Project Management versus Investment Proposals

PROJECT MANAGEMENT

DEVELOPMENT PLANNING: CONCEPT, TYPES

PLANNING PROCESS IN BANGLADESH

1. DEVELOPMENT:

2 DEVELOPMENT AND PLANNING: CONCEPT AND RELATIONSHIP

3. DEVELOPMENT PLANNING:

4. RELATIONSHIP BETWEEN DEVELOPMENT AND PLANNING:

5. AIMS OF DEVELOPMENT PLANNING:

6 TYPES OF DEVELOPMENT PLANNING:

7. DEVELOPMENT:

8. PLANNING MACHINERY:

9. PLANNING PROCESS:

10. PLANS AND PROJECT:

11. CONCLUSION:

1. DEVELOPMENT:

Development may be defined as a process where by the entire social system of a country moves upward. It is a process of a cumulative change resulting from positive forces that raises the standard of living of the common mass.

Though growth rate is an important parameter of development; there are some other parameters of development. These are as follows: a) pattern of production;  b) pattern of trade;  c) use of energy; d) consumption pattern; e) degree of urbanization; f) demography; g) health level and health input; h) education; i) gender equality etc.

PLANNING: (DEFINISIONS)

Ø  Deliberate direction and control of the economic resources for the purpose of attaining certain goals & objectives within a specific period of time

Ø  A deliberate conscious effort of attaining certain pre-set goals with the use of limited resources over period of time for a particular geographical area.

Ø  An exercise to make best use of resources available, to attain maximum possible development.

2. DEVELOPMENT AND PLANNING : CONCEPT AND RELATIONSHIP

Planning and development are generally integral components of a single concept. As such, the two are intertwined into an integrated phenomenon. However, it may be worthwhile to address two leading components of the given topic (planning & development) discretely and then attempt to synthesize them into one whole concept in the following manner:

                                i.            Try to understand the concept of development

                              ii.            Try to understand the concept of planning

                            iii.            Build up wholesome concept and their interface.

2.      Approaches to Planning

In order to stimulate thinking, to create options and to  assist planning consider the following questions;

Ø      What is to be done?

Ø       When it is to be done?

Ø       How it is to be done?

Ø       Who is to do it?

Ø       What resources are required?

Ø       Who should know about it?

4. DEVELOPMENT PLANNING:

Planning is the process of consciously developing a sequence of future actions to achieve specified goals.

Ø    Process

Ø    Consciously

Ø    Sequence of future actions

Ø    Specified goals

FUNCTIONAL CLASSIFICATION OF PLANNING

Ø    ­Macro Economic Planning/National Planning

Ø    Micro Economic Planning/Project Planning

Ø    Sectoral Planning

5 RELATIONSHIP BETWEEN DEVELOPMENT AND PLANNING:

Having discussed the concept of development and planning, we may now address the relationship between the two. We may notice that development can take place either suo-moto through natural phenomenon or/and through deliberate conscious efforts in orderly fashion within an accepted framework.

Two processes of growth and development of a waterway may illustrate this comparative scenario. In the natural process a sea, river or channel may provide a natural waterway for use. Clearly no prior planning is involved in its creation.

In the other process, systematic conscious human effort is resorted to plan creation of a new waterway. Similarly, we may observe such comparative scenario between a natural forest and a planning forestation, natural flood protection and planned flood protection etc.

In terms of timeframe, development plan may be categorized into the following:

i)                    Short term

ii)                  Medium term

iii)                Long term

This classification is illustrated in the following diagram

     

 

Again, in terms of nature/approach development plan may be divided into two broad categories viz. Directive Plan and Indicative Plan.

 

Under the directive plan, the central authority viz.; the government determines all targets, allocations and investment programs. This applies in the socialistic economy or to some extent in an economy that is predominately dependent on the public sector, i.e. the private sector plays the second fiddle.

Indicative planning is in vague in market economy when private sector is the prime mover. The plan articulates the development targets along with the projection of required investment programme. It endeavors to achieve the desired goal through adoption of appropriate policy package, infrastructure support, reform programme, and monitoring and regulatory measures.

6 AIMS OF DEVELOPMENT PLANNING:

We may note that development planning primarily aims at achieving the agreed social goals of a country over a predetermined time period through optimum use of the given resource endowment.

The common expression of the social goal is to attain improved living standard of the people through sustained increases in the per capita availability of goods and services.

The concern for sustainability of improving living standard implies that growth in absolute terms is not sufficient to achieve the social goal because, such growth could be obtained by disproportionate use of factor inputs with diminishing returns prevailing, such that output per capita might actually fall in the long run.

7 TYPES OF DEVELOPMENT PLANNING:

It could be of following types:

 

1.  INDICATIVE PLANNING:

In case of indicative Planning, the government only indicates areas where further development is desired. The government does this through adoption of certain economic policies in the monetary and fiscal areas.

This type of Planning has been taken up mainly in Japan, the U.K and the U.S.A

MAIN OBJECTIVES:

Ø  Keeping the economy in the right track so that it does not go off into a path of unstable growth.

Ø  It always maintains an economic stability through full employment / wider employment level/Balance of payment (BOP) viable/and Control of Inflation.

2. COMMAND PLANNING/CENTRALISED PLANNING:

In command planning every single economic decision is controlled, directed and undertaken by the government i.e. by centrally controlled planning machinery.

They not only draw up a specific set of targets representing a desired course of economic progress but also attempt to implement its plan by controlling directly the activities of practically all productive units in the entire national economy.

3. PLANNING IN A MIXED ECONOMY:

Mixed economies of the most of the third world economies are characterized by the existence of an institutional setting in which a part of the productive resources is privately owned and operated while the other part is controlled by the public sector.

Two principal components of development planning in such economy can be identified.

i.                    The government’s deliberate utilization of domestic saving and foreign finance to carry out public investment project and to mobilize and channel scarce resources into certain areas that can be executed to make the greatest contribution towards realization of long-term economic objectives (e.g. the construction of railways, school hydro-electric projects and other components of economic infrastructure, as well as the creation of import-substituting industries).

ii.                  Governmental economic policy (e.g. taxation, licensing, import quotas wage and price policy) is to stimulate, direct and in some cases, even control private economic activity in order to ensure a harmonious relationship between the desires of private businessmen and the social objectives of the central government.

4. SECTORAL PLANNING PROGRAMME/REGIONAL PLANNING:

Sectoral planning is prepared within the overall framework of the National plan keeping view of the national objectives, goals and priorities. Within a sector emphasis is given on those programmes which are related to:

(i)                 Increase in production,

(ii)               Quick yielding programme,

The General Economics Division of the planning supplies the macro-framework of the plan indicating national objectives, strategies and sectional allocation.

4.  REGIONAL PLANNING:

The nation is to be divided into meaningful economic regions and sub-regions on the basis of economic & physical characteristics of its various components. The characteristics of production, marketing and distribution channels, transport modes, river system, physical features etc, influence the formation of these viable economic regions.

Each region will have to undertake planning for its socio-economic development. Regional planning has been essential for comprehensive rural development as well as balance regional growth with meaningful dispersion of industries, cash crops and other economic activities. The national plan provides allocation to regional boards to undertake programme of their own.

5. PLANNING IN A MARKET ECONOMY:

Govt. has a stake in shaping the economy. It must provide direction to formulate policies, initiate reform process, mobilize public support in favor of wide range of change, in order to build up confidence of the private sectors to act and operate freely. It must not be a competition to the private sector and should not be involved in production of goods & services that private sector can provide.

Characteristics of market economy

1.                  Competitive Price

2.                  No barrier to entry

3.                  Consumer is the king

There are four important factors in market

1.                  Product

2.                  Price

3.                  Promotion

4.                  Placement

Role of govt. In a market economy

1.                  Investment Liberalization/Privatization

2.                  Trade Liberalization

3.                  Exchange Rate regulation

4.                  Public Administration Reform

5.                  Financial Sector Reform

Types on the Basis of Duration:

Durational classification of planning

1.                  Long-term/perspective planning (15/20years).

2.                  Medium-term planning (five-year plan).

3.                  Short-term planning/annual development plan (one-year).

8. DEVELOPMENT:

Development is omnipresent in day-to-day real life phenomenon in a society or a nation. Yet, its definition is neither very straightforward nor universally unique. Some of the common and conventional definitions of development are as under:

              i.            Development is what induces sustained growth of income (Facilitating improved standard of living)

            ii.            Development is increase, over time volume of a country’s per capita gross national product (GNP) on a systematic and sustainable basis.

          iii.            Development is growth plus change involving the society as a whole.

          iv.            Development is transition (transformation) from a given condition to an improved over time.

Against the above perspective of development, we may now focus on the essential elements of the above definition of development in the following way:

(i)                 Growth is neither the most essential concern of development, though not necessarily sufficient, nor the end by itself. We can easily observe that growth over time on a sustainable basis is for achieving increased income over time, which is again for attaining improved living standard of the people through sustained increase in the per capita availability of goods and services.

(ii)                 Development is not confined within the contour of growth per se. As already discussed, development implies growth plus change, involving the society as a whole. Such growth-plus change ought to be positive in the context of social objective. Development also refers to the underlying structural changes, the creation of new institutions and new industries and the application of modern technology and skills to old ones, e.g. agriculture that cause growth in output per factor unit.

(iii)             Positive change through development is infinite and dynamic. Hence, there is no terminal point of development for a society. Furthermore, prevalence of a complete utopian world of absolutely, is even defined by some as transition from one set of problems to another set of problems. This reflects absence of absolute satisfaction of all segments of a society at any given stage. This is partly because of the prevalence of host of conflicting ends, where satisfaction of some may normally exclude fulfillment of some other ends e.g. maximizing national saving would inevitably decrease current consumptions and vice-versa or increasing allocation for a sector would cause reduction in some other sectors.

We may also observe that the underlying concept, or at least thrust of development itself, saw significant transformation over time. During the fifties and sixties the primary thrust of development was growth and more often than not, the two used to stand for the same in a synonymous way. The proponents of the high growth strategy argued that high growth would ensure benefits of development to all in the society through the “trickle-down” process of development.

However, the fallacy of this approach was adequately exposed by the early seventies, through the empirical evidence, that a high growth by itself can not inevitably induce coveted social changes, where the benefits of growth or development is shared by various sections of the society on an equitable way.

Rather, prevailing economic and welfare disparity may get further accentuated with growth unless; effective rational policies/measures are incorporated in tandem with growth focused development planning. The annals of development planning is replete with instances where in spite of high growth the overall development of a society degraded, with smaller section of the society enjoying greater proportion of the fruits of development at the cost of deprivation of the larger section of the society. In such situations, not only the gap between the rich and the poor segments of the society widened, but also even the absolute number of poor increased.

9. PLANNING MACHINERY:

The Government of Bangladesh felt the need for setting up planning machinery just after independence in 1971. The Planning Commission with a Deputy Chairman and three members established; in 1972 in the following objectives:

1.            To prepare national plans, annual, five-year and perspective, for the economic and social development of the country in accordance with the socio-economic objectives of the Government of the People’s Republic of Bangladesh.

2.            To prepare annual development programmes within the framework of the national plan, and to formulate policies for the implementation of the plans.

3.            To evaluate plan performance and watch the progress of plan implementation on a continuous basis in order to prepare evaluation of national plans.

4.            To study important economic issues and formulate policies and measures.

5.            To determine external aid requirements and negotiate the total quantum and composition of aid required from foreign countries.

6.            To evaluate external debts and submit report thereon along with evaluation of national plans.

7.            To undertake and promote economic research and to initiate survey and investigations needed to support effective planning and development.

8.            To advise on the nature of the machinery for securing efficient execution of the national plan, annual programmes and economic policies.

9.            To stimulate and where necessary, initiate project formulation to examine and advise on programmed and projects with a view to determine their consistency with the national objectives.

10.        To review the progress of implementation of approved projects. Particularly of aided projects, to identify the cause of delays and difficulties in the implementation of projects and to prepare solutions thereof.

10.  Planning Process in Bangladesh:

Bangladesh Planning Commission is the Central Planning organization, primarily responsible for preparation, review and evaluation of the development planning. However, it would be naive to assume that the Planning Commission carries out this responsibility of highest national import in isolation. In fact, while playing the pivotal role in the planning process. Planning Commission engages itself to the rigorous of multiplier interaction, consultation, dialogue, review, parley etc. with all the development ministries divisions, agencies, people’s representatives, academics, research bodies, practitioners, private sector institution NGO’s etc.

Socio-economic policy and commitment of the government of the day provides the foundation plank of development planning in Bangladesh, as indeed in other countries, where development planning is formally practiced.

A macro framework of development plan is built in the light of agreed social goals so as to address the aggregate key element like growth, outlay; saving etc. with a view to guiding the economic growth in a manner that ensures achieving ore-defined social goals. Apart from defining social goals of economic planning, prioritizing the goals, fixing growth garnets, spelling out strategies are integral part of the planning exercise.

Sectors

For consistent and balance development planning, the economy is delineated into identifiable distinct sectors. The overall macro objectives, targets, allocations are consistently dis aggregated into sect oral and sub-pectoral layouts.

The Sectors relating to the total development activities in Bangladesh are.

1.      Agriculture;

2.      Rural development & Institutions;

3.      Water resource;

4.       Industries;

5.       Power;

6.      Oil, Gas and Natural Resources;

7.      Transport;

8.      Communication;

9.      Physical planning, water supply and housing;

10.  Education;

11.  Sport and Culture;

12.  Health, population and family welfare;

13.  Mass Media;

14.  Social Welfare, Women & Children affairs and youth development;

15.  Public administrative;

16.  Science, Information & Communication Technology; and

17.  Labor and manpower.

Preparation of Development Plans:

Following steps feature regularly in the process of preparation of the development plan in Bangladesh:

i.                    Survey of the existing socio-economic scenario and gauging the benchmark;

ii.                  Evaluation of the previous plans in general and the immediate preceding plan in particular;

iii.                Identification of existing constraints and potentials;

iv.                Addressing of policies having direct bearing on development and spelling out necessary policies;

v.                  Projection of macro economic indicators during the plan period.

vi.                Estimating resource requirements for achieving given growth target and working out feasible way of resource mobilization;

vii.              Sector wise proposal for incorporation in the plan;

viii.            Spelling out plan implementation mechanism.

ADP &  RADP:

ADP is a short-term version of the development plan what is popularly known as the Annual Development Programme. This is an integral component of the country’s annual budget for a financial year, which commences from the month of July. In the ADP allocation is given to different projects of different sectors/ministries. The government tries to achieve physical and financial target of the fiscal year through proper utilization of the ADP budget. The development process is enhanced through the implementation of ADP.

However, unlike the medium-term Plan, ADP is confined to the public sector only and essentially it is a project wise annual resource allocation for various development sectors/sub-sectors in the public sector.

RADP:

RADP stands for Revised Annual Development Programme. It is the revised version of ADP. In the RADP the allocation given in ADP is revised on the basis of actual necessity. For some projects allocation is increased while allocation is decreased for some projects. Besides this some important projects under different sectors/ministries while some of less important/useless projects are excluded based on the actual necessity/priority of the nation.

11. PLANS AND PROJECT:

Plans and projects are the two most important instruments of achieving development goals in Bangladesh. Systematic planning for development has been carried on in Bangladesh since the early sixties, although systematic project planning analysis in particular social cost-benefit approach is a relative new phenomenon.

The Government of Bangladesh desires to achieve simultaneously a number of economic and social objectives, e.g.

Ø   Raising standard of living,

Ø   Raising per capita income,

Ø   Improving distribution of income and wealth,

Ø   Self-sufficiency,

Ø   Self-reliance,

Ø   Rapid industrialization, creating employment opportunity and for higher

foreign exchange earnings, etc.

These objectives are final as well as intermediaries to attain other objectives and not all are necessarily compatible with one or other, free market system, especially in a developing country like Bangladesh cannot always guarantee achievement of this objective and therefore, it needs some kind of planning in order to achieve these desired objectives.

In Bangladesh according to time factor, plans are divided into perspective plan. Medium term plans and short-term plan.

• Perspective plans consist of long-term development programmes covering the period from 15 to 20 years.
• Medium terms plans are normally spread over five years.
• Short term plans are mostly the one-year plans. One-year plans have the task of setting out how the government’s policy should be carried into effect. These are drawn up in conjunction with the estimates of the budget and both form an obligation for the government.

It is obvious that plans require a great deal of research. The pre-investment studies provide the basis for the project formulation in a planned economy. The perspective plan ultimately boils down to disaggregated projects. In fact, “a sound plan requires great deal of knowledge about existing and potential projects”. According to Tinbergen, “projects provide a more concrete subject for planning than sectors if they are well prepared and data available are more accurate and detailed”. Simply, good plans always require good projects, just as projects require plans, the two are interdependent. Good plan rests on the availability of a wide range of information about existing and potential investments and their likely effects of growth and other national objectives. It is project analysis that provides this information and the projects selected for implementation then become the vehicle for using resources to create new income.

The interaction between plans and projects is circular in nature in Bangladesh. The Plans prepared according to time factor require specific projects and conversely projects equally depend upon the plans.

12.       CONCLUSION:

There is no denying fact that our resource is limited and its best or optimum utilization and extraction of benefits entirely depends how best we could manage them. There are reasons to believe that only availability of abounding resources could not change the lot of poor millions but it did change when those resources were best managed and utilized.

Malaysia and Nigeria are the two examples in this context, which are frequently referred to by the management experts, who had enough reserve of hydrocarbon in their countries. Both the countries started exploiting their Hydrocarbon resources in 1960s. Malaysia could manage its resource better than Nigeria and that brought significant difference in their economy. Malaysia achieved remarkable economic prosperity over the years and changed the lot of its people; whereas, Nigeria failed miserably to achieve it. Nigeria’s oil reserve brought bane rather than boom for its citizens.

So, the commitment of the government has to be in general for implementation of all the development projects in the country and thereby the development process has to be enhanced