Project Appraisal Template
October 15, 2011
Key steps for appraising projects
Appraising a project means reviewing and evaluating this project for feasibility and cost-effectiveness to understand and approve the project concept, which explains what problem/need to address and what solution to implement. This Project Appraisal Template is designed to help analysts and appraisers to assess and justify theirs projects. It comprises a range of steps and activities to be taken during the project initiation or pre-planning phase. The Template describes the method that is based on best practices of project management (PMI and PRINCE2 standards).
Project Appraisal: Overview
- What (Definition). Appraising a project means performing a process of reviewing evaluating this project and its content for feasibility and cost-effectiveness to approve or reject the project concept, through analyzing the problem or need to be solved by the project and identifying the best possible solution to be implemented. It involves an analyst in identifying stakeholders and creating a decision package for making the final decision on project approval or rejection.
- Why (Purpose). The purpose is to analyze the proposed project to determine whether the concept really offers an effective solution that addresses the identified problem. It serves as a tool to reach project approval and step towards further project planning and development. It aims to confirm that the proposed project is technically, financially and economically feasible and cost-effective.
- When (Phase). The appraising process is carried out during the pre-planning or initiation phase. It comes before the planning phase to confirm that the project is justified in terms of cost, benefits, feasibility and effectiveness. Sometimes in some project environments, Appraisal is regarded as a single phase that aims at initiating a project and developing a foundation for the planning process.
- How (Action Items). In this Project Appraisal Template we offer our own ideas on how to review and evaluate projects. We use the method and the steps of the appraising process listed in the template in our activities in our company. The process is based on best practices, including PRINCE2 and PMI standards. Here’re the major steps to start and complete the project appraising process:
- Concept Analysis: it aims to define concept of the proposed project and determine what problem to solve and in which way (solution).
- Concept Brief: it is to describe the concept through defining the goals, objectives, scope, costs, time-limits and business drivers of the proposed project.
- Project Organization: it is focused on describing the roles and responsibilities of project personnel through developing an organizational chart.
- Project Proposal: it summarizes all the previous steps to develop the Project Proposal and submit it for review and approval to the senior stakeholders.
1. Concept Analysis
- Problem-Solution Analysis (aka Needs Assessment). First of all, an analyst needs to define a problem and a solution. The problem is defined through identifying factors that lead to the current situation (problem) and then deterring the effects caused by the problem. Next the analyst should analyze the problem environment to determine a possible solution that can effectively address the problem.
- Feasibility and Alternatives Analysis. It is about technical, operational and economical feasibility of the proposed solution in terms of cost-effectiveness and benefits. Feasibility study includes a range of analyses including Economical analysis, Financial Returns analysis, Market analysis, Risk analysis, Cost projection, and Management analysis. The purpose is to confirm the solution’s technical, operational and economical feasibility. Also the process aims to identify alternatives (options) to the proposed solution and find out whether the solution is better (in terms of addressing the problem) than the rest of the alternatives.
- Stakeholder Analysis. This kind of analysis aims to identify all the people and organizations involved in or affected by the problem and/or solution. It focuses on developing the stakeholder list and the stakeholder needs matrix that determines the expectations of the interested parties. It also specifies a method for managing the expectations.
- Decision Package. This step aims to review all the analyses made, to create a decision package that describes the reasonability of the project concept, including the proposed solution. The document is to be submitted to the senior stakeholders (the sponsor) for approval. In case the concept is approved, the sponsor authorizes funds for investment.
Summary: For the entire problem-solution analysis it is convenient to use the context analysis which identifies general, external and internet factors, defines the problem and generates the solution.
Summary: the feasibility study along with the options analysis should unambiguously confirm that the proposed solution is feasible and reasonable and that alternatives are analyzed and rejected as less effective.
Summary: the stakeholder analysis identifies the stakeholders and their needs and determines how best to address the needs in the context of the proposed problem-solution environment.
Summary: the decision packages confirm that the concept is reasonable and worth funding.
2. Concept Brief
- Project Statement. As the concept is approved and the necessary funds are allocated, now we need to create a stamen of the project. This document describes the following details:
- Background and strategic context
- Goals Statement
- Broad Scope. As the project is not planned thoroughly we can just talk about a broad scope statement. Later, at the planning stage we must develop a detailed scope statement. The broad scope statement includes:
- Assumptions and constraints
- High-level deliverables
- Time Estimation. It focuses on developing a preliminary schedule that defines time duration required to develop and implement the project and to produce the deliverables. It is the predecessor to the scheduling process which will be carried out at the planning stage.
- Cost Projection. Cost estimates are to be developed to determine the total cost of project development and implementation and to make a foundation for the budgeting process.
Summary: the project statement explains how the project is linked to the business needs and strategic context, what goals and objectives it will address, and how it will delivery the proposed solution.
Summary: the broad scope defines what is in and out of the project, what assumptions and constrains determine the project, what to delivery by the project, and what requirements are to be met.
Summary: the time estimation creating a timeline of the activities required to perform the project, implement the solution and address the problem, within the stated scope.
Summary: the cost projection focuses on estimating the total amount of expenses that are expected to occur to support the implementation of the project and production of the deliverables.
3. Project Organization
- Governance Structure. The structure of the roles and responsibilities along with functional duties and tasks defines what jobs the stakeholders are supposed to do and how those jobs are linked to each other. The governance structure is graphically represented as a project organizational chart.
- Performance Measures. A list of performance criteria along with the acceptance criteria are to be designed to determine how to measure project performance and how to define whether the deliverables are produced as desired.
Summary: the governance aims to clarify the roles and responsibilities of the stakeholders through developing a hierarchical-view chart that defines the team composition and by what people the project activities will be carried out.
Summary: The performance measures explain the project participants how to accept the deliverables and how to evaluate project performance.
4. Project Proposal
- Proposal. After the Concept is analyzed and explained and the Project Organization is charted, it is time to make a summary of the whole apprising process trough develop the Project Appraisal. This document aims to determine that the proposed project is worth pursuing.
- Approval and Signoff. The Project Appraisal template is to be submitted to the senior management for review and approval. The managers review the appraisal and in case there are any misunderstandings or gaps in the appraisal they can return the document back for revising. When all the revisions and corrections are done, the document is approved and signed off, and the project steps to the next phase – Planning.
Summary: The Project Appraisal is a formal document that summarizes all the details of the proposed project and aims to prepare the project for further planning and development.
Summary: the senior management team needs to approve the Project Appraisal and announce the formal signoff, which means the project is verified and proceeds to planning and development.