Preparation of Project and ERP

Mr. Deepak Kothari

Dept. of ME

1
 CONTENTS
• Meaning of project
• Project Identification & Selection
• Project Report Need and Significance
• Project Report contents and Formulation
• Guidelines by Planning Commission for Project Report,
• Enterprise Resource Planning: Meaning & Importance
• Functional areas of Management
– Marketing / Sales
– Supply Chain Management
– Finance & Accounting
– Human Resources
• Types of Reports
• Methods of Report Generation 2
 Meaning of Project

• Any undertaking with a definite starting point and

defined objectives by which completion is defined .
• A project is a whole complex of activities involved in
using resources to gain benefits.
• The World Bank has defined Project as an approval for
a capital investment to develop facilities to provide
Goods & Services.
• A Project is an appraisal for Investment with the
definite aim of producing a flow of Output over a
specified period of time.
3
 Meaning of Project

• Projects partake of the following three basic attributes:

– A course of action
– Specific objectives and
– Definite time perspectives.
• Every project has starting point, an end point with
specific objectives.

4
 Project Life Cycle

• The project life cycle refers to a logical sequence of

activities to accomplish the project’s goal or objectives.

Phases of project
• Initiation/Birth phase
• Planning Phase
• Execution phase
• Closure/Exit phase

5
 Project Management

• Project management is a specialized branch of

management capable of differentiation from other
based on a variety of factors which include the
organization structure, the process of planning and
control, human relation etc..
• Project management deals with project identification,
selection, formulation and appraisal.

6
 Project Management Phases

• Identification
• Formulation
• Appraisal
• Selection
• Implementation
• Management

7
 Project Identification

• It is concerned with collection, compilation & analysis

of economical data for purpose of locating possible
opportunities for investment
• Opportunities may be additive, complementary,
breakthrough
• As an Entrepreneur, when you are searching for an
idea suitable for your commitment, background &
experience, do not pursue one idea at a time. Develop
five or even more project ideas in parallel until one
emerges so appropriate, that it begins to dominate your
thoughts. 8
 Project Identification

Project Ideas can be discovered from various internal & external

sources. These may include :
 Knowledge of potential customer needs.
 Personal observation of emerging trends in demand
for certain products.
 Scope for producing substitute product.
 Trade and professional magazines which provide a
very fertile source of project ideas.

9
 Project Identification

Project Ideas can be discovered from various internal & external

sources. These may include :
 Departmental publications of various departments of
the government.
 Success stories of known entrepreneurs or friends or
relatives.
 A new product introduced by the competitor.
 Ideas given by knowledgeable persons.

10
 Project Identification

All of these Sources put together may give a few Ideas

about the possible projects to be examined as the Final
Project. This Process of identifying Project Ideas is
referred to as ―Opportunity Scanning &
Identification.‖

11
 Project Selection
• Project selection starts once the entrepreneur has
generated few ideas of project.
• After having some ideas, these project ideas are
analyzed in the light of existing economic conditions,
market conditions, and the government policy and so
on.
• For this purpose a tool is generated used what is called
SWOT analysis.
• The intending entrepreneur analyses his strengths and
weaknesses as well as opportunities/competitive
advantages and threats/challenges offered by each of
the project ideas. 12
 Project Selection
• In addition the entrepreneur needs to analyze other
related aspects also like raw material, potential market,
labour, capital, location and forms of ownerships etc.
• Each of these aspects has to be evaluated independently
and in relation to each of these aspects. On the basis of
this analysis, the most suitable idea is finally selected to
convert it into an enterprise. The process involved in
selecting a project out of few projects is also termed as
―Zeroing in Process‖.

13
 Project Selection
• Investment Size:
– assess the Economical Size of the Plant & the Total
Investment required
– Assess Financial Capability
• Location: Location chosen should have
– Good Infrastructural Facilities
– Transportation Facilities
– Communication Facilities
– Availability of Power, Water & required Labor

14
 Project Selection
• Technology:
– Should not necessitating Foreign Technical Collaboration.
– Product with a proven technology
• Plant & Machineries:
– assess the availability of High Quality Plant & Machineries
– should not compromise on the Quality of the Equipment
• Marketing: The Success of any Enterprise finally
depends on Marketing Capability of ones Goods /
Products / Services.

15
 Project Report
• A project report or a business plan is a written
statement of what an entrepreneur proposes to take up.
• It is a kind of guide frost or course at action what the
entrepreneur hopes to achieve in his business and how
is he going to achieve it.
• A project report serves like a kind of big road map to
reach the destination determined by entrepreneur.
• A well evolved course of action devised to achieve the
specified objectives within a specified period of time. It
is like an operating document.
16
Need and Significance of Report

17
 Contents of Project Report

• Cover Page
• Table of Contents
• Executive Summary
• Company Information & Industry
• Product or Service (Technical plan)
• Marketing plan
• Manufacturing/Operating Plan

18
 Contents of Project Report

• Management Team (Organizational Plan)

• Project Timeline (Network Analysis)
• Critical Risk & Assumption
• Social Plan
• Exit Strategy
• Financial Plan
• Conclusion
• Appendix
19
 Formulation of Project Report
Project Formulation includes following steps:
• General information
• Project description
• Market potential
• Capital costs and sources of finance
• Assessment of working capital requirements
• Other financial aspects
• Economical and social variables
• Project implementation
20
 Planning Commission Guidelines For
Project Report Preparation
1. General Information
2. Preliminary Analysis of Alternatives
3. Project Description
4. Marketing Plan
5. Capital Requirements and Costs
6. Operating Requirements and Costs
7. Financial Analysis
8. Economic Analysis

21
Errors in Project Report

22
 Enterprise Resource Planning
• Enterprise resource planning system is a fully
integrated business management system covering
functional areas of an enterprise like Logistics,
Production, Finance, Accounting and Human
Resources. It organizes and integrates operation
processes and information flows to make optimum
use of resources such as men, material, money and
machine.
• Enterprise resource planning promises one
database, one application, one user interface

23
 Enterprise Resource Planning
ERP delivers a single database that contains all data for the
software modules, which would include:
• Manufacturing: Engineering, bills of material, scheduling,
capacity, workflow management, quality control, cost
management, manufacturing process, manufacturing projects,
manufacturing flow.
• Supply chain management : Order to cash, inventory,
order entry, purchasing, product configuration, supply chain
planning, supplier scheduling, and inspection of goods, claim
processing, and commission calculation.
• Financials: General ledger, cash management, accounts
payable, accounts receivable, fixed assets.
24
 Enterprise Resource Planning
• Project management: Costing, billing, time and expense,
performance units, activity management.
• Human resources: Human resources, payroll, training, time
and attendance, roistering, benefits.
• Customer relationship management: Sales and marketing,
commissions, service, customer contact and call center
support, Data warehouse and various self-service interfaces
for customers, suppliers, and employees.
• Access control : user privilege as per authority levels for
process execution Customization - to meet the extension,
addition, change in process flow.

25
 ERP Characteristics

• Flexibility : An ERP system should be flexible to

respond to the changing needs of an enterprise.
• Modular & Open : ERP system has to have open
system architecture.
• Comprehensive : It should be able to support variety
of organizational functions
• Beyond The Company : It should not be confined to
the organizational boundaries.
• Best Business Practices : It must have a collection of
the best business processes applicable worldwide.

26
 Features of ERP
• ERP provides multi-platform, multi-facility, multi-mode
manufacturing, multi-currency, multi-lingual facilities.
• It supports strategic and business planning activities,
operational planning and execution activities, creation of
Materials and Resources.
• ERP covering all functional areas like manufacturing, selling
and distribution, payables, receivables, inventory, accounts,
human resources, purchases etc.
• ERP performs core activities and increases customer service,
thereby augmenting the corporate image.
• ERP bridges the information gap across organizations.
• ERP is the solution for better project management.
27
 Features of ERP
• ERP provides complete integration of systems not only across
departments but also across companies under the same
management.
• ERP allows automatic introduction of the latest technologies like
Electronic Fund Transfer (EFT), Electronic Data Interchange
(EDI), Internet, Intranet, Video conferencing, E-Commerce etc.
• ERP eliminates most business problems like material shortages,
productivity enhancements, customer service, cash management,
inventory problems, quality problems, prompt delivery etc.
• ERP provides intelligent business tools like decision support
system, Executive information system, Data mining and easy
working systems to enable better decisions.
28
 Benefits of ERP
• Gives Accounts Payable personnel increased control of
invoicing and payment processing and thereby boosting
their productivity and eliminating their reliance on
computer personnel for these operations.
• Reduce paper documents by providing on-line formats for
quickly entering and retrieving information.
• Improves timeliness of information by permitting posting
daily instead of monthly.
• Greater accuracy of information with detailed content,
better presentation, satisfactory for the auditors.

29
 Benefits of ERP
• Improved cost control.
• Faster response and follow-.up on customers.
• More efficient cash collection, say, material reduction in
delay in payments by customers.
• Better monitoring and quicker resolution of queries.
• Enables quick response to change in business operations
and market conditions.
• Helps to achieve competitive advantage by improving its
business process.

30
 Benefits of ERP

• Improves supply-demand linkage with remote locations

and branches in different countries.
• Provides a unified customer database usable by all
applications.
• Improves International operations by supporting a
variety of tax structures, invoicing schemes, multiple
currencies, multiple period accounting and languages.
• Improves information access & management
throughout the enterprise.

31
 Functional Areas of Operation
• Marketing and Sales (M/S)
• Supply Chain Management (SCM)
• Accounting and Finance (A/F)
• Human Resources (HR)
• Business functions: Activities specific to a functional
area of operation

32
 Functional Areas of Operation (cont’d.)

Figure 1-1 Examples of functional areas of operation and their business functions
33
 Functional Areas of Operation (cont’d.)
• Functional areas are interdependent
– Each requires data from the others
• Better integration of functional areas leads to
improvements in communication, workflow, and
success of company
• Information system (IS): Computers, people,
procedures, and software that store, organize, and
deliver information

34
 Business Processes
• Collection of activities that takes one or more
kinds of input and creates an output that is of
value to customer
– Customer can be traditional external customer or
internal customer
• Thinking in terms of business processes helps
managers to look at their organization from the
customer’s perspective

35
 Functional Areas and Business
Processes of a Very Small Business

• Example: A fictitious coffee shop

– Examine business processes of the coffee shop
– See why coordination of functional areas helps
achieve efficient and effective business processes
– Look at how integration of the information system
improves the business

36
 Marketing and Sales
• Functions of Marketing and Sales
– Developing products
– Determining pricing
– Promoting products to customers
– Taking customers’ orders
– Helping create a sales forecast

37
 Marketing and Sales (cont’d.)
• Marketing and Sales tasks for the coffee shop
– Formal recordkeeping not required
– Need to keep track of customers
– Product development can be done informally
– Good repeat customers allowed to charge
purchases—up to a point
• Records must show how much each customer owes and
his or her available credit

38
 Marketing and Sales (cont’d.)

Figure 1-4 The Marketing and Sales functional area exchanges data with customers and
with the Human Resources, Accounting and Finance, and Supply Chain Management
functional areas
39
 Supply Chain Management
• Supply chain management (SCM) is the active
management of supply chain activities to maximize
customer value and achieve a sustainable competitive
advantage.
• It represents a conscious effort by the supply chain
firms to develop and run supply chains in the most
effective & efficient ways possible.
• Supply chain activities cover everything from product
development, sourcing, production, and logistics, as
well as the information systems needed to coordinate
these activities.
40
 Supply Chain Management
• Needs information from various functional areas
• Production plans based on information about
product sales (actual and projected) that comes
from Marketing and Sales
• With accurate data about required production
levels:
– Raw material and packaging can be ordered as
needed
– Inventory levels can be kept low, saving money
41
 Supply Chain Management
• Functions within Supply Chain Management
– Making the coffee (manufacturing/production)
– Buying raw materials (purchasing)
• Production planning requires sales forecasts
from M/S functional area
– Sales forecasts: Analyses that attempt to predict
the future sales of a product

42
Supply Chain Management (cont’d.)
• Production plans used to develop requirements
for raw materials and packaging
– Raw materials: Bottled spring water, fresh lemons,
artificial sweetener, raw sugar
– Packaging: Cups, straws, napkins
• SCM and M/S must choose a recipe for each
coffee product sold

43
 Supply Chain Management (cont’d.)

Figure 1-5 The Supply Chain Management functional area exchanges data
with suppliers and with the Human Resources, Marketing and Sales, and
Accounting and Finance functional areas
44
 Accounting and Finance
• Functions within Accounting and Finance
– Recording raw data about transactions (including
sales), raw material purchases, payroll, and receipt of
cash from customers
• Raw data: Numbers collected from sales,
manufacturing and other operations, without
any manipulation, calculation, or arrangement
for presentation

45
 Accounting and Finance (cont’d.)
• Data from Accounting and Finance used by
Marketing and Sales and Supply Chain
Management
– Sales records are important component of sales
forecast
– Sales forecast is used in making staffing decisions
and in production planning
– Records from accounts receivable used to monitor
the overall credit-granting policy of the coffee shop
46
 Accounting and Finance (cont’d.)

Figure 1-6 The Accounting and Finance functional area exchanges data with
customers and with the Human Resources, Marketing and Sales, and Supply
Chain Management functional areas
47
 Human Resources
• Functions of Human Resources
– Recruit, train, evaluate, and compensate employees
• HR uses sales forecasts developed by the
individual departments to plan personnel needs
• Systems integrated using ERP software provide
the data sharing necessary between functional
areas

48
 Human Resources (cont’d.)

Figure 1-7 The Human Resources functional area exchanges data with the
Accounting and Finance, Marketing and Sales, and Supply Chain
Management functional areas
49
 Network Analysis
• A network diagram represents the various activities of a
project.
• An event/node marks the begin/end of an activity.
• An activity is represented by a straight line arrow.
• There can be only one activity between 2 nodes.
• A dummy activity is a hypothetical activity which does
not require any type of resource. And duration is 0.

50
Critical Path Method

51
Critical Path Method

52
Critical Path Method

53
Critical Path Method

54
 PERT: Programme Evaluation & Review
Technique

• PERT is applied in projects where the duration of

various activities cannot be predicted with certainty.
• Similar to CPM.
• Suitable for R&D projects.

55
 PERT: Programme Evaluation & Review
Technique

• PERT calculates 3 time estimates for each activity based

on their past activity.
– Optimistic time estimate to : shortest time estimates
– Pessimistic time estimates tp : longest time estimates
– Most likely time estimate tm: highest probability of occurrence.
• Mean time(te) = (to + 4tm + t p )/6

56
 Types of Project Report
• Status Report
• Risk Report
• Board/ Executive Report
• Resource Report

57