Project Appraisal

(4) Technical analysis: Technical appraisal of a project broadly involves:

(i) Location and site: There two factors significantly influence the cost of production and distribution efficiency, the operating environment etc. The important factors that influence industrial location are raw material, proximity to market, availability of water, power, transportation facilities, man power, labor laws, taxes, incentives, subsidies etc. The factors to be considered for selection of site are load bearing capacity, access to water, effluent discharge etc.
(ii) Size of the plant/scale of operation: The size of the plant determines the economic and financial liability of a project. An important aspect of size is the available process technology. Equipment may be standardized at specific capacities in production sectors.
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Project Appraisal
(iii) Technical Feasibility:

The appraisal of the technical aspects involves scrutiny of such aspects of the project as
Technology selected Technical collaboration arrangements made Capacity/Size of the project Selection of plant, machinery and equipment Plant layout and factory building Technical and engineering services

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Project Appraisal - Meaning & Definition

Project Appraisal
(5) Organizational analysis:

As a lender and development institution, the banks and other financial institutions place particular stress on the need and efficient organization and responsible management for the execution of the project.
During project appraisal, these two aspects of a project are examined. If both aspects are not carried out properly, short term remedial steps are recommended to the entrepreneur. The objective of this aspect of appraisal is to make sure that the project is adequately carried out. The various organizational aspects are organization, structure, recruitment, training and development and so on.
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Project Appraisal
(6) Managerial aspects: If the management is incompetent, even a good project may fail. It is rightly pointed out that if the project is weak, it can be improved upon; but if the promoters are weak & lack in business acumen, it is difficult to reverse the situation. To safeguard from this problem, the financial institutions can exercise control over the assisted units. They can appoint nominee directors on the boards of all MRTP companies assisted by them. The Companies Act, the Industries Act (Development and Regulation), empower government to exercise powers of control over the management, including the take over of management of industrial undertakings. All these indicate the importance given to proper managerial strategies to prevent mismanagement. Proper appraisal at initial stage avoids future problems to a very large extent.
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