Project evaluation is a critical process used to assess the effectiveness and efficiency of a project. It involves planning, data collection, analysis, conclusions, and reporting. Financial analysis assesses the financial performance and viability of a project by analyzing financial data and indicators. Economic analysis evaluates the economic impacts and contribution to the economy by considering factors like resource allocation, employment, and long-term sustainability. Both financial and economic analysis are important for project evaluation as they help assess viability, allocate resources efficiently, identify and mitigate risks, support decision-making, measure performance, demonstrate accountability, and enhance long-term sustainability planning.

1. Project Evaluation and the Importance of Project
Evaluation; Place of Financial and Economic
Analysis in Project Evaluation

2. What is Project Evaluation?
• Project Evaluation is a process that is used in monitoring and
evaluation practice to assess the effectiveness and efficiency of
a project.
Planning the evaluation
Collecting data
Analyzing data
Conclusions and Recommendations
Reporting the findings
Steps

3. Importanceof the project evaluation
Accountability
Continuous
improvement
Decision-making
Communication
Learning
The following are some
of the key reasons why
project evaluation is
important
 Project evaluation is a critical
component of monitoring and
evaluation (M&E) practice, and
it plays a vital role in ensuring
the success of projects.

4.  Financial analysis in project
evaluation focuses on assessing the
financial aspects of a project.
 It involves analyzing financial data,
statements, and indicators to evaluate
the project's financial performance,
profitability, and viability.
 Financial analysis helps stakeholders
understand the project's financial
health, cash flow dynamics, and the
potential risks and returns associated
with the project.
 Economic analysis in project
evaluation refers to the assessment
and evaluation of the economic
aspects and impacts of a project.
 It focuses on understanding the
project's contribution to the
economy, analyzing its costs and
benefits, and determining its overall
economic feasibility.
 Economic analysis considers factors
such as resource allocation, market
dynamics, employment generation,
income distribution, and long-term
economic sustainability.
Economic Analysis Financial Analysis

5. Content
Effectiveness of Targets
Cost Measurement
Benefits
Discount Rate
Evaluation Indicator
Economic Analysis
Economically viable
Economic cost
Reduction of cost, saving
time and
Increment of productivity
Opportunity cost of capital
NPV, B/C, EIRR
Financial Analysis
Financially sustainable
Financial cost (Market
price)
Increment of revenue
income
Long term prime rate
NPV, B/C, FIRR
Differences between Economic and Financial Evaluation

6. Place of economic and financial analysis in project
management
Here are some important reasons why economic and financial
analysis has a special place in project evaluation:
Assessing Viability
and Feasibility
Allocating Resources
Efficiently
Risk Identification
and Mitigation
Supporting Decision-
Making
Measuring
Performance and
Progress
Demonstrating Value
and Accountability
Enhancing
Sustainability and
Long-Term Planning