Appraisal reports are also a very commonly used set of reports in business. Appraisal means to evaluate or judge. Project appraisal and performance appraisal are among the widely used appraisal reports in business.
Project appraisal reports relate to evaluation of projects whereas performance appraisal reports relate to evaluation of performance of a company, unit, team or person. Annual Performance Appraisal Reports (APARs) are in rampant use in business, especially for assessing and evaluating the performance of officers and managers.
Performance appraisal of staff working in business organizations is done at annual or such other periodical intervals. Based on the evaluation of performance, the persons concerned are allotted marks or grades.
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Quite often, the appraisal is done in relation to a predetermined evaluation matrix or scoring matrix. Such a scoring matrix, in turn, takes into account the key responsibility areas assigned to the person being appraised.
Preparing the performance appraisal reporting format would call for considerable skills. All the key areas relevant for performance evaluation and the weight ages to be assigned for each area should be decided in consultation with the concerned supervisory or management team.
The format will have to vary depending on the cadre of the staff, type of specialization, hierarchical level, and nature of administrative or operational duties and so on. It is worth noting here that the correct word to be used in this context is ‘appraisal’ and not ‘apprisal’.
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To appraise is to evaluate, whereas to apprise is to brief or inform. Good business communications are those who are aware of the difference in spelling and use the right word.
Project appraisal reports constitute a more comprehensive exercise. Projects are of a wide variety. They may be big or small, short term or long term, technical or non-technical, stand alone or turnkey and so on.
The progress in respect of each such project will have to be appraised or evaluated appropriately. Such project appraisals would be relevant for different purposes. The regulatory authorities need to appraise such projects to ensure regulatory compliances.
The top management team may have to appraise the project to take a view on allocating the required resources. Banks and financial institutions will have to appraise the project in detail to take a view on providing both long-term finance and working capital.
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Project appraisal of very large projects becomes a very elaborate exercise, and in most banks and financial institutions this exercise is undertaken by specialized project appraisal officers.
Apart from visiting the project site to know first hand the progress of the project, a detailed format is also prepared to make the appraisal systematic and comprehensive.
Let us now list out the details of information required for the project appraisal and for preparing a comprehensive project appraisal report:
1. Details about the company/business unit:
(a) Details of the shareholders
(b) A write-up on the group to which the company/business unit belongs and their activities
(c) Marketing network and the financial highlights for the last three years of the major concerns in the group
2. Background of the promoters/directors
(a) Detailed bio-data of each promoter/director
(b) Proposed shareholding pattern
(c) Details of companies promoted by them and their financial status
(d) Assets and network of promoters/directors
3. Organizational structure
(a) Existing and proposed organizational chart
(b) Detailed bio-data of the chief executive and other key functionaries
(c) Management information system
(d) Existing and proposed manpower and requirement of specialized skills
4. Technology/collaboration
(a) A note on the status of technology and its strengths and shortcomings
(b) Arrangements for collaboration, if any
(c) Minimum economic size of the project
5. Product and marketing
(a) Details of the product, concept, and target market segments and applicable quality standards
(b) Installed capacity, licenced capacity and details of capacity utilization
(c) Demand and supply factors, futuristic estimates and assumptions made
(d) Proposed marketing strategy
(e) Pricing policy of the company/business
6. Process
(a) Description of the process involved
(b) Quality control measures
7. Raw materials and consumables
(a) Details of raw materials, consumables or inputs required and their sourcing
(b) Demand, supply and price details
(c) Contracts, agreements and such other arrangements in place
8. Utilities
(a) Need for different types of utilities for running the project
(b) A brief note on requirement and availability of power, water, fuel, etc.
9. Technical consultants and architects
(a) Arrangements in place to get the services of technical consultants
(b) Scope of work for the consultants/architects
10. Manpower planning and development
(a) Availability of adequate professional/skilled manpower
(b) Recruitment policy and programme
(c) Job description, training facilities, etc.
11. Project implementation team
(a) A team of professionals to be associated
(b) Arrangements for awarding various contracts
(c) Project implementation schedule
12. Cost of the project
(a) Break-up of the project cost
(b) Vendor analysis
(c) Cost incurred and status of implementation
13. Location
(a) Proposed location and site
(b) Advantages and shortcomings of the location
(c) Location map and boundaries
(d) Likely impact of natural calamities
14. Future performance
(a) Estimate of profitability for the next few years
(b) Projected balance sheet
(c) Strengths, weaknesses, opportunities and threats for the project
15. Government clearances
(a) Requisite governmental clearances
(b) Specific statutory approvals, etc.
We have listed above various types of details that would be required for preparing appraisal reports of large projects. As is evident, any such appraisal is a very detailed exercise.
Given the very fact that such projects involve huge outlays and investment of land, machinery, capital, bank funds, manpower and other resources, appraisal becomes a very specialized exercise involving professional and experts at various levels.
Projects are of a wide variety—manufacturing, service, infrastructure, educational institutions, hospital complexes, commercial buildings, export units and so on. Each one of them has its own challenges and dimensions, and the appraisal report should duly factor them.
Some of the common terms used in the context of project appraisal are ‘technical feasibility’ and ‘economic viability’. Similarly, there may be other technical words and jargon appropriate for each project, and the report writer should develop familiarity with all such concepts before undertaking the appraisal and submitting an appraisal report.