Project appraisal

project appraisal,aspects of project appraisal,limitations of project appraisal.

1. Project Appraisal
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2. ContentsContents

Project appraisal Project appraisal
DefinitionDefinition

Aspects of project appraisalAspects of project appraisal
Market appraisalMarket appraisal
Technical appraisalTechnical appraisal
Financial appraisalFinancial appraisal
Socio economic appraisalSocio economic appraisal
Ecological appraisalEcological appraisal

Limitations of project appraisalLimitations of project appraisal

ConclusionConclusion
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3. DefinitionDefinition
Pre investment analysis of a project with a
view to determining the overall feasibility and
measures its investment worth which provides
a comprehensive review /assessment of all
aspects of project that lays the foundation for
implementation and evaluation when it is
completed.
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ASPECTS OF PROJECT APPRAISAL
Project
appraisal
Market
appraisal
Technical
appraisal
Economic
appraisal
Ecological
appraisal
Financial
appraisal

5. Market appraisalMarket appraisal
It is one of the major areas of introducing It is one of the major areas of introducing
of any products in market . In that case , of any products in market . In that case ,
must be considered this things before must be considered this things before
launching in a market.launching in a market.

What would be the aggregate demand of What would be the aggregate demand of
the proposed product or service?the proposed product or service?

What would be the market share of the What would be the market share of the
project under appraisal?project under appraisal?
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6. Market appraisal
(Issues)
Past and current demand trends
Past and current supply position
Production possibilities and constraints
Imports and exports
Nature of competition
Cost structure
Elasticity of demand

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7. Market appraisal
(Issues contd.)
Consumer behavior
motivation, attitudes,
preferences, requirements
Distribution channels
marketing policies
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8. Technical appraisalTechnical appraisal
Whether prerequisites for the success of
project considered ?
Good choices with regard to location ,
size, process, machines etc.
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9. Technical appraisalTechnical appraisal
(Issues)(Issues)
Preliminary tests and studies
Availability of raw materials, power and other
inputs
Optimal scale of operations
Choice of suitable production process
Choice of appropriate machines and
equipment
Effluents and waste disposal
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10. Technical appraisalTechnical appraisal
(Issues contd.)(Issues contd.)

Proper layout of plant and buildingsProper layout of plant and buildings

Realistic work schedulesRealistic work schedules

Socially acceptable technologySocially acceptable technology
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11. Economic appraisalEconomic appraisal

Social cost –benefit analysisSocial cost –benefit analysis

Impact on level of savings and investments Impact on level of savings and investments
in societyin society

Impact on fulfilment of national goalsImpact on fulfilment of national goals
Self sufficiencySelf sufficiency
EmploymentEmployment
Social orderSocial order
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12. Ecological appraisalEcological appraisal

Impact of project on quality of Impact of project on quality of

AirAir

WaterWater

NoiseNoise

VegetationVegetation

Human lifeHuman life
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13. Ecological appraisalEcological appraisal
(contd)(contd)

Major projects such as these cause Major projects such as these cause
environmental damageenvironmental damage
Power plantsPower plants
Irrigation schemesIrrigation schemes
Industries like leather processing, Industries like leather processing,
chemicals etc.chemicals etc.

Likely damage & the cost of restorationLikely damage & the cost of restoration
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14. Financial appraisalFinancial appraisal

Whether the project is financially viable ?Whether the project is financially viable ?

Servicing debtServicing debt

Meeting return expectationsMeeting return expectations

Investment and phasing of the total costInvestment and phasing of the total cost

Means of financingMeans of financing

Break even pointBreak even point

Cash flows in the projectCash flows in the project
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15. Financial appraisalFinancial appraisal
(contd)(contd)

Investment worthwhile ?Investment worthwhile ?
Net present valueNet present value
Internal rate of returnInternal rate of return
Pay back periodPay back period

Level of riskLevel of risk
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LIMITATIONS OF THE PROJECT APPRAISAL
-Quality of project analysis depends on the quality of
data and forecast made about costs and benefits. Over-
estimation of benefits and underestimation of costs is
quite common to get the project approved.
-In view of the uncertainty about the future it is
impossible to quantify completely the risks.
-It is a useful device where benefits can be quantified.
-Project analysis is useful when there is a definite starting
and finishing points.

17. ConclusionConclusion

A project feasibility report includesA project feasibility report includes
Market and demand analysisMarket and demand analysis
Technical analysisTechnical analysis
Financial analysisFinancial analysis
Socio economic analysisSocio economic analysis
Ecological analysisEcological analysis

This analysis helps the decision maker in This analysis helps the decision maker in
making the right choice of the project.making the right choice of the project.
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