Project Design and

Management

By Amaha Kiros
COURSE CONTENTS
• Introduction
• Project Development
• Project Appraisal Techniques
• Project Finance
• Project Information Management System
• Project Implémentation
• Project Monitoring and Evaluation
• Project Proposal Writing
CHAPTER 1
INTRODUCTION
The Concept of Project and Development
What is a Project?
 The concept of project has no clear cut definition
 It has been defined by:
• different scholars,
• development practitioners,
• NGOs
differently in diverse arenas
 All too often people call any work they have to do a “project.”
 To put projects into perspective, you need a common starting point
 Projects actually have a very specific definition.
 A project:
• Is defined as a directed work that is aimed at achieving specific goals
within a defined budget and schedule,
• Involves making plans for the future and describing them to others or to
the community as a whole,
• Is any work that happens only once,
• Has a clear beginning and end,
• Is intended to create a unique product or knowledge.
• May involve only a person, or thousands of individuals.
• May last for several days or many years.
• May be undertaken by a single organization, or by an alliance of several
stakeholders.
• May be as simple as organizing a one day event or as complex as
• Can also be defined as a “temporally endeavor undertaken to
create a unique product or service”.
• Can be viewed as a set of tasks or activities involving the use
of resources to obtain benefit.
• Is a specific activity, with a specific starting point and ending
that intended to accomplish the specific objectives
• Is the investment of capital in a time-bound intervention to
create productive assets,
• Is “a unique endeavor to produce a set of deliveries within
clearly specified time, cost, and quality constraints”.
• Is an assignment /task/job that has to be undertaken and
completed within a:
• set time,
• budget,
• resources and performance specification designed to meet the
needs of stakeholders and beneficiaries’.
Characteristics of Projects
Projects:
o Involve the investment of scarce resources in the expectation of future
benefits,
o Have measurable objectives,
o Have specific beneficiaries or clientele group,
o Are conceptually bounded,
o Are geographically bounded,
o Are organizationally bounded,
o Are temporally-bounded,
o
Relationship between Policies, Programs, and Projects
 Policy sets out a statement of intent or a vision of what
development should bring.
 Programs implement development policy

 project operates within a context of larger programs and within an

overall policy environment.
 It is through projects and programs that development policy is
converted into reality.
 It is necessary to distinguish between projects and programs because there is
sometimes a tendency to use them interchangeably
 While:

 A project refers to an investment activity where resources are used to

create capital assets, which produce benefits over time and has a
beginning and an end with specific objectives,
 A program :

 Is an ongoing development effort or plan involving a number of

projects.
 Yet programs cannot live forever, they have limited life cycle, which
however, may or may not be explicitly stated.
 So in effect in terms of time delimitation, there is only relative
difference between programs and projects.
 Note that projects can stand alone without being part of certain
program.
 Projects, which are not linked with others to form a program, are
sometimes referred to as “stand alone” projects
Types of Projects

1. New Investment
• New investments are designed to establish a new productive
process independent of previous lines of production.
• They often include a new organization, financially independent of
existing organizations.

2. Expansion Projects
• These are projects which involve extending an existing project with
the same output, technology and organization.
3. Updating Projects
• These are projects which involve replacing or changing
some elements in an existing activity without major
change of output.
 Based on project costs and benefits, a distinction can be drawn
between directly productive & indirectly productive projects.
 Directly productive projects are those where the immediate costs &
benefits accrue to a single organization; a consequence is that this
organization is able to calculate & commit any resulting surplus to
new activities.
 Indirectly productive projects broadly speaking are those where the
benefits received from new resources do not accrue to the
organization responsible for carrying the costs.
 In these circumstances, any resulting surplus is not concentrated in
the hands of a single organization.
 Most infrastructure projects, such as roads are indirectly productive;
the benefits accrue to users & producers whilst costs are met by
government.
Project Parameters
 Whatever the type of project, three issues invariably arise:

1. the issue of the quality standard to which the project is being

worked-Is a ‘quick and dirty’ solution being sought or is the
emphasis on high quality standards which is required?
2. The issue of cost-how much birr is required to accomplish the
project?
3. The time pressure- when the project has to be completed?
 When these three issues are combined they produce the
‘quality- cost-time’ triangle
 In addition, projects invariably take place in a context which
includes:
• Organizational politics,
• Personal objectives;
• Business pressure,
• Another most important issue that shapes the ultimate fate of a
project is Scope.
• Scope is a statement that defines the boundaries of the project.

• It tells not only what will be done but also what will not be done.

• In the information systems industry, scope is often referred to as-

a functional specification.
• In the engineering profession, it is generally called a statement of
work.
 Scope may also be referred to as:
 A document of understanding,
 A scoping statement,
 A project initiation document, and
 A project request form.

 Whatever its name, this document is the foundation for all

project work to follow.

 Beginning a project on the right foot is important, and
so is staying on the right foot.
 It is no secret that scope can change.

 You do not know how or when, but it will change.

 Detecting that change and deciding how to

accommodate it in the project plan are major
challenges for the project manager.
Role of Project Manager
 The project manager (PM) is the leader of a team performing a
project.
 The project manager and his team must:
 Identify the stakeholders,
 Determine their needs, and
 Manage and influence those needs to ensure a successful project.
 A key to stakeholder satisfaction is the diligent and accurate
analysis of the stakeholders themselves as well as their stated
needs and unstated expectations.
 A project manager should not just be handed a statement of work
from upper management and then try to complete it; rather the PM
should be deeply involved with the development of that statement
of work.
The roles of a PM are many, some of which include the following:
 Identifying the requirements and risks,
 Making plans and organizing the effort,
 Qualifying and possibly selecting project team, vendors, and other
The roles of a PM are many, some of which include the following:
 Identifying the requirements and risks
 Making plans and organizing the effort
 Qualifying and possibly selecting project team, vendors, and other participants
participants,  Communication among team, management, stakeholders
 Assessing the probability of occurrence of problems
 Developing solutions to problems (both in advance and on the spot)

 Communication among team, management, stakeholders,

 Ensuring that progress occurs according to the plan
 Deliverable management

 Assessing the probability of occurrence of problems,

 Developing solutions to problems (both in advance and on the
spot),
Project stake holders
 Project stake holders are individuals and organizations that are
actively involved in the project or whose interests may be
positively or negatively affected as a result of project execution or
The roles of a PM are many, some of which include the following:

project completion;
 Identifying the requirements and risks
 Making plans and organizing the effort
 Qualifying and possibly selecting project team, vendors, and other participants

 They exert influence over the project or its results.

 Communication among team, management, stakeholders
 Assessing the probability of occurrence of problems
 Developing solutions to problems (both in advance and on the spot)
 Ensuring that progress occurs according to the plan
 The project management team must:
 Deliverable management

• Identify the stake holders,

• Determine their requirements and
• Manage and
• Influence those requirements to insure a successful project.
Key stakeholders on every project include:
• Project manager
• Customer
• Performing organization
The roles of a PM are many, some of which include the following:
• Project team members,
 Identifying the requirements and risks
 Making plans and organizing the effort
 Qualifying and possibly selecting project team, vendors, and other participants
• Sponsor  Communication among team, management, stakeholders
 Assessing the probability of occurrence of problems
 Developing solutions to problems (both in advance and on the spot)
 Ensuring that progress occurs according to the plan
 Deliverable management
Relevant stake holders of a project

The roles of a PM are many, some of which include the following:

 Identifying the requirements and risks
 Making plans and organizing the effort
 Qualifying and possibly selecting project team, vendors, and other participants
 Communication among team, management, stakeholders
 Assessing the probability of occurrence of problems
 Developing solutions to problems (both in advance and on the spot)
 Ensuring that progress occurs according to the plan
 Deliverable management
The Concept of Development
 The concept development is very much illusive word like many
other concepts in academics.
 It is the most used, misused, and contested concept as it has been
conceptualized differently by:
 diverse scholars in academia,
 development practitioners in various contexts, and
 NGOs as well as
 It is a word that is difficult to define because of the diverse
contextual usage of the concept.
 In its simplest reductionism, development means:
 Improvement,
 To become more advanced,
 More mature,
 More complete,
 More organized,

Indicators of a Good Project
 A project should arise from a genuine, identified need;
 A project should usually originate from the grass-roots,
 A project should aim to improve the educational, social and economic
position of women, girls and children and youth;
 A project should be within the capability of the affiliate, either alone
or in cooperation with other organizations;
 Clear objectives: The most successful projects have clearly defined
objectives from the outset.
 A project should be managed, implemented, evaluated, and
reported on by the affiliate’s members, or, in part, by persons
designated to do so by the affiliate and;
 A good project plan,

 Communication-to maintain effective and continual communication

between the parties.
 A controlled scope,

 Stakeholder support
CHAPTER TWO
PROJECT DEVELOPMENT
Concept of Project Cycle Management
 A cycle is a sequence of events which a project follows.

 The way in which projects are planned and carried out follows a
sequence that becomes known as the project cycle.
 The cycle starts with the identification of an idea and develops that
idea into a working plan that can be implemented and evaluated.
 Any kind of project passes through the following stages:
• Identification
• Preparation (pre-feasibility and feasibility studies)
• Appraisal
• Implementation
• Evaluation
Project Life Cycle (figure)
Identification of Project Ideas
The search for promising project ideas is the first step
towards establishing a successful venture.
Identification of potential project ideas is such a
difficult task that it requires:
 Imagination,
 sensitivity to environmental changes, and
 Realistic assessment of what the project owners can
do.
Good project ideas are elusive. So a wide range of
sources should be tapped to identify them.
To identify promising project ideas, one must:
 Assess the Inputs and Outputs of Various Industries
 Analyze the Performance of Existing Industries
 Study Governmental Guidelines
 Look at the Suggestions of Financial Institutions and
Developmental Agencies
 Investigate Local Materials and Resources
 Analyze Economic and Social Trends
 Identify unfulfilled psychological needs etc.
Preliminary Screening of Project Idea
 By using the aforementioned suggestions, it is possible to
develop a long list of project ideas.
 Some kind of preliminary screening is required to eliminate ideas
which are less promising.
 For this purpose, it is important to look into:
o Compatibility With the Promoter
o Consistency With Governmental Priorities
o Availability of Inputs
o Adequacy of the Market
o Reasonableness of Cost
o Acceptability of Risk Level
Project Preparation
 Project preparation is about identifying and comparing technical and
institutional alternatives for achieving the project’s objectives.
 It covers the full range of analysis of:
 Technical,
 Institutional,
 Financial, and
 Economic conditions necessary to achieve the project’s objective.
 Preparation thus require feasibility studies that:
 Identify and prepare preliminary designs of technical and
institutional alternatives,
 Compare their costs and benefits, and
 Investigate in more details the more promising alternatives until the
most satisfactory solution is finally worked out.
 It involves generally two steps:
 Pre-feasibility studies, and
 Feasibility studies
 1. Pre-feasibility Study
 This provides background information for defining the basic
concept of the project, which leads to the feasibility study stage.
 Once a concept proposal is developed to conduct a project, it
needs to be examined. To begin with, a preliminary project
analysis is done.
 As an introduction to the full range of feasibility study, this
exercise is meant to assess:
• Whether the project is important to justify a feasibility study, and
• What aspects of the project are critical to its variability and
hence deserve an in-depth investigation.
 At this stage the analyst obtains approximate estimation of the
major components of the project’s costs and benefits.
 Some of the main components which must be examined
during the pre-feasibility study include:
• Availability of adequate market,
• Project growth potential,
• Investment costs, operational cost and distribution costs,
• Demand and supply factors; and
• Social and environmental considerations
 Using these preliminary data, a preliminary financial and
economic analysis will be conducted.
 If the project idea appear workable after this preliminary
assessment, the analysis will be continued to the feasibly
stage.
2. Feasibility Study
 A feasibility study is part of the process of project identification,
preparation and selection.
 This process involves further evaluation of projects or groups of
projects and then choosing to implement some of them.
 This process is very important for projects that are
implemented by governments and big organizations.
 At this stage a team of specialists:
• Scientists,
• Geographers,
• Engineers,
• Economists,
• Sociologists, and others will need to work together and more
accurate data need to be obtained.
A feasibility study should:
 Provide all data necessary for an investment decision
• The commercial,
• Technical,
• Financial,
• Economic, and
• Environmental
prerequisites for an investment project should therefore be
defined and critically examined on the basis of alternative
solutions already reviewed in the pre-feasibility study.
 Form the core of the proposal preparation process.
• Its purpose is to provide stakeholders with the basis for deciding
whether or not to proceed with the project and for choosing the
The feasibility study must provide answers to the following basic
questions:
• Does the project conform to the development and environmental
objectives and priorities of the specific country or region?
• Is the project technically and scientifically sound?
• Is the methodology the best among the available alternatives?
• Is the project administratively manageable?
• Is there adequate demand for the project’s outputs?
• Is the project financially justifiable and feasible?
• Is the project compatible with the customs and traditions of the
beneficiaries?
• Is the project likely to be sustained beyond the intervention
period?
 In developing countries, it is common to find a situation where only a few projects
are sufficiently prepared and carefully selected.
 This happens because of several reasons. Some of these could be:
• lack of enough skilled people to perform this task;
• Unwillingness to spend money on this process.
 The major difference between the pre-feasibility and feasibility studies is the
amount of work required in order to determine whether a project is likely to be
viable or not.
 If the preliminary screening suggests that the project is reliable, a detailed analysis
of the:
• Marketing,
• Technical,
• Financial,
• Economic, and
• Ecological
 The final product of this stage is a feasibility report.
 The feasibility report should contain the following elements:
 Market analysis,
 Technical analysis,
 Institutional and organizational analysis,
 Financial analysis,
 Economic analysis, and
 Social and Environmental analysis
1. Market Analysis
 Market analysis is basically concerned with two questions:
1. What would be the aggregate demand of the proposed product/service in
the future?
2. What would be the market share of the project under study?
 To answer the above two questions, the project analyst requires a wide variety
of information and need to use appropriate forecasting methods. These include:
• Consumption trends in the past and the present consumption level
• Past and present supply positions
• Production possibilities and constraints
• Imports and exports
• Elasticity of demand
• Consumer behavior, intentions, attitudes, preferences, and requirements
• Distribution channels and marketing policies in use
• Administrative, technical, and legal constraints
2. Technical Feasibility
 The technical analysis is concerned with the project’s
inputs and the technology of production and processing.
 It is about the analysis of the technical and engineering
aspects of a project when a project is formulated.
 Technical analysis seeks to determine whether the
prerequisites for the successful commissioning of the
project have been considered and reasonably good choices
have been made with respect to location, size, process etc.
 Poor technical analysis will result in under or over-
estimation of quantities related to inputs required by and
outputs of the project.
 Further analysis based on these estimates would
eventually lead to false cost and benefit estimates.
Care must also be taken in assessing alternative
designs and techniques.
 The project’s expected life time must also be
determined carefully for it has greater implication on
its overall analysis and preparation.
 All these require creative, committed and competent
specialists from different fields.
 It also requires coordination among these specialists,
as every technical aspect is interrelated and
In general the technical analysis is primarily concerned with:

• Work schedule,

• Location and site,

• Project charts and layouts,

• Structure and civil works,

• Machines and equipment,

• Plant capacity,

• Manufacturing process and technology, and

3. Financial Feasibility
• Here, the project analyst is concerned with the financial effects of the proposed
project on each of its various participants (firms, farmers/workers, government etc.).
By examining the financial implications of the project for these parties, the analysts
need to identify the project’s financial efficiency.
• The financial analysis establishes the magnitude of costs of investment, production
and expenses and magnitude of benefits. This analysis will be the basis for evaluating
the project profitability. Project profitability depends on a comparison of costs versus
revenues using realistic market prices of materials, labor and outputs.
• The aspects, which have to be considered into while conducting financial appraisal,
are:
• Costs of the project
• Means of financing; source of finance, credit terms, interest rates, etc
• Projected profitability
• Break-even point
• Level of financial risk
3. Financial Feasibility
 Here, the project analyst is concerned with the financial effects of
the proposed project on each of its various participants (firms,
farmers/workers, government etc.).
 By examining the financial implications of the project for these
parties, the analysts need to identify the project’s financial
efficiency.
 Financial analysis establishes:
• magnitude of costs of investment,
• production and expenses, and
• magnitude of benefits.
 Financial analysis is the basis for evaluating project profitability.
Project profitability depends on a comparison of costs versus
revenues using realistic market prices of materials, labor and
outputs.
The aspects, which have to be considered into while conducting
financial appraisal, are:
• Costs of the project,
• Means of financing; source of finance, credit terms, interest rates,
etc.
• Projected profitability,
• Break-even point, and
4. Economic Analysis
 Economic analysis is an assessment of a project’s costs and benefits from the
national point of view and is therefore concerned with the impact of a proposed
project on the national economy.
 It can be distinguished from financial analysis in that attention is not confined to
the costs and a benefit affecting a single group, the focus of economic analysis is on
the net return to society.
 In economic analysis the most important question is whether or not the project
under study is beneficial to the national economy.
 The aim of economic analysis in the context of project preparation is to ensure that
5. Social Analysis
The process of development is inherently social. It is, therefore,
crucial to integrate comprehensive social assessment into the
project formulation process.
The precise role of social assessment can be defined as ensuring
that people, their capacities, values and needs are put at the center
of the development process.
Project planners must make careful consideration of social factors
when formulating projects.
 Experience has shown that ignorance of these factors can lead to
project failure.
Project formulators who have designed projects by applying expert
knowledge without stakeholder consultation have often failed to
For this reason, the following points must be taken
into account in any project formulation exercises.
These are:
Identifying of stakeholders and target groups,
Identify their problems,
Participation issues, and
Social impact assessment (SIA)
6. Environmental Analysis
 Environmental analysis is a field of growing importance in project preparation.
 Underestimation of the environment has resulted in negative outcomes such as:
• poor human health,
• social disruption,
• reduced productivity and,
• ultimately, the undermining of development.
 When considering environmental aspects into project formulation exercises
there are a number of issues that should be taken into considerations.
These include:
 A clear understanding of the meaning of Sustainability
 Assessment of the potential environmental impact of the project.
 To suggest ways in which that impact could be reduced at a reasonable cost.
 To formulate mitigation strategies and a plan of action.
Aspects and Techniques
of Project Analysis
Stakeholder Analysis

Stakeholders are:
• Stakeholders are people affected by the impact of an activity &
people who can influence the impact of an activity.
• People affected by the impact of an activity
• People who can influence the impact of an activity
Why Stakeholder Analysis?
 To identify stakeholders’ interests in, importance to, & influence over the
operation,
 To identify local institutions and processes upon which to build,
 To prepare a useful starting point for problem analysis,
 Identify potential winners and losers as a result of the project,
 Reduce, or hopefully remove, potential negative project impacts,
 To reveal how little we know as outsiders and to encourages public participation,
 Identify those who have the rights, interests, resources, skills and abilities to take
part in, or influence the course of, the project,
 Identify who should be encouraged to take part in the project planning and
implementation,
 Identify and reduce risks which might involve identifying possible conflicts of
interest and expectation among stakeholders so that conflict is avoided
Problem/Situation Tree Analysis
 Before we can start to design the project, we need to analyze the problem
identified during project identification.
 Problem analysis identifies the negative aspects of an existing situation and
establishes the ‘cause and effect’ relationships between the problems that
exist.
 It involves three steps:

1. Identification of the stakeholders affected by the proposed project

2. Identification of the major problems faced by beneficiaries

 Planners use a problem tree analysis technique to identify all the
problems surrounding a given problem condition and displaying this
information as a series of cause and effect relationship.
 Problem trees enable stakeholders to get to the root of their priority
need and to investigate the effects of the problem.
 The problem analysis begins with identifying a core problem (the
trunk).
 The tree is then expanded upwards and downwards as the causes
and effects of the problem are identified.
 From these, a starter problem is selected, and a second problem
related to it, then:
 If the problem is a cause it goes on the level below
 If it is an effect it goes above
 If it is neither a cause nor an effect it goes on the same level
Method of Constructing a Problem Tree
Step 1: Agree on the main problem

Step 2: Identify the causes of the main problem by asking ‘But why?’

Step 3: Identify the effects of the main problem by asking ‘so what?’

Step 4: Draw horizontal lines to show where there re- joint causes and
combined effects.
Structure of Problem/Situation Tree Analysis
econdary
Secondary Effects
Secondary Secondary
Effects Effects Effects

Primary Primary Primary

Effects Effects Effects

FOCAL
PROBLEM

Primary Primary Primary

Cause Cause Cause
Example: Problem/Situation Tree Analysis of a Project Entitled Reducing Traffic Accident in
Axum Town, Tigray Regional State, Ethiopia
Objective/Solution Tree Analysis
 An objective tree is similar to a problem tree, except that it looks at
objectives rather than problems.
 An objective tree is a technique for identifying the objectives that will be
achieved as a result of solving the problems cited in the problem tree.
 The objectives are also displayed as a series of cause and effect
relationships.
 The objectives analysis follows from the problem analysis.

 It is the positive mirror image of the problem tree, and describes the
 The level of detail required is a judgment that must be made by
those developing the problem tree.
 In general, it is the amount of detail that permits a clear
understanding of the problem and its environment.
 If the analysis is too superficial, the solution chosen could itself
cause a whole series of additional problems because the cause-and-
effect relationships of the first analysis were not well-defined.
 The objectives tree provides the basis for determining the project’s
hierarchy of objectives, which will eventually be used to build the
project’s logical framework.
 As with the problem analysis described above, the objectives
analysis process should be conducted as a participatory exercise
with all stakeholders concerned.
 If we try to address all of the objectives we have identified, we will
find we have a very expensive and lengthy project.
 It is therefore necessary to focus on one or a few areas of the
objectives tree.
 If more than one objectives tree has been drawn, we will need to
decide which of these to focus on for the project.
Structure of Objective/Solution Tree Analysis
in Axum Town, Tigrai Regional State, Ethiopia
Logical Framework Approach/Log Frame to Project Analysis and
Implementation
Now that the project has been identified and detailed information has
been collected, we can start to plan exactly how the project will function.
A useful way of doing this may be to use a logical framework (log frame).

The log frame is a tool used to help strengthen project design,

implementation and evaluation.
Although it is constructed during the planning stage of a project, the log
frame is a living document, which should be consulted and altered
throughout the project’s life cycle.
 A logical framework is a four by four matrix, which enables the decision-maker to
identify project purposes and goals and plan for project outputs and inputs.
 It is a table of four rows and four columns, where all the key parts of a project can be
inserted as a:

• Clear set of statements;

• Project goal,
• Purpose,
• Outputs and activities,
• with their indicators,
•
The log frame is useful in planning a project and to provide measures
of evaluating the project.
 It shows the project’s structure and describes the project logically.

 It does not show every detail of the project; it is an overview of the

key factors.
 Details can be given in other documents such as the proposal,
budget and activity schedule, which accompany the log frame.
Project Measurable Indicators Source of verification Assumptions
Description/Summary (Evidence)
GOAL  Quantitative ways of measuring or Sources of information and (Goal to super goal)
 The broad development qualitative ways of judging timed methods used to collect and External factors
impact to which the project achievement of goal. report it, necessary to sustain
contributes at a national or  Measures the extent to which a It answers the questions objectives in the long
sectorial level contribution to the desired goal Who, run
 The project’s contribution has been made. When, and
to policy or program  Used during evaluation How frequently.
objectives  It is often not appropriate for the
project itself to try and collect this
information
Purpose/Objectives/Outcome  Quantitative ways of measuring or Sources of information and (Purpose to Goal)
 The development outcome qualitative ways of judging timed methods used to collect and External conditions
at the end of the project- achievement of purpose report it (including Who, necessary if achieved
more specifically the  Helps to answer the question “how When, How frequently. project purpose is to
expected benefits to the will we know if the purpose has contribute to reaching
target group(s). been achieved’? project goal.
 It should include appropriate
details of quantity, quality, and
time.
Result/Deliverables/Outputs  Quantitative ways of measuring or Sources of information and (Outputs to purpose)
qualitative ways of judging timed methods used to collect and
 The direct/tangible results Factors out of project
production of outputs report it (including Who,
(goods & services) that the control which, if
When, How frequently.
project delivers, and which  Helps answer the question ‘how present, could restrict
The log frame asks a series of further questions
 Where do we want to be? (Goal, Purpose)

 How will we get there? (Outputs, Activities)

 How will we know when we have got there? (Indicators)

 What will show us we have got there? (Evidence)

Definition of Essential Terminologies
Project Description/Summary
 This part of the project log frame outlines the project’s objectives: what it

hopes to achieve and how.

Goal
 It is a desired state where a need or problem no longer exists or is

significantly improved.
 The goal may be beyond the reach of this project on its own.
 What ultimate objective is the project contributing to? This should be a brief
Purpose
• Refers to the specific change we want the project to
contribute to the achievement of the goal.
• It is sometimes called the immediate project objective.
Result/Deliverables/Outputs
• Is what the project team has control over.
• These are what we want to see as a result of our activities, in
Activities/Inputs
• This part of the project log frame lists the activities,
which are needed to achieve these outputs.
• There may be several for each output.
• Statements should be brief and with an emphasis
on action words.
Indicators

• Answer the question ‘How do we know when we have got there?

• They are signs which measure project performance against objectives

and play an important part in monitoring and evaluation

Source of verification/Evidence

• Refers to the source of the information needed to measure

performance, who will be responsible for collecting it, and how often.
Project Description/ Objectively Justifiable Means of Verification/ Assumptions
Narrative Summary Indicators/Indicators Evidence

Goal  Crop yield per hectare  Field observation  Field community

 Agricultural production increased in the increased  Periodic reports from participation
zone agricultural office  Commitment from
both GO and NGOs
Purpose/objectives/Outcomes  Soil and water  Field observation  Community will
Promote soil and water conservation conservation systems  Periodic reports of district take care of the
practices through reducing deforestation put in place administrators system established

Deliverables/Outputs/Result  50 hectare of land  Field observation  Reliability of

 Afforestation covered with  Sample survey rainfall
 Deforestation of degraded land reduced vegetation  Community participation  No immigration
 Population pressure reduced on  Agricultural density record
farmland reduced
 Birth rate reduced

Activities/Inputs Example of Logical Framework Analysis of a Project  Funds available on

 Site identified Entitled ‘Enhancing Agricultural Productivity in time
 Labor organized Central Zone’, Tigray Regional State’  DA assigned
 Nursery established  Community
 Family planning and awareness creation commitment and
introduced participation
Log frames are useful because they:
 Help people organize their thinking

 Help people think logically

 Help identify weaknesses in project design

 Ensure key indicators are identified from the start of the project so that
monitoring and evaluation are easier.
 Ensure that people involved in the project use the same terminology

 Help people to summarize a project plan on a few sides of paper. This helps them
to communicate their plan simply with others, although a log frame is no
However, the log frame approach does have limitations:
 Project management can become rigid unless the log frame is continually
checked and adjusted.
 As the approach involves participation by a number of different
stakeholders, good leadership and facilitation skills are needed to ensure
stakeholders understand the approach and actively participate in it.
 Since the approach builds on analysis of a problem, it might not be
viewed as appropriate in cultures where people do not openly discuss
problems.
Chapter 3
Project Appraisal Techniques
Concept of Project Appraisal
Project appraisal involves a further analysis of the proposed project.

At this stage, a critical review of the proposal is undertaken.

A systematic & comprehensive review is usually undertaken by an

independent team of experts in consultation with the stakeholders of
the project.
This provides an opportunity to re-examine every aspect of the
project plan to assess whether the proposal is justified before large
sums are committed.
 The appraisal process builds on the project plan but may involve new
information if the appraisal team feels that some of the data used or some
assumptions at preparation are faulty.
 The implications of the project on the society & the environment are also
more thoroughly investigated & documented.
 Similarly, the technical design, financial measures, commercial aspects,
incentives, economic parameters are thoroughly inspected.
 More specifically, to appraise a certain development project, the appraisal
team should consider the following project appraisal criteria in a more
These criteria are:
Technical-ensures whether due attention is paid to technical
factors affecting the project design or not.
Financial-answers whether sufficient funds are obtained to
cover the expenditure requirements during the life of
the project or not?
Economic-questions two important issues:
• Whether a given nation and society at large be better off
as a result of the project.
• Whether a project’s benefits be greater than the project
costs over the life of the investment when account is taken
of time.
Social and gender-answers the following issues:
 The effect of the project on different groups, at individual,
household and community levels?
 The project impact on women and men? How will they
participate in various stages of the project cycle?
 Will the social benefits of the project be greater than the
social costs over the life of the investment when account is
taken of time?
Institutional-answers the following fundamental questions:
 Whether supporting institutions are available in place or not?
 If they available, can they operate effectively within the existing legislative
and policy environment?
 Has the project identified opportunities for institutional strengthening and
capacity building?
Environmental
 Questions whether the project have any adverse effects on the environment
or not. It also questions whether remedial measures been included in the
project design or not?
Political
 Ensures whether the project be compatible with government policy, at both
central and regional levels or nor?
Sustainability and Risk
 Questions whether the project be exposed to any undue risks or not.
Besides, this question is concerned whether the project benefits be
sustainable beyond the life of the project or not?
 On the basis of an appraisal report, decisions are made about
whether to go ahead with the project or not.
 The appraisal may also change the project plan or develop a new
plan.
Investment Criteria
 A wide range of tools have been suggested for choosing investment
proposals, which are suitable for both financial and economic
analysis.
These criteria may be broadly classified into two categories:
1. Non –Numeric Tools
2. Numeric Tools
1. Non –Numeric Techniques of Project Appraisal
A. Sacred Cow
 In this model, a project is usually suggested by a senior and powerful individual in an
organization and the idea is passed to the officers below.
 Many projects in the public sector of developing countries have been initiated using the
approach.
B. Operating Necessity
 In this model, projects are initiated because they are required to keep a system in operation.
 These are threatening situations such as floods which will simply call for projects to be
started without much evaluation.
 Funding of projects initiated in this manner is usually done without considering a lot of
analysis that goes with project preparation and identification.
C. Competitive Necessity
 Projects are usually initiated and given a lot of support if they will help an
organization to maintain a competitive edge over other organizations.
 Such projects are considered to be of survival importance to an organization and
may not necessarily be required to go through careful numerical analysis.
D. Product Line Extension
 This approach is used when a project is intended to develop and distribute a new
product or products.
 Usually such a project, if intended to fill a gap or to strengthen a weak link or to
take the organization to a new direction, will be judged favorably without careful
calculations of the profitability of the project.
E. Comparative Benefit Model
 This model is used where a firm has several projects which must be considered
and some ranking given.
 In this model, the projects are sorted out into three categories, good, fair and
poor.
 This is done according to some development doctrines, example: if a project is
labor intensive, then it must be given more priority.
 The projects sorted out into the three categories are again ranked within each
category using a merit list.
 In this way an organization will come up with a priority order of the available
2. Numeric Techniques of Project Appraisal
 The numeric tools of project appraisal are classified into two
broad categories each consisting several appraisal tools.
 The basic categories of the numeric tools of project appraisal are
presented below.
2.1 Non-Discounting Criteria including
a. Payback Period
 The payback period also called the payoff period is one of the
simplest and apparently one of the most frequently used methods
of measuring the economic value of an investment.
 It is the number of years that is required for the business firm to
recover a project’s amount of initial investment in total.
 If the cash flows from the project are in a constant form, the
payback period can easily be determined by dividing the initial
investment by the annual cash flow in the annuity.
 That is,
Payback period (in years)=
 When the cash flows from the project are not in an annuity, the payback period is computed
as follows:

Payback Period=year Before Full Recovery+

Advantages of Payback Period

 The payback period is an easy and an inexpensive method to evaluate and rank
project alternatives
Disadvantage of Payback Period
1. It ignores the cash flows beyond the computed payback period though they are
important for acceptance or rejection decisions.
2. It ignores the time value of money which is an important variable that demands
b. The Accounting Rate of Return (ARR)
 Accounting rate of return (ARR) is the rate of return that is
calculated by dividing the projects expected annual net profit by
the average investment outlays.
 The average investment outlays, on the other hand, are computed
by dividing the sum of original cost of the project and the salvage
value of return.
(ARR) can be expressed with an algebraic equation as follows:

Average Cost of I
Principles of Cost Benefit Analysis
 Cost-Benefit Analysis estimates and totals up the equivalent
money value of the benefits and costs of projects to establish
whether they are worthwhile.
 In order to reach a conclusion as to the desirability of a project all
aspects of the project, positive and negative, must be expressed
in terms of a common unit; i.e., there must be a "bottom line."
 Cost and benefit analysis valuations should represent consumers
or producers valuations as revealed by their actual behavior.
2.2 Discounted Project Appraisal Criteria
Concept of Time Value of Money
 The undiscounted measures discussed so far share a common
weakness.
 They fail to take into account adequately the timing of benefits and
costs.
 It is an accepted principle in economics that inter-temporal
variations of costs and benefits influence their values and a time
adjustment is necessary before aggregation.
 Before the above criterion can be used to decide which projects should be
selected, it is necessary to address the problem of the difference in the
timing of a projects costs and benefits.
 If these occur over a number of years, they will not be directly comparable.
 Every input item (cost item) and every output item (benefit item) must be
weighed up using the same unit.
 If the total value of benefits is greater than the total value of costs, the
project is said to be an efficient scheme.
 The process of providing a monetary value to cost and benefit items has to
take account of one important factor: time.
 Indeed, when assessing projects one has to be aware that after the
initial investment for a project is made, the project starts, at some
point, to yield a stream of benefits which last over a period of time.
 On the other hand, a stream of costs will be generated over a
period of time in order to sustain the project.
 Since the value of the measure unit (i.e., money) varies with time,
costs and benefits must be adjusted by applying a discount factor
to their nominal values.
Why a dollar today worth more to you than a dollar a year from now?
 A monetary unit received in the future is worth less than a monetary
unit received at the present for four primary reasons:
1. The presence of positive rates of inflation reduces the purchasing
power of money through time;
2. The opportunity cost of lost earnings as the money could have been
invested and earned a return between now and certain time point in
the future;
3. The uncertainty of future values due to the risk of default or non-
performance of investments; and
4. Human preference typically involves impatience or the preference to
consume goods and services now rather than in the future.
 For all these reasons, tomorrow’s income available from a project cannot be
treated as if it were equally valuable to today’s income.
 The concept of TVM is used as a method of standardizing the value of the
benefits and the costs that occur in different periods over the project’s life, so
that they can be compared and added together.
 For the reasons outlined above, income available now is more valuable than
future income even if there is no inflation.
 The accepted method for this adjustment amounts to bringing them to a
common time denominator. This principle is called discounting.
 The process of going to future values (FVs) from present values (PVs) is called
compounding.
 The most important discounted cash flow measures include:
 The net present value,
 The internal rate of return and
 The benefit cost ratio.
A. The Net Present Value (NPV)
The most widely used and straightforward discounted measure of project
worth is the net present worth or the net present value (NPV).
It is the difference between the present value of cash inflows and the cash
outflows.
It estimates the amount of wealth that the project creates.
A proposal’s net present value (NPV) is obtained by discounting the future
net cash earnings at a rate which reflects the value of the alternative use
of the funds, summing them over the life of the proposal and deducting
the initial outlay.
Practical application for the present value method
 The practical application of the present value criterion as a means of evaluating
investment proposals for project planning implies the following assumptions:
 Annual outlays and receipts from each investment are known for the entire life of the
project.
 the project life span is known.
 there is a rate of discount, which can be applied to every proposal and for every tie
period.
 However, the assumptions made above is not always available for every project.
 That means the NPV criterion may be applicable only to a limited number of project
proposals on which relevant data as indicated above could be computed or imputed. In
Advantages of NPV Approach
It is simple to use and does not rely on complex conventions
It is the only selection criteria that can correctly be used to choose
between mutually exclusive projects, without further manipulation.
This technique is based on discounted values of the future streams
of the cash flows
Limitations of the Net Present Value
 The use of the net present value criterion relies on the prior
selection of an appropriate discount rate
 This method is not the simplest method for a large and complex
investment budget
 Some projects could be deferred from implementation although
they show positive NPVs, due to scarcity of funds. Thus passing the
NPV test may be a necessary condition but not a sufficient
condition.
Some projects could be deferred from implementation although they show

positive NPVs, due to scarcity of funds. Thus passing the NPV test may be a
necessary condition but not a sufficient condition.
If some projects are mutually exclusive then the implementation of one

would naturally exclude the execution of the other. This will lead both the
central authorities and the sponsoring agency into a dilemma which
project should be implemented. If funds are unlimited then both could be
implemented, but this is not always the case.
The selection of an appropriate discount rate is another limitation.
NPV does not show the exact profitability rate of the project.
For some projects the required information/data/ for

computing the NPV may not be available, or cheaply

accessible.
It assumes the same class (type and degree) of risk for both the

costs and revenue sides of the cash flow of a project.

When it is used to select among projects, it implicitly assumes

that all projects share common type and degree of risk.

B. The Internal Rate of Return of a Project (IRR)
 This is a second measure of the long- term profitability of an investment.
 It is also called the Yield of an Investment Method or simply the Yield

Method.
 The IRR of a project is probably the most commonly used assessment

criterion in project appraisal.

 This is because the concept of an IRR is in some way comparable to the

long-term profit rate of a project and is therefore easily conceivable for

non-economists.
 In fact IRR is defined as the “earning rate of a project”.
 Unlike NPV, IRR does not rely on the selection of a predetermined discount rate.
 The method utilizes present value concept but seek to avoid the arbitrary choice of a
discount rate.
 In IRR an attempt is made to find that discount rate, which, just make the net present value
of the cash flow equal to zero.
 It is possible to think a level of interest rate that could result in NPV of zero.
 This rate of interest is termed as the Internal Rate of Return (IRR).
 The IRR is the rate of discount, which makes the present value of the benefits exactly equal
to the present value of the costs. Thus, it is the discount rate at which it is worthwhile
doing the project.
 This is the interest rate that a project could pay for the resources used if the project is to
recover its investment and operating cost and still can be at the break-even point. when the
It is the value for R which makes the following equation hold:

This also implies:

Hence, IRR is the discount rate for which the NPV equals zero.

 The element that is unknown is the rate of return (IRR) which will

make the time-adjusted outflows and inflows equal to each other.

The method recommend for establishing ‘IRR’ is the trial and error
approach (assuming that we do not have the relevant computer program
and we solve ‘IRR’ by hand).
Unlike NPV which is calculated based on pre-determined discount rate,
determining ‘IRR’ requires us to calculate NPV using many different
discount rates until we find the discount rate that produces a zero NPV.
 Unlike NPV which is calculated based on pre-determined discount rate,
determining ‘IRR’ requires us to calculate NPV using many different
discount rates until we find the discount rate that produces a zero NPV.
If the IRR is computed for financial appraisal in which all values are
measured in market prices, it is called the financial internal rate of
return (FIRR).
When economic prices are used instead, it will be termed as
economic internal rate of return (EIRR)
The Decision Rule
 The formal selection criterion using the IRR is to accept all
independent projects having an internal rate of return (IRR) equal to
or greater than the opportunity cost of capital.
IRR ≥ r,
r stands for the opportunity cost of capital, the discount rate that we
use when we compute NPV.
Advantages of the IRR
 The IRR is used in many projects;
 It is the only measure of project worth that takes account of the time
profile of a project;
 It is a measure that could be understood easily by non-economists
since it is closely related to the concept of the return on investment.
 It is a pure number and hence allows projects of different size to be
directly compared.
Problems with the IRR
 The IRR is inappropriate to use for mutually exclusive projects and
independent projects when there is a single period budget constraint.
 A project must have at least one negative cash flow period before it is
possible to calculate its internal rate of return.
 Another problem with the IRR is that in some cases it may be possible
to compute more than one IRR for a project.
 It is relatively complex to compute the IRR-the iterative nature of its
computation.
C. The Benefit Cost Ratio (BCR)
The benefit cost ratio is the earliest discounted project assessment
criterion to be employed.
The BCR is defined as the ratio of the sum of the project’s discounted
benefits to the sum of its discounted investment and operating costs.
This is given as,
Bt
n

 (1  r ) t
t 0
BCR  n
Ct
 (1  r ) t
t 0
Where,
B= the sum of the project’s discounted benefits;
C= the sum of the project’s discounted costs;
r = projected discount rate of the project;
n = the number of periods of cash flows for the project being evaluated
The Decision rule for BCR
 A project should be accepted if its BCR is greater than or equal to 1
(i.e. if its discounted benefits exceed its discounted costs).
 But if BCR is less than 1, the project should be rejected. The BCR will
be less than, equal to, and greater than one when the discount rate
used is greater, equal to, and less than the IRR.
 BCR is easy to show the impact of a percentage change in cost or
benefits on the projects viability.
D. Profitability Index (PI)
 The Profitability Index (PI), also known as value investment ratio
(VIR), is the ratio of payoff to investment of a proposed project.
 It is the ratio of the present value of an investment’s future cash flows
to the project’s initial cost.
The ratio is calculated as follows:
 A profitability index of 1 indicates breakeven.
 Any value lower than one would indicate that the project's PV is less
than the initial investment.
 As the value of the profitability index increases, so does the financial
attractiveness of the proposed project.
Rules for selection or rejection of a project:
If PI > 1 then accept the project;
If PI < 1 then reject the project.
CHAPTER FOUR: PROJECT FINANCE
• The concept of Financial Management
• The Concept of Project Finance
• Development of Project Finance
• Features of Project Finance
• Difference between Project Finance and Traditional Finance
• Participants and their Respective Roles in Project Finance
• Financing Mechanisms Under Project Finance
• Risks Associated With Project Finance and Ways of Mitigation
• Mitigating Risk with Guarantees
• Principal Advantages and Disadvantages of Project Financing
• Benefits of Project Finance
• Common Misconceptions about Project Finance
The concept of Financial Management
 Financial management is about ensuring funds available whenever it
is needed and they are obtained and used in the most efficient and
effective way to the benefit of an organization.
 The primary objective of the financial management process is to
optimize financial and economic benefits from an investment.
 Financial management optimizes output from the given input of
funds.
The Concept of Project Finance
At its core, project finance is a method of financing where the lender
accepts future revenues from a project as a guarantee on a loan.
Project financing is an innovative and timely financing technique that
has been used on many high-profile corporate projects.
Increasingly, project financing is emerging as the preferred alternative
to conventional methods of financing infrastructure and other large-
scale projects worldwide.
Project financing discipline includes:
 Understanding the rationale for project financing,
 How to prepare the financial plan,
 Assess the risks,
 Design the financing mix, and
 Raise funds
 Project finance is finance for a particular project which is repaid from the cash-
flow of that project.
 Project finance is different from traditional forms of finance because the
financier principally looks to the assets and revenue of the project in order to
secure and service the loan.
 In contrast to an ordinary borrowing situation, in a project financing the
financier usually has little or no recourse to the non-project assets of the
borrower or the sponsors of the project.
 In this situation, the credit risk associated with the borrower is not as important
as in an ordinary loan transaction; the most important issue is the identification,
 Project finance is a method of raising long-term debt financing for
major projects through “financial engineering,” based on lending
against the cash flow generated by the project alone;
 It depends on a detailed evaluation of a project’s:
• Construction,
• Operating and revenue risks, and
• Their allocation between investors, lenders, and other parties
through contractual and other arrangements.
Development of Project Finance
 The growth of project finance over the last years has been driven mainly by the
worldwide process of deregulation of utilities and privatization of public-sector
capital investment.
 This has taken place both in the developed world as well as developing countries.
 It has also been promoted by the internationalization of investment in major
projects.
 Today, various sectors employ project finance, including power, transportation,
oil and gas, leisure and property, telecommunications, petrochemicals, mining,
industry, water and sewerage, waste and recycling, and agriculture and forestry.
Features of Project Finance
 Project finance structures differ between these various industry sectors and from deal to
deal: there is no such thing as “standard” project finance, since each deal has its own unique
characteristics.
But there are common principles underlying the project finance approach.
Some typical characteristics of project finance are:
 It is provided for a “ring-fenced” project (i.e., one which is legally and economically self-
contained) through a special purpose legal entity (usually a company) whose only business is
the project (the “Project Company”).
 It is usually raised for a new project rather than an established business (although project
finance loans may be refinanced).
 There is a high ratio of debt to equity (“leverage” or “gearing”)—roughly speaking, project
 There are no guarantees from the investors in the Project Company (“nonrecourse”
finance), or only limited guarantees (“limited-recourse” finance), for the project finance
debt.
 Lenders rely on the future cash flow projected to be generated by the project for
interest and debt repayment (debt service), rather than the value of its assets or
analysis of historical financial results.
 The main security for lenders is the project company’s contracts, licenses, or ownership
of rights to natural resources; the project company’s physical assets are likely to be
worth much less than the debt if they are sold off after a default on the financing.
 The project has a finite life, based on such factors as the length of the contracts or
licenses or the reserves of natural resources, and therefore the project finance debt
Participants and their Respective Roles in Project Finance

• Project finance has many participants who participate at different

stages of a project’s development and operation.

• Because of the complex structure of project finance, not all projects

follow the same structure and not all of the participants described
below participate in all projects.
Key Participants in Project Finance
Overview of Financiers and their Roles
ROLE
INANCIER
nternational Multilateral Organizations: World Bank Group Mitigate risks and provide risk enhancements as a senior lend
both financing and loan guarantees.
nternational Bank of Reconstruction and Development (IBRD) Lender of last resort, meaning that no other lender will provide fi
the borrow must demonstrate that the project is feasible and th
will be able to repay the loan.
nternational Development Association (IDA) Finances projects in the world's poorest countries (that do not
market-based interest rates). IDA charges a small fee rather than
rate. IDA receives funds from subscription members and the W
rather than capital markets, providing long-term loans.
nternational Finance Corporation (IFC) Provides financing, and while it does have the capacity
guarantees, it does not. The IFC has two types of loans: "A loans"(
the IFC's own funds) and "B loans" (financed by external funds). B
high interest rates (higher than the World Bank) to attract mor
offering capital investors a higher interest rate. IFC can be
shareholder.
Multilateral Investment Guarantee Agency (MIGA) Main function is to mitigate risk by providing political risk insu
change of authority or change in legislation) as well as to media
disputes. As a result, MIGA backing can help attract funding.
egional Development Banks* Goals are to reduce poverty and increase development on a region
frican Development Bank Finances at rates based on its own costs and not international r
with drafting feasibility studies, technical cooperation, and other
of the project.
sian Development Bank Focused on providing financing rather than guarantees. In fact, un
the ADB required the host government to provide a guarantee
Financing Mechanisms Under Project Finance
tep 1
Host government tenders a project( procurement process) and awards the project to a sponser company and the host government sign a concession agreement.

tep 2
he sponsor company assesses project viability (technical, legal, environmental, etc). Sometimes this is the first step, before a sponsor company bids on a project.

tep 3
he sponsor company establish an entity that will conduct the project, the Special Purpose Vehicle (SPV).

tep 4
he sponsor company assembles financing for the project and arranges the offtake agreement (predetermined agreements with the buyer to purchase some amount
of the goods or services produced).

tep 5
he sponsoring company works out agreement with contractors, sub-contractors, equipment providers, etc.

tep 6
he sponsoring company will oversee construction and upon completion will either handback the project to the host country, operate the site itself, or transfer
Finance Risks Associated With Project Finance and Ways of Mitigation
• Commercial Risks
• Political Risks
• Legal Risks
• Construction, Operation, and Technical Risks
Mitigating Risk with Guarantees
Principal Advantages and Disadvantages of Project Financing
Benefits of Project Finance to Investors
• Investors use project finance for the following variety of reasons:
• Non-Recourse
• High Leverage
• Tax Benefits
• Off-balance-sheet financing
• Borrowing Capacity
• Risk Limitation
• Risk Spreading / Joint Ventures
• Long-Term Finance
• Enhanced Credit
The Benefits of Project Finance to Third Parties
Lower Product or Service Cost

Additional Investment in Public Infrastructure

Risk Transfer

Lower Project Cost

Third-Party Due Diligence

Transparency

Additional Inward Investment

Disadvantages of Project Finance

• Complexity of risk allocation

• Increased Lender Risk

• Higher Interest Rates and Fees

• Lender Supervision

• Lender Reporting Requirements

• Increased Insurance Coverage

• Transaction Costs May Outweigh the Benefits

Common Misconceptions about Project Finance
There are several misconceptions about project finance:
 The assumption that lenders should in all circumstances look to the
project as the exclusive source of debt service and repayment is
excessively rigid and can create difficulties when negotiating between
the projects participants.
 Lenders do not require a high level of equity from the project
sponsors. This may be true in absolute terms but should not obscure
the fact that equity participation is an effective measure to ensure
that the project sponsors are incentivized for success.
 The assets of the project provide 100% security. Whilst lenders
normally look for primary and secondary sources of repayment (cash
flow plus security on project assets),
 The project’s technical and economic performance will be measured
according to pre-set tests and targets. Lenders will seek flexibility in
interpreting the results of such negotiations in order to protect their
positions. Borrowers on the other hand will argue for purely objective
tests in order to avoid being subjected to subjective value judgments
on the part of the lenders.
 Lenders will not want to abandon the project as long as some surplus
cash flow is being generated over operating costs, even if this level
represents an uneconomic return to the project sponsors.
 Lenders will often seek assurances from the host government about
the risks of expropriation and availability of foreign exchange. Often
these risks are covered by insurance or export credit guarantee
support. The involvement of a multilateral organization such as the
World Bank or regional development banks in a project tends to
‘validate’ a project and reassure lenders’ concerns about political risk.
Chapter 5 PROJECT
INFORMATION
MANAGEMENT
SYSTEM
An Overview to Project Information Management System
 Accurate and timely information is essential for the management of a
project.
• Project planning,
• organizational design,
• motivation of project stakeholders,
• monitoring,
• evaluation and meaningful project reviews simply
cannot be carried out without information on the project.
 Every manager has to get the quality and quantity of information
available to manage the project.
 Information is really a fuel that drives organizations.
 A major purpose of a manager is to convert information into action
through the process of decision making.
 The better the information, the better the resulting decision, because
Information versus Data
• Many people use the terms, “data” and “information” synonymously.
However, there is a distinct and important difference between data and
information.

• Data refer to a collection of unorganized facts, statistics, opinions or

predictions.

• Typical data may include records about accounts receivable, data on

personnel files and so on.

• Information, on the other hand, is processed data which is directly used in the
nformation Needed by Various Managers

• No effective decision can be taken and implemented to solve any problem

unless complete and accurate information relating to the problem and its
surroundings is made available to the management.

• Not only should this information be made available, but it must be made
available quickly.

• The right information at the right time reduces the risk of wrong decisions.

• The proper collection, handling and providing the necessary information to

the right manager as soon as possible could be a tremendous benefit to the
nformation Need at Operational Level

• Lower level managers and supervisors need information and feedback about daily, weekly
and monthly activities.

nformation Need at Middle Management Level

• Middle level managers or divisional heads are concerned with the current and future
performance of their units.

• They require summarized versions of the activities and problems in their respective
departments.

• Such information may be generated from within the organization or from outside sources
for comparison purposes.

• Especially, financial managers need timely information about financial statements, budgets,
Information Need at Top Level Management
 Top level management is primarily concerned with strategic planning and much
of the information that top level managers need comes from outside sources.
 For strategic planning, information regarding:

• General economic conditions,

• Technological developments,
• Political and legal developments and so on, assume paramount importance.

 Whatever the information and whatever the managerial level at which it is

needed, the organization’s information system must provide it effectively and
Understanding Information Flows
 An organization must deal with two broad types of information
flows. These are:
1. External Information flows
 Information flows from the organization to its environment and /or
from the environment to the organization. Hence, information flows
in both direction:
a.Inward information flow
b.Outward information flow
2. Intra-Organizational information flow
 In this case, information is generated internally from within the
organization at horizontal and vertical levels.
 In the organization, information is used for planning, control and
operation purposes.
Funding Other
Agency agencies
Clients
Dos
network
Govt.
v
Concept of Project Information Management System (PMIS)
 A project management information system is a set of interrelated components working
together to:
• Collect,
• Classify,
• Store,
• Process, And
• Distribute information to support decision making, & monitors the progress of a project.
 PIMS is a tool to collect, analyze, store and disseminate information useful for
decision making in a project.
 PIMS is about how:
• How effectively the project manages the data,
• How it transforms data into information and
• How that information eventually becomes knowledge.
 A project management information system is not about technology alone, a good system has
a systematized approach to manage information.
 It does not necessarily mean complex or expensive technology. It is more about designing
the appropriate methods and processes and implements a sound plan to manage the
Elements of Project Information Management System (PMIS)
 The five elements of a useable MIS are:

• Timeliness
• Accuracy
• Consistency
• Completeness, and
• Relevance.

 The usefulness of Management Information System is hindered

Characteristics of Project Information Management System (PMIS)
• In the project information cycle, establishing smart goals and objectives and selecting
indicators for measuring progress are the elements that form the basis of a sound
information system.
• An important step in developing the system is the development of an information
management plan that outlines how information will be:
• Selected,
• Collected,
• Analyzed and
• Shared During the lifecycle of the project.
• PIMS focuses on the systematization of the information management processes.
• Once the project has completed the design and the planning of the information, the
project should be able to move to a systemized process to manage all the
information maintained by the project.
• In order to have flexible and responsive interventions, a project information system
needs to be more than just a reporting mechanism, but serves as a powerful
management tool for advancing an organization’s program goals of accountability,
Characteristics of a Good Project PIMS
A good PIMS:
 Supplies necessary information and feedback so that potential problems are
identified and solutions are implemented early before becoming constraints.
 Builds on a project's success while using lessons from earlier experiences to
improve project performance.
 Is demand-driven approach and requires it to be flexible and adaptable to the
changing conditions of the project.
 Involves transparent, accountable, and participant information flow as its
Levels of Technology
 PIMS does not necessarily mean a state-of-the-art technology
solution that tries to be everything to everybody.
 Every project has different information needs both in quality and in
quantity.
 Every project requires different levels of technologies to satisfy its
basic information management needs.
 A small project with small needs will suffice with simple technologies,
but large projects with large information needs can benefit from
more extensive technology solutions.
 A major imperative lies in the need for a coherent systematization of
information handling as part of the information management
process, and this must occur before automating, this implies adapting
the technology to the process and not the process to the technology.
 The use of complex technology not necessarily means efficiency.

 A small project with little information needs will not benefit from a
complex integrated system. On the contrary, managing the system
can be less efficient than a simple solution.
 It is important for the project to identify and develop a PIMS that
satisfies its critical requirements to manage information and avoid
the creation of complex systems that are too expensive, take more
time to develop and require additional resources to manage it
properly.
Define the Information Needs
Locate the Information Sources
Select the Information Needed
Collect the Information
Organize and Store Information
Analyze and Report the Information
Share and Use on the Information
Current Problem with Project Information Management System (PMIS)
 There are real challenges in developing and implementing a MIS.

 These problems must be avoided or overcome if an effective PMIS is

to be developed.
 Computer based MIS has been hailed as the most important
contribution to the process of managerial decision making.
 Hence, some steps must be taken to improve upon all areas that
provide input to the system.
Some of the common misconceptions about MIS are:
• Human acceptance
• Isolated systems
• Drowning in data
• High expectations
• Low priorities in information management
• Technology Myopia
• Systems disconnected from the log frame
• Reports for reporting sake
• No standard PIMS process
• Duplication of efforts
• Failure of proper communications
• Training and maintenance costs for each system
• Little or no experience in PIMS
• Projects with little or no IT support
Guidelines to Address PMIS Problems
 MIS difficulties and inadequacies vary from situation to situation, depending upon
the quality of the existing system and the kinds of individuals implementing MIS.
 Some of the guidelines that can be used to improve the quality of MIS are:
1. Top management should be involved in the design of MIS. This creates greater
acceptance and commitment resulting in overall commitment to the program
2. Cooperation between designers and the users of the program should be made.
This cooperation will result in proper feedback on the quality of information being
received. As a result, it will bring improvements in the effectiveness of MIS.
3. A master plan must be developed with careful analysis of the current needs and
the forecasted needs. Such a plan would avoid any uncertainties associated with
MIS.
4. Both designers and users should be held responsible and accountable for the
success of MIS on a cost benefit basis. This accountability consistently reminds
them to be cost conscious so that benefits achieved exceed the costs incurred.
5. The social and behavioral aspects of the systems must be considered in designing
and implementation. All efforts should be made to ensure that all people accept
CHAPTER 6
PROJECT
IMPLEMENTATION
An Overview to Project Implementation
 Project implementation is perhaps the most important part of the
project cycle.
 It is time to deliver the product or products.
 Implementation costs are usually the greatest costs involved in the
entire project.
 Project implementation phase can be described as the phase
whereby “project inputs are converted to project outputs”.
 During the implementation phase, the design from the previous
phases is converted into a finished product.
During project implementation:
 Project managers must be able to respond intelligently to any unpredicted
changes
 Technical changes are almost inevitable.

 Price changes may necessitate different adjustments in inputs.

 Project managers can reshape and re-plan the parts of the project.

 Project managers can make further refinement in different circumstances

 Project managers review the products and its costs continually to ensure
 Unplanned changes that require additional money might occur.

 Contingency funds must be reserved to cover unplanned expense.

 However, any changes offered during the implementation phase

usually cause project delays and cost overruns.
 The on-time completion of a project—according to specifications and
within allotted funds—enhances the reputation of the manager, the
team members, and the organization.
 Implementation is usually done by implementing agency
(organization) that prepared the project and received funding for it.
 Other organizations that participate in the implementation of the
project by way of collaboration, say by:
 Good working relationship,
 Extending technical advice or
 Seconding their staff to the project

are referred to as co-operating agencies.

Project Implementation Phases
Phase 1: Project Activation
 Project activation means making arrangements to have the project
started.
 It involves coordination and allocation of resources to make project
operational.
Phase 2: Project Operation
 This is practical management of a project.
 Here, project inputs are transformed into outputs to achieve
immediate objectives.
Project Implementation Plan (PIP)
 Project implementation plan (PIP) is an important activity in project
implementation.
 It is carried out at the project activation stage.
 Project implementation plan includes:
a. The project implementation schedule
 This answers fundamental questions of:
• What activities can produce expected project outputs?
• What is the sequence of these activities?
• What is the time frame for these activities?
• Who will be responsible for carrying out each activity?
 The following methods may be used to answer the above questions:
• Gantt chart;
• Critical Path Method (CPM) or Network analysis;
• Project Evaluation and Review Techniques (PERT);
b. The role of the implementing agency

c. Beneficiary participation

d. Organizational structure and staffing

e. Financial management

f. Reporting system

g. Sustainability
Time control and remedial action
 Time taken to implement project activities is one measure of successfulness of
supervision or monitoring of project implementation.
 Supervisor pays particular attention to:
 Time control measures,
 Time scheduling and its supervision,
 Time extension and postponement,
 Damages for non-completion and defect or warranty period.

Supervision of implementation of project schedule

 This involves a set of checks and balances to ensure that the schedule is being
Approaches to Project Implementation
Top-down approach
 In this case, implementation is mainly done by agencies from outside the
community with limited involvement by the beneficiaries.
Bottom-up approach
 It is an approach whereby beneficiaries implement the project.
 Outside agencies may provide the financial resources and technical assistance.

Collaborative participatory approach

 In this approach, top-down and bottom-up approaches to project
implementation are applied in the process.
Major Problems in Project Implementation
 Financial Problems

 Management Problems

 Technical Problems

 Political Problems

 Other Problems
Pre-Requisites for Successful Project Implementation
• Adequate Formulation
• Political Commitment
• Simplicity of Design
• Careful Preparation
• Good Management
• Advance Action
• Timely Availability of Funds
• Judicious Equipment Tendering and Procurement
• Better Contract Management
• Effective Monitoring
• Other Factors
CHAPTER 7
PROJECT
MONITORING AND
Contents In Brief
 The Concept of Monitoring and Evaluation

 Common Features of Monitoring and Evaluation

 Major Difference between Monitoring & Evaluation

 Complementary Features of Monitoring & Evaluation

 Usefulness of Monitoring & Evaluation

 Prerequisites for a Successful Monitoring & Evaluation System

 Reporting
The Concept of Monitoring and Evaluation
Monitoring
 Is the process of routinely:
• Collecting,
• Storing,
• Analyzing, and
• Reporting project information used to make decisions for project
management.
 Monitoring provides project management and project stakeholders the
information needed to:
• Evaluate the progress of the project,
• Identify trends,
• Patterns or deviations,
• Keep project schedule and measure progress towards the expected goals.
 Monitoring information allows decisions regarding the use of project
resources:
 Human,
 Material, and
 financial to enhance its effectiveness.

 When the right information is available at the right time and to the
right people it can support decisions.
 Project monitoring is the continuous assessment of project
implementation in relation to the agreed plans and the agreed
provision of services to project beneficiaries.
 Monitoring can be carried out by the:

• Beneficiaries,
• Managing staff
• Supervisory staff, and
• Project management staff.
 The aim should be to ensure that the activities of the project are
being undertaken on schedule to facilitate implementation as
specified in the project design.
 Any constraints in implementing the design can quickly be detected
and corrective action taken
 Monitoring is an internal project activity, an essential part of good
management practice, and, therefore, an integral part of the day-to-
day management.
 The term has a close meaning with control and supervision.
Key questions in project monitoring include:

Key questions in project monitoring include:

Are the right inputs being supplied/delivered at the right time?

Are the planned inputs producing the planned outputs?

Are the outputs leading to the achievement of the planned

objectives?

Is the policy environment consistent with the design assumptions?

Are the project objectives still valid?

Evaluation
Evaluation, on the other hand, can be defined as a
periodic assessment of the:
Relevance,
Efficiency,
Effectiveness,
Impact,
Economic and financial viability, and
Sustainability of a project in the context of its stated
objectives.
The purpose of evaluation is to review the
achievements of a project against planned
expectations, and to use experience from the project to
improve the design of future projects and programs.
Evaluation draws on routine reports produced during
project implementation and may include additional
investigations by external monitors or by specially
This implies that evaluation is a continuous exercise during
the project life and is much related to project monitoring.
Monitoring provides the data on which the evaluation is
based.
However, formalized evaluation is undertaken at specified
periods.
There is usually a mid-term and a terminal evaluation.
Evaluation can also be undertaken when the project is in
trouble as the first step in a re-planning effort.
Careful evaluation is also undertaken before any follow-up project.
Evaluation can be done internally or by external reviewers.
Some organizations have monitoring and evaluation units.
Such a unit can provide project management with useful information
to ensure efficient implementation of projects.
This happens especially if it operates independently and objectively,
This is because what the unit needs is to judge projects on the basis
of:
 Objectives,

 Original project design and

 The reality on the ground (the operating physical and policy

environment).
With no free hand, the feedback mechanism will be stifled and
information be “held-back” instead of being “fed-back”.
The aim of evaluation is largely to determine the extent to which the
objectives are being realized.
Evaluation, an essential ingredient of project management, is concerned
with the following critical questions:

Are or have objectives being/been met? If not, were the objectives

realistic?

Was the technology proposed appropriate?

Was the institutional, management arrangements suited to the

conditions?

Were the financial aspects carefully worked out?

Were the economic aspects carefully explored?

Did management quickly respond to changes?

Was its response carefully considered and appropriate?

How could the project’s structure be changed to make it more

flexible?
Common Features of Monitoring and Evaluation
In many cases;

• Both M&E use the same data collection and analysis system;

• The indicators for monitoring may be included in the range of

information required for evaluation.

Major Difference between Monitoring & Evaluation

Monitoring Evaluation
Objective  To determine the efficiency  To determine whether the
& legitimacy of the objectives set were
application and use of realistic, given the
inputs as well as their capacities with which & the
conversion into outputs circumstances in which they
 To facilitate an adjustment had to be fulfilled
of  To undertake review of
activity plans, time things done i.e. to assess the
schedules or budgets impact of the project
(focuses on inputs, process, activities (Focus on
Complementary Features of Monitoring & Evaluation
Monitoring Evaluation
Implementation oriented Policy oriented
Tracks results Explain results
Assess intermediate
Assess attributes
results
Focus in thoroughness
Focus on timeliness
Emphasis on final
Emphasis on multi-level
results results
Usefulness of Monitoring & Evaluation
M&E studies can be of direct use to policy makers, planners and
managers in four different ways:
It can help a country to improve its methods of identifying and
selecting projects and programs
M&E studies can determine whether the project:
• Is being implemented efficiently,
• Is responsive to the concerns of the intended beneficiaries and
• Will have its potential problems detected and corrected as quickly as possible.
They measure whether projects and programs that are underway are
achieving their intended social and economic objectives as well as
contributing to sectorial and national development objectives.
Evaluation studies can be used to assess the impact of projects on
wider developmental objectives such as:
• Protecting the environmental and managing the natural resources,
• Alleviating poverty and
• Giving women full economic, social and political participation in all aspects of
development.
Prerequisites for a Successful Monitoring & Evaluation System

Managers have to be committed to its use.

Decisions on the data to be collected should be based on the

problems that will need to be solved during implementation.

Requirements for data collection have to be adapted to realistic

standards of accuracy, timeliness & cost.

The system has to be designed at an early stage of project preparation

& baseline data collected well in advance.

Reporting
 It is a systematic activity of processing and distributing information

to partners depending on the type of information they require.

 It is a tool through which we know what happened or what we got

from monitoring and evaluation activities.

 Monitoring report focuses on what goes into a project/program and

its outputs.
 Evaluation report, on the other hand, deals with what we got from

the development intervention.

 Reporting requirements depends upon the user’s objectives and

needs.
Features of Good Reports

Narrates an event or an activity;

Is prepared for a specific audience;

Explains how the information is gathered;

States why the information is collected and how useful it is;

Include conclusion reached and recommendation as required; etc.

Current Status of Monitoring & Evaluation in Developing Countries
 Little is known about the sustainability projects and their intended
impacts in developing countries
 The focus of monitoring and evaluation studies in most developing
countries is narrow.
 A high proportion of monitoring and evaluation resources are
devoted to physical and financial implementation of large projects
and little attention is devoted to the:
 Sustainability of the project,
 Quality of social development projects,
 Distribution of project benefits among various socio-economic groups or
geographical regions,
 Extent to which the projects have achieved the intended impacts or the effect
development strategies have had on the environment.
 While very ambitious demands have been placed on the monitoring
and evaluation systems in development projects, many of the
methods of:
Designing,
Organizing,
Managing, and
using the systems are criticized for their inefficiency and ineffectiveness.
 There are several limiting factors for successful monitoring and
evaluation of development projects.
In the Ethiopian case, the following are the most important frequently
mentioned problems:

Insufficient awareness of the purpose of monitoring and evaluation and

inadequate attention paid to project implementation.

Inadequate or lack of monitoring and evaluation unit and staff both at the

project level and higher implementing body.

Poor accountability for failures and inadequate reward for special efforts made

towards successful project implementation.

Limited training opportunity for monitoring and evaluation personnel in projects

or offices where the unit exists.

Limited information source on project progress.

Late arrival of information required for monitoring.

Too costly to collect information.

Disregard of previous monitoring and evaluation findings in the design

of new projects.

High mobility of project staff disrupting continuity of monitoring and

evaluation functions.
CHAPTER 8
PROJECT PROPOSAL
WRITING
BRIEF CONTENTS

An Overview

Preconditions to Write a Project Proposal

Fundamental Components and Structure of a Project Proposal

Qualities of a Well Written Project Proposal

Project Proposal: An Overview
A project proposal is a detailed description of a series of activities
aimed at solving a certain problem.
A technical proposal, often called a "Statement of Work,” is a
persuasive document.
Its objectives are to:
• Identify what work is to be done
• Explain why this work needs to be done
• Persuade the reader that the proposers (you):
 are qualified for the work,
 have a plausible management plan and technical approach, and
 have the resources needed to complete the task within the
 The project proposal should be a detailed and directed

manifestation of the project design.

 It is a means of presenting the project to the outside world in

a format that is immediately recognized and accepted.

Preconditions to Write a Project Proposal
 There are critical issues that must be examined in advance of the
actual preparation of project proposal.
 These include:
 Interview past and prospective beneficiaries
 Review past project proposals
 Review past project evaluation reports
 Organize focus groups
 Check statistical data
 Consult experts
 Conduct surveys,
 Hold community meetings or forums
Fundamental Components and Structure of a Project Proposal
There is no single fixed and universally accepted structure for the
development of a project proposal.
However, the following can be used as a general guideline within
which one can make an adjustment depending on:
 the overall context of the problem under consideration and
 situational factors that directly or indirectly can affect
implementation of the project.
Accordingly, an ideal project must involve the following elements.
These include:
Title Page
Contents Page
Abstract/ Executive Summary
Project Background/Context
Project Rationale/Project Justification
Project Goal and Objectives
Project Implementation and Management Plan
Project Implementation Management Strategy
Risks and Assumptions
Expected Project Results
Monitoring and Evaluation
Reporting
Management and Personnel
Budget
References
Annexes
1. Title Page
 A title page should appear on proposals longer than three to four
pages.
 The title page should indicate:
• The project title in initial capital letters
• The name of the lead organization (and potential partners, if any),
• Team name and individual member names
• Date
• An appropriate picture of the product, a team logo, or both
 The project title should be short, concise, and preferably refer to a
certain key project result or the leading project activity.
 Project titles that are too long or too general fail to give the reader
an effective snapshot of what is inside.
2. Contents Page
 If the total project proposal is longer than 10 pages it is helpful to
include a table of contents at the start or end of the document.
 The contents page enables readers to quickly find relevant parts of
the document.
 It should contain the title and beginning page number of each section
of the proposal.
3. Abstract/ Executive Summary
 Abstract which sometimes is also called Executive Summary is a brief
summary of the proposal.
 Many readers lack the time needed to read the whole project
proposal.
 It is therefore useful to insert a short project summary-an abstract.
 For this reason, an Abstract should summarize the proposal so that a
reviewer knows what to expect when reading the rest of it.
 It also helps for others who may not be reviewers, to understand and
approve the general concept of the proposed research.
 This summary should not include information not explained in greater
detail later in the proposal.
The abstract should include:
The problem statement;
The project’s objectives;
Implementing organizations;
Key project activities; and
The total project budgets.
 For a small project the abstract may not be longer than 10 lines.
Bigger projects often provide abstracts as long as two pages.
4. Project Background/Context
 This part of the project describes the social, economic, political and
cultural background from which the project is initiated.
 It should contain relevant data from research carried out in the
project planning phase or collected from other sources.
 The writer should take into consideration the need for a balance
between the length of this item and the size of the overall project
proposal.
 Large amounts of relevant data should be placed in an annex.
5. Project Rationale/Project Justification

At this stage it is important to clarify why this particular

project is needed, as opposed to all the other possible
projects that might be proposed to address the same
problem.

Due to its importance usually this section is divided into four

or more sub-sections.
These include:
5.1 Problem Statement
The problem statement provides a description of the specific
problem(s) the project is trying to solve, in order to “make a
case” for the project.
Furthermore, the project proposal should point out why a
certain issue is a problem for the community or society as a
whole, i.e. what negative implications affect the target group.
There should also be an explanation of the needs of the target
group that appear as a direct consequence of the described
problem.
5.2 Priority Needs
The needs of the target group that have arisen as a direct
negative impact of the problem should be prioritized.
An explanation as to how this decision was reached (i.e. what
criterion was used) must also be included.
5.3 The Proposed Approach (Type of Intervention)
The project proposal should:
Describe the strategy chosen for solving the problem and
Precisely show how it will lead to improvement.
5.4 The Implementing Organization
This section should describe:
 The capabilities of your organization
 Why exactly your organization is the most appropriate to run the project,
 The organization’s connection to the local community,
 The constituency behind the organization
 Information about the kind of expertise the organization can provide.
 Information about the capacity of partners, if the project is planned to be
accomplished with partners.
6. Project Goal and Objectives
6.1 Project Goal/Overall Objective/Aim

This is a general aim that should explain what the core problem is

and why the project is important.

This describes what the long-term benefits to the target group are.

In principle, there should be only one goal per project.

The goal should be connected to the vision for development.

It is difficult or impossible to measure the accomplishment of

the goal using measurable indicators.

But, it should be possible to prove its merit and contribution

to the vision.
6.2 Project Objectives/Project Purpose/Project Immediate Objectives
This is a more:
Refined,
Specific,
Measurable,
Achievable,
Real, and
Time bounded
activities that contribute to the overall achievement of a project
goal.
7. Project Implementation and Management Plan
 It is a kind of framework within which the project’s specific
objectives and the necessary project activities are stated in a:
• Clear,
• Precise, and
• Meaningful manner along with the responsible
bodies/organizations.
Project Activities Format
Objectives Activities Responsibility Remark

Objective-1 Activity-1 the specific Any kind of suggestions

responsible bodies and comments on the
Objective-2 Activity-2 and/organization(s) specific tasks and
must be stated as per responsible body to carry
Objective-3 Activity-3 their respective roles out project activities can
in the project be can be illustrated
here.
Work Plan /Activity Plan
 The activity plan should include specific information and
explanations of each of the planned project activities.
 The duration of the project should be clearly stated, with
considerable detail on the beginning and the end of the project.
 In general, two main formats are used to express the activity plan: a
simple table and the Gantt chart.
 A simple table with columns, sub-activities, tasks, timing and
responsibility, is a clear, readily understandable format for the
Work Plan /Activity Plan in a Table Format
Activities/Tasks Implementation Time Responsibility Remark

Start End
No Activity 1

Activity-2
8. Project Implementation Management Strategy
8.1 Implementation Strategies
 Implementation strategies refer to the basic mechanisms the project
manager devises to actually carry out the project.
 These include:

• Distribution of leaflets,
• Preparation of symposiums and trainings,
• Meetings with community groups and conducting focus group
discussions, etc.
 Implementation strategies of projects can vary from one to other
depending on the:
Nature and characteristics of the discipline (project);
Methodological approach of project planners;
Actual context of the problem under consideration, and
many other possible reasons.
8.2 Sustainability

Sustainability of a project implies the future fate of the project

mainly after the intervention/implementation period is completed.

In this section of the proposal, the project manager should outline

the key mechanisms that can likely sustain the impact of the project

done on a certain problem and in certain community.

Some factors can affect sustainability of projects. These include:

 Sustainability of project impacts can be explained by different

dimensions. These include:

1.Organizational Sustainability

Is the division of responsibilities between various organizations,

groups and or individuals clear?

Have various stakeholders participated in planning, decision making

and implementation?

Is the management plan good?

2. Finance
Have the long-term running costs been considered?

Are there other possibilities for long-term financing?

3. Technology

Are local technologies and equipment being used?

Does the project build on existing local expertise?

Is there any training required?
4. Risks
In this case, project planners must ensure the existence of
organizations or individuals who prefer the project not be successful.
In such cases, project designers must set steps to offset such a threat.
Similarly, project designers must ensure the prevalence of any sort of
legislation that could negatively affect the success of the project.
 In general, project designers must describe the steps to be taken to
make sure the project be sustainable.
 Furthermore, project designers should effectively illustrate the long-
term plans for continuing the work beyond the life of the project.
9. Risks and Assumptions
 At this part of the project proposal, the project manager together
with the project team members should wisely predict and illustrate:
The possible risk/s of the project,
Probability of the risk
Degree of impact of the risk, and
Possible mitigation strategies for the risk.
Risks and Assumptions Format
No Risk Impact Probability Mitigation

h Risk-1 Low/ Medium/ High

Risk-2 Low/ Medium/ High

Risk-3 Low/ Medium/ High

10. Expected Project Results
 This section of the project proposal states the possible results of the
project.
 It is usually stated in the form of the following format.

Activiti Outcom Output Indicat

es e ors
Activity- Outcome Op-1 I-1
11. Monitoring and Evaluation
At this stage of the project proposal the project manager/
project owners should clearly indicate the ways of monitoring
and evaluating the overall project implementation process.

More specifically, the project proposal should indicate:

• How and when the project management team will conduct
activities to monitor the Project’s progress;
• Which methods will be used to monitor and evaluate; and?
• Who will do the evaluation?
12. Reporting

 The schedule of project progress and financial report could

be set in the project proposal.

 Often these obligations are determined by the standard

requirements of the donor agency.

 The project report may be compiled in different versions,

with regard to the audience they are targeting.

13. Management and Personnel
 A brief description should be given on the:

Project personnel,

Individual roles each one has assumed, and

Communication mechanisms that exist between them.
14. Budget
 In simple terms, a budget is an itemized summary of an
organization’s expected income and expenses over a specified
period of time.
 The two main elements of any budget are income and
expenditures.
 The project costs should present a reasonable reflection of
the activities presented in the project proposal.
15. References

References refer to anything cited in the text of the proposal.

One must acknowledge the author/s of the source material/s

used in the development of the project proposal.
A separate section entitled "Bibliography" lists other materials
(books, journal articles, etc.) related to the project but not
specifically referred to in the document.
16. Annexes
The annexes should include all the information that is important, but
is too large to be included in the text of the proposal.
This information can be created in the identification or planning
phase of the project, but often it is produced separately.
The usual documentation to be annexed to the project proposal
Analysis related to the general context;
Policy documents and strategic papers;
Information on the implementing organizations (e.g. annual
reports, success stories, brochures and other publications);
Additional information on the project management structure and
personnel (curriculum vitae for the members of the project team);
Maps of the location of the target area; and
Qualities of a Well Written Project Proposal
A well written project proposal should be:

Clear: the proposal should convey one and only one meaning.

Accurate and Objective: facts must be written as exactly as they are

and presented fully and fairly;

Accessible: information in the proposal must be easily accessible

Concise: the proposal must be written in a brief, direct, and in a to

the point manner.

End of the lecture