THE ROLE OF PROJECT APPRAISAL: To stop bad projects; To prevent good projects from being destroyed; To determine if components of project are consistent; To assess the sources and magnitudes of the risks; To determine how to reduce risks and efficiently share risks | Fulbright Economics Teaching Program, 2004-2005 The Appraisal of Development Expenditures - Project appraisal and risk management for the public sector PROJECT APPRAISAL AND RISK MANAGEMENT FOR THE PUBLIC SECTOR CAO HAO THI I. THE ROLE OF PROJECT APPRAISAL z To stop bad projects z To prevent good projects from being destroyed z To determine if components of project are consistent z To assess the sources and magnitudes of the risks z To determine how to reduce risks and efficiently share risks Cao Hao Thi 1 Fulbright Economics Teaching Program, 2004-2005 The Appraisal of Development Expenditures - Project appraisal and risk management for the public sector II. STAGES IN PROJECT APPRAISAL AND APPROVAL z Why should a project evaluation be done in stages? a. Idea and project definition b. Pre-feasibility study. c. Feasibility d. Detailed design e. Project implementation B. PRE-FEASIBILITY STUDY z Example overall potential of project z Should maintain same quality of information across all variables z Whenever possible should use secondary information z Biased information better than mean values KEY QUESTION a. Is this project financially and economically feasible throughout the project’s life? b. What are the key variables? c. What are the sources of RISK? d. How can the RISK be reduced Cao Hao Thi 2 Fulbright Economics Teaching Program, 2004-2005 The Appraisal of Development Expenditures - Project appraisal and risk management for the public sector C. FEASIBILITY STUDY z Focus is on improving accuracy of the key Variables z Alternatives for reducing risk are examined in detail z Some primary data may be needed KEY QUESTION – Is project financially attractive to all interested parties in activity? – What is level of uncertainty of key variables? – Can final decision for approval be taken? III. MODULES OF PRE-FEASIBILITY AND FEASIBILITY STUDIES Why break study into Modules? BUILDING BLOCKS a. Marketing or demand module b. Technical or engineering module c. Management .
