This document discusses project appraisal and its technical aspects. It defines project appraisal as the pre-investment analysis done to evaluate a project's feasibility, profitability, and viability. It distinguishes project appraisal, which occurs before investment, from project evaluation, which assesses achievement after investment. The technical feasibility aspect of project appraisal examines engineering, technology, production processes, infrastructure requirements, machinery, costs, and other technical factors to determine if the project is sound. It provides details on evaluating various technical considerations like raw materials, utilities, manufacturing processes, plant capacity, product mix, location, machinery needs, and work schedules.

2. Project Appraisal (PA) :
Project : Commitment of scarce resources to create tangible or intangible assets which
are expected to yield a stream of return over a certain period of time.
A project is a set of inter –related activities having the specific objective of
producing some socio-economic return in the form of goods and / or services ,
through employment of scarce resources within a defined time period .
"Appraisal" means the pre-investment analysis that is done before a project is
approved, funded, & executed.
Project Appraisal in a simple terms means pre-investment analysis of an investment
project with a view to determining its market and technical feasibility , financial ,
socio-economic and managerial soundness and measuring its investment worth .
Appraisal activities are part of the project planning phase which analyze &
describe the potential benefits & cost of the project i. e to examine as to whether
a proposed project which is going to take up for implementation and finance is
a) commercially profitable,
PROJECT ANALYSIS: TECHNICAL ASPECTS

3. Distinction between "project Appraisal" and "Project
Evaluation“:
 Very often we ignore the necessity of drawing a clear-cut distinction
between the terms "appraisal" and "evaluation" of projects.
 But as a matter of fact "project appraisal" should be clearly
distinguished from "Project Evaluation" as both of the exercises do not
carry the same meaning.
 The project appraisal means the pre-investment analysis and Project
Evaluation shows the post-investment achievement.
PROJECT ANALYSIS: TECHNICAL ASPECTS

4. Needs for Project Appraisal in Banks:
i) From the individual`s/borrower`s entrepreneur`s point of view:
To ensure profitability.
ii) From the lender`s/banker`s point of view :
To ensure repayment of bank finance.
To replace the traditional method of providing
"collateral or security oriented" loan by the
"Project or purpose oriented ”loan.
To achieve organizational goals.
iii) From national point of view :
Optimum utilization of resources
Achievement of national objectives.
PROJECT ANALYSIS: TECHNICAL ASPECTS

5. Different Aspects of Project Appraisal:
There are mainly two types of feasibility studies in broader sense, viz,
i) commercial feasibility and
ii) socio-economic feasibility or simply economic feasibility.
whereas in case of economic feasibility the same is viewed from the
society`s angle as a whole. Commercial feasibility study again comprises
of five different aspects namely
i. Technical,
ii. Marketing,
iii. Financial,
iv. Managerial,
v. Socio-economic
vi. Environmental.
PROJECT ANALYSIS: TECHNICAL ASPECTS

6. PROJECT ANALYSIS: TECHNICAL ASPECTS
Technical Feasibility:
The technical aspects of an industrial project are appraised to determine
whether the project is sound with regard to every engineering and
technological consideration, including product specification, process, size,
internal balance, suitability and availability of physical facilities, designs and
layouts of equipment and buildings etc.
Technical Aspect on Project Appraisal is concerned with :
* Raw Material * Structure & Civil Works
* Utilities * Project Chart and Layout
* Infrastructure * Work Schedule
* Manufacturing Process * Quality Control
* Technology * Repair and maintenance
* Product Mix * Stock and Spare
* Plant Capacity * Safety Provision
* Location & Sites * Technical Managerial Personnel
* Machineries & Equipment * Project cost estimation

7. 1) RAW MATERIAL
In case of Raw Materials the following aspect to be considered :
* Source of Raw Materials
i. Local, ii. Foreign
* Requirement Volume
* Quality
* Price
i. Past trend, ii. Present trend, iii. Future trend
* Auxiliary Materials
2) UTILITIES
* Power Supply * Gas Supply
* Water Supply * Fuel and Lubricates
* Generator for electricity/gas
3) INFRASTRUCTURE
* Power * Transportation
* Water * Communication
4) MANUFACTURING PROCESS
* Select Process of Manufacturing
5) TECHNOLOGY :
To choice of the technology the under-noted things should be considered:
* Plant Capacity * Principal Input
* Investment Outlay & Production Cost * Use by other units
* Product Mix * Latest Development
* Ease of Absorption
PROJECT ANALYSIS: TECHNICAL ASPECTS

8. 6) PLANT CAPACITY
* Technological requirement * Input Constraints
* Investment Cost * Market Condition
* Resource of the firm * Government Policy
7) PRODUCT MIX
* The choice of product mix is guided by market requirement. In the
production of most of items variation in size and quality are aimed at
satisfying a broad range of customers.
* The flexibility with respect in product mix should be considered while
planning the production facilities of a firm.
8) LOCATION & SITES
To choice the location of a project must be considered :
* Proximity of raw materials and market
* A availability of Infrastructure
* Government Policy
* Other Factors
i) Environmental Pollution
ii) Labor Situation
iii) Climate Condition
iv) General Living Conditions
To choice the site of a project must be considered :
* Cost of land * Cost of development of the site
PROJECT ANALYSIS: TECHNICAL ASPECTS

9. 9) MACHINERIES & EQUIPMENTS
The requirement of machineries and equipment is dependent on production
technology and Plant capacity. So to determine the requirement of machineries and
equipment’s the following procedure may be followed :
* Estimate the likely level of production overtime
* Define the various machining and various operation
* Calculate the machine hour required
* Select Machineries & Equipments for each function
10) STRUCTURES & CIVIL WORKS
Structures & Civil Works may be divided into three categories:
i) Site preparation and Development
ii) Building and structure
iii) Out door works
PROJECT ANALYSIS: TECHNICAL ASPECTS

10. 11) PROJECT COST ESTIMATION
Cost computation has concerned under different subheads namely:
* Cost of land including registration * Land Development
* Building and other civil works * Imported Machinery
* Local Machinery * Duty and other Charges
* Internal Freight * Furniture and Fixture
* Erection, Installation & Security Deposit for electric power & Gas
* Development Cost
i) Interest during construction period
ii) Preliminary and Start-up Expenses
* Contingencies
i) For Machinery
ii) For Building
12) PROJECT CHARTS AND LAYOUT
Once data is available on the principal dimensions of the project market size, plant capacity,
production technology, machineries and equipments, building and civil works, conditions
obtaining plant site and supply of inputs to the project, project chart and lay out may be
prepared.
The important Charts and Layout drawing are briefly described below :
* General functional layout * Utility consumption layout
* Material flow diagram * Communication layout
* Production line diagram * Organizational layout
* Transport layout * Plant layout
PROJECT ANALYSIS: TECHNICAL ASPECTS

11. 13)WORK SCHEDULE
The purpose of work schedule is :
* To anticipate problems likely to be arise during installation
* To establish the phasing of investments
* To develop a plan of operations covering the initial period
PROJECT ANALYSIS: TECHNICAL ASPECTS

13. THANKS TO ALL