Explain The Significance of Project Report


Project Report



Meaning of Project Report:

                A project report is a document wherein all the details obtained from technical analysis, financial analysis, profitability analysis, economic analysis etc. are put together. A project report may be defined as a document with respect to any investment proposal based on certain information & factual data for the purpose of appraising the project.

Significance / Importance of Project Report:

              Project report is an important cornerstone for setting up an enterprise. It is a business plan to convert a business idea into a productive venture. It is like a blue print for any construction activity without which one would land in confusion or chaos at a later stage. The significance of a project report is as follows;

Serves as a Master Plan-

         For successful management, effective planning is absolutely essential. A project report serves as a business plan indicating the objectives or goals of the enterprise & states in detail how these objectives are going to be achieved at various stages of the enterprise.


Describes Direction / Road Map-

          A project report is like a road map. It describes the direction in which the enterprise should go & how to reach the goal. Without well defined goals & operational methods as stated in the report, most enterprises land in troubled waters & flounder on the rocks of hard times.


Shows Feasibility-

            A project report also shows the feasibility of the proposed project & the probability of achieving profit. Whether a project is feasible from different angles- economic, financial, commercial, social etc. can be ascertained while preparing a project report.


Foresees requirements-

              A project report enables an entrepreneur to realize what he needs for implementing the project well in advance. It also gives a general idea of his various resource requirements like raw materials, manpower, finance, infrastructure facilities etc. and also the means of procuring them. Thus, it enables an entrepreneur to foresee his requirements in advance & helps him to take suitable decisions accordingly.


Indicates Profitability-

                It gives an indication of likely & benefits which a prospective entrepreneur can get from his venture. This profitability indication will help an entrepreneur to take an important investment decision. Thus, the financial rewards can be visualized in advance.


Helps in Decision Making-

                  Crucial decisions have to be made at various stages of production. How much to produce to achieve Break-Even-Level? How to fix the repayment schedule? Such important decisions can be taken with the help of a project report prepared well in advance. It also anticipates problems in advance so that suitable decisions can be taken then & there to solve those problems. Thus, it helps to visualize action tasks also.


Paves way for Financial Assistance-

                   The preparation of a project report is absolutely essential for those enterprises which apply for financial assistance from different financial institutions & banks. It is on the basis of project report, that the financial institutions could be given or not. In most cases, the quality of the firms project report weighs heavily in taking lending decisions. Thus, it paves the way for financial assistance which is the life blood of an enterprise.


Ensures Survival-

                    The survival of any business depends upon the marketability of its products. The project report projects the demand & supply position, competitor’s position in the market, expected price etc. and thus ensures the survival of the business unit.


To Plan Expected Performance-

                     A project report is prepared to plan in advance about the fulfillment of expected performance in various areas like technology, marketing, finance, personnel, production, customer satisfaction & social endowment.


Assess Profitability-

                     Project report assesses the demand potential of the proposed product, works out the cost of capital invested & operational costs & side by side expected profitability of the proposed project.



To know expected Inputs & Outputs-

                   A project report enables an entrepreneur to know how much money, manpower & material would be required to set up the project, type of machine & technology required & the economic gains from the project.


To Evaluate Organisational Goals-

                   A project report helps to evaluate the organization objectives, to what extent they are achievable. For this purpose, an entrepreneur is expected to consider the input data, analyse the data, predict outcome, choose best alternatives, take action, measure results with predictions.


To Quantify Objectives-

                   Project report helps to quantify the objectives. It makes them to be measurable, tangible, verifiable & attainable.


To gain Financial Support-

                    Project report ensures to avail financial support from the financial institutions. This report helps to evaluate the desirability of financing the project.


Guides the Course of Action-

                     Successful implementation of a project is governed by the course of action as given in project report.


Government Authorities-

                       A project report is of importance to government authorities to provide subsidies, tax exemptions, deductions, incentives, concessions, government clearance from Pollution Control Boards.


Useful to Entrepreneur-

                       A project report highlights the practicability of a project in terms of different factors like economy, finance, technology & social desirability. It is needed by the entrepreneur for carrying out expansion or starting a new production line & for getting loans from banks & financial institutions. It enables the entrepreneur to understand, at the initial stage, whether the project is sound on technical, commercial, financial & economic parameters. It helps the entrepreneurs in establishing techno-economic viability of the project.


Banks & Financial Institutions-

                      Commercial banks & financial institutions are the interested parties in project report which is prepared for direct submission to banks & financial institutions for getting loans. Financial institutions & banks require project report for granting financial assistance. It will help the bankers in appraising the project report & offer financial assistance.




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