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The most important function of project appraisal is to evaluate the project’s ability to meet its avowed objectives and its ability to contribute towards the long term development and growth of the national economy.
One of the main reasons for undertaking appraisal is to prevent waste or misallocation of limited resources which have to be allocated between competing claims/projects. It is thus necessary in principle to define and value costs and benefits and, measure their impact on the development objectives. In some cases, it may be helpful to place a project in the sectoral context.
Project appraisal needs to answer two main questions
“Will the project as designed meet its own objectives as well as the larger needs of its location and the national economy?”
‘How does the project compare with other projects competing for the same funds?”
This becomes relevant when there is a budget constraint and many projects compete for the same limited funds...
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