DEPARTMENT - MANAGEMENT STUDIES

Course Pack
FOR
PROJECT APPRAISAL AND FINANCING-BBA643A

BBA643A - PROJECT APPRAISAL AND FINANCING

Total Teaching Hours For Semester : 60 Total Teaching Hours For Semester : 4

Max Marks : 100 Credits : 4

Course Objectives/Course Description:

This course introduces to Planning & Analysis of projects, Generation and Screening of Project Ideas, Financial Analysis, Types and Measures of Risk, Social Cost

Benefit Analysis, and the methods in applying fundamentals of project financing; rationale for this type of financing; completion, operating, regulatory, and sovereign risk

analysis; risk mitigation strategies; financing options. Course Objectives:

● To plan, analyze and manage the projects
● To assess the feasibility of the project ideas
● To understand and measure risks associated with the project
● To evaluate cost and benefit of the projects
● To strategy the ways of mobilizing finance required for the project

Learning Outcome
Students should be able to
● Conceive and Manage the projects
● Evaluate the feasibility of the project ideas
● Measure the risks associated with the project
● Assess costs and benefits of the project

Unit-1 Teaching Hours:8

Planning and Analysis Overview

Level of Knowledge: Conceptual Phases of Capital Budgeting - Levels of Decision Making – Objective,
Resource Allocation Framework: Key Criteria for Allocation of Resource - Elementary Investment
Strategies - Portfolio Planning tools – Strategic Position and Action Evaluation - Aspects Relating to
Conglomerate Diversification - interface between Strategic Planning and Capital Budgeting.
Unit-2 Teaching Hours:10

Generation and Screening of Project Ideas

Level of Knowledge: Analytical Generation of ideas – Monitoring, the environment - regulatory framework
for projects - corporate appraisal - preliminary screening - project rating index - Sources of positive NPV
qualities of a successful entrepreneur - the porter model for estimation of profit potential of industries.
Market and demand analysis: Situational analysis and specification of objectives - collection of secondary
information - conduct of market survey - characterization of the market - demand forecasting - market
planning. Technical Analysis: Study of Material Inputs and Utilities – Manufacturing Process and
technology - Product Mixes - Plant Capacity - Location and Site - Machinery and Equipment - Structures
and Civil Works - Project Charts and Layouts - Work Schedule.
Unit-3 Teaching Hours:10
Financial Analysis
Level of Knowledge: AnalyticalFinancial Analysis: Estimation of cost of project and means of financing -
estimates of sales and production - cost of production - working capital requirement and its financing -
estimates of working results – breakeven points - projected cash flow statement - projected balance sheet.
Project cash flows: Basic principles of measurement of cash flows - components of the cash flow streams
- viewing a project from different points of view - definition of cash flows by financial institutions and
planning commission - biases in cash flow estimation. Appraisal criteria: Net Present Value - benefit cost
ratio - internal rate of returns urgency - payback period - accounting rate of returns – investment appraisal
in practice, Analysis of Risk, Assessing the Tax Burden.
Unit-4 Teaching Hours:8

Types and Measures of Risk

Level of Knowledge: Analytical Types and Measure of Risk - Simple estimation of risk - Sensitivity
Analysis - Scenario Analysis, Monte Carlo Simulation - Decision Tree Analysis – Selection of Project -
Risk Analysis in practice. Special Decision Situations: Choice between Mutually Exclusive Projects of
unequal life - Optimal Timing Decision - Determination of Economic Life - inter-relationships between
Investment and Financing aspects - Inflation and Capital Budgeting.
Unit-5 Teaching Hours:6

Social Cost Benefit Analysis

Level of Knowledge: Analytical Rationale for Social Cost Benefit Analysis (SCBA) – UNIDO Approach to
SCBA - Little and Mirle Approach to SCBA, Qualitative Considerations-Social Cost Benefit Analysis,
Contribution to Government Revenue, Political Stability, Priority and Evaluation of International
Competitiveness.
Unit-6 Teaching Hours:6

Project Financing in India

Level of Knowledge: ConceptualMeans of Finance - Norms and Policies of Financial Institutions - SEBI
Guidelines - Sample Financing plans - structure of Financial Institutions in India - Schemes of assistance -
term Loans procedures - Project Appraisal by Financial Institutions.
Unit-7 Teaching Hours:12

Project Management
Level of Knowledge: Analytical Forms of Project Organization - Project Planning, Project Control, Human
aspects of project Management - Prerequisites for successful Project Implementation. Network techniques
for Project Management - Development of Project Network - Time Estimation - Determination of critical
path - scheduling when resources are limit - PERT and CPM models - Network cost system (Only
Problems on Resources Allocation and resources leveling) Project review and administrative aspects:
Initial review – Performance evaluation - Abandonment analysis - Administrative aspects of Capital
Budgeting - Evaluating the Capital Budgeting System of an organization.
Text Books And Reference Books:
● Bennet P. Lientz, Kathryn P. Rea (2010). Breakthrough Technology Project Management. New Delhi. Academic Press.
● Machiraju, H.R. (2009). Introduction to Project Finance. New Delhi. Vikas Publishing House.
● Narendra Singh (2009). Problems and Solutions in Project Management and Control. New Delhi. Himalaya Publishing House.
● Rao.P.C.K (2009). Project Management and control. New Delhi. Sultan Chand & Sons.
● Vasanth Desai (2008). Project Management. New Delhi. Himalaya Publishing House.

Essential Reading / Recommended Reading:

• Prasanna Chandra (2011). Project Preparation Appraisal Budgeting and Implementation. New Delhi. Tata McGraw Hill.

Evaluation Pattern
Continuous Internal Assessment Criteria

CIA – 1 CIA – 2 CIA – 3 Atten

1 2 3 MSE 1 2 3 dance
Marks – Marks – 10 Marks – 10 Marks – 50 Marks – 10 Marks – 10 Marks – 10 Marks
10 (5)* (5)* (5)* (25)* (5)* (5)* (5)* – (5)*
Research
Presentation /
Based
Case Role Play /
Written Class Activities:
Analysis/Ca Case
Assignme Quiz / Test Participation / Article Review
se presentation /
nt Quiz / Test / Book review
Simulation Mini Project /
/ Mastery
Discussion
Project
 COURSE PLAN
SECTION I

Semester Class 6BBAF1

Course Code BBA643A Course title Project Appraisal and

Financing

Hours 60 Hours per week 4

Faculty name Veena Contact details 9448556986

Dixit [email protected]

Class policies
and
guidelines

In addition to the CIAs, additional assignments/pre-class study topics will

be given and students are expected to come prepared with the same for
maximising the learning engagement.
This course introduces to Planning & Analysis of projects, Generation and
Course Screening of Project Ideas, Financial Analysis, Types and Measures of Risk,
Description Social Cost Benefit Analysis, and the methods in applying fundamentals of
project financing; rationale for this type of financing; completion, operating,
regulatory, and sovereign risk analysis; risk mitigation strategies; financing
options.
To plan, analyze and manage the projects
Course To assess the feasibility of the project ideas
Objectives To understand and measure risks associated with the project
To evaluate cost and benefit of the projects
To strategy the ways of mobilizing finance required for the project
Conceive and Manage the projects
Course Evaluate the feasibility of the project ideas
Outcomes Measure the risks associated with the project
Assess costs and benefits of the project
SECTION II

Unit Unit details Week Hours Pedagogy Resource/

num (starting (teaching Reference
ber and end learning methods details
dates) used)/ activities
and or class trips/
dates for
assessment
1 Planning & Analysis Overview 1-2 8 Class Room Prasanna
Phases of Capital Budgeting - (Should Teaching – Chandra
Levels of Decision Making – be week Presentation & (2011).
Objective, Resource Allocation Project
Framework: Key Criteria for wise) Discussions Preparation
Allocation of Resource - 13/11/20 Caselets Appraisal
Elementary Investment Strategies 18 to discussions Budgeting
- Portfolio Planning tools – 24/11/20 a n d
Strategic Position and Action 18 Implementa
Evaluation - Aspects Relating to tion. New
Conglomerate Diversification - Delhi. Tata
interface between Strategic McGraw
Planning and Capital Budgeting. Hill.
2 Generation and Screening of 3-5 10 Class Room Prasanna
Project Ideas 26/11/20 Teaching – Chandra
Generation of ideas – Monitoring, 18 to Presentation & (2011).
Project
the environment - regulatory 12/12/20 Discussions Preparation
framework for projects - corporate 18 Appraisal
appraisal - preliminary screening - Budgeting
project rating index - Sources of a n d
positive NPV qualities of a Implementa
successful entrepreneur - the tion. New
Delhi. Tata
porter model for estimation of profit McGraw
potential of industries. Market and Hill.
demand analysis: Situational
analysis and specification of
objectives - collection of secondary
information - conduct of market
survey - characterization of the
market - demand forecasting -
market planning. Technical
Analysis: Study of Material Inputs
and Utilities – Manufacturing
Process and technology - Product
Mixes - Plant Capacity - Location
and Site - Machinery and
Equipment - Structures and Civil
Works - Project Charts and
Layouts - Work Schedule
3 Financial Analysis 5-7 10 Class Room Prasanna
Financial Analysis: Estimation of 13/12/20 Teaching – Chandra
cost of project and means of 18 to Presentation & (2011).
Project
financing - estimates of sales and 22/12/20 Discussions Preparation
production - cost of production - 18 Problems Appraisal
working capital requirement and its Budgeting
financing - estimates of working And a n d
results – breakeven points - 2/1/2019 Implementa
projected cash flow statement - to tion. New
Delhi. Tata
projected balance sheet. Project 8/1/2019 McGraw
cash flows: Basic principles of Hill.
measurement of cash flows -
components of the cash flow
streams - viewing a project from
different points of view - definition
of cash flows by financial
institutions and planning
commission - biases in cash flow
estimation. Appraisal criteria: Net
Present Value - benefit cost ratio -
internal rate of returns urgency -
payback period - accounting rate
of returns – investment appraisal in
practice, Analysis of Risk,
Assessing the Tax Burden.
4 Types and Measures of Risk 8-9 8 Class Room Prasanna
Types and Measure of Risk - 21/1/201 Teaching – Chandra
Simple estimation of risk - 9 to Presentation & (2011).
Sensitivity Analysis - Scenario Project
Analysis, Monte Carlo Simulation -
31/1/201 Discussions Preparation
Decision Tree Analysis – Selection 9 Caselets Appraisal
of Project - Risk Analysis in discussions in Budgeting
practice. Special Decision class a n d
Situations: Choice between Implementa
Mutually Exclusive Projects of tion. New
unequal life - Optimal Timing Delhi. Tata
Decision - Determination of McGraw
Economic Life - inter-relationships Hill.
between Investment and Financing
aspects - Inflation and Capital
Budgeting.
 5 Social Cost Benefit Analysis 10-11 6 Class Room Prasanna
Rationale for Social Cost Benefit 4/2/2019 Teaching – Chandra
Analysis (SCBA) – UNIDO to Presentation & (2011).
Approach to SCBA - Little and Project
Mirle Approach to SCBA,
13/2/201 Discussions Preparation
Qualitative Considerations-Social 9 Some sections Appraisal
Cost Benefit Analysis, Contribution maybe given for Budgeting
to Government Revenue, Political self study a n d
Stability, Priority and Evaluation of Implementa
International Competitiveness. tion. New
Delhi. Tata
McGraw
Hill.
6 Project Financing in India 11-12 6 Class Room Prasanna
Means of Finance - Norms and 14/2/201 Teaching – Chandra
Policies of Financial Institutions - 9 to Presentation & (2011).
SEBI Guidelines - Sample Project
Financing plans - structure of
25/2/201 Discussions Preparation
Financial Institutions in India - 9 Appraisal
Schemes of assistance - term Some sections Budgeting
Loans procedures - Project may be given for a n d
Appraisal by Financial Institutions. self-study Implementa
tion. New
Delhi. Tata
McGraw
Hill.
7 Project Management 13-16 12 Prasanna
Forms of Project Organization - 26/2/201 Chandra
Project Planning, Project Control, 9 to (2011).
Human aspects of project Project
14/3/201 Preparation
Management - Prerequisites for
successful Project Implementation. 9 Appraisal
Network techniques for Project Budgeting
Management - Development of a n d
Project Network - Time Estimation Implementa
- Determination of critical path - tion. New
scheduling when resources are Delhi. Tata
limit - PERT and CPM models - McGraw
Network cost system (Only Hill.
Problems on Resources Allocation
and resources leveling) Project
review and administrative aspects:
Initial review – Performance
evaluation - Abandonment analysis
- Administrative aspects of Capital
Budgeting - Evaluating the Capital
Budgeting System of an
organization.

SECTION III
Assessment outline:
Mapping: A template to map the Learning Outcomes of the course against the components of
assessment is given below:
 SECTION IV
Brainstorm project ideas and select one feasible project for the group. Students are
required to apply the concepts discussed in Unit 1 and Unit 2. This is a group
assignment. Any member of the group may be asked questions on how the group
selected the project idea and formulated the business plan.
Group assignment (groups of 5, will be decided by the faculty)
Format of submission will be presentation
Due date: End of Week 3/Early week 4
Marks: 15
Learning Outcome:
1. Conceive the project idea
2. Evaluate the feasibility of the project ideas

Evaluation rubrics:

Criteria 5 Marks 4 Marks 3 Marks 2 Marks 1 Mark

Relevanc Excellently Project idea Project idea Project idea

e of the designed and is very good is good and meets the N e e d s
business very relevant and relevant relevant to m i n i m u m improvem
idea Project idea is t o t h e the chosen requirement.Pr ent
relevant to the c h o s e n industry. oject idea is
i n d u s t r y industry. Implementat novel but
scenario and Implementat ion may be implementation
is feasible to ion may be a challenge will be a
undertake. It is possible w i t h challenge
novel and is with a few roadblocks
expected to roadblocks that cannot
generate which can be identified
substantial be identified due to
revenues. in advance l i m i t e d
c l a r i t y
Prelimina Project is Project is Project is Project idea N e e d s
r y logically created c r e a t e d logic meets the improvem
Feasibilit created by logically logically well m i n i m u m ent
y brainstorming very well by by applying r e q u i r e m e n t
Analysis and applying applying the t h e
of the the concepts concepts concepts
project excellently

Justificati Justification Justification Justification Justification N e e d s

o n & a n d a n d a n d a n d Improvem
Presentat presentation is presentation presentation presentation is ent
ion v e r y is very i s Satisfactory N o
impressive convincing convincing evidence
Presentation Presentation Idea needs of team
of idea is well of idea can I d e a improvement effort
structured be bettered s t r u c t u r e Team has no
T e a m Team work a n d coherence N o
participation/w is evident presentation U n a b l e t o justificatio
ork Team is n e e d s majority of n provided
Team is able able to improvemen q u e s t i o n s o n
to answer all a n s w e r t. questions
the questions majority of Team has asked
raised during questions w o r k e d
discussions r a i s e d together
d u r i n g Team is
discussions able to
a n s w e r
atleast half
t h e
questions
raised

Learning Outcomes of the Method of assessment Component of the evaluation

assignment rubrics
LO 1 Usage of appropriate sources; Relevance of the business
Conceive the project idea relevant assumptions idea
This point will be evaluated on
the basis of the content of the
presentation

Establish the relevance of the

idea
Outcome of the idea
 LO 2 Ability to do preliminary Analysis of the project
Evaluate the feasibility of market research and feasibility
the project idea analysis; preliminary
competitor analysis
On the basis of preliminary
market research and feasibility
analysis; preliminary
competitor analysis
LO 3 Ability to justify the sources of Justification &
information and assumptions Presentation

Students will work in the same group as CIA 1A. This is an extension of the earlier
assignment. Students will apply the concepts discussed in Unit 2. Students are required
to research and perform a brief market analysis for the project idea that has been
chosen in CIA 1A. Sources of information and justification of assumptions have to be
clearly articulated.
Group assignment (group will remain the same as in CIA 1A)
Format of submission will be presentation
Marks: 15
Due date: End of Week 6; before the Christmas break

Learning Outcome:
1. Conceive the project idea
2. Evaluate feasibility of project idea

4. Able to identify relevant industry reports and statistics published by the government and
other agencies

Evaluation rubrics: (This rubrics has room for only 10 marks max... Remaining 5
marks???
***** 3 criteria multiplied by 5 marks each = 15 marks ******

Criteria 5 Marks 4 Marks 3 Marks 2 Marks 1 Mark

Use of Excellently M a r k e t M a r k e t M a r k e t
relevant researched and analysis is analysis is analysis N e e d s
sources of very relevant very good good and meets the improvemen
m a r k e t a n d relevant to minimum t
information Has been able relevant to the chosen requiremen
U s i n g to analyse all t h e industry t.
Porter’s 5- five forces chosen Has been Has been
f o r c e s industry able to able to
M o d e l Has been analyse analyse
Suppliers able to atleast 3 atleast 1-2
Substitutes analyse forces sources
Bargaining atleast 4
power of forces
buyers
Threat of
n e w
entrants
Industry
rivalry

Interpretatio Sources of Sources of Sources of Logic N e e d s

n o f m a r k e t market m a r k e t meets the improvemen
sources of information has informatio information minimum t
information been used in an n has has been requiremen
e x c e l l e n t been used used in a t
manner to in a useful fairly decent
justify the way to way to
project idea justify the justify the
project project idea
idea

Justification Presentation of
& idea is well Presentati I d e a No evidence
Presentatio structured on of idea structure Idea needs o f team
n T e a m can be a n d improveme e f f o r t
participation/wor bettered presentatio nt
k T e a m n needs Team has N o
Team is able to work is improveme n o justification
answer the evident nt. coherence provided on
questions raised Team is Team has Unable to q u e s t i o n s
able to w o r k e d majority of a s k e d
answer together questions
majority of Team is
questions able to
r a i s e d a n s w e r
d u r i n g atleast half
discussion t h e
s questions
raised
 Justification Presentation of
& idea is well Presentati I d e a No evidence
Presentatio structured on of idea structure Idea needs of team
n T e a m can be a n d improveme effort
Justification participation/wor bettered presentatio nt
& k T e a m n needs Team has N o
Presentatio Team is able to work is improveme n o justification
n answer the evident nt. coherence provided on
questions raised Team is Team has Unable to questions
able to w o r k e d majority of asked
Justification and a n s w e r together questions N e e d s
presentation is majority of Team is Improvemen
very impressive questions able to Justification t
r a i s e d a n s w e r a n d
d u r i n g atleast half presentatio
discussion t h e n i s
s questions Satisfactory
Justificatio raised
n and Justification
presentati a n d
on is very presentatio
convincing n i s
convincing

(Clarity is missing)

Learning Outcomes of the Method of assessment Component of the evaluation

assignment rubrics
LO 1 Usage of appropriate sources; Use of relevant sources of
relevant assumptionsAbility to market information
analyse market scenario and
apply Porter’s five forces
model
LO 2 Interpretation of sources
Ability to identify and use data of information
from industry reports such as Justification and
CII, Assocham, IBEF, CRISIL Presentation
etcAbility to interpret the
jargons and basis for
publishing information
LO 3 Ability to justify the sources of Justification &
information and assumptions Presentation

Students will work in the same group as CIA 1A. Students are required to forecast
demand and financial aspects for the project idea that has been chosen in CIA 1A.
Financial estimates such as working capital requirements, breakeven points, projected
balance sheet, and projected cash flows will be presented.
Group assignment (group will remain the same as in CIA 1A)
Format of submission will be presentation
Marks: 15
Learning Outcome:
1. Learn to forecast the demand for the product/service in the project idea conceived
2. Learn to do a financial assessment
3. Justify the use of tools and assumptions used in LO1 and LO2

Due Date: Week 11

Evaluation rubrics:

Criteria 8 5 Marks 6 4 Marks 4 3 Marks 2 1 Mark

Marks

1. Estimated
working Presented Presented Presented Presented N e e d s
c a p i t a l a l l 4 3 criteria 2 criteria 1 criteria improveme
requirement criteria nt
2. breakeven
points
3. projected
cash flow
statement
4. projected
balance
sheet
Criteria 7 Marks 5 Marks 3 Marks 2 1 Mark
Marks
Justification & Justificatio Justificatio Justificatio N e e d s
PresentationReven n a n d n and n and Justificatio Improveme
ue forecasting presentatio presentati presentati n a n d nt
Sources of finance n is very on is very o n i s presentatio Covered
– capital structure impressive convincing convincing n i s only Social
Social implications All 3 areas Covered Satisfactor Implications
have been Revenue Covered y
covered forecastin s o c i a l
g and implication C o v e r e d
sources of s and any only 1 out
finance one o f of the 3
r e v e n u e areas
forecastin
g o r
sources of
finance

Learning Outcomes of the Method of assessment Component of the evaluation

assignment rubrics
LO 1 Usage of appropriate sources; 1. Estimated working
Learn to do a financial relevant assumptionsHas capital requirement
assessment understood the concepts of
forecasting finances and can 2. breakeven points
demonstrate the same by 3. projected cash
preparing financial statements flow statement
Learn to forecast the
demand for the
product/service in the project
idea conceived
LO 2 Assumptions, format and Revenue forecasting
Justify the use of tools and relevance of financial analysis Sources of finance –
assumptions used in LO1 Basis for assumptions of capital structure
discount rate, cost of capital Social implications
etc Learn to do a
financial assessment
Estimated working
capital requirement
breakeven points
projected cash flow
statement
projected balance
sheet
LO 3 Ability to justify the sources of Justify the use of tools used
information and assumptions in LO1 and LO2

CIA 3B:
Assessment Description:
Students will assess atleast 2 (two) of the project ideas presented by the other groups.
Each student will appraise 2 projects using criteria discussed in the class – NPV, BCR,
IRR, Payback Period, ARR. The appraisal criteria will be discussed in Unit 3
This will include an assessment of the risk factors which will be discussed in Unit 4.
This is an individual assignment.
Word limit is 500.
Marks: 15
Learning Outcome:
1. Measure the risks associated with the project
2. Assess costs and benefits of the project
3. Decide scientifically which project to select

Due Date: Week 13

Evaluation rubrics:

Criteria 5 Marks 4 Marks 3 Marks 2 1 Mark

Marks

S c e n a r i o Able to do Able to do Able to do Meets the

A n a l y s i s a scenario a scenario a scenario minimum N e e d s
analysis analysis analysis requireme improveme
for both for both for both nt. nt
t h e t h e t h e
chosen chosen chosen
projects in projects in projects in
a n a very a fairly
excellent good and decent
manner relevant manner
manner
S e n s i t i v i t y Able to do Able to do Able to do Meets the
Analysis a a a minimum N e e d s
sensitivity sensitivity sensitivity requireme improveme
analysis analysis analysis nt. nt
for both for both for both
t h e t h e t h e
chosen chosen chosen
projects in projects in projects in
a n a very a fairly
excellent good and decent
manner relevant manner
manner
Has used H a s H a s H a s
Decision Tree t h e understoo understoo understoo N e e d s
Analysis decision d the d the d t h e Improveme
t r e e usage of usage of u s a g e o f nt
analysis in decision decision decision
a n trees and trees and trees and
excellent has used has used c a n
manner i t it in a explain but
effectively g o o d has some
manner issues in
using it for
t h e
assignmen
t

Learning Outcomes of the Method of assessment Component of the evaluation

assignment rubrics
LO 1 Appropriate use of scenario Scenario analysis
analysis
LO 2 Appropriate understanding Sensitivity analysis
and use of sensitivity analysis
LO 3 Decide scientifically which Decision Tree
project to select AnlaysisAnalysis