1 Lecture 5 Engineering Economics 20 Project Management

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Lecture # 5 Engineering Economics (2+0) Project Management in Public Sector of Pakistan Instructor: Prof. Dr. Attaullah Shah Department of Civil Engineering City University of Science and IT Peshawar 2

n History of Planning Bodies in Pakistan Development Board was established early in 1948 n In 1950 a Six-Year Development Plan was formulated and embodied in the Colombo Plan for Cooperative Economic Development in South and South East Asia. n Planning Board: 18 th July, 1953, To develop the resources of the country as rapidly as possible so as to promote the welfare of the people, provide adequate living standards, and social services, secure social justice and equality of opportunity to all and aim at the widest and most equitable distribution of national wealth. n n n Planning Commission On 22 nd October 1958, the President was pleased to re-designate the National Planning Board as the Planning Commission. Federal Ministries/Divisions The Federal Ministries are responsible for the preparation of programmes and projects in their respective fields of interest including autonomous organizations under their control

Conceptual Plans. Perspective Plan-Vision Plan ( Ex: 2030 Vision) n To provide a long-term (15 -25 years) economic and social policy framework so that the objectives to be achieved over a much longer period can be incorporated in a medium-term framework. Five Year Plan: n A five year plan is a general statement of objectives and targets relating to the economy as a whole and its various component sectors. Roll-On Plan n In order to bring flexibility into the Five Year, a roll-on plan of medium term is designed in which the sectoral and project-wise position is adjusted according to the foregoing year Annual Plan n It is regarded as the implementation side of the five year plan. n The annual plan includes an evaluation of past performance, a presentation of the main targets, an assessment of the resource position for the year.

FEASIBILITY STUDY Pre-requisite for preparation of a major development project on sound lines, and is not ruled out even for a minor one Preparation/Processing of PC-II. n For Large projects of cost 500 Million or more n Consultants are appointed for pre-feasibility. n The consultancy charges should not exceed 10% PC-I/Project Feasibility: n Part 'A' is the "Project Digest”- containing eight questions which are more or less common to all sectoral PC-I’s forms. n Part 'B' entitled "Project Description and Financing", n Part 'C' deals with "Project Requirements". n Part 'D' deals with environmental aspects.

n n n PC-III Proforma Designed to furnish information on the progress of on-going projects on quarterly basis PC-IV & V Proformae PC-IV form is required to be submitted at the time when the project is adjudged to be complete while the PC-V form is to be furnished on an annual basis for a period of five years by the agencies responsible for operation and maintenance of the projects. Umbrella PC-I Some times a Federal Ministry is required to prepare a PC-I having provincial components to be financed through a joint loan by a donor agency.

Public Sector Development Program PSDP n n The Public Sector Development Programme (PSDP) is an annual document which lists all the public sector projects/ programmes with specific allocations made for each one of them in that particular financial year Federal Vs Provincial Projects Major share of the total Development Programme is allocated to Federal projects While the remainder is allocated to the Provincial Development Programme.

PROJECT APPROVING BODIES n National Economic Council (NEC) –CEO/PM as Chief. ( No limit) n Executive Committee of National Economic Council (ECNEC) Headed by the Federal Minister of Finance/ Adviser to the Prime Minister for Finance and Economic and Planning. n n n Economic Coordination Committee of the Cabinet (ECC) Headed by the Federal Minister for Finance and Federal Ministers of economic ministries as its members. It attends to all urgent day-to-day economic matters and coordinates the economic policies initiated by the various Divisions of the Government

n Central Development Working Party (CDWP) n Headed by the Deputy Chairman, Planning Commission and which includes as its members the Secretaries of the Federal Ministries concerned with the development and the heads of the Planning Departments of the Provincial Governments. n Departmental Development Working Party (DDWP/DSC) Headed by the respective Secretary/ Head of Department and includes representatives of Finance Division and concerned Technical Section in the Planning and Development Division. n n n Provincial Working Party (PDWP): headed by the Chairman, Development Board/Additional Chief Secretary (Development) and includes Secretaries of the Provincial Departments concerned with development, as its members

Preparation/Processing of PC-II • A PC-II is prepared for undertaking a feasibility study in respect of a major project. • A project-oriented TOR should be prepared and professional consultants should be engaged for the feasibility study, if necessary • The procedure for processing a PC-II is the same as for the PC-I. The consultancy cost should not exceed 10% of the project cost. • The relevant scrutinizing body and the sanctioning authority will also remain the same as for the PC-I. In short, all the rules and procedures in respect of the PC-I will apply mutatis mutandis to the PC-II. • All proposals for consultancy, both local and foreign, for preparation of feasibility studies/ conducting surveys should be drawn up on the PC-II form and got approved from the Competent Authority before undertaking the actual work. • The need for utilization and development of local consultancy has been recognized by the Government.

n Accordingly, ECC in its meeting held on 19 -7 -1988 decided that 30 per cent of expenditure to be incurred on foreign consultancy should be devoted to the development of local consultancy and that the limit of 30 per cent would be mandatory foreign consultants, who would be required to engage local consultants n The Pakistani consultants and engineers be given full opportunity and they should be the first to be hired for projects for consultancies in Pakistan before hiring any foreigners. For details of PC-II refer to Doc-PC-II n

n n n n n Project Preparation PC-1 General Linking Projects to Resources Location, Area and Population Coverage Project Description Project Objectives and Targets Project Scope Change in Scope of Projects Cost Estimates Revised Cost Estimates Financial Plan Financial Phasing Physical Scheduling of Activities Period of Implementation Appointment of Consultants for Project Preparation, Detailed Designing and Tender Documents Economic Benefits Inter-Agency Coordination Preparation of PC-I/Project Document For details refer to PC-I doc.

n PROJECT APPROVAL Approval Stage n Project Approving Bodies - National Economic Council (NEC) - Executive Committee of National Economic Council (ECNEC) - Economic Coordination Committee (ECC) of the Cabinet - Central Development Working Party (CDWP) - Departmental Development Working Party (DDWP) - Provincial Development Working Party (PDWP) n Sanctioning Powers of Approving Authorities n Submission of Schemes to the Competent Authority n Processing of Schemes

n n n n n PROJECT IMPLEMENTATION AND MONITORING Project Management & Supervision Appointment of Project Director Increase in Scope of Work and Delay in Execution of Projects Project Execution/Supervision-Development of Management Information System (MIS) PERT/CPM Techniques Steps in Project Formulation/Implementation - Listing of Activities - Acquisition of Land - Tendering of Civil Works and Award of Contracts - Procurement of Machinery and Equipment - Local Purchase/Fabrication Foreign Procurement/Utilization of Foreign Aid Submission of Completion Report Project Review and Monitoring Progress on PC-III Proforma Progress Review by the Ministries/Divisions Project Review Groups Review of Foreign Economic Assistance and Problematic Foreign Aided Projects by the Committee

Project Control Cycle. Monitoring Collect the performance Establish the Standards Data. Feedback Evaluation Take the corrective actions Resolve Compare with the standards

Project Management & Supervision 1. The objective of any effort in project planning and analysis is to have a project that can be implemented to the benefit and socio-economic uplift of the society. 2. The Project Director is appointed, staff of all categories arranged, the detailed designs got prepared, if need be, with the assistance of consultants, contractors pre-qualified and short-listed, tenders floated for civil works, equipment, and their installation, contracts awarded, all in timeliness with the objective of initiating the operations and getting them fully underway for achieving the goals envisaged without any time and cost over-run, in order that the economic benefits accrue according to the promises made in the scheme. 3. For achievement of the stipulated targets and tangible returns, however, it is imperative to entrust the management and supervision of the project during the implementation stage to capable and competent hands of required qualifications, experience and calibers.

CASH PLAN General • The Cash Plan has to be prepared on the basis of allocations made in the PSDP for the next financial year. • Provide name of the ministry/division along with Project and PSDP allocations. The serial number of the project as reflected in the PSDP may also be provided. • The actual expenditure are the expenditure actually incurred on the project. The funds transferred to PWD/C&W department are not expenditure rather it is deposited with the department to be spent on behalf of executing agency. The expenditure incurred by PWD/C&W department may be shown as an expenditure. Object/Functional Classification The classification and head of expenditure as given in the chart of account of PIFRA Items of Expenditure The major components of expenditure have been identified in the Cash Plan. However the items of expenditure may vary from project to project. The executing agency may incorporate any additional item of expenditure as per approved items of expenditure given in the PC-I The executing agencies can further bifurcate an item of expenditure if required. ( For details refer to Cash Plan Doc. )

Approved Cost as per PC-I Provide item-wise approved cost as reflected in the PC-I. Cumulative Expenditure Provide item-wise, cumulative expenditure up to the end of last financial year. Quarterly Financial Targets The cash requirements be worked out on the basis of quarterly physical activities proposed to be undertaken in the next financial year. Ensure a relationship between items of Work Plan and cash requirements of different items of work.

WORK PLAN General n The Work Plan has to be prepared on the basis of activity chart annexed with the Work Plan. n n Identify the activities to be undertaken on the basis of PSDP allocations for next financial year. The activities have to be developed in line plan or bar. n In case, PSDP releases are not lapsable, the executing agency is required to prepare a separate Work Plan for the unspent releases. n Items of Work The items of works are the same as indicated in the Cash Plan. In case of addition of any item in cash plan, it may also be added in the Work Plan. Unit Please indicate the Unit of measurement. It can be kanals, acres, hectare for land sq. ft. for civil works etc. Scope of Work The approved scope of work in quantifiable terms as per PC-I be provided. Physical targets/items of work be provided in absolute figures and not in percentages. n n n

n Cumulative Physical Progress n Item-wise cumulative Physical progress up till 30 th June of the last financial year be provided. n Quarterly Physical Targets n The quarterly physical targets are developed on the basis of activities identified and time allocated for each activity in activity chart. The activity-wise targets developed be reproduced under quarterly Physical targets. n n n n Out Put Indicators Indicate output of the project in quantifiable terms (if applicable) during the financial year. ACTIVITY CHART Activity charts have been developed to identify the time required in undertaking an activity. Relationships between different activities have to be developed. An activity can be undertaken after completion of previous activity or a number of activities can be undertaken simultaneously. Time required to undertake an activity can be identified by line or bar. Activity chart will not be developed for n POL, repairs and maintenance. n Stationery utilities etc. n Contingencies.

GOVERNMENT OF PAKISTAN PLANNING COMMISSION Annex-I Education ( Higher Ministry Education Commission) PROJECT: Model labs for Training of Science teachers of Allama Iqbal Open University-Islamabad. ANNUAL WORK PLAN FOR FY 2008 -09 ACTIVITY/ITEM OF WORK UNIT SCOPE OF WORK CUMULATIVE PHYSICAL ACHIEVEMENTS UPTO THE END OF LAST FINANCIAL YEAR QUARTERLY PHYSICAL TARGETS JUL-SEP 1 2 3 Scientific Equipment Glassware/Chemical Books LC being opend for 3 major equipments No 128 No 1440 No 1000 No 149 Ls LS Furniture & Fixture Contingency Prep ared by Engr. Attaullah Shah Project Director AIOU 4 604 glassware items delivered amd and LC opened for theprocurement of chemicals 223 books procured. 149 Approved by (Ministry of As required 5 To. R for second consigment of equipment and advertising in the poress ( 30) 250 150 Procurement of furniture and fixture completed. As required Accepted by _______________________ Ministry of Finance _______________________

Planning for land Procurement

Consultancy Procurement

Civil Works Planning

Road Construction Planning

Procurement of Equipment and Goods

GOVERNMENT OF PAKISTAN PW Proforma-001 PLANNING COMMISSION Ministry Education ( Higher Education Commission) PROJECT: Model labs for Training of Science teachers of Allama Iqbal Open University. Islamabad. PSDP Allocation for FY 2008 -09: RS. 14. 100 Million PSDP Seria : # 232 CASH PLAN FOR FY 2008 -09 (Rs. In Million) OBJECT/ Functional CLASSIFICATI ON 1 ITEMS OF EXPENDITURE 2 Scientific Equipment Glassware/Chemical Books Furniture & Fixture Contingency Total: Prepared by Engr Attaullah Shah Project Director AIOU CUMULATIVE EXP. UPTO THE END OF APPROVED COST LAST FINANCIAL YEAR 3 4 19. 233 0. 000 3. 000 0. 840 3. 000 1. 815 0. 500 0. 099 28. 733 2. 754 QUARTERLY FINANCIAL REQUIREMENTS BASED ON WORK PLAN 1 st Quarter 2 nd Quarter 3 rd Quarter 4 th Quarter Total 5 1. 500 0. 000 1. 500 Approved by (Ministry of Approved by P&D Division(Technical FEC 6 0. 000 Total 7 4. 000 0. 600 0. 500 0. 000 0. 100 5. 200 FEC 8 0. 000 Total 9 4. 015 0. 600 0. 685 0. 000 0. 100 5. 400 FEC 10 0. 000 Total 11 2. 000 0. 000 2. 000 Accepted by Ministry of Finance FEC Total FEC 12 13 14 0. 000 11. 515 0. 000 1. 200 0. 000 1. 185 0. 000 0. 200 0. 000 14. 100 0. 000

Some Funny Quotes of Project Managers n As of tomorrow, employees will only be able to access the building using individual security cards. Pictures will be taken next Wednesday and employees will receive their cards in two weeks. What I need is a list of specific unknown problems we will encounter. E-mail is not to be used to pass on information or data. It should be used only to be used for company business. Turnover is good for the company, as it proves that we are doing a good job in training people. This project is so important, we can't let things that are more important interfere with it. Doing it right is no excuse for not meeting the schedule. No one will believe you solved this problem in one day! We've been working on it for months. Now, go act busy for a few weeks and I'll let you know when it's time to tell them