– Deals with factors affecting the earning capacity of the project if the program doesn’t go as per the expectation.
Factors affecting the sensitivity Analysis of project:
I) Change in Market price of input and output.
ii) Delay in implementation.
Iii) Cost of overrun.
iv) Yield of the project.
Merits of sensitivity Analysis :
a) Shows vulnerability of project.
b) Indicates where further work may be done.
Demerits of Sensitivity Analysis:
a) One variable is changed at a time.
b) Interpretation of results is subjective.
Differences between Feasibility Analysis and sensitivity Analysis ?
|
Feasibility Analysis |
Sensitivity Analysis |
|
a) Done before implementation of program |
a) Done during project implementation |
|
b) Doesn’t depend on variable. |
b) Depends on variable for analysis. |
|
c) Done to make a program successful / accept or reject program. |
c) Done to reduce the risk factor as much as possible. |
