Why project preparation and appraisal? - Abu Dhabi Fund for ...

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10 Νοε 2013 (πριν από 3 χρόνια και 11 μήνες)

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Saeed Ahmed Rana






ADFD/WB Project Preparation and Appraisal Workshop Abu Dhabi, April 2010

Overall Framework

for Project
Preparation and
Appraisal


This is an instrument to provide assistance to the
billions in the developing world, who need to
overcome poverty and raise their standards of
living.



Investment projects contribute to the sustainable
socio
-
economic development of member countries.



Such investment helps borrowers make the best
use of their resources


natural, financial and
human


to alleviate poverty, protect the
environment and enhance effectiveness of public
and private sectors.

2

Why A Project?


Why project preparation and appraisal?


Project preparation and appraisal processes play an
important role in
enhancing the developmental impact
of investments and building government capacity in
national planning and investment.



These processes are not intended to be document
driven but to bring together
multiple perspectives
on a
project and various
tools of analysis
needed to assess,
monitor and improve on the different activities and
expenditure components involved in the project.



A strong foundation of
preparation

and
appraisal

can
ensure better performance and disbursement during the
life of the project and is the primary framework for
conducting
project supervision and monitoring
.

3

A Framework for Project Preparation


and Appraisal

I. Project Cycle

II. Project Rationale and Preparation

III. Borrower Roles

IV. Donor Roles

V. Project Appraisal



Costing Analysis



Environmental and Social Assessments

VI. Assessing Project Quality

VII. Early Signs of Project Failure

4

The Bank Project Cycle

Project Cycle

-

The project cycle starts with a
development strategy based on selectivity and
comparative advantage.


It is targeted to country’s development objectives. It is
followed by:


Identification


Preparation


Appraisal


Negotiations and Approval


Implementation and Supervision


Completion and


Evaluation


5

Stages of the Bank’s Project Cycle (I)


Country Assistance Strategy
-
the Bank proposes lending
and advisory services to help countries identify their
priorities and reach their main development goals.



Identification
-
Projects are identified that support country
strategies and that are financially, economically, socially
and environmentally sound.



Preparation
-
The Bank provides policy and project advice
along with financial assistance. Clients conduct studies
and prepare final project documentation.



Appraisal
-
The Bank appraises the economic, technical,
institutional, financial, environmental and social aspects of
the project. The project appraisal document and draft
legal agreements are prepared.


6

Stages of the Bank’s Project Cycle (II)


Negotiation and Board Approval
-
The Bank and Borrower
agree on loan or credit agreement and the project is
presented to the Board for approval.



Implementation and Supervision
-
The Borrower implements
the project. The Bank ensures that the loan proceeds are
used for the loan purposes with due regard for economy,
efficiency and effectiveness.



Implementation and Completion
-
The Bank team evaluates
the performance of both the Bank and Borrower.



Evaluation
-
The Bank’s Independent Operations Evaluation
Department prepares an audit report and evaluates the
project. Analysis is used for future project design.

7

Project/Lending Types


Development Projects

can be original projects, pilot projects or repeater
projects



Pilot projects
test the design criteria and implementation strategy of new
technologies before embarking upon a full scale investment.



Repeater

projects adopt the design and practices of a successful project for the
same Project Development Objective (PDO) under similar implementation
conditions and environments.



A

SWAp

is

a

sectorwide

approach

that

supports

locally

owned

programs

for

a

particular

sector

in

a

comprehensive

and

coordinated

manner
.



SWAps

promote

increasing

reliance

on

country

systems

and

procedures

and

use

a

common

framework

for

planning,

implementation,

expenditure,

and

monitoring

and

evaluation


Project

Lending

is

primarily

the

Specific

Investment

type

Loan

(SIL)
.

Lending

is

also

extended

for

sector

investment,

maintenance,

financial
-
intermediary

and

technical

assistance

projects
.



8


Project Identification


Birth of a Project



Country Development Plans


Borrower Specific Request


Unforeseen Conditions (e.g. natural calamities)


Set Project Development Objectives



Basic Consideration:



If the project is successful, what will be its principal outcome
for the primary target group?



General Guidelines (
see next slide
)

9

Project Development Objective Guidelines

10


What group is targeted directly by the project as the key recipient of project
benefits?



Immediately after the close of the project what problem would have been solved
for the target group?



What will the target group be doing differently after the project that should make
it better off?



The PDO should focus on the outcome for which the project reasonably can be
held accountable, given the project duration, resources and the approach.



The PDO should not merely restate the project’s components or outputs.
Efficient use of inputs or delivery of outputs must be translated into outcomes or
results for the primary target group.



KISS

Your PDO (Keep


It


Short
-

and
-

Simple), concise and meaningful.



Don’t try to reach the sky in one go.



PDO should not encompass higher level objectives that depend on other efforts
beyond the scope of the project.

Strategic Areas of Focus for the Bank




Achieving results on the ground




Country capacity building



Measuring and reporting on results



Enabling environment



Beneficiary participation/ownership



Communication/messaging on results



Gender balance



Harmonization with MDBs


11







Statistics


M &E


Public Sector
Management


RX Budgeting



MDGs, Country


CAS Program


Sector/Theme


Project


Core Indicators


Quantitative


Qualitative




Realistic DOs,
Strategy, Quality,
RX Frameworks,
Implementation


Risk Mgmt, RX
based
instruments

Achieving
Results on
the Ground

Measuring
and Reporting
on Results

Enabling
Environment

Country
Capacity
Building
MfDR

Bank’s Communication/Messaging on Results

Harmonization with MDBs/Donors


Senior
Management
attention


Recognition


Tools, IT
systems, RX
Platform,
CPRT


Training, KL


Resources


12

Project Preparation
-

Borrower Role


Review identification and results



Initiate project preparation



Identify/set institutional framework



Determine need for TA



Set up project preparation office



Appoint project consultants



Inter
-
agency/departmental coordination



Prepare a Project Information Paper (PInfP)



Approach donors


13

Project Preparation
-

Donor Role



Assign project preparation team



Review borrower progress in project identification/preparation



Identify shortcomings and suggest actions to complete



Review alternative designs and justification for the selected design



Prepare Interim Information document (PID) based on PinfP




Set up peer reviewers



Review consultant’s progress and propose strengthening, if
needed



Discussions



Borrower



Stakeholders



Potential donors

14

Sustainability Considerations At Preparation


Post project needs



Follow
-
up to sustain benefits



Institutional arrangements



Implementation


Follow up



Budget for O&M (Operation and Maintenance)



Beneficiary participation


Are beneficiaries identified?


Are they organized?


Are they willing to participate in project activities?
[Participation is important to ensure ownership and
sustainability.]



Any NGO participation?


15

Project Preparation




Update Project Information Document (PID)



Field visit to assess preparation progress



technical, economic, environment, social studies



Completion of feasibility studies



Discussions with probable/potential co
-
financiers



Prepare Project Implementation Plan (PIP)






Project components



Implementation plan



Monitoring and Evaluation (M&E) Arrangements



Prepare Project Operation Plan (POP)





Guidelines



Arrangements for effective project operation



Risk analysis and mitigation measures



Performance Indicators
PI. (
see next
slide
)


16

Performance Indicators and Guidelines

17


Fewer is better. Identify a limited set of indicators for the
Project Development Objective (PDO)


both qualitative
and quantitative



However, make sure that the selected indicators measure
all PDO dimensions



Indicators should be S
-
M
-
A
-
R
-
T



S Specific


M Measurable


A Attributable


R Realistic


T Targeted


The Project Concept Note (PCN)

Draft and Circulate Project Concept Note
[PCN] *hyperlink


Three to four page document


It focuses on project concept, not design


It is prepared soon after project identification before project preparation
costs become substantial


Functions


Examine the strategic rationale for Bank involvement


Promote consideration of alternative project concepts


Seek a go/no
-
go decision from the Country Director


Obtain early guidance/agreement on issues and approaches


Flag risks and potential mitigation measures


Seek early guidance on potential safeguard issues, consultation and
disclosure


Agree on a resourced estimate, schedule and team
[See PCN Template 1]

18

Sample PCN Cover Sheet

19


Preparation Completed


Quality Enhancement Review (QER)



Consistency of design with approved project concept



Quality assurance of the technical aspects of the project



Establish fiduciary (Financial Management and Procurement) requirements that
need to be met by appraisal



Review safeguards needed and specify project’s environmental and safeguard
classifications and the requirements to be met by appraisal.




Review project feasibility and sustainability aspects
.



Propose actions to update PCN



At Preparation stage all
technical

economic

financial

institutional

socia
l
environmental M&E O&M
aspects must be fully analyzed with viable options
presented



PCN review



Discussion at management Level



Follow up on PCN review and finalize PCN



Obtain management’s authorization for project appraisal.

20


Project Appraisal

Project Appraisal
is the process of assessing, in a
structured way, the case for proceeding with a project or
proposal. It involves comparing various options, based on
economic and financial viability, technical feasibility and
social and environmental consideration/justification


Pre
-
Mission Actions


Finalize appraisal arrangements


Assign appraisal mission members


Ensure all subject matter specialists are included


Preferably Bank regular staff


consultants only in
specialized areas


Ensure staff continuity until mission accomplished


Draft Project Appraisal Document

21

Pre
-
Mission Actions

Critical elements of PAD are:


Country background


Sector background


Project Development Objectives (PDO) Project
Design (Tech. Institutional, Financial, Social,
Environmental, Procurement, M&E)


Project cost and financing


Project analysis (economic, financial)


Implementation arrangements (PIM, Institutional etc.)


Sustainability consideration



22

PAD Cover Sheet (1)

23

PAD Cover Sheet (2)

24


Pre
-
Mission Actions (Contd.)


Prepare issues paper


Explain unresolved issues and proposed solutions


Hold decision meeting


Seek managerial guidance on unresolved issues


[Note: Above two steps may be combined with
activities under PCN Review]


Finalize appraisal arrangements with the
government, borrower and co
-
financiers, if any.


Prepare mission TOR


25


Appraisal Mission Field Activities



Field check design assumptions


Ensure that all information in the draft PAD is correct


make
changes as necessary to make it a factual document


Reach agreement with the government/borrower on all
project aspects


Agree on holding Medium Term Review (MTR) in due course


Prepare an aide memoire summarizing main findings and
understanding reached by the mission, mainly on:


Policy issues


Supplementing and strengthening project components with
special reference to:


Social


Environmental


Procurement arrangements


Financial and Economic Analyses


Safeguards



26

Field Mission Completed


Institutional arrangements


NGO role, if any


Implementation schedule


Funding arrangements


M&E arrangements.


Actions to be completed by
government/borrower and the donor to
complete project appraisal


Confirm Aide Memoire (AM) findings and
agreements with the government/borrower


27

Inputs:

Budgeting &
planning activities

Eg.$ to water
sector

Outputs &

Intermediate

Outcomes

(on
-
going)


Eg:

Water
connections

Strategy &

Program

Results (3
-
5
yrs)

Eg:

Improved water
access +
quality

Country/
Sector

Long term

Outcomes


Eg:

MDGs etc


Managing for Results:

The Results Chain

Doing
right
things?

Doing
them
right?

Getting

Desired
Results?

Lasting

Impact?

Time


Level

Learning loop: evaluation


28

Results Framework

(RF)


RF is the program logic that
explains how (PDO) is to be
achieved.


It links PDO, outputs,
outcomes to be delivered and
indicators used to verify
achievement.


RF is a management tool for
all stages :


at the beginning for strategic
planning


during implementation for day
to day management and
evaluation of project progress


near the end for overall project
evaluation and feedback.

29

Example of Results Framework

30

Post
-
Mission Activities


Management approval of mission findings


Convey management approval and the loan
conditionality to the government/borrower


Complete outstanding actions agreed in the aide
memoire


Determine if post appraisal mission work is
needed


Update appraisal document


Coordinate with the government/borrower


Negotiations


Board approval


Loan agreement signing


Project launch workshop


31

Assessing Project Quality


A checklist of commonly found deficiencies
in project preparation is given in the next
slide.



A focused and timely Quality Enhancement
Review (QER) should help in making up
these deficiencies before the project is
appraised.



A second look at these issues would
determine, among others, if post
-
appraisal
work is needed.













32

Checklist of General Deficiencies in Project
Preparation

33


Overambitious and non achievable Project Development Objectives (PDO)



Project design not fully relevant to PDO



Project implementation period is not long enough



Mismatch with country context



Inflexibility in project design



Complexity of project design compared to absorptive capacity of the
government, including project cost and post project activities



Inadequate M&E arrange
ments



Weak governmental institutions



Poor risk analysis



Lack of beneficiary participation



Weak ownership by the government



Weak sustainability analysis


Early Signs of Project Failure


Normally, with the approval of a project by the
Board and signing of the loan agreement, the
appraisal team signs off with mission
accomplished satisfaction and the ball bounces to
the implementation court.



As noted in the project cycle steps, the next step
is equally important for the parties concerned.



Early signs of implementation issues should be
carefully monitored.



The main issues are listed in the next slide.




34

Early Signs of Project Failure

35


Undue delay in project effectiveness [recipient country’s
legal requirements]. An initial test of the recipient’s
commitment to the project objectives



Delay in the establishment/appointment of project
implementation unit (PIU)



Delay in recruitment of project consultants



Delay in holding a project launch workshop. This is the
venue to straighten out financial, procurement and
startup issues



Slippage in the government’s ability to meet obligations in
the conditionality package including funding



Absence of a champion in the government for achieving
project objectives

Some Examples of Project Experience

Republic of Yemen (RoY) Case

General Background



Since 1995 Bank assisted RoY in 47 projects for
US$1.7 billion and has provided substantial
technical and analytical support



Implementation overall has been satisfactory



Some cases of strengths and weaknesses are
presented in the following slides

36

Taiz: Municipal Development and


Flood Protection

PDO


Protect city residents, businesses and infrastructure from seasonal flash flooding


Capacity development of Taiz local government


Support for Yemen Decentralization Program


Strength


Simple design conforming to Govt. dev strategy; clear focused Development
Objectives (DOs)


High level of borrower commitment


Experienced PMU


Targeted good training program


Weakness


Original 4
-
year time frame was too ambitious; had to be extended


However, in view of satisfactory implementation Bank approved additional financing
for enlarged scope.


37

Third Public Works Project

PDO


Provide needed infrastructure to improve services and environmental conditions


Creation of short term employment


Community involvement in project selection, preparation and implementation


Development of local contracting and consulting business


Strength


Well designed Repeater Project


Clear objectives applying lessons from previous projects


Strong government support


PMU gained experience and responded to implementation issues (e.g. unexpected
events such as sharply increasing costs of construction materials)


Weakness


No major weakness. Presents a good model for Repeater Projects and Pilots.


38

Groundwater and Soil Conservation Project

PDO


Improve groundwater conservation in farming areas and increasing surface water
availability


Improve water use efficiency


Improve recharge and protection of watersheds


Support groundwater management framework and institutions


Strength


PDOs are strategically strong but not fully supported by project design


Project pursued needed policy objectives (increasing fuel price and reducing
subsidy)


Institutional strengthening e.g. IAS Fed of WUAs, quality control and agreement with
beneficiaries on water usage


Weakness


M&E design


inappropriate indicators


Weak project consultants (funded by other agency with no Bank control)


39

Second Rural Access Project

PDO


Reduce isolation of poor rural people by giving them better access to markets and
services


Strength


Result framework is well designed


PDO very relevant to government’s Poverty Reduction Strategy Paper (PRSP)


Provides impetus to sound institutional framework


Weakness


Beneficiary participation low


Poor preparation


premature Board presentation
-

first year’s design not ready


Weak risk analysis
-

particularly related to benefits to minorities who are the main
beneficiaries
-

elite capture prospects


40

Yemen

Rural Energy Access Project

PDO


In pursuance of
GoY’s

commitment to an agreed nationwide rural electrification program and the
strategy set out in PRSP, the PDOs are to:


Improve electricity access of rural population in the selected areas of Yemen in a financially
sustainable manner


Demonstrate feasibility of increasing access in the off grid areas using solar energy.


Strength


High level of borrower commitment; Institutional and legal framework in place; significant local
funding


Clear objectives relevant to sector development strategy


Achievable and
monitorable

objectives; satisfied consumer population is a good indicator of
desired outcome


Simple design with a low cost pilot component for sustainable solar energy use


Substantial co
-
financing by IDB,AFD, Germany, France ($80 m+ compared to $25 m by IDA and
$11 m by government) indicates confidence in project design


T
argeted good training program


Weakness


Selection of beneficiary areas may become an issue.


Financial sustainability RESPs will be difficult to achieve. A combination of tariff adjustment and
government subsidies needed to achieve full financial viability.


Keeping end use tariff affordable to rural consumers is a High risk


Need to develop a suitable solar energy system with little outside help

41


Summing Up


PDO



Simple
,
real
,
achievable

-

KISS it


Preparation


Complete

with full justification
--





Resource,

Availability,

Institutional



Framework,

Risk,

Analysis,





Sustainability




Design



Flexible,

Relevant,

Proven Track





Record


Participation


Beneficiary,

Government


Ownership

Beneficiary,

Government


Appraisal



Project Ready
for
Implementation


Result



Achieve PDO


Final Word

Beneficiary Satisfaction


42

Thank You





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