BACK

Definitions of terms used in Projects Today

Projects Today monitors projects envisaged in the manufacturing, mining, power, services and utilities and irrigation sectors. Though our main endeavour is to cover capital ( project) investment planned in India we are also monitoring a few large projects envisaged in other SAARC countries (Bangladesh, Pakistan, Nepal, Sri Lanka, Maldives, Bhutan) and Middle-East countries like UAE and Saudi Arabia.

Project: Any capital investment activity aiming to install additional capacity or increase the existing capacity to manufacture goods or to provide a service is defined as a project.

Project Investment: Total amount of money spent on a project from conception till completion. This include the initial fee paid to project consultants, cost of land and building, plant and machinery, initial working capital requirements, etc. The project cost is always taken in nominal terms.

Project Types: A project listed in Projects Today database belongs to one of the following types:

New Unit: Green field project

New product/services: An existing company plans to diversify into manufacturing a new good or decides to provide a new branch of service.

Capacity expansion: A brownfield project wherein a company plans to expand the capacity of its existing unit.

Renovation & modernization: Capital expenditure programme to renovate the existing manufacturing   lines by replacing/refurbishing machineries or by adding some balancing equipments.

Rehabilitation: A complete revamping of a sick unit either by the existing owner or by a new owner.

Stages of Project Implementation

Every project is monitored from its conception till completion. The progress of a project is tracked by a status, which is dynamic in nature. The standing of a project, as suggested by the status, is therefore true to that point of time when the status was accorded.

The status of a project, at a given point of time, can be one of the following:

• Nascent
• Planning
• Under Execution
• Partially Completed
• Completed
• Abandoned
• Shelved
• Deferred

A live project is one that has the status Nascent, Planning, Under Execution or Partially Completed.

The following is a description of the different kinds of status that a live project can have:

Nascent

At this stage the promoter announces his intention to set up a project or provide a service. As the promoter himself is not very clear about the various nuances of the project, project details available to the general public are sketchy. 

Projects, which have one or more of the following attributes, are accorded Nascent status.

• Project size and scope not known
• Feasibility of the project not established
• MoU signed with the State government (as in the case of infrastructure projects)
• Approval of PIB is awaited (as in the case of Central PSU projects)
• Project location to be finalised
• Land allocated but not transferred in the company’s name
• Exact cost not known
• Envisaged capacity not known
• Project partners not identified
• Equity stake of project partners not yet finalised
• Sanctioning of funds awaited
• Licence agreement not signed with the respective agencies (telecommunication project)
• Bids invited by State government for awarding a project (typically infrastructure projects).

Planning

Once the viability of the project is established, the main promoter starts charting the roadmap for project implementation.

At this stage the scope of the project becomes clear. The location, cost and capacity are, by and large, finalised. The promoter starts looking out for partners and approaches various government agencies for the necessary approvals. In the case of large projects, global tenders are also floated for awarding the main EPC contract.  

Projects that achieve one or more of the following milestones are assigned Planning status.

• Approval of Public Investment Board received (Projects of Central PSUs)
• Approval of CCEA or CCFI received (in case of large projects)
• FDI proposals cleared by the FIPB, SIA or RBI
• Land acquired
• PPA signed with the SEB
• CEA in-principle clearance received
• PPA revised and signed
• CEA techno-economic clearance received
• Agreement signed with DGFT on export commitments
• Licence agreement signed
• Project partners identified
• Equity contribution by different partners decided
• Project capacity or scope defined
• EPC contractor shortlisted
• Bids awarded
• Fuel supplier identified and FSA signed

Under Execution

After obtaining the necessary clearances and achieving the financial closure, a project enters the execution stage. The actual implementation of a project starts with the laying of the foundation stone and placing orders for plant and machinery. In case of infrastructure projects, the rehabilitation work of the displaced land occupants is also undertaken concurrently.

Projects that pass through one or more of the following stages are accorded the Under Execution status.

• EPC Contracts awarded
• Rehabilitation of land occupants commenced
• Plant and Machinery ordered
• Plant and Machinery arrived at the site
• Counter guarantee and other guarantees obtained
• Financial closure announced
• Funds allocated in the Union Budget
• Company enters the primary markets to raise funds
• First installment of licence fee paid (telecommunication)
• Civil work commenced

Partially Completed

Infrastructure projects like power, roadways and railways generally have large outlays and long gestation periods. These composite projects are therefore implemented in stages.

If the cost and time of each stage become available separately, every stage is considered as an individual project.

However, in some cases, the phase-wise breakup of the costs and implementation schedules are either not disclosed or are not available. Such projects are therefore treated in their entirety. When a portion of such a composite project is completed and commercial operation starts, the Partially Completed status is assigned to the project.

Abbreviations Used in Projects Today:

CCEA: Cabinet Committee on Economic Affairs

CCFI: Cabinet Committee on Foreign Investment

CEA: Central Electricity Authority

DGFT: Directorate General of Foreign Trade

EPC: Engineering, Procurement & Construction

FDI: Foreign Direct Investment

FIPB: Foreign Investment Promotion Board

FSA: Fuel Supply Agreement

MoU: Memorandum of Understanding

PIB: Public Investment Board

PPA: Power Purchase Agreement

PSU: Public Sector Unit (Also referred to as PSE: Public Sector Enterprise)

RBI: Reserve Bank of India

SEB: State Electricity Board

SIA: Secretariat for Industrial Assistance

BACK