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Project AnalysisProject Analysis

Chapter 6

Project ManagementProject Management

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Project AnalysisProject Analysis

Technical AnalysisAnalysis of the technical and engineering aspects of a project needs to be done continually when a project is formulated. Technical analysis seeks to determine whether the prerequisites for the successful commissioning of the project have been considered and reasonably good choices have been made with respect to location, size, process, etc. The important questions raised in technical analysis for the ICT projects are:

Whether the preliminary tests and studies have been done or provided for?

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Project AnalysisProject Analysis

Whether the availability of human resources, power, and other inputs have been established?

Whether the selected scale of operation is optimal?

Whether the production process chosen is suitable?

Whether the equipment and machines chosen are appropriate?

Whether the auxiliary equipments and supplementary engineering works have been provided for?

Whether provision has been made for the treatment of effluents? ,Whether work schedules have been realistically drawn up?

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Project AnalysisProject AnalysisEconomic Analysis

Economic analysis, also referred to as social cost benefit analysis, is concerned with judging a project from the larger social point of view. The questions sought to be answered in social cost benefit analysis are:

What are the direct economic benefits and costs of the project measured in terms of shadow (efficiency) prices and not in terms of market prices?

What would be the impact of the project on the distribution of income in the society? What is the impact on digital divide of the investment project? Cont…….

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Project AnalysisProject Analysis

What would be the contribution of the project towards the fulfillment of certain merit wants like self-sufficiency, employment, and social order?

Financial AnalysisFinancial analysis seeks to ascertain whether the proposed project will be financially viable in the sense of being able tomeet the burden of servicing debt and whether the proposed project will satisfy the return expectations of those the shareholders (owners of the firms). The aspects which have to be looked into while conducting financial appraisal in ICT projects are:

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Project AnalysisProject Analysis

Investment outlay and cost of project

Means of financing Cost of Capital

Projected profitability

Break-even point

Cash flows of the project

Investment worth wholeness judged in terms of various criteria of merit.

Projected financial position. Level of risk

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Project AnalysisProject Analysis

Environmental AnalysisIn recent years, environmental concerns have assumed a great deal of significance and rightly so. Investment in the ICT/Telecom industry should give much consideration on the environmental aspects. Among the question to be asked include:

What is the likely damage caused by the project to the environment? E.g. how used prepaid vouchers/cards affect the environment? How installation of transmission stalls affect the environment?

What is the cost of restoration measures required to ensure that the damage in the environment is contained within acceptable limits?

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Project AnalysisProject Analysis

Market AnalysisMarket analysis is concerned primarily with two questions:

What would be the aggregate demand of the proposed product/service in future?

What would be the market share of the projects under appraisal?

To answer the above questions, the market analyst requires a wide variety of information and appropriate forecasting methods. The kind of information required are:

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Project AnalysisProject Analysis

Consumption trends in the past and the present consumption level (for telecommunication companies the number of telephone lines, mobile subscribers, air time rates, etc are important factors to be considered)

Past and present supply position (Who supplies what services?)

Production possibilities and constraints (In telecommunication industry, bandwidth and regulatory framework matters a lot)

Structure of competition (the regulations regarding competitions)

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Project AnalysisProject Analysis

Cost structure (Cost models used in costing variable and fixed costs, direct and indirect costs)

Elasticity of demand

Consumer behavior, intentions, motivations, attitudes, preferences, and requirements.(e.g. on telephone accessories and types of telephone products)

Distribution channels and marketing policies in use (Should the company use a pre-paid service or billing system?)

Administrative, technical, and legal constraints.

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Procurement Procurement

Managing the procurement process is an important aspect of project implementation.

Delays in acquiring the necessary goods and works are likely to be compounded into future delays in acquiring necessary goods and works are likely to be compounded into further delays & increase the cost of the project as whole.

Procurement must serve three objectives

To help & ensure the efficient execution of the project by acquiring goods & works with optimal combination of quality,price & delivery time

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Use of Consultants Use of Consultants

Procurement consulting services raises different issues

Question of need : If local staff is are not experienced & in house capacity does not exist

Establishing a local consulting industry is desirable both to provide some competition to stimulate agency staff & to supply more specialized skills.

The consultant-Client relationship is very close,personal one & trusty.When a satisfactory relation exists ,it is sensible to continue

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Project AnalysisProject Analysis

End Of

Chapter 6