By Abigail Pugal Somera
DM 211 Project Development & Management
2nd Sem 2013-2014
Prof. Josefina B. Bitonio, DPA
To be able to understand the phases of
a Project Life we first have to
understand the different
interpretations of a Project Life Cycle
as interpreted by different global
organizations that deal with
• World Bank Project Cycle
Strategy / Regional
and Board Approval
Completion / Evaluation
I. Pre – Investment
•Appraisal and Decision
Negotiation and Contracting
•Construction and Training
• Find Promising Business Opportunities
• Screen According to Criteria
• Classify for Further Study or Later Consideration
• Preliminary Information from Knowledgeable Individuals and
Screen Ideas vs.
Scan Sources of
Ideas and Lists
• Government Policy
• External Constraints
• Sources of Ideas
• National, Regional
• Sector Studies
• Local Resource Studies
• Other Countries’
• Product Classification Lists
• Size and Growth of Market
• Local Resources
• Plant Size
• Appropriate Technology
• Size of Investment
• Estimated Financial Indicators
• Requirements and Constraints
• Varies according to Investigator
• Risk of All Concerned
• Set-up Screening System to Measure Long-Term
• Concentrate on Best Prospects
• Quick Negative Decision Better than Delay
• Assure Commitment of Potential Sponsor to
• Business Concept
• Criteria Satisfaction
• Business Climate
• Business Cycle
• Economic Trend
IDENTICAL SCOPE AT ALL LEVELS,
INCREASING ACCURACY AND
• Related to preparation of investment studies
Project Background and Basic Idea
Market Analysis and Marketing Concept
Raw Materials and Supplies
Location, Site and Environment
Engineering and Technology
Organization and Overhead Costs
Implementation, Planning and Budgeting
Financial Analysis and Investment Appraisal
• Refinement of Business Idea
• Preliminary Evaluation of Alternative Approaches
• Preliminary Assessment of Strengths and Weaknesses of
Sketchy, Based more on rough aggregate estimates than on
• Preliminary Project Assessment
• Identify Project Alternatives
• Identify Critical Aspects that Require Special Support Studies
Intermediate Level of Detail Based Primarily on Secondary Data
Provide Commercial, Technical, Financial and Economic Information
Needed for Investment Decision-Making
Clear Project Concepts and Criteria
Comprehensive Project Design
Reliable Information, Often Primary Data
Quantified Prediction or Performance
Detailed Analysis with High Confidence Level
Consistent and Defensible Conclusion
Provide Detailed Technical Analysis of Critical Design Features
Performed by Technical Experts
Answer Key Questions
Degree of Rigor Commensurate with Stage of Project
Comparing Project Characteristics with Criteria
• All Sectors of Economy
• Revenue and Non-revenue Projects
• All Types of Projects
• Public and Private Investment
• Commitment of Scarce Resources
• Expectation of Future Benefits
• Inherent Uncertainties
1 VERY IMPORTANT
2 SOMEWHAT IMPORTANT
3 NOT SO IMPORTANT
• Is it compatible with other Investment
• Is the Project potentially bankable?
• Does the project make the best use of the
• Do I have the capacity to energize the project
and to retain its momentum in the face of
obstacles to growth?
(on the ability of Foreign
Partner to contribute more
• “He can afford it.”
• “The exchange rate is
• “He wants our market.”
(on the reason to offer lower
price for participation)
• “Political and Economic Risk”
• “Low Purchasing Power in the
• “Uncertain Future Earnings”
• “Workers’ Demands”
• “Book Value is Irrelevant”
• Does the Project Make Sense for the Country?
• Consistent with Development Goals?
• Positive Impact on Macro-economic Indicators?
• Satisfy Economic Rate of Return Criterion?
• Project Background
• Analysis of
• Commercial / Market
• Environmental Impacts
• Institutional / Managerial
• Economic and Social
• Is it a Sound Business Concept?
• Is there a Market for Product
• Is the Marketing Strategy Viable?
• Are the Sales Projections Realistic?
• Is the Distribution Plan Viable?
• Is the production at a competitive price?
• Is the process technology accessible?
• Are the operating conditions sustainable?
• Will we be able to provide the quality demanded by the
• Are the inputs to the planning reliable?
• Are there adequate technical personnel?
• Do process emissions and
effluents meet or exceed
• Are products environmentally
• Do impacts indicate future
• Are the following Competent?
• Implementation Management
• Operations Management
• Is the organization capable of executing
• Are the financial resources adequate to
• Will there be adequate returns to the investor?
• Are the financial criteria of other participants
• Are the financial risks and risk sharing
• Is the financial structure acceptable?
The process of identification, analysis and either acceptance or
mitigation of uncertainty in investment decision-making.
Essentially, risk management occurs anytime an investor or fund
manager analyzes and attempts to quantify the potential for
losses in an investment and then takes the appropriate action
(or inaction) given their investment objectives and risk tolerance.
Inadequate risk management can result in severe consequences
for companies as well as individuals. For example, the recession
that began in 2008 was largely caused by the loose credit risk
management of financial firms.
Any project organization is subject to risks. One which finds itself
in a state of perpetual crisis, is failing to manage risks properly.
Failure to manage risks is characterized by inability to decide
what to do, when to do it, and whether enough has been done.
Risk Management is a facet of Quality, using basic techniques of
analysis and measurement to ensure that risks are properly
identified, classified, and managed.
• Identify Uncertainties
Explore the entire project plans and look for areas of uncertainty.
• Analyze Risks
Specify how those areas of uncertainty can impact the performance of the
project, either in duration, cost or meeting the users' requirements.
• Prioritize Risks
Establish which of those Risks should be eliminated completely, because of
potential extreme impact, which should have regular management
attention, and which are sufficiently minor to avoid detailed management
• Mitigate Risks
Take whatever actions are possible in advance to reduce the effect of Risk.
It is better to spend money on mitigation than to include contingency in the
• Plan for Emergencies
For all those Risks which are deemed to be significant, have an emergency
plan in place before it happens.
• Measure and Control
Track the effects of the risks identified and manage them to a successful
• UNIDO Methodology for the Identification, Preparation and
Evaluation of Investment Projects, Costa Rica, Sept 23-27, 2002
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