- Asked 2/26
- 2076 Chaitra · 4+4 marks
Necessity of appraisal; formulation techniques
Short answer
Appraisal is needed for go/no-go decisions, avoiding waste, ranking alternatives, detecting risks early, checking realism, giving lenders confidence and providing a monitoring baseline. Formulation techniques include feasibility, cost-benefit, input, market, technical, financial, environmental and social analysis, SWOT, sensitivity/risk analysis, and logical framework/ToR preparation.
Explain the necessity of an appraisal in a project. Explain in detail the techniques of project formulation.
Necessity of appraisal
- Helps decide whether to accept, modify or reject a project (go or no-go).
- Avoids wasting scarce capital on unviable projects.
- Compares alternatives and ranks projects for limited funds.
- Finds risks and weaknesses early, when changes are cheap.
- Checks that technical design, cost and schedule are realistic.
- Ensures economic benefit to the nation and acceptable environmental and social effects.
- Gives lenders and donors confidence; usually a condition for financing.
- Provides a baseline for later monitoring and evaluation.
Techniques of project formulation
| Technique | Description |
|---|---|
| Feasibility analysis | Checks that the project is possible technically, economically, financially, environmentally and socially |
| Cost-benefit analysis (CBA) | Compares all costs and benefits in monetary terms (B/C ratio, NPV, IRR) |
| Input analysis | Studies the resources needed: materials, manpower, equipment, utilities, finance, and their availability and cost |
| Market analysis | Estimates demand, supply and price |
| Technical analysis | Selects technology, capacity, location and layout |
| Financial analysis | Cost, funding, cash flow, profitability |
| Environmental analysis | Impacts and mitigation (IEE/EIA) |
| Social analysis / socio-economic survey | Effects on people, participation |
| SWOT analysis | Strengths, weaknesses, opportunities and threats |
| Sensitivity and risk analysis | Effect of changes in cost, benefit or time on viability |
| Logical framework / ToR preparation | Structures objectives, outputs, indicators and assumptions |
✓ Answer checked by Claude Opus 5.5 (high effort)
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