---
title: "Step by step project appraisal process"
subject: "Project Engineering"
chapter: 2
key: "semester_7/project_engineering:appraisal-steps-process"
source: https://www.bctengineer.com/q/semester_7/project_engineering/appraisal-steps-process
site: BCT Engineering
---

# Step by step project appraisal process

Project Engineering · Chapter 2: Project Appraisal and Project Formulation

- Asked in: 2080 Baisakh, 6 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-steps-process
- Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-2

## Question

Describe the step by step process of project appraisal.

## Short answer

Project appraisal is systematic assessment before funds are committed. The process steps are screening, defining criteria, collecting data, appraising technical, market, managerial, financial, economic, environmental and social aspects, performing risk and sensitivity analysis, comparing alternatives, recommending, preparing the report, and deciding with follow-up. The outcome is accept, modify or reject, with a baseline for monitoring.

## Answer

**Project appraisal** is the critical, systematic assessment of a proposed project, before commitment of funds, to judge whether it is technically sound, economically and financially viable, environmentally and socially acceptable, and worth undertaking.

#### Step by step process

1. **Receive and screen the proposal:** check it is complete and matches policy.
2. **Define the scope and criteria** of appraisal (technical, economic, financial, social, environmental).
3. **Collect and verify data:** site visit, market data, costs, laws.
4. **Technical appraisal:** design, technology, capacity, schedule.
5. **Market and managerial appraisal.**
6. **Financial appraisal:** cost, funding, cash flow, NPV, IRR, payback.
7. **Economic appraisal:** shadow prices, B/C, EIRR.
8. **Environmental and social appraisal.**
9. **Risk and sensitivity analysis.**
10. **Compare alternatives and make the recommendation:** accept, modify or reject.
11. **Prepare the appraisal report** and submit it to the approving authority.
12. **Decision and follow-up:** approval, conditions, baseline for monitoring.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. What is the first step of the appraisal process?
   A. Compute EIRR
   B. Prepare the appraisal report
   C. Approve the project
   D. Receive and screen the proposal for completeness and policy match
   Answer: D. Screening comes first, then defining scope and criteria. (Key point: First step)

2. What is done at the data collection step?
   A. Negotiate the contract
   B. Collect and verify data by site visit, market data, costs and laws
   C. Write the report
   D. Make the final decision
   Answer: B. Data is collected and verified before the aspect-wise appraisals. (Key point: Data collection)

3. Where do risk and sensitivity analysis and comparison of alternatives come in the sequence?
   A. After the aspect appraisals and before the recommendation
   B. They are not part of the process
   C. Before screening
   D. After the project is approved
   Answer: A. The recommendation (accept, modify, reject) follows aspect appraisals, risk analysis and comparison. (Key point: Risk before recommendation)

4. What follows the recommendation?
   A. Closing the project
   B. Preparing the appraisal report and submitting it for decision and follow-up
   C. Collecting data again
   D. Starting a new screening
   Answer: B. The report is submitted to the approving authority; the decision gives a baseline for monitoring. (Key point: Final steps)

## Related in Project Engineering

- [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×
- [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×
- [Project appraisal and its importance](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aappraisal-concept-importance) — Project Engineering, chapter 2
- [Contents of project appraisal report](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aappraisal-report-contents) — Project Engineering, chapter 2
- [Appraisal parameters for civil engineering project](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aappraisal-parameters-civil-project) — Project Engineering, chapter 2
- [Necessity of appraisal; formulation techniques](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Aappraisal-necessity-formulation-techniques) — Project Engineering, chapter 2, asked 2×

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- [Close project process](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aclose-project-process) — ICT Project Management, chapter 7
- [Components of economic appraisal](https://www.bctengineer.com/question.md?key=semester_6%2Ftransportation_engineering_i%3Aeconomic-appraisal) — Transportation Engineering I, chapter 2
- [Step and touch potential in mat design](https://www.bctengineer.com/question.md?key=semester_8%2Fpower_plant_design%3Astep-touch-potential) — Power Plant Design, chapter 4