0% found this document useful (0 votes)
18 views

Chapter One-Project

Uploaded by

Adugna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
18 views

Chapter One-Project

Uploaded by

Adugna
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 13

Chapter One

Introduction to Project Analysis and Management

Learning Objectives: At the end of this chapter, you will be able to:
 Understand the concept of project
 Define of project
 Understand the characteristics of project
 Know the types of projects
 Explain the difference between projects and programs
 Explain the relationship between plans and project
 Briefly describe what project life cycle means.
 Know the general stages of project development.
 Identify and describe the stages in a project cycle.
 Describe the different stages in each phase of a project life cycle.
 Compare and contrast different classifications of project life cycle.

1.1 Introduction
Project analysis and management plays a key role in the economic development of the country.
Projects are the predominant means employed by business, industry, government and non-
governmental organizations to introduce major changes and undertake new activities to
accomplish objectives, regardless of whether the objective is very specific i.e., infrastructure
development, or increase profit by certain percent, or increase market share with a new product.
However, despite the pre-eminence of projects as means to achieve organizational ends thee is a
gap in translating project plans in to actual investment and operation. No matter how
sophisticated or detail the project preparation work, it has no value unless it is transformed into
action or implemented. With this regard studies based on previous project implementation
experiences shown that there is continuing difficulties in many developing countries in
transforming plans or project studies into investment projects due to lack of adequate knowledge
and project management skills by most of the individuals engaged in project undertakings.

1.2 Project Definition


The word project has a wider meaning. Many people and organizations have defined what a
project is, or should be, but probably the most authoritative definition is that a project is “a
unique set of co-ordinated activities, with definite starting and finishing points, undertaken by an
individual or organization to meet specific objectives within defined schedule, cost and
performance parameters.” A project is a complex of economic activities in which we commit
scarce resources in expectation of benefits that exceed these resources. A project is an
investment made on a package of interrelated time-bound activities; consequently, a project
becomes a time-bound task.
It is a set of proposals for the investment of resources in to a clearly identified set of actions and
these actions are expected to produce future benefits of a fairly specific kind. It can be small, as
in the case of the construction of a house, awareness campaign or it can be large as in the case of
multi-lateral or integrated project involving a number of sectors or rural and urban communities.
It is also defined as a non-routine, non-repetitive, one-off undertaking, normally with discrete
time, financial and technical performance goal. Project may be defined as planning work for

1|Page
various activities for a completion of a final work. Project is a plan for arranging, coordinating,
supervision, monitoring and complication of various activities related to a final objective. A
project is a unique venture with a beginning and an end, undertaken by people to meet
established goals within defined constraints of time, resources, and quality.
Examples of projects include construction of building, construction of road, establishment of
factories, launching of products, developing a new product, designing a software,
implementation of software, develop a new system or service, making significant improvements
to a system or service, improving internal processes or introduce new ones, building or
significantly enhancing infrastructure, researching new technology for a specific purpose, etc
Some examples of work that are not projects include daily production support activities (system
administration, system operations, break/fix activities, customer support, etc), other operational
activities that follow a defined process, very small system change requests, etc.
From the above definitions and examples, we can understand that projects have well defined
objectives, start and finish dates, are designed and implemented to produce specific results,
require financial, material and human resources, involve one or more individual or groups, are
unique (i.e., they will not be repeated precisely in the same way in the future), and have definite
location and target group (beneficiaries).
We can also see projects from different angles such as distinguishing:
 Projects of long and short duration such as hydroelectric and annual crop projects.
 Projects producing goods (oil mill), research station or information(mineral exploration)\
 Projects catering to regional, national or international markets.
 Rural and urban projects.
 Agricultural, industrial, transportation and other projects.
 Capital, labor or energy intensive projects and so on.
1.3 Project Characteristics
From the above definitions, we can have the following features (characteristics) of projects:
 Projects have a purpose/objective: projects have clearly-defined aims and set out to
produce clearly-defined results. A project has a set of objectives or a mission. Once the
objectives are achieved, the project is treated as completed. For example the objective of
a project may be construction of a highway connecting two cities ‘A’ and ‘B’. Once the
construction of the highway is completed the project comes to an end.
 Projects are realistic: their aims must be achievable, and this means taking account both
of requirements and of the financial and human resources available.
 Projects are limited in time and space: they have a beginning and an end, and are
implemented in a specific place and context. That means it can not continue forever.
Construction of a highway connecting two cities for instance is a project which is to be
completed within a given time limit.
 Projects are complex: projects call on various planning and implementation skills, and
involve various partners and players.
 Projects are collective: projects are the product of collective endeavor. They are run by
teams, involve various partners and cater for the needs of others. A project normally
consists of diverse areas. There will be personnel specialized in their respective areas. Any
project calls for the services of experts from a host of disciplines. Co-ordination among the

2|Page
diverse areas calls for team work. Hence a project can be implemented only with
teamwork.
 Projects are unique: all projects stem from new ideas. They provide a specific response
to a need (problem) in a specific context. The principal identifying characteristics of a
project is its novelty. No two projects ever exactly alike and even a repeated project will
differ from its predecessor in one or more commercial, administrative, or physical
aspects.
 Projects are an adventure: every project is different and ground-breaking; they always
involve some uncertainty and risk. It is a step into the unknown, fraught with risk and
uncertainty.
 Projects can be assessed: projects are planned and broken down into measurable aims,
which must be open to evaluation.
 Projects are made up of stages: projects have distinct, identifiable stages.
 Commitment of Scarce Resources: A project consumes resources. The resources required
to for completing a project are man, material, money and time. The nature of resources is
that they are limited and scarce.
 Change: A project is not rigid in its life span. Changes occur throughout the life span of
a project as a natural outcome of many environmental factors. The changes may vary
from minor changes which may have very little impact on the project to major changes
which may have a big impact or even may change the very nature of the project.

1.4 Classification of Projects


Projects may be classified in different way for different purposes. For example we can classify
projects from the point of view of ownership, sources of finance and forces behind as follows:
Ownership:
 Private sector projects – undertaken by business enterprises
 Public sector projects – undertaken by national/local government bodies
 NGOs projects– undertaken by nongovernmental not-for-profit entities
 Projects undertaken by public sector such as federal/state governmental units and
NGOs are called development projects.
Sources of finance:
 government treasury (equity) vs. external assistance/loan (debt)
Forces behind:
 Demand/need driven - unsatisfied demand e.g. building schools and health centers.
 Donor driven e.g. constructing donor backed health center.
 Political driven e.g. constructing martyr (willing victim) building/monument.

It is convenient also to classify projects under the following four main headings.
Civil engineering, Construction, Petrochemical, Mining and Quarrying Projects: Projects in
this category are those which spring most readily to mind whenever industrial projects are
mentioned. There common future is that the fulfillment phase must be conducted on a site that is
exposed to the elements, and usually remote from the contractors head office. These projects
incur special risks and problems of organization. They often require massive capital investment
and they deserve (but do not always get) rigorous management of progress, finance and quality.

3|Page
Manufacturing Projects: Manufacturing projects aim at the production of a piece of equipment
or machinery, ship, aircraft, land vehicle or some other item of specially designed hardware. The
finished product might be purpose-built for a single customer, or the project could be generated
and funded within a company for the design and development of a new product intended for
manufacture and sale in quantity. Manufacturing projects are usually conducted in a factory or
other home-based environment, where the company should be able to exercise-on-the-spot
management and provide an optimum environment.

Management Projects: This class of project proves the point that every company, whatever its
size, can expect to need project management expertise at least once in its lifetime. These are the
project that arise when companies relocate their headquarters, develop and introduce a new
computer system, prepare for a trade exhibition, produce a feasibility or other study report,
restructure the organization, mount a stage show or engage in any operation that involves the
management and coordination of activities to produce an end result that is not identifiable
principally as an item of hardware or construction.
Research projects: Projects for pure research can consume vast sums of money, last for many
years and result in a dramatically profitable discovery. They can on the other hand, result in a
complete waste of money and resources invested. Research projects carry the highest risk
because they are attempting to extend the boundaries of current knowledge. Unlike the other
types of projects, their end objectives are usually difficult or impossible to define. Research
projects might not, therefore, be amenable to the project management methods that can be
applied to industrial or management projects.

1.5 Project Management


Project management is planning, scheduling, controlling and monitoring the complex non-
routine activities that must be completed to reach the predetermined objectives of the project. It
involves the coordination of a group activity, wherein the manager plans, organizes staffs,
directs, and controls to achieve an objective, with constraints on time, cost and performance of
the end product.
Projects analysis involves estimation and comparing the beneficial effects of an investment with
its costs. Though it originated many years ago, it has been extensively used in the last years.
The basic ideas of project analysis became clear only after their applications. In 1830s a
problem was formulated in the U.S. in relation to water resource investments. The costs of
investment could easily be estimated. But the benefits were not that much easy to compute
because there was no established price to value water. Thus, guidelines were established for
estimating the benefits and costs of water resource projects. The first use of project analysis was
made in the Soviet Union in 1930s. The emphasis was on expanding material production than
social service sectors.

The application of project analysis has been considerably increasing in developing countries.
India provides an example where project analysis has been extensively applied over a long
period in both commercial and non-commercial investments and in the assessment of private
investment proposals. In Jamaica, a committee primarily assesses the project proposals. Since
most of the projects in Sri Lanka are externally funded, assistance agencies carry out the analysis
work, which will be renewed by managerial planning staff.

4|Page
Even socialist countries such as China and Mozambique have adapted project analysis as part of
a process of reform. The last two decades have witnessed serious applications of project analysis
in Africa and Asia. Internationalization (globalization) of products, privatization policies and
invitation of foreign investment has enhanced the applications of project analysis and
management techniques.

1.6 Project and Plans


Virtually every developing country has a systematically elaborated national plan to hasten
economic growth and further a range of social objectives. Projects provide an important means
by which investment and other development expenditures foreseen in plans can be clarified and
realized. Sound development plans require good projects, just as good projects require sound
planning.
Development strategies are packages of ways and means by which available resources are put in
their best use in achieving specific objectives. Since projects commit scarce resources, project
selection is meaningful only when it is consistently placed within a broader development
framework. This framework is usually delineated in medium and long-term development plans
and policy statements issued by the government. It is within this framework that all affects a
project such as its requirements and benefits can be assessed properly. The more elaborate the
development plans and policy statements, the easier becomes the work of the project planner. As
a minimum, they should outline the desired socio-economic pattern of development and should
specify the major objectives. The analyst should constantly keep in mind the declared objectives
and should always verify that the selected project contributes to the maximum extent possible in
attaining them.
Components of a macro-plan (national): can also apply to private sector projects
Development goals/objectives: Are statements of intention or aspiration of a government to
improve the living conditions of its people. E.g. improving the material and cultural well
being of people, poverty reduction, etc

Development strategies: Are general methods of achieving specific objectives e.g. Ethiopia’s
development strategies e.g. Food security

Development programs: Are organized set of activities directed toward a common purpose or
goal and serve as frame of references for identifying and evaluating projects. E.g. Ethiopia’s
rural development program, sustainable development and poverty reduction program

Development projects: Are policy instruments through which national and sub-national
plans are translated in to action. They are the most practical aspects of the national plan (or
any other plan for that matter). They often referred to as the “cutting edge of development”

5|Page
1.7 Project and Programs

The term project should be differentiated from the term program to avoid the confusion that
arises when they are used interchangeably. Programs unlike projects are open ended. This means
they do not have a well defined finish date. A series of related projects make programs. Programs
in turn are what produce the longer-term impact on societies.

Project Program
 Is specific in objectives/purpose  Has got general objectives
 Has specific area/geographic unit  May not have specific area
 Has specific target groups  May not have specific target groups
Differences  Has clearly determined and  May not have clear and detailed
allocated fund. financial allocation
 Has specific life  May not have specific time of ending.

Similarities  Have purpose/objectives


 Require input (financial, manpower, material, etc).
 Generate output(goods and/or services)
 Operate over space and time.

1.7 Project Cycle


There are distinct stages that shall be passed in achieving goals of a project and that are repeated
in the right order whenever a project is to be undertaken. These stages of a project life cycle may
differ according to the expression of different authors or institutions. But the basic ones are the
pre-investment phase, the investment phase and the operational phases.
Project life cycle refers to the various stages through which a project planning passes from its
time of inception up to its completion. It is the project’s life cycle through which a project
advances from infancy to maturity. The stages/phases constitute a specific sequence that is
cyclical in nature. Most, if not all, projects go through a life cycle which varies with the size and
complexity of the project. On medium to large projects, the life cycle will generally follow the
following seven patterns:
(1) Identification: stage where one project-idea out of several alternatives is chosen and
defined.
(2) Preparation: defined idea is carefully developed to the appraisal stage.
(3) Appraisal: every aspect of the project idea is subjected to systematic and comprehensive
evaluation, and a project plan is prepared.
(4) Presentation: detailed plan is submitted for approval and financing to the appropriate
entities.
(5) Implementation: with necessary approvals and financing in place, the project plan is
implemented.
(6) Monitoring: at every stage the progress of the project is assessed against the plan.

6|Page
(7) Evaluation: upon completion the project is reassessed in terms of its efficiency and
performance.

1.7.1 Features of Project Cycle


The main features of this process are information gathering, analysis and decision making.
Through the project cycle, the primary preoccupation of the analyst is to consider alternatives,
evaluate them and to make decisions in which of them should be advanced to the next stage.
1.7.2 Project Cycle Models
Many Project Cycle models which differ in their perspective, emphasis and level of detail. Three
of these models are listed below and explained further in detail as follows:
A. The Baum Cycle
B. The New Project Cycle (World Bank 1994)
C. United Nation Industrial Development Organization (UNIDO) Project Life Cycle

A. The Baum Cycle (Adopted by the World Bank in 1970)


The World Bank suggested some stages in the project activities. These project cycles is divided
into the following stages:
1. Project identification
2. Project preparation
3. Project appraisal
4. Project implementation
5. Project evaluation
1. Project Identification (Pre-feasibility studies): Project identification is the initial stage of
the project. It contributes towards achieving specified development objectives are identified.
A project idea may originate from multiple sources.
 Many of the important projects in developing countries emerge from political
commitment of national leader, as response to crisis, emergencies and external threats or
to foreign governments’ policies and assistance agency priorities.
 Others are new experiments emerging from previous project failures or expansion and
replication of successful projects tested locally or proven feasible in other developing
countries or from the discovery of critical economic and social bottlenecks of shortages,
excess or idle resources and forward and backward linkages with existing projects.
The work of voluntary agencies, non-profit organizations and foundations in such fields as health
care, education, family, social services and housing has been a catalyst for new ideas.
Developing nations are required to link informal processes with formal national planning
systems very closely.
a) Preliminary Screening: Project screening is a process of elimination of inferior alternatives.
Once some project ideas have been put forward, the first step is to select one or more of them
as potentially viable. At this stage the analyst should eliminate proposals that are technically
unsound.

7|Page
b) Pre-feasibility Study: Following the preliminary study, promising options should be
investigated in a systematic manner to suggest which are to be eliminated. Sophisticated
analyst of the technical, financial, social and institutional aspect of the project is postponed to
a later stage. However, the report should indicate which of these aspects deserve particular
attention during the subsequent step. These reports are called pre-feasibility studies.
To enable the relevant authorities to decide on the merit of various project options, the studies
should contain:
o The structure and objective of the project
o The nature and size of the demand of output or the need that it would satisfy
o Availability of material and human input
o Basic alternative technologies available and their merit and drawbacks
o Approximate investment and operation cost
o Rough estimates of financial and economic return
o Any major factor that is likely to an impact on the project and
o What further information on technical, financial, economic or institutional aspects of
the project should be acquired through special studies and surveys?
2. Project Preparation (Feasibility Study): After the pre-feasibility study has been done the
project enters the next stage for more and sophisticated analysis supported by accurate
information in the study. All aspect, technical and non-technical, should receive the attention
to serve without postponing any consideration to the later stage
Project preparation necessitates a team work approach with professionals investigating different
aspects of the project, working closely. They should exchange views and check their conclusions
under the coordination of an expert working as team leader.
There are two key areas where the analysts have choices to be making: the technological area
and institutional area. Some economic aspects relating to employment and income distribution
may be placed under these areas if they are not included in the basic objectives. The feasibility
study should give due consideration to the strong interrelation linkages to ensure mutual support
between the technical and institutional components in achieving the objectives of the project.
a). Technological choices: In the technological sphere the choices to be made through
comparative consideration of alternatives. It is the function of professionals to scrutinize the
merits of each alternative. Certain technical aspects that seek alternatives consideration may be:
Building a new plant or facilities as against improving the capacity of existing one.
indigenous against imported technologies labor intensive against capital intensive one
and technologies with high initial costs but low maintenance requirements against those
low initial cost but high maintenance need.
Possibility of implementing the project in the stage and the merits of one big plant in the
center versus a number of smaller regional ones.
b) Institutional choices: Professionals may consider many institutional aspects where alterative
are feasible like:

8|Page
Consider the merits of establishing a new agency to implement and operation the projects
as against using an existing one.
Comparative advantages of various degrees of centralization and decentralization of
functions and decision making.
Evaluate alternative types of ownership and control such as public, private, cooperative,
joint venture, domestic, foreign, etc
Compare alternatives in the supply of inputs (e.g. estate farming Vs out growers) and the
supply chain of output
3. Projects Appraisal and Investment Decision: Appraisal is the comprehensive and
systematical assessment of all aspect as of the proposed project. The appraiser are usually the
central economic authorities responsible for drafting the overall development strategy and
entrusted with major decisions on matters relating to this strategy. The project is reviewed to
conform that it accords with the broad development objectives and fits into the development
process of the country. The project is viewed from different perspectives; technical,
commercial, function, economic, managerial and organizational. It is to ensure that the
project represents a high priority use of countries resources and in combination with other
policies, contributes the maximum possible towards achieving national development
objectives.
4. Project Implementation, Supervision and Follow-up: It is the stage the conclusions
reached and decisions made are put into action. Detailed designs and specification should be
drawn, contract to be signed, workers to be hired and put to work, materials to be moved to
site, etc. It is not well-prepared and evaluated but studiously executed projects that deliver
the envisaged benefits. The project planning and execution require higher level of managerial
skills and adequate administrative capacities. With many developing countries have proved
to be lacking, many countries are not as expert as they are at planning. Any plan is only as
good as it achieves. Some implementation problems are changed in the economic and
political situation of the country or the world marker while others project specific.
The execution of the project should be supervised closely and progress should be reported
regularly to ensure that the implementation is progressing without deviating from the envisaged
path. The follow up exercise or ex-post evaluation is considered as continuation of supervision to
assess whether the objectives of the project have been reached.
5. Project Evaluation: It involves ex-post evaluation process (after the fact evaluation). At this
stage, performance of the project is observed and evaluated and important decisions are made
based on the feed back obtained. It may include expanding the project, discontinuing it,
merging with others or the like.
B. New Project Cycle (World Bank 1994)
This cycle emphasizes on the issue of participation of different groups in the project. It is
particularly relevant where beneficiary participation is critical to the success of projects. It has
four distinct phases:
 Listening- this is the stage of understanding the needs of the stakeholders of the
completed project.

9|Page
 Piloting- is a stage of trying the success or failure of the project in small scale operation
before scarce resources are spent and wasted.
 Demonstrating-this is the stage of showing the stakeholders the successfulness of pilot
in an effort to convince them accept the whole project idea.
 Mainstreaming- this is the stage of duplicating the pilot as large scale operation and
getting into the main project activity.
It can be shown by the following diagram:

Listening Piloting Demonstrating Mainstreaming

C. UNIDO (United Nation Industrial Development Organization) Project Cycle


The following phases are the project cycle according to UNIDO:
1. Per-investment Studies (Project Identification)
a) Opportunity studies (Project identification)
b) Pre-selection (Pre-feasibility study)
c) Preparation (Feasibility study)
d) Appraisal (Appraisal report)
2. Investment phase (implementation)
a) Negotiation and contracting stage
b) Project design stage
c) Construction stage
d) Preproduction marketing stage
e) Training stage
f) Start up stage
3. Operating phase (operation and ex-post evaluation)
a) Long-term views (expansion, innovation)
b) Short-term views (replacement and rehabilitation)
1. Pre-investment Phase
Pre-investment phase comprises several stages from identification of projects to evaluation stage.
Support studies are conducted during this stage. It is easy to understand the scope of an
opportunity study. But, it is very difficult to phase into various stages. It facilitates for studying
the possibility of investing in the project step by step.
a) Opportunity Studies/Project Identification: Identifying investment opportunities is the
starting point in a series of investment related activities. Potential investors, private or public
from developing and developed countries are interested in obtaining information on newly
identified variable investment opportunities. It should consider analyzing the following:
 Availability of natural resources
 Existing agricultural pattern
 Future demand for goods, increasing population, purchasing power
 Exports and import substitution
 Environmental impact
 Functioning similar project of other countries

10 | P a g e
 Possible in less linkage with other industries
 Extension by backward as forward linkage
 Industrial politics
 General input climate the economy
 Expansions an existing to have large care economic
 Export potential
 Availability and cost of production factors
Opportunity studies can be general or specific. General opportunity studies may be:
1. Area studies designed to identify opportunities in region or in an area.
2. Industry studies designed to identify opportunities in an industrial branch ( such as
building materials or food processing)
3. Resource based studies designed to utilize natural and agricultural resources.
A specific opportunity study may be defined as the transformation of a project idea into a broad
investment proposition. It focuses on a specific project. However, specific studies should follow
the initial identification of general investment opportunities.
b). Per-feasibility studies/pre-selection: The idea of the project that is generated from the
opportunity studies must be elaborated in a more detailed study. But, a feasibility study for a
definite decision is expensive and time consuming. So, before conducting a feasibility study, a
further assessment of the project idea might be made in pre-feasibility study. All possible
alternatives examined
 The project concept justifies detailed analysis
 A critical area necessitates in-depth investigation
 Project idea is either attractive for investment or non-viable
 The environment situation at the site in line with national standards
A pre-feasibility study should be viewed as an intermediate stage between a project opportunity
study and a detailed feasibility study. The structure of pre-feasibility study should be the same
as that of a detailed feasibility study. The difference is in the degree of detail feasibility study.
The difference is in the degree of detail of the information. Sometimes, a comprehensive
opportunity study may justify by passing the pre-feasibility study stage.

Support functional studies cover specific aspects of an investment project in support of pre
feasibility or feasibility studies. E.g. Market studies, Raw material studies, Laboratory tests,
Location studies etc.
c). Feasibility study/preparation/: Feasibility study aims at providing all data necessary for an
investment decision. Before the final decision is taken to commit resources, the technical,
economical and commercial justification has to be provided in comprehensive and authentic
terms. These should be clarity about the location, the plant size, the material and the major
inputs. Proceeding from this base, capital outlays, production costs, and expected sales revenues
and return on investments have to be ascertained. It assists in arriving at the final decision to
invest. Feasibility study is an essential document spelling out the economic viability and
prospects of the project. Though the contents of pre feasibility and feasibility studies are the
same, more accuracy is expected in the feasibility study.

11 | P a g e
d). Appraisal/Evaluation report/: When the feasibility study is completed, the various parties
involved in the project will carry out their own appraisal of the investment projects in accordance
with their individual objectives. An evaluation of expected risks, costs and gains of the project
will be done. The project appraisal should be considered as an independent stage of the pr
investment phase, marked by the final investment and financing decision taken by the project
promoters.

Appraisal reports are necessary for getting funds from the financial institutions. They reveal the
health of the company to be financed and the protection of its creditors.
2. Investment Phase
The investment or implementation phase of a project provides wide scope for consultancy and
engineering work, first and foremost in the field of project management. The investment phase
can be divided in to the following stages.
a) Establishing the legal, financial and organization basis of the implementation of the
project.
b) Technology acquiring and transfer, including basic engineering
c) Detailed engineering design and contracting including tendering evaluation of bids and
acquisition of Land, construction work and installation
d) Pre-Production marketing, including the securing of supplies and setting up the
administration of the firm.
e) Recruitment and training of personnel
f) Plant commissioning and start- up
Detailed engineering design comprises preparatory work for site preparation, the final selection
of technology and equipment, the whole range of construction planning etc. Tendering and
evaluation of bids are important to get comprehensive tenders from competitive suppliers. This
stage covers signing of contracts between the investor and the contractors, architects, suppliers of
raw materials and financing institutions. The construction stage involves site preparation,
construction of buildings and other civil works.

The personnel recruitment and training stage is very crucial for the expected growth of
productivity and efficiency operations. Timely initiation of marketing arrangements to prepare
the market for the new products (pre production marketing) and securing supplies are also very
crucial for the commencement of operations of the project.
3. Operating Phase
The problem of the operational phase should be considered from both a short and a long-term
viewpoint.
 The short-term view relates to the initial period after commencement of production when
a number of problems may arise concerning such matters as the application for
production techniques, operation of equipment or inadequate labor productivity owing to
a lack of qualified staff and labor. Most of these problems have their origin in the
implementation phase.
 The long-term view relates to chosen strategies and the associate production and
marketing costs as well as sales revenues. These have a direct relationship with the

12 | P a g e
projections made at the pre investment phase. If such projections prove faulty, remedial
measures will not only be difficult but may probe highly expensive.

13 | P a g e

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy