4 PROJECT REPORT PREPARATION

MODULE

PROJECT EPORTT

project report is a business plan to convert a business idea into a working ventu
A
feasibility.
states the business
tes the undertaken by the entrepreneur and its
proposed to be
It
Hence, project.
project report is also known asfeasibility report. The report enables an entrepreneur
himself that the project is perfectly sound in all matters regarding its technical,
i n

convincing
c o n v i n c i n

commercial and financial aspects.

Meaning and Definition

A project report is a statement which contains relevant data in respect of a proJect
of
which serves as a guide to management in allocatingresources for the production
which serves

necific productorrendering ofservice.|Usually a project report is prepared by

an expert
fter analysing the different aspects of the project. Complete analysis of the project inputs
afte

is contained in a project
and output repor.
A project report is defined as "a report which provides all the necessary details of the

unit proposed to be established either for the manufacture of a product or for rendering
a

service".

Purpose Objectives/ Importance of a Project Report

The basic aim of a project report is to assess the financial viability of the project as
well as the soundness of its production, marketing and other related aspects. The project
report serves the following objectives.

1. Project appraisal: A project report helps in assessing the feasibility of a project. It

helps the entrepreneur to decide whether to move forward or not with the proposed
project for the developmental activities or the development of a new product line.
 P r a y e c rR e p

Pen
4.2
facilitates
business planning. A
acPo
oject reportis
proier.
should also
Specify whether
Project report analysis of the various
4.3
2.
Business planning:

prepared by
an expert
after a detailed study and of aspects about oroduct design shouldthe product is exporn
also be
helps in planning.
Managerial a aspects: The given in theworthy. AA complete
comp description
implementationqualshouldificatbeiondetailedexperiences
which for presentino.
project
A project report provides
a
framework
ne same he projectect impleme and report.
and for availino
3. Legal requirements: for fulfiling legal
requirements ling itself
:
ving outt
is carrying out the ces of the persons entrusted with
to Government
authorities ot
such a responsib inanagement
Sponsibility should be himself, his
in the
repont.
In case the entrepreneur
the facilities
and concessions
fulfils formalities of e
clarifed in qualifications that enable nable him
n to undertake
Helpful to financial
institutions: A project report
industrial units. It helps the
inancial e q u i r e m e n t s ,
I
Contents of a
the
report.
cal fa financia Project Report
4. finances to
new
R e q

which provide nd project report

instintions

institutions to make appraisal

as regards financial,
economic and technical

the project report ena

feasibility, goo

should contain the

eral Information: following details:
CEssa
direction: If rightly prepared, oles the General
"The project report should
Deciding the right in the right direction. Drofile and product detail
give information
ensure that he is
proceeding
regarding product
entrepreneur to
A project report
entrepreneur to compate
enables an entrepreneur tos moter: The project report should
the best project: 2 contain the
6. Selection of
proposals and
select the most
suitable one. work experience, project related name, educaional
qualificano
practicability of a -ation: Information as to the experience, etc. of the promoter.
investment
different
highlights the
project report projecu exact
7. Deciding the
feasibility: A
such as economy,
finance, technique freehold, its locational advantages, location of the
project,, whether
wi it is leasehold
basis of various factors
etc. to are be
on the included in the proje
roject report
4
Land and building: Land area,
construction area, ype of construction, cost of
desirability, etc. constructi
ction, detailed plan and estimate
in the project report.
along with plant layout,, etc. are to be included
Scope of Project Report project r e n .
arecontained in
a

details regarding the

following aspects report: Plant and machinery; Details of machinery required,
The complete
of such plants, cost, etc. are to be inchuded in the capacity
1. Economic aspects: A project report should clarity the justification of the investm
aced. of the plant, suppliers
stment
to be prodee. project report.
market analysis of the product
proposal. It should
be able present to a
role of competitors
Production process: The report should include description of production process,
its future demand and etc. chart, technical
The present demand
of the product, process
P know-how, technology alternatives available, production
programme, etc.
should be analysed.
clear picture of the techniua.
should give a
7. Utilities: Water, power, steam, compressed air requirements, cost estimates, soureces
2. Technical aspects: The
project report
and the sources from which hey can beobaine of utilities, etc should cover the detailed project report.
required, the machinery and equipments
information regardina
should reveal the complete Transport and communication: Facility for transportaion and communication is
3. Financial aspects: The project report
of the entrepreneur, etc. for transport and
of financial availability,
the contribution
very important on selecting a project. Information as to facility
the sources
should clarify details regarding the product communication should be given in the report.
4. Production aspects: The project report
for making such a selection. The report
production and the
reasons
selected for
 E

idelines for the

PrinciplesGuidelines 4.5
4.4

required:
quality
and quantity
of raw
of mat
tive raw materiala
Planning
a C

Commi ssio n preparation formulation of

India has of or
LIStofraw
materials
materials,
alternat.

arformulatin ating realisticreports issued the of project

project repor
Raw-material: ofraw on
9.
for
tie-up arrangements.ifany
p r o c u r e m e n t

ofpre
industrial projes
aring project reports. following guídelin
wi a view eparing
and semiskilet
t a s k

in the report. ofskilled The to assist new

if any, etc should be given
should
cover
requirement

raining, etc.
and trair
a
the

eneralinfomation
guidelines are summarised entrepreneurs
10. Manpower: The project report
cost of
p r o c u r e m e n t
as
follos
of
supply,
as to
product mix..
timatej Along with
the
casibility
feasibilit
d also be included report,
anpower

workers, sources information

an
should
cover
the
oduct standard, imput
produc.
h e l o n g ss h o u l da l s e
analysis of the
11. Products: The proje report
and their
capacities, in the
project report. This industry tto which the project
industry, description of the
st
p e r f o r m a n c eo f t h

sales,distribution channe!s
competitors
analysis
lysis should
sthould deal
d with the
substitute, etc. end-users he
of the produo production, its role in the sector
to type of industry 1proposedincrease in
Output ratio, product as to which it
cover
particulars
technique, etc. belongs, allocation of
12. Market: The projec report
should
international
ievel, trade practices
sales ice of investment funas
national and
at local, supply position, exn
dustr+bution of market

promoton devices, proposed

market
research,
demand and
2

oeliminary Analysis ofAlternatives

P r e h

etc. Thepr eliminary analysis should contain

price, after sale service, required, sources, need the following:
Working capital nt data on the gap between demand and
captal: and available
Requirements of working offered Present
3 extent of credit
facilities
supply for the output which are to be
and
security, nature
p r o d u c e d .

collateral

should also be given in the project report Data on the capacity that would be available from the
requirements of fund with reak-
connected with b.
under implementation at the time
oduction «or projectss that
t are already in
14. Requirementof funds:Information building, machinery,
miscellane
eous when the report is
of cost of land, list of all existing plants in
prepared.
in complete list
Acomplete
cost tems
up of product project report. the industry, giving their capacity and level of
etc. should
be given in the C.

assets, preliminary expenses,

development activities and production actually attained.
of research and
and

development: Possibility
15. Research and should also be explained in the project report d.
A list of all projects for which licences have been issued and a list of proposed
activities
cost involved for such
and useless substances resultinea projects
Wastes are unwanted
16. Waste management system: The location of the project.
These may be solid waste, liguid
from different human and
industrial activities. e
eliminate or dispose off these wastages. fAn account of the foreign exchange requirement.
measures to
waste, etc. There should be
report either alone
or
with the help of an The profitability of different options.
An entrepreneur can prepare the project
that assist entrepreneurs in preparing The rate of return on investment.
expert. Now, there are plenty of organisations h.
(SISI) and Small Industries
Service Institutions
project reports. Small Industries 3. Project description
organisations. Today, State
Development Organisation (SIDO) are examples of such
The feasibility report Should present a brief description of the technology process
or
assistance for the preparation of project
Governments are engaged in extending financial
of the environmental impacts on
chosen for the project. In order to assist in the assessment
Teports.
 P r i e e

4.6 g EconomicAnalysis
ormation on certain
the inforn 4.7
to present The report should
report
possib assess the
a project, it is necessary fore v e r y
feasibility

land, flora
and fauna,
pollutionary
ttes, ec ndirectcostsand

benefits should alsoimpactbe of the enterpri1se's

specific points, such as population,
operational
requirements
of the plant, require should at least be unalysed included in the
se' operations
s
operatio on foreign trade
list of the
The report should conta a and their importand repot. 1f it is difficu
etC. ortance should be santify
of water, power, personnel, report.

S i m p l ea n d nd concise emphasise in the

4. Marketing plan- in the

marketing plan: 2
should be s
be
tollowing items
should be included The report simple concise and
()simplify.
ne

and () straight forward. The report observe the

marketingplat-
fys'-(a):
(6) justify,
All available data onthe
three i
i.
prospective supply in each
area to be serve simplify means
keeping all the essentialsquantiífy.
.
Demand and estimates of domestic
Supply and selecti
Aion of
.The method and
data used for the
main Justify eans supporting every statement with
means specitying
ouantify means specifying facts.
he market areas.
dimensions, weights, amouts and volumes as
iv. Estimates of the degree of price sensitivity. Seecimen form of a Project Report red.
regu
An analysis of the past trends
in prices
.
PRO-FORMA FOR APROJECT SCHEME FOR THE
S. Captal requirements and costs collected and included in
MANUFACTURE OF
n the
should be carefully
Information on all items of costs 1. I N T R O D U C T I O N NAME OF THE FIRM

a. Scope
report.
b. Product (give specitication, such as,
ISS/BSS/ASS etc.)
6. Operating requirements and cosís c. P r o c e s s
commencement of commetei
which are incurred after the d. Marketability
Operating costs are those, fuel, utilities, labour, repair
cost of raw materials, pair, e. Location
production. These costs relate to the f. Sources of finance and repayment schedule
costs should be collected
Data regarding these
an
maintenance, sellingexpenses, etc. 2. SCHEME

presented in the report. a. Land and building (Owned, rented or leased) . .

*****************

b. Machinery and equipment (give detailed specifications/

7.Financial Analysis viability of

the financial
capacity/imported or indigenous. If imported mention
allowances for duty, dock clearance charges, freight
measures to assess
This analysis is intended to present some
and insurance) Total
the project. A Proforma Balance Sheet for the project
data should be presented. Depreciation
c. Testing equipment *.************

the 'Bureau of Public Enterprises'. Foreign

should be allowed for on the basis specified by d. Other fixed investments:

exchange requirements should be cleared by

the 'Department of Economic Affairs'. The 1. Packing and forwarding charges. *********************************

rebates for priority industries, incentives 2. Electrification andinstallation charges.************************.

should take into account income tax
feasibility 3. Cost of tools/jigs/fixture . *****************************°
. .

for backward areas, etc. 4. Cost of office equipment ********************** ***********

 maYRep ort Prepara
Enirepreneurship pevelopmen
ROFTTABILTY,
TY AND PROJECTIONS
4.8 49
*****"

for about S to 10
(Genera years)
+()+(C)* Phase of activity
eynentinure:(a)
C.
Tal
man-muming "*''"*'"''** profitability of phases
.Staffand lahur
ladur:
Number and
wagesp.m.
*

INFRASTRUCTUR CTURE
1. Indirat
u s o

wagesp.m.
Numder and I. Ocational advantage
Direct labour: [() + (2).
Total salaries p.m. Availability
of materialpower/water/labou
ofmat

2.
materials and onsumables: Government policy
&. Raw
specifications)
* with

*************"******* .. insnpses
******** '****''''*****""*
shift Aasis
(Fer manth on single sBREAK-EVENPO,
POINT:
1. Indigenouss .Firedcosts
2 Imported
(Executive salaries/
Toal(1)+2)
(Per month on
a singie
Sne u

investment and admini depreationciation/renl imerest on

n. Otber itenms of ependiture:
*************t**s**** (direct
costs *******.
1. Power and water c h a r g e s . 2.Variable
costs
bourldirect
material income-ta ****ntssissssrste***
2 Adverising and
*************
travelling
************
* **************'"**
commission and administration
3. Transport
****************
Item of cost Fixed coSts).
costs

4. Commission to distributors.
*****************

Material
+Variable Total
L. Total recurring erpenditnure
()+(9+0) . ************
Labour
expendinure)..
recuring
for 3 months (3
x
Woriking capital Other exp.
k. Total investment required:
****************************°°***°°.
****************************'**"''****"
1. Non-recuring expenditure...
Total **********************************"*********************
3 months Here, Break-even quantity
2. Working capital for F Fixed cost
V Variable cost
1. Total cost af production: ***********************************
P Sales price per unit
1. Total recring expenditure. ****************

on machinery
and equipment. ES AND ADDRESSES OF SUPPLIERS
2. Depreciation *******************************.**
1. Raw Materials
3. Maintenance
4. Deprecianion on building.
5*e**************************'*******"******"*******
and equipment
************************"
2. Machinery
investment .....
5. Interest on total **************************************************** 7 REMARKS

6. Welfare for staff... ***************************

SEAL AND DATE
7. Office stationery and postage (Signanure of the consultant)
*************'**.
**************'**************'******
Total
m. Profit and Loss Account.
********ss*DDBpe**********************

1. By sale of...(qty) of..@..

taxes)
(ex-factory exclusive applicable
2. Cost ofproduction (1).
the total
3. Profit (1)-(2) Approximate percentage
on

capital employed . '

******************1ttnm****************l'*******

*****************************D**09*********************
Total