Friday, October 31, 2014

How to Find Internal Rate of Return (IRR)


For a business proposition, an individual always start the business with some initial investment.  After a regular internal, which may be a month or a quarter or a year, one takes stock of things which may also be required by the land laws.  One must be having some financial outcome just after the completion of an interval, which may be positive (net return or income of that interval) or a further net investment (which can be taken as negative income or return).  Thus, after some periods of time intervals, one may be having a series of positive and negative incomes/investments recorded after each of the regular interval including the initial investment.  If one is interested in knowing the overall return from one’s investments over the entire period from initial to the present time, one may adopt the following procedure.

The algorithm one may adopt is:

1.    Fix a point of time; say the beginning of the said business or the present/ current time.
2.    With proper sign (negative for net investment and positive for net income at the end of the regular interval) list all the financial cash flows over the period from start to present time.
3.    Take the entire series of cash flows valued at the fixed point of time settled at step 1 by assuming a rate of return (r%) which can be one’s gut feeling or first rough guess.  Normally one may take it as 10%, if not known.
4.    Add all the Net Values at the fixed point of time to zero.
5.    Solve the value of r with iterative method (numerical method).
6.    Value of r is your Internal Rate of Return (IRR).

The same can also be obtained by fitting the financial function (IRR) in EXCEL package of MS office, if available.


Thursday, October 9, 2014

Need to Write A Winning Project Proposal – Do Read it



Introduction
A project proposal is a document you write with one objective/goal i.e., to convince a funding agency that you are the right and best organization/person for the specific assignment. When you bid on a project, you are into a highly competitive process and is competing against other organizations / freelancers with similar skills. Unless you make your strengths and experience shine in your proposal, you could miss out the present opportunity as winning profiles backs winning proposals.

The Beginning
Step one is to read carefully through the project proposed (RFP or TOR) by the funding agency and make sure that you understand it fully before you start writing the bid. It is highly recommended that one should use the proposal templates (if provided), but make sure that you personalize your proposal for each assignment – even if for the same funding agency. Writing a winning project proposal begins with by successfully matching your talents, interests, and skills to the project/ assignment under consideration.

Start with a Strong First Impression
The first impression is always very important.  The first few lines of your project proposal are your “key” lines and it would help the reader to form impression on you and your organization. When the official of the funding agency (the evaluator) gets your proposal, these are the lines that will make him or her decide to keep reading your proposal with interest or keep on skipping the various pages. If the evaluator requires a specific response to show that you read the entire project, put it always on top or high light the same some where in the beginning. Do not try to creatively embed your response in a sentence. Chances are good that, if the evaluator does not see it immediately, he or she will not even read the rest of your proposal with some intense zeal.

Sell Your Specific Strengths
What is your most marketable trait? Include it underneath any required responses. This trait may vary depending on the project. For example, if you are applying for a project that is more academic oriented, your and your team’s educational qualification will be the first focus. On the other hand, if the assignment requires a specific skill (experience) set, you should focus on the team’s experience. On rare occasions, such as when the funding agency needs an assignment finished quickly say within a week’s time, you should put something such as a time estimate near the top as the same is highlight of the assignment.  What other qualities do you have that make you a good fit for the assignment? Outline them in one paragraph if possible.

Answer all the Funding Agency Questions with due importance
Next, be sure you answer all the questions the funding agency might have asked. Sometimes these questions can be answered throughout your text (even at the top); other times you can just set them in their own paragraph(s) with proper headings and sub-headings.

Provide Time and Cost Estimates
After you have explained why you would be the best team to complete the project, then it is time to provide time and cost estimates. Be accurate with all possible details. If some mention is there about the overall time available in the TOR of the funding agency, do stick to the overall time target and give the details of the time line for all the important events/ benchmarks of the project.  Provide precise time estimates with all possible and required details along with staff requirements, so that the funding agency gets more confidence in giving out the project. Provide precise cost estimates with all possible and required details too, so that the funding agency further gets more confidence in giving out the project.  Most funding agencies do not like placeholder bids, so ask questions, if any, before bidding.

Lastly Don’t Forget Your Manners!
Finally, thank the funding agency for reading your technical proposal. Make an impression, so that even if you are not chosen for that particular project, the employer might think of you for future projects. If you are awarded the project, you will be starting off on the right foot!

A few More Precautions for Writing a Winning Proposal:

Stick to the templates provided – both in terms of required details and size expected. Only rarely should your proposal grow to be bigger than the box in which you type it. Try to keep it about that size, or in some cases less, without sacrificing quality.

Use your templates too – if it adds to the value of your proposal without irritating the officials of the funding agency, as you need to make individualized proposals. However, templates save time, and they prevent editing mistakes that can cause you to be overlooked for the assignment. Regardless of whether you filled in a template or wrote from scratch, you should always write in complete sentences and reread a proposal for errors before you post it. 

Premium proposals are best used to draw attention to your bid on projects that fit your profile perfectly or assignments where you are competing against many other organizations. Of course you want every project to which you apply, but using premium proposals all the time can drain your bids.

Winning proposals have work samples attached even if you have them posted on your organization’s profile. If you cannot attach a sample, point the funding agency to your profile and put samples there.