Transcript Contents

Overall Framework
for Project
Preparation and
Appraisal
Saeed Ahmed Rana
ADFD/WB Project Preparation and Appraisal Workshop Abu Dhabi, April 2010
Why A Project?
 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.
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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.
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A Framework for Project Preparation
and Appraisal
I.
II.
III.
IV.
V.
Project Cycle
Project Rationale and Preparation
Borrower Roles
Donor Roles
Project Appraisal
Costing Analysis
Environmental and Social Assessments
VI. Assessing Project Quality
VII. Early Signs of Project Failure
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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
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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.
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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.
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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.
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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)
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Project Development Objective Guidelines
 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.
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Strategic Areas of Focus for the Bank
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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
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Bank’s Communication/Messaging on Results
• Realistic DOs,
Strategy, Quality,
RX Frameworks,
Implementation
• Risk Mgmt, RX
based
instruments
• Statistics
• M &E
• Public Sector
Management
• RX Budgeting
Achieving
Results on
the Ground
Country
Capacity
Building
MfDR
Measuring
and Reporting
on Results
Enabling
Environment
Harmonization with MDBs/Donors
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• MDGs, Country
• CAS Program
• Sector/Theme
• Project
• Core Indicators
• Quantitative
• Qualitative
•Senior
Management
attention
•Recognition
•Tools, IT
systems, RX
Platform,
CPRT
•Training, KL
•Resources
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
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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
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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?
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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)
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Performance Indicators and Guidelines
 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
M
A
R
T
Specific
Measurable
Attributable
Realistic
Targeted
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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
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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]
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Sample PCN Cover Sheet
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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 social
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.
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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
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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
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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
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PAD Cover Sheet (1)
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PAD Cover Sheet (2)
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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
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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:
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Social
Environmental
Procurement arrangements
Financial and Economic Analyses
Safeguards
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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
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Managing for Results:
The Results Chain
Time
Getting
Desired
Results?
Doing
them
right?
Level
Doing
right
things?
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
Learning loop: evaluation
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Lasting
Impact?
Country/
Sector
Long term
Outcomes
Eg:
MDGs etc
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.
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Example of Results Framework
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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
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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.
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Checklist of General Deficiencies in Project
Preparation
 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 arrangements
 Weak governmental institutions
 Poor risk analysis
 Lack of beneficiary participation
 Weak ownership by the government
 Weak sustainability analysis
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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.
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Early Signs of Project Failure
 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
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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
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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.
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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
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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.
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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)
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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
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Yemen
Rural Energy Access Project
PDO
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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
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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
Targeted good training program
Weakness
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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
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Summing Up
 PDO
 Preparation
 Design
 Participation
 Ownership
 Appraisal
 Result
 Final Word
Simple, real, achievable - KISS it
Complete with full justification-Resource, Availability, Institutional
Framework, Risk, Analysis,
Sustainability
Flexible, Relevant, Proven Track
Record
Beneficiary, Government
Beneficiary, Government
Project Ready for Implementation
Achieve PDO
Beneficiary Satisfaction
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Thank You
•
ً‫شکراً جزیل‬
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