project conceptualization to commercial operation, according to a time scale and in order of precedence. Funds Drawdown tells the time when funds for a particular activity should be Schedule withdrawn/disbursed or made available.  This is significant since both the creditor and specially the proponent may have to prepare funds for the purpose. This drawdown schedule is also significant for computation of the financial charges during the pre-operating period. Marketing Feasibility PPT Marketing process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services, to create exchanges that satisfy individual and organizational objectives. -​ concentrates primarily on the buyers, or consumers. Objective of To determine the extent to which the goods/services to be generated by a Marketing project are needed or demanded and to design the appropriate marketing strategies and plans that will help ensure that the project’s outputs will reach and be accepted by the target users. Target Market specific group of customers that a company aims to capture. They have been identified as people with needs or wants that can be met with the products or services from this company. Ways to Identify Target Markets Geographic The location, size of the area, density, and climate zone of your customers Demographic The age, gender, income, family composition and size, occupation, and education of your customers. Psychographic The general personality, behavior, life-style, rate of use, repetition of need, benefits sought, and loyalty characteristics of your customers Behavior The needs they seek to fulfill the level of knowledge, information sources, attitude, use or response to a product of your customers. Survey Formula for sample size Demand Total volume to be bought by a defined customer group in a defined marketing environment under a defined marketing program. Demand analysis Involved the estimation of market demand for the output/s of the proposed project by: -​ Identification & analysis of demand determinants. -​ Estimation of past & present demand. -​ Projection of future demand Demand -​ Population Determinants -​ Income -​ Population -​ Income -​ Prices -​ Substitution Possibilities -​ Changes in user’s taste -​ Rate of investments -​ Government Policies and Budget Projecting Demand Methods Survey of people’s This is done by using comparing different data that has the same impact intentions and to the people or population. needs assessment Expert’s Opinion -​ Group discussion method -​ Pooled individual estimate method -​ Delphi approach Time Series assumes that what happened in the past will continue to happen in the Analysis future Components of Time Series Trend refers to a gradual, long term movement in the data Seasonality short-term , fairly regular variations that are generally related to weather factors or to human-made factors such as holidays and vacations Cyclical Wavelike variations of more than one year’s duration Variations Irregular Are due to unusual circumstances such as severe weather conditions, variations strikes. Demand Projection Methods Linear Regression assume a linear relationship between variables-frequently used when time (Straight Line is the independent variable. Method) Statistical curvature is an advantage because it is flexible relative to the straight line Parabolic Method -​ Projections may show a decline especially when you reach the maturity stage. -​ The equation may indicate a decline which may not be true. -​ Does not reflect/include the qualitative information which the analyst might have gathered. Descriptive of the products at the growth stage. Product Life Cycle Exponential Growth increases by a constant ratio or percentage Curve Trend Analysis Uses linear and nonlinear and nonlinear regression with time as the explanatory variable-used where pattern over time. Moving Average Simple moving averages-forecasts future values based on a weighted Analysis average of past values-easy to update Weighted Moving Very powerful and economical. Widely used where repeated forecasts Averages required-uses methods like sum-of-the-digits and trend adjustment methods. Exponential A moving average form of time series forecasting-efficient to use with Smoothing seasonal patterns- easy to adjust for past errors-easy to prepare follow-on forecasts must be prepared-several different forms are used depending on presence of trend or cyclical variations Modeling and Describes situation through series of equations-allow testing of impact of Simulation changes in various factors-substantially more time-consuming to construct-generally requires user programming or purchase of packages. Probabilistic Use Monte Carlo simulation techniques to deal with uncertainty-gives a Models range of possible outcomes for each set of events Statistical Involves quantifying the functional relationship between the level of Demand Analysis demand and various demand determinants Use of planning Use of coefficients in order to project the demand of certain products standards Market Testing Use when potential benefeciaries are uncertain and are not consistent. Can be in use also when experts can not make good guesses. Thru conducting pilot marketing of product in certain areas Supply Represents the total volume available in the market at a defined price, geographical area and at a defined time period. Three major 1.​ Local Production sources of supply -​ Can be measured by taking into consideration competitor’s data rated capacities 2.​ Importations 3.​ Product Substitutes Supply Projection Same as in demand projection Demand and Demand and Supply gaps are derived by comparing the projections of the Supply Analysis level of demand and the level of supply. Pricing ◦ Legal pricing laws Considerations ◦ Consumer behavior ◦ Competitor’s policies ◦ Seasonality ◦ Price limits ◦ Availability of product(s) ◦ Discounts ◦ Profit target Distribution -​ Path which is taken by the goods from the time they are produced channel to the time they are purchased by consumers Two Main 1.)​ Transporting Distribution 2.)​ Warehousing Activities Promotions Undertakings designed to inform prospective buyers about the product, and influence the market towards buying the product OT