Project concept Understanding interrelationship between plan planning program

Project concept Understanding interrelationship between plan, planning, program and project (Uprety, 2009)

Plan, planning, Programme and project Plan? A plan is a vision or map to represent the form and/or feature of desired situation

Beauty and success of plan, Programme and Projects: • Visionary clarity of planners • Consistency with the plan • Success of ingredients • Adequacy of resources (financial, technical, human, infrastructure, management)

Plan, Programme and Project Plan Increase rice production by 20% and improve economic status of farmers To increase rice production by 20%: Program Projects Irrigation, seed, fertiliser, pesticide, agri-loan, technicians, agrimarketing

Types and nature of project • • • Basis Sector Ownership Outputs Motto Scale Type/nature non-industrial/industrial Private/Public goods/services Profit/non-profit Small/medium/large

Project characteristics Objectives Investment Space System Cycle Time bound

Sources to Projects Government organisations International NGOs Projects Private Investors NGOs Public-private partnership

The diagnosis phase encompasses the step of identification, the planning phase encompasses the steps of preparation, appraisal and agreement by the supporting agency and Government

Project formulation To carry out the project analytical works that includes: • technical feasibility, • economic advantages combined with its viability; • financial profit, • institutional and managerial requirement, • environmental consideration etc

Project formulation Stages Stage-1 Pre-investment stage - Identification assists to find a potential project. Project idea is translated into a preliminary description of the project. TOR for the project reconnaissance team prepared, analyses of existing situations, a broad evaluation of the future “with” and “without” the project is carried out, and the extent and limits of the project are proposed. Different approaches to the project are identified and the options lead to project preparation.

• Project preparation, that includes all the work necessary to bring the project to the point at which a careful review or appraisal can be undertaken.

Stage-2 Project preparation Steps First step is feasibility study, that provides enough information for deciding whether to begin more advanced planning. The feasibility study should define the objectives of the project clearly. It should explicitly address the question of whether alternative ways to achieve the same objective may be preferable and it will enable project planners to exclude poor alternatives. The feasibility studies indicate the project that will be worthwhile and then detailed planning and analysis may begin.

This is the stage where following studies are commenced: - Situation analysis (location, population, environment etc) - Problem analysis (Problem tree) - Opportunity analysis (monetary and nonmonetary) - Resource constraints overview

Stage-2 Project preparation Steps Second step is Analysis, that involves thorough analysis of all aspects relevant to the project. The inferences should be correlated with the ground truth for a realistic estimation of project cost and benefits. This includes: 1. Technical Analysis: (A) Input analysis- Location, Size and cost of land, Raw material, Utilities, Manpower, Transport facility, Incentives and concessions, Environmental consideration, climatic and natural hazard consideration, Technological aspect (B) Demand Supply Analysis: mainly focusing on the marketing prospect

Stage-2 Project preparation Steps 2. Economic Analysis: It determines the viability of a project over a period of time. It is on this basis that the intended profits and loss can be arrived at and final decision taken for the selection and implementation of the project. The economic analysis is done by considering the following requirements: - Capital cost - Working capital requirement - Estimates of operating costs - Estimates of operating revenue - Depreciation / Taxes and - Profits

Stage-2 Project preparation Steps 3. Financial Analysis: The analysis can be done based on (a) Commercial profitability that includes both investment profitability analysis and financial analysis. The investment profitability aims at assessing the earning power of the resources deployed for the project while financial analysis takes into view the financial features for the smooth implementation and operation of the project. (b) Social Cost- benefit profitability analysis aims at analyzing the real contribution of an investment towards the welfare of country as a whole. There are number of techniques that are employed for this purposes.

Stage-2 Project preparation Steps Few important techniques employed for Social Cost- benefit profitability analysis are as - Net National value added - Employment effect - Distribution effect - Foreign exchange effect - Infrastructure effect - Environmental effect Third step is to prepare detailed Project plan. It may be prepared by a consulting firm or owner itself or technical assistance agency.

Stage 3 Appraisal • This is final and crucial stage in territory of project formulation. Any project has to be appraised in relation to the feasibility of the technical, economic, financial, commercial, organizational, managerial, social, environmental and other aspects of the projects by raising various pertinent questions. All these details when put together in one document is known as “ Project Appraisal”. Project appraisal attempts to consolidate the results of exercise made at various levels from different angles on various aspects of the project. It is through this report that the investors, the lending institutions, the policy making, advisory and regulatory agencies in the Government, the beneficiaries and the public, can review the desirability of project.

Stage 3 Appraisal • After project appraisal provides an opportunity to reexamine every aspect of the project plan to assess whether the proposal is appropriate and sound before investments are committed. The appraisal is based on the project plan, but it may require new information if the specialist in appraisal team feel that some of the data are questionable or some of the assumptions are fallacious. If the appraisal team concludes that the project plan is sound, the investment may proceed. If project team finds serious flaws, it may be necessary for the analysis to alter the project plan or develop a new plan.

Stage 3 Appraisal 1. 2. 3. 4. 5. 6. Technical Appraisal: If proposed project requires a specific skill and technology then we must assess whether it could be accessed or not, Financial Appraisal: Whether a proposed project is financially profitable or not, Economic Appraisal: Whether a project offers employment opportunity, increase household income, contributes national economy and create other economic benefits to the society or not, Social acceptable: Whether proposed project fit-in with local socio-cultural set-up, Market Appraisal: Whether goods and services produced from the purposed projects have market demand or not, and Management Appraisal: Whether purposed project is compatible to existing organizational capability or not.

Stage 4 Financing The successful implementation of any project depends upon the timely availability of financial resources as per the projections. The success also depend on working capital resources. Hence, financing involves: - Ascertain the funding source: external or internal - Type of funding : Loan, soft loan, grant, kind - Hidden Interest : Structural adjustment, Technical assistance - fund disbursement mechanism - Co-financing modality - Repayment conditions and pay back period

Investment and design stage In this stage we finally design the implementation plan of the project. The project is brought to the point of meeting the required start-up agreement conditions, sometimes after revision and adaptation of project schedule, cost, objectives, and financing. Steps: - Verify the validity of each aspect of project formulation stage - Negotiation and approval (unilateral, bilateral, multilateral ) - the project management and lines of command are established, and various implementation procedures are established. - progress is monitored, revisions and adaptations are acknowledged wherever crucial.

Project implementation In this step Implementation plan is finalized with the help of - Logical framework - Annual work plan • Organization and working process (organization structure, communication systems, rules and regulations) • Monitoring and control system ( how and by whom)

Post investment stage • The final stage is Evaluation. The analysis looks systematically at the elements of success and failure in the project and experience to learn how to better plan for the future. Evaluation is not limited only to completed projects. It is a most important managerial tool in ongoing projects and formalized evaluation may be done many times in the life of the project. Evaluation may be undertaken when the project faces substantial problems. Types of evaluation • On-going evaluation • Mid term evaluation • Ex- post evaluation