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:
1. Who comprise the different stake holders?
2. What are their interests?
3. How will they be affected by proposed project?
4. What are project priorities between different
groups?
5. 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…
o Availability of Land & Site,
o Availability of water , power, transport,
communication facilities,
o Availability of serving facilities like machine
shops, electric repair shop, etc.
o Availability of work force as per required skill &
arrangements proposed for training in plant and
outside,
o 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:
i. Assessment of the financial requirements,
ii. Assessing the fixed capital requirements,
iii. Assessment of Working Capital,
iv. 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