Project evaluation, like all issues in allocation economics, involves determination of the ways in which the most efficient use can be made of scarce resources. in its simplest form, the issue is how to determine the composition of the budget of a given size or how to allocate a total of given funds among alternative projects. there is also the more complex question of the determining the appropriate size of the budget. Further complications arise when projects are not divisible but in lumpy form. In taking a first look at these various situations, we assume that benefits and costs are known. the indentification and measurement of costs and and benefits are considered in later sections of this chapter.