Scribd
Upload
4 views18 pages

Chapter One

operation research

Uploaded by

bethanyafeseha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
4 views18 pages

Chapter One

operation research

Uploaded by

bethanyafeseha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 18

Chapter One

OVERVIEW OF PROJECT
ANALYSIS AND MANAGEMENT
2. PROJECT LIFE CYCLE
The development of an industrial
investment project from the stage of the
initial idea until the plant is in operation
can be shown in the form of a cycle
comprising three distinct phases,
1. the pre-investment,
2. the investment and
3. the operational phases.
Each of these three phases is divisible into
stages.
2.1. Project Cycle According To Baum
(World Bank) Approach:
It comprises five main stages, namely;
1. Identification
2. Preparation
3. Appraisal and Selection
4. Implementation
5. Evaluation
 Actually, the division into stages is
artificial, but it helps us to understand
that project planning, though a
continuous process over time, has
distinct phases and stages.
2.1.1. Identification
The first stage in the cycle is to find
potential projects.
Some sources of projects are given here;
• Some may be “resource based”
• Some projects may be “market based”
• Others may be “need-based”
• Well-informed technical specialists and
local leaders are also common source of
projects.
• Ideas and new projects also come from
proposals to extend existing programs.
2.1.2. Preparation (Pre-
feasibility studies)
Once projects have been identified, there
begins a process of progressively more
detailed preparation and analysis of
project plans.
It covers the establishment of technical,
economic and financial feasibility.
Complete technical specifications of distinct
proposals accompanied by full details of
financial and economic costs and
benefits are the outcome of the project
preparation stage.
2.1.3. Appraisals
After a project has been prepared, it is
generally appropriate for a critical review
or an independent appraisal to be
conducted to assess whether the proposal
is appropriate and sound before large
sums are committed
On the basis of these report, financial
decisions are made –whether to go
ahead with the project or not.
2.1.4. Implementation
The objective of any effort in project
planning and analysis clearly is to have a
project that can be implemented to the
benefit of the society (promoters).
In this stage, funds are actually
disbursed to get the project started and
keep running.
2.1.5. Evaluation
The final phase in the project cycle is
evaluation.
Once a project has been carried out, it is
often useful, (though not always done) to
look back what took place, to compare
actual progress with the plans, to judge
whether the discussion and actions taken
were responsible and useful.
2.2. Project Life Cycle – UNIDO Approach

According to UNIDO, project cycle involves


three major phases. These are:
1. Pre-investment phase
2. Investment phase (Implementation phase)
3. Operation phase (operation and ex-post
evaluation)
Each of the above phases will be explained
in the section that follows:
2.2.1. Pre-investment Phase
The pre-investment phase includes four
major activities; namely,
1. project identification,
2. pre–selection,
3. project preparation, and
4. appraisal.
Project Identification / opportunity study/
In opportunity study, the firm is required to
analysis the following:
o Availability of resources
o Future demand for goods
o Import substitutions
o Environmental impact
o Success of similar projects elsewhere
o Possible inter-linkage with other industries
o Expansion through linkages (Backward
integration) and forward linkages (Forward
integration)
o Industrial policies of the government
o General investment climate of the country
o Export potentials
o
Pre-selection /pre-
feasibility study/
This phase involves the analysis of the following
factors:
1. Examination (investigation) of all possible
project alternatives
2. Ensure that the detailed analysis of the project
is justified.
3. In-depth investigation of critical areas of the
project
4. Examine the attractiveness (viability) of the
project
5. Investigate the stability of the environmental
situation at the location site
The above analyses are based on guess-
estimated data.
Preparation (feasibility
study)
 The projects justified by pre-feasibility study enter this
phase for detailed analysis
 The components of feasibility study are:
1) Project Background and history
a. Name and address of the promoter
b. Project Background
c. Project objectives
d. Outline of the proposed basic project strategies
e. Project location
f. Economic and industrial policies supporting the project
2) Summary of market analysis and marketing concepts
3) Raw materials and supplies
4) Location, site, and environment
5) Engineering and Technology
6) Organization and Management
7) Implementation planning & budgeting
8) Financial Analysis and investment appraisal
Project Appraisal
After feasibility studies are completed, the
projects should be presented to the
appraising parties.
The appraisal of project is based on the
objectives set earlier, the expected
risk, costs, and gains.
2.2.2. Investment Phase
The investment phase, also called implementation
phase, includes the following activities:
1. Establish legal, financial and organizational basis
2. Technology acquisition and transfer
3. Detailed engineering, design, contracting,
tending & negotiations.
4. Acquisition of land, construction works, and
installations
5. Pre-production marketing, securing of supplies,
and setting up administration.
6. Recruitment, training, and placement of workers.
7. Plant commissioning and startup
2.2.3. Operating phase
Once activities listed under investment phase
are completed, the project will go in to actual
operation.
The operation involves producing the
envisaged goods, and sale to the target
market, or renders the envisaged service
to the target market.
The project also requires evaluation, which
deals with the review of whether the project
is being implemented as per expectation. The
necessary corrective actions should also be
taken if deviation is identified.
2.3. DEPSA’s Project Cycle
According to the Guidelines to project
planning in Ethiopia (1990) of Development
Project studies Authority (DEPSA), the
project compromises three major places.
1. Pre-investment
2. Investment and
3. Operation
Cont.…
Each of these three phases may be divided into
stages. The guidelines have divided the project
into six stages.
1. Identification
2. Preparation
3. Appraisal
4. Implementation
5. Operation
6. Ex-post evaluation
 The pre-investment phase consists of the first-
three stages, the investment phase includes
the fourth stage and the operation phase
covers the last two stages.

You might also like