Development project appraisal for sustainable development tài liệu, giáo án, bài giảng , luận văn, luận án, đồ án, bài t...
Trang 1LECTURE:06
Development Project Appraisal for sustainable development
M A Kamal, Ph.DDirector General
Trang 2Outline:1.Introduction2.Definition of a Project3.Types of Project4.Project Cycle5.Project Appraisal
6.Objectives of Project Appraisal7.Scope of Project Appraisal
Trang 31 Introduction:
1.1 Development projects impose a series of
costs and benefits on recipient
communities or countries.
1.2 Those costs and benefits can be social, environmental, or economic in nature, but may often involve all three.
Trang 42 Definition: Project
2.1 A Project is a set of interrelated
Trang 53.Projects types:
Projects are:
3.1 Type ‘x’ : Self financing projects i.e projects which
earn revenue through sale of output (goods & services) These are called directly productive projects,
i.e Industrial Projects.
3.2 Type “y” : In directly productive but non-revenue
earning projects, i.e., projects which give rise to tangible output, benefit of which do not accrue directly to projects themselves but to other parties Example: Irrigation Projects, Roads, Bridge etc.
3.3 Type “z” : Service Sector Projects Projects which do not
Trang 64.Projects Cycle
4.1 There tends to be a natural sequence in the way
projects are planned and carried out and this sequence has come to be known as ‘ the Project Cycle’.
4.2 Project Cycle Covers following stages:
I.Project Identification.
II Project Preparation & AnalysisIII Project Approval / Negotiation IV Project Appraisal
V Project Implementation & Monitoring
VI Project Evaluation & Follow-up Analysis.
4.3 A Project generally goes through all these phases
Trang 85 Project Appraisal
5.1Project Appraisal involves the comparison of
costs and benefits If benefits exceeds costs, the project could be considered for acceptance Otherwise, it is not.
5.2The basic principle in appraisal / CBA is for potential acceptance of a project
5.3Project Appraisal means a pre-investment
Trang 96 Objectives of Project Appraisal
6.1Project Appraisal is necessitated because the resources or means are limited as compared to the needs of the society 6.2As a result, any investment undertaken implies depriving
other projects resources
6.3Hence, it is very important to appraise each project before investment decision so that scarce resources are utilized in the best possible ways.
6.4In other words, before allocation of resources for a particular project, the decision making authority must convince itself that the proposed project is the best and most economical way of achieving the desired objective (in terms of socio-economic benefits)
Trang 106 Objectives of Project Appraisal
6.6A Project Appraisal involves detailed
pre-investment analysis of market & technical feasibility, financial soundness, economic desirability and, finally, measuring its investment worth.
6.7The task aims mainly at ensuring that scarce resources are put to most effective use.
Trang 117 Scope of Project Appraisal
7.1 Market Feasibility study.
7.2 Technical Feasibility / viability.7.3 Financial Soundness.
7.4 Management and Organizational Aspects / Managerial Soundness.7.5 Economic viability / Appraisal.
Trang 127.1 Market Feasibility
a) Whether does a sufficient demand exist?
b) In case of import substitution,
whether the domestic cost of
production is less than the cost of
Trang 137.2 Technical Appraisal
a Availability of inputs at reasonable cost.b Consistency & soundness of engineering
design.
c Economics of scale in production.
d Appropriate technology & alternative ways of production.
e Advantageous location of the project.f.Maintenance & Repairs.
Trang 147.3 Financial Soundness
a Exhaustive & realistic cost estimationb Sound capital structure: Fund Source
c Provision for working capital requirement
d Generation of sufficient cash flows to cover debt-service liability
e Generation of adequate profit.f Safety margin.
g Break- Even Pointh Pay back period.
Pay back period: Pay back period is a measure of
Trang 157.4 Managerial Soundness
a Experience of the top managerial personnel in the line.
b Expertise and ability of supervisory staff.
c Balance between supervisory staff and workers
d Clarity of job description,
Trang 167.5 Environmental Aspects
The environmental impacts include –
a Ecological :Fisheries, Tree Plantation, Wet
Land / Wet Land Habitats, Forests.
b Physico- Chemical : Flood Control & Drainage Erosion, Drainage, Congestion / Water Logging, Obstruction to waste water Flow, Soil Fertility, Early Flooding.
c Human Interest : Areas of Settlements,
Agricultural Lands, Navigation / Boat
Trang 177.6 Measurement of Investment Worthiness
a.What benefit does the project promise for
its sponsors or owners?
b.What benefit does the project promise for
the national economy?
c.The satisfactory answers to these
Trang 188 Methods of Calculating Profit Worthiness.
8.1 Net Present Value = NPV
Trang 198.1 Formula for:
i) NPV = Discounted Total Benefits – Discounted Total costs.
2.2Formula:
Trang 208.3 Formula for IRR: NPViii) IRR = LRD + LRD x ( HRD – LRD ) NPV - NPV LRD HRDWhere,
LRD = Lower Rate of Discount at which NPV is positive;HRD = Higher Rate of Discount at which NPV is negative;NPV = Net Present value at the Lower Rate of Discount; LRD
NPV = Net Present value at the Higher Rate of Discount HRD
What is IRR?
Trang 2311 The basic difference between Financial Appraisal &Economic Appraisal
Financial Appraisal Economic Appraisal
a Profitability or worthiness of any
project is determined or judged from the point of view of an individual/ Entrepreneur
a Profitability/ viability or worthiness of any project is determined or judged from the point of view of the society or nation as a whole
b Only direct cost and direct benefits
are considered while determining the profitability of the project
b Include both direct and indirect cost and benefits
c Cost and benefit are evaluated at
market prices
c Costs and benefits are
evaluated at shadow price/ Accounting price
Trang 2513 Conclusion:
13.1 It involves comparison of costs and benefits
13.2 Objectives of a project Appraisal are needed because of limited resources, allocation of resources, investment analysis, etc.
13.3 It involves Market, Technical, Financial, Management, Economic and Environment Feasibilities
13.4 It entails measurement of investment worthiness
13.5 Methods of calculation of profit worthiness is highly essential.
13.6 Acceptability criteria are needed.
Trang 2614 Farewell Call:
14.1 There is a widespread concern that adverse environmental effects of economic activities will seriously affect both the present and the future welfare of people in less developed countries, and that the present project
appraisal practices do not adequately
address the issues
14.2 It is necessary to use the idea of sustainable development in project appraisal with the