project appraisal assignment

• PM Tips & Ideas

Project Appraisal: Definition, Process, Steps, Tools

by Eric Morkovich · Published October 14, 2011 · Updated December 5, 2023

When an organization wants to find a solution to a particular business problem and identify the best way for implementing that solution, it needs to plan and develop a project that might provide an effective action plan for addressing the problem through implementing the solution.

This organization will need to give an appraisal of the potential project to make sure the project is really effective because it supports the right solution and solves the required problem. In this context, project appraisal management serves as the major process of analyzing and approving the project.

In this article, I am going to write about the project appraisal process and its key steps. I hope my article will help you learn how to evaluate and appraise projects. At the end of the article I give a link to the project appraisal template , which is a more structured way of explaining the appraising process.

What is Project Appraisal? – Definition

Before we talk about the definition of project appraisal, I would like to tell one interesting story from my life. Here’s that story.

Since I’m a PMP and have extensive experience in managing various types of projects, I’ve always wondered how my neighbor, who is a truck driver and therefore not experienced in project assessment management, could do all those “projects” without first assessing and analyzing the initial concept, problem, and solution. By “projects” I mean the activities my neighbor did when he built the garage in his backyard, renovated the kitchen, fixed his truck, even talked to the mailman, and so on. I was amazed that this person had no idea about project evaluation and management, yet he could do successful “projects” without even understanding that they were projects.

One day I took all these thoughts with me and went to my neighbor’s house. I wanted to find out how he had achieved success without using a project, evaluation, or anything else I might consider an evaluation process. When I met him in his renovated kitchen, I was surprised to see that he was making a preliminary plan for his next project: Buying a new car. He was sitting at the small kitchen table, writing something on a large sheet of newspaper (“Daily News”, to be precise). I approached the table and saw many words and sentences underlined and crossed out, with many arrows and circles on the sheet of paper. “What are you doing?” I asked. “Don’t you see? I’m trying to plan my new purchase. Remember that big Mercedes I showed you last month in Truck Driver magazine? I’ve decided to buy it. And now I want to plan everything in advance to avoid failure, you know.”

I sat at the table next to my neighbor and he told me about his plans. I found out that he always made a plan before doing something important or unusual in his daily life, such as building a garage or renovating a kitchen. He never used documents and templates, just a sheet of newspaper, because, as he said with a smile, “newspapers always lie, but my records and plans will make reality more “realistic” and pragmatic” (I still can’t quite understand what he meant).

I’m not going to annoy you by retelling our conversion in this article. I just want to focus you on the key idea behind this story: Often people unwittingly use the methods and techniques of project assessment and evaluation to determine the chances of success of their endeavors. Before I saw in my neighbor’s kitchen how newspapers could be used in the evaluation process, I thought that only formal documents and papers were the tools to evaluate a professional project. But now I know for sure that anyone can do an appraisal; the only thing to remember is that each type of project requires the appropriate level of knowledge and skills to produce a good project appraisal report. And that’s all… Let’s give the definition of project appraisal.

Defining Project Appraisal

Project Appraisal is a consistent process of reviewing a given project and evaluating its content to approve or reject that project by 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 involved with or affected by the project and its expected results. It is an attempt to justify the project through analysis, which is a way to determine the feasibility and cost-effectiveness of the project.

Appraising a project means evaluating the proposed solution for its ability to solve the identified problem or need. Some PM methodologies and guides (e.g., PMBOK) consider technical and financial project appraisal to be part of the initiation or pre-planning phase. PRINCE2 suggests developing the Business Case , which is a form of project formulation and appraisal. Method 123 (MPMM, based on the PMI and PRINCE2 standards) also uses the business case to prepare a proposed project for feasibility analysis and evaluation.

Project Appraisal Management is an essential stage of any project, regardless of its nature, type and size. This stage represents the first point of the pre-planning or initiation phase. Without a project assessment, it is financially and technically unreasonable to proceed with further planning and development. Whether you are buying a new car (e.g. my neighbor’s project), constructing a building, improving a business process, upgrading a network system, conducting a marketing campaign, building a garage, or any other initiative, you should conduct a preliminary assessment and evaluation of your endeavor to ensure that you are making a desired and necessary change in your environment.

Project Appraisal: Key Steps

Different PM methodologies use different approaches and techniques to develop a project appraisal. In my practice, we use a method that views the appraisal process as a series of 4 steps that have a number of sub-steps and tasks. In this checklist you can see the whole hierarchy with the details. I will give an overview of the steps. If you want to go deeper, please read the checklist.

Step #1. Concept Analysis

The first step requires you (as a project appraiser or analyst) to perform a series of analyses to determine the concept of the future project and to present the Decision Package to senior management ( project sponsors ) for approval. This means that you need to perform the problem-solution analysis that determines the problem/need to be addressed and the solution to be used to address the problem.

The solution should be analyzed for cost-effectiveness and feasibility (various project appraisal methods and techniques can be used). You also need to identify stakeholders (the people and organizations involved in or affected by the problem and/or solution) and analyze their needs (how they relate to the problem and/or solution). Finally, you will need to develop a decision package that includes the problem statement, solution proposal, stakeholder list, and funding request. This package is then submitted to the sponsor for approval (or rejection). If the sponsor approves the project concept, you can proceed to the next step.

Step #2. Concept Brief

In this step, you must develop a summary of the project concept to define the goals, objectives, broad scope, duration, and projected costs. All of this data will be used to develop the Concept Brief .

You need to develop a project statement document that specifies the project mission, goals, objectives, and vision. Then you create a broad scope statement that defines the boundaries, deliverables, and requirements of your effort.

Finally, you create a preliminary schedule template that establishes an estimated project duration, and then develop a cost projection document based on cost estimates and calculations.

Step #3. Project Organization

You use the Concept Brief to establish an organizational structure for your project. This structure should be developed and explained in the Project Organization Chart . The document covers issues such as the governance structure (roles and responsibilities), team requirements and composition, implementation approach, performance measures, and other information.

The idea behind the Project Organizational Chart is to create a visual representation of the roles, responsibilities and their relationships, and which people/organizations are assigned to which roles and tasks within the project.

Step #4. Project Approval

The final stage requires you to review all of the previous steps and compile them into a single document called the Project Appraisal . This document summarizes all the estimates and assessments that have been made to justify the project concept and verify that the proposed solution addresses the identified problem.

The financial, cost-benefit, and feasibility analyses will serve as project evaluation methods for project approval. The document is to be submitted to the Snooper stakeholders (the customer, the sponsor ) for review and approval. If the assessment is approved, the project moves to the next phase, planning.

Types of Project Appraisal

Project appraisal uses the following two major types:

• Results oriented appraisal
• Financial appraisals (cost/benefit analysis)

1. Results Orientation

It is carried out at the beginning of a project, before any financial or other material costs are incurred.

Results-oriented project appraisal focuses on identifying and predicting risks and their impact on the achievement of the results foreseen in the project plan and contract. This type of appraisal involves identifying risks based on project management processes such as the initiation process, the planning process, the execution process, and the control process.

Outcome-oriented project assessment also focuses on comparing actual and projected results and ensuring that they are all aligned with the project’s goals and objectives.

2. Financial Appraisal (cost-benefits analysis)

This type of project evaluation is used to determine whether a request for funding (or an investment made) can be justified by the projected savings or revenues after it is completed.

Cost-benefit analysis is a planning tool that helps you determine whether an investment will provide a satisfactory return for your organization. It compares the investment or change with its alternatives according to one or more criteria such as cost, technical factors, services, resource utilization, etc.

Cost-benefit analysis considers all the resources invested in a project and compares them to the expected benefits. The benefits of a project are usually measured against the costs that would have been incurred if the project had not been undertaken.

Under this method, projects with a balance of benefits and costs are accepted, those with an excess of costs over benefits are rejected, and those with an excess of benefits over costs are deferred for further consideration.

In practice, some organizations use a different approach where projects with projected benefit-cost ratios greater than one are accepted, those with ratios between zero and one are borderline for further consideration, and those below zero are rejected before any further investment in plans or work on plans is made.

The Future of Project Management Appraisal

Looking ahead, we can expect several trends to shape the project appraisal landscape.

The use of AI and machine learning in project appraisal is likely to increase, enabling more accurate and efficient appraisals. We can also expect to see a greater emphasis on sustainability in project appraisal, with a greater focus on environmental and social impacts.

Finally, as remote working becomes more prevalent, we can expect to see an increase in the use of digital tools and platforms for project appraisal.

Integrating big data analytics

Big data analytics will play an important role in the future of project evaluation. With the ability to quickly process large amounts of data, big data analytics can provide valuable insights that can improve the accuracy of project evaluations. For example, it can help identify patterns and trends that may affect a project’s viability, such as market fluctuations, consumer behavior, or technological advances. This can lead to more informed decisions and better project outcomes.

Increased Use of Predictive Analytics

Predictive analytics uses historical data to predict future outcomes, and its use in project assessment is likely to increase. By analyzing past project performance, predictive analytics can help predict a project’s success and identify potential risks before they occur. This proactive approach can significantly improve project planning and execution.

Focus on Agile Project Appraisal

As organizations continue to adopt agile methodologies, we can expect to see a shift toward agile project appraisal. This approach emphasizes flexibility, collaboration, and customer satisfaction. Agile project assessment involves continuous evaluation and adaptation throughout the project lifecycle, allowing for rapid response to change and ensuring that the project remains aligned with business objectives.

The Rise of AI-Based Project Appraisal Tools

Artificial Intelligence (AI) is poised to revolutionize project appraisal with the development of AI-powered tools. These tools can automate various aspects of project appraisal, such as data collection, risk assessment, and financial analysis. This not only increases efficiency, but also reduces the potential for human error.

In conclusion, the future of project assessment looks promising, with technological advances paving the way for more accurate, efficient and proactive assessments. As these trends continue to evolve, organizations that adapt and innovate will be better positioned to make informed project decisions and achieve their strategic goals.

Project appraisal might seem daunting, but with the right approach, it can be a powerful tool in your project management arsenal. Remember, the goal is to make informed decisions that steer your project towards success. So, happy appraising!

Link to Project Appraisal Checklist

Tags: initiation steps tips

Eric Morkovich

Eric is an enthusiastic project manager who has worked on various projects in the software industry for over ten years. He took on a variety of roles and responsibilities for projects and teams. Today Eric helps product companies review and improve their software definition, development, and implementation processes. Follow Eric on Twitter .

• Next story  Project Appraisal Template
• Previous story  Project Task Management – Definition and Software

You may also like...

The Planning Process – Ten Simple Steps to Planning a Project

March 2, 2011

 by Eric Morkovich · Published March 2, 2011 · Last modified June 26, 2023

Being a Better Business Decision Maker in 8 Steps

August 3, 2012

 by Daniel Linman · Published August 3, 2012 · Last modified June 26, 2023

Project Constraints and Assumptions – A Planning Checklist

December 30, 2010

 by Mary Levinson · Published December 30, 2010 · Last modified June 26, 2023

Worth Reading

Why Project Management Skills are Important to HR Professionals

August 24, 2023

Project Facilitation – Definition, Role and Skills

September 13, 2012

Project Scope Statement

November 15, 2010

How Companies are Encouraging a Healthy Work-Life Balance in 2022

November 8, 2022

Business Strategy by Predictive and Adaptive Project Management

May 14, 2013

#ezw_tco-3 .ez-toc-title{ font-size: 120%; ; ; } #ezw_tco-3 .ez-toc-widget-container ul.ez-toc-list li a{ ; ; ; } #ezw_tco-3 .ez-toc-widget-container ul.ez-toc-list li.active{ background-color: #ededed; } Table of Contents Toggle

Project Implementation Guide

Project Governance Roles and Responsibilities

Contract Management 101: Everything You Need to Know

Project initiation stage – Project Initiation Document (PID). Duties of project owner and project team

Organizing Procurement and Purchasing Activities in a Project

Two Common Mistakes in Project Procurement Contracts

Project Sponsor – The Role and Responsibilities

Browse Course Material

Course info.

• Prof. Annette M. Kim

Departments

• Urban Studies and Planning

As Taught In

• Financial Economics
• International Development
• The Developing World

Learning Resource Types

Project appraisal in developing countries, assignments, problem sets.

Students are encouraged to form study groups of 2-3 members. However, each student must construct his / her own financial spreadsheet and write his / her own accompanying write-up. Everyone must use Excel software for their submission and leave the formulas in the cells for ease of grading. These problem sets were adapted from the teaching of Glenn Jenkins at Harvard’s Kennedy School of Government in 1994, and are used with many thanks.

Written Assignments

Students will be asked to write one case study memo and one critical essay. In these assignments students will use the issues covered in the readings to critically appraise an actual project appraisal document and the use of cost-benefit tools in development.

There is no final examination in this course.

The Assignments will be due on the following dates:

You are leaving MIT OpenCourseWare

• For educators
• English (US)
• English (India)
• English (UK)
• Greek Alphabet

This problem has been solved!

You'll get a detailed solution from a subject matter expert that helps you learn core concepts.

Question: PROJECT APPRAISAL AND MANAGEMENT – PMP12 ASSIGNMENT Project appraisal is a multifaceted exercise. The backdrop of the exercise is provided by the value system of the outside agency by or for whom appraisal is undertaken. The appraisal compresses total evaluation of the performance ratings of the project. It covers technological, financial also

PROJECT APPRAISAL AND MANAGEMENT – PMP12 ASSIGNMENT

Project appraisal is a multifaceted exercise. The backdrop of the exercise is provided by the value system of the outside agency by or for whom appraisal is undertaken. The appraisal compresses total evaluation of the performance ratings of the project. It covers technological, financial also Socio-economic aspects of the project and presents to the decision-maker(s) not a single figure or Numerical value as a measure of the excellence of the project, but a set of valuations embracing the total performance of the project. The project has to be assessed from the point of view of the relationship it will have with other systems (including environmental/ecological) with which it has to co-exist. It needs to be judged on technological soundness. The output of the project has to have a target group. The project has, therefore to be appraised with reference to the marketability of its Output (commercial viability). The project needs to generate adequate returns on capital invested.

Question 1.

There are two basic types of Project selection models (numeric and nonnumeric), nonnumeric models are older and simpler and have only a few subtypes to consider.

a) List and Explain at least 3 types of Non-numerical Project selection Models.

b) Describe some of the challenges that can be found when conducting a Project Appraisal.

c) The portfolio of projects is typically represented and classified by compliance, strategic, and operations of projects. What impact can this classification have on project selection?

Specifications / Instruction

1. Minimum 5pages (Excluding Cover and reference page)

2. Font Size 12

3. Spacing 1.5

Answer: a) Non-numeric Project selection Models Non-numeric project selection models are those that do...

Not the question you’re looking for?

Post any question and get expert help quickly.

• High School
• You don't have any recent items yet.
• You don't have any courses yet.
• You don't have any books yet.
• You don't have any Studylists yet.
• Information

Group Work - Assignment 1 CIVL2812

Project appraisal (civl3812), university of sydney.

Students also viewed

• TEC 2021 Phys HSC Trial - ][opiouiytrdsaerdtfyguhkjil dtrfyguhijlokm,n ncgfhjbn mbvhjb hvgyuijknmbhgvftdxegrcfyguhijokpl[;l',kmnjbhvgf][opiouiytrdsaerdtfyguhkjil
• Exam 16 September 2016, questions and answers
• Response 4 from weekly responses
• Response 3 from weekly responses
• Response 2 from weekly responses
• Biology Scientific Report (Comparing impacts of swimming against resting heart rate)

Related documents

• Response 1 in weekly responses
• G3 Fitness Meal Plans Male 2600 Cal May21 1
• G3-Fitness-Meal-Plans-Female-1900 Cal-May21-1
• G3-Fitness-Meal Plans Male 2100 Cal May21-1
• G3-Fitness-Meal Plans Female 1600 Cal May21-1
• Bare LEAN - Lecture notes for unit

Preview text

Civl 2 81 2 project appraisal - semester 2, 20 21, group work – assignment 1 (15 marks), due week 5 friday 10 september 2021, not later than 11:59pm.

Group formation You are Assigned into groups of max 6 members. Contact your Group’s members to plan the activities of the assignment.

Task (15Marks)

1- All group members to read the article in Appendix A:

Project Appraisal – Definition and Steps

2- All group members to read the article in Appendix B:

Project Appraisal Template

3- Groups to research and find major engineering project case study. Groups to conduct the first step of project appraisal on their chosen project: Concept Analysis , (details on page 6 of this assignment) as demonstrated in Appendix A and Appendix B

4- The concept analysis of their case study should be written in a report of 12 pages.

5- Fill the peer assessment form ( Optional , and only if you are not satisfied with your team performance).

Assessment Criteria

Development of logical, persuasive, coherent presentation of the report (2 Marks)

Demonstrate an in-depth level of research with supporting references (3 Marks)

Use appropriate professional presentation including clear tables, images and themes (2 Marks)

Answers the task clearly and comprehensibly (8 Marks)

Report to be maximum 12 pages A4, with 1 spacing and font size 12. (Marks will be deducted for wrong formats).

Assignment Submission

Groups must ONLY submit a pdf copy through Turnitin . The cover page should contain: 1. The Group Number 2. Name of members and their student ID numbers 3. ONE SUBMISSION PER GROUP

Late submissions penalties apply (10% reduction of mark for every day delay).

Marking Scheme

• Every student will get individual mark for the group work project. The mark is the mark of the report multiplied by the peer assessment mark given to each student (if any). For Example, if the report mark is 12/15 and your peer assessment average is 80%, your final mark will be 12x0.8=9/
• If you are satisfied with the general contribution of your group members, you do not need to submit the peer assessment form and all team members will get a 10/10 rating.. 3. Please do not show the peer evaluation marking to any other group members, email the form to Dr Chaaya ( [email protected] ) before the 12th September 2021, 11:59pm (two days after the submission).

For the purpose of this assignment, students are asked to attend to Step #1 only in this assignment. More details are given in Appendix B.

Step #1. Concept Analysis The first step requires you (as a project appraiser or analyst) to conduct a range of analyses in order to determine the concept of the future project and provide the Decision Package for the senior management (project sponsors) for approval. It means you need to carry out the problem-solution analysis that determines the problem/need to be addressed and the solution to be used to handle the problem. The solution should be analysed by cost-effectiveness and feasibility (students may use the various project appraisal methods given in the lectures). Also you will need to identify stakeholders (those people and organizations involved in or affected by the problem and/or solution) and analyse their needs (how they relate to the problem and/or solution). After all, you must develop a decision package that includes the problem statement, the solution proposal, the stakeholder list, and the funding request. This package will then be submitted to the sponsor for approval (or rejection). If the sponsor approves the project concept, then you can proceed to the next step.

Step #2. Concept Brief At this step you must develop a summary of the project concept to define the goals, objectives, broad scope, time duration and projected costs. All this data will be used to develop the Concept Brief. You need to develop a project statement document that specifies the project mission, goals, objectives and vision. Then you create a broad scope statement that specifies the boundaries, deliverables ad requirements of your endeavor. Finally, you make a preliminary schedule template that determines an estimated duration of the project, and then develop a cost projection document based on cost estimates and calculations.

Step #3. Project Organization You use the Concept Brief to determine an organizational structure of your project. This structure should be developed and explained in the Project Organizational Chart. The document covers such issues as governance structure (roles and responsibilities), team requirements and composition, implementation approach, performance measures, other info. The idea behind the Project Organizational Chart is to create a visual representation of the roles, responsibilities and their relationships and what people/organizations are assigned to what roles and duties within the project.

Step #4. Project Approval The final stage requires you to review all the previous steps and gather them into a single document called the Project Appraisal. This document summarizes all the estimations and evaluations made, to justify the project concept and verify that the proposed solution addresses the identified problem. The financial, the cost-effectiveness and the feasibility analyses will serve as the methods of project appraisal to approve the project. The document is to be submitted to the stakeholders (the customer, the sponsor) for review and approval. If the appraisal is approved, then the project steps to the next phase, the planning (which is not part of this course).

Appendix B: Project Appraisal Template

Appraising the project chosen by your Group means reviewing and evaluating this project for feasibility and cost-effectiveness to understand and approve the project concept, which explains what problem/need to address and what solution to implement. This Project Appraisal Template is designed to help the students to assess and justify theirs projects. It comprises a range of steps and activities to be taken during the project initiation or pre-planning phase.

Project Appraisal: Overview

What (Definition) . Appraising a project means performing a process of reviewing and evaluating this project and its content for feasibility and cost-effectiveness to approve or reject the project concept, through analysing the problem or need to be solved by the project and identifying the best possible solution to be implemented. The Group should identify stakeholders and create a decision package for making the final decision on project approval or rejection.

Why (Purpose) . The purpose is to analyse the proposed project to determine whether the concept really offers an effective solution that addresses the identified problem. It serves as a tool to reach project approval and step towards further project planning and development. It aims to confirm that the proposed project is technically, financially and economically feasible and cost-effective.

When (Phase) . The appraising process is carried out during the pre-planning or initiation phase. It comes before the planning phase to confirm that the project is justified in terms of cost, benefits, feasibility and effectiveness.

How (Action Items) . The students are to use these steps as highlighted in Appendix A to start and complete the project appraising process. However, Assignment 1 should address only Step #1 Concept Analysis:

• Concept Analysis : it aims to define concept of the proposed project and determine what problem to solve and in which way (solution).
• Concept Brief : it is to describe the concept through defining the goals, objectives, scope, costs, time-limits and business drivers of the proposed project.
• Project Organization : it is focused on describing the roles and responsibilities of project personnel through developing an organizational chart.
• Project Proposal : it summarises all the previous steps to develop the Project Proposal and submit it for review and approval to the senior stakeholders

2. Concept Brief

• Project Statement . As the concept is approved and the necessary funds are allocated, now we need to create a stamen of the project. This document describes the following details: ▪ Background and strategic context ▪ Vision ▪ Goals Statement ▪ Objectives

Summary: the project statement explains how the project is linked to the business needs and strategic context, what goals and objectives it will address, and how it will deliver the proposed solution.

• Broad Scope . As the project is not planned thoroughly, we can just talk about a broad scope statement. Later, at the planning stage we must develop a detailed scope statement. The broad scope statement includes: ▪ Boundaries ▪ Assumptions and constraints ▪ High-level deliverables ▪ Requirements

Summary: the broad scope defines what is in and out of the project, what assumptions and constrains determine the project, what to delivery by the project, and what requirements are to be met.

• Time Estimation . It focuses on developing a preliminary schedule that defines time duration required to develop and implement the project and to produce the deliverables. It is the predecessor to the scheduling process which will be carried out at the planning stage.

Summary: the time estimation creating a timeline of the activities required to perform the project, implement the solution and address the problem, within the stated scope.

• Cost Projection . Cost estimates are to be developed to determine the total cost of project development and implementation and to make a foundation for the budgeting process.

Summary: the cost projection focuses on estimating the total amount of expenses that are expected to occur to support the implementation of the project and production of the deliverables

3. Project Organization

• Governance Structure . The structure of the roles and responsibilities along with functional duties and tasks defines what jobs the stakeholders are supposed to do and how those jobs are linked to each other. The governance structure is graphically represented as a project organizational chart.

Summary: the governance aims to clarify the roles and responsibilities of the stakeholders through developing a hierarchical-view chart that defines the team composition and by what people the project activities will be carried out.

• Performance Measures . A list of performance criteria along with the acceptance criteria are to be designed to determine how to measure project performance and how to define whether the deliverables are produced as desired.

Summary: The performance measures explain the project participants how to accept the deliverables and how to evaluate project performance.

4. Project Proposal

• Proposal . After the Concept is analysed and explained and the Project Organization is charted, it is time to make a summary of the whole apprising process trough develop the Project Appraisal. This document aims to determine that the proposed project is worth pursuing.

Summary: The Project Appraisal is a formal document that summarizes all the details of the proposed project and aims to prepare the project for further planning and development.

• Approval and Signoff . The Project Appraisal template is to be submitted to the senior management for review and approval. The managers review the appraisal and in case there are any misunderstandings or gaps in the appraisal they can return the document back for revising. When all the revisions and corrections are done, the document is approved and signed off, and the project steps to the next phase – Planning.

Summary: the senior management team needs to approve the Project Appraisal and announce the formal signoff, which means the project is verified and proceeds to planning and development.

• Multiple Choice

Course : Project Appraisal (CIVL3812)

University : university of sydney.

• Discover more from: Project Appraisal CIVL3812 University of Sydney 6   Documents Go to course
• More from: Project Appraisal CIVL3812 University of Sydney 6   Documents Go to course

Financial Reporting and Analysis Software

• Our products:
• Financial Analysis
• Reporting Tool
• US Industry Benchmarking
• Russian Entites Profiles

Project Appraisal

Project appraisal definition.

Project appraisal is the structured process of assessing the viability of a project or proposal. It involves calculating the feasibility of the project before committing resources to it. It is a tool that company’s use for choosing the best project that would help them to attain their goal. Project appraisal often involves making comparison between various options and this done by making use of any decision technique or economic appraisal technique.

Project appraisal is a tool which is also used by companies to review the projects completed by it. This is done to know the effect of each project on the company. This means that the project appraisal is done to know, how much the company has invested on the project and in return how much it is gaining from it.

Steps of Project Appraisal

Project appraisal is the process of assessing the feasibility, viability, and potential impact of a proposed project. It involves a systematic analysis of various aspects of the project, such as its objectives, scope, benefits, costs, risks, and potential outcomes. The following are the steps involved in project appraisal:

Project identification: This involves identifying and defining the project, including its objectives, scope, and key stakeholders.

Project screening: This step involves assessing the project's alignment with the organization's strategic goals, resource availability, and overall feasibility.

Project scoping: This step involves defining the project's boundaries, deliverables, timelines, and resource requirements.

Market and demand analysis: This step involves analyzing the market and demand for the project's output or services, including potential customers, competitors, and market trends.

Technical analysis : This step involves assessing the project's technical feasibility, including the availability of technology, expertise, and other resources required for the project.

Financial analysis: This step involves assessing the project's financial viability, including the costs, revenues, profits, and cash flows associated with the project.

Economic analysis: This step involves assessing the project's economic impact, including its contribution to economic growth, employment, and social welfare.

Risk analysis: This step involves assessing the project's risks, including its vulnerability to external factors, such as market fluctuations, natural disasters, and political instability.

Environmental and social impact analysis: This step involves assessing the project's potential impact on the environment and society, including the potential risks and benefits associated with the project.

Project appraisal report: This step involves compiling all the information gathered from the above steps and presenting it in a comprehensive project appraisal report. The report should provide a clear recommendation on whether the project should be approved, modified, or rejected.

The process of project appraisal consists of five steps and they are – initial assessment, defining problem and long-list, consulting and short-list, developing options, and comparing and selecting project. The process of appraisal generally starts from the initial phase of the project. If the appraisal process starts from an early stage, then the company will be in a better position to decide how capital should be spend in the project and also it will help them to make the decision of not spending too much or stopping a project that is not economically viable.

Types of Project Appraisal

Appraisal of projects can be done by many ways, but the most common of them are financial and economic appraisal. In case of financial project appraisal, the company reviews the cost of the project and the expected revenues that will be generated by the project. This type of appraisal helps the company to prevent overspending on a project. It also helps in finding certain areas where alterations can be done for generating higher revenues. Under economic appraisal, the company mainly focuses on the total benefit of the project and less on the costs spent on the project. Other than these two types of appraisal, there are also other types of project appraisal which include technical appraisal, management or organizational appraisal and marketing and commercial appraisal.

What period of the future should be chosen for a better project evaluation?

The time period for project appraisal depends on the project's nature, scope, and expected lifespan. Generally, a project's appraisal period should cover the entire project lifecycle, including the planning, implementation, and post-implementation stages.

For short-term projects, the appraisal period may be one to three years. In contrast, for long-term projects, the appraisal period may be 10 to 20 years or even longer. The appraisal period should be long enough to capture the project's expected benefits and costs, including the initial investment, ongoing operational costs, and expected benefits over the project's lifespan.

It's also critical to keep in mind that the length of the project appraisal period can change based on the goals of the project and the organization's policies and processes. For instance, if the project's goal is to make quick money, the appraisal time can be shorter than if the goal is to benefit stakeholders over the long term.

In conclusion, the term for project evaluation should include the full project lifecycle and be extensive enough to include all of the estimated costs and benefits, including the initial investment, continuous operating expenses , and anticipated benefits during the project's duration.

Specialists carry out project appraisals

Project appraisal involves a wide range of specialists from different fields, depending on the nature, scope, and complexity of the project. The following are some of the specialists who may be involved in project appraisal:

• Project manager : The project manager is responsible for overseeing the entire project appraisal process, including the coordination of all the specialists involved.
• Financial analyst : A financial analyst assesses the financial viability of the project, including the cost-benefit analysis, cash flow projections, and other financial metrics.
• Economist : An economist assesses the economic impact of the project, including its contribution to economic growth, employment, and social welfare.
• Market analyst : A market analyst assesses the demand and supply factors related to the project, including market trends, customer preferences, and competition.
• Technical specialist : A technical specialist assesses the technical feasibility of the project, including the availability of technology, expertise, and other resources required for the project.
• Environmental specialist : An environmental specialist assesses the potential environmental impact of the project, including its impact on air, water, and land.
• Social specialist : A social specialist assesses the potential social impact of the project, including its impact on the community, culture, and social norms.
• Legal specialist : A legal specialist assesses the legal aspects of the project, including compliance with laws and regulations, contractual agreements, and liability issues.
• Risk analyst : A risk analyst assesses the potential risks associated with the project, including market risks, operational risks, financial risks, and other types of risks.

The specific specialists involved in project appraisal may vary depending on the type and scale of the project, as well as the organization's policies and procedures.

Software Used for Projects Appraisal

There are several software tools that can be used for project appraisal, including:

Microsoft Excel : This is a spreadsheet software that can be used for financial analysis, cost-benefit analysis, and other types of quantitative analysis .

Project management software : There are several project management software tools available in the market, such as Microsoft Project, Primavera P6, and JIRA. These tools can be used for project scoping, scheduling, resource allocation, and other project management activities.

Decision-making software : There are several decision-making software tools available, such as DecisionTools Suite, Expert Choice, and Analytica. These tools can be used for cost-benefit analysis, risk analysis, and other types of decision-making analysis.

Mind mapping software : There are several mind mapping software tools available, such as MindManager, XMind, and FreeMind. These tools can be used for brainstorming, SWOT analysis, and other types of visual analysis.

Environmental and social impact assessment software : There are several environmental and social impact assessment software tools available, such as ESRI ArcGIS, IMPACT, and OpenLCA. These tools can be used for environmental and social impact analysis, including the analysis of land use, water use, energy consumption, and carbon footprint.

Depending on the organization's rules and processes, as well as the project's type, scale, and complexity, the specific software tools utilized for project assessment may change.

• Trend Analysis
• Technical Analysis

Start free Ready Ratios financial analysis now!

No registration required! But once registered , additional features are available.

Most Wanted Financial Terms

• Most Important Financial Ratios
• Debt-to-Equity Ratio
• Current Ratio
• Interest Coverage Ratio (ICR)
• Financial Leverage
• Break-even Point

All terms →

• Terms of Use
• Privacy Policy

Login to Ready Ratios

If you have a Facebook or Twitter account, you can use it to log in to ReadyRatios:

Have you forgotten your password?

Are you a new user ?