Fulbright Economics Teaching Program, 2004-2005 The Appraisal of Development Expenditures -
Project appraisal and risk management for the
public sector
Cao Hao Thi 1
PROJECT APPRAISAL
AND
RISK MANAGEMENT
FOR THE PUBLIC SECTOR
CAO HAO THI
I. THE ROLE OF PROJECT APPRAISAL
z
To stop bad projects
z
To prevent good projects from being
destroyed
z
To determine if components of project are
consistent
z
To assess the sources and magnitudes of the
risks
z
To determine how to reduce risks and
efficiently share risks
Fulbright Economics Teaching Program, 2004-2005 The Appraisal of Development Expenditures -
Project appraisal and risk management for the
public sector
Cao Hao Thi 2
II. STAGES IN PROJECT APPRAISAL
AND APPROVAL
z

Focus is on improving accuracy of the key
Variables
z
Alternatives for reducing risk are examined in
detail
z
Some primary data may be needed
KEY QUESTION
–
Is project financially attractive to all
interested parties in activity?
–
What is level of uncertainty of key variables?
–
Can final decision for approval be taken?
III. MODULES OF PRE-FEASIBILITY AND
FEASIBILITY STUDIES
Why break study into Modules?
BUILDING BLOCKS
a. Marketing or demand module
b. Technical or engineering module
c. Management and manpower module
analysis
d. Financial/budget module
e. Economic module
f. Social module
Fulbright Economics Teaching Program, 2004-2005 The Appraisal of Development Expenditures -
Project appraisal and risk management for the
public sector
Cao Hao Thi 4

Study of sources of demand, nature of market,
prices and quantities
z
Major distinction between domestic versus
internationally traded goods and services
z
For internationally traded goods secondary
information most important
z
For domestic market, primary research more
important