Transcript Effective Communication Techniques

Project Feasibility Studies
By; Engr.Dr.Attaullah Shah
PhD ( Civil) Engg , MSc Engg ( Strs), BSc Engg ( Gold Medalist),),
MBA, MA ( Eco) MSc Envir Design, PGD Computer Sc.
Tel: 051-9250100
E-mail: [email protected].
Project management includes:
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Project Appraisal
( Before Commencement of Project PC-I, PC-II).
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Project monitoring.
( During Execution of the Projects PC-III)
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Project Evaluation
( After Completion of the projects. PC-IV,PC-V)
What is Project Feasibility Study?
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A feasibility study is defined as an evaluation or analysis of the potential
impact of a proposed project or program.
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A feasibility study is conducted to assist decision-makers.
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In determining whether or not to implement a particular project or
program.
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The feasibility study is based on extensive research on both the current
practices and the proposed project /program and its impact on the
existing operation.
The feasibility study will contain extensive data related to financial and
operational impact and will include advantages and disadvantages of
both the current situation and the proposed plan.
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The selection of a sound project to achieve the given target of
economic development in a particular sector is very important for
attainment of Plan objectives.
Development projects, especially large and complex ones, often
meet with difficulties during their execution process. A feasibility
study is, therefore, a pre-requisite for preparation of a major
development project on sound lines, and is not ruled out even for a
minor one.
It is basically an in-depth "three-in-one" study consisting of the
technical, financial and economic viability of a project. The study
arrives at a definite conclusion about the feasibility of a project after
considering the various options
Assessing Project Feasibility
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You need to calculate Nine categories of
feasibility:
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Economic
Financial
Operational & Technical
Schedule ( Time)
Legal and contractual
Political
Marketing
Ethical
Environmental
Project Appraisal.
 Technical Analysis
 The analysis for determining the technical viability of the
development project is based on the technical data and
information given in the PC-I form as well as the earlier
experience of carrying out similar projects. The technical
analysis covers the following areas:
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Impact Analysis:
Location, land, suitability of location ( Seismic Zones),
Utilities, roads, infrastructure,
Raw material, Present and Future needs.
Availability of machinery, plants and equipments, technology.
Transportation facilities, commercial centers,
Manpower, Local labor, technicians, unskilled workers.
Climate, natural hazards,
Demand and supply analysis.
Government incentives and commissions.
Institutional/Organizational/Managerial Analysis:
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A whole range of issues in project preparation revolves around the
overlapping institutional, organizational and managerial aspects of the
project.
Managerial Feasibility.
Managerial feasibility involves the capability of the infrastructure of a
process to achieve and sustain process improvement, Management
support, employee involvement, and commitment are key elements
required to ascertain managerial feasibility.
It is the most neglected part in the feasibility studies of construction
projects.
Two basic approaches of Project Organization.
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Separation of organizations:
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Traditional sequence of design and construction.
Professional construction management
Integration of organizations:
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Owner-builder operation in which all work will be
handled in house by force account.
Turnkey operation in which all work is contracted to a
vendor which is responsible for delivering the
completed project .
Various Forms of Project Organization
A Matrix Organization
A Project-Oriented Organization
The Matrix Organization in an Engineering Division
Coordination between Owner and Consultant
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Commercial/ Marketing Analysis
The commercial aspects of a project include the
arrangements for marketing the output produced by
the project and the arrangement for the supply of
inputs needed to build and operate the project.
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Test marketing
Market Planning process.
Market Share determination.
Pricing and Competition strategies (Skimming or Penetration)
Distribution networks.
Advertisement plans.
Sales promotion strategies.
Product Life Cycle studies.
Financial Analysis
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Financial analysis involves assessment of financial impact,
judgment of efficient resource use, assessment of incentives,
provision of a sound financing plan, coordination of financial
contribution and assessment of financial management
competence. The following techniques are used.
The overall resource requirements of the projects are
tabulated in three basic documents:
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Income/Expenditure Statement ( Profit & Loss Statement)
Project Cash Flows ( Cash inflows and outflows)
Project Balance Sheets ( Assets & Liabilities)
Various tools of project Financial Analysis:
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Simple Rate of Return
Break Even Analysis.
Pay Back period
Net present Value
Internal Rate of Return ( IRR)
Financial Ratio Analysis.
Benefits Cost Ratio.
Financial Analysis of Project based on Social Cost
Benefit Profitability
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Contribution of the project to social welfare of a
society.
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Impact of the project on Foreign trade ( Exports and
Imports)
Effect on trained Human Resource
Direct and Indirect impact on environment.
Techniques used for Social CBA.
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Net Value Added
Distribution effect ( Poverty Alleviation)
Foreign Exchange Effect
Sensitivity analysis ( Impact of project in case of cost
and time overruns).
Risk Analysis
Economic Feasibility
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Viability of a project over a period of time.
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Capital Costs
Working Capital requirements.
Estimates of operating Costs
Depreciation/Taxes and Profits.
Determine Tangible Costs
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Can easily be measured in PKR
Determine Tangible One-Time Costs
 Associated with project startup, initiation and
development Includes
 System Development
 New hardware and software purchases
 User training
 Site preparation
 Data or system conversion
Assessing Economic Feasibility
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Determine Tangible Recurring Costs
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Associated with on-going use of system
Includes:
 Application software maintenance
 Incremental data storage expense
 New software and hardware releases
 Consumable supplies
Determine Intangible Costs
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Cannot be easily measured in dollars
Examples:
 Loss of customer goodwill
 Loss of employee morale
Assessing Economic Feasibility
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Determine Intangible Benefits
Cannot be measured easily
 Examples
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Increased employee morale
Competitive necessity
More timely information
Promotion of organizational learning and
understanding
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Operational Feasibility
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How likely is it that system can be used to meet desired
objectives? (e.g., functional illiterate line workers make
up 90% of production staff…can proposed system work
at our facility?)
Assessing Other Project
Feasibility Concerns
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Schedule Feasibility
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Assessment of timeframe and project
completion dates with respect to organization
constraints for affecting change
Legal and Contractual Feasibility
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Assessment of legal and contractual
ramifications of new system (e.g., does it
violate the union contract?)
Assessing Other Project
Feasibility Concerns
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Political Feasibility
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Ethical Feasibility
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Assessment of view of key stakeholders in
organization toward proposed system (e.g., How
will this affect morale? Will we see a worker
slowdown in other areas?)
Are there issues that are inconsistent with
corporate ethics and goals even if legal (e.g., lots
of e-waste?)
With above analyses, firm can rank order
project and determine if it should be done via
prioritization…
EIA: Environmental Impact Assessment of Projects
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EIA is a systematic process to identify, assess and manage the potential
environmental effects of a proposed development or activity.
The findings of
Statement (ES).
Local Planning
consequences of
the EIA process are presented in an Environmental
The process and findings inform decision-makers e.g.
Authorities (LPAs) of the likely environmental
the proposals.
The EIA process gathers data and evaluates effects on a range of
technical topic areas that are specified in the legislation, these include,
air, population, soil, fauna, flora, water, climatic factors, material assets
including architectural and archaeological heritage, landscape and the
inter-relationships between these factors.
The findings from evaluation of each of these topic areas link together to
provide a picture of the effects of the proposal as a whole.
Why EIA of the Projects?
EIA Process.
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Part-II Project Management in
Public Sector
History of Planning Bodies in Pakistan
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Development Board was established early in 1948
In 1950 a Six-Year Development Plan was formulated and
embodied in the Colombo Plan for Cooperative Economic
Development in South and South East Asia..
Planning Board: 18th July, 1953,
To develop the resources of the country as rapidly as possible so as
to promote the welfare of the people, provide adequate living
standards, and social services, secure social justice and equality of
opportunity to all and aim at the widest and most equitable
distribution of national wealth.
Planning Commission On 22nd October 1958, the President was
pleased to re-designate the National Planning Board as the
Planning Commission.
Federal Ministries/Divisions
The Federal Ministries
are responsible for the preparation of programmes and projects in
their respective fields of interest including autonomous
organizations under their control
Conceptual Plans.
Perspective Plan-Vision Plan ( Ex: 2030 Vision)
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To provide a long-term (15-25 years) economic and social policy
framework so that the objectives to be achieved over a much longer
period can be incorporated in a medium-term framework.
Five Year Plan:
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A five year plan is a general statement of objectives and targets
relating to the economy as a whole and its various component sectors.
Roll-On Plan
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In order to bring flexibility into the Five Year, a roll-on plan of medium
term is designed in which the sectoral and project-wise position is
adjusted according to the foregoing year
Annual Plan
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It is regarded as the implementation side of the five year plan.
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The annual plan includes an evaluation of past performance, a
presentation of the main targets, an assessment of the resource
position for the year.
FEASIBILITY STUDY
Pre-requisite for preparation of a major development project on sound
lines, and is not ruled out even for a minor one
Preparation/Processing of PC-II.
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For Large projects of cost 500 Million or more
 Consultants are appointed for pre-feasibility.
 The consultancy charges should not exceed 10%
PC-I/Project Feasibility:
 Part 'A' is the "Project Digest”- containing eight questions
which are more or less common to all sectoral PC-Is forms.
 Part 'B' entitled "Project Description and Financing",
 Part 'C' deals with "Project Requirements".
 Part 'D' deals with environmental aspects.
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PC-III Proforma
Designed to furnish information on the progress of on-going
projects on quarterly basis
PC-IV & V Proformae
PC-IV form is required to be submitted at the time when the project
is adjudged to be complete while the PC-V form is to be furnished
on an annual basis for a period of five years by the agencies
responsible for operation and maintenance of the projects.
Umbrella PC-I
Some times a Federal Ministry is required to prepare a PC-I having
provincial components to be financed through a joint loan by a
donor agency.
Public Sector Development Program PSDP
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The Public Sector Development Programme
(PSDP) is an annual document which lists all the
public sector projects/ programmes with specific
allocations made for each one of them in that
particular financial year. ( 1920 Projects in 200607)
Federal Vs Provincial Projects
Major share of the total Development Programme
is allocated to Federal projects
While the remainder is allocated to the Provincial
Development Programme.
PROJECT APPROVING BODIES
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National Economic Council (NEC) –CEO/PM as Chief.
( No limit)
Executive Committee of National Economic Council (ECNEC)
Above 500 M
Headed by the Federal Minister of Finance/ Adviser to the Prime
Minister for Finance and Economic and Planning.
Economic Coordination Committee of the Cabinet (ECC)
Headed by the Federal Minister for Finance and Federal Ministers of
economic ministries as its members. It attends to all urgent day-today economic matters and coordinates the economic policies initiated
by the various Divisions of the Government
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Central Development Working Party (CDWP)
Headed by the Deputy Chairman, Planning Commission and which includes
as its members the Secretaries of the Federal Ministries concerned with the
development and the heads of the Planning Departments of the Provincial
Governments.
Departmental Development Working Party (DDWP/DSC)
Headed by the respective Secretary/ Head of Department and includes
representatives of Finance Division and concerned Technical Section in the
Planning and Development Division.
Provincial Working Party (PDWP):
headed by the Chairman, Development Board/Additional Chief Secretary
(Development) and includes Secretaries of the Provincial Departments
concerned with development, as its members
Predecessor and Successor Activities
1. Pre-feasibility
A
2.
B
Concept clearance (where necessary)
A
3. Negotiation for foreign aid/loan (where necessary)
C
4. Preparation of PC-II
D
C
5. Feasibility
E
D
6.
F
E
7 . Processing/Scrutiny of the Project
G
F
8. Approval of the project by competent authority.
H
G
9’ Project documents (work plan/ PERT/CPM)
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10 Signing of foreign loan/aid agreement+
J
B
K
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L
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Project formulation/preparation of PC-I
11 Administrative approval
12 Allocation of funds/ADP (PLA)
B
13 Release of funds*M
- Appoint of Project Director N
- Land Acquisition O- Simultaneous
- Creation of Posts and appointment of staff
- Appoint of consultant O
- Detailed design preparation R
14 Tendering
S
R
15 Evaluation of Tender
16 Award of Contract
T
S
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T
17 Construction of Civil Works
V
U
18 Procurement of Machinery / other inputs
W
K/L/V
19 Installation of machinery / equipment
X
W
20 Commissioning / Completion
YV
X
Preparation/Processing of PC-II
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A PC-II is prepared for undertaking a feasibility study in respect of a
major project estimated to cost Rs 50 million or more. This is mandatory.
•A project-oriented TOR should be prepared and professional consultants
should be engaged for the feasibility study, if necessary
• The procedure for processing a PC-II is the same as for the PC-I. The
consultancy cost should not exceed 10% of the project cost.
•The relevant scrutinizing body and the sanctioning authority will also remain
the same as for the PC-I. In short, all the rules and procedures in respect of
the PC-I will apply mutatis mutandis to the PC-II.
•All proposals for consultancy, both local and foreign, for preparation of
feasibility studies/ conducting surveys should be drawn up on the PC-II form
and got approved from the Competent Authority before undertaking the
actual work.
• The need for utilization and development of local consultancy has been
recognized by the Government.
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Accordingly, ECC in its meeting held on 19-7-1988
decided that 30 per cent of expenditure to be
incurred on foreign consultancy should be devoted to
the development of local consultancy and that the
limit of 30 per cent would be mandatory for foreign
consultants, who would be required to engage local
consultants
The Pakistani consultants and engineers be given full
opportunity and they should be the first to be hired
for projects for consultancies in Pakistan before
hiring any foreigners.
For details of PC-II refer to Doc-PC-II
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Project
Preparation PC-1
General
Linking Projects to Resources
Location, Area and Population Coverage
Project Description
Project Objectives and Targets
Project Scope
Change in Scope of Projects
Cost Estimates
Revised Cost Estimates
Financial Plan
Financial Phasing
Physical Scheduling of Activities
Period of Implementation
Appointment of Consultants for Project Preparation, Detailed
Designing and Tender Documents
Economic Benefits
Economic Benefits
Inter-Agency Coordination
Preparation of PC-I/Project Document
For details refer to PC-I doc.
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PROJECT APPROVAL
Approval Stage
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Project Approving Bodies
- National Economic Council (NEC)
- Executive Committee of National Economic Council (ECNEC)
- Economic Coordination Committee (ECC) of the Cabinet
- Central Development Working Party (CDWP)
- Departmental Development Working Party (DDWP)
- Provincial Development Working Party (PDWP)
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Sanctioning Powers of Approving Authorities
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Submission of Schemes to the Competent Authority
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Processing of Schemes
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PROJECT IMPLEMENTATION AND MONITORING
Project Management & Supervision
Appointment of Project Director
Increase in Scope of Work and Delay in Execution of
ProjectsProject Execution/Supervision-Development of
Management Information System (MIS)
PERT/CPM Techniques
Steps in Project Formulation/Implementation
- Listing of Activities
- Acquisition of Land
- Tendering of Civil Works and Award of Contracts
Procurement of Machinery and Equipment
Local Purchase/Fabrication
Foreign Procurement/Utilization of Foreign Aid
Submission of Completion Report
Project Review and Monitoring
Progress on PC-III Proforma
Progress Review by the Ministries/Divisions
Project Review Groups
Review of Foreign Economic Assistance and
Problematic Foreign Aided Projects by the Committee
Project Control Cycle.
Monitoring
Collect the performance
Establish the Standards
Data.
Feedback
Evaluation
Take the corrective actions
Resolve
Compare with the standards
Project Management & Supervision
1. The objective of any effort in project planning and analysis is to have a
project that can be implemented to the benefit and socio-economic uplift
of the society.
2. The Project Director is appointed, staff of all categories arranged, the
detailed designs got prepared, if need be, with the assistance of
consultants, contractors pre-qualified and short-listed, tenders floated for
civil works, equipment, and their installation, contracts awarded, all in
timeliness with the objective of initiating the operations and getting them
fully underway for achieving the goals envisaged without any time and
cost over-run, in order that the economic benefits accrue according to the
promises made in the scheme.
3. For achievement of the stipulated targets and tangible returns, however, it
is imperative to entrust the management and supervision of the project
during the implementation stage to capable and competent hands of
required qualifications, experience and calibers.
CASH PLAN
General
• The Cash Plan has to be prepared on the basis of allocations made in the PSDP for
the next financial year.
• Provide name of the ministry/division along with Project and PSDP allocations. The
serial number of the project as reflected in the PSDP may also be provided.
• The actual expenditure are the expenditure actually incurred on the project. The
funds transferred to PWD/C&W department are not expenditure rather it is deposited
with the department to be spent on behalf of executing agency. The expenditure
incurred by PWD/C&W department may be shown as an expenditure.
Object/Functional Classification
The classification and head of expenditure as given in the chart of account of PIFRA
Items of Expenditure
The major components of expenditure have been identified in the Cash Plan. However
the items of expenditure may vary from project to project. The executing agency may
incorporate any additional item of expenditure as per approved items of expenditure
given in the PC-I
The executing agencies can further bifurcate an item of expenditure if required.
( For details refer to Cash Plan Doc.)
Approved Cost as per PC-I
Provide item-wise approved cost as reflected in the PC-I.
Cumulative Expenditure
Provide item-wise, cumulative expenditure up to the end of
last financial year.
Quarterly Financial Targets
The cash requirements be worked out on the basis of
quarterly physical activities proposed to be undertaken in the
next financial year.
Ensure a relationship between items of Work Plan and cash
requirements of different items of work.
WORK PLAN
General
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The Work Plan has to be prepared on the basis of activity chart annexed with
the Work Plan.
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Identify the activities to be undertaken on the basis of PSDP allocations for
next financial year.
The activities have to be developed in line plan or bar.
In case, PSDP releases are not lapsable, the executing agency is required to
prepare a separate Work Plan for the unspent releases.
Items of Work
The items of works are the same as indicated in the Cash Plan. In case of
addition of any item in cash plan, it may also be added in the Work Plan.
Unit
Please indicate the Unit of measurement. It can be kanals, acres, hectare for
land and sq. ft. for civil works etc.
Scope of Work
The approved scope of work in quantifiable terms as per PC-I be provided.
Physical targets/items of work be provided in absolute figures and not in
percentages.
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Cumulative Physical Progress
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Item-wise cumulative Physical progress up till 30th June of the last financial
year be provided.
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Quarterly Physical Targets
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The quarterly physical targets are developed on the basis of activities
identified and time allocated for each activity in activity chart.
The activity-wise targets developed be reproduced under quarterly Physical
targets.
Out Put Indicators
Indicate output of the project in quantifiable terms (if applicable) during the
financial year.
ACTIVITY CHART
Activity charts have been developed to identify the time required in
undertaking an activity.
Relationships between different activities have to be developed. An activity
can be undertaken after completion of previous activity or a number of
activities can be undertaken simultaneously.
Time required to undertake an activity can be identified by line or bar.
Activity chart will not be developed for
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POL, repairs and maintenance.
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Stationery utilities etc.
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Contingencies.