Project appraisal

Project appraisal is a process of detailed examination of several aspects of a given project before recommending the same. The project promoter/sponsor has to ensure that the investment on proposal will generate sufficient returns and loan amount disbursed will be recovered along with interest within reasonable period of time. Appraisal is the analysis of a proposed project to determine its merit and acceptability in accordance with established criteria. This is the final step before a project is agreed for financing. It checks that the project is feasible against the situation on the ground, that the objectives set remain appropriate and that costs are reasonable.

Various criteria of project appraisal

Technical: will the project work? Has due attention been paid to technical factors affecting theproject design? Given the human and material resources identified, can the project activities be undertaken and outputs achieved within the time available and to the required standards?

Financial: can the project be financed? Will there be sufficient funds to cover the expenditure requirements during the life of the project?

Economic: will the nation and society at large be better off as a result of the project? Will the project benefits be greater than the project costs over the life of the investment when account is taken of time (namely, is the Net Present Value of the project positive at the test discount rate)?

Social and gender: what will be the effect of the project on different groups, at individual, household and community levels? How will the project impact on women and men? How will they participate in various stages of the project cycle? Will the social benefits of the project be greater than the social costs over the life of the investment when account is taken of time?