Cost-Benefit Analysis for Investment Decisions: Chapter 2 (A Strategy for the Appraisal of Investment Projects)

Every project has certain phases in its development and implementation. The appraisal stage of the project cycle should provide information and analysis on a range of issues associated with the decision making of the project. First, the administrative feasibility of project implementation must be fairly assessed and the marketing and technical appraisals of the project must be provided to evaluate its feasibility. Second, the financial capability of the project to survive the planned duration of its life must be appraised. Third, the expected economic contribution to the growth of the economy must be measured based on the principles of applied welfare economics and a series of assumptions used to undertake this appraisal. Finally, an assessment must also be made to determine if, and how, this project assists in attaining the socio-economic objectives set out for the country, along with an analysis to determine if this project is cost-effective in meeting these objectives. This chapter describes how this appraisal functions is carried out with the framework of project cycle.