Question

Explain the effect of non-financial/non-quantitative factors on project appraisal by using relevant examples.

Answer 1

The non-financial /non-quantitative factors on project appraisal and their effect on the projects success are:

1) Managerial Capabilities: The skill and experience of the management should be non-financial factor that could affect the success of a project. For example, the provision of building new skills and using the experiences of the management for the project.

2) Legislation requirements: The non-financial factors includes the requirements of the laws of the land towards the environmental impact of the project and social upliftment through the project. The safety and health machine would not require any investment criteria.

3) Future Challenges and threats : The future challenges and threats are the anticipating point which will affect the project and can decide the performance of the project. For example, protecting the assets against the undue competition and race to win.

4) Relationship with Clients: The relationship with clients can affect a project because certain projects are taken-up to keep with the relationship with the suppliers and clients, such as small projects of the Big Clients are ought to be handled to have bigger profitable projects.

5) Industry Standards: The projects success is also dependent on Industry standards which says about the percentage of success of the projects. For example, if industry has a cent per cent success of the projects undertaken, then the forthcoming project is also expected to be a success.

6) Employees morale : The employees morale to extract success out of each and every project would be a affecting point to pick and make it a success. For example, any project can be a successful project if the employees do the hardwork for the success of the project and also said there is no alternative to hardwork.

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