Project appraisal What is project In the context

Project appraisal

What is project � � � In the context of economic development, a project can be defined as a “set of planned activities that involves an initial capital outlay, with a flow of benefit in the future”. a government-subsidized guest house development with relatively low cost. Appraisal involves a careful checking of the basis data, assumptions and methodology used in project preparation, an in -depth review of the work plan. Critical examination of the project from all aspects is called appraisal A project appraisal involves detailed pre investment analysis of market and technical feasibility, financial soundness, economic desirability and finally measuring its investment worth.

Definition of project appraisal � Pre investment analysis of a project with a view to determining the overall feasibility and measure its investment worth which provides a comprehensive review/assessment of all aspects of project the lays the foundation for implementation and evaluation when it is completed. � Analysis of prospective costs and benefits that leads to desirability for committing resources.

� The task aims mainly at ensuring that scares resources are put to most effective use � It requires the combined efforts of a team of person from various disciplines such as engineers, financial analysis , economist etc working close coordination

Methods of Project Appraisal � Market Appraisal � Technical Appraisal � Ecological appraisal � Financial appraisal

Market Appraisal � It is one of the major areas of introduction of any products in market. In that case, must be considered this things before launching in a market � What would be the aggregate demand of the proposed product or service? � What would be the market share of the project under appraisal ? � Past and current demand trends � Past and current supply position � Imports and exports � Nature of competition � Consumer behavior-attitudes, preferences, requirement � Distribution channels

Techinal appraisal � Good choice with regards to location, size , process , machines etc � Availability of raw material. � Optimal scale of operations � Choice of appropriate machine and equipment � Waste disposal � Proper layout of plant and buildings � Realistic work schedules � Social acceptable technology

Financial appraisal � Whether the project is financially viable? � Servicing debt � Investment � Break even point � Cost flow in the project � Level of risk � Internal rate of return � Pay back period

Ecological appraisal � Impact of project on quality of � Air, water , noise, human life � Major projects such as these cause environment damage � Power plants � Damage and the cost of restoration

Conclusion A project feasibility report includes � Market and demand analysis � Technical analysis � Financial analysis � Ecological analysis � This analysis helps the decision maker in marking the right choice of the project.

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