Project Appraisal and Impact Analysis

Public investment typically occurs through the selection, design and implementation of specific projects to achieve the goals of policy. Why are some project proposals accepted and rejected, and how? What are the considerations in appraisal other than the economic rate of return? How are questions of environmental impact, welfare distribution and risk taken into account?

Aims & Objectives

The purpose of this course is to give a theoretical and applied background to investment finance, the project cycle from project identification to project and programme appraisal techniques, including financial and economic analysis, impact assessment and risk analysis. It should enable you to deal with such issues as the following:

How should a private company choose whether to invest in a high-technology computer chip factory in Singapore or to locate the factory in Shanghai, China?

A new airport is proposed for development in Southern England: given that three sites are potentially available, which site should be chosen on economic, environmental and social grounds?

Should development finance be targeted on large medical facilities or decentralised clinics with a policy based on preventative medicine?

Should the Government of Tanzania support investment in a large fertiliser plant with foreign capital or support the use of local small-scale fertiliser production?

Are EU fishing agreements in the best economic and financial interests of countries such as Senegal, Mauritania and Mozambique, which have signed such agreements?

Should the state invest heavily in education provision at primary school level or allow entry to private sector school operators?

Resources

Students receive a looseleaf binder containing eight ‘course units’; these texts are carefully structured to provide the main teaching and are equivalent to traditional course lectures, defining and exploring the main concepts and issues, locating these within current debate and introducing and linking the further assigned readings. Two assignments (to be marked by your CeFiMS tutors), a data CD and a specimen examination paper are also included within the student pack, along with the following:

Textbooks:

P. Belli, J.R. Anderson, H.N. Barnum, J.A. Dixon and Jee-Peng Tan, Economic Analysis of Investment Operations, First Published 2001, World Bank Institute, ISBN0821348507.

D. Potts, Project Planning and Analysis for Development, First Published 2002, Lynne Reinner Publishers, ISBN1555876560.

H. Campbell and R. Brown, Benefit-Cost Analysis: Financial and Economic Appraisal Using Spreadsheets, 2003, Cambridge University Press, ISBN0521528984.

Steve Lumby and Chris Jones, Corporate Finance, Seventh edition, 2003, Thomson Business Press, ISBN1861522576.

Readings:

A compilation of further readings: recently published articles or seminal writings which augment and illustrate the main text. The Online Study Centre also has supplementary readings and useful links to academic and other resources for this course.

Course Timetable:

This shows the linkage between the various components of the course and indicates the schedule for reading the texts, submitting assignments, etc.

Course Content

Unit 1 Project Evaluation, an Introduction

Project and Programme Evaluation: an Overview
The Project Cycle
Project Planning Techniques
SWOT Analysis
Problem Tree Analysis
Stakeholder Analysis
Logical Framework Analysis
Project Quality Factors and Basic Needs
Measurement of Project Performance
The Application of Spreadsheet Modelling

Unit 2 Investment Appraisal, Introduction and Techniques

The Concept of Investment and Operational Costs
Project Finance, a Summary Treatment
Private Sector Appraisal Techniques
Public Sector Appraisal Techniques
Appraisal in other Sectors (NGOs etc)

Unit 3 Economic Analysis

Social Cost – Benefit Analysis
Cost Effectiveness Analysis
Techniques of Social Impact Analysis
Case Studies

Unit 4 Impact Assessment

Economic Impact Analysis
Social Impact Analysis
Environmental Impact Analysis
Social Impact Analysis
Contingent valuation, stated preference, revealed preference, effects of production, preventative expenditure, human capital

Unit 5 Project and Programme Appraisal, Applications in Specific Sectors

Natural resources and Environment
Mining, Agriculture, Forestry and Fisheries
Manufacturing and Processing
Transport and Infrastructure
Energy Production and Distribution
Telecommunications
Health, Education and Social Services
Other sectors
Summary and Conclusions

Unit 6 Simulation and Modelling Techniques

Spreadsheet modelling
Linear programming
Other techniques: probabilistic, inventory, network

Unit 7 Political Economy, Welfare and Poverty

Political Economy Aspects of Programmes and Projects
Welfare Aspects of Projects
Poverty Reduction and Alleviation – do Projects and Programmes reduce Poverty?

Unit 8 Risk Analysis in Project Evaluation and Appraisal

Taxonomy of Risks
Techniques for Risk Analysis: sensitivity, probabilistic, Monte Carlo

Tuition & Assessment

There are two Assignments which will be marked by your tutor. The assignments are for submission after Units 4 and 8, that is, in weeks 4 and 8 of the study calendar.

To assist with revision and preparation for the final examination, review questions for each unit and a specimen examination paper are contained in section 10 of the course file. The assignments count for 30% of the final mark and the examination 70%. Assignments are submitted and feedback given online. In addition, queries and problems can be answered through the Online Study Centre.

Individual Professional Courses – IPC

Project Appraisal and Impact Analysis [PPM204]

Introduction