--- title: "Need of formulation; techniques for ToR" subject: "Project Engineering" chapter: 2 key: "semester_7/project_engineering:formulation-need-techniques-tor" source: https://www.bctengineer.com/q/semester_7/project_engineering/formulation-need-techniques-tor site: BCT Engineering --- # Need of formulation; techniques for ToR Project Engineering · Chapter 2: Project Appraisal and Project Formulation - Asked in: 2081 Baisakh, 2+4 marks - Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14 - Page: https://www.bctengineer.com/q/semester_7/project_engineering/formulation-need-techniques-tor - Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-2 ## Question Why does any project need to be formulated properly and concisely? State and analyse the various techniques used in project formulation to provide project parameters in terms of terms of reference (ToR) of a project. ## Short answer Proper formulation defines objectives, scope and deliverables, avoids waste, gives reliable estimates, finds risks early, and supports appraisal, financing and monitoring. Techniques: feasibility, cost-benefit, input, market, technical, financial, environmental, social, SWOT, sensitivity/risk and logical framework. These provide ToR parameters: scope, design standards, data needs, methods, discount rate, indicators, IEE/EIA, risk cases, schedule, staffing and deliverables. ## Answer #### Need for proper and concise formulation Proper and concise formulation is needed because it: - defines clear objectives, scope and deliverables so that everyone understands the project; - avoids wasting resources on a poor or unnecessary idea; - gives reliable cost, time and benefit estimates; - finds risks and alternatives early; - provides the basis for appraisal, financing, tender and contract; - helps monitoring and evaluation later. A vague or overly long formulation causes confusion, disputes and cost overruns. #### Techniques and ToR parameters | 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 | **Terms of Reference (ToR)** state the objectives, scope, tasks, outputs, schedule, qualifications and conditions for a study or project. Formulation techniques give the parameters that go into the ToR: - Feasibility and technical analysis: scope of survey, design standards, capacity. - Market and input analysis: data to be collected, resources required. - Cost-benefit and financial analysis: methods, discount rate, indicators required. - Environmental and social analysis: IEE/EIA requirement, mitigation. - Risk analysis: sensitivity cases. - SWOT and logical framework: strategy, outputs, indicators, assumptions. - Management and implementation: schedule, deliverables, staffing, reporting. ## Check yourself The answer's key points as multiple-choice questions, with the correct option and why. 1. Why is proper and concise formulation needed? A. It increases project length B. It avoids all risk C. It replaces the ToR D. It defines clear objectives and scope and gives the basis for appraisal, financing, tender and contract Answer: D. Clear formulation avoids confusion, disputes and cost overrun. (Key point: Need of formulation) 2. What do Terms of Reference state? A. Only the contractor's profit B. Objectives, scope, tasks, outputs, schedule, qualifications and conditions C. Only the price D. Only the site Answer: B. ToR sets the requirements for a study or project. (Key point: ToR) 3. Which technique supplies the ToR parameter 'discount rate and indicators required'? A. Market analysis B. Environmental analysis C. SWOT D. Cost-benefit and financial analysis Answer: D. CBA and financial analysis specify methods, discount rate and indicators. (Key point: Technique to ToR parameter) 4. What does environmental and social analysis contribute to the ToR? A. IEE/EIA requirement and mitigation B. Design standards C. Sensitivity cases D. Staffing Answer: A. Design standards come from technical analysis; sensitivity cases from risk analysis. 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