Project Appraisal Definition And Steps

When an organization wants to find a solution to a particular business problem and identify the best
way for implementing that solution, it needs to plan and develop a project that might provide an
effective action plan for addressing the problem through implementing the solution. This organization
will need to give an appraisal of the potential project to make sure the project is really effective
because it supports the right solution and solves the required problem. In this context, project
appraisal management serves as the major process of analyzing and approving the project. In this
article, I am going to write about the project appraisal process and its key steps. I hope my article will
help you learn how to evaluate and appraise projects.

Project Appraisal is a consistent process of reviewing a given project and evaluating its content to
approve or reject this project, through analyzing the problem or need to be addressed by the project,
generating solution options (alternatives) for solving the problem, selecting the most feasible option,
conducting a feasibility analysis of that option, creating the solution statement, and identifying all
people and organizations concerned with or affected by the project and its expected outcomes. It is
an attempt to justify the project through analysis, which is a way to determine project feasibility and
cost-effectiveness.

Appraising a project means evaluating the proposed solution against its ability to solve the identified
problem or need. Some PM methodologies and guides (e.g. PMBOK) regards the technical and
financial project appraisal as a component of the initiation or pre-planning phase. PRINCE2
suggests developing the business case which is a form of project appraisal. The Method 123
(MPMM, which is based on PMI and PRINCE2 standards) also uses the business case for preparing
a proposed project for feasibility analysis and assessment.
Project appraisal management is an essential stage of any project, regardless of its nature, type and
size. This stage represents the first point of the pre-planning or initiation phase. Without having
appraised a project, it is financial and technically unreasonable to proceed with further planning and
development. No matter whether you are going to purchase a new car (e.g. my neighbors project),
constructing a building, improving a business process, updating a network system, conducting a
marketing campaign, building a garage, or any other initiative, you should make a preliminary
assessment and appraisal of your undertaking in order to be sure that that you will do a required and
necessary change to your environment.

Key Steps
Various PM methodologies use various approaches and techniques for developing a project
appraisal. In my practice we use some method that regards the appraisal process as a series of 4
steps that have a range of sub-steps and tasks. In this checklist you can view the entire hierarchy
with the details. I am going to give an overview of the steps. If you want to get deeper, please read
the checklist.

Step #1. Concept Analysis

The first step requires you (as a project appraiser or analyst) to conduct a range of analyses in order
to determine the concept of the future project and provide the Decision Package for the senior
management (project sponsors) for approval. It means you need to carry out the problem-solution
analysis that determines the problem/need to be addressed and the solution to be used to handle
the problem. The solution should analyzed by cost-effectiveness and feasibility (various project
appraisal methods and techniques can be used). Also you will need to identify stakeholders (those
people and organizations involved in or affected by the problem and/or solution) and analyze their
needs (how they relate to the problem and/or solution). After all, you must develop a decision
package that includes the problem statement, the solution proposal, the stakeholder list, and the
funding request. This package will then be submitted to the sponsor for approval (or rejection). If the
sponsor approves the project concept then you can proceed to the next step.

Step #2. Concept Brief

At this step you must develop a summary of the project concept to define the goals, objectives,
broad scope, time duration and projected costs. All this data will be used to develop the Concept
Brief. You need to develop a project statement document that specifies the project mission, goals,
objectives and vision. Then you create a broad scope statement that specifies the boundaries,
deliverables ad requirements of your endeavor. Finally you make a preliminary schedule template
that determines an estimated duration of the project, and then develop a cost projection document
based on cost estimates and calculations.

Step #3. Project Organization

You use the Concept Brief to determine an organizational structure of your project. This structure
should be developed and explained in the Project Organizational Chart. The document covers
such issues as governance structure (roles and responsibilities), team requirements and
composition, implementation approach, performance measures, other info. The idea behind the
Project Organizational Chart is to create a visual representation of the roles, responsibilities and
their relationships and what people/organizations are assigned to what roles and duties within the
project.

Step #4. Project Approval

The final stage requires you to review all the previous steps and gather them into a single document
called the Project Appraisal. This document summarizes all the estimations and evaluations made,
to justify the project concept and verify that the proposed solution addresses the identified problem.
The financial, the cost-effectiveness and the feasibility analyses will serve as the methods of project
appraisal to approve the project. The document is to be submitted to the snooper stakeholders (the
customer, the sponsor) for review and approval. If the appraisal is approved, then the project steps
to the next phase, the planning.