Project Evaluation

New and existing projects need to be evaluated before start-up or during operation, to determine their viability and long term success. Areas of evaluation include the following:

  • Financial Evaluation
  • Technical Evaluation
  • Economic Evaluation

Financial Evaluation

Projects need to be financially viable before they can get funding in the case of new projects, or stay in business for existing projects. Financial evaluation will determine and assess indicators like profitability, cash flow, rate of return, payback time, etc. to determine the viability of the project.

Technical Evaluation

For a project to be successful and sustainable, certain technical requirements should be met. These requirements differ for different projects and even for similar projects under different circumstances.

With some projects for example, availability of raw materials in sufficient quantity at the right quality, within a limited radius from the project facility is essential for success.

Basic infrastructure like electricity power and water is important for every project, but some projects need them at high levels of reliability and stability to be able to operate efficiently.

Availability of local skilled manpower and technical support services are among some of the important factors that need to be considered under technical evaluation of a project.

 

Economic Evaluation

The economic evaluation of a project determines how the project contributes to the economic growth of the country, region, province or locality where it is established. The impact of a project on different aspects of an economy is both positive and negative.

A project can create jobs in one area of the economy and destroy jobs in another. A project that establishes a new industry can also cause the collapse of other industries. A desirable economic evaluation however, should result in a net benefit to the economy.

The duration of the economic benefit is also important. Generally, projects with a long term economic benefit are usually preferred to those with a short term benefit even if the value of the short term benefit is greater.

A good economic evaluation however, should be able to assess the overall impact of projects considering the value and duration of the economic benefit.