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P.A : 311
• Economics : Concentrate on how efficiently you can use your resources as we
have resource scarcity. EX : Demand, supply ,market etc.
• Finance: Maximization of your wealth: It is greater than the maximization of
your profit. Ex : your future profit and others. Finance is sub part of economics.
• Accounting = calculation of previous data and accounts.
• Macro economics : Broad perspective like Country’s economy
calculation ,monitory policy, fiscal Policy etc.
• Micro economics : Company ,persons etc.
What is Analysis
• Analysis?
• Simply - Detailed examination of the elements (such as cost, resource,
risks) or structure of something.
• Analysis is breaking a complex topic or substance into smaller parts to
gain a better understanding of it.
• Project analyst :
• The project analyst provides critical data support to the technical team.
Research and analysis functions may include budget, tracking, financial
forecasting, project evaluation and monitoring, maintaining compliance
with corporate and public regulations, and performing any data analysis
relevant to the project task.
• For example , World bank identify and compare the costs
and benefits of a project. After valuing them and
determining by how much benefits should balance cost for
a project to be considered beneficial. And suitable for
financing.
• Sometimes all cost and benefits analysis can not be
executed for good as there may be political or strategic
reasons.
•
Elements of Project analysis :
1. Feasibility analysis.
2. Financial and economic analysis
3. Cost-benefit analysis.
4. Economic appraisal.
5. Product analysis
6. Social impact assessment
7. Stakeholder analysis
8. Logical framework analysis.
9. SWOT analysis
10. Social soundness analysis.
11. Environment analysis.
12. Gender analysis.
Feasibility analysis
• Feasibility analysis is a process used to assess the practicality and potential
success of a proposed project or idea. It aims to evaluate whether the project is
achievable, sustainable, and worth pursuing by analyzing various factors like
resources, market conditions, and financial viability.
• Key Components of Feasibility Analysis:
• Technical Feasibility:
• Economic Feasibility:
• Legal Feasibility:
• Operational Feasibility:
• Scheduling Feasibility:
• Economic Analysis: Economic analysis is a means to
help bring about better allocation of resources that can
lead to enhanced incomes for investment or consumption
processes.
• It helps sustainable investment of projects.
• So, It’s a tool of decision-making in project programs on
policy that considers a wide range of costs and benefits
measured in monetary terms.
• Suppose the use of correct prices for valuing output and
inputs. Starting from a simple observation that many
prices, as used in the marketplace, do not reflect an
equilibrium situation. In many case, they are subject for
instance,to government intervention either by direct legal
price fixing or by restriction of supply or demand.
• Financial analysis :
• One of the most important parts of project planning
process is financial analysis. The goals of this phase are to
determine whether or not to take on the project, to
calculate its profits and to ensure stable finance during
project. In other words, financial analysis evaluates
project liquidity and profitability.
• Technique of financial analysis :
• Cash flow analysis: Measuring future deficit probability
and taking action. The measurement system is listing
project cash inflows and outflows divided into time
periods.
• Payback Period analysis: Payback period analysis is a
method that will tell you how much time you can earn the
same amount of money you would spend on the project.
• Payback period =Project cost / Annual cash flow.
• Example: If the project costs $ 100000 and is expected to
return $20000 annually. The payback period would be five
years.
• Accounting rate of return: Simple method of
estimating project net profits. One good thing about this
method is that it considers depreciation . Depreciation is
the decrease in the value of assets.
• Net Present value : Net present value considers the time value of
money.
• Same value of money worth more right now than at some point in
future.
• Internal rate of return : IRR is another method of calculating time
value of money. The IRR of an investment represents the discount rate
at which net present value of costs ( negative cash flows) of the
investment equals the net present value of the benefits (positive cash
flows) of the investments. It represents the interest rate which is
equivalent to the amount of money you expect to earn on the project.
• It also discover :
• Financial strength
• Cost
• Benefits
• Income source
• Expenditure
• Taxation
• Internal and external donation.
• State financial policies.
• Social Impact analysis : There are various types of
social analysis :
• Social Impact analysis : Social impact analysis is a
methodology to review the social effects of infrastructure
project and other development interventions.
• Social soundness analysis : It means analysis of socio
culture environment where you are going to run this
project.
• Social Management plan :
• Components of SMP are :
• 1. Determine the project affected person.
• 2. Measure to minimize resettlement ( journey)
• 3. Consultation
• 4. Entitlement framework
• 5. Institutional arrangement.
• Use of Social impact analysis:
• Its not just forecast impacts but also way to mitigate
impacts.
• Modification of project.
• operation and redesign of project policy.
• Compensation for the impact providing substitute
facilities, resource and opportunities.
