Planning Manual Punjab PDF
Planning Manual Punjab PDF
Planning Manual Punjab PDF
LIST OF ABBREVIATIONS 6
PREFACE 8
ACKNOWLEDGEMENTS 9
VOLUME ONE 10
SECTION 1 – INTRODUCTION 10
1.1 DEVELOPMENT PLANNING – CONCEPT AND PRACTICE 10
1.2 PLANS, PROGRAMMES AND PROJECTS 10
1.3 PLANNING PROCESSES 11
1.3.1 FORMULATION OF ADP 11
1.3.2 ADP AND MTDF FORMULATION GUIDELINES 15
1.3.3 PROJECT CYCLE MANAGEMENT 16
1.4 PLANNING: INSTITUTIONAL REGIME 17
1.4.1 PLANNING COMMISSION 17
1.4.2 P&D BOARD 18
1.4.3 PLANNING AT DIVISIONAL LEVEL 21
1.4.4 PLANNING AGENCIES AT DISTRICT/DIVISIONAL LEVEL 21
1.5 USER GUIDANCE FOR PLANNING MANUAL 21
List of tables
Table 1: List of PC proformas .......................................................................................................... 16
Table 2: Planning Commission forms and their use ............................................................... 16
Table 3: PPP modalities ..................................................................................................................... 26
Table 4: Stakeholders group classification matrix.................................................................. 30
Table 5: Project appraisal toolkit................................................................................................... 52
Table 6: Development projects approval matrix ..................................................................... 53
Table 7: Composition of PDWP....................................................................................................... 53
Table 8: Composition of DDSC ........................................................................................................ 55
Table 9: Composition of DDWP ...................................................................................................... 57
Table 10: Composition of DDC ........................................................................................................ 58
Table 11: Composition of Union Administration..................................................................... 58
Table 13: Composition of DDWP ................................................................................................... 59
Table 14: Composition of CDWP .................................................................................................... 60
Table 15: Present composition of ECNEC ................................................................................... 61
Table 16: Special invitees for NEC meetings ............................................................................. 63
Table 17: Composition of committee for concept clearance for foreign-aided projects
........................................................................................................................................................... 66
Table 18: Project allowances for different basic pay scales ................................................ 68
Table 19: Relevant questions about results chain .................................................................. 74
Table 20: Monitoring, evaluation and impact assessment .................................................. 77
Table 21: Indicators at various levels of results chain .......................................................... 79
Table 22: Data collection tools........................................................................................................ 82
Table 23: Types of evaluation ......................................................................................................... 83
Table 24: PPP project life-cycle steps ........................................................................................110
Table 25: Private sector support calibration template .......................................................113
Over the last few years, provincial planning has undergone a transformation in Punjab
with the introduction of a medium-term perspective, increased inflow of resources in
the wake of 18th constitutional amendment, and new planning imperatives such as
public–private partnerships and results-based management (RBM). The last Planning
Manual was issued in 1996; therefore it is clearly outdated and has some critical gaps.
These gaps underscore the need to revise the Planning Manual and develop a
document that is up-to-date and provides hands-on guidance to provincial
departments and officials.
It was against the backdrop of these emerging challenges and cumulative experiences
of recent decades that the Planning and Development (P&D) Board took up the
ambitious task of revisiting the existing Planning Manual in the province. The overall
objective of the assignment was to revisit the existing Planning Manual with a view to
restructuring it in line with modern notions of development planning while taking care
to remove the redundancies and obsolete notions. A conscious effort has also been
made to ensure that the revised manual serves as a user-friendly reference and
learning document for the policy-makers as well as the practitioners in the provincial
government. Moreover, the document has been structured so that it is aligned with the
project management cycle and different users can access the document as per their
specific needs. The manual also provides the much-needed guidance to provincial
departments on selecting projects for public–private partnerships (PPPs), while
formulating their plans. This manual consists of two parts. Volume I provides the main
contents of the Planning Manual, while Volume II consists of important appendices and
allied documents.
I would like to thank the relentless efforts by the staff of the P&D Board, Punjab as well
as the Sub-National Governance Programme, which has made the formulation of this
document possible in a relatively short span of time. We are also in the process of
creating an online version of this document to benefit users.
IRFAN ELAHI
CHAIRMAN
PLANNING & DEVELOPMENT BOARD
The P&D Board would like to express its satisfaction and appreciation for the
commendable work that has led to the formulation of the revised user-friendly
Planning Manual in Punjab. We are especially grateful to Mr. Javed Latif, Senior Chief,
Planning & Development Board for driving this effort and to Mr. Hamed Yaqoob Sheikh
and Mr. Naveed Saleh Siddique from the Sub-National Governance Programme for
providing technical assistance. Without consultations with and valuable feedback from
all provincial departments, it would not have been possible to develop the revised
Planning Manual. We would also like to thank Mr. Hasaan Khawar, the lead consultant,
for undertaking this effort to develop the document.
SECTION 1 – INTRODUCTION
Why is there any need for development planning? This question needs to be
answered so as to appreciate the rationale for planning. A close look at developing
countries reveals that they have certain common characteristics/features. These
common features are: poverty, primitive agriculture, population pressure, scarcity
of capital, social exclusion and gender inequality, low rate of savings, inequitable
income distribution, low level of literacy and high unemployment, with a
consequent low level of economic development.
• It takes care of the collective needs of the people, including women, girls and
the most vulnerable.
• It helps in determining the future desirable direction of the economy.
• It facilitates the equitable distribution of economic power.
• It serves as a powerful instrument for reducing uncertainty and provides
direction for future development.
• It provides for proper coordination and thereby avoids the waste of scarce
resources.
• It helps in coping with major economic changes.
• It facilitates the optimum utilisation of a country's resources.
• It enables the economy to look ahead and, thereby, to lay the foundation for
long-term growth.
In earlier stages of development, when the priorities in various sectors of the economy
are not clearly defined, programmes and projects may be conceived without reference
to an overall sector or national plan. However, as the development process gains
momentum, the choice of investment opportunities becomes wider and the task of
resource allocation against various competing demands becomes very complex and
difficult. At this stage, identification of specific plan objectives/targets and setting out
of detailed sectoral programmes become imperative. The achievement of physical
targets set for various sectors of the economy necessitates the preparation of a
The formulation of the ADP/MTDF is an important exercise carried out by the P&D
Board, Government of Punjab (GoPb), in collaboration with the Finance Department
and other provincial departments and agencies. This exercise is based on the
guidelines provided by the federal government in accordance with the national
priorities and resource availability. As a result of the ADP formulation exercise, the size
and the direction of the public sector programme in the province are determined.
Thus, the task of formulation of ADP is of crucial importance as it has a significant
impact on the socioeconomic standing of the province. The preparation of the ADP
involves a number of stages, which are briefly discussed below:
The first six months of a financial year typically represent the first stage of formulation
of the ADP. During this period, two main exercises are conducted in the P&D Board in
collaboration with the Finance Department. Firstly, an estimate is made in respect of
the expected resource availability for the next financial year. The trend of the past few
years and outlook of the economy constitute the basis of the estimate. An assessment
of the anticipated external capital assistance is also included in this estimate. Secondly,
determination of inter-sectoral priorities is carried out on the basis of the latest
government policies regarding concerned sectors, ongoing programmes expected to
be completed and new programmes likely to be initiated. After conducting these two
exercises the tentative size of the ADP, indicating sector-wise allocation for the next
financial year, is communicated to all the concerned departments. The departments
are required to prepare lists of the ongoing and the new schemes relating to their
respective sectors. Every year the P&D Board also issues ADP Formulation Guidelines
(as discussed later in this section).
All departments and concerned agencies prepare a portfolio of schemes for the
sector/sub-sector allocated to them. While preparing such portfolio the
following guidelines are to be considered1:
Preparation of the preliminary draft of the ADP starts from January every year. A
series of inter-departmental meetings are held during this period by the chief/senior
This stage takes two–three months, i.e. from 15 February to the first week of April.
During this period, ADP meetings are held in the P&D Board with the concerned
departments, including the Finance Department, headed by the chairman, P&D Board.
In these meetings, the lists prepared/finalised in the previous stages are modified, if
necessary, and brought in line with the anticipated financial resources. Simultaneously,
the draft ADP for the financial year is prepared. It represents an estimate of possible
minimum available resources. The departments have to complete the formalities, e.g.,
preparation of PC-I, as well as scrutiny and approval of projects from the competent
authorities, before publication of the ADP.
In the fifth stage, which is spread over the second week of April to the end of June, the
final shape is given to the ADP. During this period several meetings are held at the
federal level, e.g. of the Priorities Committee, Annual Plan Coordination Committee,
Executive Committee of the National Economic Council and National Economic
Council, to finalise the federal and provincial ADPs. It is presented to the Cabinet and
Provincial Assembly in June. After approval and with the governor’s authentication by
the end of June, the ADP is ready for implementation with effect from the beginning of
the financial year.
The P&D Department initiates the process of formulation of the ADP in January/
February each year with the issuance of the ADP Formulation Guidelines. The ADP is
prepared in accordance with the guidelines within the MTDF. These cover a three-
year period, with a scheme-based portfolio, allocation of funds for the next year, and
tentative financial projections for the two subsequent years. The guidelines direct
the adoption of a consultative process with the administrative departments and the
other stakeholders including public representatives and experts; the guidelines also
provide relevant proformas to be used for scheme-based sectoral programmes as
well as a prescribed time schedule. The guidelines have to be followed by
administrative departments, attached departments, autonomous bodies, project
directors, project executing agencies, and administrative divisions and districts.
Various proformas are used for different cycles of the project, as prescribed by the
Planning Commission, as follows:
Appendices (VOLUME TWO – SECTION B) present these forms and guidance notes
from Planning Commission.
The planning process was initially formalised in Pakistan with the creation of the
National Planning Board in 1953 along with provincial departments. The Planning
Commission at the federal level was set up in 1958 along with the provincial
departments. In addition, a number of planning agencies have come into existence at
different levels in the country. The present chapter briefly surveys the planning
machinery in operation at various levels:
The Planning Commission, including the Planning, Development & Reforms Division,
occupies the central position in the overall planning machinery. The prime minister is
the chairman of the Planning Commission, which, apart from the deputy chairman,
comprises various members including the secretary, Planning, Development &
Reforms Division/member (Coordination); member (Private Sector Development &
Competitiveness); member (Energy); member (Food Security & Climate Change);
member (Science & Technology); member (Development Communication); member
(Infrastructure & Regional Connectivity); member (Social Sectors & Devolution);
• preparing the national plan and review and evaluating its implementation;
• formulating the annual plan and ADP;
• monitoring and evaluating implementation of major development projects and
programmes;
• stimulating preparation of sound projects in regions and sectors lacking adequate portfolio;
• continuously evaluating the economic situation and coordinating economic policies;
• organising research and analytical studies for economic decision-making;
• assisting in defining the national vision, and undertaking strategic planning;
• assessing the material, capital and human resources of the country and formulating
proposals for augmenting such resources;
• facilitating capacity building of agencies involved in development; and
• any other functions assigned by the Prime Minister.
At the provincial level, P&D activities of all nation-building departments and agencies
are coordinated by this board. The P&D Board is headed by a chairman. He is assisted
by the chief economist, secretary, joint chief economists, members, senior chief and
chief of sections.
Distribution of work – The P&D Board is divided into self-contained sections, each of
which is headed by a senior chief/chief of section. The main sections are as follows:
Functions of the P&D Board – The main functions of the Board as per the Rules of
Business include:
• ADP/MTDF:
o preparation in coordination with all departments of the government
o monitoring implementation
o evaluation of development projects and programmes
• economic issue(s):
o conducting of research/surveys
o review/analysis of socioeconomic data
• foreign assistance:
o determination of key areas for foreign assistance and preparation of the
sector-wise portfolio for foreign assistance
o loan negotiations and securing of federal financial guarantees, wherever
required
o review of foreign-aided projects
• information technology:
o IT policy
o electronic data management
o control of and liaison with district IT departments
o e-governance and e-service delivery
o web content management
o pre-qualification of firms to provide IT consultancy, software development
and IT products to the government
o coordination with both public sector departments and private sector
agencies in the field of IT
o service matters of IT cadres at both provincial and district levels
While performing its functions the Board closely coordinates with the Finance
Department regarding formulation and determination of the ADP. The Finance
Department is also involved with the process of approval of individual development
All local government tiers prepare and implement development programmes through
their own budget. In addition, autonomous bodies like the Lahore Development
Authority, Multan Development Authority, Faisalabad Development Authority,
Gujranwala Development Authority, Bahawalpur Development Authority, Punjab
Small Industries Corporation, Punjab Mineral Development Corporation, Punjab
Industrial Development Board and Tourism Development Corporation have emerged
over time to cater for the specific development needs of those areas and relevant
sectors. These development authorities have streamlined their own procedures for
preparation, approval and implementation of their programmes. All these autonomous
bodies are carrying out small and big development projects, which are not fully
reflected in the ADP.
Special care has been taken to make the Planning Manual a user-friendly resource.
This manual has been divided into five sections. The first section presents the
introduction of the planning regime, etc., while the next four sections address
various user-planning needs. A reader does not have to go through the whole
manual to get any help and should rather consult the relevant section for quick
reference.
Project identification forms the most critical stage in the project cycle because
projects are supposed to deliver public policy objectives to ultimate beneficiaries,
within limited resources. It is very important that all projects forming part of
ADP/MTDF are closely aligned with national and provincial policy frameworks and
work in sync with the overall development portfolio. Even if political leadership or
other stakeholders directly identify some of the projects, the line departments or
other users must apply some objective criteria to assess if the projects are
'correctly' identified and are aligned with the development portfolio.
For identifying any project, the users must look at the overall national and
provincial growth frameworks, which lay down the broader priorities. All projects
must also be part of their respective integrated sector framework. Usually each
sector has its own strategy or vision document, which lays out the key areas of
future interventions. Such documents can give any user a comprehensive
understanding of what needs to be achieved in a particular sector. Even if the users
feel that there is no formal strategy document or sector framework available, the
departmental strategy is usually articulated in the form of a presentation or
document, which can provide guidance on broad sectoral priorities.
At present, Vision 2025 presents the national growth framework, whereas the
provincial economic growth policy sheds light on provincial growth framework.
Recently a number of departments have also developed their sector plans, which
should be consulted for project identification.
Box 4: National Vision 2025
Other than these documents, the users should also look at global development
imperatives such as the MDGs as well as country assistance and partnership
strategies of donors and development partners (DPs) to identify intervention areas5.
Another lens that can help such identification process is the question of whether the
proposed project can be financed through private capital and can therefore be
potentially undertaken in PPP mode. If it can be, then ideally it should not form part
of the ADP6, which is meant for only publicly financed projects. It must be noted that
5 As per the Government of Punjab’s ADP Formulation Guidelines 2015-16, some of the articulated
priorities are given. As per the guidelines, efforts should be made to focus the new portfolio on the
economic growth strategy and sector plans. Education and health departments should make every
effort to ensure consolidation and improvement in service delivery projects for enhancing efficiency
and effectiveness to achieve the MDGs. Special attention may be given to new initiatives
/programmes of the government with an emphasis on inclusive growth, poverty alleviation, MDG
attainment, creation of productive assets and gender mainstreaming.
6 ADP funding may be used for public sector contribution for a PPP project for land acquisition or
other uses.
The following sections introduce the current national and provincial frameworks;
however, it is important that at the time of project identification, the user should
consult the most recent policy documents.
Pakistan Vision 2025 is the national growth plan, recently developed by the
Planning Commission of Pakistan. The vision document puts forward the goal of
transforming Pakistan into one of the top 10 economies in the world by 2047. By the
year 2025, it envisions Pakistan among the top 25 economies of the world and an
upper-middle income country. The document also identifies five enablers and seven
pillars to offer an integrated approach for development and prosperity. The
enablers include a shared vision, political stability and continuity of policies, peace
and security, rule of law, and social justice.
1. Achieving 8% economic growth (real growth rate in gross domestic product) in Punjab by 2018
2. Increasing annual private sector investment in Punjab to US$ 17.5 billion by 2018
3. Creating 1 million quality jobs every year in Punjab
4. Training 2 million skilled graduates in Punjab by 2018
5. Increasing Punjab's exports by 15% every year until 2018
6. Achieving all MDGs and targeted Sustainable Development Goals in Punjab
YES
NO Sector GoPb – Screening Projects for PPP Comparison
with Other
RANK LOW
Eligibility Projects
YES
YES
OUT
NO PPP Impact on NO
Applicability Compe on
LIKELY
YES
OUT
YES
YES
YES
NO Private NO
Willingness VGF Available
Sector
to Pay
Capacity
NO
YES
YES
NO Technical Financial NO
Suitability Viability
YES
2) PPP applicability – The project should be consistent with the following PPP
definition that underlies the government’s PPP policy: “PPPs are medium- to long-
term contractual arrangements between the public sector and a private party for the
provision of an infrastructure facility and/or service with a clear allocation of risks
between the two parties.” In line with this definition, the project should provide
Furthermore, the project should adopt one of the PPP modalities listed in Schedule
II of the Punjab Public–Private Partnership Act 2014. Some guidance on these
models is given in the following matrix:
4) Private sector capability and appetite – The project should be within the
capability of the private sector to finance and implement. At the same time, the
project should be able to attract sufficient market interest and have the potential to
operate as a commercially viable venture. These criteria highlight the importance of
project size. On one hand, the project should have a certain minimum size to
generate cash flows that will enable both public and private parties to achieve value
for money and thereby attract investors’ interest. On the other hand, the project
5) Technical scope of the project – The project should be prima facie technically
viable. The PPP approach is particularly suitable if the following are needed:
6) Financial viability of the project – To attract private investors and satisfy their
lenders, it should be demonstrated that the project most likely can generate
revenues over the concession period at levels sufficient to recover and repay the
estimated investment cost, cover the estimated O&M expenses, and generate a
commercially acceptable rate of return on equity.
8) Need for and availability of government support – There are four main
categories of government support for PPP projects including: administrative
support such as land acquisition, permits, etc.; asset-based support such as leasing
land or infrastructure facilities; direct financial support; and contingent support in
the form of government guarantees. It is important to identify any such support
required for the project and assess if such support is viable or likely.
For mega projects, where significant resources for feasibility studies are involved, a
separate proposal on the PC-II proforma is to be submitted for approval. These
projects require proper feasibility studies to be undertaken before the submission
of the PC-I. In more complex projects, technical assistance could be requested from
one of the donors. For other low-cost projects, in-house feasibility studies can be
carried out. Based on the data and positive findings of the feasibility study, the PC-I
is prepared and submitted for approval by the concerned forum.
At the project preparation stage, various indicators such as required inputs, baseline
data, and expected outputs and outcomes are determined over the life of project. In
addition, the viability of the project in terms of financial and economic indicators is
determined, which focuses on financial and economic costs and benefits of the
project. Another important aspect, which needs to be considered, is the
sustainability aspect after completion: how it would yield the required
output/outcome. Therefore, due attention has to be given to the sustainability
aspect of the project at the preparation stage.
For accurate estimates, the users need to use credible sources of data only and
should clearly mention any source that they use. The users may consult the
following sources/documents for data and only if they cannot find the requisite data
from these sources should they consult other sources.
Key stakeholders are those individuals or groups whose interest in the project must
be recognised if the project is to be successful – in particular those stakeholders
who will be positively or negatively affected during the project or on successful
completion of the project.
The classification list is not definitive, nor will every project utilise every
classification. It may be necessary to break some groups down into sub-categories,
for example breaking the outcome-impacted group into beneficiaries (those
stakeholders who receive a benefit) and affected people (those stakeholders who
may experience some form of penalty, be harmed by the project or bear a cost). It
may also be useful to further break the groups down by gender to understand
different outcomes of a project for men and women separately.
Group
Group Description Stakeholder Examples
Classification
The roles of all stakeholders should be fully understood and their concerns should
be highlighted. Any good project proposal would pre-emptively address concerns of
all stakeholder groups and would have mitigitating stratgies integrated into the
proposal to manage any risks. Such an approach would avoide later delay issues or
objections during the appraisal and approval process.
The aforementioned studies are required to find out whether the project would be
technically feasible, administratively manageable, economically and financially viable.
These are normally required for big projects (at present costing more than PKR 300
million). In the case of medium and small projects, preliminary investigations are
comparatively simple. Hence, formally outsourced pre-feasibility and feasibility
studies are not needed for such projects.
1) Market aspect – The study of the market is of basic importance. It is on the basis of
such a study that the demand for the product/services to be produced is estimated.
Similarly, levels and trends of supply are examined. The comparison of the project
demand with the supply gives the 'net demand'. The factors that determine the extent
of marketability of a product/service are the following:
4) Economic analysis – The economic analysis of the project helps to spell out the
impact of the project on the economy or the society as a whole. Such an analysis
involves comparison of the costs that the economy or society is required to bear to see
the expected benefits. A project is considered to be economically viable if it contributes
to the gross national product. The financial and economic analyses of projects are
discussed in detail in the next chapter.
Selection of consultants
After approval of the PC-II / PC-I from the competent forum, including ToRs for the
consultants, the procuring agency shall select the consultants following the
provisions of Punjab Procurement Rules 2014. In the said rules Chapter VII has
specifically been added for procurement of consultancy services. The Client
Department shall also ensure that the consultant has adequate expertise to perform
the assignment. In the case of non-development funding, the Client Department may
select the consultant/firm without having a PC-I/PC-II. However, ToRs may be
cleared from the P&D Department.
Box 8: Provision for consultancy
Land acquisition – For projects where land is required, either the government land is
provided or it has to be acquired under Land Acquisition Act 1894.
Basic civil works – Various civil works are identified on the basis of the objectives of a
project. The types and characteristics of the civil works will depend on the selected
design. At the feasibility stage, civil work design includes preliminary architectural and
engineering plans along with specifications. The basic structural framework, thus
determined, should give the desired operational efficiency.
Auxiliary facilities – Besides basic civil works, auxiliary facilities are also required to
be spelled out. The auxiliary works normally include: roads, water supply and
drainage, power supply, housing facilities for employees, etc. Such works are also
planned in detail at the time of project formulation. The auxiliary works, in fact, are the
key elements, which need to be properly identified and provided in a project to ensure
its smooth and successful operation.
For projects in which construction work is not a substantial part, the overall
methodology would be as follows:
• For construction works, the guidelines as given in the preceding section are
applicable.
• For other works, e.g. extension, research, training, education, health coverage,
etc., the implementation schedule should specifically indicate the various
activities and timings for their completion to achieve the desired objectives.
• Clear parameters for measuring the success of the project or achievement of
objectives should be highlighted for subsequent M&E. For performance
evaluation the benchmark survey should precede the project implementation.
Once the basic and auxiliary civil works and other activities have been planned, the
next stage is to chalk out suitable schedules for implementation and operation of the
project. The implementation schedule should indicate the manner of executing the
physical work. In short, it should clearly reflect:
7A network diagram, also referred to as a logic diagram, is an easy-to-use tool for visualising and
depicting how the project is expected to proceed. A network diagram is a sequence of steps
The detailed planning of basic and auxiliary works enables the project planner to
determine the types and quantity of resources required for project implementation
and its subsequent operation. Different types of resources required for the project are
finances, machinery and equipment, manpower, supplies, materials and various
utilities, which should be commensurate with the requirements and implementation
plan. Details are given below:
Machinery and equipment – The choice for machinery and equipment is influenced
by the nature of project, alternative use of machinery, available technology levels, scale
of output, costs and availability of spare parts, and the performance reliability. When
selecting any machinery and/or equipment it is essential to consider the scale of
production for its optimal use.
Supplies and material – The quantities and specifications of supplies and materials
required for implementation and operation of the project may also be worked out in
detail. While estimating such requirements the availability and continuity of supply of
these resources may be thoroughly examined.
Utilities – The requirements for different utilities such as water, power, and fuel
should be properly identified for both implementation and operation of the project.
The analysis should also clearly indicate the sources and the cost for provision of the
required utilities.
Project costs
Once the project requirements have been identified and quantified, its cost analysis is
taken in hand. This task should preferably be undertaken jointly by the experts to
(activities), commonly represented by blocks that are linked together in the logical sequence in
which they need to be carried out.
1) Capital cost – All the expenditure incurred on physical assets such as basic and
auxiliary civil works, machinery and equipment constitute the capital cost of the
project.
2) Recurring cost – The expenditure incurred on goods and services, e.g. salaries,
wages and running costs of essential utilities (water, fuel, electricity, etc.) and
expenses on repair constitute the recurring cost of a project.
Phasing of costs – The capital and recurring costs of a project should be phased out
on an annual basis for the entire project life. The requirements for funds to
implement the project will be mainly regulated by the financial phasing of the
project.
Box 9: Classification of project costs
All projects to the extent possible should have the inclusive growth integrated
within the proposals. Each project proposal should address the following issues:
All projects should have gender-responsive proposals and ensure equitable gender
representation in project beneficiaries. Project design and implementation should
ensure that the projects aim to achieve positive results for women and girls, along
with other social groups. For example, human resources should also be planned
with a gender-sensitive lens. The project teams should also have gender
considerations knitted into their recruitment/selection criteria. Reporting and M&E
should be based on gender-disaggregated data. All public facilities as part of any
development project should ensure women-friendly facilities and all services
8 Extreme poverty, or absolute poverty, was originally defined by the United Nations in 1995 as 'a
condition characterized by severe deprivation of basic human needs, including food, safe drinking
water, sanitation facilities, health, shelter, education and information. It depends not only on income
but also on access to services'. Currently, extreme poverty widely refers to earning below the
international poverty line of $1.25/day (in 2005 prices), set by the World Bank.
• Does the project identify the needs of specific groups, especially for women,
girls and other vulnerable groups?
• Do the project targets specifically include women, girls and other
marginalised groups?
• Does the project help reduce gender disparity and help contribute to the
empowerment of women and girls and help promote social inclusion?
• Does the project promote capacity building of women, girls and other
marginalised groups?
• Does the project results framework have gender-sensitive indicators to track
results for women and girls?
Irrespective of the level of results, for both intermediate and longer-term objectives,
the project proposal should clearly list quantifiable or measurable indicators to
make the project structure more objective and accountable. While these indicators
would vary from project to project, each sector/department should develop a
repository for relevant indicators to help the project formulation teams to make
their results framework more crisp and clear. VOLUME TWO – SECTION A lists some
indicators/parameters for social, productive and infrastructure sectors.
3.1 Appraisal9
A project appraisal assesses the technical soundness and economic and financial
viability of a project. Appraisal facilitates the selection of suitable projects by clearly
identifying the financial and economic implications of various alternatives. If a project
is well formulated and thoroughly appraised, a good follow-through on subsequent
stages of the project cycle will see successful implementation of the project and
achievement of desired outcomes. The overall objective of systematic appraisal is to
achieve better spending decisions for capital and current expenditure on schemes,
projects and programmes.
Appraisal involves a careful review of the basic data, assumptions and methodology
used in project preparation, an in-depth review of the work plan, review of cost
estimates and funding arrangements, an assessment of the project's organisational and
management aspects, and finally an assessment the validity of the financial, economic
and social benefits expected from the project. On the basis of such an assessment, a
judgement is reached as to whether the project is technically sound, financially
justifiable and economically viable. A comprehensive project appraisal is carried out in
the P&D Department at approval stage. However, the responsibility of some form of
appraisal lies at multiple stages whenever the PC-I is reviewed or approved (such as at
district, division or department level).
This section provides an overview of the main analytical methods and techniques
that should be used in the appraisal process.
The first step in project appraisal is proper identification of costs and benefits.
To determine the viability of a project, the costs are compared with the benefits, i.e. if
the benefits are greater than costs, a project is considered viable. The proper
identification of costs and benefits is, therefore, a step of basic importance. In project
appraisal, the project objectives provide the basis of costs and benefits. For public
projects, the objectives can be as specific as provision of municipal services to citizens
of a community to sometimes as broad as to maximise the national income or reduce
poverty or stimulate economic growth. All projects consume resources such as land,
labour, capital, machinery, etc. and produce outputs in the form of goods and services.
Whereas the consumption of resources through investment in projects is a 'cost' to the
economy, the addition to the goods and services is the 'benefit' to the economy.
There are different categories of costs and benefits, which need to be identified
carefully for their proper treatment. Various categories of costs and benefits are listed
below:
COSTS
Direct costs – These costs are directly borne by the project and are also known as primary costs. The
components of direct cost are expenditure incurred on all goods and services used in the execution of a
project including taxes, import duties, subsidies, etc. However, these components are treated differently
in financial and economic analyses.
Indirect costs – The project may lead to costs being incurred outside the project itself. Such a cost is
known as indirect or secondary cost. For example, construction of a dam may reduce river flow, causing
an increase in the cost of dredging of the dam site. If such a technological externality is significant and is
to be identified and valued, it may be treated as an indirect cost to the project.
Tangible costs – The costs that can be monetised are known as tangible costs, and these may include
components of direct and indirect costs.
Intangible costs (and negative externalities) – The costs that cannot easily be monetised are
intangible costs. The damage caused to the human health by air, water and noise pollution gives
examples of intangible costs.
Box 10: Various types of costs
BENEFITS
Direct benefits – Direct or primary benefits are those benefits that directly flow from the project.
Indirect benefits – The benefits that occur outside the project are considered secondary benefits. In
contrast to the primary benefits, which accrue to the project itself and are also derived as direct benefits,
secondary benefits are also known as indirect benefits.
Tangible benefits – All the direct and indirect benefits that can be measured in money terms are known
as tangible benefits.
Intangible benefits (and positive externalities) – Intangible benefits refer to the benefits that cannot
be measured in money terms. Examples of intangible benefits are improvement of a site as a result of
construction of a dam and appreciation in value of real estate due to infrastructural development.
Box 11: Various types of benefits
PROJECT
APPRAISAL
Organiza onal or
Economic & Financial
Management
The first step of any appraisal should be to carefully review the project proposal and
to assess the following:
• Ensure that the project goal and objectives are in line with sector plans and
the provincial growth framework.
• Validate all assumptions used.
• Make sure that specified project outputs are directly linked with intended
outcomes. The results framework should be a core element of this technical
review.
3.3.2 Technical appraisal
A social appraisal reviews the project design and the process of project identification
through to implementation and monitoring, from a social perspective. Particular
attention is paid to the likely impact of the project on different stakeholders, their
opportunities for participation and the project’s contribution to poverty reduction.
Social and environmental appraisal should focus on following dimensions:
Social and environmental considerations require that all projects avoid adverse
impacts on the people and environment and be appropriate for the culture of the
local communities and project beneficiaries. If adverse impacts are unavoidable,
efforts should be made to mitigate these impacts to ensure that the affected people
can restore or improve their living standards compared with the situation before
the project.
For financial appraisal, the financial soundness of the project must be assessed. This
should include the incremental financial benefits and costs to the project and the
IRR or NPV. Assumptions underlying the forecasts of financial benefits and costs
(e.g., market outlook for key outputs and inputs, pricing, phasing of development)
and the results of sensitivity analysis testing and changes in assumptions are
reviewed. The adequacy of project financing and any risks it presents are also
assessed.
The recommended analytical methods for appraisal are generally discounted cash flow
techniques, which take into account the time value of money. People generally prefer
to receive benefits as early as possible while paying costs as late as possible. Costs and
benefits occur at different points in the life of the project, so the valuation of costs and
benefits must take into account the time at which they occur. This concept of time
preference is fundamental to proper appraisal and so it is necessary to calculate the
present values (PVs) of all costs and benefits.
NPV method – In the NPV method, the revenues and costs of a project are estimated
and then are discounted and compared with the initial investment. The preferred
option is the one with the highest positive NPV. Projects with negative NPVs should be
rejected because the present value of the stream of benefits is insufficient to recover
the cost of the project.
Compared to other investment appraisal techniques such as the IRR and the
discounted payback period, the NPV is viewed as the most reliable technique to
support investment appraisal decisions. There are some disadvantages with the NPV
approach. If there are several independent and mutually exclusive projects, the NPV
method will rank projects in order of descending NPV values. However, a smaller
project with a lower NPV may be more attractive due to a higher ratio of discounted
benefits to costs (see the section on BCR below), particularly if there are affordability
constraints.
The key determinants of the NPV calculation are the appraisal horizon, the discount
rate, and the accuracy of estimates for costs and benefits.
Discount rate11: The discount rate is a concept related to the NPV method. The discount rate is used to
convert costs and benefits to PV to reflect the principle of time preference. The calculation of the
discount rate can be based on a number of approaches, including, among others:
- The social rate of time preference – the way society values present, as opposed to future, consumption.
- The opportunity cost of capital – the value of the next-highest-valued alternative use of capital.
- Weighted average method – weighted average of different rates reflecting proportions of funds
obtained from their respective sources
1 20 20 (20.00) (17.86)
2 20 20 (20.00) (15.94)
3 20 20 (20.00) (14.24)
4 4 4 20 16.00 10.17
5 4.5 4.5 25 20.50 11.63
6 5 5 30 25.00 12.67
7 5.5 5.5 35 29.50 13.34
8 6 6 40 34.00 13.73
9 6.5 6.5 45 38.50 13.88
10 7 7 50 43.00 13.84
TOTAL 60.00 38.50 98.50 245.00 146.50 41.23
*PKR in billions; discount rate 12%
10 Time value of money – 'The idea that money available at the present time is worth more than the
same amount in the future due to its potential earning capacity. This core principle of finance holds
that, provided money can earn interest, any amount of money is worth more the sooner it is
received.' (Finance - Professional Essays and Assignments; Edited by Zoan NG)
11 Cost-Benefit Analysis for Development – A Practical Guide; Asian Development Bank
IRR – The IRR is the discount rate12 that, when applied to cash inflows of a project, sets
them equal to the initial investment. The preferred option is the one with the IRR most
in excess of a specified rate of return. An IRR of 10% means that with a discount rate of
10%, the project breaks even. The IRR approach is usually associated with a hurdle
cost of capital/discount rate, against which the IRR is compared. The hurdle rate
corresponds to the opportunity cost of capital. In the case of public projects, the hurdle
rate is the discount rate. If the IRR exceeds the hurdle rate, the project is accepted.
There are disadvantages associated with the IRR as a performance indicator. It is not
suitable for the ranking of competing projects. It is possible for two projects to have
the same IRR but different NPVs due to differences in the timing of when those costs
and benefits are accrued. In addition, applying different appraisal techniques to the
same basic data may yield contradictory conclusions. Moreover, the IRR technique is
only suitable for projects that are supposed to yield some revenues/cash inflows.
IRR = 27%
(The calculation of IRR is done through an Excel model, the soft copy of which will
be made available through Punjab’s P&D Department’s website.)
12 Interest rate used for discounting future cash flows to compute present value of those cash flows.
BCR – The BCR is the discounted net revenue divided by the initial investment. The
preferred option is the one with the ratio most in excess of 1. In any event, a project
with a BCR of less than 1 should generally not proceed. The advantage of this method
is its simplicity. Using the BCR alone to rank projects can lead to suboptimal decisions
as a project with a slightly higher BCR ratio will be selected over a project with a lower
BCR, even though the latter project has the capacity to generate much greater
economic benefits because it has a higher NPV value and involves greater scale.
Sensitivity analysis is the process of establishing the outcomes of the CBA, which is
sensitive to the assumed values used in the analysis. This form of analysis should also
EXAMPLE: Sensitivity analysis of NPV and BCR with discount rate of Lahore–Sialkot
Motorway (hypothetical figures; data given in earlier examples)
A number of scenarios are formulated – best case, worst case, etc. – and for each
scenario identified, a range of potential values is assigned for each cost and benefit
variable. When formulating these scenarios, it is important that appropriate
consideration is given to the sources of uncertainty about the future (i.e. technical,
political, etc.). Once the values within each scenario have been reviewed, the NPV of
each scenario can then be recalculated.
1 15
2 20
3 18
4 5 30
5 5.5 35
6 6 40
7 6.5 45
8 7 50
9 7.5 55
10 8 60
TOTAL 53.00 45.50 315.00
*PKR in billions; discount rate 10%
PKR 90.90 billion
NPV
BCR 2.36
IRR 40%
1 20
2 20
3 20
4 4 20
5 4.5 25
6 5 30
7 5.5 35
8 6 40
9 6.5 45
10 7 50
TOTAL 60.00 38.50 245.00
*PKR in billions; discount rate 12%
1 30
2 25
3 22
4 3 10
5 3.5 12
6 4 14
7 4.5 16
8 5 18
9 5.5 20
10 6 22
TOTAL 77.00 31.50 112.00
*PKR in billions; discount rate 14%
PKR (29.56) billion
NPV
BCR 0.59
IRR 1%
Various analytical techniques are used for economic appraisal of projects but the
most frequently used are CBA (after incorporating economic returns) and CEA.
13In economic analysis, an externality is the cost or benefit that affects a party that did not choose to
incur that cost or benefit. For example, a dam that causes environmental degradation and
resettlement problems impose environmental and social costs on the whole society. Similarly, a
project may entail external benefits, such as improvement in public safety.
For projects appropriate for CBA, the analysis is based on summary measures of
performance (economic internal rate of return or NPV), calculated based on the
incremental benefits and costs of the project to society as a whole (using the 'with-
project' and 'without-project' criteria). The main benefits and costs, including the
key underlying assumptions made (e.g., market output for key outputs and inputs,
phasing of development, shadow prices) and sensitivity analysis should be
presented.
For projects not appropriate for cost-benefit analysis, the basis for the performance
of project should be clearly specified. For example, the project's cost-effectiveness
ratios may be compared with those of alternative designs that achieve the same
desired results. The analysis should identify those key variables that render the
cost-effectiveness ratio higher than that of a rejected alternative, or higher than
some critical point. All key assumptions should be presented.
CBA – The general principle of CBA is to assess whether or not the social and economic
benefits associated with a project are greater than its social and economic costs. To
this end, a project is deemed to be desirable where the benefits exceed the costs.
However, should the benefits exceed the costs, this does not necessarily imply that a
projects will proceed as other projects with a higher NPV may be in competition for the
same scarce resources. In addition, there are affordability constraints, which mean that
projects should not proceed even if the NPV is positive.
In CBA, all of the relevant costs and benefits, including indirect costs and benefits, are
taken into account. Cash values, based on market prices (or shadow prices, where no
appropriate market price exists) are placed on all costs and benefits and the time at
which these costs/benefits occur is identified. The analytic techniques outlined above
(i.e. NPV method, IRR method, etc.) are applied using the discount rate. The general
principle of CBA is that a project is desirable if the economic and social benefits are
greater than economic and social costs. It is vital that CBA is objective. Its conclusions
should not be prejudged. It should not be used as a device to justify a case already
leaning for or against a proposal. Factors of questionable or dubious relevance to a
project should not be introduced into an analysis in order to affect the result in a
preferred direction.
3.3.5 Organisational and management appraisal
Technical Appraisal
No Criteria ? Comments
6 Sound rationale for the selected technical design or ☐
approach ☐
7 Proposed design conforms to international standards
8 Proposed design meets the identified needs in the best
☐
possible way
9 Proposed technology is proven or tested ☐
10 Proposed design is aligned with existing ☐
structure/facilities/programmes
11 List of equipment and machinery to be installed with costs
and specifications attached ☐
Equipment capacity is satisfactory and in line with ☐
12 requirements
14The person entrusted with appraisal may like to look at different criteria with varying importance,
depending upon the project requirements. A simple checklist, rather than a scorecard, is deliberately
used to accommodate a variety of projects.
For project approvals, various bodies involved in granting approvals for execution
of projects exist right from field levels to the federal level. These
bodies/committees can be divided into three categories, i.e. approval of projects by
bodies/committees constituted at federal, provincial, and sub-provincial (divisional
and district) levels. Please see the approval matrix below. The functioning and
powers of these bodies are briefly discussed below:
The DDSC is competent to approve the projects where the cost is up to PKR 200
million. The DDSC is fully competent to approve projects placed before it, reject
them outright or approve them with certain conditions. However, in the case of a
difference of opinion, the scheme is referred to the PDWP for
consideration/approval.
17Notified under the Punjab Delegation of Powers Rules, 2006 (amended up to 26th May 2009);
Powers of DDSC were enhanced from PKR 100 million to 200 million and notified vide letter No.35
(231)RO(COORD)/P&D/2006 dated 30.10.2006
1) The DDSC is presided over by the administrative secretary in person and attended by
officers not below the rank of additional secretary/chief of section of the Finance and
P&D Departments.
2) These powers are exercised only in respect of approved plans of schemes included in the
ADP.
3) No expenditure is allowed to be incurred on a scheme that is not included in the
development budget of the year.
4) The scheme finally sanctioned by PDWP is sent to the P&D Department and Finance
Department for their records.
5) Posts created under the approved scheme should not be in grade 17 or above. Whenever
a post at grade 17 or above is involved, prior approval of the Finance Department would
be necessary.
6) A notice of the meeting is sent simultaneously to the P&D Department and Finance
Department at least 10 days before the scheduled date of the meeting.
7) The committee is not competent to approve any scheme based on a subsidy. All
development schemes with a subsidy element are sent to PDWP for approval irrespective
of their costs.
8) Five copies of the PC-I for all the schemes to be considered by the DDSC have to be
furnished to the Coordination Section of the P&D Department at least two weeks earlier
than the scheduled date of the meeting for internal distribution in the P&D Department.
9) The minutes of this sub-committee's meeting are approved and issued by the concerned
department and be simultaneously furnished to the Finance Department and other
members of the DDSC.
10) Administrative approval of the approved scheme is issued by the administrative
secretary of the department concerned.
11) On receipt of the schemes by the Coordination Section, copies of PC-I are supplied to the
technical, appraisal, and concerned chief of section. The views/comments of these
sections are separately annexed with the working paper.
12) The DDSC is not competent to approve schemes based on foreign aid component and
subsidy.
3.5.1.3 DDWP
DDSCs were established in 1979 at divisional headquarters. These committees
were abolished in 2001 due to introduction of a devolution plan. In 2008, a
DDWP was constituted at each divisional headquarters18, which is competent to
approve projects up to PKR 100 million. The existing composition of DDWP is as
follows:
18Notified by the Finance Department vide letter No.FD(FR) II-5/82-P-III dated 6th November 2008;
Finance Department’s Notification No. FD(FR)2-5/82-P-III dated 1st January 2009.
1) The administrative approval of the schemes approved by the DDWP is issued by the
sponsoring department.
2) The development schemes relating to the judiciary under the Lahore High Court,
Lahore and other special institutions, including the Provincial Assembly, Punjab
Public Service Commission, Office of Ombudsman, Punjab Election Authority and
Technical Educational & Vocational Training Authority (TEVTA), fall outside the
purview of the DDWP.
3) Where a divisional tier of the concerned department exists, the divisional officer,
with the signatures of the divisional commissioner, issues administrative approval.
In cases where a divisional tier of the department does not exist, the administrative
approval is issued by the director (development & finance), with the signatures of
the divisional commissioner.
3.5.1.4 DDC
The DDCs were established in October 1998 to approve the schemes of the devolved
sectors costing up to PKR 20 million. Later on these powers were enhanced to
approve development schemes up to PKR 50 million19. The DDC can also approve
schemes of TMAs exceeding PKR 5.0 million.
19Vide the Finance Department's Notification No. FD(FR)II-5/82 dated 20th October 2006; Notified
by the Finance Department vide No. FD(FR)II-5/82 dated 11.08.2001.
The powers of DDC were enhanced from PKR 20 million to PKR 50 million vide the Finance
Department’s Notification No. FD(FR)II-5/82 dated 20.10.2006.
The TMO shall act as a member of the DDC to consider and approve development schemes of the
respective tehsil/town above PKR 5 million vide the Finance Department’s Notification No. FD(FR)II-
5/82(P) dated 01.04.2014.
1. TMO Chairman
2. Tehsil/Town Officer (Finance) Member
3. Tehsil/Town Officer (Planning) Member
4. Tehsil/Town Officer (I & S) Secretary/Member
Table 12: Composition of TMA Works Committee
At the federal level, three main bodies are involved in the process of project
approval. These are briefly described below.
3.6.2 CDWP21
The next higher forum at the federal level is CDWP with the following composition:
1. Deputy Chairman/Secretary, Ministry of Planning, Development and Chairman
Reform, Government of Pakistan (in absence of DCPC)
2. Chairman, P&D Board, GoPb, Lahore Member
3. Additional Chief Secretary (DEV), P&D Department, Government of the Member
Sindh, Karachi
4. Additional Chief Secretary (DEV), P&D Department, Government of the Member
Khyber Pakhtunkhwa, Peshawar
5. Additional Chief Secretary (DEV), P&D Department, Government of the Member
Baluchistan, Quetta
6. Additional Chief Secretary (DEV), P&D Department, Government of Azad Member
Jammu and Kashmir, Muzaffarabad
7. Secretary, Development, Gilgit-Baltistan, Gilgit Member
8. Additional Chief Secretary, Development, Federally Administered Tribal Member
Areas, Peshawar
9. Finance Division, Government of Pakistan, Islamabad Member
10. EAD, Government of Pakistan, Islamabad Member
11. Chairman, Pakistan Council of Science & Technology, Islamabad Member
12. Climate Change Division, Government of Pakistan, Islamabad Member
13. Relevant federal administrative ministry Member
MINISTRY OF PLANNING, DEVELOPMENT AND REFORM/PLANNING COMMISSION
1. Secretary Member
2. Chief Economist Member
3. Members, Planning Commission Members
4. Additional Secretary Member
5. Joint Chief Economist (Operation & Macro) Member
20 Decision of NEC in its meeting held on 04.06.2009, notified by the P&D Department vide its
letter No. 35(231)RO(COORD)/P&D/2009.
21 Decision of NEC notified by Ministry of Planning, Development and Reform vide letter
No. 20(1)PIA-I/PC/2013 dated 03.06.2014 and also notified by the P&D Department vide its
letter No. 35(231)RO(COORD)/P&D/2014 dated 12.06.2014.
Functions of CDWP
The CDWP, organised by the Planning Commission, should perform the following functions:
3.6.3 ECNEC
Although the NEC does not approve projects, it is important to explain the
composition and functions of this body. According to Article 156 of the Constitution
of Pakistan, the composition of the NEC is as follows:
• prime minister of Pakistan (chairman);
• CMs of all provinces;
• one member from each province, to be nominated by the respective CM; and
• four other members, nominated by the prime minister.
The following attend the meetings of the NEC by special invitation for all items on
the agenda:
Other federal secretaries, including the secretary of the Board of Investment and
chief secretaries of the provinces Azad Jammu & Kashmir and Gilgit-Baltistan,
attend the meetings of the NEC by special invitation, as needed.
CHARTER OF NEC
156- National Economic Council:
1) The President shall constitute a National Economic Council which shall consist of
• the Prime Minister, who shall be the Chairman of the Council;
• the Chief Ministers and one Member from each Province to be nominated by the Chief
Minister; and
• four other members as the Prime Minister may nominate from time to time.
2) The National Economic Council shall review the overall economic condition of the country
and shall for advising the Federal Government and the Provincial Governments, formulate
plans in respect of financial, commercial, social and economic policies; and in formulating
such plans it shall, amongst other factors, ensure balanced development and regional equity
and shall also be guided by the Principal of Policy set out in Chapter-II of Part-II.
3) The meetings of the Council shall be summoned by the Chairman or on a requisition made
by one-half of the members of the Council.
4) The Council shall meet at least twice in a year and the quorum for a meeting of the Council
shall be one half of its total membership.
5) The Council shall be responsible to the Majilis-e-Shoora (Parliament) and shall submit an
annual Report to each House of Majlis-e-Shoora (Parliament).
In some of the projects, whose approval is not granted by the ECNEC, a request for
anticipatory approval is made to the secretary, Planning Division, Government of
Pakistan, generally through a D.O.22 letter addressed by the Chairman, P&D Board.
Anticipatory approval is sought for those projects that have been recommended by
the PDWP. If the ECNEC cannot consider this project for some reason, then the
provincial governments move to the federal government for a grant of anticipatory
approval, so that objectives/physical targets of the project may not suffer. Along
with the request of the Provincial P&D Department an annexure is enclosed
(VOLUME TWO – SECTION C), which clearly explains the main features of the
project. The annexure includes information such as the name of the project, its
location, the sponsoring agency, a brief description of the project entailing the scope
of the work, its physical targets, organisational structure, head-wise financial
phasing, etc. Apart from this, the date of consideration of the project by the PDWP
and, in case the project has been recommended by the CDWP, this date as well,
should be indicated. The reasons for getting anticipatory approval should be
elaborated as well. The finances already incurred and the physical targets achieved
should also be depicted in the annexure, so that the approving authority may have a
picture of the ongoing state of the project. It may be mentioned that anticipatory
approval should only be sought for those projects whose cost is beyond the
approving competency of the PDWP.
22 Demi official
The following guidelines apply for projects as well as programmes, policy units and
policy cells.
• For larger projects, project steering committees may be formed, with due
approval from the government. Such steering committees should be
empowered to take all key decisions regarding project implementation. The
ToRs for such steering committees should include:
o providing overall policy direction to the project;
o deciding strategies for the implementation of the project;
o constituting sub-committees as and when required;
o reviewing work of any sub-committees and the project management
for conformity to the overall policy framework of the government;
o sorting out administrative and financial matters relating to the
project;
o monitoring the performance of the project in the terms of quality and
timelines;
o reviewing the impact of the project;
• Project directors have to be appointed for the project's life, in any case not
exceeding five years. Upon expiry of this project posting, a project director is
liable to serve under government for at least same period before jumping to
the next posting in a project. The higher pay packages/project allowances are
admissible for those government servants who are posted in different
projects and entities (both development and non-development) after
selection through a competitive process.
Qualification/experience requirements
• The minimum educational qualification for the post of project director should be broad
based and not less than 16 years of education in the relevant field from institutions
recognised by the Higher Education Commission of Pakistan. However, administrative
departments may fix minimum qualifications according to the nature and requirement of
the project.
• Project directors must have a minimum five years' experience in project
management/implementation. They must also possess basic knowledge of the project
planning and management processes and procedures.
• An age limit may be prescribed by the administrative department according to the
requirement of the project.
Box 18: Qualifications/experience requirements for project staff
Selection Committee
Project procurement
23 Notification No. FD. SR-I/9-20/2006; dated 21st November 2014; GoPb; Finance Department
Effective M&E of a project depends on how effectively it has been planned and how
clearly the desired outcomes have been stipulated. It has been observed that in
many ongoing government projects, the outputs have been clearly earmarked but
either the intended outcome and impact are not clear or there are gaps in the results
chain. Planning and M&E processes should be geared towards ensuring that results
are achieved — not towards ensuring that all activities and outputs get produced as
planned. Moreover, these individual project results must be in line with the overall
national, provincial, sectoral and departmental goals and vision.
RBM is a good approach to synthesise planning and M&E, and is adopted by the
Planning Commission of Pakistan as well as the GoPb. All the PC-Is now have a
section on desired results, although they are seldom given due consideration in
project planning.
Monitoring is also an ongoing process. The lessons from monitoring are discussed
periodically and used to inform actions and decisions. Evaluations should be done
for programmatic improvements while the project/programme is still ongoing and
should also inform the planning of new projects/programmes. This ongoing process
of implementing, learning and improving is what is referred to as the RBM life-cycle
approach.
25 At some places, RBM is also referred to as Managing for Development Results (MfDR) to place the
emphasis on development rather than organisational results.
26 Handbook on Planning, Monitoring and Evaluating for Development Results; UNDP
Stakeholder
Par cipa on
Monitoring
Monitoring
27 Handbook on Planning, Monitoring and Evaluating for Development Results; UNDP 2009
Actual Project
Objectives (Achieved)
E E
M M M M
In order to start M&E for any ongoing or new project or activity, there are seven
steps involved:
STEP 1 - Identify the key questions to be asked and answered by the M&E
STEP 4 – Select tools and instruments for data collection and analysis
STEP 6 – Identify people and other resources for undertaking the M&E
All these steps have been summarised here with relevant examples:
• Does this project have a results framework? If it does, then what are the key
outputs and desired outcome and impact for the project? If it does not, then
what should be the desired results?
• Did any other organisation undertaken a similar project earlier? If yes, then
what has been the learning?
• How would the M&E results feed into the project cycle? Is the design flexible
enough to incorporate the learning?
This section provides some guidance on developing a results framework for various
projects. However, detailed technical guidance is also available through a number of
internationally available resources on implementing RBM29. To begin with, the
project development team needs to clearly identify the desired impact and outcome
of every project and other activities as well as the planned outputs and inputs (or
activities) for them. Indicators for all targets also need to be identified along with
the source of their verification. The following matrix provides some guidance on
these terms:
IMPACT What are we trying to achieve? Why are we working on this problem?
(Vision, goal, objective, What is our overall goal?
longer-term outcome,
long-term results)
OUTCOME Where do we want to be in three to five years? What are the most
(First, positive result or immediate things we are trying to change? What are the things that must
immediate result, be in place first before we can achieve our goals and have an impact?
prerequisites, short- and
medium-term results)
OUTPUT What are the things that need to be produced or provided through
(Interventions) projects for us to achieve our short- to medium-term results? What are
the things that different stakeholders must provide?
The outcome and impact part answers the 'why' question, while the outputs present
the answer to what is going to be done under any given project. Together, they
define the desired results. The input and activities on the other hand answer how all
of this is going to be done and what resources would be required for achieving this.
'Evaluation is the systematic and objective assessment of an ongoing or completed project, program or
policy, its design, implementation and results. The aim is to determine the relevance and fulfillment of
objectives, development efficiency effectiveness, impact and sustainability. An evaluation should provide
information that is credible and useful, enabling the incorporation of lesson learned into the decision
making process of both recipients and development partners.'
Desired impact: poverty reduction; economic Desired impact: poverty reduction; reduction in
growth mortality rates
Desired outcome: better access to electricity; Desired outcome: better access to healthcare
sustainable development
Desired output: fully equipped mobile healthcare
Desired output: solar power plant up and units delivering primary healthcare services
running, connected to national grid
Suggested inputs: vehicles; doctors and
Suggested inputs: civil works; equipment paramedics; equipment; etc.
(photovoltaic (PV) technology with solar
panels, inverters and control systems); M&E results from pilot project will feed into full-
technical services; engineering, procurement scale project
and construction contractor; etc.
• What is going to be the best approach for M&E? What is the counterfactual?
• What has been learned from previous M&E designs?
• What is going to be the baseline? Would secondary data suffice or are
primary data needed?
• How will the sample be selected?
• What will be the periodicity of data collection?
Monitoring gives information on where a programme or project is at any given time (or over time)
relative to respective targets and outcomes. Monitoring focuses in particular on efficiency and the
use of resources. While monitoring provides records of activities and results, and signals problems to
be remedied along the way, it is descriptive and may not be able to explain why a particular problem
has arisen, or why a particular outcome has occurred or failed to occur.
Box 22: What is monitoring?
Evaluations can be done at the beginning of a project (baseline evaluation), during the
course of a project (mid-year, year-end or mid-term evaluations), at the end of a
project (end-term evaluation), or even after a few months or years subsequent to the
completion of a project (impact assessment).
Evaluation deals with questions of cause and effect. It is assessing or estimating the value, worth or
impact of an intervention and is typically done on a periodic basis – perhaps annually or at the end of
a phase of a project or programme. Evaluation looks at the relevance, effectiveness, efficiency and
sustainability of an intervention. It will provide evidence of why targets and outcomes are or are not
being achieved and addresses issues of causality.
Box 23: What is evaluation?
Director general, M&E has issued detailed evaluation guidelines, which are appended to this
32
manual.
Randomised controlled trials (RCTs) have recently gained a lot of popularity in development science for
evaluations. Under an RCT, the people being studied are randomly allocated one of the different
treatments under study. RCTs are currently being used by a number of international development
experts to measure the impact of development interventions worldwide. The GoPb is also using RCTs in a
number of projects including Performance Incentive Scheme for Excise Officers as well as the Punjab
Economic Opportunities Programme implemented by the Punjab Skills Development Company.
Approach for M&E: physical inspection; Approach for M&E: smart geographic
consultant validation information system (GIS)-based monitoring by
special M&E firm; vehicle tracking system;
What has been learned from previous M&E feedback system by calling selected treated
designs? Project completion time estimates; patients
approved tariffs
What has been learned from previous M&E
What is going to be the baseline? Greenfield designs? Staff absenteeism; pilferage in medicine
project dispensation
How will the sample be selected? Not What is going to be the baseline? Special baseline
required study commissioned to assess state of access to
primary healthcare services
What will be the periodicity of data
collection? Monthly site visit by line How will the sample be selected? Stratified
department; resident consultant on site sampling
M&E will cover periodic monitoring and final What will be the periodicity of data collection?
project evaluation Weekly visits by M&E firm; occasional visits by
line departments; real-time data on tracking
devices
Does the relevant sector/department use any Does the relevant sector/department use any
core indicators? Access to electricity; average core indicators? Access to primary healthcare
household electricity bill; number of services; infant and adult mortality rate; life
fans/lights; energy mix (renewable versus expectancy; percentage coverage of
non-renewable energy) immunisation services
What should be the right mix of quantitative, What should be the right mix of quantitative,
core and customised, activity and process core and customised, activity and process
indicators? Design validation at design stage; indicators? Impact should focus on quantitative
percentage of completion during indicators in terms of better access as well as
construction; days left in project qualitative indicators such as improvement in
commissioning life expectancy indicators; process tracking
should also have thresholds for acceptable level
How can indicators be appropriately of service
disaggregated for various dimensions, such
as for gender, geography, etc.? Electricity How can indicators be appropriately
access to rural versus urban areas disaggregated for various dimensions, such as for
gender, geography, etc.? Electricity access to
rural versus urban areas: women's access to
healthcare services; availability of female staff on
board
Sample surveys Collect a range of data through questionnaires A number of citizens are
with a fixed format that are delivered via the interviewed for use of a
post, electronically, over the telephone and in basic health unit.
face-to-face interviews.
Quantitative data is
Can be used with a range of subjects such as produced on the average
households (socioeconomic survey); a sector time taken by citizens on
(livestock or agriculture survey); or an activity getting a fard (land
(school beneficiaries). revenue record) from a
land revenue record
centre.
A livestock census is
another example.
Tracer studies A range of data collection methods are used to A sample of beneficiaries
collect different types of data on an individual who have been provided
group or community to determine the effects literacy training are
of an aid intervention over a longer period. observed.
Types of evaluation
Project evaluation and impact evaluation are two main types of evaluation
techniques. The following matrix summarises the main components of these
evaluations.
Examines whether the activities have Is usually carried out by those 'outside' of the
delivered the planned outputs and whether project in an effort to enhance objective
Whether the beneficiaries have been given Whether support to beneficiaries has led to
MEASURING
due support and facilitation and whether increased contribution to the economy,
they have been positively impacted leading to growth and poverty alleviation
The evaluation methodology adopted by P&D’s Directorate General, M&E has laid
out the following process.
In case of secondary data, are the sources In case of secondary data, are the sources
reliable? Not applicable reliable? Benazir Income Support Programme
data partially used for baseline study
In case of primary data, who will be collecting
the data? How can data integrity be ensured? In case of primary data, who will be collecting
Line department staff visit; consultant the data? How can data integrity be ensured?
reports M&E firm validating staff-submitted data;
triangulation through spot checks by department
How often should the various data sets be staff and feedback calls made to selected
collected? Monthly inspection visit; 24/7 patients; real-time information coming from
availability of resident consultant smart monitoring and vehicle tracking
Who will be responsible for subsequent steps How often should the various data sets be
such as data entry, consolidation, cleaning collected? Monthly M&E reports; real-time data
and analysis? Line department’s M&E cell plotted on web-based dashboard
STEP 5 – TIMEFRAME
It is essential to plan clear timeframes with milestones. The key considerations at
this stage include:
• What are the key M&E milestones and when should they be reached?
• How can the activities leading to these milestones be designed?
• What are the implications of delay?
Periodic reporting and review meetings – For smooth and timely implementation
of development projects, a number of periodic progress reports are obtained from all
the key departments and agencies. On-the-spot inspection is carried out and periodic
meetings are held on the basis of performance data furnished by the line departments
and agencies. A few words on the reporting procedure are given below:
• Meetings: Apart from monitoring through reporting, review meetings are also
held at different levels to review the pace of implementation of projects. At the
provincial level, ADP review meetings are organised regularly in the P&D
Board. In these meetings, monthly progress reports sent by the administrative
departments/agencies are considered. Of these, the most important are the
mid-year ADP review meetings. A series of meetings are held in the P&D Board
wherein sector-wise and scheme-wise discussions are carried out to review the
progress of implementation of ADP. The main purpose of these meetings is to
ascertain the absorptive capacity of each department. The schemes with poor
progress are weeded out and additional funds are allocated to the schemes
with good progress. The inter-sectoral and intra-sectoral re-appropriation
proposals are also discussed and finalised in these meetings so as to ensure
successful implementation of the ADP. The line departments/agencies also hold
meetings to review the pace of implementation of their respective projects. At
the divisional level, the implementation of development projects/programmes
is reviewed by the Divisional Coordination Committees.
The M&E work needs to be carried out at multiple stages, depending upon the
project requirement. These stages include the following:
Pilot phase – A project may involve undertaking a pilot phase, where something
will be tested out with a group or a particular locality before the project is 'rolled
out' further. Again it is important that the analysis of M&E data from this pilot is
undertaken thoroughly and quickly, as the findings from this are needed to inform
the progression of the project.
EXAMPLES
What are the key M&E milestones and when What are the key M&E milestones and when
should they be reached? Design sign-off and should they be reached? Procurement of vehicles
validation; ground breaking; civil works and equipment; recruitment of staff;
completion; equipment installation; grid procurement of medicine; commissioning
connectivity; commissioning
How can the activities leading to these
How can the activities leading to these milestones be designed? M&E firm inspections
milestones be designed? Design sign-off and and spot checks; validation by line department
validation – technical due diligence; ground staff
breaking – physical inspection; civil works
completion – physical inspection; equipment What are the implications for delay? Limited
installation – consultant sign-off; grid access to health services; cost overruns; delays in
connectivity – consultant sign-off; meeting national/provincial poverty reduction
commissioning – provision of power as per targets
required technical parameters
STEP 6 – RESOURCES
Considering the general resource crunch and fiscal considerations, the resource
identification would be critical. It is important to have a realistic M&E regime in
place, so that the resource availability does not become a problem. Some of the
important questions at this stage would include:
• Who is going to bear the costs or provide resources for these activities?
• Is there any provision for M&E costs in the PC-I?
THE PLANNING MANUAL 87
EXAMPLES
Cost provision for technical consultant 2.5% of project cost dedicated for M&E
STEP 7 – IMPLEMENTATION
Once the M&E plan is approved, the next stage is to undertake M&E activities. This
would include assigning M&E tasks and responsibilities; preparing ToRs for any
external sources needed; initiating baseline work; collecting data; etc.
After baseline values for performance indicators are set, their change over time can
be monitored using GIS to see if the planned targets are reached or can be reached
realistically in the defined timeframe.
IRIS will be a transformational solution, providing new insights for urban planners
and managers, through integrating various layers of data and providing ready
access to information. This in turn, once fully implemented, is expected to ensure
better coordination among departments; information validation from various
sources, increasing transparency; and access to digitised information, thereby
increased planning and responsive capacity of client departments. It is also a major
step towards e-governance, as it is resulting in digitisation of data sets in selected
sectors and processes and has introduced use of technology by various government
departments34.
IRIS – TUU
TUU has been working on IRIS since its inception in 2006 and the funding has been provided from
government's own resources. The IT interface and solution have also been developed and deployed
by an in-house team of experts, based at TUU. TUU initially collected spatial data of city boundaries
by taking their paper maps and geo-referencing them. Government departments, which became
clients for specific applications, were requested to share their lists of assets and other related
information. TUU's staff mapped these assets on the GIS-based map, after physical verification of
their location and recording of their geo-coordinates. The spatial maps were then shared with the
department for population of the attributed departmental data layer.
Evolution of GIS has proven to be a technological shift from paper-based maps to spatial data and has
opened up numerous possibilities for data integration, mining and analysis. The government
departments, which were initially hesitant in embracing technology, have also now gotten used to
this innovative use of technology and are moving ahead, with TUU's assistance, to develop various
new applications. IRIS basically acts as an information cube, with multiple applications of various
departments running on it.
34A provincial department may only get access to its own data. Presently there is no mechanism in
IRIS to download boundary files, road layers, locations of schools and hospitals, or other layers. A
provincial department requiring such GIS layers for its M&E work would need to make some
arrangement with TUU to access this data – possibly a licensing arrangement. Presently inter-
departmental access to GIS layers from TUU is still facing some challenges and would require some
memoranda of understanding between departments to facilitate access to whatever GIS layers they
have themselves and to the GIS layers of TUU.
• Any GIS-based solution should be aligned with IRIS, to the extent possible.
• The M&E plan should also explore using mobile GIS and the concept of smart
monitoring through use of smartphones.
• All efforts should be made to align GIS-based systems with other systems
deployed in the province to ensure data integration.
o On the technical side, due thought must be given to the platform used,
data source identification, existing systems in use, integration and
scalability issues, etc.
In Punjab, the agencies at the provincial level that carry out monitoring functions are
as follows:
Monitoring Section – P&D Board – The main functions of this section are
monitoring of sector-wise projects in terms of financial utilisation against the
allocations and physical achievements in comparison with the envisaged targets at
various levels. For the purpose of monitoring, monthly progress reports are
collected in the prescribed proforma in respect of all the projects included in the
ADP. The administrative departments and other agencies are required to send
monthly progress reports by the 16th of each month for the previous month. These
reports are considered in the ADP review meetings held regularly in the P&D Board
at various levels, i.e. under the chairmanship of the chief minister and minister, P&D
Department or chairman, P&D Board. The mid-year review of ADP is the most
important exercise. In a series of meetings a scheme-by-scheme review is carried
out in association with the Finance Department and the concerned administrative
departments. As a result of this exercise, schemes with slow/poor progress are
identified; additional funds are allocated to the schemes that register fairly good
Planning cells – All the Nation-Building Departments and agencies are supposed to
have Planning & Evaluation Units. However, a number of departments do not have
proper Planning and Evaluation Cells. As such these units do not seem to be effective in
carrying out evaluation functions in their respective sectors.
Other agencies – From time to time the evaluation of important and big
programmes/projects is entrusted to other independent/autonomous organisations.
At the provincial level these agencies include PERI, NESPAK and other consultant
firms.
Directorate General, M&E – The Directorate General, M&E, headed by the director
general, has been established in the P&D Department to focus on the following core
areas:
Apart from structural adjustment lending primarily secured from the International
Monetary Fund to redress balance of payment deficits, foreign assistance is also
sought for projects and programmes in the shape of soft loans, commodity aid,
grants and technical assistance to supplement provincial domestic resources,
poverty reduction and technical expertise for achieving accelerated growth in
priority areas. Specifically to Punjab, these areas include agriculture and livestock,
irrigation and energy, physical infrastructure, urban development, governance,
education, skill development, health, water and sanitation, and other areas.
Loans – Loans constitute the first category of foreign aid. These are obtained for
development projects as well as programmes. Major multilateral DPs extending
loans include the World Bank Group (including the International Development
Association (IDA), International Bank for Reconstruction and Development, and
International Finance Corporation) and the Asian Development Bank. Apart from
these international agencies, bilateral DPs such as the Department for International
Development (DFID)-UK and Canadian International Development Agency provide
grant assistance, whereas France, Germany, Italy and Japan provide loans as well as
grants/technical assistance. Loans are normally provided on beneficial terms such
as a nominal interest rate of approximately 1–2% and a repayment period averaging
25 years, including a grace period of 5–10 years. The International Fund for
Agricultural Development provides interest-free loans in the agriculture and
livestock sector with a longer repayment period.
Credit – IDA used to provide interest-free credit to Pakistan. However, IDA is now
providing credit on blended terms @ 1.25% with service charges of 0.75% and
commitment charges that could be up to 0.5%. The repayment period has been
reduced to 20 years, with a five-year grace period.
Grants – The third category of foreign assistance consists of grants in aid, which are
not to be paid back. Major agencies that provide grants include the United Nations
agencies such as the United Nations Children's Fund (UNICEF), World Food
Programme, United Nations Development Programme (UNDP), United Nations
Educational, Scientific and Cultural Organization (UNESCO) and Food and
Agriculture Organization, along with bodies granting official development assistance
in Japan, Canada, Germany, etc. A project-specific technical grant may include
equipment/material and technical expertise/consultancies. These grants must be
availed as needed..
The DPs prepare medium- to long-term strategic plans for specific countries in
consultation with all stakeholders in the public and private sectors. Accordingly, the
provincial government starts initial consultations with the DPs. Loans must not be
requested on a supply basis; rather, they should be demand driven. A foreign agency
showing interest in any project on its own must be discouraged. EAD coordinates all
36Detailed guidance on seeking foreign assistance is available from the Government of Pakistan's
Debt Management Manual, which can be accessed from
http://www.ead.gov.pk/gop/index.php?q=aHR0cDovLzE5Mi4xNjguNzAuMTM2L2VhZC9mcm1EZXR
haWxzLmFzcHg%2FaWQ9NSZhbXA7b3B0PXBvbGljaWVz
Foreign assistance is usually obtained for projects that involve large investment
outlays and foreign exchange requirements or modern technology. To obtain foreign
assistance, the administrative departments furnish the copies of relevant projects
on concept clearance proformas. The P&D Department, after getting the clearance of
the PDWP, submits the proposals to P&D Division, Government of Pakistan for
concept clearance by the Federal Concept Clearance Committee headed by the
deputy chairman, Planning Commission. Thereafter, the project proposals are
forwarded to EAD, Government of Pakistan to be presented to the DP.
The P&D Department plays a coordinating role between the recipients and the
donors via EAD by coordinating visits of various types of foreign missions. Usually at
the end of the visit of a foreign mission, a wrap-up meeting is held in the P&D
Department wherein the mission presents its findings and recommendation. The
future course of action is agreed upon between project authorities and the mission
for smooth implementation of projects. The coordination role of the P&D
Department also includes the processing of all communications on federal
government participation in loan negotiation, signing of the project agreements, and
M&E of the foreign-assisted projects. The P&D Department also convenes review
meetings with various administrative departments/PMIUs to ensure timely
utilisation of the foreign assistance. Project Steering committees are usually housed
in P&D and led by the chairman, P&D Board. The Project Director is the member /
secretary of the committee.
Credits into and payments out of ‘Revolving Fund Accounts’ in Dollars shall be transcribed into Rupees at the SBP
weighted average buying rate of exchange prevailing on the date of transfer of funds by the Lenders or on the date of
payments to the payees
Both accounts lapsable. Lapsed balances in one year will be protected in the next year’s alloca ons.
District Account
For a foreign donor-assisted project, a revolving fund account (RFA) in respect of donor financing
under a loan/credit/grant shall be established at a branch of the National Bank of Pakistan (NBP),
separately from the account to be established for the government's share of project financing
(counterpart funds), if any is required. Such accounts shall be in the nature of assignment
accounts.
37 Office memorandum
The payments out of RFAs by way of reimbursement to NBP would be translated notionally at
the aforesaid SBP rate of exchange at which the foreign currency was purchased by the SBP (date of
receipt of funds from the donor in the SBP). The RFAs at NBP branches shall show debits, credits
and the balance in Pakistani rupees as the funds available to the project management would be in
Pakistani rupees.
The rate of exchange used for donor reporting purposes by the project authorities would be
the rate of exchange applied by the SBP for converting foreign currency into Pakistani rupees for that
tranche at the time of receipt of funds in the SBP from the donor. In the case of more than one tranche,
the rate applied for each tranche will be used for donor reporting purposes; the funds received in the
first tranche will be utilised first and the unutilised balance shall be attributed to the last tranche.
The 'foreign currency' for the purposes of this procedure would mean the United States Dollar
(USD), Euro (EUR), Pound Sterling (GBP), Japanese Yen (JPY), Australian Dollar (AUD), Canadian
Dollar (CAD), Swiss Franc (CHF) and any other foreign currency that may be permitted specifically or
generally later on by the Finance Division (Budget Wing) in consultation with SBP (Finance
Department), Karachi.
Separate RFAs shall be established by the project management by the NBP for each of the
loans/credits/grants, and each RFA will be designated a special sub-fund identification number
upon establishment of the account. These individual sub-accounts will together constitute a single but
separate account (child account) under Central Government Account No. 1 (Non-Food) held
presently with the SBP.
The RFA shall be lapsable at the end of each financial year. However, the lapsed balance in one financial
year will be protected through a budgetary allocation in the next financial year.
If the funds from donors are received in currencies other than US dollars, these shall be credited in
respective RFAs in Pakistani rupees at the prevailing rate of exchange.
On receipt of the credit advice in respect of a disbursement of foreign currency funds to the project
from donors that must be routed through the SBP Karachi, the SBP's Finance Department will advise
the chief manager (SBP-Banking Services Corporation (BSC)) Karachi, to credit the Pakistani rupee
equivalent of the foreign currency to the assignment account (sub-account of Central Account-I) under
the appropriate debt or grant head. The chief manager will, in turn, and at the latest by the next
business day, authorise the amount in Pakistani rupee credit into the relevant RFA of the project.
The (SBP-BSC) Karachi will immediately report the receipt in Pakistani rupees and the equivalent
foreign currency to NBP headquarters with a copy to respective NBP branch, the relevant project
director, P&D Division/Department (as the case may be), EAD, Finance Division/Department and
AGPR/AG. No accounting entry shall be made in the books of DAO/AG/AGPR at this stage.
The DPs and the developing countries under the Paris Declaration are bound to
work together and jointly monitor and evaluate foreign-funded development
projects and programmes to make sure that funds are spent on the approved
projects and programmes. To strengthen and streamline the system, the developing
countries agreed to introduce RBM systems. Other similar frameworks for results
mapping include:
• MfDR;
• results-based M&E;
• result management;
• performance measurement/management; and
• management by objective.
What is a result?
'A result is a describable or measurable change that is derived from a cause-and-effect relationship.
There are three types of such changes – outputs, outcomes and impact - which can be set in motion
by a development intervention. The changes can be intended or unintended, positive and/or
negative. It is expected that careful management for development results within programmes using
RBM will lead to positive change. However, this is not always the case. Change can sometimes lead to
unintended or negative consequences. It is therefore important to continually manage for results so
that programmes can truly result in positive change.'39
Box 35: What is a result?
Traditional monitoring looks into financial and physical progress but RBM probes
into the outcomes and impacts of development projects and programmes. RBM has
been promoted as an important means to improve the quality and impact of
development efforts. It is essentially a special public management tool; governments
can use it to measure and evaluate outcomes and then feed the information back
into the ongoing processes of governance and decision-making. At its core are
notions of:
• Goal orientation – Setting clear goals and results providing targets for
change and opportunities to assess whether change has occurred.
• Causality – Various inputs and activities leading logically to outputs,
outcomes and impacts, also called the 'results chain'.
• Continuous improvement – Periodically measuring results providing the
basis for adjustment (tactical and strategic shifts) to keep programmes on
track and to maximise their outcomes.
38 This section has been largely extracted from Planning Commission’s Guide on Project Management
and the United Nations Development Group's RBM Handbook.
39 United Nations Development Group's RBM Handbook
RESULTS CHAIN
IMPLEMENTATION RESULTS
INPUTS ACTIVITIES OUTPUTS OUTCOME IMPACT
Ac ons taken or Ac ons taken or The changes in The ins tu onal Posi ve and
work performed work performed skills or abili es, or and behavioral nega ve long-term
through which through which the availability of changes in effects on
inputs, such as inputs, such as new products and development iden fiable
funds, technical funds, technical services that result condi ons popula on
assistance and assistance and from the that occur between groups produced
other types of other types of comple on the comple on by a development
resources are resources are of ac vi es of outputs and interven on,
mobilized mobilized within a the achievement directly or
to produce to produce development of goals. indirectly,
specific outputs. specific outputs. interven on. They are the intended
intended or or unintended.
achieved effects of
an interven on’s
outputs.
EXAMPLES EXAMPLES
Project budget; Civil works for Basic Provision of Improved access to Improved life
Availability of Health Unit primary healthcare basic healthcare expectancy
doctor and other services to services; Improved
staff for a BHU community vaccina on
coverage
In RBM, a results chain is used, which shows how activities, through a number of
intermediate causal links, are expected to result in the realisation of the goals of
those projects, programmes and policies. For example, training of farmers in
improved agricultural techniques can lead to changes in agricultural practices,
• If you do not measure results, you cannot tell success from failure.
• If you cannot see success, you cannot reward it.
• If you cannot reward success, you are probably rewarding failure.
• If you cannot see success, you cannot learn from it.
• If you cannot recognise failure, you cannot correct it.
• If you can demonstrate results, you can win public support.
The lack of sufficient viable projects to offer to private investors has been pointed
out in a number of countries as one of the major constraints to promoting PPPs.
Therefore, a proactive approach is needed for identifying and screening projects
that are potentially suitable for implementation in the PPP mode. As the line
departments and local governments in Punjab lack experience in this area, there is a
need for adopting a relatively simple methodology and procedures, which they
could follow.
To provide the necessary support, the government has established a PPP cell in the
P&D Department, which is staffed by technical, financial and legal experts. All line
departments and local governments that want to implement PPP projects in their
sector and/or geographical area of responsibility can seek support from the PPP cell
in project identification, screening, preparation and transaction execution.
40For detailed information on the subject, please see Punjab’s PPP Policy Guidelines, which can be
accessed at http://ppp.punjab.gov.pk/guidelines, as well as the PPP Act and Rules at
http://ppp.punjab.gov.pk/policy_act
The following four main phases can be distinguished in the overall life-cycle of PPP
projects:
• project inception;
• project preparation (feasibility study);
• transaction execution (procurement of the private party); and
• construction, operation and transfer (development, delivery and exit).
The sequence of the main activities during these phases is shown in the chart below:
Construction
Project Inception and Preparation Transaction Execution
and Operation
PPP Steering
Committee
Approval / Approval /
Approval / Rejection of
Rejection of
Rejection of Contract
Project
PDF Request Award
Proposal
PPP Cell
PDF funding
required
Risk
Review Review
No PDF funding
required
Market
Sounding
Government
Agency
Provided the outcome of the feasibility study is positive and the PPP project
proposal is approved by the PPP Steering Committee for implementation, the third
phase – transaction execution – starts. During this stage, the consultants should
assist the line departments in undertaking market sounding aimed at packaging the
project in a way that attracts the interest of private investors. The market sounding
should be followed by the tendering process as prescribed in the Punjab Public–
Private Partnership Act 2014. Based on technical and financial evaluation of the bids
received, the preferred bidder should be determined and invited to contract
negotiations. After the PPP agreement has been signed, the selected private party
should endeavour to arrange the necessary financing and thereby achieve financial
closure for the PPP project. This will mark the end of the transaction execution
phase and the beginning of project construction.
41 As the costs of consultants are significant and cannot be funded frequently by the annual budgetary
allocations, the government has established the PDF as a part of the overall enabling PPP framework.
The PDF, which will be administered by the PPP cell, will ultimately be a revolving fund, with the
project preparation and transaction execution costs reclaimed from winning bidders.
42 These activities are sometimes referred to as technical, legal, environmental and financial due
diligence.
The following matrix lists the main responsibilities of different partners during the
PPP project life-cycle:
and specifications
Monitor and evaluate project operation to ensure conformity
with performance standards and tariffs
Prepare annual reports on project performance to the PPP cell
Monitor and evaluate financial performance of the project
Make arrangements for project transfer to the government at the
end of the term of the PPP agreement
Table 24: PPP project life-cycle steps
CF = Consulting Firm; LD = Line Department; PDF = Project Development Facility; PPP = Public–Private Partnership;
PPPC = PPP Cell; PPPSC = PPP Steering Committee; RMU = Risk Management Unit.
a) If support by the PPP cell for this activity is requested by the government agency.
b) If government support is required for the project.
The GoPb has been endeavouring to support a number of industries in recent years,
through various interventions. Furthermore, in the past few years, the sponsoring
departments have increasingly opted for developing independent companies to take
responsibility for implementation of these interventions. These recently established
organisations usually take the form of a not-for-profit company, registered under
Section 42 of the Companies Ordinance (commonly referred as Section 42
companies). Most of these Section 42 companies have been established through a
direct grant or loan from the GoPb, but after the utilisation of initial seed money,
these companies often seek more funding through their parent department, with or
without PC-I, for meeting their recurring costs as well as for new development
initiatives.
The need for government interventions for industrial support should only be
justified if they are addressing a market failure that cannot be addressed by the
private sector itself43. These failures include coordination failures and information
spillover.
Coordination failures occur when markets are incomplete so that the return to
one investment depends on whether some other investment is also made:
building a hotel near a beautiful beach may be profitable if someone builds an
airport. The opposite may also be the case. However, there may be not be a way
for the market to coordinate both investments. A typical solution is for the
government to provide a guarantee to both investors. If done well, this will be
costless for the government ex post as the investments would be profitable
when they both take place. If the guarantee is not credible, then the
government can just build the airport and the hotels would follow.
For instance, surgical instrument manufacturers may not invest in training their
workforce, as these workers, once trained, may be hired by other players in the
market. However, the government may address this failure by establishing a
technical and vocational training institute in the area for the surgical manufacturing
workforce.
All private sector support interventions should have clear performance benchmarks
for beneficiaries, and if these are not met, there should be a clear process for
filtering out such beneficiaries. For example, in special industrial or export
processing zones, the beneficiaries can be asked to meet certain export targets.
The notion of cost recovery is important not only for creating ownership and
responsibility but also so that the government’s limited resources could be
channelled in the most effective manner. The government may decide to support
interventions that do not contribute anything towards cost recovery; nevertheless,
the principle should be there to prioritise, rank and assess any such interventions.
5.4.6 Targeting
The government has the mandate of directing limited resources to the initiatives
that meet its strategic priorities. Some of the interventions, while having clear
objectives, only aim at increasing the profitability of the private enterprises.
However, all such interventions should target either productivity or innovation as
clear criteria for targeting. For instance, at the federal level, the export rebates are
given to all exporters, thereby increasing their profitability. As per this principle,
however, these rebates should be focused on certain types of exporters, including
those exporting to new markets (where they could not previously export and now
due to productivity enhancement have become more competitive) or in new
product categories (which indicates innovation).
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2 Does the project have clear objectives and results-based
performance indicators?
3 Are there clear selection criteria for beneficiaries?
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4 Are there any performance benchmarks for beneficiaries? ☐
5 Have relevant stakeholders been consulted? ☐
6 Are beneficiaries making any cost contributions? ☐
7 Does the project have a sunset clause? ☐
8 Does the project have an exit strategy? ☐