Technical Appraisal of an industrial project.docx

7/29/2019 Technical Appraisal of an industrial project.docx

http://slidepdf.com/reader/full/technical-appraisal-of-an-industrial-projectdocx 1/8

Technical Appraisal of an industrial project

Technical appraisal is an in-depth study to ensure that a project is (i) soundly designed, (ii) appropriately engineered and

(iii) follows accepted standards. These considerations differ from project to project. But, in any case, the emphasis is on

the inputs needed for the project and the resulting outputs of goods & services.

Put another way, such an appraisal determines whether the pre-requisites of a successful project have been covered

and good choices have been made in regard to (i) location, (ii) plant capacity, (iii) raw materials requirements and (iv)

other such factors as availability of required professional, technicians and workers. In addition, project costs are

estimated and subsequently manufacturing costs are worked out. Adverse environmental impact, if any, is also

visualized and efforts are made to reduce it through a better project design incorporating treatment of effluents and noise

abatement.

This hub would briefly cover the following technical aspects:

TECHNICAL SOUNDNESS:

1. Technology

2. Location

3. Capacity

4. Timing

BEST ALTERNATE :

1. Objectives

2. State of Economic Development



Inputs for sugar and its different outputs like crystal sugar, liquid sugar etc.

APPROPRIATE TECHNOLOGY

Ingrediamts for development

TECHNOLOGY

(a) Suitability of raw materials

For manufacturing of desired products, a number of raw materials can be used which bring equally good results.

Therefore, it should be studied which of the raw materials is economically available in the area and machinery selection

be made accordingly. For example:

Crystal sugar can be manufactured from sugarcane, beet and sweet potato. Similarly, liquid sugar can be

extracted from rice, corn or fruits.

Soda Ash can be made by converting sea salt or common salt.

Paper and Board can be manufactured using wood, bagasse, rice husk, wheat straw & cotton stick

Quality of limestone determines whether the cement process should be wet or dry.

For making fertilizers, a number of alternatives are available such as air, gas, water, coal, coke, wood & gypsum

Edible Oil is extracted from different sources like palm, soya, cotton and sunflower & rice bran.

(b) Suitable to local conditions

While selecting an appropriate technology, local conditions should be kept in like heat, dust, rain or cold.

Also related other factors be considered such as power interruptions and low literacy and skills. In case of low-

literacy, semi-automatic process should be introduced.



(c) Proven Technology

The process should be well-tried. If it is a new process, a performance bond should be obtained from the

machinery supplier which should be supported by a guarantee from a bank of international repute.

In Pakistan, a plant for the manufacture of seamless pipes failed as it was based on hot-rolled process which was

said to be first of its kind in the world in late sixties.

Similarly, a edible oil project was based on rice-bran. However, the bran must be brought to the mills within 24

hours else the oil extracted would be unsuitable for human consumption for presence of free fatty acid.

(d) Others

In addition, there should be flexibility in the plant for any change in dimension or switch over to other varieties.

The plant must have some add-on features to ensure diversification.

Besides, it should be bought from the cheaper sources to keep the fixed capital expenditure low.

Sugar mills capable of crushing 8,000 cane per day of which sugar is at best 11%.

LOCATION

Location should selected keeping in view the Operational Advantages, Financial Advantages and Government Policies.

This is discussed as follows:

a) OPERATIONAL ADVANTAGES

(1) Nearness to Raw materials

Wood processing Woods

Cement plant requiring Shale and gypsum

Sugar mills to be in the Crop area

Oil refineries be located at Port or Oil fields

(2) Nearness to Market

Auto-parts (motor assembly plants)

Services (Hotel, banks, training institutes)



(3) Availability of personnel

Soft ware developers should be in an area with lots of Computer Universities.

Engineering goods in areas where skilled workers are concentrated (Lahore & Gujranwala)

Labor intensive projects like jute and textile mills in those areas where cheap labor is available.

(4) Infra-structure

Suitability of water and waste disposal -Cloth printing/ Paper Plants/ Tanneries

Social Amenities

(5) Pleasant Climatic Conditions for:

Tourist complex / Health resorts

Ecological requirements for mineral water.

(b) FINANCIAL ADVANTAGES

Taxes, subsidies, grants and allowances offered by the Government

Availability of Cheaper credit by banks through Central Bank Support.

Reduced rates for utilities

(c) PUBLIC POLICIES

Location policy - negative areas - where no industry can be established

Incentives for un-attractive areas

Establishment of public sector project like steel mills, petrochemical leading to feeder or down-stream projects.

Development of infra-structure.

CAPACITY

Capacity should be chosen keeping in view present and future demand. It becomes a choice between (i) going idle if the

capacity is excessive and (ii) loss of business if the capacity is low. Besides, technological requirements and resource

constraints should be kept in mind.

(a) Technological requirements (minimum economic size)

Sugar Plant - 6,000 tons/day

Spinning Unit - 25,000 spindles/day

Cement Mills - 7,000 tons/day especially when rotary kiln is to be operated.

(b) Resource & Input Constraints



Power supply may be limited

Basic raw material not available within range

Limited Foreign Exchange

Plastic Shopping - living on a borrowed time

TIMING

Timing is very crucial. Project coming into operation before time do not find any market. While those coming after time

have an obsolete product which no body would buy even offered at low price.

(a) Before Time

A project for producing polyethylene shopping bags came into production when home-made waste-paper bags

were available at 10% of the price of plastic bag. So plastic bags were out priced and plant had to be closed down

after one year of unsuccessful operation.

If such plant is established now, it would again face marketing difficulties since plastic shopping bags are being

discourage the world over.

(b) After Time

Another project started manufacture of Manual typewriters at time when the product had already become

redundent.

industrial project - solar park

PROJECT’S OBJECTIVES

Objectives also shape the project as discussed below:



(a) More Employment

If job creation is the objective, project has to be semi-automatic and labor intensive near the town.

(b) More Forex Earnings

If earning foreign exchange is purpose of the project, it has to produce defect free products. A comparison of

quality may be made between gray-cloth produced by power loom and by shuttles looms.

(c) Balanced Growth

If balanced regional growth is the aim, the projects would have to be established in far off neglected areas. Such

projects are typically of low technology, semi-automatic and having sturdy machine rather than sophisticated as

there are no repair facilities near the plant.

If balance industrial growth is the aim, one would go to new type of industry thus incurring more risk than afforded

by the conventional industries.

Initially moderate demand which pickup only when Pakistan Medical Association put up an advertisement in newspapers

that "Corn Oil is good for heart."

STATE OF ECONOMIC DEVELOPMENT

Lack of Infra-structure communication, may hinder establishment of some projects like those requirement large

quantity of water or electricity or gas.

Some products like corn oil were introduced only when the public became fully aware of its good effect on health

particular heart.

Garment factory - an example of labor-intensive unit

Computer Integrated Manufacture

OPTION AVAILABLE

(a) Degree of automation

Keeping in view, state of the economy, a project can be labor- intensive or capital-intensive.

Labor intensive project are consumption oriented.The workers have lower propensity to save and spend their

wages in purchase of basic goods and service which would enlarge the market. These are counter-inflationary as

these have a small gestation period and soon match the money supply. These are said to be environment friendly.

Capital intensive projects are investment oriented since they empolyee highly paid engineers and administrative

personall which have more propensity to save.These result in the transfer of technology, result in cost reduction

due to economy of scale.



Suitable qualified and experienced technical staff is available. Labor is estimated at 57 skilled workers while 38 semi

skilled workers would also be inducted. No difficulty is foreseen regarding labour availability.

Environment Consideration:

The proposed project would not pose any environmental hazards.

Construction schedule:

Technical Appraisal of an industrial project.docx

Documents

Transcript of Technical Appraisal of an industrial project.docx