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p. 12 of 14 BACK | NEXT Introduction Part I: Scope of Project Economic Analysis Part II: The 10 Areas of Analysis 1. Assess Macroeconomic Context 2. Assess Sector Context 3. Assess Demand 4. Identify Economic Rationale 5. Identify Project Alternatives 6. Identify and Compare Benefits and Costs 7. Assess Financial and Institutional Sustainability 8. Undertake Distribution Analysis 9. Undertake Sensitivity and Risk Analysis 10. Establish a Project Performance Monitoring System (PPMS) Part III: Areas of Analysis in ADB's Project Processing Cycle

Key Areas of Economic Analysis of Projects : Part II: The 10 Areas of Analysis

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Undertake Sensitivity and Risk Analyses

• Identify the plausible range of variability for key parameters or assumptions.
• Estimate the switching value for each parameter, and compare to the plausible range.
• Use the results to identify the key parameters that affect the financial and economic performance of the project.
• Propose and explain measures for monitoring each key parameter.
• Assess and explain the institutional risks, such as capacity limitations.
• Specify a probability distribution over the plausible range of each key parameter, and explain the basis for the distribution.
• Conduct quantitative risk analysis for key parameters. Use results to identify major risks to the economic basis of the project.
• Propose and explain measures for managing or reducing the project’s major risks.

Back 8. Undertake Distribution Analysis	Next 10. Establish a Project Performance Monitoring System (PPMS)