Project Appraisal chapter 2

1. Chapter 2
Identification and analysis of investment
opportunities: Preparation and appraisal of
projects at the subsectoral level

2. Opportunity Studies:
 Objectives
 Scope and contents
 Sources of data
 Institutional and Consultancy Services
 Organization of work
 Data bank for subsectoral and project data
 The executive summary

3. What is Opportunity?
A time or set of circumstances that
makes it possible to do something

4. Opportunity studies should do four things
 Provide relevant information related to internal and external factors
of the subsector.
 Provide specific data.
 Enable the Investor to choose one of the best investment
opportunity.
 Lower the cost of preparing feasibility studies as the information
and data collected and analyzed at the subsector level could be
shared by number of prospective investors.

5. Scope and contents
 The scope of an opportunity studies depend on the size of the subsectors is
question and the number and heterogeneity of the projects falling with in the
subsector there are also some eternal factors having an impact on the business
conditions of a subsectors.
 Agencies and institutions concerned with the preparation of opportunities studies
for small and medium scale projects always face the problem that the tine and sot
involve in the preparation analysis and appraisal of studies are to great in relation
to the scope of the investment
 further more in many developing countries budge tries provisions for project
preparation and appraisal are meager and scarce funds are used instead for large
scale pre investment studies while small industrial projects are not prepared
adequately or at all.

6. Sources of data
 In the case of opportunity studies at the subsectorial level the primary resources of
data will be 0published or easily accessible information as well as data can be
obtained
 From:
 private and public resources such as statistic published by government agencies
publication of trade and industrial associations and research institutions
information
 also be obtained from bank and the business community existing sectorial and
regional studies or feasibility studies for particular projects
 may be an other sources of data sources should be evaluated according to
qualitative and quantitative criteria such as method of data collection and
processing synoptic structure of data a and cost of access.

7. Institutional and Consultancy Services
 While feasibility studies for small industrial business projects probably with the
exception of international joint ventures are usually carried out by local
consultants and public institutions
 sub sectorial opportunity studies are frequently prepared by a public development
institution setup for the purpose of industrial promotion or by industrial banks
research institutes and other organization working at the national and international
level
 It is cleared at subsectors studies by these agencies are used for promotion
purposes in that they provide essential information and data on individual
 projects to enable prospective investors to go ahead with the feasibility study and
in some cases perhaps to take a decision to invest based on the opportunities
studies therefore the participation of a prospective investor may not always be
necessary at this stage

8. Organization of work
 Management of the preparation of opportunities study at the sub sectorial level composes
the organization and supervision of data collection including:
 integration of information data and expertise obtained form different sources as
well as the coordination of the work of experts as a major objective management
deals not only with the provision of accurate information
 with communication data processing forecasting and reporting but also with
organizational matter
e.g. meeting dead lines and remaining with in the budgetary limits
 The preparation of opportunity studies requires input from a team of experts such
as marketing experts technicians and financial analysis the team work usually
needs to be organized under the leadership of an opportunity study
 manager who will direct the work of the specialist depending on the complexity of
the study the responsibility of the manager could be split among all number of
project managers

9. Data Bank for Subsectoral and Project data
 Opportunity studies in the small industrial business sectors are designed to
provide information and data that are applicable at the local level
 in order to lower cost for issuing feasibly studies and to provide sufficient support
to local personal who have to prepare individual feasibility studies in the case of a
particular project deviating from typical subsectoral and regional patterns an
opportunity study still the serve as a valuable background
 source of data in such subsector typical data can be stored on a data bank an then
use for other opportunity
 studies of related purpose consecutive feasibility will not only draw on this data
bank but will also enrich the data bank but reporting additional local data thus the
data bank will constantly grow and develop the more is used

10. The Executive Summary
 The executive summary of an opportunity studies at the subsector level should be
a concise abstract of the entire study pointing
 subsector typical project characteristics such as typical successful strategic options
and key success factors and there relative importance representing the basic
requirement of small industrial business
 the summary should also refer to the current business environment as related to a
subsector and given locations the executive summary
 evaluate the impact of business conditions and expected developments in a
subsector the following structure should be observed when preparing the
executive summary of a study :

11. 1) Project idea and objectives
 The summary should provide the following in a concision clear formal
 The basic idea and objectives of the project such as imports substitutions and
reduced dependency
 The facts figures and assumptions conceited significant for the appraisal by
decision makers
 Overall sectors specific information with regard to country region sociocultural
and technical aspects and typical for the business sector

12. 2) Description of the project
 The executive summary should describe the main aspects as dealt with in the
individuals chapters and highlight what is typical for the subsector or sector to
facilitate
 the verification of data conclusions and recommendations references should be
made to each chapter and its supporting annexes the structure of the summary
should corresponds to the structure of study itself and the manual entrepreneurship
 and human resources business environments location site and environmental
impacts marketing analysis and output planning production planning and input
requirements organizations and controlling and project implementations
followed by an overall financial and economic analysis of the project
recapitulating essential aspects of the over all feasibility

13. Conclusion and Recommendations
 At the subsectoral data assessment project appraisal and recommendation and
should be grad not so much to the important implementation of an individual
projects standardization and schematization should therefore always be
maximized to enable easy access to the results as far as planning references and
suggestion for promotion are concerned are division into target groups or
stakeholders should be considered because entrepreneurs joint adventure partners
banks and institutions setup for promotion at different idea and different
conclusions therefore the executive summary should consider these individuals
criteria.