Project Appraisal

Project appraisal follows the project formulation phase resulting in the preparation of feasibility
report (FR). The main objective of project appraisal is to ultimately decide whether the project
proposed/sponsored in the FR has to be accepted for Capital Investment, or be rejected. The
initial appraisal of the project sponsored also aims at, if need be, recommending the steps or
ways in which the project can be redesigned or reformulated with a view to better technical,
financial and economic viabilities; also mitigate or minimize any adverse on negative
environmental impact. Thus, project appraisal is an essential tool for judicious investment
decision-making, full and complete data and information need to be documented/presented, and
analyzed in the feasibility report so as to facilitate the appraisal authorities to carry out:
(i) Economic analysis to determine the raw materials, cost benefit analysis and
fulfillment of national goals.
(ii) Technical analysis to determine whether the specification of technical parameters are
sound and realistic.
(iii) Financial analysis to assess whether the project proposal is financially viable.

Economic appraisal:
Under economic analysis, the project aspects highlighted include the requirements for raw
material, level of capacity utilization, anticipated sales, anticipated expenses and the probable
profits for the mall of Islamabad. It is said that a business should have always a volume of profit
clearly in view which will govern other economic variables like sales, purchases, expenses and
alike, The Mall of Islamabad clearly kept that in mind along with the main focus on the quality.
It will have to be calculated how much sales would be necessary to earn the targeted profit.
Undoubtedly, demand for the product will be estimated for anticipating sales volume. Therefore,
demand for the product needs to be carefully spelled out as it is, to a great extent, deciding factor
of feasibility of the project concern. As the Mall of Islamabad is the project of Bahria town
which fulfill all the requirements of their customers so the demand for their project is really high
and they forecasted the sales to be in large number, the return of which would be the profit.
In addition to above, the location of the enterprise decided after considering a gamut of points
also needs to be mentioned in the project. The Government policies in this regard should be
taken into consideration. Bahria town had the location for this mall since many years, after
looking into some factors they decided to construct a mall at that place.
Moreover the economic analysis included the cost-benefit analysis, a systematic process where
decisions relating to construction projects are analyzed in terms of the strengths and weaknesses.
The mall of Islamabad is a large project Larger projects with a long time-line may be exposed to
more cost uncertainties (e.g. interest rates, inflation, availability of labor, price of materials, etc.).
For these larger and more uncertain projects, analysis models that may be more suitable include
net present value (NPV) and internal rate of return (IRR).
Economic appraisal also include the impact on fulfillment of national goals, the mall of
Islamabad would provide a lot of employment opportunities to the people as the Boutique
Shopping Mall includes leading International & Local Brands including Green valley Premium
Supermarket and Food Court. 
Technical appraisal:
While making project appraisal, the technical feasibility of the project also needs to be taken into
consideration. In the simplest sense, technical feasibility implies to mean the adequacy of the
proposed plant and equipment to produce the product within the prescribed norms. As regards
know-how, it denotes the availability or otherwise of a fund of knowledge to run the proposed
plants and machinery.
Availability of raw materials, power and other inputs is in the technical appraisal, so basically
the mall of Islamabad is being built by the Dascon construction company based in Lahore which
is a well-known company with which Bahria town has some other projects so they choose this
company. While the other raw materials such as Cement they are purchasing from best way and
Fauji, Sand from Lawrencepur and Crush from Margalla. These are the well-known companies
for the construction material and they provide best quality products. The raw materials are
available as per quantity & quality.
It includes the availability of the location for the project, Malik Riaz had this site, where then the
Bahria town thought of building the mall, as the location is very best for the construction of mall.
Centaurus mall is also present near that mall.
Availability of the labor force is kept in mind too, on the greywork round about 80 workers work
and on the frame structure 180 to 190 workers work.
Financial Appraisal:
Finance is one of the most important pre-requisites to establish an enterprise. It is finance only
that facilitates an entrepreneur to bring together the labor of one, machine of another and raw
material of yet another to combine them to produce goods.
The Mall of Islamabad didn’t have any issue regarding the financial aspect but the profit in the
future is needed to be forecasted before starting a specific project. For the financial appraisal the
owner of Bahria town approved the budget of Budget for the structure of building of 2 Arab
Rupees and contingency reserves are also there to manage unforeseen events.
The Mall of Islamabad while doing the financial appraisal assess the financial requirements of
both fixed capital and working capital. Fixed capital normally called ‘fixed assets’ are those
tangible and material facilities which purchased once are used again and again. Land and
buildings, plants and machinery, and equipment’s are the familiar examples of fixed assets/fixed
capital.
The requirement for fixed assets/capital will vary from enterprise to enterprise depending upon
the type of operation, scale of operation and time. But, while assessing the fixed capital
requirements, all items relating to the asset like the cost of the asset, architect and engineer’s
fees, electrification and installation charges (which normally come to 10 per cent of the value of
machinery), depreciation, pre-operation expenses of trial runs, etc., should be duly taken into
consideration. Similarly, if any expense is to be incurred in remodeling, repair and additions of
buildings should also be highlighted in the project report.
For Knowing if the investment is worthwhile several measures such as net present value, internal
rate of return and payback period are used for the financial appraisal.
Approval of the Project:
After the Appraisal of the project, the project further needs the approval by the different parties
involved in it and the government. As the approval of the project management plan is
confirmation that the project information and management strategy have been developed to a
level of detail sufficient to proceed to the design phase for the development of a design solution
in compliance with the project objectives and requirements.
Capital Development Authority being a statutory body is expected to deal with citizens fairly,
and honestly and conduct its all actions transparently. The mall of Islamabad after showing their
project proposal took the approval of the project from CDA.
Secondly the project was approved by the leading director of the Bahria town and the mall of
Islamabad, furthermore the project of the mall of Islamabad was approved by the dascon
construction director, clients Bahria town and the material testing labs.