MAKERERE UNIVERSITY

INSTITUTE OF STATISTICS AND APPLIED ECONOMICS

PROJECT APPRAISAL AND ITS ROLE IN PROJECT MANAGEMENT

COURSE UNIT: SAS 3117 (PROJECT APPRAISAL)

GROUP MEMBERS

NAME REGISTRATION NO
SIGN
MULIMA SIMON PETER 07/U/671
ASHABE GRACE 07/U/16935/PS
KATEETE KEVIN WALUNGAMA 07/U/8757/PS
NUWAGIRA SHARON 07/U/14129/PS
AKORI LAURAH 07/U/6435/PS

1. INTRODUCTION
UNIDO defines a project as a proposal for an investment to create and develop certain facilities in order
to increase the production of goods/services in a community during a certain period of time. Burns and
Tolbet define the term projects as a discrete package of investments, policy measures, institutional and
other actions designed to achieve specific development objectives (Kumar, 2006). In fact a project can be
defined as a problem scheduled for solution (Nantamu, 2007/08). Projects can either be successful or may
fail, therefore before undertaking any project it is important to assess its likelihood of success. In Uganda
and the world over, organizations, corporations and institutions commit large sums of resources into
projects and assure their project success through the use of project appraisals and project management.

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. It often involves comparing various options, using economic
appraisal or some other decision analysis technique (Wikipedia, 2009).

Project management is the discipline of planning, organizing, and managing resources to bring about the
successful completion of specific project goals and objectives (Wikipedia, 2009). Project management is
a carefully planned and organized effort to accomplish a specific (and usually) one-time objective
(managementhelp.org). Appraisals help ensure that projects will be properly managed, by ensuring
appropriate financial and monitoring systems are in place, that there are contingency plans to deal with
risks and setting milestones against which progress can be judged(renewal.net overview). Project
appraisal therefore cannot be overlooked and goes hand in hand with effective project management.

This paper seeks to address the questions below;

1. What is project appraisal?

2. What is the role of project appraisal in project management?

2.1. PROJECT APPRAISAL

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Project appraisal is the process of examining the various dimensions of a project be it Technical,
financial, social, Environment etc and providing an assessment of the projects likelihood for success and
its viability. It is the process of assessing and questioning proposals before resources are committed. It
evaluates a project’s ability to meet its stated objectives and to provide long term Economic growth in the
larger framework of local and National needs (renewal.net overview).

The project appraisal process is an essential tool in regeneration and neighbourhood renewal. An effective
project appraisal offers significant benefits to partnerships and, most importantly, to local communities.
A good appraisal justifies spending money on a project. It is an important tool in decision making and
lays the foundation for delivery and evaluation. Getting the design and operation of appraisal systems
right is important. The proper consideration of each of the components of project appraisal is essential
(renewal.net overview). These components are illustrated below;

Illustration of the project appraisa l process

Consult & shortlist

co Initial assessment
Context &
Need, targeting &
connections objectives The project
Consultatio
proposal
n
Options analysis,
Outputs &
inputs & budget
outcomes
examinations Define problem & long list

Value for
Develop options money
Risk &
Implementati
uncertainty
on
The Compare & select project • Identify the
organization risk
& delivering Sustainabil • Estimate the
Scope and ity scale of risk
time Forward • Evaluate the
strategies
Recommendati
ons
Project Project
approval rejection

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There are two types of project appraisals;

• Economic appraisal; which consists of Cost-benefit analysis, Cost-effectiveness analysis and

Scoring and weighting

• Multi-criteria analysis(Wikipedia, 2009)

An example of where an economic appraisal is that written for the World Bank (Devarajan, 1995) which
sites three areas critical for proper project appraisal. These are;

(1). Counterfactual private sector supply response. Any type of cost-benefit analysis requires the project
evaluator to specify the counterfactual: what would the world have looked like in the absence of the
project?

(2). Fiscal impact. Applying the private sector counterfactual would lead the Bank to undertake projects
with a reasonable case for public intervention, such as basic infrastructure, primary education, and rural
health.

(3). Lending. Project-specific appraisal can at best assess only the rate of return and the acceptability of
the project being appraised.

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 1.1. ROLE OF PROJECT APPRAISAL IN PROJECT MANAGEMENT
Roles of project appraisal;

Project appraisal helps a partnership’s management to;

• Be consistent and objective in choosing projects

• Make sure its programme benefits all sections of the community, including those from ethnic
groups who have been left out in the past

• Provide documentation to meet financial and audit requirements and to explain decisions to local
people.

Appraisal justifies spending money on a project.

Appraisal asks fundamental questions about whether funding is required and whether a project offers
good value for money. It can give confidence that public money is being put to good use, and help
identify other funding to support a project. Getting it right may help a partnership make its resources
go further in meeting local need.

Appraisal is an important decision making tool.

Appraisal involves the comprehensive analysis of a wide range of data, judgements and assumptions,
all of which need adequate evidence. This helps ensure that projects selected for funding:

• Will help a partnership achieve its objectives for its area

• Are deliverable

• Involve local people and take proper account of the needs of people from ethnic minorities and
other minority groups

• Are sustainable

• Have sensible ways of managing risk.

Appraisal lays the foundations for delivery.

Appraisal helps ensure that projects will be properly managed, by ensuring appropriate financial and
monitoring systems are in place, that there are contingency plans to deal with risks and setting
milestones against which progress can be judged.

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3.0. CONCLUSION

The successful implementation of the project lies on the effectiveness of the project plan, management
and appraisal. Project implementation is based on the anticipated goals and objectives of the project
planning to be made. The project plan is the blue print of the project while the appraisal is the dry run.

Effective planning gives proper direction in the implementation of the project and it further helps in
adequate monitoring and evaluation. Before the implementation of plan, a project appraisal helps
partnerships choose the best projects to help them achieve what they want for their neighborhood.

Emphasis should be placed on the importance of developing an ‘appraisal culture’ which involves
developing the right system for local circumstances and ensuring that everyone involved recognizes the
value of project appraisal and has the knowledge and skills necessary to play their part in it.

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4.0. REFERENCES

• The World Bank policy research working paper No.1496 (Shantayanan Devarajan, 1995)
http://www.ssrn.com/abstract=636145 Accessed on 15th September 2009
• Project appraisal (http://www.renewal.net/overview )
• Wikipedia, The free encyclopedia, Project appraisal
http://en.wikipedia.org/wiki/project_appraisal. Accessed on 15th September 2009
• Project design and Management (Simon Nantamu, 2007/08)
• Wikipedia, The free encyclopedia, project management
http://en.wikipedia.org/wiki/project_management. Accessed on 15th September 2009
• Project appraisal & Management (Prof. Dileep Kumar M., 2006)
• Management help, project management
http://managementhelp.org. Accessed on 15th September 2009

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