ESBM/U4 Topic 6 Project Appraisal, Plant Layout
Project appraisal is an important activity to evaluate the key factor of the project to check the viability of a project proposal. We can use various Appraisal methods and tools to accept or reject the project. For example, economic or financial appraisal analysis, Excel Templates and other decision techniques.
Project appraisal is the process of assessing, in a structured way, the case for proceeding with a project or proposal, or the project’s viability. It often involves comparing various options, using economic appraisal or some other decision analysis technique. The entire project should be objectively appraised for the same feasibility study should be taken in its principal dimensions, technical, economic, financial, social and so far to establish the justification of the project or The project appraisal is the process of judging whether the project is profitable or not to client. Or it is process of detailed examination of several aspects of a given project before recommending of some projects.
Objectives of Project Appraisal
Here are the Key objectives of the Appraisal Process of a Project:
- Assessment of a project in terms of its economic, social and financial viability
- Decide to Accept or reject a Project
- It is a tool to check the viability of a Project Proposal
Features of Project Appraisal
Here are the Key Features of the Appraisal of Project:
- Evaluate the key factor of a project
- Decide to Accept or reject a Project
- It is a tool to check the viability of a Project
Steps in Project Appraisal Process
Here are the key steps this process. Proposal of a Project is assessed with the below steps and aspects.
- Financial and Economic appraisal
- Organizational or Management Appraisal
- Marketing and Commercial Appraisal
- Technical and Legal Appraisal
Types of Project Appraisal and aspects
Project Appraisal is process of assessing the following types of the Appraisal Aspects. And these Key aspects of appraisal will be evaluated before committing a Project. Appraisal factors are evaluated by a personal who is not involved in the preparation of the Project Proposal.
- Organizational Aspects
- Technical Aspects
- Managerial Aspects
- Economic Aspects
- Financial Aspects
- Marketing and Commercial Aspects
Plant layout is the most effective physical arrangement, either existing or in plans of industrial facilities i.e arrangement of machines, processing equipment and service departments to achieve greatest co-ordination and efficiency of 4M’s (Men, Materials, Machines and Methods) in a plant.
Layout problems are fundamental to every type of organisation/enterprise and are experienced in all kinds of concerns/undertakings.
The adequacy of layout affects the efficiency of subsequent operations. It is an important pre-requisite for efficient operations and also has a great deal in common with many problems. Once the site of the plant has been decided, the next important problem before the management of the enterprise is to plan suitable layout for the plant.
According to James Lundy, “Layout identically involves the allocation of space and the arrangement of equipment in such a manner that overall operating costs are minimized.”
In the words of Mallick and Gandreau, “Plant layout is a floor plan for determining and arranging the designed machinery and equipment of a plant, whether established or contemplated, in the best place, to permit the quickest flow of material, at the lowest cost and with the minimum handling in processing the product, from the receipt of raw material to the shipment of finished product.”
According to Apple, “Plant layout is planning the path each component/part of the product is to follow through the plant, coordinating the paths of the various parts so that the manufacturing processes may be carried out in the most economical manner, then preparing drawing or other representation of the arrangement and finally seeing that the plan is properly put into effect.” (Plant Layout and Material Handling by Apple).
Need of Plant Layout
Many situations give rise to the problem of plant layout. Two plants having similar operations may not have identical layouts. This may be due to size of the plant, nature of the process and management’s calibre.
The necessity of plant layout may be felt and the problem may arise when:
(i) There are design changes in the product.
(ii) There is an expansion of the enterprise.
(iii) There is proposed variation in the size of the departments.
(iv) Some new product is to be added to the existing line.
(v) Some new department is to be added to the enterprise and there is reallocation of the existing department.
(vi) A new plant is to be set up.
Importance of Plant Layout
The layout of a plant is quite important in view of the above definition but the importance of a layout may greatly vary from industry to industry.
The possibility of attaining the best possible layout is directly proportional to following factors:
(i) The Weight, Volume or Mobility of the Product
If the final product is quite heavy or difficult to handle involving costly material handling equipment or a large amount of labour, important consideration will be to move the product minimum possible e.g. boiler, turbines, locomotive industries and ship building companies etc.
(ii) Complexity of the Final Product
If the product is made up of a very large number of components and parts i.e. large number of people may be employed for handling the movement of these parts from shop to shop or from machine to machine or one assembly point to another e.g. automobile industry.
(iii) The Length of the Process in Relation to Handling Time
If the material handling time represents a appreciable proportion of the total time of manufacturing, any reduction in handling time of the product may result in great productivity improvement of the industrial unit e.g. Steam Turbine Industry.
(iv) The Extent to which the Process Tends towards Mass Production
With the use of automatic machines in industries for adopting mass production system of manufacturing the volume of production will increase. In view of high production output, larger percentage of manual labour will be engaged in transporting the output unless the layout is good.
Objectives of Good Plant Layout
A good rather an optimum layout is one which provides maximum satisfaction to all concerned i.e. shareholders, management employees and consumers.
The objectives of a good layout are as follows:
(i) Should provide overall satisfaction to all concerned.
(ii) Material handling and internal transportation from one operation to the next is minimized and efficiently controlled.
(iii) The production bottle necks and points of congestions are to be eliminated so that input raw materials and semi-finished parts move fast from one work station to another.
(iv) Should provide high work in process turnover.
(v) Should utilize the space most effectively; may be cubical utilization.
(vi) Should provide worker’s convenience, promote job satisfaction and safety for them.
(vii) Should avoid unnecessary investment of capital.
(viii) Should help in effective utilization of labour.
(ix) Should lead to increased productivity and better quality of the product with reduced capital cost.
(x) Should provide easy supervision.
(xi) Should provide space for future expansion of the plant.
(xii) Should provide proper lighting and ventilation of the areas of work stations.
Factors Affecting Plant Layout
Whatever be the type of layout being contemplated the following factors are to be considered because these factors have got significant influence on the design of the layout.
(i) Man Factor
The man is very flexible element who can be made suitable for all sort of layouts.
Main considerations are as follows:
- Safety and working conditions.
- Man power requirements-skill level of workers, their number required and their training programme.
- Man power utilization in the plant.
- Human relations.
(ii) Material Factor
It includes the various input materials like raw materials, semi-finished parts, and materials in process scrap, finished products, packing materials, tools and other services.
The main considerations are:
Design and specifications of the product to be manufactured.
Quantity and variety of products and materials.
Physical and chemical characteristics of various inputs materials.
Component parts or material and their sequence of operations i.e. how they go together to generate the final product.
(iii) Machinery Factor
The operating machinery is also one of the most important factors therefore all the information regarding equipment and the tools are necessary for inspection, processing and maintenance etc.
- The processes and methods should be standardized first.
- Machinery and tools selections depend upon the type of process and method, so proper machinery and other supporting equipment should be selected on the basis of volume of production.
- Equipment utilization depends on the variation in production, requirements and operating balance.
- Machines should be used to their optimum levels of speed, feed and depth of cut.
- Machinery requirement is mostly based on the process/method.
- Maintenance of machines and replacement of parts is also important.
(iv) Movement Factor
It mainly deals with the movement of men and materials. A good layout should ensure short moves and should always tend towards completion of product. It also includes interdepartmental movements and material handling equipment. This includes the flow pattern reduction of unnecessary handling, space for movement and analysis of handling methods.
(v) Waiting Factor
Whenever material or men is stopped, waiting occurs which costs money. Waiting cost includes handling cost in waiting area, money tied up with idle material etc.
Waiting may occur at the receiving point, materials in process, between the operations etc.
The important considerations in this case are:
- Location of storage or delay points.
- Method of storing.
- Space for waiting.
- Safeguard equipment for storing and avoiding delay.
(vi) Service Factor
It includes the activities and facilities for personnel such as fire protection, lighting, heating and ventilation etc. Services for material such as quality control, production control, services for machinery such as repair and maintenance and utilities like power, fuel/gas and water supply etc.
(vii) Building Factor
It includes outside and inside building features, shape of building, type of building (single or multi-storey) etc.
(viii) Flexibility Factor
This includes consideration due to changes in material, machinery, process, man, supporting activities and installation limitations etc. It means easy changing to new arrangements or it includes flexibility and expendability of layouts.