Effective Project Appraisal Methods
"Learn about the essential methods involved in project appraisal, including economic analysis, financial feasibility, market analysis, technical feasibility analysis, and management competence. Discover the importance of assessing various aspects of a project to determine its viability and make informed decisions. Explore concepts such as cost-benefit analysis, creditworthiness evaluation, and the modification of project scope for enhanced viability."
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Presentation Transcript
Project Appraisal 1. Concept 2. Methods (i) Economic Analysis (ii) Financial Feasibility (iii) Market Analysis (iv) Technical Feasibility Analysis (v)Management Competence
1.Concept Concept Project appraisal means assessment of a project For proposed project it is known as ex-ante analysis For executed projects known as post-ante analysis Here it relates to proposed project Cost benefit analysis of different aspects of the project Objective is to judge viability of the project Helps in the selection of best project from the available alternative projects
Concept cont Its economic, financial, technical, managerial and social aspects have to analysed for project appraisal Financial institutions do independant and objective project appraisal to find the credit worthiness of the project Determine viability of project To modify scope and content to make it viable
1.Economic analysis Requirements for raw material, capacity utilization, anticipated sales expenses, revenue and probable profit Sales, purchases, expenses Demand forecasting- great attention Location of the industry Govt policies- incentives tax concessions-notified backward region
2.Financial Analysis important for any project- Can mobilise resources and coordinate Assessment financial requirement- fixed capital and working capital Fixed capital- to create fixed assets land, building, machines Working or operational capital- raw material, labour, electricity, transport, repair and maitaintenace
Cont. Source of finance and cost of finance Capacity utilization Break even analysis-cost and revenue and sales
3. Market Analysis anticipate the market local, state level ,country, foreign for the product or service potential customers and time of sales marketing 1.Opinion polling method- getting opinion from customer, salesman, retailers, wholesaler and experts Two methods to collect opinion A. complete enumeration method or census B. sample survey method c.Sale experience
Cont.. 2, Life cycle segmentation method Introduction Growth Maturity Saturation Decline
Technical feasibility The adequacy of plant machinery and equipment Technical know how available Collaboration- terms and condition Foreign collaboration- legal provisions Availability of i. land and site other inputs- water, power, transport Servicing facilities-repairing Work force- skill, training in plant or outside Raw materials- quantity and quality Coping with anti-pollution laws
Management competence Talent of the promoter mismanagement
Project Identification- Meaning Concerned with collection, compilation for and analysis of economic data for the eventual purpose of locating possible opportunities for investment. Drucker-three kinds of opportunities - Additive better utilisation of existing resources , complementary and breakthrough
