Why businesses, organizations and individuals should appraise investment projects

No matter how carefully prepared and analyzed the project still shows the analysts subjectivity and project formulation, the shortcomings and deviations that exist in the project process are natural. In order to confirm more firmly the rationality and effectiveness, feasibility of the project as well as the investment decision to implement the project, it is necessary to review and re-check independently from the standard process. project drafting, or in other words, appraisal of the project. Project appraisal helps investors overcome the subjectivity of the drafters and helps detect and supplement the shortcomings in each analysis content of the project. Project appraisal is a part of investment management, which provides a solid basis for effective investment execution.

The project plays a very important role for investors, managers and directly impacts the socio-economic development process. Without projects, the economy will find it difficult to grasp development opportunities. The works of mankind in the world are always proofs of the importance of the project. The project is an important basis for deciding to invest capital, building an investment plan and monitoring the investment implementation process. The project is the basis for financial institutions to make funding decisions, and state authorities to approve and grant investment licenses. The project is also considered as an important tool in the management of capital, materials and labor in the investment process. Therefore, understanding the projects characteristics is one of the decisive factors for the success of the project.

Appraisal of investment projects is a part of management to ensure effective investment.

What is the purpose of an investment project appraisal?

• Evaluate the reasonableness of the project expressed in the effectiveness and feasibility of each content and calculation method of the project
• Evaluate the projects effectiveness in terms of both financial and socio-economic aspects
• Evaluate the feasibility of the project: this is a very important purpose. The feasibility shows in the consideration of the implementation organization plan, the legal environment.

What is the meaning of investment project appraisal?

• A project will be successful if its features are properly identified and evaluated by project managers. Therefore, investment project appraisal is very meaningful in businesses
• Helping investors choose the best investment plan
• Helping state management agencies evaluate the suitability of the project to the general development planning of the industry and country in terms of goals, scale and efficiency.
• Identify the advantages and disadvantages of the project
• Help donors make the right decision to fund the project or not
• Clearly defining the legal status of the parties to the investment.