PROJECT APPRAISAL

An Essential Element of
Entrepreneurship
Development

Project appraisal is..

A consistent process of reviewing a given project
and evaluating its content to approve or reject this
project, through analyzing the problem or need to
be addressed by the project, generating solution
options (alternatives) for solving the problem,
selecting the most feasible option, conducting a
feasibility analysis of that option, creating the
solution statement, and identifying all people and
organizations concerned with or affected by the
project and its expected outcomes.
It is an attempt to justify the project through
analysis, which is a way to determine project
feasibility and cost-effectiveness

Project appraisal can be defined as

a..
Systematicandcomprehensive
review of the economic,
environmental, financial,
social,technicaland other such
aspects of aprojectto determine if it
will meet itsobjectives.

Scope of Project Appraisal

When is it done:
After preparation and design of the project
What is project appraisal:
Provides a comprehensive and systematic review of all
aspects of the project
Why the project Appraisal is Needed:
For development and successful completion of
projects

Scope of Project Appraisal

(cont.)
Hard questions are asked and the answers determine
whether project proposal is adopted or rejected.
The questions raised rotate around:
appropriateness of project objectives,
size, scope, implementation methods,
modalities, time scale, and
the project technical, financial, economic, institutional,
environmental, social and distributional justification of
the project.

What can a Project Appraisal

deliver?
Be reliable and objective in choosing projects
Make sure their program benefits all sections of the
community
Provide documentation to meet financial and audit
requirements
Appraisal justifies spending money on a project.
Appraisal is an important decision making tool.
Appraisal lays the foundations for delivery.

Good appraisal systems should

ensure that:
Project application, appraisal and approval functions are
separate
All the necessary information is gathered for appraisal
Race/tribal equality and other equality issues are given
proper consideration
Those involved in appraisal have appropriate technical
expertise
There are realistic allowances for time involved.

Key issues in appraising

projects
Need, targeting and objectives
We should provide detailed description of
project, identifying local needs/ objectives it
aims to meet.
Context and connections
Are there links between the project and other
local programmes and projects.
Consultation
Local consultation determines priorities and
secure community consent and ownership.

Key issues in appraising

projects
Implementation
Appraisal scrutinises the practical plans for
implementation, asking whether staffing, timetable and
implementers are okay.
Risk and uncertainty
There should also be contingency plans in place to
minimize the estimated risks.

Key issues in appraising

projects
Eligibility
Regional Development
Environmental protection
Legal Frame Work
Policies, public acceptance
Licensing, safety
Environmental compatibility

Key issues in appraising

projects
Technology And Design
Project Definition
Viability and performance
Adaptation to technical progress
Local-specific requirements
Appropriate technical capacity

Key issues in appraising

projects
Time Schedule
Preparation of feasibility studies
Environmental studies Licensing requirements
Time needed for procurement
Local conditions (climatic, etc)

Key issues in appraising

projects
Economic + Financial Viability
Cost effectiveness
Rate of return
Pay-back period, etc
Investment Cost
Local and foreign currencies
Phasing of expenditure
Cost Justification

Key issues in appraising

projects
Forward strategies
Appraisal should also consider mainstream links
and implications in case the project funds are over

Sustainability
Appraisal should include an assessment of a
projects environmental, social and economic
impact, its positive and negative effects.

Checklist for project

appraisal
Some Questions worth asking:
Are appraisals systematic and disciplined with a clear
sequence of activities and operating rules?
Is there an independent assessment of the project?
Does the appraisal process conclude in clear
recommendations that inform approval (or rejection) of
the project?

Checklist (cont.)
Is the approval stage clearly separate?
Is the appraisal process well documented
with key documents signed,
showing ownership and agreement, and
allowing the appraisal documentation to act as basis for
future management, monitoring and evaluation?
Does appraisal system comply with relevant government
guidance?
Are right people involved and, if necessary, how can you
widen involvement?

Technical Appraisal
Will the project Work?
Availability of the required quality and quantity of
raw material.
Availability of utilities like power and water etc
Follows anti pollution laws

Financial Appraisal
Can the project be financed properly?
Will there be sufficient funds to cover the
expenditure requirements during the life of the
project?
Means of financing

Economic Appraisal
Impact of the project one the distribution of income
in the society
Impact of project on the level savings and investment
in the society and socially desirable objectives like
self sufficiently, employment etc.
Contribution of project

Social Aspects
What will be the effect of the project on different groups?
At
Individual
Household and
Community levels
How will the project impact on women and men?
Will the social benefits of the project be greater than the
social costs over the life of the investment when account
is taken of time?

Environmental Appraisal
Will the project have any adverse effect on the
environment?
Have remedial measures been included the project
design?

Ecological & Political Appraisal

Environmental Damage.
Restoration Measures.
Will the project be compatible with government policy, at
both central, regional and local level?

Conclusion
It is seen from the previous discussion that the Project
Appraisal can be structured to cover the full range of
functionality of the project management process. It is
a powerful tool which should not be overlooked but
which must be judiciously applied .

Thank You