A project appraisal is an important part of any project and should be taken seriously because a lot rests on it.
The effects of a project appraisal are long reaching and have very definite long term effects because of the capital investment that is always required in any project.Making an effective project appraisal is no easy task because there are often unforeseen circumstances (though a good project manager should be able to cover as many eventualities as possible). It is also not easy to measure all costs and the potential benefits of a project.
This high degree of uncertainty could undermine the confidence of a project so it is vital that the appraisal is as thorough as it possibly can be.It is also important when it comes to a project appraisal to be realistic about the amount of capital that is going to be tied up, and the length of time that the project is going to take. If this is not done, it is possible that the business may suffer real hardship because it was unprepared for the financial constraints placed upon it.