Project Development, Evaluation & Feasibility
MBA – IV
DBA – 552
Course Outline:
Basic Idea of Projects:
Main Feature of Projects,
Capital Budgeting, Importance and Difficulties
Project Development Cycle
Aspects of Appraisal
Objective of Investment Decision Making
Basic Consideration: Risk and Return
Market Appraisal:
Information Required for Market and Demand Analysis
Secondary Source of Information
Market Survey
Demand Forecasting: Trend Projection Methods, Consumption
Level Method, Lend use Method
Technical Appraisal:
Materials and Inputs: Raw Materials, Processed Industrial
Materials and Components, Auxiliary Materials and Factory
Supplies, Utilities
Production Technology
Plant Capacity
Location and Site
Machinery and Equipment, Structure and Civil Works
Project Charts and Layout, Work Schedules
Financial Aspects of Appraisal:
Cost of Project and Means of Financing: Cost of Project, Major Components and their Details.
Means of Financing: Planning the Capital Structure of a New Company:
Equity, Term Loans, Bridge Loan, Sponsors Non-Interest Bearing Loans, Security of Loans, Interest and Principal Repayments, Restrictive Covenants and Main Contents of the Loan Agreements.
Financial and Development Financial Institutions.
Profitability: Financial Projection:
Production Estimates, Production Capacity, Capacity utilization and Sales Estimates, Formulation of Assumptions for Financial Projections.
Cost of Production: Materials, Labor, Utilities, Factory Overhead, Administrative, Marketing, Financial and Other Expenses.
Development of Different Schedules for Projected Income Statement and Balance Sheet based on various Appraisal factors already considered above.
Break Analysis and Sensitivity Analysis.
Economic and Financial Appraisal – Single Project:
Measuring Cost and Benefits: Cash Inflows and Outflows:
Internal Cash Flows, Operational Cash Flows and Terminal Cash Flows.
Time Value of Money, Estimating and Appropriate Discount Rate, Future and Present Value of Single Cash Flow, Future and Present Value of and Annuity, Discount Factors, Annuity Factors and Capital Recovery Factor.
Present Value of an Uneven Series, Shorter Compounding Periods,
Effective versus Nominal Rate.
Cost of Capital:
A Central concept in Financial Management,
Linking the investment and financial decisions,
Cost of Different Sources of Finance.
Project Selection Criteria:
Project Criteria for Single Projects:
Calculating Internal Rate of Return
Estimating Net Present Value
Calculating Benefit Cost Ratio
Other Project appraisal criterion.
Post-Completion and Life Cycle of the Project:
REQUIRED READING: TEXT BOOKS:
- Steve Curry & John Weiss, “Project Analysis in Developing Countries”, St Martin Press Inc. USA (Latest Edition)
- Ch. Muhammad Hussain, “Project Appraisal, Monitoring & Evaluation Process”, Karachi Royal Book Co, Karachi.
- Prasanna Chandra “Projects, Preparation, Appraisal, Budgeting and Implementation”, (Latest Edition), Indian Institute of Management, Bangalore
- The World Bank, “Guideline for Calculating Financial and Economic Rates of Return for DFC Projects”, Washington DC. USA, 1984
- Vircent muro, “Preparation of Project Feasibility Studies for Philippine Business Enterprises”, Manilla Business Technology Corp.
- John E. Walsh Jr, “Preparting Feasibility Studies in Asia”, Tokyo, Asian Productivity organization (APO)
- Steve Curry & John Weiss, “Project Analysis in Developing Countries”, St Martin Press Inc. USA (Latest Edition)
- The World Bank, “Guideline for Calculating Financial and Economic Rates of Return for DFC Projects”, Washington DC. USA, 1984
- Vircent muro, “Preparation of Project Feasibility Studies for Philippine Business Enterprises”, Manilla Business Technology Corp.
- John E. Walsh Jr, “Preparting Feasibility Studies in Asia”, Tokyo, Asian Productivity organization (APO)
- Ch. Muhammad Hussain, “Project Appraisal, Monitoring & Evaluation Process”, Karachi Royal Book Co, Karachi.