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European CommissionEuropeAid Cooperation OfficeRue de la Loi 41 — B-1049 BrusselsFax (32-2) 299 64 07E-mail: europeaid-inf...
P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e sTABLE OF CONTENTSACKNOWLEDGEMENTS -------------------------...
S e c t i o n 5 : T h e L o g i c a l F r a m e w o r k A p p r o a c h54.5 IMPLEMENTATION, INCLUDING MONITORING AND REPOR...
P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s7 MONITORING, REVIEW AND REPORTING-------------------------...
S e c t i o n 5 : T h e L o g i c a l F r a m e w o r k A p p r o a c h7viiACKNOWLEDGEMENTSThese Guidelines have been prep...
P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e sviiiABBREVIATIONSAIDCO EuropeAid Co-operation OfficeALA Asi...
In 1992 the European Commission adopted “ProjectCycle Management” (PCM) as its primary set ofproject design and management...
• An operational framework within which staff ofthe RELEX family (EuropeAID, DG Developmentand DG External Relations) and ...
1.2 Users and useWhile the Guidelines are primarily targeted at ECTask/Project Managers (at Delegations and in Brussels)an...
2.1 Partnership strategieswith developing countriesArticle 177 of the European Union (EU) Treaty sets outthe three broad a...
To address these challenges, the EC is giving particularattention to:• streamlining aid delivery instruments;• promoting t...
P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s6X-cutting issue DescriptionGender equalityEnvironmental su...
The Rome ‘Declaration on Harmonisation’ ofFebruary 2003, states that:4‘We in the donor community have been concerned with ...
3.1 What is a project?Definition: A project is a series of activities aimed atbringing about clearly specified objectives ...
Project objectives should therefore contribute tonational and sector policies wherever a public sectoractivity is being su...
• The establishment of separate management,financing and monitoring/reportingarrangements has often undermined localcapaci...
Drawing on international experience, the EC hasestablished the definitions described below.The Sector Approach simply invo...
Budgetary aidBudgetary Aid is a resource transfer to the governmentof partner country. Once received, the transfer ismanag...
3.4 Implications forEC support to projects3.4.1 When is a project appropriate?As noted, EC policy is to increase its use o...
• Regional environmental projects or internationalpublic goods.When the expected benefits are very long termor when they s...
SkillsThere is a need to expand the skill sets amongEC staff, both at HQ and Delegations. Better under-standing of some ke...
This cycle highlights three main principles:1. Decision making criteria and procedures aredefined at each phase (including...
Also, there are differences between EC programmesin the way in which financing decisions are made –particularly the timing...
The Logical Framework Approach is an analytical andmanagement tool which is now used (in one form oranother) by most multi...
S e c t i o n 4 : P C M O p e r a t i o n a l G u i d e l i n e s19Figure 5 – The project cycle, main documents and respon...
4.1.5 Decision making points, options and lead responsibilitiesThe table below summarises the main decision points for the...
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
Aid Delivery Methods - Project Cycle Management Guidelines
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Aid Delivery Methods - Project Cycle Management Guidelines - Conférence de la 5e édition du Cours international « Atelier Paludisme » - Luciano TUSEO - World Health Organization / Roll Back Malaria - Office for Madagascar and Reunion - Antananarivo, Madagascar - maloms@iris.mg

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Aid Delivery Methods - Project Cycle Management Guidelines

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. .SupportingeffectiveimplementationofECExternalAssistance
  2. 2. European CommissionEuropeAid Cooperation OfficeRue de la Loi 41 — B-1049 BrusselsFax (32-2) 299 64 07E-mail: europeaid-info@cec.eu.intDevelopment DGRue de Genève 12 — B-1140 BrusselsFax (32-2) 299 25 25E-mail: development@cec.eu.intInternet: http://europa.eu.int/comm/worldhttp://europa.eu.int/comm/europeaidhttp://europa.eu.int/comm/developmenthttp://europa.eu.int/comm/external.relations
  3. 3. P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e sTABLE OF CONTENTSACKNOWLEDGEMENTS -------------------------------------------------------------------------------------------------------------viiABBREVIATIONS-----------------------------------------------------------------------------------------------------------------------viii1 INTRODUCTION-----------------------------------------------------------------------------------------------------------------------11.1 PURPOSE OF THE GUIDELINES ---------------------------------------------------------------------------------------------11.2 USERS AND USE-------------------------------------------------------------------------------------------------------------------31.3 OVERVIEW OF CONTENTS ---------------------------------------------------------------------------------------------------3PART 12 EUROPEAN COMMISSION DEVELOPMENT COOPERATION POLICY---------------------------------------42.1 PARTNERSHIP STRATEGIES WITH DEVELOPING COUNTRIES ---------------------------------------------------42.2 NEW DIRECTIONS IN DEVELOPMENT COOPERATION POLICY------------------------------------------------42.3 CROSS CUTTING ISSUES-------------------------------------------------------------------------------------------------------52.4 OWNERSHIP AND PARTICIPATION----------------------------------------------------------------------------------------63 THE PROJECT APPROACH-------------------------------------------------------------------------------------------------------83.1 WHAT IS A PROJECT?-----------------------------------------------------------------------------------------------------------83.2 WEAKNESSES OF THE PROJECT APPROACH ---------------------------------------------------------------------------93.3 SECTOR APPROACH AND BUDGETARY AID--------------------------------------------------------------------------103.4 IMPLICATIONS FOR EC SUPPORT TO PROJECTS--------------------------------------------------------------------133.4.1 When is a project appropriate? -----------------------------------------------------------------------------------133.4.2 Improving the quality of projects--------------------------------------------------------------------------------144 PCM OPERATIONAL GUIDELINES -----------------------------------------------------------------------------------------164.1 OVERVIEW------------------------------------------------------------------------------------------------------------------------164.1.1 The cycle of operations----------------------------------------------------------------------------------------------164.1.2 PCM and managing ‘Calls for Proposals’ ----------------------------------------------------------------------174.1.3 PCM principles and the Logical Framework Approach ---------------------------------------------------174.1.4 Key documents and responsibilities-----------------------------------------------------------------------------184.1.5 Decision making points, options and lead responsibilities ----------------------------------------------204.1.6 Quality support and assessment system -----------------------------------------------------------------------214.1.7 The financing decision ----------------------------------------------------------------------------------------------244.2 PROGRAMMING ----------------------------------------------------------------------------------------------------------------264.2.1 Introduction-------------------------------------------------------------------------------------------------------------254.2.2 The programming process ------------------------------------------------------------------------------------------254.3 IDENTIFICATION ---------------------------------------------------------------------------------------------------------------274.3.1 Purpose--------------------------------------------------------------------------------------------------------------------274.3.2 Key tasks and responsibilities--------------------------------------------------------------------------------------274.3.3 Key assessments and tools ------------------------------------------------------------------------------------------294.3.4 Assessment criteria and standards--------------------------------------------------------------------------------304.3.5 Key documents ---------------------------------------------------------------------------------------------------------324.3.6 Deciding next steps ---------------------------------------------------------------------------------------------------334.4 FORMULATION------------------------------------------------------------------------------------------------------------------334.4.1 Purpose--------------------------------------------------------------------------------------------------------------------334.4.2 Key tasks and responsibilities--------------------------------------------------------------------------------------334.4.3 Key assessments and tools ------------------------------------------------------------------------------------------344.4.4 Assessment criteria and standards--------------------------------------------------------------------------------354.4.5 Key documents ---------------------------------------------------------------------------------------------------------384.4.6 Deciding next steps ---------------------------------------------------------------------------------------------------38iv
  4. 4. S e c t i o n 5 : T h e L o g i c a l F r a m e w o r k A p p r o a c h54.5 IMPLEMENTATION, INCLUDING MONITORING AND REPORTING -----------------------------------------394.5.1 Purpose--------------------------------------------------------------------------------------------------------------------394.5.2 Main periods ------------------------------------------------------------------------------------------------------------394.5.3 Definition of monitoring, regular review, evaluation and audit---------------------------------------404.5.4 Key tasks and responsibilities--------------------------------------------------------------------------------------414.5.5 Key assessments, tools and documents-------------------------------------------------------------------------434.5.6 Information collection and use - overview -------------------------------------------------------------------434.5.7 Assessment criteria and standards--------------------------------------------------------------------------------454.5.8 Deciding next steps ---------------------------------------------------------------------------------------------------464.6 EVALUATION---------------------------------------------------------------------------------------------------------------------464.6.1 Purpose and principles-----------------------------------------------------------------------------------------------464.6.2 Key tasks and responsibilities--------------------------------------------------------------------------------------474.6.3 Tools and key documents-------------------------------------------------------------------------------------------474.6.4 Information requirements and evaluation criteria ---------------------------------------------------------494.6.5 Decision options-------------------------------------------------------------------------------------------------------504.7 AUDIT ------------------------------------------------------------------------------------------------------------------------------504.7.1 Purpose and principles-----------------------------------------------------------------------------------------------504.7.2 Key tasks and responsibilities--------------------------------------------------------------------------------------504.7.3 Tools and key documents-------------------------------------------------------------------------------------------514.7.4 Information requirements and audit criteria-----------------------------------------------------------------534.7.5 Decision options-------------------------------------------------------------------------------------------------------53PART 25 THE LOGICAL FRAMEWORK APPROACH -----------------------------------------------------------------------------575.1 OVERVIEW OF THE LOGICAL FRAMEWORK APPROACH -------------------------------------------------------575.1.1 Background --------------------------------------------------------------------------------------------------------------575.1.2 What is it? ---------------------------------------------------------------------------------------------------------------575.1.3 Link to the project cycle and key PCM documents --------------------------------------------------------585.1.4 Practical issues in applying the Logframe Approach-------------------------------------------------------585.1.5 Two main stages -------------------------------------------------------------------------------------------------------605.2 THE ANALYSIS STAGE---------------------------------------------------------------------------------------------------------615.2.1 Preparatory analysis---------------------------------------------------------------------------------------------------615.2.2 Stakeholder Analysis--------------------------------------------------------------------------------------------------615.2.3 Problem Analysis ------------------------------------------------------------------------------------------------------675.2.4 Analysis of Objectives------------------------------------------------------------------------------------------------695.2.5 Analysis of Strategies -------------------------------------------------------------------------------------------------705.3 THE PLANNING STAGE-------------------------------------------------------------------------------------------------------715.3.1 The Matrix format, terminology and the process of preparation--------------------------------------715.3.2 First Column: Intervention Logic --------------------------------------------------------------------------------745.3.3 Fourth Column: Assumptions-------------------------------------------------------------------------------------785.3.4 Second and third columns: Indicators and Source of Verification ------------------------------------805.3.5 Completing the draft Logframe matrix ------------------------------------------------------------------------845.4 ACTIVITY, RESOURCE AND COST SCHEDULES ---------------------------------------------------------------------855.4.1 Overview -----------------------------------------------------------------------------------------------------------------855.4.2 A Checklist for Preparing an Activity Schedule--------------------------------------------------------------865.4.3 Preparing resource and cost schedules--------------------------------------------------------------------------905.5 USING THE LFA DURING FORMULATION, IMPLEMENTATION, EVALUATION AND AUDIT--------925.6 A NOTE ON INTERLOCKING OR ‘NESTED’ LOGFRAMES --------------------------------------------------------946 INSTITUTIONAL CAPACITY ASSESSMENT-----------------------------------------------------------------------------956.1 WHY? -------------------------------------------------------------------------------------------------------------------------------956.2 WHEN? -----------------------------------------------------------------------------------------------------------------------------956.3 WHAT AND HOW?-------------------------------------------------------------------------------------------------------------95v
  5. 5. P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s7 MONITORING, REVIEW AND REPORTING--------------------------------------------------------------------------1007.1 INTRODUCTION --------------------------------------------------------------------------------------------------------------1007.1.1 Purpose------------------------------------------------------------------------------------------------------------------1007.1.2 Definitions -------------------------------------------------------------------------------------------------------------1007.1.3 Principles of good practice----------------------------------------------------------------------------------------1017.1.4 Key steps in developing a project based monitoring system ------------------------------------------1027.2 TOOLS ----------------------------------------------------------------------------------------------------------------------------1027.2.1 The Logical Framework Approach------------------------------------------------------------------------------1027.2.2 Risk management----------------------------------------------------------------------------------------------------1037.2.3 Basic data analysis to generate performance information----------------------------------------------1057.2.4 Checklist for planning a short monitoring visit-----------------------------------------------------------1077.2.5 Using question checklists for semi-structured interviews ----------------------------------------------1087.2.6 Reviewing administrative and management records-----------------------------------------------------1107.2.7 Checklist for managing regular review meetings----------------------------------------------------------1117.2.8 Progress reports and updated plans----------------------------------------------------------------------------1137.2.9 CRIS ‘Implementation Report’ format ------------------------------------------------------------------------1178 PARTICIPATION & FACILITATION ---------------------------------------------------------------------------------------1188.1 PROMOTING PARTICIPATION AND OWNERSHIP ----------------------------------------------------------------1188.1.1 Objectives of participatory approaches-----------------------------------------------------------------------1188.1.2 Principles ---------------------------------------------------------------------------------------------------------------1188.1.3 Approach ---------------------------------------------------------------------------------------------------------------1188.1.4 Intensity of participation------------------------------------------------------------------------------------------1198.1.5 Promoting ownership ----------------------------------------------------------------------------------------------1208.2 FACILITATION SKILLS -------------------------------------------------------------------------------------------------------1218.2.1 How we learn and what we remember -----------------------------------------------------------------------1218.2.2 Adult learning---------------------------------------------------------------------------------------------------------1218.2.3 What makes a good participatory trainer/facilitator -----------------------------------------------------1228.2.4 Workshop Preparation ---------------------------------------------------------------------------------------------1229 PREPARING TERMS OF REFERENCE------------------------------------------------------------------------------------1269.1 PURPOSE -------------------------------------------------------------------------------------------------------------------------1269.2 USING TOR IN THE PROJECT CYCLE----------------------------------------------------------------------------------1269.3 FORMAT AND CONTENT OF TOR --------------------------------------------------------------------------------------1269.3.1 Background to the assignment ----------------------------------------------------------------------------------1269.3.2 Study objectives ------------------------------------------------------------------------------------------------------1279.3.3 Issues that might be included in a study/mission TOR -------------------------------------------------1289.3.4 Methodology ----------------------------------------------------------------------------------------------------------1349.3.5 Expertise required----------------------------------------------------------------------------------------------------1349.3.6 Reporting requirements--------------------------------------------------------------------------------------------1349.3.7 Work plan and time-schedule -----------------------------------------------------------------------------------135ATTACHMENTS ----------------------------------------------------------------------------------------------------------------------------136A1 - GLOSSARY OF KEY TERMS--------------------------------------------------------------------------------------------------136A2 - USEFUL REFERENCES---------------------------------------------------------------------------------------------------------147vi
  6. 6. S e c t i o n 5 : T h e L o g i c a l F r a m e w o r k A p p r o a c h7viiACKNOWLEDGEMENTSThese Guidelines have been prepared for the European Commission by the staff of the Aid Delivery MethodsHelpdesk with the support of, and input from, a significant number of staff within the European AidCooperation Office (EuropeAID). It would be inappropriate to try and name all individuals who havecontributed, however thanks to all those who have provided their time and ideas.The work was directed by EuropeAID’s Unit O3, which is responsible for Innovation, Thematic Research, theQuality Support Group and Financing Committees. Comments on these Guidelines should be directed toVirginia Manzitti, who can be contacted by email at Viriginia.Manzitti@cec.eu.intThe previous PCM manual of 2001 and the PCM Handbook of 2002 have been important source documents.Acknowledgement is given in the text (as footnotes) where materials are knowingly drawn from other sourcedocuments.Electronic copies of this Guideline (and other related reference documents) can be accessed through theinternet at:http://www.europa.eu.int/comm/europeaid/qsm/index_en.htm
  7. 7. P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e sviiiABBREVIATIONSAIDCO EuropeAid Co-operation OfficeALA Asia and Latin America (ALA) countriesATM Audit Task ManagerAWP Annual Work PlanBA Budgetary AidCFPs Call for ProposalsCRIS Common Relex Information SystemCSP Country Strategy PaperDAC Development Assistance CommitteeDG Directorate-GeneralDG DEV Development Directorate-GeneralDG RELEX External Relations Directorate-GeneralEC European CommissionECHO European Commission Humanitarian OfficeEcoFin Analysis Economic and Financial AnalysisEDF European Development FundEU European UnionEuropeAid EuropeAid Co-operation OfficeFA and FP Financing Agreement and Financing ProposalGTZ German Agency for Technical Co-operationHoU Head of UnitHQ EC Headquarters in BrusselsIMF International Monetary FundLF Logical FrameworkLFA and LFM Logical Framework Approach and Logical Framework MatrixM&E Monitoring and EvaluationMDG Millenium Development GoalsMEDA Mediterranean (MED) countries (signatories to the Barcelona process)NIP National Indicative ProgrammeOECD Organisation for Economic Co-operation and DevelopmentOFS Order For ServiceOVI Objectively Verifiable IndicatorOWP Overall Work PlanPCM Project Cycle ManagementPIS Project Identification SheetPG Partner GovernmentPRSP Poverty Reduction Strategy PaperQSG Quality Support GroupRELEX External RelationsSA Sector ApproachSOV Source of VerificationSPSP Sector Policy Support ProgrammeSWOT Strengths, Weaknesses, Opportunities and ThreatsTOR Terms of ReferenceUNDP United Nations Development Programme
  8. 8. In 1992 the European Commission adopted “ProjectCycle Management” (PCM) as its primary set ofproject design and management tools (based on theLogical Framework Approach), and a first PCMmanual was produced in 1993. The manual wassubsequently updated in 2001, shortly after thepublication of the EC’s most recent DevelopmentPolicy document (April 2000).A decision was made in early 2003 to update the PCMmanual again (now referred to as the PCM‘Guidelines’) as a result of:• experience gained through implementing the‘new’ development policy;• issues raised by the ongoing international debateon aid effectiveness; and• feedback from participants attending PCMtrainingThe main refinements that have been made include:Nevertheless, much of the core material/informationpresented in the previous PCM Manual andHandbook remains relevant and has therefore beenincorporated in this latest version.1.1 Purpose of the guidelinesThese Guidelines have been prepared to supportongoing improvements in the quality of EC develop-ment assistance. Quality is defined primarily in termsof the relevance, feasibility and effectiveness of theprogrammes and projects supported with EC funds,including how well they are managed.More specifically, the Guidelines aim to support goodmanagement practices and effective decision makingthroughout the project management cycle – fromprogramming, through to identification, formula-tion, implementation and evaluation. The Guide-lines aim to promote consistency and clarity ofapproach, while allowing for the operationalflexibility required of a dynamic and diverse externalassistance programme.The Guidelines therefore provide:• A description of the policy framework withinwhich EC development assistance is provided,and the role of the project in relation to otheraid delivery modalities;1S e c t i o n 1 : I n t r o d u c t i o n11See also the ‘Guidelines for EC Support to Sector Programmes’ and ‘Guide to the programming and implementation of Budget Support to third countries’.1. INTRODUCTION1. Clarifying the main implications of the EC’sDevelopment Policy with regard to the choiceof aid delivery modality (namely projects,sector policy support programmes and/orbudgetary aid);2. Highlighting the importance of conductingan appropriate level of institutional andorganisational capacity assessment duringproject identification and formulation;3. Removing ‘Financing’ as a single stage in thecycle, given that the financing decision istaken at different times depending on the ECRegulation under which projects are financed(sometimes at the end of ‘Identification’ andsometimes after ‘Formulation’);4. Incorporating some additional information onoperational tasks and responsibilities at eachstage of the cycle;5. Providing a set of key quality attributes,criteria and standards (the Quality Frame)that can be consistently applied throughthe identification, formulation and implemen-tation stages of the project cycle; and6. Updating the Guidelines on the LogicalFramework Approach and providing referenceto some additional analytical tools which cansupport effective PCM.
  9. 9. • An operational framework within which staff ofthe RELEX family (EuropeAID, DG Developmentand DG External Relations) and otherstakeholders can make effective and timelydecisions related to Project Cycle Management;• A description of key tasks, quality assessmentcriteria, documented information requirementsand decision options at each stage of the cycle;• A description of key tools that support effectivePCM; and• A resource to support training in PCM.The Guidelines do not describe detailed operationaland financial procedures, which are addressedseparately in other official EC documents dealing withFinancial Regulations.The Guidelines should be used as an importantreference and resource, but not as a substitute forexperience, professional judgment and initiative.Project cycle management is a complex and creativeprocess – as much art as science – involving thenegotiation of decisions acceptable to key stakeholdergroups. Teamwork, negotiation and communicationskills are thus central to effective PCM, as is anappreciation of the political context within whichdecisions are being made.PCM provides an overall analytical and decisionmaking framework, which must nevertheless becomplemented by the application of other specific‘technical’ and ‘process’ tools. Thus, the Guidelinesshould also be used in conjunction with otherimportant EC reference documents relevant tospecific sectors (e.g. Transport, health, education), tospecific cross-cutting issues (e.g. good governanceand human rights, gender, environment) and tospecific assessment tools (e.g. Economic and FinancialAnalysis).P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s2EC ColleaguesConsultantsThe general publicOther donorsPartner GovernmentOfficialsCivil SocietyGroups in PartnerCountriesTask ManagerEuropean ParliamentFigure 1 – The Task Manager’s Web of Relationships
  10. 10. 1.2 Users and useWhile the Guidelines are primarily targeted at ECTask/Project Managers (at Delegations and in Brussels)and their official partners in third countries, theyshould also assist other stakeholders such as NGOs,non-state bodies and consultants who are engaged inthe design and delivery of EC supported projects andprogrammes.The Guidelines can be used in a variety of ways,depending on the experience and work responsibili-ties of the reader. Newcomers to Project CycleManagement should familiarise themselves withSections 2 to 4 of the Guidelines (Part 1) beforereferring to the Tools in Sections 5 to 9 (Part 2).Those more experienced with PCM, and who areconversant with the EC’s Development Policy(including the use of Sector Policy Support Programmesand Budgetary Aid), should focus on reading thePCM Operational Guidelines (Section 4), and shouldfamiliarise themselves with the Tools in Part 2(Sections 5 to 9).Once a reader is familiar with the general content ofthe Guidelines, it is expected that the primary pointsfor ongoing reference will be the Quality Criteriaprovided at each main stage of the project cycle(Section 4) and the Tools (in Sections 5 to 9).1.3 Overview of contentsS e c t i o n 1 : I n t r o d u c t i o n3Section Summary descriptionPART 1Section 2 – EC Development PolicyThis section sets out the broad policycontext within which Project CycleManagement takes placeSection 3 – Role of the projectThis section provides an overview of theproject approach as an EC aid deliverymechanismSection 4 – PCM operational guidelinesThis section provides an overview ofProject Cycle Management and an opera-tional description of each stage of theproject cyclePART 2Sections 5 to 9 – ToolsThese sections provide a description ofkey tools that can be used to supportstructured analysis and informed deci-sion-making at various stages of theproject management cycleAttachmentsBased on the objectives for Development Cooperation set out in Article 177 of the EU Treaty, andon priorities described in the EC’s Development Policy of April 2000, this section describes:(i) partnership strategies with developing countries; (ii) reasons for a new direction in aid policyand the move towards greater use of Sector Programmes and Budgetary Aid; (iii) the key cross-cutting development issues that need to be considered during the project management cycle;(iv) the emphasis given to ownership and partnership, including the role of civil society;and (v) the need for harmonisation of donor policies and procedures.This section of the Guidelines provides: (i) a definition of ‘the project’ (including the diversity ofproject ‘types’); (ii) highlights some of the potential weaknesses of the project approach,(iii) introduces the main principles behind the EC’s approach to supporting Sector Programmesand using Budgetary Aid; and (iv) provides a concluding summary of the main implications withrespect to the continued use of projects as an aid delivery mechanism.Project cycle management is described, including: (i) its purpose, (ii) key principles,(iii) stakeholders and responsibilities, (iv) decision options, (v) quality assessment criteria,and (vi) the key documents that are required. The importance of effective teamwork andcommunication are also emphasized.At each stage of the project cycle, key information is provided with respect to: (i) the purpose ofthe stage, (ii) key tasks and responsibilities; (iii) analytical tools; (iv) quality assessmentcriteria; (v) key EC documents; and (vi) decision options.These sections provide a detailed description of the Logical Framework Approach and referenceto a number of other complimentary tools, including: (ii) institutional/organisational capacityassessment; (ii) monitoring and reporting tools; (iii) promoting participation and using groupfacilitation/training skills; and (iv) preparing Terms of Reference for key studies.The Attachments provide: (i) a glossary of key terms, and (ii) a list of useful referencedocuments and information sources.
  11. 11. 2.1 Partnership strategieswith developing countriesArticle 177 of the European Union (EU) Treaty sets outthe three broad areas for European Community (EC)development cooperation. These are:• The fostering of sustainable economic and socialdevelopment;• The smooth and gradual integration of thedeveloping countries into the world economy;and• The campaign against poverty.Beyond these overarching Treaty objectives,regulations and international agreements based ongeographical regions determine the specific EU/ECcooperation objectives. For example:• Relations between the countries of Africa, theCaribbean and the Pacific (ACP) are set out inthe comprehensive trade and developmentframework of the Lomé convention;• In Asia and Latin America (ALA) countries, theemphasis is on strengthening the cooperationframework and on making an effectivecontribution to sustainable development,security, stability and democracy;• With the Mediterranean (MEDA) countries,emphasis is on the establishment of a zone ofpeace, stability and prosperity, and on supportingeconomic and political reform and transition;and• With selected partner countries in Eastern Europeand Central Asia, the TACIS program focuses itsactivities on institutional and legal reform,private sector and economic development,environmental protection, rural economy andnuclear safety.The EC has three principal means of action to pursueits development objectives – political dialogue,development cooperation and trade. Significantemphasis is being placed by the EC on ensuring thatthese dimensions are ‘Coherent, Complementary andCoordinated’.2.2 New directions in developmentcooperation policyIn November 2000, the European Parliament andthe Council of Ministers approved the communicationof the Commission on the ‘Policy of the EuropeanCommunity for Development Cooperation’. This sets out anew strategic direction for the programming andmanagement of EC development assistance, based onlessons learned from both EC and other internationalevaluations of donor funded programmes and projects.Guiding principles behind this policy include:(i) ownership by developing countries of their owndevelopment process; (ii) increased attention to thesocial dimension of growth and development,including giving priority to poverty reduction andthe needs of vulnerable groups (including children,women and the disabled); and (iii) an increased focuson ‘results’.The main challenges to implementing these princi-ples are:• adjusting intervention modalities to promote‘local’ ownership and the effectiveness of aid;and• more effectively focusing programmes andprojects on poverty reduction.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s42. EUROPEAN COMMISSION DEVELOPMENTCOOPERATION POLICY
  12. 12. To address these challenges, the EC is giving particularattention to:• streamlining aid delivery instruments;• promoting the use of Sector Policy SupportProgrammes and Budgetary Aid;• increasing decentralisation of responsibilities tothe EC’s Delegations; and• promoting harmonisation with Member Statesand other donors.The implications of the EC’s decision to accelerate thetransition towards providing a greater proportion of itsdevelopment assistance through Sector Policy SupportProgrammes (SPSPs)2and the use of Budgetary Aid(BA), rather than through using stand alone projects,are described in more detail in Section 3.2.3 Cross cutting issuesIrrespective of the sector focus, delivery modality(e.g. budgetary aid or projects) or geographic locationof EC development assistance, there are a number ofcritical cross-cutting development issues which mustbe appropriately addressed throughout the projectmanagement cycle.3The key cross-cutting development issues are brieflydescribed in the table below:S e c t i o n 2 : E u r o p e a n C o m m i s s i o n d e v e l o p m e n t c o o p e r a t i o n p o l i c y52A SPSP is the EC’s instrument for planning and managing its financial support to the implementation of a partner government’s Sector Policy.3These cross-cutting issues can also be development objectives in themselves.X-cutting issue DescriptionGood governance and human rights Good governance is defined as: ‘The transparent and accountable management of human, natural,economic and financial resources for the purposes of equitable and sustainable development, in thecontext of a political and institutional environment that upholds human rights, democratic principlesand the rule of law’.In order to give further focus to this broad definition, the EC has established six essential elements ofgood governance, which should be applied to the design and implementation of EC-fundedprogrammes and projects in third countries. These are:• Support to democratization including support to electoral processes and electoral observation (withan emphasis on participation and accountability)• Promotion and protection of Human Rights (as defined in the international covenants andconventions, respects of norms and non-discrimination)• Reinforcement of the rule of law and the administration of justice (as to the legal framework, legaldispute mechanisms, access to justice, etc)• Enhancement of the role of non-state actors and their capacity building (as a partner in publicpolicy making and implementation)• Public administration reform, management of public finances and civil service reform; and• Decentralisation and local governmentReference should be made to the specific EC Guidelines on Good Governance for more detailedinformation. Consideration of general good governance issues is also built into the quality criteriaprovided in these PCM Guidelines.continued ➔
  13. 13. P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s6X-cutting issue DescriptionGender equalityEnvironmental sustainabilityThe United Nations Fourth World Conference on Women held in Beijing in 1995 established genderequality as a basic principle in development cooperation. Gender equality refers to equality ofopportunity, rights, distribution of resources and benefits, responsibilities for women and men inprivate and public life and in the value accorded to male and female characteristics. Promotion ofgender equality is not only concerned with women’s issues, but also covers broader actions to be takenby both women and men. An essential requirement for gender equality is that women shouldparticipate in decision-making and political processes on an equal footing with men.Gender disparities are deeply entrenched in policies, institutional and legal practices, households andsocial relations. Gender is therefore a cross-cutting issue that needs to be built into all aspects ofpolicy formulation, programme and project planning, institutional structures and decision makingprocedures. The process of integrating gender equality concerns across all these areas is known asgender mainstreaming.References to various guidelines on gender equality and mainstreaming are provided at Attachment 2.Sustainable development is development that meets the needs of current generations withoutcompromising the ability of future generations to meet their needs. In this context, environment andnatural resources are capital that must be maintained in order to support sustained economic activity.Protecting the environment thus preserves the very basis for development.Environmental sustainability refers to the need to protect biological and physical systems that supportlife (e.g. ecosystems, the hydrological cycle and climatic systems). Environmental sustainability is across-cutting principle which needs to be integrated across all areas of decision making.This requires development planners to assess the environmental impact of all proposed policies,programmes and projects, and to take action to minimize the adverse environmental impacts and totake advantage of opportunities for environmental improvement.References to various guidelines on environmental impact assessment are provided at Attachment 2.Some specific reference documents on addressing the needs of disabled people are also provided atAttachment 2.2.4 Ownership and participationThe quality of dialogue with partner countries(government and civil society representatives) is a keyto establishing effective development cooperationpolicies and to their successful implementation.Partnership, ownership of development processesby the target population, and strengthening ofinstitutional and administrative capacity to effectivelymanage change, are principles which are now largelyshared by all donors.Two issues are given emphasis in the EC’s develop-ment policy in this regard, namely:Role of civil society. Close cooperation with andpromotion of civil society provides the conditions forgreater equity, inclusion of the poor in the benefitsof economic growth and helps strengthen thedemocratic fabric of society.The Commission will therefore continue to cooperatewith a wide range of civil society actors, includinghuman rights groups and agencies, women’s associa-tions, child-protection organisations, environmentalmovements, farmers’ organisations, trade unions,consumers’ associations, and other developmentsupport structures (e.g. NGOs, teaching and researchestablishments).Harmonisation. There is an urgent need tostreamline and harmonise donor procedures toreduce the significant administrative burden thatthese can place on partner countries. The insistenceon using donor specific procedures can have hightransaction costs and works against the principle ofpromoting partner ownership of project ideas,documentation and decision making/managementprocesses.
  14. 14. The Rome ‘Declaration on Harmonisation’ ofFebruary 2003, states that:4‘We in the donor community have been concerned with the growingevidence that, over time, the totality and wide variety of donorrequirements for preparing, delivering and monitoring developmentassistance are generating unproductive transaction costs for, anddrawing down the limited capacities of, partner countries’ and that‘donor practices do not always fit well with national developmentpriorities’.The EC will therefore play its part in promotingharmonisation of policies and practices. At anoperational level, this will require some changes to,inter alia: (i) the way that EC staff work andcommunicate with third country partners and otherdonors, (ii) the type of information required to supporteffective decision making, (iii) documentation andreporting requirements; and (iv) financing modalitiesand conditions. The overall aim is to promote localownership and to reduce any unnecessary duplicationof administrative and reporting procedures.Consideration of these issues is taken into account inthe description of PCM operational tasks providedin Section 4 of these Guidelines.S e c t i o n 2 : E u r o p e a n C o m m i s s i o n d e v e l o p m e n t c o o p e r a t i o n p o l i c y74The Rome Declaration on Harmonisation was endorsed by Ministers, Heads of Aid agencies and other Senior Officials representing 28 aid recipientcountries and more than 40 multilateral and bilateral development institutions.More information can be found at: http://www.oecd.org/dataoecd/0/48/20896122.pdf
  15. 15. 3.1 What is a project?Definition: A project is a series of activities aimed atbringing about clearly specified objectives within adefined time-period and with a defined budget.5A project should also have:• Clearly identified stakeholders, including theprimary target group and the final beneficiaries;• Clearly defined coordination, management andfinancing arrangements;• A monitoring and evaluation system (to supportperformance management); and• An appropriate level of financial and economicanalysis, which indicates that the project’sbenefits will exceed its costs.Development projects are a way of clearly definingand managing investments and change processes.Types of project: Development projects can varysignificantly in their objectives, scope and scale.Smaller projects might involve modest financialresources and last only a few months, whereas a largeproject might involve many millions of Euro and lastfor many years.6In order to accommodate this kind of diversity, itis important that project cycle management systemssupport the application of standard workingmodalities/rules in a flexible manner.Relationship between projects, programmes andpolicies: A well-formulated project should derivefrom an appropriate balance between the EC’sdevelopment policy priorities and the partner’sdevelopment priorities.Within the scope of these policy priorities, theexecutive arms of government or non-governmentalagencies formulate the broad areas of work requiredto implement policy decisions. These broad areasof work are often called programmes, which, likeprojects, may vary significantly in scope and scale.The definition of what a programme is dependsessentially on how the responsible authority(ies)choose to define it.For example, a programme may:• cover a whole sector (e.g. Health SectorProgramme);• focus on one part of the health sector (e.g. aPrimary Health Care Programme);• be a ‘package’ of projects with a commonfocus/theme (e.g. ASEAN-EU university linksprogramme); or• define what is essentially just a large project witha number of different components.The general relationship between policies, programmesand projects is illustrated in Figure 2.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s85In the context of the Logical Framework Matrix (see Section 5.1), a project is defined in terms of a hierarchy of objectives (inputs, activities, results,purpose and overall objective) plus a set of defined assumptions and a framework for monitoring and evaluating project achievements (indicators andsources of verification).6The EC’s financial commitments to projects are usually for less than 5 years, however a project may (through more than one financial commitment) last longer.3. THE PROJECT APPROACHExamples of projects could include:• A health service reform and expansion project,implemented primarily by the Ministry ofHealth of the partner government and withfinancial support of other donors, costing Euro30m over 10 years;• An emergency relief project, coordinated bythe UN and implemented throughInternational NGOs, costing Euro 5m over oneyear;• Business promotion projects, providing grantsto non-profit organizations of up to Euro200,000 over a maximum time line of 2 years;• A road and bridge building project, using acontracted project manager, costing Euro 50mover 5 years;• A regional food security training project,focused on the provision of technicalassistance and training services, costing Euro2m over 3 years; or• An election monitoring project, conductedprimarily by staff from the EC and its memberstates, costing Euro 600,000 over 5 months.
  16. 16. Project objectives should therefore contribute tonational and sector policies wherever a public sectoractivity is being supported.When non-state actors are implementing projects, adistinction needs to be made drawn between activitiesfully outside the realm of the public sector andactivities undertaken on behalf of government. In thelatter case, non-state actors typically deliver servicesof a public nature as if these services had been‘contracted out’ by government. Even if a formal‘contracting out’ process has not occurred, it isimportant that such functions should be consistentwith government policy to ensure their relevance andpromote prospects for sustainability.For fully private activities, the framework for judginga project or programme’s relevance is provided by theCommission’s development policies (i.e. as articulatedin a Country Strategy Paper) and the demonstratedneeds of beneficiaries.3.2 Weaknesses ofthe project approachThe project approach has been at ‘the cutting edge ofdevelopment’7for many years, primarily because ithas helped meet the accountability requirements ofdonors.However, significant problems with the ‘classical’donor-controlled project approach have also becomeincreasingly evident, namely:• Inadequate local ownership of projects, withnegative implications for sustainability ofbenefits;• The huge number of different developmentprojects, funded by different donors each withtheir own management and reportingarrangements, has resulted in large (and wasteful)transaction costs for the recipients ofdevelopment assistance;8S e c t i o n 3 : T h e p r o j e c t a p p r o a c h97Price Gittinger, Economic Analysis of Agricultural Projects, OUP, 1978.8For a definition of ‘transaction costs’ and ‘fungibility’, see the Glossary of Key Terms.Figure 2 – Policy, programmes and projects
  17. 17. • The establishment of separate management,financing and monitoring/reportingarrangements has often undermined localcapacity and accountability, rather than fosteringit; and• The project approach has encouraged a narrowview of how funds are being used, withoutadequate appreciation of the ‘fungibility’ issue.As noted by the World Bank in 1998:9“Aid agencies have a long history of trying to ‘cocoon’ their projectsusing free-standing technical assistance, independent projectimplementation units and foreign experts – rather than trying toimprove the institutional environment for service provision…. Theyhave neither improved services in the short run nor led to institutionalchange in the long run”The concept of fungibility of aid resources highlightsthe fact that donor funded projects can simply allowpartner governments to re-direct their own financialresources to other purposes (assuming that govern-ments would have spent their own money on theproject(s) even if the donor funding was notavailable). For example, donor funding of Euro 100mto the Health Sector of a particular country couldallow the partner government to then use (or ‘divert’)Euro 100m of its own resources (which it otherwisewould have had to allocate to Health) to fund otheruses (e.g. internal security or military expenditures).The total effect of donor support therefore dependson how government uses these freed resources (in aneconomic sense the ‘marginal use’) and not on thespecific project or programme against which thedevelopment assistance is specifically earmarked.Reaching agreement between the partner governmentand donors on overall public expenditure priorities(i.e having a donor/partner government policydialogue on overall objectives and expenditureplanning) is thus a way of helping to ensure thatfungibility does not compromise the developmentobjectives that donors specifically want to promote/support.It is as a result of such issues that the EC and member stateshave decided to significantly increase the use of sectorprogramme and budgetary aid approaches (described inSection 3.3 below), and to progressively decrease theoverall level of funding using the project approach.10The implications of this change on the future use ofprojects are discussed in Section 3.4.3.3 Sector approachand budgetary aidThis Section provides a brief introduction to thesector approach and budgetary aid, taken from themore detailed “Guidelines for EC support to SectorProgrammes” and the “Guide to the programmingand implementation of Budget Support to thirdcountries”. Budgetary aid transfers and support toSector Programmes are only appropriate as mecha-nisms of assistance to the public sector. Thus unlikethe project modality, they cannot be used for directsupport to the private sector or NGOs.Key definitionsSector Approaches and Sector Programmes have beenlabelled over time in different ways: SIPs (SectorInvestment Programmes), SDPs (Sector DevelopmentProgrammes), Sector Expenditure Programmes, andmore recently SWAp (Sector Wide Approach). In spiteof the varied terminology, there are key principles onwhich there is agreement in the international donorcommunity.11Firstly, it is accepted that they should be led bypartner governments. Secondly, they have thecommon goal of improving the efficiency andeffectiveness with which internal and externalresources are utilised. This common goal reflects amutual concern to improve the results of governmentand donor spending both by focusing resources onthe priorities stated in national poverty reductionstrategies or similar documents, and by improving thequality of spending. In striving to attain this goal,sector approaches share three common objectives:• To broaden ownership by partner Governmentsover decision-making with respect to sectoralpolicy, sectoral strategy and sectoral spending;• To increase the coherence between sectoralpolicy, spending and results through greatertransparency, through wider dialogue andthrough ensuring a comprehensive view of thesector;• To minimise as far as possible the transactioncosts associated with the provision of externalfinancing, either by direct adoption ofgovernment procedures or through progressiveharmonisation of individual donor procedures.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s109World Bank, Assessing Aid: what works and what doesn’t work, OUP, 1998.10Joint Declaration of November 10th2000.11An economic definition of a ‘sector’ is that it ‘comprises, for the most part, the producing or operating units in the economy that have a common functionor output’.
  18. 18. Drawing on international experience, the EC hasestablished the definitions described below.The Sector Approach simply involves workingtogether with partner governments, donors and otherrelevant stakeholders in pursuit of these threeobjectives. As a result of following a sector approach,partner governments may produce an updatedprogramme of policy and spending for the sector. Thisis classified as a Sector Programme, where and whenit includes three components:• An approved sectoral policy document andoverall strategic framework (such as a PovertyReduction Strategy Paper);• A sectoral medium term expenditure frameworkand an annual budget; and• A co-ordination process amongst the donors inthe sector, led by Government.When funding is made available by the Commission,the purpose is to support the Government’s SectorProgramme or some agreed sub-set of activities withinthat Programme. The decision on whether to providefunding will depend upon an assessment of thequality of the Programme. There are seven keyassessments12which need to be undertaken in order tojudge the quality of the Programme, decide on theappropriate EC operating modality and finalise thedesign of the EC contribution to the Programme.The Sector Policy Support Programme (SPSP) is theprogramme of the European Commission by whichfinancial support is provided to the partner Govern-ment’s Sector Programme. An SPSP may follow threetypes of operating modalities:• Sector Budget Support – which is the modality ofchoice, wherever appropriate and feasible;• Financial contributions to Common PooledFunds (or “common basket funds”) which fundall or part of the Sector Programme; and• Commission-specific procedures (EuropeanCommission budget or EDF).S e c t i o n 3 : T h e p r o j e c t a p p r o a c h1112The key assessments cover: 1) the macro-economic framework; 2) the sector policy and overall strategic framework; 3) the medium term expenditureframework for the sector; 4) accountability and public expenditure management systems; 5) donor co-ordination systems; 6) performance monitoring andclient consultation systems; 7) institutional and capacity issues.Typical components of a Sector ProgrammeBuilding on international experience, 6 key com-ponents of a Sector Programme can be identified:1. A clear sector policy and strategy to knowwhat government is aiming to achieve in thesector and how – distinguishing government’sregulatory role from its service delivery role,specifying the roles of non-government agentsand outlining any necessary institutionalreforms.2. A sectoral medium term expenditure pro-gramme, based on a comprehensive actionplan, to clarify what is the expected level ofavailable internal and external resources andhow these resources will be utilised in pursuitof the policy.3. A performance monitoring system to measureprogress towards the achievement of policyobjectives and planned results, distinguishingbetween male and female beneficiaries andensuring the needs of vulnerable groups(disabled, young/old) are assessed.Sector Programmes also often aim to correctdistortions specific to contexts where there is ahigh level of aid dependency. These distortionsarise in particular where many of the activities inthe sector are financed from external funds andwhere these external funds are not programmedand managed in the same way as governmentfunds.There are two crucial components of a SectorProgramme which aim to correct thesedistortions:4. A formalised process of donor coordination;and5. An agreed process for moving towards harmo-nised systems for reporting, budgeting, finan-cial management and procurement.continued ➔
  19. 19. Budgetary aidBudgetary Aid is a resource transfer to the governmentof partner country. Once received, the transfer ismanaged by the recipient government, using itsexisting budget and financial management systems.Thus, it is a way of providing direct support to theimplementation of national or sectoral policies,utilising systems which maximise ownership andcoherence with national policies, whilst minimisingtransaction costs.There are two main types of Budgetary Aid:1. Macroeconomic Budgetary Aid, which supports theoverall national development policy and themacroeconomic and budgetary framework; and2. Sector Budgetary Aid (within a Sector Policy SupportProgramme), which provides additional funding toa specific sector, supporting a stated sector policyand agreed spending framework.Sector Budgetary Aid (also known as Sector BudgetSupport) is the Commission’s preferred method offinancing a Sector Programme, where the conditionspermit it. Eligibility for Budgetary Aid – whethermacro-economic or sectoral – depends on the assess-ment of four criteria:1. The extent to which macro-economic managementis stable and provides a supportive environment forthe private sector;2. The extent to which National Policy reflects a crediblecommitment to poverty reduction and growth, andin the case of the MEDA region, a commitment toconvergence with the European economy;3. The quality of the public finance managementand/or the existence of a credible programme ofreforms to public finance systems; and4. The existence of agreed performance indicators bywhich to measure and review progress towardsnational policy objectives.Maintaining a close policy dialogue with the partnergovernment is a central feature of both Budgetary Aidand Sector Programmes. The key point being thatthese aid modalities achieve their objectives byadopting governments’ policies, budget systems andservice delivery structures. Consistent dialogue –supported sometimes by external audits and reviews –represents the main vehicle for monitoring theeffectiveness of government systems and ensuringthat they are continuously improved.Choosing appropriate aid delivery methodsThe aid delivery methods to be used (at least in thecontext of a country program) is initially establishedduring the programming phase of the cycle ofoperations, and documented in the Country StrategyPaper. The choice should be based on an assessmentof the social, economic and political developmentcontext of the country(s) one is working with and therespective priorities of the development partners. TheEC’s Guidelines on Budgetary Aid and on Support toSector Programmes provide a detailed description ofthe specific assessment criteria to be applied indetermining the likely relevance and feasibility ofthese aid delivery methods.When considering an appropriate mix of aid deliverymethods, four important considerations to bebalanced include: (i) the degree of control donorswish to maintain over their resources; (ii) who takesprimary responsibility for targeting resources; (iii) thelevel at which donors and their partners wish toengage in dialogue – policy or project; and (iv) thelevel of transaction costs associated with managingdonor funds. These considerations are illustrated inFigure 3.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s12The final component common to most SectorProgrammes reflects how governments haveincreasingly learned to respond to their clients – thegeneral public – and to involve non-governmentagents in service delivery. Hence, a SectorProgramme would typically also include:6. A systematic mechanism of consultation withclients and beneficiaries of government servicesand with non-government providers of thoseservices.
  20. 20. 3.4 Implications forEC support to projects3.4.1 When is a project appropriate?As noted, EC policy is to increase its use of BudgetaryAid and Sector Policy Support Programmes andincreasingly transfer responsibility for projects to localpartners (Governments, local governments andnon-public entities).Nevertheless, the project will remain an appropriateaid delivery modality in a range of circumstances,including:• Decentralised cooperation with non-public entities.The Commission will continue to directly supportinitiatives being implemented outside the publicsector, such as through NGOs, the private sectorand civil society groups.• Emergency aid and post-crisis interventions.There will be circumstances when partner govern-ments do not have the capacity to effectively meetthe needs of people in emergency or post-crisissituations, and when projects may therefore remainthe most practical and effective option for deliveringshort-term humanitarian assistance.• Technical assistance projects or ‘pilot’ projects tobuild capacity.In some circumstances, individual donor managedprojects can encourage innovation and learning,through promoting new methodologies or waysof working. For example, the Commission maydirectly fund technical assistance to support thepiloting of new public sector management processes(including support to sector policy and programmedevelopment).S e c t i o n 3 : T h e p r o j e c t a p p r o a c h13Direct support toprojectsSector PolicySupportProgrammesMacro-economicbudgetary aid•Donor controlover externalresources•Donor targetingof externalresources•Limited donorinfluence onpartner policy•High transactioncosts•Partner Govt. (PG)control of externalresources•Targeting by PGthrough NationalBudget•Donor influenceon PG policy &budget•Lowertransaction costsCommon-poolfundsSectorbudgetsupportEC-specificproceduresFigure 3 – The mix of aid delivery methods
  21. 21. • Regional environmental projects or internationalpublic goods.When the expected benefits are very long termor when they spill over national boundaries (e.g.regional environmental management), govern-ments may not be providing funding at sociallyoptimal levels. The Commission may thereforehave a role in directly funding such initiatives.• Investment projects with high transaction costsfor governments.Donor managed projects might be a preferable aidmechanism where the transaction costs are lowerfor the donor than for the partner government. Thismight be the case for large international tenders(e.g. for airport or harbour development) wherethe partner government does not possess thenecessary capacity to effectively manage the overallcontracting process (such as for some smaller islandnations).• When conditions within a country or sector do notyet allow other approaches to be used.As has been noted in the section on the SectorProgramme approach and Budgetary Aid, certainconditions need to be met before either of thesetwo approaches/tools can be effectively used. In themeantime, projects will continue to be an aiddelivery option as long as they can demonstratethat they support the delivery of sustainablebenefits and do not impact negatively on localinstitutional capacity.It is also worth noting that some of the analyticaltools associated with the project approach can alsobe usefully applied to the analysis and managementof Sector Policy Support Programmes and BudgetaryAid operations. Examples include the use of theLogical Framework Approach (including stakeholderanalysis, problems analysis, objective setting etc),institutional capacity assessment, the identificationof key indicators and sources of verification, andeconomic and financial analysis.3.4.2 Improving the quality of projectsThere is certainly scope to continue to improve thequality of new (and ongoing) projects by addressingthe identified weaknesses in the ‘donor controlled’project approach. For example, projects can beidentified, formulated and implemented which:This will require ongoing changes in the way that staffwithin the RELEX family do business, includingchanges in: (i) attitudes and values; (ii) roles andresponsibilities; (iii) skills; and (iv) procedures.For example:Change in AttitudesViews on ‘accountability’ need to place greateremphasis on (i) accountability for results (not onlyexpenditure targets or activities undertaken), and (ii)accountability to local partners, including targetedbeneficiaries, rather than only to donor ‘audit’requirements. Related to this point, attitudes about‘who is in control’ need to give greater appreciation tothe importance of local ownership, and the practicalways in which this can be supported. There is also aneed for a more inclusive approach, taking intoaccount all the differences in society, including suchissues as disability, age and gender.Change in Roles and responsibilitiesMore management and decision making responsi-bility needs to be effectively given to the EC’simplementing partners. The EC is, in most cases,not responsible for implementing projects. It isresponsible for assessing the quality of proposals,facilitating their formulation, providing finance,monitoring progress (ideally through locally basedmonitoring systems), and evaluating results in orderto support institutional learning and improve futureprogramming decisions. The EC’s primary role is tosupport institutions/agencies in partner countries tocarry out their programmes and projects.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s14• Are more clearly consistent with the policyframework;• Integrate with and support localplanning/budgeting, management, financingand monitoring systems (rather than creatingparallel systems);• Are better coordinated with other donors;• Build local capacity and rely less on expatriatetechnical assistance;• Take a longer-term (and more realistic)perspective of the process of change; and• Allow greater flexibility during implementation
  22. 22. SkillsThere is a need to expand the skill sets amongEC staff, both at HQ and Delegations. Better under-standing of some key analytical tools is required,including how to engage in (and interpret) the resultsof policy, sector and institutional analysis.Developing a better understanding of partner govern-ment’s planning, budgeting and financial manage-ment systems is also critical. Effective use of theLogical Framework Approach also needs to be furtherstrengthened, while team work and cross-culturalcommunication skills are also a high priority in thecontext of establishing effective working relationshipsbetween EC staff, implementing partners and otherstakeholders.ProceduresAs highlighted by EC evaluations of projectsimplemented under the ALA, MEDA and ACPprogrammes, there is also a need for ongoing changesto promote streamlining and harmonisation offinancial management and contracting proceduresand regulations within the Commission.S e c t i o n 3 : T h e p r o j e c t a p p r o a c h15
  23. 23. This cycle highlights three main principles:1. Decision making criteria and procedures aredefined at each phase (including key informationrequirements and quality assessment criteria);2. The phases in the cycle are progressive – each phaseshould be completed for the next to be tackledwith success;13and3. New programming and project identification drawson the results of monitoring and evaluation aspart of a structured process of feedback andinstitutional learning.In practice, the duration and importance of each phaseof the cycle will vary for different projects, dependingon their scale and scope and on the specific operatingmodalities under which they are set up. For example,a large and complex engineering project may takemany years to pass from the identification through tothe implementation phase, whereas a project toprovide emergency assistance in a post-conflictcontext may only take a few weeks or months tocommence operations on the ground. Nevertheless,ensuring that adequate time and resources arecommitted to project identification and formulation iscritical to supporting the design and effectiveimplementation of relevant and feasible projects.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s1613It should be noted that the type of evaluation referred to in this diagram is ‘ex-post’ or ‘after project completion’, while it is possible to conduct ‘formativeevaluations’ which take place during implementation.4. PCM OPERATIONAL GUIDELINES4.1 Overview4.1.1 The cycle of operationsThe cycle of operations for managing the EC’s external assistance projects has five phases, as shown inFigure 4 below.ProgrammingIdentificationFormulationImplementationEvaluation & AuditFigure 4 – The Cycle of Operations
  24. 24. Also, there are differences between EC programmesin the way in which financing decisions are made –particularly the timing. Thus for programmes suchas MEDA and TACIS, the decision to finance iscurrently made at the end of the Identification stage(on presentation and approval of a FinancingProposal consisting of a Programme with ProjectFiches), whereas for the ACP states and the ALAcountries the funding decision is made only afterFormulation has been completed. The way in whichfinancing decisions are made is described further inSection 4.1.7.4.1.2 PCM and managing ‘Calls for Proposals’‘Calls for Proposals’ (CfPs) are usually used underthematic budget lines (such as for Human Rights,Gender, Environment, Food Security and Co-Financing with NGOs) to provide grant funds,particularly to non-state actors.14Geographical budgetlines are also increasingly using CfPs to allocatefinance to non-state actors (such as through the AsiaLinks Programme), and this approach is also beingused by new Financing Facilities (such as the Waterand Energy Initiatives). The use of CfPs is now thegeneral rule when dealing with non-state actors.The primary distinction between using CfPs and using‘direct arrangements’ with partner governmentsrelates to the management responsibilities of the ECat different stages of the project cycle. For example,under a CfP approach, the EC establishes the broadobjectives it wishes to achieve, the scope of projects itis willing to fund, application and assessmentprocedures and a set of eligibility criteria for appli-cants. The responsibility for identifying, formulatingand implementing projects is thus passed on to thosewho apply for co-funding.15When working directlywith a partner Government (e.g. under EDF orgeographical budget line funding arrangements) theEC maintains a more direct role and responsibility formanaging the identification and formulation steps inthe cycle.It should therefore be noted that this section(Section 4) of the PCM Guidelines focuses on adescription of the key steps and responsibilities formanaging geographical budget lines, not for calls forproposals/financing facilities.The Guidelines should nevertheless still provide auseful framework for those involved in designing andmanaging calls for proposals/financing facilities, tothe extent that:• all EC supported development projects (howeverfinanced and managed) can still be assessedagainst the established set of quality attributes,criteria and standards (see Section 4.1.6), and• good practice principles of project cyclemanagement (including the Tools described inSections 5 to 9) can still be applied by whoever isreceiving/managing EC funds.4.1.3 PCM principles and the LogicalFramework ApproachProject Cycle Management is a term used to describethe management activities and decision-makingprocedures used during the life-cycle of a project(including key tasks, roles and responsibilities, keydocuments and decision options).PCM helps to ensure that:• projects are supportive of overarching policyobjectives of the EC and of development partners;• projects are relevant to an agreed strategy and tothe real problems of target groups/beneficiaries;• projects are feasible, meaning that objectives canbe realistically achieved within the constraints ofthe operating environment and capabilities ofthe implementing agencies; and• benefits generated by projects are likely to besustainable.To support the achievement of these aims, PCM:• requires the active participation of keystakeholders and aims to promote local ownership;• uses the Logical Framework Approach (as well asother tools) to support a number of keyassessments/analyses (including stakeholders,problems, objectives and strategies);• incorporates key quality assessment criteria intoeach stage of the project cycle; and• requires the production of good-quality keydocument(s) in each phase (with commonlyunderstood concepts and definitions), to supportwell-informed decision-making.S e c t i o n 4 : P C M O p e r a t i o n a l G u i d e l i n e s1714An exception would be when there is only one available (monopolistic) supplier.15Another distinction between ‘direct arrangements’ with partner Governments and the CfP approach is the usual requirement for grant recipients tocontribute a proportion of total eligible costs, excluding in-kind contributions.
  25. 25. The Logical Framework Approach is an analytical andmanagement tool which is now used (in one form oranother) by most multi-lateral and bi-lateral aidagencies, international NGOs and by many partnergovernments. Indeed, the EC generally requires thedevelopment of a Logframe Matrix as part of itsproject formulation procedures for externalassistance. This Guideline therefore gives emphasis tothe application of the Logical Framework Approach atthe various stages of the project management cycle.The tools that make up the Logframe Approach arereferred to at appropriate points in Section 4(Operational Guidelines), and are also described indetail in Section 5 (The Logical Framework Approach).The LFA is a very effective analytical and managementtool when understood and intelligently applied.However, it is not a substitute for experience andprofessional judgment and must also be complement-ed by the application of other specific tools (such asEconomic and Financial Analysis and EnvironmentalImpact Assessment) and through the application ofworking techniques which promote the effectiveparticipation of stakeholders.4.1.4 Key documents and responsibilitiesThe key documents that are produced within theEC project management cycle, and who is primarilyresponsible, are shown below in Figure 5.A distinction is made between the ‘Individual Project’approach (financing decision made after formulation)and the ‘Programme’ approach (financing decisionmade after identification of a programme or ‘package’of projects). These two main approaches are based onthe two main currently applicable legal (financing)instruments used to commit funding to developmentprojects, and do not represent funding ‘options’ forEuropeAID staff to choose from.The main official EC documents and informationsources supporting PCM are therefore:• The EC’s Development Policy, Country StrategyPapers and National Indicative Programmedocuments;• The Identification Fiche (sometimes called anEnd of Identification Document);• The Financing Proposal (FP) – either forindividual projects or for a Programme ofprojects (sometimes called an ‘ActionProgramme’);• The Financing Agreement and associatedTechnical and Administrative Provisions andTerms of Reference;• Information contained in the CRIS (CommonRelex Information System), including theImplementation Report window; and• Evaluation and Audit reports.The general structure and expected content of each ofthese documents is referenced under the relevantstage of the project cycle.An important point to note is that the preparation ofpre-feasibility studies and feasibility studies and theproduction of annual operating plans and regularmonitoring reports should generally be the leadresponsibility of implementing partners, not the EC(although the EC may contribute or provide theresources to support these tasks). The EC need nottherefore prescribe the exact format of thesedocuments, as they should be ‘owned’ primarily byimplementing partners.16The EC must neverthelessensure that it is provided with adequate information(quantity and quality) on which to assess itsinvestment decisions, monitor implementation andremain accountable for the resources it commits.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s1816Refer to ‘Harmonising Donor Practices for Effective Aid Delivery’, OECD 2003.
  26. 26. S e c t i o n 4 : P C M O p e r a t i o n a l G u i d e l i n e s19Figure 5 – The project cycle, main documents and responsibilitiesNationalIndicativeProgrammeCountryStrategyPaperPre-feasibilitystudyFeasibility/design studyFinancingproposalAnnual operational plans(including activity andresource schedules andbudgets)Evaluation &Audit reportsMonitoringreports (quarter,annual, etc)IdentificationFicheNational Policy,PRSPEC DevelopmentPolicyPartner responsibility (with EC support)EC responsibility (some shared with partner country)Updated information inCRIS ImplementationReportKeyor Financing Proposal-Action Programmewith Project FichesorTORs asFurtherspecification ofTechnical &AdministrativeProvisions andrequiredfor each projectIndividualProjectApproach‘Programme’ApproachFinancingAgreementFinancingAgreementFinancingDecisionFinancingDecisionProgrammingIdentificationFormulationImplementationEvaluation & Audit
  27. 27. 4.1.5 Decision making points, options and lead responsibilitiesThe table below summarises the main decision points for the EC in the project cycle.P r o j e c t C y c l e M a n a g e m e n t G u i d e l i n e s20Stage & Focusing Key EC Primary DecisionQuestion decision points responsibility optionsProgramming • Agreement of a • DEV/RELEX in • Choice of programmeWhat are the partner’s Country Strategy collaboration with priorities, sector focus,development priorities Paper and National Delegations, EuropeAID type of assistance andand what is the EC’s Indicative Programme and Partner Governments financing modalitiesfocus for assistance?Identification • On completion and • Delegation makes initial • Accept, modify orIs the project concept submission of the assessment with PG reject the projectrelevant to priority local Identification Fiche counterparts/other primary idea(s)needs and consistent (individual projects) stakeholders • For Programme ofwith EC policy or the Financing • 1ststep review by QSG – projects, whether orpriorities? Proposal (Programme to provide quality support not to commit financewith Project Fiches) • Line management,make decision on next stepsfrom EC perspectiveFormulation • On completion of • Delegation makes initial • Accept, reject orIs the project feasible Financing Proposal assessment with PG modify the proposaland will it deliver and Technical and counterparts/other primary • For individualsustainable benefits? administrative stakeholders projects, whether orprovisions/TORs • 2ndstep review by QSG – not to commit financeto provide qualityassessment• Line management, makedecision on next stepsfrom EC perspectiveImplementation • On submission of • Delegation makes • Continue financing,Are results being Annual assessment with PG modify scope of ECachieved and resources Operating/Work counterparts/other support, orefficiently and effectively Plans and other primary stakeholders terminate supportused? What corrective monitoring/review • HQ may still make finalaction should be taken? reports decision on any majorchanges to projectscope/financingEvaluation • On completion of • Task Manager plans • Change policies, scopeWere planned benefits evaluation studies and manages of forward programme,achieved, will they be study implementation or EC operatingsustained, and what • Follow up actions decided modalitieslessons have been by EuropeAID linelearned? management(in consultation withDG DEV/RELEX)Audit • On completion • Audit Task Manager • Continue, modify orHas there been of the audit manages the audit stop project activitiescompliance with • Task (project) Manager • Recover project fundsapplicable laws and provides information and • Modify design ofrules? Are efficiency, input to the audit future projectseconomy and • Task (project) Manager • Change policieseffectiveness criteria ensures follow-up ofbeing met? response by auditee toaudit findings andrecommendations

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