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Unit 4: Project Analysis and Selection

5. Product Mix: The technology chosen must be judged in terms of the total product mix Notes
generated by it, including saleable by products.
6. Latest Developments: The technology adopted must be based on the latest developments
in order to ensure that the likelihood of technological obsolescence in the near future, at
least, is minimised.

7. Ease of Absorption: The ease with which a particular technology can be absorbed can
influence the choice of technology. Sometimes a high-level technology may be beyond
the absorptive capacity of a developing country which may lack trained personnel to
handle that technology.

4.6.2 Appropriateness of Technology

Appropriate technology refers to those methods of production which are suitable to local
economic, social, and cultural conditions. In recent years, the debate about appropriate technology
has been sparked off mainly by Schumacher and others. The advocates of appropriate technology
urge that the technology should be evaluated in terms of the following questions:
1. Whether the technology utilises local raw materials?
2. Whether the technology utilises local man power?
3. Whether the goods and services produced cater to the basic needs?

4. Whether the technology protects ecological balance?
5. Whether the technology is harmonious with social and cultural conditions?

4.6.3 Technical Arrangements

Satisfactory arrangements must be made to obtain the technical know how needed for the
proposed manufacturing process. When collaboration is sought, inter alia, the following aspects
of the agreement must be worked out in detail:
1. The nature of support to be provided by the collaborators during the designing of the
project, selection and procurement of equipment, installation and erection of the plant,
operation and maintenance of the plant, and training of the project personnel.
2. Process and performance guarantees in terms of plant capacity, product quality, and
consumption of raw materials and utilities.

3. The price of technology in terms of one time licensing fee and periodic royalty fee.
4. The continuing benefit of research and development work being done by the collaborator.
5. The period of the collaboration agreement.
6. The assistance to be provided and the restrictions to be imposed by the collaborator with
respect to exports.
7. The level of equity participation and the manner of sharing management control, especially
if the technical collaboration is backed by financial collaboration.
8. Assignment of the agreement by either side in case of change of ownership.
9. Termination of the agreement or other remedies when either party fails to meet its
obligation.
10. Approach to be adopted in force majeure situations.

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