Introduction To Project Appraisal and Management

Introduction to Project Appraisal and Management
1. Definitions:
1.1 Project can be defined as: A scientifically evolved work plan, devised to achieve
specific objectives within specified time limit.
1.2 Project appraisal is a generic term that refers to the process of assessing, in a
structured way, the case for proceeding with a project or proposal.
1.3 Project management: Project management is a process by which certain

predetermined goals are achieved. It is simply the means to an end.
1.4 Project Appraisal and Management:

An enquiry into the effectiveness of a project's management may take one of several
forms. It may range from a one-off assessment, through a periodic independent review, to
an on-going project management overview. It can also range from an informal internal
enquiry to a full and formal project management audit.
In short, project appraisal and management is the effort of calculating, auditing and
evaluation of project. It often involves comparing various options, time to time
assessment of defined goals, cost benefit analysis or some other decision analysis
technique like budgeting, forecasting and arrangement for resource allocation and supply.
1.5 A little explanation:

A project is a specific plan or design presented for consideration. United Nations
Industrial Development Organization (UNIDO) defines a project as a proposal for an
investment to crate and or develop certain facilities in order to increase the production of
goods/services in a community certain period of time. Tolbet define the term projects as
discrete package of investments, policy measures and institutional and other actions
designed to achieve a specific development objectives. Projects are common term used
by many flexibly to denote specific action plans. There are projects to develop a new
road, new car, new motorbike, marketing plan, construction of buildings, transport and
communication etc. A project can be long term or short term, limited or comprehensive,
single sector concentrated or multi sector concentrated. All kinds of projects have a
general goal with macro and micro directives with specific time frame.
2. Project Questions:
Before the formulation of project problem, many questions to be asked by the project
initiators. These questions can be summarized as follows:
• What for: The objectives of the project

• How: The process, and the internal and external resources
• Who: For whom, By whom – Project partners, stake holders
• When: The time factor
• Where: The location
• What: The activity
3. Identifying the Project:
The first phase of project management is concerned with identifying the project to
achieve the desired objectives. The initial task coming under project identification is to
find out the sources of the project. Agencies like government organizations, international
institutions like WHO, World Bank, UNDP, and Non Governmental Organizations etc
can be better source of identifying different projects.
4. Project Need Analysis (PNA):

The factors included under project need analysis are the, problem, solutions, beneficiaries
and decisions. The problem should exhibit an immediate intervention. The focus should
be to identify the beneficiaries. The solutions should be based on the original problem.
The decision to take up the project lies on how these three factors problem, solutions and
beneficiaries are important to project intervention.
5. Problem formulation and Statement of the Problem:

The crux of the project lies in the problem formulation process. The project team should
have detailed understanding of the problem, scope, intervention areas and the out come of
the project to be hypothesized. Based on a multi phased understanding and analysis,
describe the problem to be addressed and resolved. The macro level objectives and micro
level objectives to be separated and should give differential wastages.
6. Project Planning:
Project planning can be defined as a scientific and systematic process, in which logical
linkages are clearly established, among various element of projects i.e. integration of
different functions involved in project.
Successful implementation of the project lies on effective project plan. On the bases of
the clearly define objectives or goal, the project planning is to be made. The project plan
is the outline of the project. Effective planning gives proper direction in the
implementation of the project and it further helps in adequate monitoring and evaluation.
For the implementation of plan, an activity chart to be prepared. The activity chart
consists of all the proposed activities in the implementation process, including the start
date, calendar for the entire project, dates of monitoring and evaluation periods, finishing
stages, series of out puts, slack time and person(s) responsible to be coordinating the
activities etc.
7. Project Budget:
The project budgeting phase is aligned with the project formulation phase. Two types of
budgets are to be made. First is the cost category budget (materials, administration,
capital; expenditures etc) and second is the activity budget. This project budget is to
calculate the cost of each project out put. Keep in mind the cash flow of the project,
considering the contingencies like, technical shortage, shortage of raw materials, delays
in the activity implementation etc. The estimation of the project cost should be made on
fairly realistic sense of financial values. In the multi year projects the inflation rate also to
be anticipated in advance.
8. Feasibility of the Projects:
8.1. Management Appraisal

Management appraisal is related to the technical and managerial competence, integrity,
knowledge of the project, managerial competence of the promoters etc. The promoters
should have the knowledge and ability to plan, implement and operate the entire project
effectively. The past record of the promoters is to be appraised to clarify their ability in
handling the projects.
8.2. Technical Feasibility

Technical feasibility analysis is the systematic gathering and analysis of the data
pertaining to the technical inputs required and formation of conclusion there from. The
availability of the raw materials, power, sanitary and sewerage services, transportation
facility, skilled man power, engineering facilities, maintenance, local people etc are
coming under technical analysis. This feasibility analysis is very important since its
significance lies in planning the exercises, documentation process, risk minimization
process and to get approval.
8.3. Financial feasibility

One of the very important factors that a project team should meticulously prepare is the
financial viability of the entire project. This involves the preparation of cost estimates,
means of financing, financial institutions, financial projections, break-even point, ratio
analysis etc. The cost of project includes the land and sight development, building, plant
and machinery, technical know-how fees, pre-operative expenses, contingency expenses
etc. The means of finance includes the share capital, term loan, special capital assistance,
investment subsidy, margin money loan etc. The financial projections include the
profitability estimates, cash flow and projected balance sheet. The ratio analysis will be
made on debt equity ration and current ratio.
8.4. Commercial Appraisal

In the commercial appraisal many factors are coming. The scope of the project in market
or the beneficiaries, customer friendly process and preferences, future demand of the
supply, effectiveness of the selling arrangement, latest information availability an all
areas, government control measures, etc. The appraisal involves the assessment of the
current market scenario, which enables the project to get adequate demand. Estimation,
distribution and advertisement scenario also to be here considered into.
8.5. Economic Appraisal

How far the project contributes to the development of the sector, industrial development,
social development, maximizing the growth of employment, etc. are kept in view while
evaluating the economic feasibility of the project.
8.6. Environmental Analysis

Environmental appraisal concerns with the impact of environment on the project. The
factors include the water, air, land, sound, geographical location etc.
9. The Implementation of the Project:
This is the period in which all the activities that are planned in the initial phases of the
project get materialized through operation. Here the role of the project managers comes
in to the picture. It is the task of the project managers to schedule the activities one by
one and establish functional relationship of the project activities in the fulfillment of the
project. The techniques like PERT (Programme Evaluation and Review Technique),
CPM (Critical Path Method) etc are the various network techniques the managers make
utilize to implement the activities planned in the project considering the cost and time.
10. Monitoring and Evaluation of the Project:
10.1 Monitoring:
UNIDO define monitoring as it is the process of observing progress and resource
utilization and anticipating deviations from planned performance. In the monitoring and
controlling phase the project managers have to monitor the technical performance, time
and cost performance in addition to the organizational performance. Correction, re-
planning and cancellation of the activities are the control actions expected from this
phase in order to get the expected outcome. The monitoring is periodical by fixing
milestones in the project phases.
10.2 Evaluation:
The final stage is the evaluation of the project. Upon the conclusion of the project success
in attaining the goals, and to determine how future projects could be managed. Here the
effeteness of the degree of the objective achievement, the efficiency of the financial,
human, and time resources to be observed. The impact of the project, the major concern
of the project, i.e. whether the project reach up to the beneficiaries with quality and
quantity is to be measured. Different types of evaluation are there like performance
appraisal, work audit, result evaluation, cost benefit evaluation, impact analysis etc.
Evaluation is done to ensure the effective mutilation of all resources for the
accomplishment of the project.
11. Conclusion
Here the role of the project manager to be analyzed into. From the conception stage to
implementation stage and from periodical monitoring to evaluation stage his role is
inevitable. He should show his leadership in managing the relationship, motivating the
team, procuring the resources, developing the capabilities, leading all the resources to the
accomplishment of the project. The accountability of the project manager's leadership
comes only when the team members accept the ideas and directions of the leader towards
the accomplishment of the project. A project manager here should be an effective leader.
This article briefs up the conceptual and theoretical understanding of the project
management and project appraisal. It will be beneficial to those who are inspired to take
a business of socio-economic project in their career.

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Introduction to Project Appraisal and Management

1.3 Project management: Project management is a process by which certain

1.4 Project Appraisal and Management:

1.5 A little explanation:

• What for: The objectives of the project

4. Project Need Analysis (PNA):

5. Problem formulation and Statement of the Problem:

8.1. Management Appraisal

8.2. Technical Feasibility

8.3. Financial feasibility

8.4. Commercial Appraisal

8.5. Economic Appraisal

8.6. Environmental Analysis

10. Monitoring and Evaluation of the Project:

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