Preparation of a project report is an important function. Many contents & subject matter are required for building a powerful Project Report. It is prepared after considering technical, commercial, financial, managerial and socio-economic aspects, etc. of the project proposal. But, here the important question is, what should be included in it? In response, it may be said that the entrepreneur of a small size institution himself prepares the report.
Hence, he has knowledge of its Contents & Subject Matter of Project Report. But, in case of large scale institution, the report is prepared by various experts and these experts also take advice from various institutions.
In such a case, the subject matter is in accordance with the nature of the institution.
Generally, the Contents & Subject Matter of Project Report may be divided into the following category:
- General Information.
- Project Description.
- Market Feasibility.
- Cost of Capital and Sources of Finance.
- Assessment of the Requirement of Working Capital.
- Other Financial Issues.
- Economic and Social Aspects.
Following is the description of each Contents & Subject Matter of Project Report:
1. General Information
In the subject matter or content of project report, General information are mentioned at the beginning of the report, like – name of the entrepreneur, his address, educational qualifications, capacity, experience, liquid structure of the institution, organisational structure, project related problems, status of the organisation, details of registration, utility of proposed production and expansion, etc.
2. Project Description
After the mention of General information, a brief description of the following aspects are given:
Following information related to the site is included in the project description:
- Where the site of the project is owned or has been taken on the lease?
- The project site is in the approved industrial area or not? It may be mentioned.
- Whether the site is suitable for the proposed project? If not, to what extent?
2. Basic Infrastructure Facilities
Following points relating to basic infrastructure facilities are included in the report:
1. Regarding raw material, it is mentioned in the project report, whether the raw material will be indigenous or foreign. If it will be foreign, from which country it will be imported, whether the license has been obtained for it or it is still to be obtained, and what will be the sources for procuring raw material.
2. Water is an important component of any project. Hence, the project report should mention about quality, quantity, and sources of water supply.
3. Availability of transport facilities, means thereof and possibilities of further development of these facilities should be clearly mentioned.
4. Requirements of power approved power load, continuity power supply or not, alternative sources of energy, etc. should be clearly spelled out.
5. The cost of power consumption at various levels should also be shown.
6. Whether other fuel, like coal, gas, oil, etc. will be required to complete the project? If so, how these will be procured and what will be the cost thereof.
7. Mention of the means of communications.
3. Skilled or Unskilled Labour
Completion of the project required labour also.
Following information related to labour is to be included:
- Whether the skilled labour will be available at the project site?
- If unskilled labour is available, whether there is a need to provide them trending? If so, where and what will be the cost of training.
4. Manufacturing Process
Various stages of production in the manufacturing process and likely time to be taken in the transformation of raw materials into finished products and other related facts, are to be highlighted.
5. Tools, Equipment and Other Facilities
Following information related to tools and equipment, etc. to be used for the production of the commodities are to be given:
- Types of tools and equipment to be used, their quantity, costs, etc.
- Size of tools and equipment.
- Sources for the supply of capital goods and equipment.
- What will the services for manufacturing capital goods and equipment? How these will be accomplished?
- Arrangements for tools, equipment, workshops, molding, repairs an engineering shops, etc. are also to be specified.
6. Plant Capacity
Two things related to plant capacity is included in the project report; What will be installed capacity of plant and number of shifts, and if permission has been obtained for installation of the plant, then what will be its capacity and number of shifts in it?
7. Balance of Plant
Balance in plants to be used in necessary for achieving good results.
Hence, the following points are included in the project report:
- How many will be the stages of production?
- Is the production process necessary for each plant?
- Will capacity of various plants be the same in various stages of the production?
Various points relating to technology, like – whether the selected technology is the latest and appropriate, in which other concerns, this technology is being used, what are the results thereof, whether some other efficient skill is required, etc. are included in the subject matter of the project report.
9. Quality Control
Following points relating to quality control are included in the project report:
- Is quality control necessary, and if so, whether at each stage of manufacturing?
- What method or system will be used for it?
- Quality control mark should be obtained or not, and if yes, what efforts are to be made to obtain it?
10. Research and Development
Issues related to research and development to be included in the project report, whether research will be required for quality, costs, manufacturing process, marketing, and personal issues and if required, whether some cell will be established for it or not?
3. Market Potential
Various aspects related to market potential are also included in the project report.
By doing so, the institution will be able to have good knowledge about the market, which will facilitate its sustenance in competition.
Following issues are included in heading entitled ‘Market Potential’.
1. Total Demand and Supply of Product
Following aspects are included in total demand and supply of the product:
- In which market and in what quantity, is the demand for the product of the existing Institution, and not in which market?
- What will be the total demand of the proposed commodity?
- Is the level of production adequate, according to the demand of the commodity, or not? if not, what improvements are desirable?
- To what extent the proposed project will cover the gap between the estimated demand and present level of production.
2. Marketing Strategies
Various issues relating to marketing strategies are included in the project report, of which following are important:
- Will the basis of marketing strategies be internal or external, or both?
- What strategy will be followed to sell the products in the market, including price, quality and after sale services, etc?
- What arrangements will be distributors and intermediates?
- The sales promotion schemes and Publicity measures for reducing or removing the competition from the market shares also be mentioned in the report.
3. Seasonal Demand
We know that the demand for various products varies according to the season.
Following points regarding seasonal demand are included in the project report:
- Which is the market of commodities regular or seasonal?
- What arrangements have been made to continue the demand for the whole year?
- What regular efforts will be done to meet the seasonal demand or these will be done only in the particular season?
- What measures will be taken for creating demand?
- Whether the space for the stock is sufficient? If not, what will be the alternative arrangements?
4. Estimation of Cost and Price
Various issues, relating to cost and price are included in the project report, like – the production cost of the commodity, price policy, the limits of profits to be earned, Administrative expenses and the likely prices, etc.
5. Transportation of Goods
Following issues relating to transportation of goods are included in the project report:
- What arrangements will be made by institutions for carrying of goods from the producer to the consumers?
- Whether the institution will depend upon the public carrier or it will have its means of transportation?
- What with the cost of own means of transportation?
- How much financial assistance will be required to meet the cost from external sources and how much cost will be met by the institution itself?
6. After Sale Services
These days, services after the sale are also required.
The project report should mention which commodities, after sales services are required and for which, it is not required?
For those commodities for which it is required, its requirements and types may also be specified.
4. Capital Costs and Sources of Finance
It is also necessary to mention the costs of capital and sources of finance, in this project report. It should be ensured that the costs and financial requirements should be assessed realistically.
It is essential that till the required capital is not managed to meet the capital costs, it will be difficult to implement the project and it may just remain and imagination.
Hence, to materialize the imagination, the following issues be mentioned in the report and the required arrangements should be made.
1. Different Items of Capital Cost
To begin with, capital costs of land and buildings, plants and machinery, other assets, preliminary expenses, contingency fund, and working capital margin, etc. should be shown.
2. Estimation of Funds
In the project report, correct and realistic estimates of various funds to be set up at various project costs should be incorporated.
Otherwise, the new industrial units may have to face the financial problems in the initial stage or operational stage.
3. Present and Possible Sources
The present and possible sources of finances should be necessarily mentioned in the report, along with the mention of capital costs
It may include own funds of the entrepreneur, debts from the financial institution and also the public deposits.
5. Assessment of Working Capital Requirement
Planning and arranging of working capital is also an important function of the entrepreneur. Hence, correct assessment of the requirements of working capital should be made along with the assessment of total costs, from the very initial stage of the project.
However, for that margin of working capital should also be considered.
Now, the question arises what factors affect the requirements of the working capital. In response, it may be said that a large extent, it depends upon the operating cycle for business.
Here, the operating cycle means investing money in Raw materials, converting raw materials into finished products or conversion in receivables by sale and conversion of receivables in cash.
Following points regarding estimates of working capital requirements should be included in the project report.
1. Margin Money
While estimating capital costs, the entrepreneur should consider the margin of working capital and write it.
Otherwise, several obstacles may emerge in the operation of the project, due to lack of working funds.
2. Estimation of Period
The entrepreneur should estimate working capital requirements, by estimating the period (time) for completion of his project cycle.
3. Report on New Units
In the project report of a new unit, the estimate of total sales, raw materials, net profit, sales in cash and credit, production and administrative expenses, etc. for the next year should be given, for estimation of working capital requirements.
Besides, an estimate of sales in cash and in credit and available liquidity surplus may be also be worked out.
6. Other Financial Aspects
In a good project report, information is also given about various other financial aspects, besides the estimate of working capital.
It facilitates in providing information to the Financial Institutions, regarding the soundness of the project.
Other financial aspects may be shown as follows in the project report.
1. Financial Nature
The firm/entrepreneur had shown financial information in the financial report for it, information about the nature of past financial behaviour of the firm may be given.
2. Rate of Return on Capital
The expected rate of return on capital should also be mentioned in the report.
3. Net Profit on Sale
The volume of net profit to accrue on sale should also be mentioned in the report.
4. Debt Equity Capital Ratio
In case the volume of the long-term debt, according to the project report is more than three times owns resources, it is not good for the financial health of the Institution.
5. Break Even Point
Plan for reducation in fixed costs or variable costs may be prepared on its basis.
6. Projected Financial Statement
Consideration of forecasts of financial position and financial flows is necessary to evaluate the financial viability of the project report.
7. Social and Economic Aspects
Enterprise is the economic social process. Hence, reducing the social costs and solving of human problems is good for entrepreneurs.
Hence, the following points should be included in this aspect:
- Issues relating to employment should be mentioned in the project report, likely position of areawise employment, Number of persons to be employed, etc. should be mentioned in the report.
- Measures for import substitution and likely advantages thereof may be mentioned.
- Whether the development of subsidiary Industries is possible? If so, it may be specified in quantitative terms also.
- What are the possibilities of regional development by the establishment of the new unit?
- What will be the aspects to fulfill social responsibilities?
Thus now you all know all Contents & Subject Matter of Project Report.