Once the project is identified there begins the process of progressively more detailed preparation and analysis of project plan.

– It is done to determine how remunerative the proposed investment would be and what would be its impact.

– The different aspect of project preparation are :-

1. Technical aspect :-

– Deal with Inputs and outputs of real goods and services.

– Deal with location , size and process.

– Done continually throughout the project.

– Deals with technical know how of beneficiaries.

Purpose :-

– To ensure whether the project is technically feasible.

– Whether the inputs for carrying out the project are available or not.

2. Institutional/ Organizational / Managerial aspect :-

– Deals with organizational strength and weaknesses of the project.

– Whether Organizational structure of project is within framework of government policy.

– Whether the Authority and responsibility are Properly linked ?

Things of concern

a) Enhance skill by tour and training

b) Staff recruitment if needed.

3. Social Aspect :-

– Whether the project is socially acceptable.

– Doesn’t impose social implications or adverse effects.

– Focus on disadvantaged people , poverty alleviation  and labor intensive instead of capital intensive.

4. Commercial Aspect :-

– Deals with marketing and supply of needs of project.

– Arrangement of the marketing of the output Produced.

Output side

a) Provision for marketing of the good produced at reasonable price.

b) Arrangement of transportation for domestic and international export.

Input side

a) Availability of fertilizers , seed , pesticides , etc. at reasonable price.

b) Market is so big such that it fulfills the need of supplies.

c) Price and subsidy of government.

5. Financial Aspect :-

– Analyses repayment of loan by project.

– Whether financially viable.

– Whether farmer will need loan to finance on-farm invetsment.

6. Economic Aspect :-

– How project affects society as a whole not individually.

– Focus on social cost and benefits of project.

Shadow price ??

– It is the opportunity cost and is difficult to calculate.

– Economic price of the projects that has no market price.

– Deals with impact of project on price of the inputs.

Differences between Economic and Financial Aspect ?

7. Environmental Aspect :-

– Must not produce any environmental / ecological implications.

– Cost of restoration of damage is taken into account.