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Financial Appraisal - Essay Example

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These three financial aspects must be that, in order to run or execute them, it necessitates substantial inputs in terms of costs and they must entail a wide range of benefits upon their execution (Kirkpatrick & Weiss 2006). As such, the costs and the subsequent benefits must be subjugated in terms of money or they should be such that, their worth can be estimated considering the monetary terms. Further, it can be said as a systematic process by which alternative utilization of wide variety of resources are examined with a great focus on assessment of factors, which are likely to influence a decision (Gupta 2011). They include; benefits, affordability, goals, risks, costs, funding, needs and options among others. In some cases, it is used to mean the same thing as economic appraisal. It entails methodologies, which are put in place in an effort to assist in establishing and defining problems and thereby finding ways to solve them. As such, these solutions should be those that aim at offering the best value for money (Carroll 2006). This is ideal when it comes to matters concerning public expenditure. In this context, it is mostly used as a catalyst for planning as well as public investment approval relating to the three notions of financial aspects. This paper aims at establishing a good financial appraisal that best gives a good value for money taking into account, projects, policies as well as programs (Lock 2007). Financial appraisal tools and methodologies A good financial appraisal is the one that incorporates the use of various financial appraisals tools. As such, these tools are used in different stages involved in the process of development and by differentiated individuals who have a stake in the business (Lefley & Ryan 2011). For instance, there are situations where, a financial appraisal tools developer or applicant tends to appraise the site using such approach as residual land. In such a case, the costs, value, as well as returns maybe used to establish the potential value of the land, which they are ready to give out in exchange with the land but must be subjected to a negotiation. In this example, there are assumptions made and as such, before they are applied, it must be ensured that they are tested. This test is usually done against a framework associated with planning as well as the extant policy (Dayananda 2009). The developer, in most cases, is likely to have come up with appraisal tools that are more of an in-house nature. This is important as the in-house appraisal tools, aided by commercial accounting software, they do reflect the processes related to accounting and of which are internal (Nagarajan 2004). Moreover, there exist other financial appraisal models used in the public sector. These models are exclusively designed to suit a particular use usually in the process of planning. As such, they are used primarily in situations in which the impact of finance involving the affordable housing aimed at assessing the contribution of grant as well as additionality, if any, that affordable housing may achieve, are to be considered (Tosh & Rayburn 2003). Both the Affordable Housing Development Control Toolkit as well as Development appraisal tools are spreadsheet based financial appraisal models and as such, they are effective if utilized to see these functions through. Again, the HCA is also efficient as it produces an appraisal model commonly known as Area Wide Viability. This kind of an appraisal model has the capability to test the viability of alternative sites that differ in terms of their characteristics (Morden 2007). There are other projects that involve expenditure considering the public sector. Considering these projects and expenditures, there is a great deal of likelihood that there will be ...Show more


A financial appraisal is a term commonly used in finance and accounting and as such, it refers to a method of a financial decision mostly applied in such economic aspects as policies, projects or programs. …
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Financial Appraisal essay example
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