Project appraisal part 1

Project Appraisal In Project Management

1. PROJECT APPRAISAL By, Prof. D. C. Dharwad Asst. Prof., Civil Engg . Dept. Sanjivani College of Engg . Kopargaon

2. Contents Definition Objectives Advantages Types

3. Definitions Appraisal is the analysis of a proposed project to determine its merit and acceptability in accordance with established criteria. It is a pre investment analysis of a project with a view to determine the overall feasibility and measures its investment worth which provides a comprehensive assessment of all aspects of project that lays the foundation for implementation and evaluation after completion.

4. Defn . continues… Project Appraisal is a tool which is also used by companies to review the project completed by it. Project Appraisal is the structured process of assessing the viability of a project or proposal.

5. Objectives To assess a project in terms of its economic, social, and financial viability To decide to accept or reject a project To extract relevant information for determining the success or failure of project To determine the expected costs & benefits of the project To arrive at specific conclusions about project.

6. Advantages It helps an organization in identifying the right project to execute by analyzing, whether it is viable in a given situation and place It helps an organization taking a firm decision on acceptance of project It scans the political, social, and legal conditions surrounding the project to ascertain its future success

7. Adv. continues It also looks at govt. policies and taxation rules towards specific rules. It helps an organization to know the technical capability required by the organization for the successful execution of the project. It helps an organization in knowing its financial aspects in terms of the investment required and the rates of returns expected.

8. Types 1. Political 2. Social 3. Environmental 4. Techno- Legal 5. Financial 6. Economical

9. 1. Political It is concerned with appraising the govt. policies both at the central and state levels. In this appraisal , an organization considers following related with a new project: Political stability Industrial Policy Subsidy Taxation Policy Financial and Technical Assistance

10. 2. Social A social appraisal reviews the project design and the process of project identification through implementation and monitoring from social perspective, Particular attention is paid to likely impact of project on different stakeholders, their opportunities for participation and the project’s contribution to poverty reduction.

11. Social Appraisal Continues… Stakeholder Analysis & Participation It reviews: Who comprise the different stake holders? What are their interests? How will they be affected by proposed project? What are project priorities between different groups? What is their capacity to participate in the project?

12. 3. Environmental It is supposed to provide the project analyst with a good qualification of the biophysical & social impacts from developments. It generally refers to broader system of environmental analysis, including project- specific Environmental Impact Assessment (EIA).

13. 4.Techno- Legal It implies to mean the adequacy of proposed plant and equipment to produce the product within the prescribed norms. As regards know- how , it denotes the availability or otherwise of a fund of knowledge to run the proposed plants and machinery. While assessing the technical feasibility of the project, the following inputs covered in the project should also be taken into consideration:

14. Techno- Legal App Continues… Availability of Land & Site, Availability of water , power, transport, communication facilities, Availability of serving facilities like machine shops, electric repair shop, etc. Availability of work force as per required skill & arrangements proposed for training in plant and outside, Availability of raw material as per quantity & quality.

15. 5. Financial Finance is one of the most important pre- requisites to establish an enterprise. It is finance only that facilitates an entrepreneur to bring together the labour of one, machine of another & raw material of yet another to combine them to produce goods.

16. Financial Appraisal Continues… In order to adjudge the financial viability of project, some of the aspects need to analyzed are: Assessment of the financial requirements, Assessing the fixed capital requirements, Assessment of Working Capital, Break Even Analysis.

17. 6 . Economic Under Economic Appraisal, the project aspects highlighted include requirements for raw material, level of capacity utilization, anticipated sales, anticipated expenses and the probable profits. It must be calculated how much sales would be necessary to earn the targeted profit. The govt. offers specific incentives & concessions for setting up industries in notified backward areas.

18. Thank You