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Projectappraisal

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Project

Appraisal

1
Contents
 Project
appraisal
Definition
 Aspects of project
appraisal Market appraisal
Technical appraisal
Financial appraisal
Socio economic
appraisal Ecological
 appraisal 2
Definition

 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.

3
ASPECTS OF PROJECT APPRAISAL

Market
appraisal

Financial
appraisal Project Technical
appraisal appraisal

Ecological Economic
appraisal appraisal

4
Market appraisal
It is one of the major areas of
introducing 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?

5
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

6
Market appraisal
(Issues contd.)
 Consumer behavior
motivation, attitudes,
preferences, requirements
 Distribution channels
marketing policies

7
Technical appraisal

 Whether prerequisites for the success of


project considered ?
 Good choices with regard to location ,
size, process, machines etc.

8
Technical appraisal
(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
9
Technical appraisal
(Issues contd.)

 Proper layout of plant and


buildings
 Realistic work schedules
 Socially acceptable technology

10
Economic appraisal
 Social cost –benefit analysis
 Impact on level of savings and
investments in society
 Impact on fulfilment of national
goals Self sufficiency
Employm
ent Social
order
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Ecological appraisal

 Impact of project on quality


of Air
 Wat
 er
 Noise
 Vegetati
on
Human
life 12
Ecological appraisal
(contd)
 Major projects such as these cause
environmental damage
Power plants
Irrigation
schemes
Industries like leather
processing,
chemical
s etc. 13
Financial appraisal

 Whether the project is financially


viable ?
 Servicing debt

 Meeting return expectations

 Investment and phasing of the total cost

 Means of financing

 Break even point

 Cash flows in the project

14
Financial appraisal
(contd)
 Investment
worthwhile ?
Net present value
Internal rate of
return Pay back
period
 Level 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.
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Conclusion

 A project feasibility report


includes Market and demand a
nalysis Technical analysis
Financial analysis
Socio economic
analysis Ecological
analysis
 This analysis helps the decision maker
in making the right choice of the 17
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