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.

 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 introducingIt is one of the
major areas of introducing of any products in market . In that case ,of any products in market .

 4 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 introducingIt 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 beforemust be considered this things before launching
in a market.launching in a market. What would be the aggregate demand ofWhat would be the
aggregate demand of the proposed product or service?the proposed product or service? What
would be the market share of theWhat would be the market share of the project under
appraisal?project under appraisal? 5
 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 6
 7. Market appraisal (Issues contd.) Consumer behavior motivation, attitudes, preferences,
requirements Distribution channels marketing policies 7
 8. Technical appraisalTechnical appraisal Whether prerequisites for the success of project
considered ? Good choices with regard to location , size, process, machines etc. 8
 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 9
 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 10
 11. Economic appraisalEconomic appraisal Social cost –benefit analysisSocial cost –benefit
analysis Impact on level of savings and investmentsImpact 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 11
 12. Ecological appraisalEcological appraisal Impact of project on quality ofImpact of project
on quality of AirAir WaterWater NoiseNoise VegetationVegetation Human lifeHuman
life 12
 13. Ecological appraisalEcological appraisal (contd)(contd) Major projects such as these
causeMajor 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 13
 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 14
 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 15
 16. 16 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 inThis analysis
helps the decision maker in making the right choice of the project.making the right choice of
the project. 17