Project Appraisal

INTRODUCTION-PROJECT
• Organizations perform work continuously.

• These works include operations or projects

• For the organizations, projects are important
elements of change.

• They are considered to be the leading edge of change

in organizations.

• A project consists of a combination of organizational

resources pulled together to create something that
did not previously exist
 INTRODUCTION-PROJECT

• Projects therefore support the ongoing activities of a going

concern.
For example,

• An R&D project bridges the gap from an existing technology to a future technology.
• A new factory adds to the manufacturing capability.
• A new building contributes to the infrastructure of the city.
• A new highway improves transportation systems.
• A canal provides a waterway over land.
• A pipeline moves oil, gas, or water.
• A new house improves the living standards of a family.
DEFINITION OF PROJECT
Project Management Institute (PMI), US –it has certified over 200000
project management professional (PMP) world wide. (www.pmi.org)
• As per Project management book of Knowledge (PMBOK) of PMI
project is a temporary endeavor to create a unique product or service.
PROJECT -MEANING
– A set of well defined activities , clear cut beginning and end

– It is carried out to meet established goals, within cost, schedule and

quality objectives.
– Consumption of large amounts of money
– Limitations on resources
– Not undertaken frequently
Characteristics of Project
• A project has specific start and end points.
• It has a well defined objectives
• A project Endeavour (attempt) is unique not repetitious
• A project bears definitive cost and financing structures
• A project generally cut across many organisational and functional
boundaries.
Key Considerations in a Project

• a) How much will it cost?

• b) What is the time required?
• c) What technical performance capability will it provide?
• d) To what extent will the project results fit into the design and
execution of organizational strategies?
What is project appraisal?

• – A process of analyzing the technical feasibility and economic

viability of a project proposal with a view to financing their costs.
Importance of project appraisal

• – It is a capital investment decision

• – It has long term effects
• – Decision once taken is irreversible
• – Expenditures are high
Difficulties in respect of project appraisal

• – Measurement of costs and potential benefits are difficult

• – High degree of uncertainty
• – Long term spread – time value of money
Types of projects

• – Mandatory investment (to comply with statutory requirement)

• – Replacement investment
• – New projects
• – Expansion projects
• – Diversification projects
• – Research and Development projects
• – Public good /social welfare projects
• – Infrastructure projects
PLANNING
ANALYSIS
SELECTIONS
FINANCING
IMPLEMENTATION-Setting up of
Manufacturing Facilities
MARKET ANALYSIS
TECHNICAL ANALYSIS
FINACIAL ANALYSIS
ECONOMIC ANALYSIS
SOCIAL COST BEBEFIT ANALYSIS
ECOLOGICAL ANALYSIS
PROJECT LIFE CYCLE
1.Develop an idea something which is something new.
2.Do Research by enquiring or examining into the field of knowledge with the objective to convert
idea into a practical plan.
3.Design-idea and get it converted into practical plan.
4.Convert Design by developing into actual product, service, or process.
5. Take the product, service, or process through Marketing to customers. It may precede the design
phase.
6. Convert the resources into product, service, or process through Production.
7.Provide Post Sales service and support to customers during the use of product or service.
PROJECT LIFE CYCLE
IN SIMPLE TERMS
• a) Have an idea
• b) Have a quick look
• c) Have a closer look
• d) Do it
• e) Try it
• f) Use it
• g) Post implementation review