--- title: "Necessity of appraisal; formulation techniques" subject: "Project Engineering" chapter: 2 key: "semester_7/project_engineering:appraisal-necessity-formulation-techniques" source: https://www.bctengineer.com/q/semester_7/project_engineering/appraisal-necessity-formulation-techniques site: BCT Engineering --- # Necessity of appraisal; formulation techniques Project Engineering · Chapter 2: Project Appraisal and Project Formulation - Asked in: 2076 Chaitra, 4+4 marks - Video: [PROJECT APPRAISAL](https://www.youtube.com/watch?v=LuK0PiD0EsM) — COMMERCE HIGHLIGHTS - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/project_engineering/appraisal-necessity-formulation-techniques - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-2 ## Question Explain the necessity of an appraisal in a project. Explain in detail the techniques of project formulation. ## 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. ## Answer #### 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 | ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Which is a reason for appraisal? A. Increase cost B. Hide risks C. Check that technical design, cost and schedule are realistic D. Delay the project Answer: C. Appraisal tests realism of design, cost and schedule. (Key point: Necessity) 2. What does cost-benefit analysis do? A. Studies resource availability B. Lists strengths and threats C. Compares all costs and benefits in monetary terms using B/C ratio, NPV and IRR D. Estimates demand only Answer: C. CBA is the monetary comparison technique. (Key point: Cost-benefit analysis) 3. What does SWOT stand for? A. Strengths, weaknesses, opportunities and threats B. Survey, wages, operation, tariff C. Safety, welfare, organisation, training D. Scope, work, output, time Answer: A. SWOT is a formulation technique. (Key point: SWOT) 4. What does sensitivity and risk analysis show? A. The effect of changes in cost, benefit or time on viability B. The market size C. The technology choice D. The environmental permit Answer: A. It tests how robust the project is to changes. (Key point: Sensitivity analysis) ## Close variants set in other exams - [Appraisal vs formulation; formulation techniques](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aappraisal-vs-formulation-techniques) — Project Engineering, chapter 2, asked 2× ## Related in Project Engineering - [Techniques of project formulation](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Atechniques-project-formulation) — Project Engineering, chapter 2, asked 3× - [Necessity and aspects of project appraisal](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Awhy-appraisal-necessary-aspects) — Project Engineering, chapter 2, asked 4× - [Formulation and appraisal; proposal procedure](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aformulation-appraisal-define-procedure) — Project Engineering, chapter 2 - [Formulation, appraisal, proposal procedure, CBA drawbacks](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aformulation-appraisal-cba-drawbacks) — Project Engineering, chapter 2 - [Need of formulation; techniques for ToR](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aformulation-need-techniques-tor) — Project Engineering, chapter 2 - [Appraisal aspects of a hydropower project](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aappraisal-aspects-hydropower) — Project Engineering, chapter 2, asked 4× ## Related in other subjects - [Necessity of computational techniques; FEM algorithm](https://www.bctengineer.com/question.md?key=semester_8%2Fcomputational_techniques_in_civil_engineering%3Anecessity-computational-fem-algorithm) — Computational Techniques in Civil Engineering, chapter 1 - [Project life cycles in detail](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aproject-life-cycles) — ICT Project Management, chapter 4 - [Detail estimate report for sewerage project](https://www.bctengineer.com/question.md?key=semester_7%2Festimating_and_costing%3Aestimate-report-sewerage) — Estimating and Costing, chapter 5, asked 2×