Concept of Project - Project Management, Entrepreneurship & Small Businesses | Entrepreneurship & Small Businesses - B Com PDF Download

Introduction

The economic development of a country depends on how many new combinations of available resources are carried out and the number of industrial activities undertaken. The entrepreneur is the person with initiative, drive, skill and spirit of innovation who converts his business ideas into successful enterprise. For converting the business opportunities into realities an entrepreneur has to traverse through various phases of project management. Broadly, the process of project management may be divided into identification, formulation, appraisal, selection, implementation and management of projects. All these phases have to be very carefully considered as they architecture the success or failure of the enterprise. These phases of project management have been discussed in the present chapter. Further, ample light is thrown on preparation of project report, which is very crucial for the entrepreneur. At the end of the chapter three model project reports have been given with an intent to make the learners conversant with the technique of preparing the project reports for various business ideas.

Concept of Project  

In common parlance, the word ‘project’ has been used to connote ‘any programme of action’. For example, agricultural projects, illiteracy eradication project, land development project, pulse-polio and so on. The dictionary meaning of ‘project’ is an idea or a plan that is intended to be carried out in the future or that is being carried at preset. For better understanding of the concept of project let us see some definitions given by various authorities.

1. Webster New 20^th Century Dictionary— "A project is a scheme, a design, a proposal of something intended or devised”

2. The World Bank— “ A project means approval for a capital investment to develop facilities to provide goods and services”

3. Little and Mirless------ “A project is any scheme or a part of a scheme for investing resources, which can be reasonably analyzed and evaluated as an independent unit. It may be any item of investment activity, which can separately be evaluated”

4. Gittinger---- “A project is the whole complex of activities involved in using resources to gain benefits”

5. Vasant Desai —"A project is an economic activity with well defined objectives and having specific beginning and end.”

In businessman’s language, the project is a specific activity on which money is spent in expectation of getting some returns.

Examples of Project

There may be mega/gigantic projects to very small projects. For example, a multi-purpose river valley project, Krishna valley project, water park, iron and steel plant, Disney land, oil refinery, and making papad or agarbatti (Mega projects are very large size projects having the investment of $ 500 mn to $1bn plus e.g. Devner International Airport and Delhi-Mumbai Industrial Corridor)

In a very broader sense, a project includes all activities, which are aimed at —

1. Production of goods and/or services

2. Increasing the capacity of the existing projects, and

3. Enhancing the productivity of the existing means of production

From the entrepreneur’s point of view, a project can be considered as a proposal involving capital investment for the purpose of developing facilities to provide goods and services.

Characteristics of a Project

The project has the following characteristics

1. The project is essentially an investment plan

2. The project begins with precise and clear objectives

3. The project determines the direction of future actions of an entrepreneur

4. It outlines the allocation of resources

5. The scientific and reasonable analysis and appraisal is done in the project with respect to financial and technical aspects.

6. The project has specific beginning and terminating points.

7. Commercial viability is the soul of the project

8. The project has a specific geographic location

Project Classification

Having understood the concept of a project, lets see why and how the projects are classified. Truly speaking the project classification helps in graphically expressing and highlighting the essential features of a project. Therefore the projects are classified differently by different authorities such as Planning Commission and All India Financial Institutions.

Broadly the projects have been classified as under.

I. Little and Mirrles’s classification

Little and Mirrles have classified the projects as follows

a. Quantifiable projects

If the benefits of the projects are assessable in quantitative terms, such projects are quantifiable. For example-power generation project, mineral development, and industrial development projects etc.

b. Non-quantifiable projects

The projects in which the quantitative assessment of benefits is not possible are non-quantifiable projects. For instance-educational project, health project, defense project etc.

II. Sectoral project

The Planning Commission of India has classified the projects on sectoral basis, for the purpose of allocation of scare resources at macro level, as under

III. Techno-economic projects

On the basis of techno-economic factors, projects can be classified as under.

a. Factor-intensity oriented classification

Capital (plant and machinery) and labour are two important factors used by the projects. On this basis the projects are classified as follows.

• Capital-intensive projects - In such projects, the large investment is done in plant and machinery. In other words, there is maximum use of machinery / technology than labour force in the project.

• Labour-intensive projects - The projects in which more labour is used than machinery are termed as labour-intensive projects.

b. Causation-oriented classification

Cause of starting a project forms the basis of this classification. According to this basis, the projects are classified as follows.

• Demand based projects - If there is an increasing demand for certain goods or services and the project is undertaken to fulfill it, it is called demand-based project. For instance, as there is an increasing demand for systematic efforts for reducing weight, the Talwakars, VLCC and Yoga clubs have been started. Cosmetic surgery, Aesthetic dental service center etc. are other examples

• Raw materials based projects - If the availability of specific raw materials or other inputs is the proximate cause of starting a project, it is known as raw- materials based project. For example, in certain parts of Maharashtra, grapes are easily available; hence the bedana projects could be undertaken.

• Magnitude oriented classification - Under this category, the projects are classified on the basis of size of the investment as explained hereunder.

• Mega/gigantic projects (Tremendous investment)

• Large-scale project (High investment)

• Medium scale projects (Moderate investment)

• Small-scale projects (Investment upto 1 Cr.)

• Tiny industries (Investment upto Rs. 25 lakh as per recommendation made by Abid Husen Committee in 1997)

IV. Financial Institutions Classification

The financial institutions have classified the projects into following two broad categories. a) Profit oriented projects and b) Service-oriented projects

a. Profit-oriented projects

These include the following

1. New Projects                                        

2. Development / Expansion Projects

3. Modernization / Technology Projects   

4. Diversification Projects

b. Service-oriented projects These include the following

1. Welfare projects                                 

2. Service projects

3. Research and Development projects

4. Educational projects.

Remember-----

• A project is an economic activity with well-defined objectives. A project is a scheme, a design, a proposal of something intended or devised. It is essentially an investment plan.

• Broadly the projects are classified as follows.