PROJECT REPORT

Meaning of Project : An entrepreneur takes numerous decisions to convert his business idea into a running concern.
His / Her decision making process starts with project/product selection.
Project Report: A project report is a document that describes a project's objectives, milestones, challenges,
and progress. It plays a critical role in the project planning and management process.

1.1 Basic Guidelines of a Project Report

In order to process investment proposals and arrive at investment decisions, the planning Commission has issued
guidelines for preparing/formulating industrial projects.

The guidelines have been summarized as follows:

1. General information: The feasibility report should include an analysis of the industry to which the project belongs.
It should deal with the past performance of the industry. The description of the type of industry should also be given, i.e.,
the priority of the industry, increase in production, role of the public sector, allocation of investment of funds, choice of
technique, etc. This should contain information about the enterprise submitting the feasibility report.
2. Preliminary analysis of alternatives: This should contain present data on the gap between demand and supply
for the outputs which are to be produced, data on the capacity that would be available from projects that are in production
or under implementation at the time the report is prepared, a complete list of all existing plants in the industry, giving their
capacity and their level of production actually attained, a list of all projects for which letters of intent licenses have been
issued and a list of proposed projects
3. Project description: The feasibility report should provide a brief description of the technology/process chosen for
the project. Information relevant for determining the optimality of the location chosen should also be included. To assist in
the assessment of the environmental effects of a project every feasibility report must present the information on specific
points, i.e., population, water, land, air, flora, fauna, effects arising out of the project’s pollution, other environmental
destruction, etc.
4. Marketing plan: It should contain the following items: Data on the marketing plan, demand and prospective supply
in each of the areas to be served. The methods and the data used for making estimates of domestic supply and selection
of the market areas should be presented. Estimates of the degree of price sensitivity should be presented. It should
contain an analysis of past trends in prices.
Capital requirements and cost: The estimates should be reasonably complete and properly estimated. Information
on all items of costs should be carefully collected and presented.
6. Operating requirements and costs: Operating costs are essentially those costs which are incurred after the
commencement of commercial production. Information about all items of operating cost should be collected. Operating
costs relate to cost of raw, materials and intermediaries, fuel, utilities, labour, repair and maintenance, selling expenses
and other expenses.
7. Financial analysis: The purpose of this analysis is to present some measures to asses the financial viability of the
project. A Performa balance sheet for the project data should be presented. Depreciation should be allowed for on the
basis specified by the Bureau of Public Enterprises. Foreign exchange requirements should be cleared by the
Department of Economic Affairs.
8. Economic analysis: Social profitability analysis needs some adjustments in the data relating to the costs and
return to the enterprise. One important type of adjustment involves a correction in input and cost, to reflect the true value
of foreign exchange, labour and capital.

1.2 Project Appraisal: Project appraisal is an exercise whereby, a leading financial institution makes an independent
and objective assessment of various aspects of an investment proposition to arrive at the financial decision. Project
appraisal means the assessment of project in terms of its economic, social and financial viability. It is a complete
scanning of the project.
Usually banks and financial institutions conduct a critical appraisal of projects, which are submitted to them by the
entrepreneur for getting loans. They have been traditionally accepting the data provided by the entrepreneur as valid
while assessing the project. In fact the emphasis has largely been on the cash flow and financial viability of a project in
assessing their suitability for extending the loans.
1.3 Essential for good project report:
1. The project report should be sequentially arranged.
2. The project report should be covering all the details about the proposed project.
3. The project report should not be very lengthy an subjective.
4. 4 The projections should be appropriately be made from two ten years.
5. The project report should justify the financial needs and financial projection.
6. The project report should also justify market prospects and demands.
7. The project report should be attractive to the financial agencies and investors.
8. The project report should also have a high aesthetic value.

1.4 Format of a Project Report:

1. Cover Sheet:: Cover sheet is like the cover pages of the book .it mentions the name of the project ,address
of the promoters.
2. Table Of Contents : The table of contents is like the table of contents of content of a book .it guides the
person reviewing the project report to the desired section quickly. a good methodology would be to divide
the project report into section and number or label the section like 1,2,3,or a,b,c;
3. Executive Summary: Executive summary is the first impression about the business personal as the saying
goes the first impression is the last impression a careful presentation of information should be done to
attract the more than two or three pages.
4. The Business: This will give details about the business concept. it will discuss the objective of the business
a brief history about the past performance of the company, what would be the form of ownership. It would
also label the address of the proposed headquarters.
5. Funding Requirement : The investors & financial institutions are one of the key bodies examining the
project report. In the project report, a careful, well- planned funding requirement should be documented. It is
also necessary to project how these requirements would be fulfilled.
6. The Product of Services :: A brief description of product/services is given in this sub section. It includes
the key features of product & the product range that would be provided to the customers. It also gives
details about the patents, trademarks copyrights, franchises & licensing agreements.
7. The Plan: Now the functional plans for marketing, finance, human resources & operations are to be drawn.
a. Marketing Plan : Marketing ix strategies are to be drawn based on the market research. The market
research provide information regarding the taste, needs, habit of the customer market research is the backbone of
success & failure of any product in the market.
b. Operational Plan : The operational plan would give information about plant location & plant layout. When
we choose a particular location so many factors should be considered such as market suppliers, labour, transport
facilities, power supply, govt. etc.
c. Organization Plan : The organization plan indicate the pattern of flow of responsibilities & duties
amongst people in the organization it provides details about the boards of directors, it can also enlist the
manpower plan that would be required to put life into the company & it would be required to put life into the
company & it would also enlist the details about the laws that would be goverened in managing the employees of
the organization. In the end the organization plan is also budgeted.
d. The financial plans drawn for two or five years for an existing company. A summary of previous financial
data is given whereas for a new organization the projections are as:
1. Projected sales
2. Projected income & expenditure statement.
3. Projected breakeven point
4. Projected profit & loss statement
5. Projected balance sheet
6. Projected cash flows.
7. Projected fund flows.
8. Projected ratios.
8. Critical Risks: The investors are interested in knowing the tentative risks. To evaluate the viability of the
project & to measure the risks involed in the business. This can further give confidence to the investors as they can
calculate the risks involved in the business from their perspective as well.
9. Exit Strategy: The exit strategies would provide details about how the organization would be dissolved, what
would be the share of each stakeholder in case of winding up of the organization. It further helps in measuring the
risks involved in investing.
 1.5 A good project report should contain the following:
(1) General information: Information on product profile and product details.
(2) Promoter: His/her educational qualification, work experience, project related experience.
(3) Location: exact location of the project, lease or freehold, location advantages.
(4) Land and building: land area, construction area, type of construction, cost of construction, detailed plan and
estimate along with plant layout.
(5) Plant and machinery: Details of machinery required, capacity, suppliers, cost,various alternatives
available, cost of miscellaneous assets.
(6) Production process: Description of production process, process chart, technical know how, technology
alternatives available, production programme.
(7) Utilities: Water, power, steam, compressed air requirements, cost estimates sources of utilities.
(8) Transport and communication: Mode, possibility of getting costs.
(9) Raw material: List of raw material required by quality and quantity, sources of procurement, cost of raw material,
tie-up arrangements, if any for procurement of raw material, alternative raw material. (10) Man power: Man power
requirement by skilled and semi-skilled, sources of manpower supply, cost of procurement, requirement for training and
its cost.
(11) Products: Product mix, estimated sales distribution channels, competitions and their capacities,
product standard, input-output ratio, product substitute.
(12) Market: End-users of product, distribution of market as local, national, international, trade practices, sales
promotion devices, proposed market research.
(13) Requirement of working capital: Working capital required, sources of working capital, need for
collateral security, nature and extent of credit facilities offered and available.
(14) Requirement of funds: Break-up project cost in terms of costs of land, building machinery,
miscellaneous assets, preliminary expenses, contingencies and margin money for working capital, arrangements
for meeting the cost of setting up of the project.
(15) Cost of production and profitability of first ten years.
(16) Break-even analysis.
(17) Schedule of implementation.