Undertaking the Preliminary Assessment
A number of basic indicators are used to provide a preliminary assessment of the project profile, and these are described and discussed in the next section. Together, these measures provide a very rough and ready guide to the viability of the eventual project. Except in the case of very small or simple projects, they can not tell us whether or not a project is likely to be successful; too many details still unsettled, and too many factors left aside, for that to be possible. However, they do provide an indication as to whether it is worth dedicating the time and resources necessary to move from the profile to the full project stage.
Given the simplifications employed, if a project appears infeasible at the profile stage, it is unlikely to prove worthwhile later on. Thus projects that fail the simple tests applied at this level should be rethought, and either abandoned or restructured to respond to the apparent weaknesses.
The specific indicators used to assess a project profile vary according to whether the project is income generating or not; i.e. whether the project is justified on the basis of its profitability, or on its social, environmental or other non-monetary impact. For projects targeting profitability, costs must be less than income, and the net income must be enough to repay the initial investment within a reasonable period of time, as well as to fund the eventual replacement of the machinery and equipment employed. For non-income generating projects, the aim is to keep investment and operating costs per beneficiary within acceptable levels, and to identify sources of labour and money that will be needed later on for operating and maintaining the investment (school, road, etc.).