Investment Programming


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DM 211 Course Title: Project Development and Management

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Investment Programming

  1. 1. PROGRAMMING Professor Jo B. Bitonio DM 211 Project Development and Management Presented by: Sheryle A. Domingo MDM Public Mgmt.
  2. 2. To begin with the presentation, let us review how investment programming is related to Development Planning Process and Strategic Planning Process Model
  3. 3. DEVELOPMENT PLANNING MODEL HAS 8 STEPS 4. Situational analysis Goal/ objective/ target setting Policy/ strategy formulation Program/ project identification 5. Investment programming 1. 2. 3. 6. 7. 8. Budgeting Implementation and monitoring Evaluation and plan update
  4. 4. Feedback loop Situation Analysis Policies Strategies Goals Objectives Targets Implementation and Monitoring Investment Programming Program Project Evaluation Budgeting and Plan Update Identification Project Preparation Studies researches Programming Planning Implementation Budgeting Figure 2. Development Planning Process Model (NEDA, 2001) Evaluation
  5. 5. Steps in Strategic Planning Process Model a. Organizing and staffing b. Training a. External environment b. Internal organization c. SWOT Analysis d. Strategic Planning framework
  6. 6. Strategic Planning Process Model Outcome Effect Impact Evaluation Plan Update Organization And Staffing Implementation Environment Scanning Vision Program / Project Identification Policy Strategy Formulate Training Investment Programming External SWOT Input Framework Mission Goals Objectives Targets Process Budgeting Project Preparation Internal Output Source: Miclat (1997)
  7. 7. INVESTMENT PROGRAMMING - Is the process of rational listing of programs and projects planned to be undertaken within a given time frame for the purpose of enhancing the process of asset generation and capital accumulation for some desired future benefits for the institution - Entails a systematic, identification, preparation, selection, scheduling or even phasing of programs and projects given the scarce resources available. accessed 2/4/2014
  8. 8. INVESTMENT PROGRAMMING The investment program is the basis for programs and projects that are considered or included in the preparation of the annual plan corresponding budget estimates (Miclat, 2005). accessed 2/4/2014
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  10. 10. The 2011-2016 PIP shall serve as: (a) an instrument to tighten the planning, programming, budgeting and monitoring and evaluation linkages; (b) basis for public sector resource allocation and for pipelining public sector PAPs for processing at the Investment Coordination Committee (ICC)/NEDA Board (NB); (c) Basis in monitoring public investment performance in terms of achieving the goals and targets under the PDP/RM pursuant to AO 25 s, 2011 –accessed 2/6/2014
  11. 11. The PIP contains PAPs to be implemented by the NG, GOCCs, GFIs and other offices and instrumentalities within the medium-term regardless of financing but which indicates, nonetheless, sources of funding whether purely NG, GOCCs, GFIs, ODA grants, publicprivate partnerships, including joint ventures, or from local government units (LGUs) for their counterpart in NG projects. It includes identification of the spatial coverage of PAPs, including the PDP Chapter and 16 point agenda being addressed and their objectively verifiable indicators (OVIs). –accessed 2/6/2014
  12. 12. EXCLUDED  recurrent cost on the general operation of the government, personnel services, relending and/or guarantee related activities to private institutions, and other administrative capital expenditures.  PAPs to be financed purely from LGU revenues and independent projects of the private sector including those of non governmental organizations (NGOs) –accessed 2/6/2014
  13. 13. There are four types of instruments through which a strategic development plan may be carried out (Miclat, 2005). These instruments are: 1. Government investments and development services to promote development of the public sector; 2. Government investments and development services to * 1 & 2 controlled by the promote development of the private sector; government and contained in the investment program 3. Private sector activities; and investments and other development 3. Private sector initiative subject to influence by Government 4. Government policies and regulation affecting public and private sector development. 4. Supports proposed investments and services -accessed 2/4/2014
  14. 14. SPECIFIC TYPES OF INVESTMENTS IN INVESTMENT PROGRAM 1. Capital expenditures/ outlay. Capital expenditures require physical facility construction and asset acquisition An amount spent to acquire or upgrade productive assets (such as buildings, machinery and equipment, vehicles) in order to increase the capacity or efficiency of a company for more than one accounting period. Also called capital spending -accessed 2/4/2014 -accessesd2/6/2014
  15. 15. Cont. SPECIFIC TYPES OF INVESTMENTS IN ……. INVESTMENT PROGRAM 2. Outlays for social and human development Outlays for social and human development investments on health, education, counseling, placement as well as physical infrastructure like academic buildings and laboratory rooms and administrative buildings and structures. 3. Equity investments and financial and technical assistance. These are direct investments of the government and bilateral or cooperative ventures with private sector like loans, financing, grants, endowments, etc. -accessed 2/4/2014
  16. 16. Cont. SPECIFIC TYPES OF INVESTMENTS IN INVESTMENT PROGRAM 4. Expenditures for project development. These are expenses for project identification, environmental and institutional scanning, pre-feasibility studies, feasibility studies proper and other expenditures related to and necessary in determining the desirability of a project. 5. Other expenditures attributable to any of the above items. These are recurrent or repetitive expenses for operations and maintenance of facilities or services resulting from and directly attributable to the afforested programs and projects. -accessed 2/4/2014
  17. 17. OTHER TYPES OF INVESTMENTS Bonds  grouped under the general category called fixed-income securities  commonly used to refer to any securities that are founded on debt When you purchase a bond, you are lending out your money to a company or government. In return, they agree to give you interest on your money and eventually pay you back the amount you lent out. accessed 2/5/2014
  18. 18. STOCKS Real Estate  literally certificates that say you own a portion of a company which entitles you to vote at the shareholders’ meeting and allows you to receive any profits that the company allocates to its owners. These profits are referred to as dividends Houses, apartments or other dwellings that you buy to rent out or repair and resell are investments
  19. 19. Precious Objects Paintings, jewelries and other collections MUTUAL FUNDS -accessed 2/5/2014
  20. 20. INVESTMENT PROGRAMMING PROCESS 1. Project Identification In identifying projects, meeting of development needs and solving problems and constraints are taken into account. The identification of projects begin with ideas which are believed or perceived to be effective solutions to development problems and unsatisfied demands and unmet needs; utilization of present and potential human physical and financial resources; and required response to external threats to government incentives, and to local political and economic pressures such as growing disparities in the level of development of faculty and colleges, and among faculty members and non teaching staff. -accessed 2/4/2014
  21. 21. Cont. INVESTMENT PROGRAMMING PROCESS 2. Project Integration  refers to the unification of various sets of programs, projects and activities in the institution to achieve efficiency, effectiveness, unity, cohesiveness, and complementarily. Uses the techniques Sanitization and Augmentation a. Sanitization  programs and projects are screened, evaluated. Modified, and eliminated considering the factors of redundancy, impracticality, undesirability or inefficiency in relation to the goals and objectives of the strategic plan.
  22. 22. b. Augmentation  Refers to adding or increasing potential and viable project ideas as well as modifying proposed programs, projects and activities in order to better attain the specific target of the strategic development plan.  Aims to achieve maximum possible economic efficiency.  Identified additional programs and projects must be those considered critical, supplemental, supportive, and innovative -accessed 2/4/2014
  23. 23. Cont. INVESTMENT PROGRAMMING PROCESS 3. Project Packaging  Refers to the combination of mutually reinforcing investments from different sectors and agencies required to achieve common development. Mutually reinforcing simply means that the combined benefits of two or more objectives will be larger than the sum total of benefits of these projects if they are implemented separately
  24. 24. Each development package shall have as its focus a development objective and the geographic unit to which the objective is directed or aimed. Project components can be derived from: A. The goal and objectives of the strategic plan which are disaggregated into sectoral or sub-sectoral levels; B. Project ideas from the local level which originate from the recognition and analysis of unsatisfied needs, constraints or potentials; C. A combination of the two.
  25. 25. Cont. INVESTMENT PROGRAMMING PROCESS 4. Project Prioritization With scarce capital resources, it is normally not possible to implement at the same time all programs and projects which have been identified, screened, and packaged. The logic of investment programming lies in the task of matching the requirements of proposed investment projects with expected available financial resources over a specified timetable.  process for determining which projects will be scheduled for implementation ahead of others. -accessed 2/4/2014
  26. 26. COMMON METHODOLOGIES IN PRIORITIZATION 1. Problem structure approach The project which addresses the problem identified as the most significant obstacle to development is considered. 2. Supply and demand projection. By extrapolation and use of coefficient through time and space, areas with larger supply and demand gap are given priority.
  27. 27. COMMON METHODOLOGIES IN PRIORITIZATION 3. Weighted ranking indicators and goal matrix systems Any of the systems of ranking projects involving the use of weighted indicators and goal is applied. 4. Economic profitability indicators. The economic profitability or desirability indicators like cost-benefit ratio (CBR), net present value (NPV), internal rate of return (IRR) can be used (NEDA, 1993) -accessed 2/4/2014
  28. 28. TOOLS IN DEVELOPING THE PRIORITIZATION APPROACH 1.Financial Viability (Financial & Economic Returns) 6 Relevance to Productivity 2.Social and Political Acceptability 7 Environmental Implications 3.Connectivity to National Policies 4.Implement ation 8 Feasibility of Inter-local Cooperation 5.Number of 9 Functionality (Utility and Use) Capability Beneficiaries and Social Impact -accessed 2/6/2014
  29. 29. CRITERIA FOR PRIORITIZING PROJECTS CATEGORY Urgent GENERAL CRITERIA Projects that cannot be reasonably postponed Projects that would remedy conditions dangerous to public health, safety and welfare Projects needed to maintain critically needed programs Projects needed to meet emergency situations Essential Projects required to complete or make usable a major public improvement Projects required to maintain minimum standards as part of ongoing program Desirable self-liquidating projects Projects for which external funding is available -accessed 2/6/2014
  30. 30. CRITERIA FOR PRIORITIZING PROJECTS CATEGORY Necessary GENERAL CRITERIA Projects that should be carried out to meet clearly identified and anticipated needs Projects to replace obsolete or unsatisfactory facilities Repair or maintenance projects to prolong life of existing facilities Desirable Projects needed for expansion of current programs Projects designed to initiate new programs considered appropriate for a progressive community Acceptable Projects that can be postponed without detriment to present operations if budget cuts are necessary Deferrable Projects recommended for postponement or elimination from immediate consideration in the current LDIP Projects that are questionable in terms of over-all needs, adequate planning, or proper timing -accessed 2/6/2014
  31. 31. References: -accessed 2/6/2014 –accessed 2/6/2014 -accessed 2/4/2014 -accessesd2/6/2014 -accessed 2/5/2014 accessed 2/5/2014