Tuesday, December 18, 2007

Project formulation and Appraisal

In my previous post I dealt with project selection process. My discussion of selection of projects presupposes availability of detailed project reports (DPRs) in respect of all the projects in the zone of consideration. I do not want to elaborate the process of preparing detailed project report here unless somebody really asks for it. DPR is a document that communicates all the details about the project under consideration, like project objectives, technical aspects, commercial aspects, financial aspects, economic aspects, possible risks, feasibility analysis, so on. However, I would like to direct you to two publication of Food and Agricultural Organisation (FAO). First one is a field guide for project design and implementation- with reference to project on women in community forestry. This guide will surely help one in designing projects effectively. See the details and the link below.

A field guide for project design and implementation - Women in community forestry
link: http://www.fao.org/docrep/t8820e/t8820e00.htm
Reprinted, 1991

The other one is Aquaculture project formulation authored by David Insull Senior, Fishery Planning Officer, FAO Fishery Policy and Planning Division, andColin E. Nash, Programme Leader, UNDP/FAO Aquaculture Development and Coordination Programme. This is available online at: http://www.fao.org/docrep/003/T0403E/T0403E00.HTM

This publication details the entire project cycle in aquaculture projects. The book is in two parts. First part covers introduction to projects and second part deals with project identification, preparation and appraisal.

Project formulation

(For detailed guidelines see FAO “Guide for Training in the Formulation of Agricultural and Rural Investment Projects”)

The Six Phases of Project Formulation
The three stages of the project cycle are Identification,Preparation and Appraisal. These can be further broken into six phases as below, which may have some overlaps.

Phase I:Preparatory Organization
Phase II: Reconnaissance and Preliminary Project Design
Phase III: Project Design
Phase IV: Analysis of Expected Project Results
Phase V: Project Documentation and Submission
Phase VI: Project Negotiation

PHASE I: Preparation for Project Formulation
Step 1 -Project inception
Step 2 - preparation of a formulation workplan.

The output is the programme of work for project formulation.

PHASE II: Reconnaissance and Preliminary Project Design
Step 3 - analysis/diagnosis of the situation from an overall perspective;
Step 4 - analysis/diagnosis of the situation from the perspective of the main interest groups involved;
Step 5 - assessing the future without the project
Step 6 - outline specification of a possible project.

The output of this phase is the preliminary design of a project, including identification of its main features, such as location, type of participants, main activities, size, timing, organizational structure, and management system. It may be called a project reconnaissance and preliminary design report and also called a project prefeasibility study.

PHASE III: Project Design
Step 7 - detailed technical and socio-economic investigations,
Step 8 - more precise definition of project objectives, targets, and design criteria,
Step 9 - design of individual project components,
Step 10 - design of project organization, structure, and management arrangements, and
Step 11 - project cost and revenues estimation, and first financing proposal.

The output of the phase is a full description and costing of the project, together with a proposed financing plan.

PHASE IV: Analysis of Expected Results

Step 12 - financial analysis,
Step 13 - economic analysis,
Step 14 - social analysis, and
Step 15 - environmental impact analysis.

The output of the phase is the determination of effects and impacts of the project.

PHASE V: Project Documentation and Submission
Step 16 - project documentation and submission.

The output of the phase is the project document.

PHASE VI: Negotiating the Project
Step 17 - project appraisal and negotiation.

The output is a project fully ready for implementation.

Project appraisal:
As we can see above, appraisal is the last step in the project cycle which involves negotiation.

The aims of appraisal are to:

1. evaluate the financial, economic, and social objectives of the project;
2. verify the procedures of the project formulation team;
3. recommend the conditions which will ensure that the project objectives are met; and
4. ensure that the proposed grant/loan/expenditure is in accordance with the policy of the financing institution.

Project appraisal is a process of verification of the situation in the field and a scrutiny of the report. The form of appraisal will vary according to the type of project. For production-oriented projects it will normally include the following aspects:
1. technical, for example, engineering design and environmental matters;
2. financial, for example, requirements for funds, the financial situation of the implementing agency, and of project beneficiaries when appropriate;
3. commercial, for example, procurement and marketing arrangements;
4. social, for example, sociological factors and expected impact of the project on certain groups (such as ethnic minorities and women);
5. institutional, for example, organization and management arrangements, the requirement for arrangements of technical assistance, project monitoring and evaluation;
6. economic, for example, project costs to the national economy, and the size and distribution of benefits.

The format and content of any appraisal report changes with the agency, bank, or corporation concerned, and is their internal reference document. Thus, its reflects their views, and not those of the project formulation team. It is on the basis of this report that the project is formally approved. It is also the reference document for the implementation agreement and subsequent evaluation made.

Here I give a link to WORLD Bank's appraisal report for State Highway project in Andhra Pradesh. You may download the appraisal report of the Bank in pdf format. The report gives all the analysis the Bank made based on the project report submitted to them. The report is an internal document prepared to assess the feasibility before approval.

The report is organised into 5 blocks:

BLOCK 1: Project Description

Covers Project Objectives, Project Components , Benefits and Target Population and Institutional and Implementation Arrangements

BLOCK 2: Project Rationale
Country Assistance Strategy Objectives Supported by the Project, Main Sector Issues and Government Strategy, Sector Issues Addressed by the Project and Strategic Choices, Project Alternatives Considered and Reasons for Rejection, Major Related Projects Financed by the Bank, Lessons Learned and Reflected in the Project Design, Indications of Borrower Commitment and Ownership, Value Added of Bank Support

BLOCK 3: Summary of Project Assessments
Economic Assessment, Financial Assessment, Technical Assessment, Institutional Assessment, Social Assessment, Environmental Assessment, Participatory Approach, Sustainability,
Critical Risks, Possible Controversial Aspects

BLOCK 4: Main Loan Conditions

Effectiveness Conditions, Others

BLOCK 5: Compliance with Bank Policies

ALso contains annexures that tells the top decision making body about the Bank's lending programme ongoing in the country in question and its experience thereof, country profile, etc.

Tuesday, November 27, 2007

project selection basics

Today I came across one website http://www.ittoolkit.com/ which contains useful articles on project management, general management topics and IT operations articles and so on.

I discuss the project selection process here in the powerpoint presentation prepared by me based on the material iven on this site.

Besides, project management articles cover the following topics: Interested readers may explore the links.
Project Planning Strategies
Project Scheduling: Backwards and Forward Planning
Project Success: Found in the Eye of the Beholder
Testing Project Deliverables: From Concept to Production
Managing the Project Selection Process
Get Your Project on the Fast Track
Outsourcing Project Work: Choice or Necessity?
The Project Queue: Keeping Customers Informed and Motivated
Smooth Transitions: Planning Project Closure
Concepts and Principles (The Project-Speak Series)
Assumptions and Constraints
Critical Path
Document Management
Lessons Learned
Quality Management
Project Management Standards
Project Office
Project Planning Definitions
Project Steering Committees
Project Sizing
Requests for Proposals
Resource Management Glossary
Status Reporting
Work Breakdown Structure
Risks, Issues and Change Control
Risk Management Series Part 1: Identifying Risks
Risk Management Series Part 2: Controlling Risks
Risk Management Series Part 3: Practices and Procedures
Project Closure: Graceful Exits from Troubled Projects
Issues Management: From Onset to Resolution
Control Rogue Projects in Four Easy Steps
Controlling Chaos: Managing Change Requests
Finances and Procurement
Calculating the Costs of Quality
Managing the Proposal Process with the RFP
Estimating and Tracking Project Costs
Staffing and Resource Management
Assigning Project Roles and Responsibilities
Evaluating Project Team Performance
Creating Project Job Descriptions
Delegate: It's Easier Than You Think
Is Your Project Team Ready?
Organizing Successful Project Teams
Tailor Made: Matching Project Responsibilities to Project Needs
Project Outsourcing: By Choice or Necessity
Focus on IT Projects
The Role of the End-User in IT Projects
Planning the Technology Migration Project
Project Management in the IT Environment
Projects and IT: Acknowledge the Driving Force
Do You Need a Management Mentor for Your Projects?
Requirements Planning
Dig Deep for Project Requirements
Planning and Managing Project Requirements

Thursday, November 22, 2007

Introduction to projects and project cycle

In this post i cover the following aspects.
1. What is a project?
2. What is a project and how it differs from process?
3. What is project cycle and what are its stages?
4. What is organisational Project Management maturity?

for brief answers to the above see the powerpoint show at the following link.

Project Cycle (from World Bank website)

Note: links are not working here and for links you may kindly visit the original page following the link provided at the end of this note. The project cycle diagram is given in the ppt for which link was given above.


Each year the World Bank lends between US$15-$20 billion for projects in the more than 100 countries it works with. Projects range across the economic and social spectrum in these countries from infrastructure, to education, to health, to government financial management. The projects the Bank finances are conceived and supervised according to a well-documented project cycle. Documents produced as part of the project cycle can be valuable sources of information for interested stakeholders wanting to keep abreast of the work the Bank is financing and for businesses wishing to participate in Bank-financed projects. Below is a step-by-step guide to the project cycle, the documents that are produced as part of the process, and how to access them.

How the Process

Begins: Poverty Reduction and Country Assistance Strategies

The Bank recognizes that many past assistance efforts, including some of its own, failed because the agenda was driven by donors rather than by the governments it was trying to assist. Under its current development policy, the Bank helps governments take the lead in preparing and implementing development strategies in the belief that programs that are owned by the country, with widespread stakeholder support, have a greater chance of success.
In low-income countries, the Bank uses the Poverty Reduction Strategy (PRS) approach which involves widespread consultation and consensus building on how to boost development. Under this process, a national poverty reduction strategy is prepared by the country, creating a framework for donors to better co-ordinate and align their programs behind national priorities. The government consults a wide cross-section of local groups and combines this with an extensive analysis of poverty in the country's society and its economic situation. The government determines its own priorities from this process and produces targets for reducing poverty over a three to five year period. These are outlined in a Poverty Reduction Strategy Paper (PRSP). The Bank and other aid agencies then align their assistance efforts with the country's own strategy - a proven way of improving development effectiveness.

The Bank's blueprint for its work with a country is based on a Country Assistance Strategy (CAS) which, in the case of low income countries, is derived from the priorities contained in the country's Poverty Reduction Strategy Paper. The CAS is produced in co-operation with the government and interested stakeholders. The preparation of the CAS may draw on analytical work conducted by the Bank or other parties on a wide range of economic and social sectors, such as health, education, agriculture, public expenditure and budgeting, fiscal management, or procurement, among others.

The Identification Phase

The Bank's Country Assistance Strategy (CAS) forms the blueprint for its assistance to a country. In low-income countries, the CAS is based on the priorities identified in the country's Poverty Reduction Strategy Paper (as outlined above). The goals outlined in the CAS guide the priorities of the Bank's lending program and are a useful source of information for interested stakeholders and businesses wishing to identify potential future areas of Bank lending. During the identification phase, Bank teams work with the government to identify projects which can be funded as part of the agreed development objectives. Once a project has been identified, the Bank team creates a Project Concept Note (PCN) which is an internal document of four to five pages that outlines the basic elements of the project, its proposed objective, likely risks, alternative scenarios to conducting the project, and a likely timetable for the project approval process.

Useful public documents

The Project Information Document (PID) is prepared after an internal review of the PCN and is released publicly through the Bank's InfoShop. It is usually four to five pages long and contains the information mentioned above - the objective, a brief description, etc. It also contains the name of the World Bank Task Manager or Team Lead who is supervising the project, a useful contact for companies interested in bidding for work on the project. The PID is an essential resource for tailoring bidding documents to the project concerned.

The Integrated Safeguards Data Sheet (ISDS) is also prepared for the first time after the project's first formal review and made available publicly. It identifies key issues under the World Bank's safeguard policies for environmental and social issues, and provides information about how they will be addressed during project preparation.

The Preparation Phase

This part of the process is driven by the country that the Bank is working with and can take anything from a few months to three years, depending on the complexity of the project being proposed. The Bank plays a supporting role, offering analysis and advice where requested. During this period, the technical, institutional, economic, environmental and financial issues facing the project will be studied and addressed - including whether there are alternative methods for achieving the same objectives. An assessment is required of projects proposed for Bank financing to help ensure that they are environmentally sound and sustainable (Environmental Assessment). The scope of the Environmental Assessment depends on the scope, scale and potential impact of the project.
Useful public documents
An Environmental Assessment Report (EA) analyzes the likely environmental impact of a planned project and steps to mitigate possible harm.
An Indigenous Peoples Development Plan identifies potentially adverse effects on the health, productive resources, economies, and cultures of indigenous peoples.
The Environmental Action Plan - describes the major environmental concerns of a country, identifies the main causes of problems, and formulates policies and concrete actions to deal with the problems.
The Appraisal Phase
The Bank is responsible for this part of the process. Bank staff review the work done during identification and preparation, often spending three to four weeks in the client country. They prepare for bank management either Project Appraisal Documents (investment projects) or Program Documents (for adjustment operations) and the Financial Management team assesses the financial aspects of the project. The PID is updated during this phase. These documents are released to the public after the project is approved (see below).
The Negotiation and Approval Phase
After Bank staff members have appraised the proposed project, the Bank and the country that is seeking to borrow the funds, negotiate on its final shape. Both sides come to an agreement on the terms and conditions of the loan. Then the Project Appraisal Document (PAD) or the Program Document (PGD), along with the Memorandum of the President and legal documents are submitted to the Bank's Board of Executive Directors for approval. The appropriate documents are also submitted for final clearance by the borrowing government which may involve ratification by a council of ministers or a country's legislature. Following approval by both parties, the loan agreement is formally signed by their representatives. Once this has occurred, the loan or credit is declared effective, or ready for disbursement, after the relevant conditions are met, and the agreement is made available to the public.
Useful public documents
The Project Appraisal Document (PAD) presents all the information the Board needs to approve Bank financing of the proposal. Before 1999, this document was called the Staff Appraisal Report. The Program Document (PGD) describes adjustment lending operations, and sets out the Bank's appraisal and assessment of the feasibility and justification for the program.
The Technical Annex supplements a Memorandum and Recommendation of the President for freestanding technical assistance loans, which do not require Project Appraisal Documents.
The Implementation and Supervision Phase
The implementation of the project is the responsibility of the borrowing country, while the Bank is responsible for supervision. Once the loan is approved, the borrowing government, with technical assistance from the Bank, prepares the specifications and evaluates bids for the procurement of goods and services for the project. The Bank reviews this activity to ensure that its procurement guidelines have been followed. If they have, the funds will be disbursed. The Bank's Financial Management Team maintains an oversight of the financial management of the project including periodically requiring audited financial statements.
Useful public document
Report on the Status of Projects in Execution provides a very brief summary of all projects that were active during the previous fiscal year. Previously an internal communication to the Board of Executive Directors, the SOPE Report now is available to the public. Projects that closed during the fiscal year are no longer included in the SOPE, since their Implementation Completion Reports are also publicly disclosed.
The Implementation Completion Report
At the end of the loan disbursement period (anywhere from 1-10 years), a completion report identifying accomplishments, problems, and lessons learned is submitted to the Bank Board of Executive Directors for information purposes.
Useful public document
Implementation Completion Reports review the results and assess an operation on completion of each loan financed by the Bank. Operational staff prepare these self-evaluations for every completed project.
The Evaluation Phase
Following the completion of a project, the Bank's Operations Evaluation Department conducts an audit to measure its outcome against the original objectives. The audit entails a review of the project completion report and preparation of a separate report. Both reports are then submitted to the executive directors and the borrower. They are not released to the public.
Useful public documents
Project Performance Assessment Reports rate project outcomes (taking into account relevance, efficacy, and efficiency), sustainability of results, and the institutional development impact. One in four completed projects (or about 70 a year) is chosen for a Project Performance Assessment Report, which takes Operations and Evaluation Department staff about six weeks to produce and normally includes a visit to the project in the borrowing country.
Impact Evaluation Reports assess the economic worth of projects and the long-term effects on people and the environment. These "second looks" at projects are performed five to eight years after the close of loan disbursements.
Inspection Panel Reports review claims by affected parties that the Bank failed to follow its operational policies and procedures with respect to the design, appraisal and/or implementation of a Bank-financed operation.
Projects may be dropped at any point in the project cycle from preparation to approval. For these projects, which never achieve active status, Project Information Documents, described above, are effectively the final documents.
See also Measuring Results.
Additional Information
• The Monthly Operational Summary discloses the status of projects in the World Bank's lending pipeline from the point they are identified to the time the loan or credit agreement supporting them is signed.
• The Infoshop provides an explanation of the Project Cycle and related documents.
• The Bank's Latin America and Caribbean section has prepared its own description of the Project Cycle, along with relevant links and check lists associated with different stages
• The Business Opportunities site provides advice on how businesses wishing to bid on Bank-financed projects can interact with the Project Cycle.
• A glo
ssary of project documents.

Permanent URL for this page: http://go.worldbank.org/GI967K75D0

project planning and management-Introduction

I work for development finance institution for agriculture and rural development. As such I have interest in project planning and management issues.

I plan to blog on different topics on the subject: project planning and managment. Lot of resources are available on the net on this topic. I will try to place the links to them here for easy access. ALready Wikipedia contains material on the subject. I will be posting powerpoints, lecture notes i may prepare as I keep learning. I wish to discuss project planning with special focus on agriculture and rural development as it is my field of work. Hope visitors to my blog benefit from it. I also hope to see your comments, suggestions and any requests for coverage of specific topics.
Thank you all