EDP Notes

It involves a number of elements, they are summarized as below:
Feasibility Analysis: It involves an examination of the project idea in the light of internal
and external constraints. Internal constraints arise because of limitations of the project
sponsoring body and external constraints arise due to the characteristic of the environment.
If on feasibility analysis, the project is found feasible, the same is put to further analysis.
Techno-Economic Analysis: It is mainly concerned with the identification of the project
demand potential and selection of the optimal technology suitable for achieving the project
objectives. This study includes:
a)Estimation Of Demand Or Market Potential: The entrepreneur has to estimate
the expected share of the sale in the market, intensity of competition, mobility of products to
other places etc., The data collected from various sources are first complied, tested and
tabulated in a form suitable for interpretation.
b)Selection Of Technology: It refers to that combination of controlled variables
which will ensure the achievement of the project objectives with minimum expenditure of
resources.
Project Design and Network Analysis: A project comprises certain sequential activities
which are interrelated. These activities can be shown in the form of a diagram, which is
called network diagram. Project design is concerned with the development of a detailed
work plan of the project and its time estimates. When a network is designed, its analysis is
carried out to identify the optimal course of action so as to complete the project with the
minimum of time and cost, subject to the available resources. Important network analysis
techniques are PERT (Programme Evaluation Review Technique) and CPM (Critical Path
Method).
Input Analysis: Input analysis is primarily concerned with the identification, qualification
and evaluation of project inputs. The objective of input analysis is to identify nature of
resources needed to estimate the quality of the required resources and to ensure that there is
continuous and adequate supply of inputs. Input analysis is the basis for financial analysis
and cost benefit analysis.
Financial Analysis: It involves estimates about the project costs and revenues and the funds
required for the project. It seeks to find out whether the project will generate income to
realize the ultimate objective for which it is undertaken.

Social Cost Benefit Analysis: Under cost benefit analysis the investment projects are
evaluated from the point of view of the society as a whole. The cost benefit analysis aims at
analyzing the real contribution of an investment project towards welfare of the country as a
whole. It implies the enumeration and evaluation of all the relevant costs and benefits. It can
be applied to both private and public investments.
Pre-Investment Appraisal: The proposal gets the final and formal shape. The purpose of
pre-investment appraisal is to enable the concerned authorities to take an investment
decision about the project i.e. to accept or reject.