Module 5 Session 06-ProjectAppraisal

8/20/2019 Module 5 Session 06-ProjectAppraisal

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Module 5 Session 6

Notes: Project Appraisal

Summary

This session will defne project appraisal and introduce dimensions o

project appraisal, including issues o social acceptability/desirability,

environmental riendliness, technical easibility/ appropriateness,

gender sensitiveness, economic soundness and ability to be

sustainable and most importantly fnancial viability.

Introduction

Project appraisal is the process o assessing and questioning

proposals beore resources are committed. It is an essential tool or

eective action in community renewal. It!s a means by which

partnerships can choose the best projects to help them achieve what

they want or their community.

"ut appraisal has been a source o conusion and diiculty or

projects in the past. #udits o the operation o $ingle Project "udget

schemes have highlighted concerns about the design and operation

o project appraisal systems, including%

•

&echanistic, in'e(ible systems• # lac) o independence and objectivity

• # lac) o clear defnition o the stages o appraisal and o

responsibility or these stages

• # lac) o documentary evidence ater carrying out the appraisal

It!s no surprise that audits or inspections aren!t impressed with the

quality o appraisals, and are specifcally ound with problems li)e*

• Individual appraisals which do not cover the necessary

inormation or provide only a superfcial analysis o the project

• Particular problems in dealing with ris)s, options and value ormoney

• #ppraisals which are considered too onerous/burdensome or

smaller projects

• +ushed appraisals

Project appraisal is a requirement beore unding o programs is

done. "ut tac)ling problems li)e those outlined above is about more

than getting the systems right on paper. (perience in projects

emphasi-es the importance o developing an appraisal culture!

Districts Training Programme Module 5 Session 6 – Page 1



Module 5 Session 6

which involves developing the right system or local circumstances

and ensuring that everyone involved recogni-es the value o project

appraisal and has the )nowledge and s)ills necessary to play their

part in it.

What can Project Appraisal Deliver?

Project appraisal helps project initiators and designers to*

• "e consistent and objective in choosing projects

• &a)e sure their program benefts all sections o the community,including those rom ethnic groups who have been let out in the

past

• Provide documentation to meet fnancial and audit requirements

and to e(plain decisions to local people.

• Appraisal justifes spending money on a project.

#ppraisal as)s undamental questions about whether unding is

required and whether a project oers good value or money. It can

give confdence that public money is being put to good use, and helpidentiy other unding to support a project. etting it right may help

a community ma)e its resources go urther in meeting local need

• Appraisal is an important decision making tool.

#ppraisal involves the comprehensive analysis o a wide range o

data, judgments and assumptions, all o which need adequate

evidence. This helps ensure that projects selected or unding%

• 0ill help a partnership achieve its objectives or its area

• #re deliverable

• Involve local people and ta)e proper account o the needs o

people rom ethnic minorities and other minority groups

• #re sustainable

• 1ave sensible ways o managing ris).

• Appraisal lays the oundations or delivery.




Module 5 Session 6

#ppraisal helps ensure that projects will be properly managed, by

ensuring appropriate fnancial and monitoring systems are in place,

that there are contingency plans to deal with ris)s and setting

milestones against which progress can be judged.

Getting the system right

The process o project development, appraisal and delivery is

comple( and partnerships need systems, which suit local

circumstances and organi-ation. ood appraisal systems should

ensure that%

• Project application, appraisal and approval unctions are separate

#ll the necessary inormation is gathered or appraisal, oten as parto project development in which projects will need support

• +ace/tribal equality and other equality issues are given proper

consideration

• Those involved in appraisal have appropriate inormation and

training and ma)e appropriate use o technical and other

e(pertise

• There are realistic allowances or time involved in project

development and appraisal• 2ecisions are within a implementers! powers

• There are appropriate arrangements or very small projects

• There are appropriate arrangements or dealing with novel,

contentious or particularly ris)y projects.

Appraising a project

Key issues in appraising projects include the following.

•

3eed, targeting and objectivesThe starting point or appraisal% applicants should provide a detailed

description o the project, identiying the local need it aims to meet.

#ppraisal helps show i the project is the right response, and

highlight what the project is supposed to do and or whom.

• Context and connections

#ppraisal should help show that a project is consistent with the

objectives o the relevant unding program and with the aims o the




Module 5 Session 6

local partnership. #re there lin)s between the project and other

local programs and projects 4 does it add something, or compete5

•Consultation

6ocal consultation may help determine priorities and secure

community consent and ownership. &ore targeted consultation,

with potential project users, may help ensure that project plans are

viable. # )ey question in appraisal will be whether there has been

appropriate consultation and how it has shaped the project

7ptions

7ptions analysis is concerned with establishing whether there are

dierent ways o achieving objectives. This is a particularly comple(part o project appraisal, and one where guidance varies. It is vital

though to review dierent ways o meeting local need and )ey

objectives.

• Inputs

It!s important to ensure that all the necessary people and resources

are in place to deliver the project. This may mean thin)ing about

unding rom various sources and other inputs, such as volunteer

help or premises. #ppraisal should include the e(amination o

appropriately detailed budgets.

• Outputs and outcomes

2etailed consideration must be given in appraisal to what a project

does and achieves% its outputs and more importantly its longer8term

outcomes. "enefts to neighborhoods and their residents are

re'ected in the improved quality o lie outcomes 9jobs, better

housing, saety, health and so on:, and appraisals consider i these

are realistic. "ut projects also produce outputs, and we need a more

realistic view o output orecasts than in the past.• Value for money

This is one o the )ey criteria against which projects are appraised.

# major concern or government, it is also important or local

partnerships and it may be necessary to ta)e local actors, which

may aect costs, into account.

• Implementation

#ppraisal will need to scrutini-e the practical plans or delivering the

project, as)ing whether staing will be adequate, the timetable or




Module 5 Session 6

the wor) is a realistic one and i the organi-ation delivering the

project seems capable o doing so.

•Risk and uncertainty

;ou can!t avoid ris) 4 but you need to ma)e sure you identiy ris) 9is

there a ris) and i so what is it5:, estimate the scale o ris) 9i there is

a ris), is it a big one5: and evaluate the ris) 9how much does the ris)

matter to the project.: There should also be contingency plans in

place to minimi-e the ris) o project ailure or o a major gap

between what!s promised and what!s delivered.

• Forward strategies

The appraisal o orward strategies can be particularly diicult,given inevitable uncertainties about how projects will develop. "ut is

never too soon to start thin)ing about whether a project should have

a f(ed lie span or, i it is to continue beyond a period o

regeneration unding, what support it will need to do so. This is

oten thought about in terms o other unding but, with an increasing

emphasis on mainstream services in neighborhood renewal,

appraisal should also consider mainstream lin)s and implications

rom the frst.

•

ustaina!ility In regeneration, sustainability has oten been tal)ed about simply in

terms o whether a project can be sustained once regeneration

unding stops but sustainability has a wider meaning and, under this

heading, appraisal should include an assessment o a project!s

environmental, social and economic impact, its positive and negative

eects.

0hile appraisal will ocus detailed attention on each o these areas,

none o them can be considered in isolation. $ome o them must be

clearly lin)ed 4 or e(ample, a realistic assessment o outputs may be

essential to a calculation o value or money. 3o project will score

highly against all these tests and considerations. The fnal judgment

must depend on a balanced consideration o all these important

actors.

Checklist or project appraisal




Module 5 Session 6

0hether you are involved in a partnership with an appraisal system

in place, or starting to design one rom scratch, these questions are

worth as)ing.

• #re appraisals systematic and disciplined with a clear sequence o

activities and operating rules5

• Is there an independent assessment o the project by someone

who has not been involved with the development o the project5

• 2oes the appraisal process culminate in clear recommendations

that inorm approval 9or rejection: o the project5

• Is the approval stage clearly separate5

• Is the appraisal process well documented, with )ey documents

signed, showing ownership and agreement, and allowing the

appraisal documentation to act as a basis or uture management,

monitoring and evaluation5

• 2oes the appraisal system comply with any relevant government

guidance

• #re the right people involved at various stages o the process and,

i necessary, how can you widen involvement5




Module 5 Session 6

Proposed real lie project Appraisal Case Study:

Case study: !uilding a Pit "atrine #ith $ stances at one o the schools in%asese& %ya'arungira Su' County:

This case study is sourced rom the 3ew <ision o &onday, #ugust

=th >??@. $ummary data o the proposed project%

A. 3ame% &odern Pit 6atrine in Basese 2istrict, Byabarungira sub

county.

>. 6ocation% Byabarungira $ub County

@. Proposed goal% Improvement o sanitary conditions in Basese

suering rom shortage o 6atrines.

=. Project (ecution% $chool authority, parent associations, civil

society and Byabarungira sub8county authorities.

D. Einancing% $chool authorities, Byabarungira sub county council,

Basese 2istrict Coucil, &inistry o ducation and possibly a donor

and international 37s.

Project description% #ccording to the 3ew <ision te(t, 9see page >D:

shortage o latrines has hit Basese schools. It is revealed that

&inistry o ducation!s policy stipulates one stance or only >D

pupils. In contrast, the current status in Basese schools is one stance

or A>? pupils. This reveals that there is urgent need or about our

e(tra stances or one stance in use.

The proposed project is thereore to initially build = pit latrines o @?

eet deep, = eet wide and >? eet long with D separate square

stances =F=, D doors and D windows at one o the schools in

Byabarungira sub county.


Eor the participants to apply their newly acquired or enhanced

project appraisal competencies to a practical case study. 3amely*

building =t by >?t and @?t deep, with fve stances, fve doors, fve

windows, school latrine at one o the schools in Byabarungira sub

count see 3ew <ision article in ro ect identifcation a e



Module 5 Session 6

"roject #usti$cation

This will immediately improve sanitary conditions at the school,reduce the incidence o terminal sic)ness and enhance learning

conditions at the schools.

"roject risks

There are e(pected to be project ris)s mainly due to lac) o unds,

lac) o appropriate building s)ills, bureaucratic corruption, and

intererences rom local politicians and there may be lac) o space.

These aspects are normally presented in a project analysis log rame

matri( or a ocused appreciation o the main eatures and theirlin)ages. # typical project log rame matri( is summari-ed below.




Module 5 Session 6

%a!le &."roposed project 'nalysis (og frame )atrix

*arrati+e ummary Veri$a!le

Indicat

ors

,OVI-

)eans Of

Veri$cation

,)OV-

Important

'ssumpti

ons

A. oal

Improvement o

sanitary conditions

and elimination o

total disease inBasese $chools,

Byabarungira $ub

County

Provision o

one stance

latrine or

only >D pupils

• Progress report

by*

• $chool

authorities

• Parent

#ssociation• Byabarungira

sub county

• 2istrict Council

• #vailability o

unds

• #vailable

space

• 6ocal councils

• ducation

policy

compliance

>. Purpose

Construction o =

latrines at one o the

schools in

Byabarungira subcounty

2imensions o

= t wide, >?

t long and @?

t deep with

fve stances

with a

loc)able door

and window

Progress and

status report

• Eunds

• "uilding s)ills

• 6ocal politics

• (ternal

support

A. 7utput

Completion o Glatrines

= latrines

with fve

stances

Completion report +espect o contractualterms and timing

>. #ctivities

• 1iring builders

• Procurement o materials

• Training localsta

Eunds

available$pace

allocated

&aterials

purchased

Completion report • Timely ollow8

up!

• $chool

authorities

• County

council

@. Einancing

• $chool

Eunds

available

Progress report 0illingness to

support the

project




Module 5 Session 6

• Contributions

• Council

• 2istrict

• 7thers

H. Commissioning = modern pit

latrines

Completion report 7icial

commissioning

(easi'ility Study

2uring the process o project appraisal a easibility study may be

underta)en to establish the justifcation o the identifed

project in all o its relevant dimensions, including its technical

design, economic and fnancial viability, environmental

compliance and social acceptability* as well as its conormity

with the national development objectives and priorities and the

relevant policy, legal and regulatory ramewor). The aim o a

easibility study is to initially identiy the ollowing aspects%

i. 2evelopment objectives against which the project proposed

conorms

ii. Policy ramewor) and detailed project objectivesiii. Technical soundness o the project

iv. #dministrative easibility o the project

v. The economic and fnancial viability o the project proposal

vi. The status o demand or the project benefciaries

vii.Considerations o customs and traditions o project

beneactors, issues o compatibility

viii. 7ther important policy and cross cutting issues 9gender,

environment, 1I</#I2$:

The results o a easibility study in'uences decisions to commit or

not commit scarce resources to a given project proposal

#n important analytical tool that underpins the value o underta)ing

a easibility study is the use o production possibility curve. This tool

is e(tremely useul in underscoring the eicient allocation o scarce

fnancial and human resources, as e(emplifed below by the trade

os between production o mil) and matoo)e.

The natural resource bases o districts in ganda are largely in the

conte(t o land and human resources. The process o transorming




Module 5 Session 6

these resources involves a choice in the use o land and human

power. In the bac)ground o traditional land use with majority o the

population largely rural and with very little education, these actors

limit the level o production in the districts. This situation

notwithstanding, the government is determined to fght the current

high levels o poverty in rural areas through a number o government

policies. In particular, poverty reduction policies, P and P&#. The

implementation o these policies implies ma)ing a choice with

respect to the use o available land and human resources. # tool

)nown to illustrate the eect o choice in the use o such resources

to bring about the desired change in the social economy is the

ollowing Transormation Production Possibility Curve.

In other words, a district can choose only to be involved in livestoc)

production, only agricultural products, or to produce both at a

certain level o output combination as indicated by the curve below.

The curve indicates the units that would be sacrifced i one more

units o agricultural products are produced 9i.e. the o tradeos:

The curve illustrates that the economy would be at an optimal level

o production when total output is comprised o G,??? liters o mil)

and A,??? tones o matoo)e. #t this point, producing one e(tra litre

o mil) would cost ?.A= tones o matoo)e and vice versa.Transormation Production Possibility Curve8 6itres o &il) <s Tons

o &atoo)e

*ote




Module 5 Session 6

A. Production at%

a: 2 represents optimal utili-ation o available resources

b: C is sub8optimal utili-ation o resources, being inside theproduction possibility curve

c: J is an impossible case as it is outside the production possibility

curve

>. Trade os and 7pportunity costs

A litre o mil) K ?.A= tons o &atoo)e

A Ton o &atoo)e K G litres o mil)

The curve depicts that the economy would be at an optimal level oproduction when total output is made o G??? litres o mil) and A???

tons o &atoo)e. #t this point producing one e(tra litre o mil) would

cost ?.A= tons o &atoo)e and vice versa.

Project appraisal in relation to technical& economic& inancial& social& and

environmental analyses)

2uring project appraisal, hard questions will be as)ed and the

answers will determine whether the project proposal will be adopted

or rejected. The questions raised will include concerns such as the

appropriateness o project objectives, si-e, scope, implementation

methods and modalities, implementation time scale, and the project

technical, fnancial, economic, institutional, environmental, social

and distributional justifcation o the project.

# well prepared and assessed project preparation and an appraisal

consumes large amounts o data and thereore requires an equipped

oice with computer acilitation as depicted in the fgure below*

Eigure* # modern oice with computer access

,a- %echnical analysis


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Module 5 Session 6

Technical analyses o a project is aimed at ensuring the ollowing%

i. To confrm the source o the project proposal, nature o the

studies 4 including easibility studies underta)en beore theproposal, and the nature o decisions ta)en by all relevant

authorities involved

ii. That the problem or the need to be resolved by the project has

been clearly stated

iii. That the project has been clearly spelled out with the correct

technical design details 9such as si-e, location, timing, and

technology:

iv. That the required materials have been correctly determined

and their source identifed

v. That the costs o the project have been clearly established,

e(pected product prices projected, and payment modalities

and schedules agreed to

,!- conomic 'nalysis

The need or economic analysis arises out o the act that 1igher

6ocal overnments 916s: operate within limited resources. #s a

result, some diicult choices o where to commit limited resources

rom a large pool o deserving and competing priorities and needsmust be made by 16 oicials. The economic costs and benefts o a

project are estimated through the application o a cost8beneft

analysis, i.e. evaluating both the implicit and social cost8benefts o a

project. Eor proft ma)ing projects, proftability tools li)e 3et

Present <alue, Internal fnancial rate o return, Pay "ac) Period and

Incremental Proft are used to estimate the viability o the project.

16s do not generally operate on proft motivation when consideringprojects* thereore, social cost8beneft analysis is most applicable or

16s. In a cost beneft analysis, one must as) basic questions as to

what costs and benefts should directly and indirectly accrue to the

target benefciaries in terms o poverty reductions, enhanced

savings, improved medical care, educational, water and health

services.

The fgure below illustrates the participatory process including

especially the benefciaries o medical, water and sanitation in the

design and discussion o project ormulation. The participatory




Module 5 Session 6

process allows or more ideas to be incorporated into the project,

and oten increases the success o the project.

Figure/ "articipatory "lanning

9c: Financial 'nalysis ta)es a hard loo) at the unding sources

or the project both in terms o completing the project and or its

sustained operation. This analysis should question i*

i. The 16 would und the project rom internal resources5ii. The 16 would und the project rom e(ternal resources5

iii. The e(ternal resources would be borrowed unds5

iv. I the unds are to be borrowed, would the 16 be able to pay

bac) the loan with accrued interest5

v. 0ould the e(ternal resources be a grant rom the central

government or rom any other source5

vi. 0ould the 16 co8und the project with an outside donor,

whether it is a central government or another development

partner5 vii.0ould eective cost recovery mechanisms aimed recouping

the project costs be put in place5

viii. 0ould fnancial management modalities be put in place

to record the transactions during implementation and

operation o the project5 2ocuments could include cashboo),

assets register, ban) statements, balance sheet 9accruals

accounting:, income statements 9or receipt and payment

schedules:, etc

d- n+ironmental 'nalysis

2epending on the nature o the project, it is important that the

project is seen to comply with the various environmental

requirements as administered by the 3ational nvironmental

&anagement #uthority 93&#:. $pecifcally, the project should


http://www.kitale.org/Newton%20_%20Booklet%20Visit%20003.jpg



Module 5 Session 6

comply with the provisions o the 3ational nvironment

$tatute 9ALLD: and the nvironmental Impact #ssessment

9ALLM:. nvironmental aspects that projects would have to

address include*

• Public health and occupational saety

• Control o air, water and land pollution

• &anagement o renewable natural resources 9plants and animals:

• icient use o natural resources through multiple use, recycling

and erosion control

• Conservation o unique habits 9orests, game reserves: or rare

species and cultural preservation

Figure/ n+ironmental pollution and degradation

e- ocial 'nalysis

The validity o the planners! assumptions about the social conditions

are tested through social analysis. 0here necessary, adjustmentsshould be made so that the project goals are e(pressed in terms that

have more meaning or both the project population and the

implementing agencies. $ocial analysis ocuses on our areas

indicated below*

i. The social8cultural and demographic characteristics o the

project population 4 its si-e and social structure, including

ethnic, tribal and class composition

ii. 1ow the project population has organi-ed itsel to carry out

productive activities, including the structure o households andamilies, availability o labor, ownership o land, and access to

and control o resources

iii. The project!s cultural acceptability* in other words, its capacity

both or adapting to and or bringing about desirable changes

in people!s behavior and in how they perceive their needs

iv. The strategy necessary to elicit commitment rom the project

population and to ensure their sustained participation rom

design through to successul implementation, operation and

maintenance


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Module 5 Session 6

The fgure below depicts a situation still prevailing in certain areas in

ganda where the girl child is relegated parental duties at an early

age while the brother goes to school

Figure showing gender discrimination

f- Cross cutting issues

The above mentioned principles o social analysis are equally

relevant in appraising the impact o cross cutting issues, such as

1I</#I2$, environment, and gender issues, on the viability o a

project. This is particularly relevant when ma)ing sure that the

indirect costs and benefts attributable to crosscutting issues are

ully articulated and considered in estimating the overall cost beneft

o the proposed project.


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Documents

Module 5 Session 06-ProjectAppraisal