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Project Formulation

Project formulation involves developing the concept of a project, defining its parameters, conducting feasibility studies, undertaking investment appraisal, and deciding to invest. It has several stages including feasibility analysis, techno-economic analysis, project design, input analysis, financial analysis, and social cost-benefit analysis. Feasibility analysis determines if a project idea is viable by examining factors like marketing, economics, technology, culture, politics, environment, and management. Project appraisal assesses the viability of a proposed project by analyzing its economic, financial, technical, market, managerial, and social aspects. Financial appraisal interprets financial data to assess a company's performance and accountability. It helps pinpoint market factors and financial risks.

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Madhvendra Singh Gaur
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61 views8 pages

Project Formulation

Project formulation involves developing the concept of a project, defining its parameters, conducting feasibility studies, undertaking investment appraisal, and deciding to invest. It has several stages including feasibility analysis, techno-economic analysis, project design, input analysis, financial analysis, and social cost-benefit analysis. Feasibility analysis determines if a project idea is viable by examining factors like marketing, economics, technology, culture, politics, environment, and management. Project appraisal assesses the viability of a proposed project by analyzing its economic, financial, technical, market, managerial, and social aspects. Financial appraisal interprets financial data to assess a company's performance and accountability. It helps pinpoint market factors and financial risks.

Uploaded by

Madhvendra Singh Gaur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

PROJECT FORMULATION By:- Dr.

Preeti Singh
MEANING OF PROJECT FORMULATION
Project formulation involves the development of the concept of the project defining its
various parameters, conducting feasibility study, undertaking investment appraisal and
making the decision to invest in the project.
The structure adopted for project formulation will vary slightly depending upon the types of
projects. The factor will be different for different projects.
NEED FOR PROJECT FORMULATION
The entrepreneur in a developing country has to encounter a number of problems while
establishing a new project. These problem cause greater concern to many enthusiastic
entrepreneurs . They could be saved o a greater extent by undertaking a project formulation
exercise at the appropriate time.
Selection of Appropriate Technology
Influence of External Economies
Dearth of Technically qualified Personnel
Resources Mobilisation
Knowledge about Government Regulation
PROJECT FORMULATION STAGES
Feasibility Analysis
Techno-Economic Analysis
Project Design
Input Analysis
Financial Analysis
Social Cost-Benefits Analysis
Project Appraisal
FEASIBILITY ANALYSIS
The feasibility analysis is also known as techno-economic feasibility. Feasibility study
analysis solution which best fits the business Problem. The main objective of the feasibility
study is to decide whether the organisation should proceed with the project idea. Early
identification of the fact that a project idea will not work. Save time, money and avoid
backtracking of the project at a large stage. A feasible project is one where the business
will generate adequate cash flow and profits, withstand the risks that it will encounter,
remain viable in the long-term and meet the goals of the stakeholders. The Project venture
can be a new start-up business, the purchase of an existing business, an expansion of current
business operations or a new enterprise for an existing business.
Types of Feasibility Analysis
Marketing feasibility
Economic feasibility, financial feasibility
Technical feasibility
Cultural feasibility
Political feasibility, Environmental feasibility, Managerial feasibility
PROJECT APPRAISAL
Project appraisal is a cost and benefits analysis of different aspects of proposed with
an objectives to a judge viability.

A Project involves employment of scarce resources for the best project. For
appraising a project , its economic , financial, technical, market, managerial and
social aspects and analysed.

Benefits
Understand the economic of appraisal
Be in control of their projects from the start
Understand the economics of their project and devise the most appropriate model.
Focus on the risk area and take out risk and control costs before they over-run.
FINANCIAL APPRAISAL
Financial Appraisal is an in-depth study and interpretation of financial data received
through various sources. The output of a successful financial analysis becomes the
foundation stone of further decision making in respect of future course of action. The
main objective of undertaking the financial appraisal is to make an assessment of a
company’s performance in financial terms . It also covers the accountability aspect of
the company, although in a limited perspective. Before taking up the exercise of
financial analysis, a number of financial reports are necessary to be generated, which
are used as the basic inputs of such reports, the most important ones are financial
statement budgeted Estimates, Sources and Expenditure.

Assumptions in Financial Appraisal:- Demand and price estimates. It is necessary to


undertake market feasibility study , whereas in order to arrive at the project cost and
operating cost , technical feasibility study is required to be undertaken .
In addition, following information also need to be worked out:-
1, Existing tax laws and the resultant implication and
2. Various financing options available and financial costs involve therein.
Projections, Period of estimation, Financing , Basic working, financial Statements,
Financial indicators
ADVANTAGES OF FINANCIAL APPRAISAL
Financial appraisal provides a number of benefits , some of which are follows:-
Pin Pointing the market and other financial factors, which are likely to have been
ignored during the initial/ conceptual phases and

Potential provides of finance, lenders and investors are given a lot of comfort with
regard to the assumptions used in the study.

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