The basis of economic analysis is assessment. The economic evaluation of projects deals with the estimation of costs, cash flows and profitability. There are two basic approaches to cost estimation, “bottom-up” design and “top-down” design. There are several cost estimation methods, and this paper explains the factor method used for preliminary cost estimates of process plants. Cash flows include project revenues and costs, and are graphically presented with a cash flow diagram. Economic estimates must include inflation and depreciation. Inflation represents a general increase in the price of goods and services, and has various sources, such as money supply and exchange rates. Depreciation is defined as a decrease in the value of an asset due to age, wear and tear or obsolescence. Depreciation methods are straight line model, declining balance model and MACRS method. The projected cumulative cash flow curve for a project over its lifetime is the basis for further evaluation. The best profitability evaluation methods of alternatives are present worth, discounted cash flow rate of return and discounted payback period. Each estimation has its own degree of uncertainty, so sensitivity analysis and risk analysis are used to determine their impact on project profitability. The goal of carrying out these analysis is to make more reliable decisions. Sensitivity analysis is used to determine the critical variables that need to be given the most attention. The most commonly used techniques in sensitivity analysis are the Tornado diagram and the spider diagram. Risk evaluation includes probability analysis and risk analysis itself. Risk analysis can be performed by Monte Carlo simulation in which each variable is represented by a probability distribution model. Monte Carlo simulation identifies those indicators that contribute the most to project risk.