Project Analysis: Situation, Market, and Financial Analysis Report

This report, originating from Rift Valley University, comprehensively explores project analysis and appraisal. It begins by defining project analysis and its importance, distinguishing it from project evaluation. The report then details the elements of project analysis, including situation analysis (SWOT, 5Cs), market/demand analysis, technical analysis (location, transportation costs), and financial analysis (cost of project, means of financing, sales and production estimates, cost of production, working capital, profitability, and breakeven analysis). The report emphasizes the importance of financial analysis, detailing the calculation of Net Present Value (NPV) and Internal Rate of Return (IRR) as key decision criteria. The report provides examples and practical insights into each aspect, making it a valuable resource for students studying project management, business development, and related fields. The report aims to determine project viability and sustainability through various perspectives.

Rift Valley University
Project Identification
and Appraisal
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Chala Dechassa, Ph.D. in Management
and Development studies
[e-mail]

Next
Ex-ante Project Analysis
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Contents
 Project analysis Defined
 Situation Analysis
 Market/Demand Analysis
 Technical analysis
 Financial Analysis
 Socio-Economic Analysis
 Environmental Analysis and Environmental
Impact Assessment (EIA)
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Definition
 Project analysis refers to analyzing a project from various
perspectives so as to determine its viability and
sustainability. Project analysis
 Also usually referred as Project Appraisal, Not Project
evaluation!
 Determines the merit and acceptability in accordance
with established criteria;
 Checks a project whether it is feasible against the
situation on the ground that the objectives set remain
appropriate and that costs are reasonable.
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Elements of the project analysis
 Project analysis consists of:
 Situation analysis (SOWT), SPACE Analysis
 Market/demand analysis
 Socio-economic analysis
 Environmental analysis
 financial analysis
 Technical analysis
 Risk analysis
 Operational analysis
 Political legal environment
 Stakeholders analysis
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Situation analysis
 A systematic collection and evaluation of past and
present economical, political, social, and technological
data,
 aimed at: Identification of internal and external forces
that may influence the organization's performance and
choice of strategies, and
 Assessment of the organization's current and future
strengths, weaknesses, opportunities, and threats.
 The situation analysis consists of several methods of
analysis, such as:
 The 5Cs analysis and SWOT analysis.
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The 5 C analysis
 Company
– Goals and Objectives: An analysis on the mission of the
business, the industry of the business and the stated
goals required to achieve the mission.
– Position: An analysis on the Marketing strategy.
– Performance: An analysis on how effectively the
business is achieving their stated mission and goals.
– Product line: An analysis on the products
manufactured by the business and how successful it is
in the market.
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Cont’d
 Competitors: Identify, assess and predict the nature of
competitors.
 Customers: Needs and wants, market size and
purchasing power.
 Collaborators: Agencies, suppliers, distributors,
partnerships, etc.
 Climate or context: PESTLE ( Political, Economic, Social,
Technological, Legal, Environmental) factors.
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Situation analysis : SOWT Analysis
 SWOT Analysis :- SWOT is an acronym for
strengths, weaknesses, opportunities and
threats.
 It represents deliberate and systematic effort by
an organization to identify opportunities that can
be profitably exploited by it.

It requires identification of opportunities and
threats and knowing strength and weakness.
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Cont;d
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Market/Demand Analysis
 This step in project analysis aims to estimate the potential size of the
market for the product proposed to be manufactured (or service
planned to be offered) and to get an idea about the
 market share that is likely to be captured. Hence, the two broad
issues raised are:
 What is the likely aggregate demand for the product/ service?
 What will be the share of the market for the proposed
product/service? Answers to these two questions call for an in depth
study of various factors like:
 Patterns of consumption growth, Income and price elasticity of
demand,
 Composition of the market, and nature of competition, Availability of
substitutes
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The Purpose of Market/Demand
Analysis
 Market/demand analysis for new/improved products development
should answer the following questions:
 Who are the buyers?
 What is the total current demand for the product? How is demand
distributed geographically?
 What is the demand for the product segmented in di erent sizes?
 What price will the customers be willing to pay for the improved
product?
 How can potential customers be convinced about the superiority of
the new product?
 What price and warranty will ensure its acceptance?
 What channels of distribution are most suited for the product?
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