Why must evaluate the investment project?

Why do we have to appraise investment projects? No matter how carefully prepared and analyzed the projector's subjectivity is, the shortcomings and defects that exist in the course of the project are obvious. In order to assure a more reliable and reasonable level of feasibility, the feasibility of the project as well as the investment decision to implement the project, it is necessary to review and re-examine independently the standard process. project preparation, or in other words, project evaluation. Project appraisal helps the owner to overcome the subjectivity of the drafters and helps to detect and correct deficiencies in each analysis of the project. Project appraisal is part of investment management, which provides a solid basis for effective investment.

The project plays a very important role for investors and managers and has a direct impact on the socio-economic development. Without a project, the economy would be difficult to grasp the opportunity for development. The centuries of mankind in the world are always evidence of the importance of the project. The project is an important basis to decide on investing, developing investment plans and monitoring the implementation of investment. The project is the basis for the financial institution to make the financing decision, the state functional agencies to approve and issue the investment license. The project is also considered an important tool in the management of capital, materials and labor in the process of investment. Therefore, understanding the characteristics of the project is one of the factors that determine the success of the project.

Appraisal of an investment project is a part of management work aimed at ensuring effective investment.

Purpose of investment project appraisal:

Evaluation of the project's rationality manifests itself in the effectiveness and feasibility of each project content and methodology
Assess the effectiveness of the project on two aspects: financial and socio-economic
Assess the feasibility of the project: this is a very important purpose. Feasibility is reflected in the review of implementation plans, legal environment.
Significance of the evaluation of investment projects:

A project will be successful if the characteristics of the project are properly identified and evaluated by project managers. Therefore, the evaluation of investment projects is very significant in enterprises

Help the investor choose the best investment plan

Assisting state management agencies in evaluating the project's compatibility with the national and regional development plannings in terms of objectives, scale and efficiency.

Determining the benefits and harms of the project

Help donors make the right decision to fund the project

To clearly define the legal person status of the involved parties.

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