EU funds assistance can be evaluated as an important contribution to the development of Latvian economics. Successful EU funds utilization is one of the pre – requisites to the development of the country. One of the main steps to effective EU funds utilisation is effective project selection and evaluation mechanism. In previous EU funds programming period 2004 – 2006 ineffective project appraisal scheme that led to various problems was in force. Therefore there was a need for a new effective method and new evaluation scheme that was elaborated by author and is analysed in this paper. According to this scheme those projects having greater contribution to the development of Latvian economy and having higher value added are approved. The scheme allows having not restricted communication, project quality is provided and evaluation criteria correspond to the financing amount allocated to have easy and fast evaluation of small projects. This new evaluation scheme is the most suitable for Latvian economic conditions and is incorporated in legal documents.