Page 57 - DMGT302_FUNDAMENTALS_OF_PROJECT_MANAGEMENT

Fundamentals of Project Management

Notes 4.1 Financial Projections

Cost of Project

Conceptually, the cost of project represents the total of all items of outlay associated with a
project which are supported by long-term funds. It is the sum of the outlays on the following:
1. Land and site development

2. Buildings and civil works
3. Plant and machinery
4. Technical know how and engineering fees
5. Expenses on foreign technicians and training of Indian technicians abroad

6. Miscellaneous fixed assets
7. Preliminary and capital issue expenses
8. Pre operative expenses
9. Margin money for working capital

10. Initial cash losses
Land and Site Development

The cost of land and site development is the sum of the following:
1. Basic cost of land including conveyance and other allied charges,
2. Premium payable on leasehold and conveyance charges,
3. Cost of levelling and development,

4. Cost of laying approach roads and internal roads,
5. Cost of gates, and
6. Cost of tube wells.
The cost of land varies considerably from one location to another. While it is very high in urban
and even semi-urban locations, it is relatively low in rural locations. The expenditure on site
development, too, varies widely depending on the location and topography of the land.

Buildings and Civil Works

Buildings and civil works cover the following:

1. Buildings for the main plant and equipment;
2. Buildings for auxiliary services like steam supply, workshops, laboratory, water supply,
etc.;

3. Godowns, warehouses, and open yard facilities;
4. Non-factory buildings like canteen, guest houses, time office, excise house, etc.;
5. Quarters for essential staff;

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