- Asked 2/26
- 2076 Asoj · 2+4 marks
Appraisal vs formulation; formulation techniques
Short answer
Project formulation develops an idea into a detailed plan; appraisal independently assesses that plan to approve, modify or reject it. Formulation is done by the promoter before appraisal by banks or authorities. Formulation techniques: feasibility, cost-benefit, input, market, technical, financial, environmental, social, SWOT, sensitivity/risk analysis, and logical framework/ToR preparation.
Differentiate between project appraisal and project formulation. Explain in detail the techniques of project formulation.
| Basis | Project formulation | Project appraisal |
|---|---|---|
| Meaning | Developing the idea into a detailed project plan | Critical assessment of the formulated project |
| Purpose | Prepare the project | Decide whether to accept it |
| Done by | Project promoter or planner | Independent agency, bank or approving authority |
| Stage | Before appraisal | After formulation, before approval |
| Output | Project report with design, cost, ToR | Recommendation to approve, modify or reject |
| Nature | Creative, constructive | Evaluative, analytical |
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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