CRITERIA OF PROJECT MANAGEMENT SYSTEM

CRITERIA OF PROJECT MANAGEMENT SYSTEM

INTRODUCTION

1.1.      CONCEPT OF A PROJECT.

1.2.      ORIGIN OF PROJECTS IDEAS.

13.       TYPES/CLASSIFICATION OF PROJECT.

14.       PROJECT CYCLE.

1.5.      ACTIVITIES OF THE PROJECT CYCLE.

1.6.      ELEMENTS OF A PROJECT.

1.7.      PROJECT IDENTIFICATION.

1.8.      PRE-FEASIBILITY STUDY.

1.9.      PROJECT PREPARATION.

1.10.    APPROVAL OF PROJECT.

1.11.    IMPLEMENTATION.

1.12.    TECHNIQUE OF MANAGING IMPLEMENTATION.

1.13.    PROBLEMS IN IMPLEMENTATION.

1.14.    EVALUATION.

1.1. CONCEPT OF A PROJECT:

The basic concept of a project is a set of systematic and organized efforts engaging an estimated amount of resource to achieve a predetermined objective over a defined period of time. Normally, projects are taken up with a programmed investment to create a capacity to obtaining a flow of output/service over a period of time to satisfy articulated objective. In a way, a project is a component of development plan. Projects are also considered as the building blocks of development plan. Projects are essential ingredients of development plan, as building blocks are in case of building. Furthermore, development plan is basically transformed into reality by implementing appropriate projects.

A project is a series of activities to achieve some pre-determined objectives investing a schedule of resources within a definite time dimension through a specified organization set up.

1.2. ORIGIN OF PROJECT IDEAS:

BASED ON THE FELT NEED THE PROJECT IDEAS MAY RESULT FROM:

a)     Unsatisfied demands;

b)     Problems encountered in the development process;

c)     The need for development of underused/unused resources or the need for conservation resources; and

d)     The need to complement other investment;

e)     Government response to local political or social pressures; and

f)      The occurrence of natural calamities

The project ideas may emanate from multiplicity of sources-internal as well as external.

Internally, projects may be identified by

·        Local political or social leaders

·        Technical specialists

·         Private or Public entrappers

Finally, project ideas may originate as a result of the following external factors:

·        International Agreements;

·        Influence of bilateral or multilateral aid agencies;

·        Investment strategies of neighboring countries;

·         Technological development.

Important factors in the identification of public sector projects in Bangladesh are unsatisfied demands, problems encountered in the development process, government response to political or social pressures, and the occurrence of natural calamities. Political leaders and technical specialists play critical role in the project identification process. Bilateral or multilateral development partners also provide impetus in the identification process of probable aided projects.

Screening and Prioritization of Project Ideas:

Initial project ideas may generate a large portfolio of projects. It is as such necessary that the project ideas are initially scanned and a process of screening is introduced to leave out unnecessary and low priority project ideas.

Prioritization of project ideas constitutes a critical stage of the project process. There should be clear understanding of the objectives of the projects ideas and mutual commitment and understanding among all parties involved in the process of project implementation.

Criteria for screening/rejection of project ideas may include:

·        Inadequate demand for the proposed output or lack of comparative advantage;

·        Uncertainty of supply of raw materials or inputs;

·        Inappropriate technological base or local capabilities;

·        Uncertainty about the source of financing;

·        Excessive economic/social and environmental costs relative to the expected benefits;

·        Experience of similar projects.

·         The consistency of the project proposals with the objectives, strategies and programs of the PRSP and other govt. policies.  

1.3. TYPES/CATEGORIES OF DEVELOPMENT  PROJECTS:

Projects may be classified in numerous ways depending upon the criterion of classification.

		1.      Safety or Emergency 2.      Infra structural projects 3.      Merit project/goods 4.      Social project 5.      Structural or Sectoral adjustment project

Besides this, the projects can be categorized  according to the following aspects :

(a) Nature of Investment (Investment/TA)

(b) Source of financing (Aided/non-aided);

(c) Nature of Financing (GOB/self finance)

(d) Timing of inclusion (Ongoing/new);

(e) According to ownership (Public/private) etc.

 

                           

Based on the types/nature of benefits/returns Planning Commission, Government of the People's Republic of Bangladesh classified projects into the following three types:

Type "X":

Projects that earn revenue through sale of output (goods and services) may be called directly productive projects. This type of project is for (1) Self sufficiency/Acceleration of production; (2) Enhancement of Export; (3) Import Substitution; and, (4) Utilization of Available Resources; Ø  Such projects normally yield direct quantifiable benefits. Notable example of this type of projects is the project of industry sector. Investment worth of such projects can be determined through cost-benefit analysis. In submitting proposals of such projects, it is mandatory to produce evidence of investment worth by determining Net Present Value (NPV), Benefit-Cost Ratio (BCR) and Internal Rate of Return (IRR)

Type "Y":	Productive but non-revenue earning projects i.e. projects which give rise to tangible output, benefit of which do not accrue directly to projects themselves but to other parties. This Type of project is mainly for (1) Transfer of Technology; (2) Development of Infrastructure; and (3) Utilization of natural/Available Resources. Notable examples are irrigation projects. Ø   These projects can be subjected to cost-benefit analysis. Evidence of investment worth e.g. Net Present Value (NPV), Benefit-Cost Ratio (BCR) or Internal Rate of Return (IRR) is necessary for justifying project proposals.
Type "Z":	Service sector projects i.e. projects, which do not give rise to tangible output but provide service benefits to the society are relating to the following aspects. Ø  The benefits of such projects cannot be quantified in monetary terms. Ø  The tools of cost-benefit analysis cannot be applied to the determination of investment worth of such projects. As such calculation of NPV, BCR and IRR will not be necessary for such projects.

1.4. PROJECT CYCLE:

Project activities take place in several distinct stages. These stages are commonly referred to as the ''project cycle, as such, refers to steps or stages that a project undergoes from the time when it is only an idea to the time it is completed and followed up.

The stages are, however, closely linked to each other and follow a logical progression with the later stages helping to provide the basis for renewal of the cycle through subsequent project work.

Different stages of project cycle have been termed and stated by different economists or organization.  

Mark Turner & David Hulme described the stages as:

·         Identification ;

·         Data Collection;

·         Data Analysis and project preparation;

·         Project Appraisal and Selection;

·         Implementation; and

·         Evaluation

 

Turner, M. and D. Hulme, 1997, Governance, Administration and Development. Making the state work, P-141.

The World Bank uses the following:

Ø Identification

Ø Preparation

Ø Appraisal and Approval

Ø Implementation ; and

Ø Evaluation

The stages of project cycle are depicted in the following diagram:

 

The stages of the project cycle indicated above are generally followed in Bangladesh. In case of large and foreign aided projects, all the steps are followed rigorously. In cases of small locally financed projects all steps are, of course, followed but less rigorously.1.5. ACTIVITIES OF THE PROJECT CYCLE:

1.	Identification	:	-	Study National Plans/programmes/priorities.
			-	National Goal
			-	Sectoral Priorities
			-	Projects ranking in relation to Plan and Sector
			-	Defining broad goal
			-	Select the project
2.	Preparation and Analysis	:	-	Set-up targets through objectives
			-	Collection of data/collect data
			-	Conduct feasibility study
			-	Choose among alternative designs
			-	Phasing of cost
			-	Phasing of benefits
			-	Prepare Development  Project Proposal (DPP)
3.	Appraisal	:	-	Examine Financial Soundness
			-	Examine Economic ability
			-	Examine Technical Soundness
			-	Organizational Strength
			-	Managerial Soundness
			-	Cost Effectiveness Test
4.	Approval	:	-	Process Development Project Proposal (DPP)
				through appropriate authority
			-	Getting approval from concerned party
			-	Giving notification.
5.	Negotiation	:	-	(Incase of foreign aided project)
	&		-	Preparation of loan document
	Monitoring		-	Organizing working committee to negotiate
			-	Negotiate loan agreement.
6.	Implementation	:	-	Organize an office
			-	Procure Material
			-	Recruit man-power
			-	Prepare work schedule
			-	Specify job description
			-	Clarify responsibility
			-	Prepare work plan and use CPM
			-	Monitoring and Supervision
			-	Check progress of project activities
			-	Suggest corrective measures and take Necessary action.
7.	Evaluation	:	-	Compare project attainment with
				Project targets.
			-	Reasons for discrepancy if any
			-	Suggest method which will help for
				future project of similar nature.

1.6. ELEMENTS OF A PROJECT:

1.9.1. A PROJECT IS LIKELY TO COMPRISE SEVERAL OR ALL OF THE FOLLOWING ELEMENTS:-

-     Vision / Mission

-     Capital Investment e.g. civil works, equipment;

-     Provision of services (for design, supervision, operation and maintenance etc.);

-     Strengthening of institution including training of personnel;

-     Improvement of policies; and

-     A plan for implementation of above elements to achieve project objectives within scheduled time.

1.7. PROJECT IDENTIFICATION:

In the first stage, the project cycle is to identify potential projects. Project identification can be described as the beginning of the process. A good understanding and analysis of existing situation is necessary for identification of projects. Analysis should include an understanding of the Strengths and Weakness, Opportunities and Threats (SWOT) of the system and resources.

1.8. PRE-FEASIBILITY STUDY:

Project concepts requiring large investment ought to undergo a pre-feasibility study to determine the broad justification of project ideas and the possible design alternatives. To permit a decision on the merits of projects ideas, the study should briefly examine:

·         The demand or market for the product or service and expected beneficiaries/target groups areas;

·         The availability of physical and human resources;

·         Technical viability;

·         Magnitude of costs, for both initial investment and for continued operation;

·         Likely financial and economic rate of return (where applicable); and

·         Institutional or policy impact.

For all large investments in Bangladesh, pre-investment analysis/study is initially done internally by the concerned department. Consulting firms are also engaged for substantiating project proposals on technical, economic, financial and administrative viability. In other cases in-house departmental study is undertaken and consultations are made with specialized agencies of the government.

IDENTIFICATION TEST:

A project may be deemed to have passed the identification test and ready for preparation stage when:

·         The project options selected are relevant and feasible in addressing the stated problem and are justified based on rough estimation of costs and benefits;

·         The project will be supported by intended beneficiaries/stakeholders and political authorities;

·         Funding is likely to be available;

·         The project is consistent with national development objectives and policy of the government.

1.9. PROJECT PREPARATION:

Feasibility study:

Once a project is identified and has passed the identification test, it continues through the stage of preparation. The usual first step in project preparation is to undertake a feasibility study in order to provide the decision-makers with enough information for deciding whether or not to proceed with the project.

The study is undertaken to establish the justification of the project as a whole in all its relevant directions-technical, economic, financial, managerial environmental etc. The depth and detail of the study will, however, depend on the complexity of the project and how much is already known about the project.

The study will provide the decision-makers with information concerning:-

·         Does the project conform with the development objectives and priorities of the country;

·         Is the project administratively workable?

·         Is the project economically justified and financially viable?

·         Is the project adequate demand for the project's output?

·         Is the project environmentally sound?

·         Is the project compatible with the customs and traditions of the beneficiaries?

For all large projects, particularly aided projects, feasibility study including detailed engineering study are conducted in Bangladesh to ensure justification and firming up of project cost.

1.11. IMPLEMENTATION:

Implementation is probably the most critical stage of the project cycle. The responsibility of translating objectives and targets earmarked in the project into reality is entrusted at this stage. Organizational set-up and management capability of the project unit is very vital in this regard. Delegation of adequate administrative and financial authority to the project management is considered very important in the way of successful implementation of a project.

Any mismatch between project design and inputs on the one hand and the implementation capacity of the project implementation organ on the other may often lead to poor project performance. Strong and sustained commitment of the government is critical for successful implementation of the projects.

Similarly, it is essential that the community and stakeholders be involved in the implementation process. Wide consultation and communication is needed within the system to ensure staff commitment, which is necessary for the successful implementation.

1.12. TECHNIQUE OF MANAGING IMPLEMENTATION:

A.    CRITICAL PATH ANALYSIS:

Critical Path analysis is considered as an important technique to assist planning and managing implementation. The analysis entails, first, establishing the sequence of activities that minimizes the cost and time of implementation and, second, identifying those activities whose timing is critical to each stage of implementation. The necessary steps can then be taken to ensure that these tasks get done on time.

B. MONITORING:

i. What is monitoring:

Monitoring is an act of overseeing project/program activities and seeks to ensure that input delivery, work schedule, targeted outputs and other required actions are as per plan.

It involves the assessment on a routine basis of the flow of planned programme inputs, the exaction of scheduled activities and progress in the achievement of program outputs without making value judgments.

Monitoring of projects during implementation has been considered to be an effective method in facilitating project implementation in efficient manner. Monitoring seeks to ensure efficient performance and improved operations through timely signals on problems, offering early warnings and ensuring timely corrective measures.

It provides feedback to all levels about various aspects of the project implementation. Monitoring is to be based on a set of simple indicators that can be collected and processed in time for management to take necessary action.

ii. Who monitors:

Monitoring functions of public sector development projects/programmes in Bangladesh are performed at various levels.

Ø    The executing agencies monitor their own development projects. This is called in-house monitoring system.

Ø    Ministries/Divisions monitor progress during implementation of the respective development projects.

Ø    Development Partners also monitor progress during implementation of development projects.

Ø    ERD mainly reviews progress of aided projects towards disbursement of loans under various agreements.

Ø    Planning Commission undertakes review in order to rationalize ADP allocation and utilization of development projects etc.

Ø    Development Partners have a continuous system of progress monitoring with emphasis on loan disbursement in case of aided projects.

Ø    IMED is involved in the monitoring process of public sector development projects/programs. It is the central external monitoring organ of the Government. IMED monitors progress during implementation through:-

(a) Periodic reports

(b) Field inspection

(c) Co-ordination review meetings.

Ø  ECNEC/NEC also reviews the progress of implementation of development projects/programs for solving major implementation problems. IMED prepares the working papers for such review meetings.

Flexibility in Implementation:

Project implementation has to be flexible to allow adjustments in design, costs scope etc. Circumstances may change and project management may have to respond to such changes intelligently.

Technical and price changes required in the course of project implementation have to be adjusted suitably. It is to be admitted that implementation is a process of refinement, of learning from experience.

1.13. PROBLEMS IN IMPLEMENTATION:

Problems are inherent in the process of Implementation of development projects. The problems may be due to the following reasons:

·         Financial (improper costing of inputs of project, inadequate allocation of funds):

·         Technical (inappropriate design, unexpected soil condition, unsuitability of imported equipment for local conditions);

·         Managerial (inappropriate organizational set up, lack of managerial talent, cumbersome procedures leading to delays in land acquisition, delays in procurement, frequent transfer of project personnel, insufficient project supervision etc.).

·         Political (adverse law and order situation, social unrest, lack of government commitment etc.).

·         Natural (floods, cyclones etc.).

Problems, irrespective of sources, cause delay execution of project. Time overrun leads to cost overrun. Consequently, the basis of worthiness of project or approval or project becomes questionable.

1.14. EVALUATION:

Need for Evaluation

Evaluation is the process for systematically analyzing the relevance, efficiency, effectiveness and impact of activities in the light of objectives. It means reviewing comprehensively the extent to which objectives/expectations have been achieved. The basic purpose of any evaluation function is two fold, namely (1) to assess how far and how efficiently operational programs and activities have produced desired results, and (2) to feed this information back into the formulation of new directions, policies and procedures. The objective of ex-post evaluation is to learn from them so that the mistakes are not repeated.

CRITERIA OF EVALUATION:

The principal issues that are addressed during ex-post evaluation include the following:

a)      Project objectives:

Ø  Were the project objectives realized?

Ø  What were the major weak points or strong points of the project?

b)      Economic and social impact:

Ø  Are the economic and social effects of the project likely to reach the expected level?

Ø  Was the distribution of project benefits as expected?

c)      Institution building:

Ø  Was the institution building strategy adopted appropriate and effective in relation to the project and its broader sector context?

Ø  Have expected reforms in policies been successful?

Ø  Were project management arrangements satisfactory?

d)     Financial Performance:

Ø  Have the financial objectives been fulfilled?

e)      Implementation:

Ø  Was the project and its principal components fully completed, on time, and within cost estimates?

f)       Efficiency: 

Ø  Could similar projects be prepared, appraised and implemented in future more quickly or economically without undue risk to project and sector objectives?

g)      Other Considerations:

Ø  Did the project have unintended social, economic, or environmental effects?

Ø  Is the project likely to be replicated or sustained?

In short, it may be said that evaluation has the benefit of hindsight. It can provide valuable clues and lessons for future guidance. The purpose is not to find faults or to uncover mistakes to point the finger of blame. Rather, the objective is to learn from the mistakes so that they are not repeated.