PROJECT DEVELOPMENT, EVALUATION AND FEASIBILITY

Course Contents

1. Basic Ideas of Projects

   1.1. Main Features of Projects

   1.2. Capital Budgeting, Importance and Difficulties

   1.3. Project Development Cycle

   1.4. Aspects of Appraisal

   1.5. Objective of Investment Decision Making

   1.6. Basic Consideration: Risk and Return
2. Market Appraisal

   2.1. Information Required for Market and Demand Analysis

   2.2. Secondary Source of Information

   2.3. Market Survey

   2.4. Demand Forecasting: Trend Projection Methods, Consumption

   2.5. Level Method, Lend use Method
3. Technical Appraisal

   3.1. Materials and Inputs: Raw Materials, Processed Industrial

   3.2. Materials and Components, Auxiliary Materials and Factory

   3.3. Supplies, Utilities

   3.4. Production Technology

   3.5. Plant Capacity

   3.6. Location and Site

   3.7. Machinery and Equipment, Structure and Civil Works

   3.8. Project Charts and Layout, Work Schedules
4. Financial Aspects of Appraisal

   4.1. Cost of Project

   4.2. Major Components and their Details

   4.3. Means of Financing: Planning the Capital Structure of a New Company

          4.3.1. Equity

          4.3.2. Term Loans

          4.3.3. Bridge Loan

          4.3.4. Sponsors Non-Interest Bearing Loans

          4.3.5. Security of Loans

          4.3.6. Interest and Principal Repayments

          4.3.7. Restrictive Covenants and Main Contents of the Loan Agreements

   4.4. Financial and Development Financial Institutions
5. Profitability: Financial Projections

   5.1. Production Estimates

   5.2. Production Capacity

   5.3. Capacity utilization and Sales Estimates

   5.4. Formulation of Assumptions for Financial Projections

   5.5. Cost of Production

           5.5.1. Materials

           5.5.2. Labour

           5.5.3. Utilities

           5.5.4. Factory Overhead; Administrative, Marketing, Financial and Other Expenses.

   5.6. Development of Different Schedules for Projected Income Statement and Balance Sheet based on various Appraisal Factors

   5.7. Break Analysis and Sensitivity Analysis
6. Economic and Financial Appraisal – Single Project

   6.1. Measuring Cost and Benefits: Cash Inflows and Outflows

   6.2. Internal Cash Flows, Operational Cash Flows and Terminal Cash Flows

   6.3. Time Value of Money

   6.4. Estimating and Appropriate Discount Rate

   6.5. Future and Present Value of Single Cash Flow

   6.6. Future and Present Value of and Annuity

   6.7. Discount Factors, Annuity Factors and Capital Recovery Factor

   6.8. Present Value of an Uneven Series

   6.9. Shorter Compounding Periods

   6.10. Effective Versus Nominal Rate
7. Cost Capital

   7.1. A Central Concept in Financial Management

   7.2. Linking the Investment and Financial Decisions

   7.3. Cost of Different Sources of Finance.
8. Project Selection Criteria

   8.1. Project Criteria for Single Projects

   8.2. Calculating Internal Rate of Return

   8.3. Estimating Net Present Value

   8.4. Calculating Benefit Cost Ratio.

   8.5. Other project appraisal criterion
9. Preparation of Appraisal (Feasibility) Report

   9.1. Organization of the Feasibility Report

   9.2. Executive Summary for the Board of Directors or Sponsors

   9.3. Contents of the Reports

   9.4. Presentation of the Information

   9.5. Data and Deductions Derived from the Data

   9.6. Annexure and their Placement Conclusions and Recommendations for Acceptance or Rejection of the Project.

Recommended Books

1. Steve Curry & John Weiss, “Project Analysis in Developing Countries”, St. Martin Press Inc. USA (Latest Edition).
2. Ch. Muhammad Hussain, “Project Appraisal, Monitoring & Evaluation Process”, Karachi Royal Book Co. Karachi.
3. Prasanna Chandra “Projects, Preparation, Appraisal, Budgeting and Implementation”, (Second Edition), Indian Institute of Management, Banglore,