Information Management and Project Evaluation

UNIT 1 Introduction

Project Classification

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Companies classify projects into the following categories:

  • Replacement: maintenance of the business, they are intended to replace damaged, fully depreciated or morally obsolete equipment.
  • Replacement: cost reduction, whose purpose is to replace useful but obsolete equipment. The forecast of these expenses is to reduce the cost of labor, materials and other items such as electricity.
  • Expansion of existing products or markets //** aims to expand stores or distribution facilities in markets currently served.
  • Expansion into new products or markets://** is used to evaluate the costs and expected benefits of a new product or service, with which it is intended to expand the company within a geographical area not currently covered.

Safety or environmental projects://** are related to the necessary expenses to comply with government regulations, with labor contracts, with the terms of insurance policies. They are called mandatory investments or projects that do not produce income.

Importance, Defintion and Origin of a Project

Project management has existed since ancient times, historically related to civil works construction engineering projects (such as hydraulic engineering projects in Mesopotamia, where logistics or the creation of work teams came into play, with their professional categories defined, or the engineering culture developed by the Roman Empire, where the control of costs and times appears and the application of standardized solutions, such as in the construction of a road), and in "military campaigns", where they also come into play many management elements (identification of objectives, human resource management, logistics, risk identification, financing, etc.). But it is from the Second World War onwards that the advancement of these techniques from a professional point of view has transformed Project Management into a research discipline.

Types of Investment Study. Pre-feasibility analysis

Criteria for Study Selection

  • All the studies to be financed with program resources must be compatible with the national priorities established by the Government and consistent with the Bank's program lines. The studies will be included in the program with the approval of the SSIP and the IDB's no objection.

General studies

  • Basic general studies of a regional and/or sectoral nature, including investigations whose purpose is the identification of possible specific programs and projects, as well as the global quantification of investment requirements.

Specific Studies

  • Pre-feasibility studies aimed at determining the best alternatives for an investment project in terms of technical, financial, economic, environmental, social and institutional feasibility. This must include the preliminary calculation of economic indicators that take into account the investment costs and the benefits generated by the different project alternatives. The alternative with the highest net present value should be selected for the feasibility study.

UNIT 2 Market Study

Marketing Analysis

The objective of the market study is to project the quantities of the product that the population will be able to consume at the different price levels foreseen. In this sense, it is necessary to calculate the unsatisfied demand.

COMMERCIALIZATION
These are the activities related to the transfer of the product from the production company to the final consumer and that can generate costs for the project.

Market research. Offer and Demand

PRODUCT DEMAND
Here the quantities of the good that consumers are willing to acquire and that justify the realization of the production programs are determined. The real or psychological need of a population of consumers must be quantified, with sufficient purchasing power and with defined tastes to acquire a product that meets their needs. It must understand the evolution of the current demand for the good, and the analysis of certain characteristics and conditions that serve to explain its probable behavior in the future.

Product Study

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In this part, the specific characteristics of the good or service under analysis must be defined.

  1. Main product. Data must be gathered to identify the main product. Its physical, chemical or any other characteristics must be indicated. There must be consistency with the data of the technical study. It is necessary to clarify if it is about products for export, traditional, or a new product.
  1. By-products. Indicate if by-products originate in the manufacture of the main product and the use that will be given to them.
  1. Substitute products. The existence and characteristics of similar products in the market must be indicated, and that they can compete with them in the market, indicating under what conditions they can favor or not the product under study.
  1. Complementary products. Indicate if the use or consumption of the product is conditioned by the availability of other goods and services. Identify these complementary products, highlighting their relationship with the product, so that they can be included in the market study.

Price Analysis

Setting the price must indicate probable maximum and minimum values ​​between which the unit sale price of the product will oscillate, and its repercussions on the demand for the good. Once a price has been chosen, it is the one that should be used for the financial estimates of the project.

Formation mechanism: there are different possibilities of setting prices in a market, it should be pointed out the one that corresponds to the characteristics of the product and the type of market.

UNIT 3 Proyect Study

Organization of production

Assembly Production
Among the industries that work by assembly are some of the most relevant productive activities for the current economy, mainly mechanics: automobiles, engines, tractors, electrical appliances, electronics, etc.

Costs control
There is no doubt that the best way to carry out quantitative control and costing of assembly production is through the MRP system. Its outputs usually include reports for these purposes.

Changing Market
When there is a lot of production of a product, the demand for it decreases. This produces an oversaturation of merchandise.

Proyect Enginner

In this section, all the necessary resources are determined to comply with the production size that has been established as optimal. As expressed by the author Gabriel Baca Urbina, “the general objective of the engineering study of the project is to resolve everything related to the installation and operation of the plant. From the description of the process, acquisition of equipment and machinery, the optimal distribution of the plant is determined, to defining the organizational and legal structure that the production plant must have”.

Proyect Magnitude

In this field, a unit of measurement must be registered, with the possibility of including, if necessary, a second unit of measurement, which allows to account for the size or magnitude of the project.
The information comes from the Project Results module, and is recorded when creating an investment initiative or when modifying the project results.

Proyect Localization

“The optimal location of a project is the one that contributes the most to achieving the highest rate of return on capital (private criteria) or obtaining the minimum unit cost (social criteria)” (G. Baca Urbina).

LOCALIZATION AT THE MACRO LEVEL.
It is to compare alternatives between the areas of the country and select the one that offers the greatest advantages for the project.

LOCALIZATION AT THE MICRO LEVEL.
In the localization at the micro level, aspects more particular to the land already used are studied.

UNIT 4 Economic Analys

Total Cost Operation

They must be calculated for the different levels of operation foreseen during the useful life of the project, classified as fixed and variable. They will be broken down into production, administration and marketing costs, financial costs, depreciation, etc.

Total Cost of Physical Investment

The costs associated with the initial investment, such as the acquisition of real estate, purchase of machinery and equipment, intangible assets and working capital.
They are the set of material resources and human talent necessary to carry out the project. Includes labor, equipment, furniture, materials, supplies, adaptations and others.

Unit Costs

When the total costs that will be incurred have already been determined, for the normal development of the activities in a given period (generally a year), it is relevant to establish the unit cost of the good to be produced.

Investment Portfolio Analysis

The investment portfolios are integrated with the different instruments that the investor has selected. To make your choice, you must take into account basic aspects such as the level of risk you are willing to take and the objectives you seek to achieve with your investment. Of course, before deciding how the portfolio will be integrated, it will be necessary to know very well the instruments available in the stock market to choose the most convenient options, according to your expectations.

UNIT 5

Structure And Funding Sources

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The stages to follow for financing are:

a) Determine the financing needs.

b) Identify possible sources of financing.

Balance Points

The break-even point shows a situation in which the company neither gains nor loses, and is carried out to determine the lowest levels of production or sales at which a project can be operated without jeopardizing financial viability.

New Proyect

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In this case, the following should be analysed:

Fixed Investments.

Fixed investments are made up of goods that are not subject to transactions, are obtained during the implementation or execution stage, and are used during the life cycle of the project.

Working Capital.

Working capital or operating capital is obtained by subtracting the current liabilities from the current assets of a company in operation.

Investment Schedule.

Every project must present an execution schedule indicating the disbursements and the dates on which they will be made.