Project appraisal involves a comprehensive pre-investment analysis of all aspects of a proposed project, including market, technical, financial, socio-economic, and ecological factors. The analysis assesses feasibility and investment worthiness. Key aspects examined are market demand, production requirements, input availability, profitability, social and environmental impacts, and risks. A thorough appraisal helps decision-makers determine if a project is viable and the right choice.

1. Project Appraisal
1

2. Contents
Contents
 Project appraisal
Project appraisal
Definition
Definition
 Aspects of project appraisal
Aspects of project appraisal
Market appraisal
Market appraisal
Technical appraisal
Technical appraisal
Financial appraisal
Financial appraisal
Socio economic appraisal
Socio economic appraisal
Ecological appraisal
Ecological appraisal
 Limitations of project appraisal
Limitations of project appraisal
 Conclusion
Conclusion 2

3. Definition
Definition
 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.
3

4. 4
ASPECTS OF PROJECT APPRAISAL
Project
appraisal
Market
appraisal
Technical
appraisal
Economic
appraisal
Ecological
appraisal
Financial
appraisal

5. Market appraisal
Market appraisal
It is one of the major areas of introducing
It 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 before
must be considered this things before
launching in a market.
launching in a market.
 What would be the aggregate demand of
What would be the aggregate demand of
the proposed product or service?
the proposed product or service?
 What would be the market share of the
What 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 appraisal
Technical appraisal
 Whether prerequisites for the success of
project considered ?
 Good choices with regard to location ,
size, process, machines etc.
8

9. Technical appraisal
Technical 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 appraisal
Technical appraisal
(Issues contd.)
(Issues contd.)
 Proper layout of plant and buildings
Proper layout of plant and buildings
 Realistic work schedules
Realistic work schedules
 Socially acceptable technology
Socially acceptable technology
10

11. Economic appraisal
Economic appraisal
 Social cost –benefit analysis
Social cost –benefit analysis
 Impact on level of savings and investments
Impact on level of savings and investments
in society
in society
 Impact on fulfilment of national goals
Impact on fulfilment of national goals
Self sufficiency
Self sufficiency
Employment
Employment
Social order
Social order
11

12. Ecological appraisal
Ecological appraisal
 Impact of project on quality of
Impact of project on quality of
 Air
Air
 Water
Water
 Noise
Noise
 Vegetation
Vegetation
 Human life
Human life
12

13. Ecological appraisal
Ecological appraisal
(contd)
(contd)
 Major projects such as these cause
Major projects such as these cause
environmental damage
environmental damage
Power plants
Power plants
Irrigation schemes
Irrigation schemes
Industries like leather processing,
Industries like leather processing,
chemicals etc.
chemicals etc.
 Likely damage & the cost of restoration
Likely damage & the cost of restoration
13

14. Financial appraisal
Financial appraisal
 Whether the project is financially viable ?
Whether the project is financially viable ?
 Servicing debt
Servicing debt
 Meeting return expectations
Meeting return expectations
 Investment and phasing of the total cost
Investment and phasing of the total cost
 Means of financing
Means of financing
 Break even point
Break even point
 Cash flows in the project
Cash flows in the project
14

15. Financial appraisal
Financial appraisal
(contd)
(contd)
 Investment worthwhile ?
Investment worthwhile ?
Net present value
Net present value
Internal rate of return
Internal rate of return
Pay back period
Pay back period
 Level of risk
Level 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. Conclusion
Conclusion
 A project feasibility report includes
A project feasibility report includes
Market and demand analysis
Market and demand analysis
Technical analysis
Technical analysis
Financial analysis
Financial analysis
Socio economic analysis
Socio economic analysis
Ecological analysis
Ecological analysis
 This analysis helps the decision maker in
This analysis helps the decision maker in
making the right choice of the project.
making the right choice of the project.
17

18. 18