Sensitivity  Analysis of a project

– Deals with factors affecting the earning capacity of the project if the program doesn’t go as per the expectation.

Factors affecting the sensitivity Analysis of project:

I) Change in Market price of input and output.

ii) Delay in implementation.

Iii) Cost of overrun.

iv) Yield of the project.

Merits of sensitivity Analysis :

a) Shows vulnerability of project.

b) Indicates where further work may be done.

Demerits of Sensitivity Analysis:

a) One variable is changed at a time.

b) Interpretation of results is subjective.