Project evaluation & Financing.

•Introduction
•Project
•Project cycle
 1. Introduction
• Teacher Profile
MBA Quaid e azam university islamabad
Joined: IDBP.
Nature of job two major areas of operation in bank
1. Deposit collection/fund raising
2. Project evaluation/fund utilizing.
served on project evaluation for 13years. Experienced of what
your this course is all about.
left bank obtaining golden hand shake
served PTCL as revenue officer senior revenue officer & director
revenue balochistan.
Finally joined university of balochistan quetta teaching finance
courses:
1. Financial accounting.
2. Financial management.
3. Project evaluation.
4. Investment analysis and etc.
during service in university went for M.Phil & P.hD. From
iqra university (in process).
joined back UOB and now teaching finance subjects.
 2. Introduction to course:
• Title: Project evaluation & financing.
Two components of course.
I. Project evaluation in simple words means
business proposal examination
if it’s suitable or otherwise we should go for it or not.
During evaluation/appraisal/examination. We examine the proposal or idea
from different aspects.
1. Market appraisal
2. Technical appraisal
3. Financial appraisal
4. Economical appraisal
5. Ecological appraisal
So in the course we will learn how to evaluate all these areas learn
techniques of evaluation for all these areas and will learn to evaluate
the result/outcome and decide to accept or reject it.
II. Financing
this is the 2nd component of the course once a project/business
proposal is examined and found feasible (worth going for it). We
need financing for it two possible sources of funds
a. Debt financing in simple words loan to be obtain from bank.
b. Equity financing/self explanatory
in this component major focus will be on debt financing or a loan from
bank
we will learn about loan application forms & its interpretation
documents banks ask for loan granting
Banks security condition and bank lending procedure.
Misc. other lending procedures and techniques practiced by the bank.
3. The objective of the course is to enable the students.
c. Evaluate a business proposal/Idea
d. to be able to arrange funds for by getting familiar with banking
procedure having learnt above two steps one will be able to
execute/implement a business unit him/herself.
4. Opening/opportunities to participants of the course.
i. Can work as private consultant.
ii. Cant work in a bank evaluating received business proposals & if found feasible
extend than join (they would already knowing loan procedure).
iii. Can evaluate an idea/proposal of their own & setup the own business unit.
5. Pre-requisites of the course.
a. Financial accounting.
income statement
balance sheet.
cash flow statement and etc.
b. Financial management.
time value of money
capital budgeting techniques.
c. Managerial accounting.
break even point
cost of goods sold statement
cost components (material cost. Labor cost and over head cost.)
6. evaluation and Assessment.
QUIZES (LMS) 10%
Assignment/Reports (Lms) 15%
Attendance + Lms Log 10%
Discussion Forum/Video/Audio Engagement 10%
Mid Term Examination (Oral Exams & Presentation) 20%
Final Examination (Oral Exam & Presentation) 30%
7. Book.
as mentioned in course outline how ever very little from book to
be followed. Lecture material and teacher handout will be
followed.
8. Course outline on LMS
7. what is a project:
by definition a project is a series of tasks that need to be completed in
order to achieve a particular goal.
8. Types of Project.
short term. Long term.
a. short term:
the project whose operating cycle is completed within one year.
i.e. investment __ Sale _____ Collection in one year.
example general stores.
since outcome is known within short time. Most evaluation/
examination of short term project is not needed.
b. Long term:
the project whose operating cycle goes beyond one year.
Investment made now result appear after one year may be in year
2,3,4,5,…..10,20. these projects needed thorough appraisal.
Reasons: a. you are planning today result appear after many years what you
assess today may vary by the time project is actually completed and run.
e.g. political condition may change over coming years when project
actually start functioning.
market condition may change
law and order situation may change.
condition may change surrounding areas e.g. afghan war. Pandemic
most recent example we can see after effects on business.
b. heavy investment difficult to be liquidated. So for this course our
focus will be only on long term projects. What ever we will study it will
be in the content of long term projects only.
now long term projects may include:
Government projects: DAMS. Power projects, roads etc.
Social Projects: water supply projects, sanitation, health projects, food
supply etc.
Industrial Projects: include industrial units(factories etc) such as sugar mill
textile mill, flour mill, ice factory, rice mill, steel mill.
 During the course our focus will be on long term projects and within
long term projects it will be only on industrial projects so whenever
we will use the term project we will be talking of some industrial unit.
E.g. some ice factory etc.
project evaluation will mean evaluation of some industrial
unit/business unit (factory).
and financing would cover financing procedure/methods followed by
banks to grant loans to factories.
9. Project Life Cycle
this is a multiple steps process in the life of a project which comprise
of the following steps:
a. generation and screening of project ideas:
project ideas are considered screened and identified at broader level
e.g. an ice factory.
b. project evaluation:
projects are examined at individual level(specifically while getting to a
specific unit)
Specific w.r.t. a specific owner, specific location, specific capacity Etc.
e.g. Ice factory at plat no ABC. Air port Road Quetta.
c. Project documentation………..explain briefly.
d. project implementation…….. //
e. project completion………
f. project monitoring………..
g. Project rehabilitation…………….
h. Project litigation…………
10. Approach of the course
we have discussed
i. Project just definition.
ii. Project cycle 8step process.
project cycle begins with generation & screening of project ideas and
ends with project litigation
a formal bookish approach would be to open the book and cover each
step by just reading each one by one the approach will lead to
Bookish knowledge
an alternative approach would be to study each step how it is followed
practically in real life this will provide us practical real life knowledge of
each step of project life cycle we will follow the practical approach a bank
is an institution that performs all step of project life cycle they have 8
departments each department perform one step of project life cycle e.g.
research dept, generation & screening dept. of project ideas. Etc.
we will activities experiences functions carried out by one dept. study it’s
practical cases and this way shall practically learn how a particular
department performs a particular step of project life cycle
Beginning with first department
Research department:
generation & screening of project ideas (broader level) study & identify
which projects are suitable in general, under given environment, condition
and circumstances
they have resource and experts
conduct survey and carry out research.
Study condition and environment of multiple areas.
How do they work?
teams went to Punjab
Studied condition and environment in Punjab
a. Noticed rich in agriculture such as cotton, sugar-cane, rice crop etc.
concluded textile mills, sugar mill, rice mills, are suitable in Punjab
b. Now these are complex projects so needed to see if infrastructure
facilities are there means of communication: village to factory
Roads: factory to market transport
these were there.
C. If technical staff available (yes engineering college, polytechnic college
producing engineers & supervisors, university producing MBA’s and
accountants.
D. If Water available, for drinking, operation
E. If power available, yes electricity in general, available through out
Punjab. So on the basis of this survey & finding research departments
give a general/broad guidelines that: in Punjab agriculture based projects
for which raw material infrastructure facilities and technical experts are
Available are success full.
identified projects like textile mill, sugar mills rice mills etc. (under given
conditions and environment in Punjab).
A part from list, research department prepared brief profiler(booklets)
also, containing some basic type of necessary information about these
projects to give some insight to interested entrepreneurs to judge if they
have the capacity, resources and skills to implement any of these units
this basic information includes.
• Cost of land.
• Cost of building
• Cost of machinery
• Cost of…………….etc, etc.
• Total cost of projects
• No of employees
• Water/power/ fuel requirement. Etc.
(Profiles will be displayed later)
Balochistan:- Likewise Punjab Research department teams conducted
Survey in balochistan to study conditions, environment and circumstances
in balochistan and noticed:
a. Lack of raw material
b. Lack of infrastructure facilities
c. Lack of technical skills
on the basis of survey is balochistan and these finding gave a general.
broad guideline that: in balochistan simple projects are only successful for
which
Necessary raw material is available
Necessary technical skills are available
Necessary infrastructure facilities are available
Identified simple projects like. Rice mill. Floor mill. Ice factory dale
processing, marble processing etc.
Apart from this , list of suitable projects in balochistan they prepared brief
profiles( blook-lets) containing necessary basis information about the
projects so that entrepreneurs can judge if they have capacity, resources
& skills to implement any of these units. (profile will be displayed later).
• How do profiles help prospective entrepreneurs
• List give idea of which projects could be successful. Ready made
list is available. Entrepreneurs can choose a project from the list
instead of home work themselves and save their time, and
resources
• The profile help prospective entrepreneurs to know basic details of
a particular unit e.g. details of land, building, machinery, their costs
& total cost of project.
• Hence they can examine these details and match if they have
enough capacity, resources and skills to meet these requirements.
• Whether they have enough funds
• Whether they have enough skills
• Whether they have enough expertise
If yes ______ they can go for it.
If not ______ they can avoid it and begin to look the details from
profile of some other project
• Why to follow list of projects identified:
Research department prepares this list after thorough surveys, studies
and research/
Choosing from this can save one from many problem.
Choosing from out of list can put one in many troubles and many lead to
failure of the project
Example selected at own --- see consequences.
1. .steel mill
. Complex unit.
2. Sections – are. Furnace Re. Rolling Mill
separate feeder
trible land conflict
focus diverted to resolve conflicts.
raw material ..from Afghanistan
labor from Punjab
Leaves, Killings, extra accommodation arrangement and cost.
• Cement Factory
• Complex Unit
• Imported machinery
• Complex importing procedure
• Labor from Punjab same leave.
• Accommodations Issues
• Power
• Water
• Ultimate result collapse of both steel mill & cement factory.
• Profile: Display, discuss