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ML0009 Project Management in Retail

Assignment Set- 1

1. What do you mean by retail project management? Explain the project life cycle in a

retail store?

Sol.

Project management (PM) involves collecting, organizing, and distributing knowledge that is

accumulated over a period of time for the purposes of improving and increasing a companys

competitive edge. This knowledge is more than mere facts and data. It is information andexperience collected and applied to achieve the overall goals of a company.

Project management is the discipline of organizing and managing resources (e.g. people) in

such a way that the project is completed within defined scope, quality, time and cost constraints.

A project is a temporary and one-time endeavor undertaken to create a unique product or service,which brings about beneficial change or added value. This property of being a temporary and

one-time undertaking contrasts with processes, or operations, which are permanent or semi-

permanent ongoing functional work to create the same product or service over and over again.The management of these two systems is often very different and requires varying technical

skills and philosophy, hence requiring the development of project management.

The first challenge of project management is to make sure that a project is delivered within

defined constraints. The second, more ambitious challenge is the optimized allocation andintegration of inputs needed to meet pre-defined objectives. A project is a carefully defined set of

activities that uses resources (money, people, materials, energy, space, provisions,

communication, etc.) to meet the pre-defined objectives.

Project Life Cycle

The Project Life Cycle refers to a logical sequence of activities to accomplish the projects

goals or objectives. Regardless of scope or complexity, any project goes through a series of

stages during its life.

There is first an Initiation or Birth phase, in which the outputs and critical success factors are

defined, followed by a Planning phase, characterized by breaking down the project into smallerparts/tasks, an Execution phase, in which the project plan is executed, and lastly a Closure or

Exit phase, that marks the completion of the project. Project activities must be grouped into

phases because by doing so, the project manager and the core team can efficiently plan andorganize resources for each activity, and also objectively measure achievement of goals and

justify their decisions to move ahead, correct, or terminate.

It is of great importance to organize project phases into industry-specific project cycles. Why?

Not only because each industry sector involves specific requirements, tasks, and procedureswhen it comes to projects, but also because different industry sectors have different needs for life

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cycle management methodology. And paying close attention to such details is the difference

between doing things well and excelling as project managers.

Diverse project management tools and methodologies prevail in the different project cycle

phases. Lets take a closer look at whats important in each one of these stages:

1)InitiationIn 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 inthe initiation stage are Project Charter, Business Plan, Project Framework (or Overview),

Business Case Justification, and Milestones Reviews.

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 criteria for thesuccessful completion of each deliverable. The governance process is defined, stake holders

identified and reporting frequency and channels agreed. The most common tools ormethodologies used in the planning stage are Business Plan and Milestones Reviews.

3)Execution and controlling

The most important issue in this phase is to ensure that project activities are properly executedand controlled. During the execution phase, the planned solution is implemented to solve the

problem specified in the projects requirements. In product and system development, a design

resulting in a specific set of product requirements is created. This convergence is measured byprototypes, 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.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 ormethodology is needed during the closure phase.

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2. Describe the roles and responsibilities of a retail project manager.

Sol.

Role of the Project Manager

A project manager is the person who has the overall responsibility for the successful planning

and execution of a project. This title is used in the construction industry, architecture,information technology and many different occupations that are based on production of a product

or service.

The project manager must possess a combination of skills including an ability to ask penetrating

questions, detect unstated assumptions and resolve interpersonal conflicts as well as moresystematic management skills.

Key amongst his/her duties is the recognition that risk directly impacts the likelihood of success

and that this risk must be both formally and informally measured throughout the lifetime of the

project.

Risk arises primarily from uncertainty and the successful project manager is the one who focuses

upon this as the main concern. Most of the issues that impact a project arise in one way oranother from risk. A good project manager can reduce risk significantly, often by adhering to a

policy of open communication, ensuring that every significant participant has an opportunity toexpress opinions and concerns.

It follows from the above that a project manager is one who is responsible for making decisions

both large and small, in such a way that risk is controlled and uncertainty minimized. Every

decision taken by the project manager should be taken in such a way that it directly benefits theproject.

Project managers use project management software, such as Microsoft Project, to organize their

tasks and workforce. These software packages allow project managers to produce reports and

charts in a few minutes, compared to the several hours it can take if they do not use a softwarepackage

Roles and Responsibilities

The role of the project manager encompasses many activities including:

Planning and Defining Scope

Activity Planning and Sequencing

Resource Planning

Developing Schedules

Time Estimating

Cost Estimating

Developing a Budget

Controlling Quality

Managing Risks and Issues

Creating Charts and Schedules

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Risk Analysis

Benefits Realization

Scalability, Interoperability and Portability Analysis

Documentation

Team Leadership

Strategic Influencing

Customer Liaison

On the other hand as stated by Tom Mochal, the Project Management Tips and Techniques

The Role of a Project Manager are as follows:

Each month, Tom Mochal presents a set of project management tips and techniques for handlingvarious aspects of planning and managing a project. Tom has over 23 years of IT experience. He

has developed a comprehensive, scalable project management process called Ten Step

(www.TenStep.com). He has also developed PMO Step (www.PMOStep.com), which is focused

on building, implementing and supporting project management methodology through a ProjectManagement Office. Tom also has a comprehensive application support methodology called

Support Step (www.SupportStep.com).

On the surface, the role of a project manager should be easy to describe. In fact, from a textbook

perspective it probably is. But the challenge to understanding roles and responsibilities is that

they are different from company to company.

In general, the project manager is responsible for the overall success of the project. In somecompanies, this person might be called a Project Coordinator, or a Team Leader, however, the

key aspect is that the person is responsible for ensuring the success of the project.

Process Responsibilities

The project manager normally is responsible for defining and planning the project. This results in

the completion of a Project Definition and a project work plan. Once the project starts, theproject manager must successfully manage and control the work, including:

Identifying, tracking managing and resolving project issues

Proactively disseminating project information to all stakeholders

Identifying, managing and mitigating project risk

Ensuring that the solution is of acceptable quality

Proactively managing scope to ensure that only what was agreed to is delivered, unless changes

are approved through scope management Defining and collecting metrics to give a sense for how the project is progressing and whether

the deliverables produced are acceptable

Managing the overall work plan to ensure work is assigned and completed on time and within

budget

To manage the project management processes, a person should be well organized, have greatfollow-up skills, be process oriented, be able to multi-task, have a logical thought process, be

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able to determine root causes, have good analytical ability, be a good estimator and budget

manager, and have good self-discipline.

People Responsibilities

In addition to process skills, a project manager must have good people management skills. This

includes: Having the discipline and general management skills to make sure that people follow the

standard processes and procedures

Establishing leadership skills to get the team to willingly follow your direction. Leadership is

about communicating a vision and getting the team to accept it and strive to get there with you.

Setting reasonable, challenging and clear expectations for people, and holding themaccountable for meeting the expectations. This includes providing good performance feedback to

team members

Team building skills so that the people work together well, and feel motivated to work hard for

the sake of the project and their other team members. The larger your team and the longer the

project, the more important it is to have good team-building skills.

Proactive verbal and written communicator skills, including good, active listening skills.

Multiple Roles

Depending on the size and complexity of the project, the project manager may take on other

responsibilities in addition to managing the work. For instance, the project manager may assistwith gathering business requirements. Or they may help design a database management system

or they may write some of the project documentation. Project management is a particular role

that a person fills, even if the person who is the project manager is working in other roles as well.

Further the Project Manager has sole responsibility and authority for project and contract

direction and control. Support Managers (Task Managers) that report within the various lineorganizations and departments have the responsibility for work definition and effective

management of the resources to accomplish the authorized work. The Project Manager isresponsible for each contracts end item (i.e., knowing what needs doing, by whom, when, and

the required amount of resources by cost element and/or cost code).

Senior Management appoints the Project Manager. Normally the Project Manager is accountable

to the General Manager, or Vice President, or President depending on the size of theorganization; and is accountable to the Customer for project and contract success. The Project

Manager has the delegated authority to commit the organization on matters concerning

performance that are within the contract scope.

The Project Manager is responsible for defining the organizational structure of the project andfor interfacing with the functional organizations. The Project Manager directs and controls all

work performed within the framework of the Work Breakdown Structure (WBS). The Project

Manager has the authority for WBS elements task assignment; control and assigns budgets; and

master project schedule(s). The Project Manager makes final decisions on tradeoff studies, andtask changes within the contract statement of work. The Project Manager is responsible for daily

communications and formal project reviews with both the customer and his/her senior

management.

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Projects vary in duration, value, and complexity. On a large or complex project, the Project

Manager may elect to appoint one or more Assistant Project Managers. The Project Manager

may delegate single or multiple responsibilities, including budget responsibility to an AssistantProject Manager. The Project Manager may direct the Assistant Project Manager to control all

work performed within the framework of various assigned WBS legs. This includes defining

work scope, authorizing work, assigning and controlling budgets, and monitoring progress.Most companies operate under a functional organization structure. The functional organizationmaintains adequate technical resources and disciplines within their own organization entities.

The Project Manager should provide written direction to the various functional organizations on

their individual contribution. This written direction, called the work authorization, provides theSupport Managers (Task Managers) with the contracts work scope, schedule, and budget

information.

3. Write a brief note on project environment in retail.

Sol.

Depending upon the complexity of the proposed project more information other than the

information asked below would be required in which case the promoter will be required toprovide the specific information as and when asked by the NEC/DOI.

a) Description of the present state of the environment within the 50 meters radius of the proposedproject location including in particular

Topography

Present land use Sett,ement / Institutions / Infrastructures

Flora and fauna

Cultural and heritage sites

Water resources

Total area required

b) Description of the principal environmental issues during the construction phase

c) Description of the principal environmental issues during the operation phase:

A description of the main characteristics of the production processes, for instance, nature andquantity of the materials used and the final product(s)

Identification and estimation, by type and quantity, of expected wastes resulting from the

operation of the proposed project.

d) A description of the likely impact that the proposed project would have on the environment,including, in particular, population, fauna flora, soil, water, air, material assets, including cultural

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and heritage resources, landscape and the inter-relationship between the above factors both

during construction and operation phases.

e) A description of the measures envisaged to prevent, reduce and where possible offset any

adverse effects on the environment.

f) A description of the method and site of disposal of the waste, indicating waste and residualproducts stored at the plant.

g) A description of measures to prevent or reduce Occupational Health and Safety (OHS) issues.

h) Provide the name and proper contact address including telephone and fax numbers, and email

address of person(s) who would be responsible for the environmental management of the Project.

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ML0009-Project Management in Retail

Assignment Set 2

Q 1. Write a brief note on stages in project formulation in retail and preparing the project

report in Retail environment.

Sol.

Stages in Project formulation in retails

Project management is composed of several different stages/types of activities such as:

1. Planning the work or objectives

2. Analysis & design of objectives and events

3. Assessing and controlling risk (or Risk Management)

4. Estimating resources

5. Organizing the work

6. Acquiring human and material resources

7. Assigning tasks

8. Directing activities

9. Controlling project execution

10. Tracking and reporting progress

11. Analyzing the results based on the facts achieved

12. Defining the products of the project13. Forecasting future trends in the project

14. Quality Management

15. Issues management

16. Issue solving

17. Defect prevention

18. Identifying, managing & controlling changes

19. Project closure

20. Communicating to stakeholders

21. Increasing/ decreasing a companys workers

Project report preparation for retails

The Project Report being compiled by the entrepreneur should accomplish the vital task of

providing a "Birds-eye-view" of the entire spectrum of activity.

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Technical Feasibility

Technical feasibility would encompass factors such as description of the product specifications

to be adopted, raw material availability as per requirements, and outline of "Manufacturing

process" inclusive of a "flow process chart", quality control measures, power supply, andavailability of water, transport facilities and communication network.

Economic Viability

Essentially involves compilation of demand for domestic and export markets, most appropriate

installed capacity requirements in regard to capital assets, evaluation of the production cost,capturing a substantial share of market sales, revenue expected suitable price structure and so

on.

Financial Implications

Project cost covering "Non-recurring expenses" such as land and building, plant and equipment,

pre-operative expenses and so on and "Recurring Expenses" such as Working capital needs, Rawmaterial needs, Wages for personnel and so on will have to be worked out in detail. The probable

cost of production over a period of 5 years to be assessed and expenses such as fixed andvariable expenses and break-even analysis should be presented. Besides profit per month,percentage of profit on total investment and percentage of profit on expected sales should also be

computed and furnished.

Managerial Competency

The new entrepreneur Manager entering the small scale sector should devote his full attention to

the new venture and should consider the product line chosen as a "Major Economic Activity".

He should develop keen desire to adopt "Modern Management Practices" for ensuring itssuccessful growth. He should endeavor to put on the market a product in his own style in an

"Innovative Spirit without blindly imitating other brands.

He should maintain up-to-date records pertaining to actual production, sales effected every

month, in addition to gathering useful data on "POTENTIAL CUSTOMER", "NEW MARKETSEGMENTS", "CHANGES IN FASHIONS", "DESIGNS" "STYLES", etc., The new enterprise

must emerge as a "CUSTOMER SATISFYING" and "CUSTOMER CREATING" organization.

More over

The Project Profile should, at the minimum, cover the following broad Chapters to facilitate theDepartment to appraise the proposed project and determine its viability:

1. INTRODUCTION: DESCRIPTION OF THE PROPOSED PROJECT

In its introduction, the Profile should briefly outline the following:

The purpose of the project (one paragraph)

The proposed legal business status and ownership structure of the project

The proposed name of the company or business

The proposed project activity (the type of manufacturing or service industry and specific

industrial sector)

The proposed products or services

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2. PROMOTER(S)

The Project Profile should contain the following details on the promoter(s):

Full Name; Citizenship Card No; Age; Date of Birth; Sex; Name of Father; Name of Mother;

Marital Status; Name of Spouse; and Occupation of Spouse

Permanent Address; Village/Town; Gewog; Dungkhag; Dzongkhag; House No. and Thram No.

Mailing or Contact Address (if different from the above), Post Office Box No. andtelephone/facsimile no. and email address

Academic qualifications

History of past employment

Promoters current line of business(es) (if any)

Registered name and address of the current business

Ownership structure and performance of existing business(es) that may be owned in part

(share/partnership), or in whole (proprietorship) by the promoter.

3. PROJECT LOCATION:

Provide the size of the proposed project are and the exact project site; precise location of

factory/business; name of area; city/town/village; Geog; Dungkhag; Dzongkhag. It should be

supported by land acquisition and use documentation (in attachments). Also mention whether theproposed site is self-owned, to be purchased, rented, commercial building/area, government land

or industrial or service estate. If the land has been purchased, the cost of the land should be

indicated in Section 7 (Project Costs).

4. INFRASTRUCTURE REQUIREMENTS:

Provide an assessment of the level of infrastructure facilities available at the proposed site, and

provide as accurately as possible in the note as well as in Part II the cost of any additionalinfrastructure that is needed to be installed (road access, power lines, telecommunication lines,

water supply, fuel storage, and cost of earthmoving and engineering works to stabilize land andcreate sufficient flat land for the project to be built.

5. TECHNOLOGY/MANUFACTURING PROCESS TO BE USED

Provide the proposed source of technology/equipment with a copy of the manufacturer(s)

equipment brochure(s) and explain the rationale for the choice of equipment.

The proposed production process should be described in detail and production flow diagram

should be provided. Also provide installed capacity per day and per year.

6. CONSUMPTION OF RAW MATERIAL, POWER, AND WATER:The Profile should provide information on raw materials, fuel, electric power and water required

annually. Raw materials should be calculated in terms of tones per annum, fuel in litres per

annum, power in kwh per annum, and water in cubic metres per annum as under. The Profileshould also provide the source of raw material supply. Table presented below may be used to

provide the required information.

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Types of Raw Materials

Required

Annual

Consumption

Source of Supply

1.

2.

3.

4. Fuel (liters)

5. Electric Power (kWh)

6. Water (cubic meters)

7.

8.

7. PROJECT COST/TOTAL INVESTMENT:

Provide the project cost in detail and as accurately as possible supported an engineering plan of

the site development work and an engineers estimate of the cost of the site works. The project

cost should include the cost of land, site development, infrastructure/installation charges, civil

construction, plant and equipment, technical know-how/services, other pre-operating expense,miscellaneous/ contingencies and working capital requirement.

8. PROJECT FUNDING REQUIREMENTS

Describe the proposed debt/enquiry ratio of the project, the equity funding source(s) and the

value of contributions, and the amounts of bank loans required for fixed asset purposes, and theamounts required for working capital purposes to place the project into operation and provide it

with sufficient cash for operations in its first year;

In describing the proposed security to be pledged against a fixed asset loan, attach a note to the

Profile/License Application for the financial institutions detailing the promoters personalfinancial conditions (net worth) in terms of assets (land, orchards, livestock, buildings, vehicles,

shares, cash etc.) and liabilities (detailing the promoters outstanding loans and

mortgage/security arrangements for these current loans).

9. HUMAN RESOURCES

Specify the maximum human resource requirements of the project (at maximum level ofproduction/sales), with a clear break-up of national/ non-national requirements, and requirements

for professional/technical personnel as under:

(1) Total National:..Professional/Technical:..Casual/Seasonal:..

(2) Total Non-National:Professional/Technical:.Casual/Seasonal:.

10. MARKETS:

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Provide an assessment of the domestic and export market, explaining if the product is new or

expected to substitute for an existing or imported product, and explaining the special (or

competitive) qualities of the product. If the product is export-oriented, provide information onthe export markets target location, size, international prices, the known supply-demand gap, the

promoters marketing strategy, and current and likely competition. A table provided below may

be used to provide information on the projected sales.Sales Projected Year 2 Sales Projected Year 5 Sales

Domestic Sales: Nup.a. Nu..p.a.

Export Sales: Nup.a. Nu..p.a.

Total Sales: Nup.a. Nu..p.a.

Current Local Prices of the Products: Nu.

Current Export Prices of the Products: Nu

11. ENVIRONMENTAL IMPACTProvide the following information to enable the NEC/DOI to access the proposed project andprocess for environmental clearance: (Depending upon the complexity of the proposed project

more information other than the information asked below would be required in which case thepromoter will be required to provide the specific information as and when asked by the

NEC/DOI).

a) Description of the present state of the environment within the 50 meters radius of the proposed

project location including in particular

Topography

Present land use

Sett,ement / Institutions / Infrastructures

Flora and fauna

Cultural and heritage sites

Water resources

Total area required

b) Description of the principal environmental issues during the construction phase

c) Description of the principal environmental issues during the operation phase:

A description of the main characteristics of the production processes, for instance, nature andquantity of the materials used and the final product(s)

Identification and estimation, by type and quantity, of expected wastes resulting from the

operation of the proposed project.

d) A description of the likely impact that the proposed project would have on the environment,including, in particular, population, fauna flora, soil, water, air, material assets, including cultural

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and heritage resources, landscape and the inter-relationship between the above factors both

during construction and operation phases.

e) A description of the measures envisaged to prevent, reduce and where possible offset any

adverse effects on the environment.

f) A description of the method and site of disposal of the waste, indicating waste and residualproducts stored at the plant.

g) A description of measures to prevent or reduce Occupational Health and Safety (OHS) issues.

h) Provide the name and proper contact address including telephone and fax numbers, and email

address of person(s) who would be responsible for the environmental management of the Project.

12. PROJECT FINANCIAL PROJECTIONS

Prepare and attach to the Profile/License Application the proposed projects financial statements

projected to year 5 of production/sales (projected cash flow statement, projected profit/loss

statement, and projected balance sheet. In considering funding requirements and calculating

financial projections, use the current debt/equity ratio in vogue.

Q 2. Discuss the five types of appraisals followed by a retailer in a retail store.

Sol.Appraisal in retail operations

Appraisers examine works of art, jewelry, antiques, and the contents of estates to determine theirvalue and authenticity. This job requires detailed knowledge of the subjects and an understanding

of current market values and trends.

A fine art appraiser, for example, will study a work of art for style of brush strokes, color values,

and other relevant characteristics. This information can establish the period in which it waspainted or help identify the artist. If a forgery is suspected, the appraiser may analyze paint

samples for their chemical content or examine the painting using sophisticated laser equipment

or under X-ray. This judgment requires knowledge of the materials, style, and techniques

employed by different artists in different periods.Antique appraisers usually have a specialty, such as silver, jewelry, or furniture of a particular

period. They must be familiar with the styles, materials, and markings that help them date and

authenticate genuine antiques. They must also assess the condition of an article in relation toothers still in existence and determine the rarity of the piece.

Most jewelry appraisers have some training in gemology. This training enables them to appraise

the value of gemstones according to their color, the clarity of the stones, and the quality of the

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cut. After examining an article, a jewelry appraiser then determines its wholesale and retail

values. This figure is based on the information the appraiser gathers about the piece and how it

compares to similar pieces. Appraisers also have to know the current market value of an itemaccording to various pricing guidelines and any trends that may affect the price, such as the

current price of gold.

Estate appraisers are in great demand today to establish the value of items for purposes of sale,estate planning, insurance, and bankruptcy. Unlike other appraisers, they tend to deal with agroup of items rather than individual types of articles. An estate appraiser will visit a house, list

and possibly photograph the contents, and take measurements of large pieces of furniture. The

appraiser then sets the value of each item by consulting catalogs, comparing retail values, andfinding prices for comparable items.

Education and Training Requirements

The education and training requirements for appraisers vary according to the types of articles

they After examining a piece of jewelry, an appraiser determines its wholesale and retail value

based on information he gathers about the piece and how it compares to other similar pieces. (

Julio Donoso/Sygma/Corbis.) appraise. Generally, training and experience are gained byworking as assistants to specialists in retail stores, galleries, and auction houses. For fine art

appraisal, galleries and art dealers prefer to hire those with a bachelors degree in fine art or arthistory. For those interested in jewelry, the Gemological Institute of America offers a six-month

training program leading to a diploma in diamonds and colored stones. It also offers courses in

sales and appraisal. Estate appraisers prefer to hire high school graduates as assistants, whomthey will train to appraise certain types of articles. Hence, there are five types of appriasel in

retail stores. They are as follows:

1 Market Appraisal for retail

2 Technical Appraisals

3 Financial Appraisals

4 Socio-Economic Appraisals

5 Managerial Appraisals

1 Market Appraisal for retail

Fair market appraisals help to determine the fair market value of an item. These appraisals are

generally sought after when a quilt owner wishes to sell a quilt. When establishing a fair market

value for a quilt, the appraiser determines what a "willing buyer" may pay a "willing seller" for

the item. In establishing this value, the appraiser assumes that both the buyer and the seller

would have equal knowledge concerning the item. It must also be assumed that the item wouldbe sold under normal conditions and that neither party could be under pressure to buy or sell the

item.

A good quilt appraiser will be aware of current market trends regarding the sale of quilts. Quiltappraisers frequently check auction houses, antique stores, Internet quilt sites and galleries for

quilt prices and sales. Appraisers use this data to find quilts similar to the quilt you want to sell.

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These values fluctuate with changing trends and popularities, the economy and geographic areas

of the country.

It should be understood that a fair market value placed upon an item does not guarantee you will

realize that value in a sale. The value is an opinion, based upon the facts of asking and sellingprices of other similar quilts. If you sell your quilt to an antique dealer or store, they will not

want to pay the fair market appraised value. They want to purchase quilts and sell them at aprofit. When selling a quilt at a regular or Internet auction (e.g. Ebay), you may realize muchmore (or much less) than the fair market value.

More over Market Appraisal has the following factors:

The reasonableness of the demand projections supplied by the promoters are verified by

utilizing the findings of available reports/ surveys, industry association/ planning commission/

DGTD projections, and independent market surveys (sometimes commissioned with the expenseborne by the promoters).

Assess the adequacy of the marketing infrastructure planned in terms of promotional effort,

distribution network, transport facilities, stock levels, etc.

Judge the knowledge, experience and competence of the key marketing personnel.

In case of appraisal for projects, the market appraisal generally tends to be accorded lowimportance. The localized/regional nature of these businesses often makes success in marketing

more a function of the entrepreneurs attributes or contacts rather than a fundamental demand-

supply mismatch in the product (currently met by expensive imports or near substitutes).However, over the past few years most financial institutions, based on their experience of past

lending have drawn up categories of industries where new projects would be restricted /

prohibited. These are clearly stated in the lending policies of the financial institutions.

When the lending policy of a financial institution (FI) categorizes an industry in the prohibited

category, it actually means that the risk of financing such projects (in its opinion) is high makingsuch projects an unacceptable risk from the point of a lender. In the event of your project being

classified under the Prohibited Category, it would be prudent to review its viability before taking

it up for implementation. Also such projects might have to be completely self-financed.

2 Technical Appraisal

The retailer has to ensure that projects are soundly designed, appropriately engineered, and

follow accepted agronomic, educational, or other standards. The appraisal mission looks into

technical alternatives considered, solutions proposed, and expected results.

More concretely, technical appraisal is concerned with questions of physical scale, layout, and

location of facilities; what technology is to be used, including types of equipment or processesand their appropriateness to local conditions; what approach will be followed for the provision of

services; how realistic implementation schedules are; and what the likelihood is of achievingexpected levels of output. In a family planning project, the technical appraisal might be

concerned with the number, design, and location of Maternal and child health clinics and the

appropriateness of the services offered to the needs of the population being served; in highways,with the width and pavement of the roads in relation to expected traffic and the trade-offs

between initial construction costs and recurrent costs for maintenance, and between more or less

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labor-intensive methods of construction; in education, with whether the proposed curriculum and

the number and layout of classrooms, laboratories, and other facilities are suited to the countrys

educational needs.

A critical part of technical appraisal is a review of the cost estimates and the engineering or otherdata on which they are based to determine whether they are accurate within an acceptable margin

and whether allowances for physical contingencies and expected price increases duringimplementation are adequate. The technical appraisal also reviews proposed procurementarrangements to make sure that the Banks requirements are met. Procedures for obtaining

engineering, architectural, or other professional services are examined. In addition, technical

appraisal is concerned with estimating the costs of operating project facilities and services andwith the availability of necessary raw materials or other inputs. The potential impact of the

project on the human and physical environment is examined to make sure that any adverse

effects will be controlled or minimized.

Further, the technical appraisal is done by qualified & experienced personnel (internal orexternal) and focuses is mainly on the following aspects:

Product mix

Capacity

Process of manufacture

Engineering know-how and technical collaboration

Raw materials and consumables

Location, site and building

Plant and equipment

Manpower requirements

Break-even point

Normally, projects do not involve breakthrough technology. As a result, the technology aspect isfairly simple to appraise. However, substandard equipment resulting in unsuccessful pilot runs

and prolonged rectification process is often a major problem leading to a unit turning sick even

prior to commercial operations. What is accorded maximum importance by the FIs is thereputation of the suppliers and the necessity of 2-3 quotes for the key equipment to judge

reasonableness of quality and price. Some of the FIs maintain lists of approved suppliers from

among whom such equipment will have to be sourced (if available). However such lists also tendto have problems since they are not updated on a regular basis. Consequently, some delays and

minor problems are unavoidable in most cases on this count

3 Financial Appraisal

Term lending institutions try to assess the following in their financial appraisal of a project

proposal:

a. Estimate of capital cost

b. Estimate of working results

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c. Rate of return

d. Financing pattern

a. Estimate of capital cost:

a. The assessment of capital cost involves a vigorous check of the financial projections provided

by the promoter on the following aspects:

Padding or under-estimation of costs

Properspecification of machinery

Credibility of various suppliers

Allowances for contingencies

Inflation factors

b. Estimate of working results:

The projections supplied by the promoters regarding the sales, realizations and profits are

assessed by checking whether:

A realistic market demand forecast has been given

Price computations for inputs and outputs are based on current quotations and

inflationary factors

An appropriate time schedule for capacity utilization is given

The cost projections are distinguished between fixed and variable costs appropriately

c. Rate of return: The norms for the financial viability are generally in the range of:

Internal Rate of Return (IRR) 15-20%

Return on Investment (ROI) 20-25%

Debt-service coverage ratio (DSCR) 1.5 to 2

The above mentioned figures are not mandatory and a certain degree of flexibility is shown on

the basis of the nature of the project, risks inherent in the project, and the status of the promoter.

d. Financing pattern:

A general debt-equity ratio norm of 1.5:1

Minimum Promoters contribution 20-25% of the project cost

Stock-exchange listing requirements in cases part of the equity is proposed to be raisedfrom the public

The financial capability of the promoter

In case of sectors involving standard technologies and having seen numerous projects, norms are

readily available for most of the parameters such as the gestation period, build-up of capacity

utilization, the unit project cost, cost structure etc. However, in case of other projects, such

financial analysis often tends to be based on an aggregation of reasonable assumptions. FIsrework these projections based on the 2-3 parameters where they have standardized assumptions.

These could be build-up in capacity utilization, power tariff per unit, etc.

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The beauty of Financial Analysis is that the viability of projects can be established by effecting

minor changes in assumptions such as growth rates, cost structure, residual value, etc (often at

the second or third decimal.). So, achieving the cut-off IRR or coverage may not prove difficultto a person well versed with the various facilities available on spreadsheets.

However, Financial Analysis remains an extremely important step, as it is the standard that

influences decision of the financiers. (Especially of the public sector). Secondly, the sensitivityanalysis conducted as part of such studies forms the basis for identifying the crucial parametersfor the success of the project. Financiers tend to monitor the project progress through these

milestones and parameters.

In day-to-day practice the financial institutions have their own independent criteria and credit

rating methodology for arriving at the credit rating of each project. Financial institutionscalculate the Internal Rate of Return (IRR). The Internal Rate of Return refers to the rate of

return that the project is expected to generate based on its projected cash flows accruing over its

expected lifespan. Institutions have a threshold IRR that the project needs to surpass to assess itsviability.

Various financial ratios are calculated for the past and future by the data provided to them by thepromoters after checking the veracity of the same. The various ratios, which are frequently

calculated include:

Current ratio:

[(Receivables + material and finished good inventory)/ (creditors for goods and expenses)]

Long term debt-equity ratio

[Long Term Debt/ Networth]

Interest coverage ratio

[(Profit Before Interest Provision for Tax)]/(Interest payments due for the year]

Fixed assets coverage ratio

[Fixed Assets/ (Term loan and other long term debt obligations)]

Debt-service coverage ratio

[{(Profit before interest- Provision for taxes)+Depreciation}/ {Interest repayments + (Principle

Repayments*(1-effective tax rate))}]

Profit after tax/sales

The minimum or maximum values for some of the ratios are as follows:

Long-term debt-equity ratio (Maximumallowable) 2

Current ratio (Minimum) 1.33

Interest cover ratio (Minimum) 2

Fixed asset coverage ratio (Minimum) 1.25

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The above values are taken as standard though a certain amount of flexibility is exercised

depending on the perception and personal judgment of the appraising officer. A rating is

assigned to the project based on the scores of the different ratios. A cut-off rating determinesfinancing decision (whether the project would be financed or not).

Above the rating, the projects maybe categorized into excellent, good and average. Based on this

and the project characteristics, the final terms and conditions of financial assistance are decidedupon like:

Moratorium

Repayment period

Availability period

Security (like pari-passu charge, first charge, personal guarantee, corporate guarantee etc.)

Interest rate

All the expenses like service fee, processing fee, document fee and other expenses like

inspection of site, factory, etc. are charged to the applicant and is a source of income for thelending institution.

More over, Capital Investment Programs (CIP) is usually thought of as building things. This

includes: development of land; erection of buildings; installation of roads, bridges, pipes and

other infrastructure above, on and under the ground; or, the supply of equipment for use on asemi-permanent basis.

Primary participants in these activities are mainly engineers. Thus, it is natural that they will be

concerned to build and install, as rapidly as possible, the infrastructure and other fixed assets

perceived to be urgently needed. They, after all, have the primary expertise for this task. Aprincipal limit on the pace and magnitude of their work is, clearly, financial resources. A capital

investment program, therefore, is an opportunity for prioritization of fixed asset implementation

activity and the related access to urgent and important funding sources. It will also show how the

vision and operational strategy of a community is reflected in the program for capitalexpenditures.

Because of the very large Capital Investment Programs (CIP) to be financed, failure to consider

the availability of funding could give rise to an undue sense of urgency. That might engender a

disregard for the need to carefully examine each project component with due diligence. It isimportant, of course, to ensure that the necessary funding will be available, in full and on time,

as and when needed for each project component. However, it is also important to ensure that:

(a) each project component, as well as its size and scope, is selected on the basis of a rational

prioritization, with reference to its financial and economic costs, measured against its benefits or

effectiveness economic, financial, social and equity; and

(b) each project component represents the least economic cost of providing a sound solution to

the concern being addressed.

These should be addressed on the basis of life-cycle costs. These allow for the capital costs andalso the impact of these on recurrent finances, together with costs of operation, maintenance and

administration. Also to be considered are the costs of replacement or rehabilitation of equipment

that will not continuously serve with optimum efficiency, or even become unserviceable, during

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the life-cycle of the principal project assets. Analyses will need to allow for expenditure in later

years to be discounted against earlier expenditures.

It is also important to take account of the extent and timing of revenue flows from the use of

various infrastructure items. Some components, such as water supply, will provide immediateindividual benefits and may well be connected with optimum promptness.

Others, such as sewerage, provide benefits that are only partially directed to individual

households. Some benefits accrue to the community as a whole. They are also more diverse and

less immediately obvious. It may be that there will be a greater reluctance by individualhouseholds to connect to the system. Solid waste services also exhibit some of the same

characteristics.

Sometimes, financial revenues may still be collected, by levying charges whether there is a direct

household service or not. However, this may well be contentious, especially for sewerage. Forexample, households that can ill-afford this may need modifications to internal plumbing.

Moreover, lack of connection will likely have technical shortcomings. Low flows will potentially

harm the sewer pipes, while a lack of connections will limit public health benefits to the wider

community.

Some infrastructure, such as roads and drainage, will likely provide benefits that are of a general

public nature, rather than to individuals. Road improvements, moreover, are likely to improve

the efficiency of other public services that rely on transport, especially solid waste removal,police, fire and ambulances. The operation and maintenance of roads and storm drainage,

together with necessary capital cost recovery, will need to be borne mainly from general taxes.

Thus, it is important to ensure that the necessary increases in general tax revenues areengendered from: buoyant increases in the tax bases; politically acceptable and administratively

sustainable increases in the tax levies; or, reductions in other tax-borne expenditures. The last-

named would need to result either from efficiency improvements or curtailment of other services.

All of these matters are the concern of both technical and financial expertise. Moreover, theyhave financial and economic effects beyond the scope of the individual projects. They impact

upon the entire financial framework of the local government unit, and way beyond it, to other

entities. Engineering specialists should, therefore, work closely with financial colleagues. Thiswill provide greater assurance that appropriate costs are budgeted and accounted for, in ways that

will be both credible for reporting and useful for effective action. Most importantly, these are

policy issues.

Cost Recognition

The above view of Capital Investment Programs has focused on the raising and spending of cash,to provide the infrastructure and other assets. Some attention has also been given to the provision

of funds to operate and maintain these.

Certainly, cash-flow management is important, for a variety of reasons. However, other than by

blind coincidence, "cash-flow," is unlikely to be synonymous with "cost." Cost definition cannotbe meaningful unless based on economic principles. Therefore, it should relate as closely as

possible to the concept of resource consumption, rather than to the mere receipt and payment of

cash. It should also incorporate, where possible, recognition of the recovery of capital costs.

Therefore, costs in terms of resource use of any business or public activity should includeproperly recognized and recorded expenditures on the following:

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(a) operation of the activity in terms of the production of goods and services;

(b) maintenance of all premises, plant and equipment in a satisfactory condition to perform its

operations in a safe and efficient manner for its entire working life;

(c) administration and management of the activities, together with the payment of taxes,

necessary to ensure that operations are efficiently effected; and,(d) the rental cost (capital cost recovery factors) of fixed and working capital, comprising, either

(for property not owned) the market rent, or (for property owned):

(i) consumption of capital, typically recognized as depreciation of premises, plant and

equipment;

(ii) adjustment of value, either in terms of changes in real values (opportunity costs) of propertyor in recognition of the effects of changes in monetary values (inflation and deflation); and,

(iii) return on investment, including interest on debt and an expected and reasonable return on

contributed (equity) capital, either by dividends to owners or by retained earnings.

After covering all the above, which are resource costs, it would be prudent to expect that thebudgeted activity costs would also allow for an additional (albeit small) "surplus," over and

above the expected and reasonable costs of capital. This would allow for periodical fluctuations

in financial fortunes, more specifically: risk; uncertainty; new activity; and, longer-term stability.

Return on Investment

Included as part of the "return on investment" is the provision for dividend and retained earnings,typically accruing to the owners (shareholders) of an entity. These are items which, according to

"generally accepted accounting principles" are not treated as costs but as allocations of "profit."

The distinction arises because financial accounts reflect property rights rather than economicprinciples. Thus, the interests of owners (shareholders) are reported as the earnings (profits) after

all claims have been met from outside of the entity, including those of lenders.

There is, however, common agreement among economists that what are considered to be

"normal" profits are no more than a part of the "opportunity cost of capital." Only extraordinaryearnings are typically regarded as true "profits." This is somewhat analogous to what is described

as "surplus" in the above set of distinctions. Furthermore, the standard practices of financial

analysis deal explicitly with costs of capital, the return on total net assets, as the weighted

consolidation of the separate and specific returns to debt and equity financing.

This has a parallel in the public sector. In some countries, notably in the USA and UK, it had in

the past typically been standard practice for state and local governments to finance up to and

including 100% of many items of capital expenditure by borrowing. This usually had

amortization periods closely related to the working life of the fixed assets acquired.

However, even where all or part of these assets may have been financed from sources other than

debt, the funds used for this purpose still have an opportunity cost. Indeed, the financing of

capital expenditure from general government revenues (local, state or central) will do one of two

things. Either it will add to the overall "deficit," which will have to be borrowed, with interest, orit will eliminate some part of the overall "surplus," which will create a loss of interest on the

related monetary investment. Even if the deficit is covered by increased taxes, the taxpayers

(effectively the "shareholders" of the government) will (collectively) lose the equivalent in

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interest on what would otherwise have been their own money. They will also forego the use of

the principal sum.

The issue of cost definition has been fully stressed and explained because it forms the basis

against which all related aspects will need to be assessed. For example, it affects, or is affectedby: cost accounting systems; prices; allocation of overheads; budgetary management; fiscal

deficits; maintenance of assets; and, inter-governmental transfers. Costs of service cannot becredibly stated, nor fully recovered, unless they include reference to all of these various factors.

Effective decisions on public service delivery depend upon whether, and in what form, the costsof these are determined. Furthermore, cost recognition, to be consistent, should relate to the

maintenance, use and consumption of resources and not to the manner in which these resources

are originally financed. Sometimes, subsidies are appropriate, for economic or social reasons.However, unless costs are determined in an authentic fashion, there is no way to know whether,

or to what extent, the subsidies already exist (such as in the initial capitalization) or are

ultimately justified, as in transfers from other accounts, funds or governmental entities.

An example of the presentation and use of financial statements, incorporating full

accounting for resource use costs, is given in the annual financial statements of the City ofBirmingham, England. As required by law, it follows the Code of Practice on Local

Authority Accounting in Great Britain and the Statements of Standard Accounting

Practice (SSAP) required by the Chartered Institute of Public Finance and Accountancy

and other UK professional accounting bodies. These include stipulations for full accounting

of all fixed assets, irrespective of the method of financing. It includes imputed rental,

depreciation and interest costs, where appropriate at current (replacement) values.

Government Grants

Central governments, of many other countries, are attempting to encourage and support activity

by the local government units. This includes activity that it favors or for which there is some

clear justification on national grounds. However, the prime responsibility is, increasingly, that ofthe local government units.

A most important means of financial support by the central government of local government

units is the government grant. Among the many reasons for government grants are the following:

(a) transfer to local government units of a proportion of revenues collected in or for their areas,

but which can be collected more efficiently at national level (e.g. income tax, sales tax, VAT andcustoms duty);

(b) support for services in which national government has an interest but which may be better

performed locally, with input from local people (e.g. primary and secondary education, local

roads and public health);

(c) equalization, to some degree, of the needs and resources among different areas;

(d) provision for specific burdens upon individual areas not shared generally;

(e) encouragement of practices which are consistent with national social, economic or financial

policies (and discouragement of those which are not);

(f) enhancement of limited local resources to provide reasonable flexibility in decision-making

on the provision of services;

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(g) major shifts in political, economic or social characteristics of a nation, group of nations or

region (e.g. the massive political changes resulting from the liberalization policies in Eastern

Europe).

There needs to be a great deal of common sense and political wisdom, as well as economic logic,in the administration of a grant structure. For example, whatever may be argued for the needs of

a particular area, it may also be one of the most important commercial centers, with a great dealmore economic potential than elsewhere. Thus, there might be a strong economic or equity-basedcase for a net transfer of resources away from the area, in favor of much poorer areas.

Capital Grants

Grants may be given towards specific capital projects or to support recurrent operations. Inprinciple, capital grants have a distinct disadvantage. They will tend to support new capital

schemes, perhaps too soon, too large or even not justified at all, instead of encouraging thecontinuance of a service using existing available equipment and infrastructure. This is very

serious in any country where capital resources, especially in foreign currency, are scarce and thus

costly.

Faced with a choice of spending its own resources on maintenance or getting a grant for newcapital investment, a local government unit may be strongly tempted to opt for a capital grant. A

more appropriate financial support for capital expenditure would be a loan, for the life of the new

asset, at market interest rates. Then, the local government would be faced with a more even-handed financial choice. It would either continue to pay operation and maintenance costs for the

old (probably inefficient) asset or pay debt service (more strictly, capital charges) on the new

one.

However, in practice, application of these principles may often be difficult, even inappropriate.First, much local infrastructure is in a very poor state and in urgent need of replacement. Indeed,

there are some areas or communities that have been so disadvantaged that there is little or no

decent infrastructure to begin with.

Second, there is no reasonable supply of market-drivenmedium-term or long-term capital. Even if there were, there is no satisfactory mechanism to

administer it. Third, many local government units lack credit-worthiness, at least until revenues

are greatly stabilized and enhanced. Finally, with the meager and uncertain financial resourcesavailable to the central government, capital grants at least represent one-time payments for which

there is no continuing obligation beyond the duration of a particular program.

Thus, capital grants offer the opportunity to assist with the initial installation, expansion,

reconstruction and rehabilitation of infrastructure. They can also be highly selective, givingpreference to areas of greatest need and with the poorest resources. Where used, they will almost

always represent a proportion of an approved capital cost, after careful examination and appraisal

of the project by central government officials, or those acting on their behalf (e.g. staff of a

"development fund" or "municipal bank").

Sometimes, as an alternative, projects will qualify if they meet pre-determined conditions that

apply to all similar and relevant circumstances. This suggests that the central government

ministry responsible for local government should try to develop an improved capability for

project appraisal. This could provide significant assistance to local government units in planningtheir development, even without grant support.

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Recurrent Grants

However capital expenditure is financed or supported, there will usually be some need for

continuing support of recurrent operations. Thus, methods must be found to provide this support.

To some degree, at least, this may also need to be supplied by central or state government grants.Usually, there is a system which combines a local governments own revenue sources with

recurrent grants from state or central governments.

Some of the methods to be considered for the administration of a recurrent grant system are set

out below. However, it must be realized that, at present, many would need to rely upon statisticalinformation that is simply not available or reliable. The ministry of local government or of

finance should, therefore, attempt to build a data-base for this and many other purposes.

Possible assessment and distribution methods for recurrent grants are:

(a) budget review central government reviews each local budget in turn, assesses its credibilityand provides a grant to cover all or some of any expected recurrent deficit;

(b) policy support central government undertakes to reimburse local government units for the

costs of nationally mandated policies, such as nation-wide salary increases;(c) reimbursement central government effectively pays for the costs of delegated services,

properly the primary responsibility of the central government;

(d) revenue compensation central government covers losses resulting from curtailment of localrevenues as a result of national policy (e.g. abolition of a local tax based on incomes or the

imposition of rent controls affecting property tax valuations);

(e) percentage central government provides a percentage of the cost of local services, with

percentages, typically, varying from service to service;

(f) population central government provides a lump sum per head of population, which could

vary among age-groups to take account, for example, of the special needs of children and the

elderly, with respect to education, health and welfare;

(g) unit central government provides a lump sum per unit of service or potential service (eg.per mile of road, per patient at clinics, per refuse vehicle);

(h) revenue potential central government compensates for potential loss of revenue, for

example, based on property tax values or assessed incomes for graduated tax, relative to total

population and national average tax potentials;

(i) revenue sharing government designates all or part of nationally-collected revenues (eg.vehicle licences) to be shared among local government units; and

(j) formula a variety of factors is taken into account to provide a grant structure which meets

multiple objectives.

All of these procedures are appropriate for most sets of circumstances, although only some of

them may be chosen for practical use

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4 Socio-Economic Appraisal

Through cost-benefit analysis of alternative project designs, the one that contributes most to the

development objectives of the country may be selected. This analysis is normally done in

successive stages during project preparation, but appraisal is the point at which the final reviewand assessment are made.

During economic appraisal, the project is studied in its sectoral setting. The investment program

for the sector, the strengths and weaknesses of public and private sectoral institutions, and key

government policies are all examined.

In transportation, each appraisal considers the transportation system as a whole and its

contribution to the countrys economic development. A highway appraisal examines the

relationship with competing modes of transport such as railways. Transport policies throughout

the sector are reviewed and changes recommended, for example, in any regulatory practices thatdistort the allocation of traffic. In education, power, and telecommunications, the "project" as

defined by the Bank may embrace the investment program of the whole sector. In agriculture,

which is more diversified and accounts for a much larger share of a developing countrys

economic activity, and where it is more difficult to formulate a comprehensive strategy for thesector; attention is given to sectoral issues such as land tenure, the adequacy of incentives for

farmers, marketing arrangements, availability of public services, and governmental tax, pricing,and subsidy policies.

Whenever the current state of the art permits, projects are subjected to a detailed analysis of their

costs and benefits to the country, the result of which is usually expressed as an economic rate of

return. This analysis often requires the solution of difficult problems, such as how to determinethe physical consequences of the project and how to value them in terms of the development

objectives of the country.

Over the years, the retailer has kept in close touch with progress in the methodology of economic

appraisal. "Shadow" prices are used routinely when true economic values of costs are notreflected in market prices as a result of various distortions, such as trade restrictions, taxes, or

subsidies. These shadow price adjustments are made most frequently in the exchange rate and

labor costs used in the calculations. The distribution of the benefits of a project and its fiscalimpact are considered carefully, and the use of "social" prices to give proper weight in the cost-

benefit analysis to the governments objectives of improved income distribution and increased

public savings is passing through an experimental phase. Since the estimates of future costs and

benefits are subject to substantial margins of error, an analysis is always made of the sensitivityof the return on the project to variations in some of the key assumptions.

Less frequently, in cases of major uncertainty, a risk/probability analysis is also carried out. The

optimal timing of the investment is tested in relation to the first years benefits. When the Batik

provides funds to intermediate agencies (development finance companies, agricultural creditinstitutions) for relending to smaller operations, or in the case of sector lending, those agencies

own appraisal methods must be acceptable.

Some of the elements of project costs and benefits, such as pollution control, better health or

education, or manpower training, may defy quantification; in other projects, for example electricpower or telecommunications, it may be necessary to use proxies, such as revenues, that do not

fully measure the value of the service to the economy. In some cases, it is possible to assess

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alternative solutions that have the same benefits and to select the least-cost solution. In other

cases, for example education, alternatives are likely to involve different benefits as well as

different costs, and a qualitative assessment must suffice.

Whether qualitative or quantitative, the economic analysis always aims at assessing thecontribution of the project to the development objectives of the country; this remains the basic

criterion for project selection and appraisal. And while greater concern with the distributionaleffects of projects reflects broader objectives of development, it does not mean that the Bank haslowered its standards of appraisal. Whether "old" style or "new," every project must have a

satisfactory economic return, a standard that the Bank believes serves the best interests of both

the country and the Bank itself

5 Managerial Appraisal

Managerial competence and integrity is an extremely important pre-requisite to translate a

project viable on paper into a real life success. Capital markets across the world (and even Indian

investors in recent times) factor in the company management in company valuations (in other

words share prices).

The following criteria tend to be looked at by the FIs to form a judgement regarding the

managerial competence and resourcefulness.

Track record in earlier projects

Resourcefulness of the promoter

Understanding of the business

Commitment to the project and

Integrity

SanctionIn the event of the project being assessed as viable, Sanction is accorded for financing to the

proposal. The Sanction is an in-principle decision for financing the project and is generally

subject to fulfillment of certain terms and conditions. Some of these conditions could be standardones such as:

In-principle approval from a bank for working capital

No Objection certificate from the Pollution Control Board

Sanction for power from the Electricity Board

Completion of all documentation formalities creating a charge in favour of the financial

institution on all the relevant assets.

Disbursement shall commence only when the First Investment Clause has been satisfied. First

Investment Clause requires the entrepreneur to invest his contribution before approaching the

Financial Institutions for disbursement.

Additionally in the event of the Financial Institution being dissatisfied with any particular aspect

of the project, then a condition stipulating the fulfillment of the desired change may be made fordisbursement to commence.

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Q 3. List out the planning components in retail operations and describe the project

designing process in retail project management.

Sol.

Planning Components in Retail Operations

It is necessary to lead a retail operation with adequate project planning components. Thesummary of Project planning components are as follows:

Summary of Supplemental Project

Plan Components

Project Plan Component Purpose

Key Elements /

Notes

Impact on

Project Planning

Change Control Plan Describes how the

project success factors

(scope, cost, schedule,

quality) will bemanaged and how

changes will beintegrated.

Can include

assessment of

expected

stability ofproject scope

Proactive

approach; manage

expectations.

Communications Plan Describes how the

information and

communication needs

of project stakeholderswill be met.

Often

documented and

presented in

tabular form.

Communications

management plan

details must be

added to WBSand project

schedule.

Configuration Management Plan Describes how

changes to projectdeliverables and work

products will be

controlled andmanaged.

Should include

both technicalwork products

and project

documentation

Proactive

approach; manageexpectations.

Procurement Management Plan Describes how theprocurement process

will be managed.

Contract typesRoles of project

team and

procurement

dept.

Remainingprocurement

management tasks

must be added to

project schedule.Constraints of

schedulingprocurement

activities with

third-partyvendors may

impact the project

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schedule.

Summary of Supplemental

Project Plan Components

Project Plan Component Purpose

Key Elements /

Notes

Impact on

Project

Planning

Quality Management Plan Describes the project quality

system.

Should address

both projectwork products

and the project

processes.

Cost and

scheduleadjustments

may be needed

to meet qualitystandards.

Quality

assurance and

quality controlactivities must

be staffed and

added to theproject

schedule.

Responsibility Matrix Lists the project roles and

responsibilities. Cross-referencesroles with assigned resources.

RACI matrix. Ensure all

requiredresources are

accounted for.

Resource Management Plan Indicates when project resourcesare needed on the project (start

and end dates).

Impact ifresource cannot

meet all skillrequirements.

Impact if

resource mustbe acquired at

rates higher

than estimated.

Cost baseline,work estimates,

and projectschedule are in

flux until the

final resourcesare acquired.

Risk Management Plan Describes how the risk

management process will bestructured and performed.

Describes the

process to beused.

Ensure risk

managementtasks are added

to WBS and

projectschedule.

Risk Response Plan Describes the response strategies

for identified risks.

Risk Log.

Details action

steps to be

Risk response

strategies may

entail the

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taken if risk

event occurs.

allocation of

additional

resources, tasks,time, and costs.

Budget

reserves,contingencyplans.

Variance Management Describes how performance

(cost, schedule) variances will be

managed.

Documents

planned

responses todifferent

variance levels.

Proactive

approach;

manageexpectations

Project Designing

After you have a list of tasks for your project and estimates for how long it will take to complete

them, you can schedule (schedule: The timing and sequence of tasks within a project. A scheduleconsists mainly of tasks, task dependencies, durations, constraints, and time-oriented project

information about the tasks). Depending on how you schedule the tasks, you can predict finish

dates for the tasks and the project as you enter information about how the project is progressing.You can use this information to determine whether your project schedule is at risk.

1. Get ready to sequence your project tasks:

At this point, you should have entered some tasks that must be completed in order to complete

your project. Each task should be associated with a duration, which indicates how long the task

will take to complete.Task schedule is easier if you list your tasks in the approximate order that you expect work to bedone on them. You may have to enter some tasks out of sequence, but be sure to list together the

tasks that will be done in the same time frame. There are two ways to sequence tasks:

1. Use dependency: To indicate that work on a task cannot begin or end until work on another

task begins or ends. For example, you use a dependency if painting cannot start until preparationwork is finished.

2. Use constraint: To indicate that work on a task must begin or end in relation to a specific

date. For example, you use a constraint if a task must end by June 30, because the subject matter

expert will be unavailable after that time.

2. Sequence the tasks in a project: You can link tasks according to their dependencies (Taskdependencies: A relationship between two linked tasks: linked by a dependency between their

finish and start dates: There are four kinds of task dependencies:

1. Finish -to -start (FS),

2. Start- to- start (SS),

3. Finish -to -Finish (FF) and

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4. Start- to- finish (SF).

specifying the sequence for your tasks includes showing which tasks overlap or have a delay

between them.

A) Create a dependency between tasks in a project: to link dependent tasks and tell Project how

they are dependent. Tasks often happen in a linear sequence: For example, you first prepare thewalls, then paint them, and then hang pictures. However, there are exceptions in any project. In

the same example, as one person prepares the walls for painting, someone else can buy the

pictures that you intend to hang.

B) Set lead or lag time between tasks: to show a delay between tasks. If a task link alone is not

enough to accurately show the relationship between tasks, you can set lag time (lag time: A delay

between tasks that have a dependency. For example, if you need a two-day delay between the

finish of one task and the start of another, you can establish a finish-to-start dependency andspecify a two-day lag time(has appositive value).

3. Create a milestone to represent an external dependency:

When you want to track an event but you cant link to it because the event doesnt appear in anyproject, you can create a milestone to represent the event. For example, you may not be able tobegin a certain task until another company completes a software program that you need to use.

You can create a milestone in your project that represents the completion of that program and

reminds you to track its progress.

4. Create a deadline for a task: To be notified when a task is finished after a particular date,you can create a deadline. Creating a deadline does not restrict you from freely adjusting the

schedule when you update information, just as it does when you enter flexible constraints.

(Flexible constraints: A constraint is flexible because it does not tie a task to a date. The

inflexible constraints must finish on and must start on a fixed date.

5. Tie a task or phase to specific date : When you absolutely must start or finish a task on aparticular date, tie a task or phase to a specific date. That date can represent an event, such as a

seminar or class.

6. Add supporting information about task: Add more information about a task in the form ofnotes, documents, and links to Web pages.

a) Add a note to tasks, resources or assignments: if you have only a small amount of information

that you want to include directly in your project file. You can also add a file from another

program to a note.

b) View and Upload document: if you want to link supporting documents by using ProjectServer.