epfo;rrpj;jll cjtpahsh;fSf;fhd ; p ; jpl;lkply; El;gq;fs; fUj;juq;F tlkhfhz rig

fUj;jpll kjpg;gPL ;

fUj;jpllk; ;
Project
1) %ytsq;fisg; gad;gLj;jp rpy ed;ikfisg; (Mjhaq;fis) ngWtjw;fhd eltbf;iffspd; xU $l;L. 2) xU Fwpg;gpl;l Nehf;if jug;gl;l ghjPl;bd; fPo; Fwpg;gpl;l fhy vy;iyf;Fs; miltjw;fhf vLf;fg;gl;l Vw;ghL (Setup)

fUj;jpll rf;fuk; ;
Project Cycle

Project Idea - Project Formulation Project Feasibility Project Appraisal

Project Selection

- Project Implementation - Project Operation Project Evaluation

Ex-post ExEvaluation

Identificati on Preparatio n Appraisal

Project Completion

Implementati on

Negotiation & Board Approval

Meaning of Project Appraisal

Project Appraisal is the analysis of costs and benefits of a proposed project with a goal of assuring a rational allocation of limited financial resources amongst Investment opportunities with the objective of achieving specific goals. Project Appraisal is mainly the process of transmitting information accumulated through feasibility studies into a comprehensive form in order to enable the through feasibility studies into a comprehensive form in order to enable the decision maker undertake a comprehensive appraisal of various projects and on a specific project or projects by allocating resources. The various Factors considered by Financial Institutions while appraising a project are: -Technical, Financial, Economic, Commercial, Social and Managerial Factors.

fUj;jpll kjpg;gPL ;

e.g. :- Financial Institutions Banks, National Planning Agencies, International Planning Agencies.

Accuracy
Coverage Reality
- Assumption

 Market Technical Financial Economical Institutional Uncertainty Environment

Main types of Analysis Technical Market Financial Economic Environment Social Institutional Policy and political Gender Sustainability

COMMERCIAL FEASIBILITY
Yes

No

TECHNICAL FEASIBILITY
Yes

No

FINANCIAL FEASIBILITY
Yes

No

Economical FEASIBILITY
Yes

No

Institutional FEASIBILITY
Yes

No

Final Feasibility

Reject, Unattractive Project

Market
,

, , , , ,

Technical
gpujhdkhf toq;Fdh; gf;fk; ,J ftdk; nrYj;Jtjhf mikAk;. nghJthf fUj;jpl;lj;jpd; %yjd kPz;LtUk; nryTfis Fwpj;Jf; fhl;Ltjhf mikAk;. fl;lhakhf jpl;lj;jpw;fhd cs;sL tpgukhfg; guprPypf;fg;gLk;. P cs;sLfis cl;gLj;jy;/jtph;j;jy; fhuzkhf P kpifkjpg;gL/Fiwkjpg;gL vd;gd tUtjw;fhd rhj;jpag;ghL ,jpy; P P cs;sJ. ghtpf;fg;gLk; njhopy;El;gk; rk;ge;jkhf $ba ftdk; nrYj;jg;gLk;. ghtpf;fg;gLk; njhopy;El;gkhdJ ep&gpf;fg;gl;ljhf mika Ntz;Lk;. rpy jpl;lq;fspy; ghPlrhh;jj Kiwapy; njhopy;El;gk; ; ; mwpKfg;gLj;jg;glyhk;. ,lk;, Neuk;, gbepiy vd;gtw;wpy; $baftdk; nrYj;jg;gLk;.

Financial
,

epjp Ma;tpy; ftdpffg;glNtz;ba ; tplaq;fs;

epjp Kd;Ndw;wk;/,yhgk;. tUkhdj;ij <l;bj;juty;y ,aysT. nryT kPlrp. (eilKiw, guhkhpg;Gr; ; nryTfis cs;slf;fpaJ) nryT tpistpd; typik KOtJKilik. (Cost effectiveness) epjp rhh;ghf ePbj;J epiyf;ff;$ba jd;ik. ntspapypUe;J fpilf;Fk; cjtpfs; epWj;jg;gLk; re;jh;g;gj;jpYk; jg;gpg;gpiof;ff; $ba jpwDilajh vdg; ghh;jjy;. ;

fzf;flLKiw rk;ge;jkhff; P ; ftdpffg;gl Ntz;bait ;

1) Pay Back (PB) 2) Accounting Rate of Return (ARR) (nghUshjhu Kiw rk;ge;jkhdJ) 3) Net Present Value (NPV) 4) Internal Rate of Return
nghUshjhu Kiw rk;ge;jkhd fzpg;gPl;by; vq;nfq;F Neuk; ngWkjpAld; rk;ge;jg;gLfpwNjh mq;F Discounted Cash Flow DCF gad;gLj;jpf; fzpf;fg;gLk;

Rules for Decisions

Criterion Nondiscounting methods Payback period (PBP) Accounting Rate of Return (ARR) PBP < target period ARR > target rate PBP > target period ARR < target rate Accept Reject

Discounting methods Net Present Value (NPV) Internal Rate of Return (IRR) Benefit Cost Ratio (BCR) BCR > 1 BCR < 1 NPV > 0 IRR > cost of capital NPV < 0 IRR < cost of capital

5) ARR

(Pay Back Period)

,d;iwa xU &gha; ehisa xU &ghia tpl $baJ.

6) FIRR (Financial IRR) 7) B/C Ration 8) Sensitivity Analysis

Financial and Economic Analysis

Financial Analysis Definition
Financial Analysis evaluates the commercial viability / Profitability of a project from the point of the owner/enterprise perspective.

Objectives
Objective is to assess the degree to which a project will generate revenue sufficient to meet its financial obligation. i.e. meet the O&M and recover the capital cost.

Aspects
Financial Performance/Profitability Owners perspective Ability to generate sufficient revenue Cost Recovery (including the O&M) Cost effectiveness Financial Sustainability Capability to survive event after the termination of the external assistance.

10

How to conduct Financial Analysis

Estimated Financial Costs Investment cost O&M Cost Estimated Financial benefit Cash flow Analysis Project Life Match the Financial benefit to Financial cost Time value of money Discounting Compute NPV, FIRR, B/C ratio, pay back period Sensitivity Analysis risk/uncertainty

Economic Analysis
Definition
Evaluates the Economic Viability of the project from the country perspective

Objectives
Assessment of the impact of the project to the National economy from a country perspective

Aspects
Contribution to the aggregate output Contribution to the Macro Economic Objectives and Sectoral Objectives Socio Economic Impact

11

How to conduct Economic Analysis

Estimated Economic Costs
Investment Cost O&M Cost (Financial Prices to Economic Prices / Shadow pricing)

Estimated Economic Benefits With and Without Project scenario

Incremental Cost/Benefits

Cost/Benefits at Constant cash flow profile Project Life Compare / Match the Economic benefit stream to Economic cost stream

Economic Criteria
Net Present Value (NPV) Benefit Cost Ratio (B/C Ratio) Economic Internal Rate of Return Opportunity Cost of Capital 10% Sensitivity Analysis

12

A Comparison of Financial and Economic Analysis

Financial
1. Objective Commercial Viability/ ProfitabilityEnterprise perspective 2. Composition of Costs/benefits (Financial) Enterprise perspective 3. Financial Prices 4. Discount Weighed Average Cost of Capital

Economic
1. Objective Impact on the National EconomyCountry Perspective 2. Composition of Costs/Benefits (Economic) National Perspective 3. Economic Prices 4. DiscountEconomic opportunity cost of public funds

nghUshjhug; gFg;gha;T
Economic Analysis
Viability

13

,g;gFg;gha;tpy;
Cost Benefit

Opportunity Cost, Shadow Price, Transfer Payment, Border Price, Externalities, Social Discount Rate

14

Opportunity Cost

epoy; tpiy
Shadow Price

15

khw;wy; nfhLg;gdT
Transfer Payment

(1) (2)

Financial
Eg Repayment of Principals

Fiscal
Eg Taxes, Duties, Subsidies

Tradeable Goods

16

vy;iy tpiy
Border Price

ntspthup tpisTfs;
Externalities

17

Rtl;lha;T
SWOT Analysis
, , S STRENGTHS ( + ) W WEAKNESS ( + O OPPORTUNITIES ( T THREATS ( + ,

SWOT Analysis
eakness
(That should be exploited)

(Which should Improved)

pportunities
a)

hreats
a)

b)

c)

What opportunities existing the Business environment? Their inherent ProfitProfitmaking Potential The Organizations ability to exploit the worth while opportunities

b)

c)

What threats might arise How will competitors affected? How will Company be affected?

18

Weakness
(That should be exploited)

(Which should Improved)

Opportunities
a)

Threats
a)

b)

c)

What opportunities existing the Business environment? Their inherent ProfitProfitmaking Potential The Organizations ability to exploit the worth while opportunities

b)

c)

What threats might arise How will competitors affected? How will Company be affected?

M A T C H I N G

Conversion

Opportunities
a)

Threats

b)

c)

What opportunities existing the Business a) What threats might arise environment? b) How will competitors Their inherent ProfitProfitaffected? making Potential c) How will Company be The Organizations affected? ability to exploit the Conversion worth while opportunities

19

r%f murpay; Ma;T

Social Political Analysis

,J rhj;jpats Ma;tpd; NghJ nra;ag;gLk;. fUj;jpl;lq;fs; Njhy;tpailtjw;F r%f> murpay; epiyfs; fhuzkhf ,Uf;fpd;wikahy; ,J Kf;fpaj;Jtk; ngWfpd;wJ.

r%f Ma;T gpd;tUk; tpdhf;fSf;F tpil gfph;tjhf ,Uf;Fk;

fUj;jpl;lkhdJ vg;gbahd r%fj; jhf;fq;fis Vw;gLj;Jk;? fUj;jpl;lkhdJ vg;gbahd murpaw;; jhf;fq;fis Vw;gLj;Jk;? fUj;jpl;lj;jpy; r%fj; jhf;fk; vj;jifa jilfis md;wpy; cjtpfis toq;Fk;? fUj;jpl;lj;jpy; murpay;; vj;jifa jilfis md;wpy; cjtpfis toq;Fk;?

20

epWtdg; gFg;gha;T
Institutional Analysis
jpwikahf jpl;lj;jpid mKy;gLj;Jtjw;Fr; nraw;glTs;s epWtd Kiwik gw;wpg; ghh;j;jy; mtrpakhFk;. fUj;jpl;l mKyhf;fypy; epWtdq;fSf;fhd nghWg;Gf;fs; tiuaWf;fg;gl;bUf;Fk;. fUj;jpl;lk; mKyhf;fg;gLk; NghJ fUj;jpl;l Kfhikf;FO mjpy; guPl;rakhdjhfTk; jpwikAilajhfTk; ,Uf;f Ntz;Lk;. mj;Jld; mth;fSf;F toq;fg;gl;l nghWg;Gf;fSk; gzpr; RikfSk; tiuaWf;fg;gl;bUf;f Ntz;Lk;. fUj;jpl;lj;jpw;F xU Fwpg;gpl;l fhy vy;iyAk;> nrytPl;bw;fhd gz xJf;fKk; ,Uf;Fk;. jpl;lkhdJ mf;Fwpg;gpl;l fhy vy;iyf;Fs; G+hj;;jpahf;fg;gl Ntz;Lk;. (Cost -Overrun) ,y;iyNay; mJ xJf;fPl;il kPwpa nryT vdg;gLk;.

fl;lhakhfg; ngwNtz;ba mDkjpfs;. (Necessary Approvals) juF Kyk; Neuj;jpw;Fs; ngwNtz;ba cs;sPLfs;. (Procurement of Inputs In Time) epWtd xOq;fikg;G (Organization). Nfs;tpahsh;fisj; njupT nra;jy;> epakpj;jy;. kjpAiuQh;fisj; njupT nra;jy;> epakpj;jy;. gy;NtWgl;l epWtdq;fSldhd xUq;fpizg;G (Coordination)

21

epiyaw;w jd;ik
Uncertainty epiyahdjhf vy;yhk; ,Uf;Fkhapd; jpl;lkpLtJ Rygk;. Mdhy; ,g;gbahd epiy xUNghJk; ,Uf;fkhl;lhJ. epiyaw;w jd;ik rk;ge;jkhf fUj;jpl;l kjpg;gPl;by; ; (Appraisal) mtjhdkhf Muhag;gLk;. epiyaw;w jd;ikapd; tpisT Mgj;ij vjph;nfhs;tjhFk;. epiyaw;w jd;ik vg;nghOJk; vjph;khwhd tpisTfisj; juhJ. KjypLNthh; gpd;tUk; tplaq;fshy; fpilf;Fk; rhjf epiyiag; nghWj;J jkJ jPh;khdq;fis vLg;gh;.
1) Break - even analysis 2) Sensitivity analysis 3) Risk analysis Eg: BOO/ BOT jpl;lq;fs;

#oy; Ma;T
Environmental Analysis

xU jpl;lj;jpd; Ma;tpy; filrpahf guPlrpf;fg;gLtJ #oy; rk;ge;jkhd ; Ma;thFk;. ,J #oy; jhf;f Ma;T (Environmental Impact Assessment EIA) vdTk; miof;fg;gLk;.

22

,J gpdtUk; tplaq;fis cs;slf;fp ,Uf;Fk;. ;

1) fUj;jpl;lk; rk;ge;jkhd tpguk;. 2) #oy; rk;ge;jkhd tpguk; . 3) vjphghh;f;fg;gLk; vjph;khW tpisTfSk;> jzpg;gpw;fhd ; gupeJiufSk;. ; 4) rhjfkhd khw;W Nahridfs;. 5) jzpg;G eltbf;iffspd; nryTfs;> ed;ikfs; rk;ge;jkhd mwpf;iffSk;. 6) epWtd xOq;fikg;G. 7) kf;fspd; gq;fspg;G Kiwfs;.

vy;yh tiff; fUj;jpl;lq;fSf;Fk; ,J mtrpakw;wJ. gy ngupa fUj;jpl;lq;fs;> fUj;jpl;l kjpg;gPl;bd; gpd; EIA rhjfkhf mikahjjhy; iftplg;gl;l epiyapy; cs;sd.
Eg: Upper Kotmale Hydro Power Project

EIA xU jpwikrhypfspd; FO xd;wpdhy; nkJthfr;

nra;ag;gLk;. ,jpy; jug;gLj;jy;> ngWkjpg;gLj;jy; %yk; jhf;fq;fs; fzpf;fg;gLk;.

23

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