Influencing policy (training slides from Fast Track Impact)
Project Life Cycle and Phases
1. By Abigail Pugal Somera
DM 211 Project Development & Management
2nd Sem 2013-2014
Prof. Josefina B. Bitonio, DPA
2. 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
governments.
4. • World Bank Project Cycle
Evaluation (6)
Implementation
and Completion
(5)
Implementation
and Supervision
(4)
Country
Assistance
Strategy (1)
Identification (2)
Preparation,
Appraisal and
Board Approval
(3)
5. Cycle Order
ADB
World Bank
1
Country Partnership
Strategy / Regional
Cooperation Strategy
Country Assistance
Strategy
2
Preparation
Identification
3
Approval
Preparation, Appraisal
and Board Approval
4
Implementation
Implementation and
Supervision
5
Completion / Evaluation
Implementation and
Completion
6
Evaluation
6. I. Pre – Investment
II. Investment
III. Operations
IV. Evaluation
Support Studies:
•Opportunity Study
•Pre-feasibility Study
•Feasibility Study
•Appraisal and Decision
Negotiation and Contracting
Engineering Design
•Construction and Training
•Start-up
7.
8. • Objective/s:
• Find Promising Business Opportunities
• Screen According to Criteria
• Classify for Further Study or Later Consideration
• Characteristics:
• Preliminary Information from Knowledgeable Individuals and
Promotion Agencies
9. Develop Selection
Criteria
Screen Ideas vs.
Criteria
Further Study
YES
Profile Readily
Available Data
Acceptable?
NO
Scan Sources of
Ideas and Lists
Reject
Rework
Later
Reconsider
10. • Investment
Opportunities
• Demand
• Linkages
• Problems
• Resources
• Development
• Trade
• Technology
• Government Policy
• External Constraints
• Sources of Ideas
• National, Regional
Development Plans
• Sector Studies
• Local Resource Studies
• Other Countries’
Experience
• Product Classification Lists
11. • Size and Growth of Market
• Local Resources
• Plant Size
• Appropriate Technology
• Size of Investment
• Estimated Financial Indicators
• Requirements and Constraints
12. • Varies according to Investigator
•Investor
•Lender
• Risk of All Concerned
13. • Set-up Screening System to Measure Long-Term
Potential
• Concentrate on Best Prospects
• Quick Negative Decision Better than Delay
• Assure Commitment of Potential Sponsor to
Implementation
14. Micro
• Business Concept
• Investors
• Market
• Resources
• Entrepreneur
• Criteria Satisfaction
Macro
• Business Climate
• Business Cycle
• Economic Trend
17. • Related to preparation of investment studies
C
• Collecting
O
• Organizing
P
• Processing
A
• Analyzing
18. •
•
•
•
•
•
•
•
•
•
Executive Summary
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
Human Resources
Implementation, Planning and Budgeting
Financial Analysis and Investment Appraisal
19. Objectives:
• Refinement of Business Idea
• Preliminary Evaluation of Alternative Approaches
• Preliminary Assessment of Strengths and Weaknesses of
Concept
Characteristics:
Sketchy, Based more on rough aggregate estimates than on
detailed analysis
20. Objectives:
• Preliminary Project Assessment
• Identify Project Alternatives
• Identify Critical Aspects that Require Special Support Studies
Characteristics:
Intermediate Level of Detail Based Primarily on Secondary Data
21. Objectives:
Provide Commercial, Technical, Financial and Economic Information
Needed for Investment Decision-Making
•
•
•
•
•
•
Characteristics:
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
22. Objectives:
Provide Detailed Technical Analysis of Critical Design Features
Characteristics:
•
•
•
•
Limited Scope
Performed by Technical Experts
Answer Key Questions
Degree of Rigor Commensurate with Stage of Project
Development
25. • All Sectors of Economy
• Revenue and Non-revenue Projects
• All Types of Projects
•
•
•
•
•
•
New Investment
Modernization
Expansion
Privatization
Technology Acquisition
Equipment Replacement
• Public and Private Investment
26. • Commitment of Scarce Resources
• Expectation of Future Benefits
• Inherent Uncertainties
29. • Is it compatible with other Investment
Activities?
• Is the Project potentially bankable?
• Does the project make the best use of the
Sponsor’s Resources?
• Do I have the capacity to energize the project
and to retain its momentum in the face of
obstacles to growth?
30. Local Partner
(on the ability of Foreign
Partner to contribute more
equity)
• “He can afford it.”
• “The exchange rate is
wrong.”
• “He wants our market.”
Foreign Partner
(on the reason to offer lower
price for participation)
• “Political and Economic Risk”
• “Low Purchasing Power in the
Marketplace”
• “Uncertain Future Earnings”
• “Workers’ Demands”
• “Book Value is Irrelevant”
32. • Does the Project Make Sense for the Country?
• Consistent with Development Goals?
• Positive Impact on Macro-economic Indicators?
• Satisfy Economic Rate of Return Criterion?
33. • Purpose
• Project Background
• Analysis of
• Commercial / Market
• Technology
• Environmental Impacts
• Institutional / Managerial
• Financial
• Economic and Social
• Conclusion
34. • Is it a Sound Business Concept?
• Is there a Market for Product
/ Service?
• Is the Marketing Strategy Viable?
• Are the Sales Projections Realistic?
• Is the Distribution Plan Viable?
35. • 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
market?
• Are the inputs to the planning reliable?
• Are there adequate technical personnel?
36. • Do process emissions and
effluents meet or exceed
regulated standards?
• Are products environmentally
acceptable?
• Do impacts indicate future
regulatory actions?
37. • Are the following Competent?
• Entrepreneur
• Implementation Management
• Operations Management
• Is the organization capable of executing
necessary functions?
38. • Are the financial resources adequate to
planning?
• Will there be adequate returns to the investor?
• Are the financial criteria of other participants
satisfied?
• Are the financial risks and risk sharing
acceptable?
• Is the financial structure acceptable?
41. 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.
42. 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.
43. • 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
attention.
44. • 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.
• 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
conclusion.
45.
46.
47. • UNIDO Methodology for the Identification, Preparation and
Evaluation of Investment Projects, Costa Rica, Sept 23-27, 2002
• http://www.investopedia.com/terms/r/riskmanagement.asp
• http://www.netcomuk.co.uk/~rtusler/project/principl.html
