The Management of Educational Project

Module Introduction
The Module entitled ‘The Management of Educational Project’ has four units. The first unit of
the module deals with the concepts of a project and its development. The definitions given by
different scholars, the origin and historical development of a project has emphasized.

The second unit of the module concerned with issues related with project management such as
project organization, project functions, project matrix of logical framework approach, and the like.

The third unit emphasizes on topics related to project cycle and its successive stages. The
techniques of prioritizing projects and determining their feasibilities, cross cutting issues, project
negotiation and evaluation are major issues included in the unit in order to simplify the preparation
and management of projects.

The last unit of the module deals with project analysis such as economic analysis, risk analysis and
management, and stakeholders’ analysis.

Module Objectives
After successful completion of the module, you are expected to:
 Explain the concept of education project and its management;
 Value the importance of educational project for sustainable development;
 Develop skills of preparing educational project;
 prioritize projects valuable for education sector development;
 use logical framework approach in the process of project functioning;
 differentiate successive stages of project management
 evaluate project activities
 conduct project economic analysis, social and environmental analysis, etc.

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 UNIT ONE
THE CONCEPT OF A PROJECT AND ITS SCOPE
Unit introduction
This unit basically, concerned with the definitions and origin of a project. The historical
developments of educational projects over periods of time are dully emphasized. Furthermore, the
theories of project planning processes, the advantages and disadvantages of project and the
importance of project management are treated under this unit. Moreover, the relationship and
conceptual differences between the terms project, program and plans are presented in the unit.

Unit objectives
At the end of the unit you should be able to:
 define the term project;
 explain historical development of project planning;
 differentiate projects from program and other plans
 discuss the characteristics of project plans

Pre-reading Activities
1. What is meant by a project?

2. How educational project difference from other types of projects?

3. Take a project that you know well and explain its characteristics

Overview
One of the basic principles of project planning is to maximize benefit to individuals and society
through efficient utilization of resources. The process of resource utilization can be seen from two
different angles namely: private investment by individual firms for the purpose of commercial
Profitability and from public investment by the government in order to provide better economic
and social services to the society at large.

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Resources utilization through project work requires systematic preparation and appraisal to ensure
efficiency.
Projects are considered as the changing effect of the society. It highly increases the pace of change
in any dimension, and ever-faster rate. The act of effective and efficient management of change
helps organizations to survive and adapt to the dynamic world.

1.1 Definitions of a Project

There is no universally agreed upon the definition of a project. However, one of the literatures in
the field has defined a project as “a temporary endeavour undertaken to create a unique product or
service”. A project is organized to fulfil certain objectives within a particular period of time and
with limited amount of human and financial resources. It does not deal with routine activities rather
with new operations. This implies that a project work focuses on new experiences to solve new
problems and challenges. Every project has its own culture, system, rules and values that bind
together every member of the project.

A project is a temporary, organized human endeavour that used to provide a solution to identified
human needs. It is a serious activity that organized to accomplish specific objective(s) such as
building a school, constructing a road, establishing a medical clinic, reforming school curriculum,
etc. According to Harrison (1995), a project can be considered to be any series of activities and
under taking tasks which have defined start and end dates; have specific objective to be
accomplished within certain specification; have funding limits; and consumes resources (such
materials, finance, human and time). Harrison also further defined a project as a non-routine, non-
repetitive, one-shot activity, normally with discrete time, financial and technical performance goal.
According to a guideline for the preparation of public sector projects in Ethiopia, a project is
defined as: an investment of scarce resources with a definite objective, time horizon and
geographical boundary. Projects can appear in a different scale and type. A common feature of all
types of project is that they have objectives, which is to be achieved over a fixed period of time.
Identification of goals and objectives, limiting the time, scale and type of a project are among the
basic features in describing and understanding project.

Activity 1

1. Define the term project

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1.2The Origin of Project Management and its Historical Development
It may be difficult to identify the exact date of the emergence of project management. But
literatures in the field associate the development of project management with the emergence of
scientific study about the nature of work by F.W. Taylor (1856-1915). Taylor was the first person
to consider the process of work design in a scientific manner. However, until 1950s many project
management techniques were assembled into single unit and guided under coherent system. After
1950s, the techniques of project management started to be perceived independently. According to
Harvard Business School (1996), it was the military organization that employed the use of project
management system for the first time in order to manage military logistics and found to be
essential to keep army secrets. Later on, automotive and movie industries, private and public
engineering organizations introduced the techniques of project management next to military
innovates or interests in creating unique outcomes from project management techniques. In order
to strengthen project management techniques, innovative ideas like histograms, net work diagrams,
etc. have started to get due attention by project management practitioners. These practitioners have
also started to employ the concept of project lifecycle and began to deal with more complex work
breakdown structures that comprehensively identify the individual tasks required to achieve
specific objectives. More recently, new project management techniques (such as cross-functional
schedules, management of shared resources, etc.), widespread use of computers and other soft ware
tools have increased the effectiveness of a variety of project management.

The variability of education projects is considerable, in terms of both of their objectives, and of
their domains of action or their content. These characteristics have evolved markedly over the last
half a century, a period that has witnessed a mushrooming of education projects in developing
countries. We illustrate this evolution by examining projects financed by the multilateral
development banks and funds. These organizations, of which the World Bank is the main one,
were created by the international community to aid the economic development of under-equipped
countries through loans. Looking at the evolution of education projects financed by multilateral
banks and funds, one can distinguish three phases, roughly corresponding to the sixties, seventies
and eighties.
Activity 2
1. When did project preparation start?
2. Explain the historical development

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i) Projects in the Sixties
In the sixties, the involvement of multilateral banks and funds in the field of education was
generally subjected to relatively strict criteria regarding the connection between projects and
economic development needs. For example, the education projects financed by the World Bank
pertained, on the one hand, to vocational training and technical and agricultural education at all
levels, and on the other hand, to general secondary education, which numerous projects tried to
diversify by developing scientific and technical streams. The Inter-American Development Bank
had a broader scope of intervention, extending in particular to university education as a whole. The
obvious major absence from this list was primary education. The banks considered at the time that
expansion was mainly a response to social demand, and therefore could not be justified by the
needs of economic development. Throughout this period, expenditure financed by multilateral bank
assisted projects included only the construction and equipment of school infrastructures. Technical
assistance, training scholarships, and more generally any expenditure related to intellectual
investment — for example, development of the national capacity to develop school curricula, to
manage, to plan or to do pedagogical research — as well as operating costs, were rarely taken into
consideration.

This kind of involvement, when it turned out to be necessary, was generally financed by other aid
sources, such as the UNDP , various bilateral aid programs or non-governmental organizations,
whose funding was coordinated, to the extent possible, with that of the banks. The evaluation of
projects, in the sixties, carried out at the beginning of the following decade showed that they did; in
fact, help the beneficiary countries to achieve their expansion objectives in secondary education,
post-secondary education and vocational training. On the other hand, virtually no improvement
was noted regarding the quality and effectiveness of education. This shortcoming can be explained
by the excessively equipment-oriented content of investments financed through projects. While a
certain amount of progress was sometimes made in the teaching of sciences, the introduction of
practical courses into general secondary education did not meet the expected success.

As far as the physical components of projects were concerned, the quality of civil engineering
work was generally satisfactory. But the supplying of equipment was almost always plagued by
delays, and its quality sometimes turned out to be inadequate. These difficulties remain even to this
day. Finally, technical assistance support and training scholarships supplied by aid sources other
than the multilateral banks often raised serious problems, especially in terms of seeking financing
and of co-ordination of the actions undertaken.

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ii) Projects in the Seventies
During the seventies, the development aid policies followed by multilateral banks, whose thrust
had been exclusively economic up to then, started to be more socially oriented. Around 1970, there
was increasing criticism concerning the lack of impact of growth in developing countries on the
standard of living of the poor, especially in rural areas. Multilateral banks realized that the projects
they had financed had served only to widen disparities, instead of correcting them. Without putting
into question the priority given to the promotion of economic development, they gradually re-
directed a growing proportion of their funding to social objectives: nutrition, literacy, reducing
infant mortality, increasing life expectancy, improving the productivity of small farmers, etc.

This shift in the policies of multilateral banks was reflected in the education projects they financed
during the seventies. Four main objectives, of variable importance depending on the funding
organization, were pursued: primary education, or, if classical primary education turned out to be
too costly or ill-suited to the country's needs, the search for another form of basic education that
could be generalized; selective development of the subsequent levels of education and training to
meet the demand for qualified manpower, improvement of the effectiveness and quality of
education; finally, equalization of opportunities of access to education. These new thrusts led the
multilateral banks to finance numerous projects aimed at implementing more or less global reforms
of education systems. Thus the projects of the seventies encompassed not only all types and levels
of education, but also institutions serving all or part of the education system, such as units
responsible for educational planning, pedagogical research, financial services and education
personnel.

With a view to selecting priority projects carefully, several multilateral banks asked borrowing
states to carry out a diagnostic study of their education system, encompassing its problems, its
prospects and the government policy. Such studies were often carried out in the seventies with the
assistance of UNESCO. In a more general sense, UNESCO played an important role in the
broadening of multilateral bank programs. The published report by UNESCO, profoundly
influenced their conception of education, and UNESCO missions, especially those under its co-
operative program with the World Bank, often proposed extending projects to fields that had been
excluded up to then, such as primary education and curriculum development.

In the seventies, a large number of projects financed experimentation with out development of non-
formal education. Some aimed at agricultural or crafts training, while others concentrated on adult

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literacy, in particular by using primary schools as development centres, as recommended by many
educators. Others sought to find basic education patterns that would be less costly than classical
primary education, and better suited to the conditions of disadvantaged rural areas.

Finally, a number of projects designed in the seventies funded the study, experimentation or
development of new technological means, such as radio or television, for education. Many
specialists then thought that such means would facilitate the expansion and improvement of
primary education by raising its productivity. The expenditures financed through projects also
became much more diversified than in the preceding period. While construction and equipment
continued to account for the lion's share of the great majority of projects, four-fifths of them did
include intellectual investment (technical assistance and training scholarships). This was the case,
in particular, for curriculum development, the production and distribution of school textbook,
assistance with the planning and administration of education, experimentation with innovations,
and the carrying out of pre-investment studies.

One of the main objectives pursued by intellectual investment is the strengthening of national
institutions, so as to ensure sustainability of the changes brought about. Mention should also be
made of the development of educational components in projects pertaining to other sectors such as
rural development or transport. The purpose of such components is either to train project
beneficiaries or staff through, for example, a functional literacy program, traineeships or a
vocational training centre or to construct primary or secondary schools within the framework of an
integrated rural development or town planning project.

The results achieved by the projects of the seventies by and large confirm those of the sixties,
although a few new observations were made. For instance, with the exception of Africa,
intellectual investment had a positive influence on the quality of education, and on the
development of relevant national institutions. On the other hand, components aimed at medium-
level agricultural training often had to scale down their quantitative objectives, because of
declining demand for technicians at that level. Evaluations underscore the failure of the many
reforms or innovations supported by projects. Their proponents frequently underestimated the
difficulties of implementation and its cost. This was true, in particular, of projects aimed at the
development of non-formal education; the idea of providing such education in primary schools
after class hours turned out to be inapplicable in most practical cases. As to the new technological

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means, the results of their use were variable, and it sometimes turned out that the proponents had
been too optimistic.

The provision of technical assistance and scholarships yielded positive results in several areas,
especially technical education and the development of institutions. However, recruitment delays,
lack of precision in post descriptions, and the instability of counterparts sometimes reduced its
impact. Evaluations also revealed that the biggest problem in project execution is the difficulty for
borrowing states, because of their other budgetary commitments, to entirely finance the additional
operating costs generated by projects. Finally, the experience of the seventies shows that it is
practically impossible for an education project to achieve its objectives if the policies followed are
ill-adapted, whether they be a continuation of past trends, or whether they be inspired by a will to
reform.

iii) Projects in the Eighties

In the course of the eighties, the characteristics of education projects financed with the support of
multilateral banks were shaped by three main influences: the impact of the world economic crisis
on borrowing countries, the results of projects during the previous decades, and research work on
education and development.
While maintaining their former objectives, especially as far as primary education was concerned,
the multilateral banks came to favour improvements in the efficiency of educational systems,
because of the severity of crisis-induced budgetary constraints. In this respect, projects were often
aimed at encouraging certain changes in national education policies, for example those regarding
the allocation of budgetary resources for education, or the policy concerning scholarships.

Past experience brought about a reduction in the importance ascribed to certain types of education,
such as non-formal education and the training of agricultural technicians. Financial constraints also
made it necessary to examine education expansion projects with more caution, and to give priority
to the renovation of existing facilities, to qualitative improvement and to institutional development.
Recently published research on the relationship between education and development in the world
has emphasized the essential role of primary education in increasing productivity, and its high
social rate of return. These results provided justification for the priority given by most multilateral
banks and funds to the expansion and qualitative improvement of such education, especially in
countries where it still encompasses only a fraction of the school-age population.

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Finally, to bridge the gaps noted in the past, projects financed by multilateral banks tend
increasingly to cover not only physical and intellectual investments, but also part of the recurrent
costs, including staff salaries and the use of national consultants, who are preferred to foreigners
when qualifications and experience are the same. All in all, education projects financed by
multilateral banks have changed considerably over the last twenty-five years. The main features of
this evolution are as follows:
 an increasingly detailed study of the national education situation and of the government's
policy, with respect to the country's economic, social and financial context, before
elaboration of the project;
 an increasingly closer linkage between projects and policies, favoring adjustment of the
education system to financial constraints;
 a gradual opening-up of projects to encompass all types, levels and institutions of
education;
 the growing importance of quality improvement and institutional development objectives;
 The gradual extension of donor and multilateral bank financing to all categories of
expenditure, including operating costs and salaries.

Activity 3
1. When did education sector development project started?
2. Identify the similarities and differences between project work in the sixties, the seventies
and eighties?

1.3 The Theoretical and Actual Processes of Project Planning

1.3.1 The Theoretical process
It maybe considered that economic and social development plans have a dual function: first, from
the political point of view, it is to mobilize efforts for national development; and from the
operational point of view, it may be to provide a coherent framework for the integration of these
efforts. The theoretical framework may be a set of programs and/or projects, which represent the
means of implementing the plan, or making it operational. The presentation of an investment
budget, in the form of a logically structured set of projects, makes it possible for national
authorities to more easily obtain external aid support. The planning process, as traditionally
defined, can be broken down into three main stages:
a) Definition of the development policy;

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 b) Estimation of available resources;
c) Elaboration of programs and projects.
The first of these stages refers to the foundation of the entire structure that is, the definition by the
government and its development policy such as economic growth, income distribution,
employment, etc.). By taking into consideration the results of the previous plan, the development
policy sets out the general objectives that focus on the long-term goals, the priorities and the
strategy of development. Planners then translate these objectives into quantitative targets, in order
to elaborate, available resources and arbitration among the various sectors.

In the second stage, planners estimate the available resources for the execution of the plan (human
resources, budgetary resources, national savings, financing from external sources, foreign currency,
etc.). This is a stage of the utmost importance, for the fact that limits of these resources constitute
constraints for the national economy, and consequently for the plan's objectives as well. In the
domain of education, in particular, committed expenditure absorbs a very large share of total
available resources, thereby leaving a rather small margin for new investments, and consequently
for projects.

In the course of the third stage, planners draw up one or several activity programs for each sector,
which are aimed at achieving the objectives of the plan. Then they estimate the amount of
investment required to implement them. Each sectoral program may consist of a certain number of
projects. The programs and projects in the different sectors are then revised by the plan's co-
ordination team, in order to ensure overall coherence, and to keep total activities within the limits
of available resources. Corresponding capital expenditure is then incorporated into the plan's
investment budget.

Activity 4
1. What is the purpose for project development?

2. is there any similarities and differences between developed and developing countries in
project planning

1.3.2 The Actual Process

In reality, the role of education project in the planning process varies in developed and developing
countries. In developing countries, education projects are rarely conceived at the time of

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elaboration of the plan. In most cases they are products of the workings of the educational system,
which is not necessarily in step with the planning process. Contrary to the classical pattern, it is
rare for the cycle of education project preparation and execution to coincide with that of the plan.
Since the period covered by a plan is relatively short, usually three to five years, the execution of
certain projects may well overlap two successive plan periods.

In the second place, in some developed countries, the main functions of the plan, focuses on the
mobilization of national resources and the implementation of the national development policy that
have more or less given way to the need of the society and motivate external financing. In the
extreme case, the plan may be nothing but scaffolding erected to justify the involvement of foreign
aid sources. The list of projects appearing in such a plan is more a catalogue for the use of aid
agencies than a coherent approach to the implementation of a systematic educational policy.

In most developing countries, the structural adjustment policies adopted by governments, under
pressure from their international creditors, have sometimes resulted in casting aside the entire
sectors of development plans. Past disappointments have resulted in growing scepticism among
political leaders and other development agents with regard to ambitious plans and radical reforms.
And this is true, in particular, of education. A more pragmatic and more cautious approach is now
winning the favour of many; it ascribes greater importance to the application of policies, to their
translation into programs and projects, since the proof of their feasibility is to be found at this
practical level. This pragmatic approach is manifested, in particular, by a tendency to make the
planning process more flexible.

The classical multi-year plan, which fixed objectives, means and programs for a period of several
years, is tending to give way to a less structured set of policies, which are implemented through
flexible programs and projects. It enables to adapt to circumstantial and structural changes. The
way, in which policies are applied, while preserving their original goals can vary with time so as to
benefit from experience and responds to new needs, or adjustment to a financial constraint. The
precise elaboration of objectives, priorities and of the strategy is tending to shift downstream in the
planning process to the stage of program and project design. Although, it does not replace the
definition of education policies which remains the point of departure of the process the project
planning approach facilitates the adjustment of objectives and the implementation strategy as a
function of reality and provides the mechanism for project monitoring and evaluation.

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Activity 5
1. What is the purpose for project development?
2. is there any similarities and differences between developed and developing countries in
project planning

1.4 Advantages and Disadvantages of a Project

Breaking down an investment budget into distinct projects makes it possible to rationalize the
implementation of development policies. The main advantage consists in the logical structuring of
problems of development objectives, proposed solutions and projected investments. This logical
framework necessitates a certain degree of rigidity on the part of policy-makers and administrators
in its elaboration and execution. A project makes possible to ensure that the initial objectives are
not lost sight of; rather helps to allocate resources in a rational manner. The specificity of the
objectives and the need to define them clearly force the planner to design projects realistically.
Moreover, the concrete nature of projects gives them good visibility, which is highly appreciated
by external aid sources. Finally, fragmentation of actions and clarification of their objectives make
it easier to assess results and to learn lessons for the future.

Experience shows, however, that programs designed to implement such investments gain a lot from
being elaborated on the basis of the methods used for projects. The same is true when there is a
shortage of precise data that could be used to clearly define problems and objectives. The
discipline required in the elaboration of a project makes it possible at least to identify gaps and to
try to fill them.

On the other hand, project utilization has its own limitations because of the fragmentation they
introduce into its implementation. The accusation is sometimes made that projects eliminate any
coherence that the plan might have. Such lack of coherence occurs when the plan is aimed more at
seeking and receiving external financing than at implementing national development policies. The
planning process is then completely reversed. First, the projects likely to enjoy the support of a
foreign aid source are identified and established to elaborate the plan's general orientations. Under
these circumstances, national objectives play second role in external aid policies. This danger is
very real. However, its root cause is not the breakdown of investments into projects, but rather the
excessive dependence of the countries in question on foreign donors for investment funding.

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Furthermore, the scarcity of nationally trained managers in the methods of project planning,
elaboration and management is also a severe handicap for many developing countries.

In summary, projects offer governments’ way of implementing their education policies which is
simultaneously rational, flexible and adaptable to changing situations. The elaboration of projects,
because of the rigor and the realism required by the process, also constitutes a first test of the
feasibility of certain policies even before they are applied. As a result, projects can play a salutary
role of re-orientation, toward a more pragmatic approach, in the course of educational planning.

Activity 6
Based on your experience, explain the advantages and disadvantages of project
planning and management

1.5 Importance of Project Management

The emergence of project management has shown the following advantages.
 The use project management techniques have increased powerful comprehensive
pressure to reduce product cycle time.
 It has increased competitiveness in a global market by linking strategic goals of the
organization and the tactical work being performed as separate functions.
 It helps to facilitate the future to manufacturing industries, natural resources
management, etc by creating better understanding both on customers and
suppliers/producers.
 The emergence of project management has increased the predictability of successful
new products of many companies.
 The emergence of project management helped to increase cross-functional teams to
work smarter. It also enabled individual strengthen to provide efficient infrastructure for
defining, planning, and managing project work.
 It helps to channel specialized functional environment into clearly defined project
cooperation and distribution of activities, roles and responsibilities;
 It enables project team members to derive value from project planning, estimation of
tasks and identifying improvement opportunities; and
 It helps to master the art of melding the power of human will and organization.

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  It helps to gather resources together to achieve organizational goals within a limited
period of time.
 It helped to solve problems more quickly and smoothly than the usual period of time.
This implies that a project helps to increase due attention to specific problems and
resources protection. For instance, a universal primary education (UPE) project
increases due attention to increase citizens’ access to education.
 It helps to facilitate better coordination in decision-making and cooperation from the
employees in implementing the new decision.
 A project proposal may result into new thinking and innovations.

Activity 7
Can you mention the importance of project planning and management?

1.6 Projects, Programs, Plans and Policies

Before examining the methods used to prepare education projects, it is necessary to have a more
precise understanding of the domain under consideration. In order to define what is meant by
projects and how they differ from programs, it is necessary to situate their roles in the planning
process. This procedure helps to show the diversity of their objectives and the means used to
implement and describe all the stages projects should go through from inception to completion.

According to guideline for the preparation of public sector projects of Ethiopia,

 Projects are usually the smallest unit of development programs and plans, which are
derived from the prevailing development policies;
 Programs are planned-continuous or on-going development or investment that is not
generally time-bound. Programs may consist of a number of projects with distinctly specific
in time and resource;
 A plan is more or less operationalised version of general program. There are long or short
term plans with specific and quantitative targets.
 Large projects sometimes referred to as programs. However, it is preferable to define a
program as a group of related projects that managed in a coordinated way. Thus, programs
could be viewed, as a series of projects that occur on a regular basis and that span a number
of years, but which eventually will come to an end.

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  Project is narrowly defined as activity which is planned for a finite duration, with a specific
goal to be achieved. When a project is successfully completed, the project will be
terminated.
 A program is defined as a functional or multifunctional broadly defined business activity,
which is planned to be continuing duration and which will provide leadership influencing
group strategies.

1.7 Characteristics of Educational Project

The characteristics of a sound project often extracted from the given definition. Different
definitions characterize the nature of good or weak project because the definitions given imply the
view of different scholars, human environment, philosophy of life etc. Accordingly, the following
elements show the views of different scholars. According to some writers in the field, a sound
project has the following five basic characteristics.
1. Projects are unique undertakings that result in a single unit of output: the objectives
of projects are to complete a specified task and see the product of the effort. They are said
to be a unique undertaking in a sense that the projects are not repeated used.
2. Projects are composed of different activities: projects usually characterized as non-
repetitive, operating on at a time, interrelated set of items that inherently have
technologically determined relationships. One activity must be completed before the other
begins.
3. Projects involve multiple resources: both human and material resources which require
close coordination are elements of projects. Generally, there is a variety of resources, each
with “its unique technologies, skills, and traits” which result in project conflicts.
4. The project is not synonymous with the product of the project.
5. Managerial emphasis is on timely accomplishment of the project: Most projects
require the investment of considerable sums of money prior to enjoyment of the benefits
of the resulting products. Interest on these funds is a major reason for emphasis on time.
Time pressure combined with coordination of multiple resources, explains why mast
project management systems have emphasized on time management.

According to Keeling (2000), there are about eleven important features or characteristics of
projects. These are:
 Simplicity of purpose: Projects have easily understood goals and objectives.

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  Clarity of purpose and scope: The project can clearly be described in finite terms, its
objectives, scope, limitations, resources, management, and quality of results and so on.
 Independent control: The project can be protected from market or other fluctuations
affecting routine operations.
 Ease of measurement: Project progress can be measured against clear targets and
performance standard.
 Flexibility of employment: The project management can employ or co-opt specialists and
experts of high calibre for limited periods without prejudice to long term staffing
arrangements.
 Conducive to team motivation and morale: The novelty and special interest of project work
is attractive to individuals and conducive to the formation of enthusiastic and self-
motivated teams.
 Sensitivity to management and leadership style: Though sometimes capable of self
management, teams of self motivated experts react critically to some styles of leadership.
 Helpful to individual development: Work with an effective project team is conducive to on
accelerated personal development and capacity.
 Conducive to secrecy and security: Projects may be protected from hostile action or
intelligence activity for defence, research, product development or the safety of market -
sensitive or high value products.
 Portability: As separate entities, projects may be carried out in remote locations, foreign
countries, and so on.
 Ease of allocation: Management or the conduct of an entire project may be let out to
contract, for example on a build, operate and transfer (BOT) agreements.

Finally, let us consider the project characteristics given by The Guidelines for the Preparation of
Public Sector Projects and The Appraisal Guidelines for Public Sector Projects of the Federal
Democratic Republic of Ethiopia. It is there to give some guidelines for every project to be
established or already established in the country as to what the characteristics of their projects
should be:
 A project involves the investment of scarce resources in the expectation of future benefits.
 A project can be planned, financed and implemented as unit. Often projects are the subject of
special financial arrangement and have their own management.
 A project has a specific starting and finishing time in which a clearly defined set of objectives
is expected to be achieved. Usually the achievements of these objectives can be measured.

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 A project has a conceptual boundary, usually geographical but sometimes organizational
 A project has clearly defined set of objectives.
Activity 8
1. What makes project work different from other planning process?

2. Is there any different characteristic of project?

Unit Summary
A project is a temporary human endeavour organized to provide better service and product. The
emergence of project management has associated with the development of scientific theory of
management that introduced by F.W. Taylor. However, its development was fostered by military
organization

The historical development of educational project has come to being after many countries have got
their independence from colonialism in the 1960s. It was initiated by the World Bank, UNDP and
UNESCO in order to fund educational activities in developing countries. Later on, beginning from
1980s to date, it emphasized on ensuring educational efficiencies.

Project planning has a lot of advantages because it helps to breakdown investment activities in
order to simplify implementation processes, though it eliminates coherences between activities. A
project is different from program in such that it is the smallest unit of program while a program
consists of various projects.

Review Questions

PART I: TRUE or FALSE

Write TRUE if the statement is true and FALSE if the statement is false
_______1. Project planning is helpful to maximize efficient utilization of resources
_______2. A project is a series activity that aimed at fulfilling human needs.
_______3. Educational project was initially developed to benefit economically advanced countries
of the world.
_______4. Educational projects developed in the 1970s had impacts on ensuring the standard of
living of the beneficiaries

17
_______5. Educational project is part of planning that used to focus on future activities of program
implementation.
PART II: MUTIPLE CHOICE Items
Choose the best possible answer from the given alternatives
____1. One of the following is considered to be the cause for the emergence of project planning
and management. Which one is it?
A) the emergence of theory of motivation
B) the emergence of scientific management theory
C) the emergence of behavioural school of thought
D) the emergence of human resources management theory
____2. Which of the following is true about historical development of project management in the
sixties?
A) the financial expenditures by multinational banks
B) the focus of the projects on providing technical supports
C) the focus of the projects on providing scholarships
D) All of the above
____3. Which of the following is not among the features of project in 1980s?
A) it focused on doubling the cost of education
B) it linked education projects with a countries policies
C) it separated education projects from country’s economy
D) it restricted categories of educational investment
_____4. ____________ is among the advantages of project management.
A) rationalization of implementation of development policies
B) replacing program design by project work
C) decreasing foreign investment
D) none of the above
____5. One of the following is not among the characteristics of a project.
A) its objectives are complex in nature
B) it is difficult to measure the outcome
C) its controlling system needs independence
D) it does not show flexibility

UNIT TWO

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 Project Management, Organization, Function and Strategies
Unit introduction
This unit basically deals with the process of project management, human relations organizations
and organizational functions. The nature of matrix organization and project management process
are dully emphasized. The issues of team management, information management, and risk
management are also considered. The logical framework approach in project management and its
purposes are also included in the unit.

Unit objectives
After successful completion of the unit you are expected to:
 Explain the ideas of project management
 Identify the nature of project management
 Discuss about projectized management
 Differentiate the nature of matrix organizations
 Facilitate project management processes
 Manage risks during project implementation
 Explain the importance of the logical framework approach in project preparation.
 Lists the important steps of logical framework approach

Pre-reading activities
1. What makes project organization and its management different from others?

2. What are the necessary strategies for the success of functions of a project?

2.1 The Concept of Project Management

Project management is a branch of management which came to being because the traditional forms
of organization and management techniques could not help to handle project works effectively.
There is a need for specialized forms of organization, information systems, managers skilled in the
techniques of project planning, financial management, control and the particular human problems

19
arising in project work, because of the special characteristics of .projects and the problems caused
by them (Harrison, 1995). According to this writer, project management is the achievement of a
project's objectives through people", and involves organizing, planning, and control of resources
assigned to the project, together with the development of constructive human relations with those
involved, both in company and with other companies involved.

Effective project management has been successful in handling problems involved in planning.
Communication and coordination of project work is proved to integrate various personal and
groups in to one organization. Due to the nature of the project work, it is necessary to develop
effective team work and increase commitment to the achievement of project objectives. Project
management has its own range of specialized methods, systems and techniques particularly in
project planning and control.

According to Adesh Jail, as cited by Partington (2004), project management is described as the
process of converting vision in to reality. Project management occurs when management gives
emphasis and special attention to the conduct of non-repetitive activities for the purpose of a single
set of goals.

Activity 1
1. What is meant by project management?
2. Explain the challenges of human relations in project management
3. take a project you know most and draw its structure

2.2 Project Organization

The organizational structures used in project management are specialized, often complex and
designed to handle multi-disciplinary and multi-company undertakings. These structures often
break many of the traditional rules of organization theory and developed the following
characteristics.
 The organization of a project has developed hierarchical structure;
 Authority is based on the superior subordinate concept;
 A subordinate can only have one supervisor;
 There is a division of labour based on task specialization;

20
  The span of control of a manager is limited;
 People are divided in to staff and line management; and
 There must be parity between a manager's responsibility and authority.

2.2.1 Human Relations and Culture

In project management, human relations problems are heightened and accelerated. Project
managers do not work in the usual superior-subordinate hierarchy and their responsibility typically
exceeds their authority yet they must manage people who are not directly responsible to them and
often outside their own company.

Project management has a culture all of its own, which includes:

 Think globally and not parochially about one's own comments;
 A total commitment to goals, including being: results oriented and cost and time conscious;
 Accepting changes as a way of life; and
 Dealing with flexibility, uncertainty, complexity, indefinite and inadequate authority,
temporary situations and relationships and a high level of imagination.

Activity 2
1. Explain the challenges of human relations in project management
2. Take a project you know most and draw its structure

2.2.2 The Nature of Project Management Organization

There is no clear and simple answer for the question: How should a particular project is
organized? Projects are often undertaken by organizations whose main activities go beyond these
projects. The problem that the management faces is not which structure to choose for the
organization rather how the project should be positioned with respect to the existing organization,
and what relationships should be established between the project and the existing organization.
Hobbs and Menard (1993), proposed two different postulates on how to organize a project.

Postulate I: Organizing Project as Distinct Entities

This is used to maximize the chances of project success. A project is generally organized as entity
and distinct from the rest parts of the organization. It helps to minimize the interdependencies
between the project and other parts of the organization. It is what most project managers wish to be

21
as free as possible from 'the constraints of the existing organization. They constantly demand more
authority and autonomy. Autonomous projects tend to be more successful because:
1. their results are more visible and thus attract more management attention;
2. they suffer less from conflicts over priorities than activities within the existing structure;
3. they facilitate and control both schedule and looses;
4. they maintaining relationship between the project and the organization’s mean that the
project manager has more interfaces to manage and coordination; and
5. The manager is more exposed to organizational pathologies such as conflicts and power
struggles.

However, the creation of an autonomous organization is not always the most economical solution
for the organization. The allocation of resources to the project on a fulltime basis is not always
justified by project requirements. This indicates that a project is cost sensitive and critical to
resources needed in the ongoing operations of the existing organization.

Postulate II: Integrating the Project in to the Existing Structure

When an organization undertakes a new project, strong pressure exists to integrate the project in to
the existing structure and management systems and practices. This pressure can be from different
sources. The creation of an autonomous unit to manage a project is a decision not to give the
project to existing departments and their managers. Some of the managers may feel that they are
capable of managing the project and that the project falls within their departments’ jurisdiction.
Thus, such a decision may be perceived as a loss of prestige, jurisdictional and resources for them
and can even be seen as lack of confidence in their ability to manage on the part of upper
management. The creation of autonomous unit also reduces the level of influences the functional
department managerial would otherwise have on technical decisions.

This perception of the stakes involved in the choice of organizational arrangement for a project
exerts a considerable pressure to have the project integrated into the existing structure. Personnel
may also resist being transferred to the project on a temporary basis. This resistance would be
expected if the assignment is perceived as risk, particularity in terms of reintegration.

There are many factors that intervenes the extent of autonomy of a project when it is integrated in
to the existing organizational structure. But these factors could be grouped into three categories as:
a) The structural types of the existing organization;

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 b) The factors relates to the organization (the organizational contextual factors); and
c) Factors related to specific project (the project factors).
The choice of appropriate organizational arrangement for the project depends on these groups of
factors and the relationships among them.

Decision model for Organizational choice

I. The existing Structure

II. Organizational factors III. Project factors

- Availability of resource - Strategic importance
- Nature of management - Size
- Novelty and innovation
system - Integration
- Environmental complexity
- Tight budget and schedule
- Stability in resource loading

IV. Project Organization

Degree of Project autonomy

In organizing a particular project, one can put four types of organizational structures.
 The functional structure;
 The fully Projectised structure;
 The project functional matrix structure; and
 The organic structure.
By eliminating the organizational structure, which is common in small and highly professional
organization with few formal arrangements, the guidelines for the preparation of public sector
project (2006) in Ethiopia has categorized organizational arrangement into three basic types.
 Functional organization
 Projectised organization
 Matrix Organization
Activity 3

23
 1. Take a project you know most and draw its structure

2. What are the differences between postulate I and II in project organizational structure?

2.2.3 Functional Organization of Educational Project

This type of organization involves the use of existing structural lines. It is called "functional"
because it involves the grouping of staff according to their specialization. This Structure is suitable
for small project in a widespread organizational form. Its principal's components are functions or
areas of technical and administrative specialization. The main objectives in organizing such unit
are:
 facilitating supervision by grouping similar activities in the same unit;
 grouping similar activities and resource so as to benefit from economies of scale; and
 facilitating the development and maintenance of technical competency in the areas that is
essential to their organizational survival.
Functional structure of a project has a pyramid shape with vertical and hierarchical conception of
authority that accompanied by series of management principals associated to ensure simplicity,
order and harmony inside the organization.
Utilizing an existing functional organization structure for project has the following advantage and
disadvantages.

Advantage Disadvantage
 Makes efficient use of resource through  Likely to be oriented to meeting the need of
functional groupings functional department rather than the project
 Provides specialist support to staff through  Responsibility for project coordination and
groupings of specializations execution may be unclear.
 provides an obvious path for career  Lacks flexibility and adaptability
progression and job motivation
 No upheaval after the project because staff  Vertical lines of command lead to
remain in the same functional positions difficulties in communication at an
operational level
Source: - Guidelines for the preparation of Public Sector Projects (2006)
2.2.4 Projectised Organization

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Projectised organization involves the creation of separate and self-contained organization with
specific goal of project implementation. This type of organization is common for large and
complex projects which will be disbanded when the project is completed. It establishes in a
temporary basis and is more or less independent from the rest of the organization.
Its organizational structure stinks to:
 concentrate responsibility for the management of the project in the hands of one person
whose only preoccupation is the success of the project and the attainment of project
objectives;
 facilitate the integration of different technical specialists required by the projects as well as
other relevant dimension, such as political, cultural, economic and environmental; and
 Ensure that decision affecting either the content or the management of the project, is the
result of an optimum among the different objectives of the project

The following are some of advantages and disadvantages of projectised organization.

Advantage Disadvantage
 All activities are catered around the  Possible duplication of inputs with other
achievement of project goals (task areas within an organization.
oriented).
 Unity of command allow for rapid  Expensive and time consuming to
decision making. establish.
 Reduces conflict over resource use.  Removing staff from functional groupings
reduce the amount of professional support they
receive.
 Facilitates communication.  Temporary structure may lead to problem of
termination where staff members try to prolong
activities to extend the life of the organization.

Activity 4
1. Mention some advantages and disadvantages of project management
2. What makes projectized organizations different from others?
3. What do understand by matrix organization?

2.2.5 Matrix Organization of a Project

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 It is an organizational form that seeks to combine the advantages of functional structure and the
project organization while avoiding their disadvantaged. It is characterized by the simultaneous
presence of both project and functional components which are administratively independent but
interdependent in the execution of the project. Specialists remain under the authority of their
functional head but in the need of the project. Their activities would be lent for temporary basis.
The project components as an autonomous body comprised of project managers directing·
temporary multidisciplinary team whose composition may frequently vary, through the progress of
the project. Besides the high interdependence, the matrix structure performs better· if the
responsibilities of each party are made as clear and as distinct as reasonably possible.

i) Project Dimension Responsibility

 Responsible for results;
 Attaining project objectives;
 Producing the desired deliverables to meet schedules;
 Respecting budgetary constrains;
 Minimizing cost; and
 Responsible for liaison with the client and other external stakeholders

ii) The Functional Dimension Responsibility

 Responsible for the technical quality of projects and maintaining technical excellence;
 Responsible for the efficient use of specialized resources;
 Responsible for the management of specialized resource;
 Hiring and invitation;
 Training development and acculturation;
 Evaluation; and
 Responsible for developing the organizational memory.

As it is described in the Guideline for the Preparation of Public Sector Projects of Ethiopia (2006),
matrix organization combines the horizontal structure necessary for the project activities with
vertical structure of a functional organization.

Advantage Disadvantage
 Very flexible, inputs can change readily  Potential conflict between project manager and

26
 with regard to project demands; functional departments’ manager.
 Staff remain within functional groupings  Complicated management procedures due to dual
and so have access to professional responsibilities of some staff members
support  Project manager has no direct power over
 Can be easily disbanded up on project resources
completion with minimal upheaval
 Staff are made more task oriented through
awareness of project objectives
 Allows for efficient resources use.

Source: Guidelines for the preparation of public Sector Projects (2006)

iii) Project Management Strategy

Project management strategy is the way of setting up a project. It determines the success of the
project. There are essential logics for the strategic model of project management.
 The project is in great danger of encountering serious problems if its objectives, general
strategy, and technology are inadequately considered or poorly developed, or if its design
is not firmly managed in line with its strategic plans;
 The project definition both affects and affected by changes in the external factors (politics,
community views, and economic and geophysical conditions), the availability of financing,
and the project duration;
 The project interaction with those external, financial, and other matters and its
implementations are much harder to manage and quite possibly damaging;
 A project is unfair if the attitudes of the parties essential to its success are hot positive and
supportive;
 Realization of the project as it is defined, developed, built, and tested involves decisions
appropriate to project matrix-functional orientation and balancing the involvement of the
owner, as operator, and the project implementation specialists;
 Establishing checks and balances between the enthusiasm and drive of the project staff and
the proper conservatism of its sponsors;
 Developing team attitudes, with great emphasis put on active communication and
productive conflict; and
 Having the right tools for project planning, control and reporting.

External factors, finance and

Attitude
duration
27 s
  Politics
 Government
 Company
 Community Definition
 Geophysical
 Economic  Objectives
 Strategy
 Financing  Technology
 Cost Benefit  Design

 Duration
 Phasing
 Urgency

Implementation
Organization  Leadership  Planning control, and reporting
Contracting  Team work systems
Conflict management  Quality assurance
 Industrial relations

Fig: Strategic Model for Managing Projects

A project should be defined comprehensively light from its earliest days in terms of its purpose,
ownership, technology, cost duration and phasing, financing, marketing and sales, organization,
energy and raw materials supply, and transportation. A failure to define at the outset may lead to a
poor or disastrous project management.

a) Objectives
The extents to which the project's objectives are clear, not complex, fit with longer-term strategic,
communicated clearly, or are agreed up on compromises the chance of project success.

b) Strategy
A strategy for the attainment of the project objectives should similarly be developed in a
comprehensive manner right from the beginning. This means that at pre-feasibility and feasibility

28
stages, organization and system issues should all be considered, if not elaborated up on technical,
financial, schedule and planning issues.

c) Technology and Design

The development of the design criteria and the technical elements of the project should be handled
with the utmost care. The design standards selected affects both the construction and the operating
characteristics of the plant maintainability and reliability and therefore, should be critical factors in
determining the project's operating characteristics.

Many studies show that technical problems have significant impact on the likely hood of project
over run and thorough risk analysis is therefore essential. The rate of technological change in all
relevant systems and sub systems should be examined and the technology should be tested before
being designed in to production.
No design is ever complete and technology is always progressing. In setting up projects, then, care
should be taken to appraise technological risks, prove new technologies, and validate the -project
design, before feeling the design and moving into implementation.

Activity 5
1. What makes projectized organizations different from others?

2. What do understand by matrix organization?

2.3 Project Management Processes

Project management is a process of leading a team of capable people in planning and implementing
a series of related activities that need to be accomplished on a specific date with a limited budget.
Most of the time development projects take on unexplored territory and assumptions about the list
and evaluation projects. It also requires a close monitoring of the budget and schedule to deliver
the project objectives under the expected quality. Each one of these elements needs to be managed
in a systematic manner with the development of plans to identify the roles and resources needed.
There is also the complexity of development projects that require a different approach and new
ways in managing the limited resources and the increasing demands from all stakeholders. To
manage this complexity the project needs to be de-constructed into manageable, interrelated parts;
or processed by separating the project into different management process. In this regard, the

29
project manager has a better chance to control the outcomes of the project and manage the
challenges that can never be fully predicted during its design. Managing a project requires that
organizations take in to consideration a system approach to manage the different elements of a
project. A systems approach includes a holistic view of a project environment, and an
understanding that the project is made of a series of interacting components working to meet an
objective in order to obtain the desired benefits.

There are nine management processes on a development project. These are designed to manage
different elements of a project because different projects may have different needs from each
process. These processes are the key knowledge areas which a project manager should master. One
of the most critical roles of the project manager is the integration of these nine processes to ensure
that all are properly coordinated. These nine processes are all integrative, that is, they need to be
managed in a combining and coordinating manner to bring these diverse elements into a whole.
The nine management processes occur during the entire project life cycle and each one of them
requires a cyclical approach that consists of planning, doing, checking and learning to ensure
process quality.
The nine project management processes are: Scope Management, Schedule Management, Budget
Management, Quality Management, Team Management, Stakeholder Management, Information
Management, Risk management and Contract Management. Some of the literatures have divided
these processes into two groups:
 Enabling processes
 Facilitating processes

2.3.1 The Enabling Processes

Enabling processes include scope management, schedule management, budget management and
quality management. They are called enabling because they lead to specific objectives of the
project and are the basis to define a project success; on time, under budget, as requested by the
donor and by the quality needed by the beneficiaries.

i) Scope Management:
Scope management includes the processes involved in defining and controlling what is or what is
not included in the project. Scope is the way to describe the boundaries of the project. It defines
what the project will deliver and what it will not. A scope management plan is created to manage

30
any changes to the projects. This is a critical process will help project managers’ to deal with
scope creep, which includes additional work after a project has started without considering the
impact on the resources or schedule of the project. To manage scope creep the project needs to
establish a scope change control plan that will facilitate how, when and why any changes to the
scope are needed. The steps include an assessment of impact to the budget and/or schedule with the
corresponding authorization, incorporation of changes to the project plans and implementation of
the approved change of scope. It is a good practice for the project to define what is not included in
the project, by defining what is out of scope the project stakeholders can have a better
understanding of the project boundaries.

During the scope management process the project manager develops a work breakdown structure
(WBS) which is a management technique of breaking the project down into a hierarchy of work
tasks which represent the work to be done. This schedule then is used as an input to define the time
and budget of the project.

ii) Schedule Management

This process includes the actions required to ensure the timely completion of the project. Schedule
management is the development of a project that contains all project activities. The project
schedule is a communication tool that informs project stakeholders about the status of a project and
gives project team members’ information. The first step in schedule management is estimating the
time required for each activity identified in the WBS. A network diagram is a tool used to
graphically display the activity sequence and dependencies. The project schedule is also used to
assign project staff with their tasks. Monitoring the schedule is an ongoing task, as each activity is
performed the project manager must review the progress made against the schedule baseline and
determine what schedule variance have occurred, the schedule management plan should also
include instructions on how to proceed when schedule variances occur. Schedule reporting includes
techniques to compare the project baseline with the actual dates and uses variance analysis to
determine project progress. If the project is behind schedule then the project must determine the
best options to bring the project back to schedule using methods such as making trade-offs to
compress the schedule or fast tracking which involves doing more activities in parallel.

iii) Budget Management

Budget management processes are required to ensure that the project is completed within the
approved budget. This is the area that receives a lot of scrutiny during and after the project is

31
completed. The project’s ability to manage the financial resources obtained by the organization
and viewed as a measure of the organizations honesty. Inadequate budget management can lead to
misappropriations of funds, improper assignment of expenses and losses that the organization may
have to cover using its limited funds.

Budget management process also include the activities to develop a budget to meet the
requirements of the proposal (in case of a donor funded project) and a budget to meet the
monitoring and accounting needs of the organization. A leading cause for project failure is poor
estimating of the project budget. It is not unusual that during the proposal process the organization
in its rush to meet the deadlines. This can lead to estimates that the project implementation does
not reflect the actual needs of the project.

One of the tools used during budget management process is the application of activity based budget
that helps to closer the approximation to the project real needs. The work breakdown structure
(WBS) is used to estimate the value of each task or activity and then add-up the values until a total
budget is achieved. With this technique the project can determine the cost of each objective and the
total cost of the project.
The main steps in budget management includes the definition of all resource required by the
project from consultancy to material and/or equipment and development of all cost estimate of the
resources including human resources.

Outputs from this process include; a project budget, a budget management plan and a budget
control plan that defines revision to the budget, budget updates and a budget monitoring plan. An
important technique in budget management is the use of Earned Value Analysis (EVA) which is
basically a tracking metric to measure the actual amount of work the project has accomplished.

iv) Quality Management

Quality management is the process to ensure that the project will satisfy the needs of the
beneficiaries. Quality is defined as a commitment to deliver the project outputs and meet the
expectations of the beneficiaries, which means that quality is ultimately defined by the beneficiary.
Quality is not about delivering the most expensive materials or services ensuring the project
outputs are relevant to the needs of the beneficiaries.

32
During the quality management process the project manager develops a quality management plan
which identifies the quality standards that are relevant to the project, some of these standards may
be initially set by the organization, the donor or part of the technical supporters. The second
process in quality management includes quality assurance, which implies the execution of the
quality plan. Quality assurance focuses on prevention measures during the project implementation
phase and checks to see that project staff, consultants or project partners are following the quality
standards. In certain conditions meeting quality standards could mean meeting legal and regulatory
standards set by the local government or the donor agency.

The third process in quality management is quality control; this is where the project measures the
results of the deliverables or outputs and check to see if they meet the quality standards. The final
process is quality improvements is making changes to the quality plan and identifying ways to
improve quality and eliminate causes of unsatisfactory quality discovered during quality control.
Quality management outputs include a quality management plan, quality audit reports, and quality
improvement records.

2.3.2 The Facilitating Processes

The facilitating process area includes team management, stakeholder management, information
management, risk management, and contract management. They are called facilitating because
they assist and make possible for the projects to achieve their objectives.

v) Team Management
Team management helps to identify the skills needed by the project. It ranges from highly
technical to administrative and support functions. Team management includes the processes
required to make the most effective use of the people involved in the project. The first step is
identifying the roles, responsibilities and reporting relationships. The second step is getting the
people that will be assigned to the project. Team formation is the place where the project manager
needs to be heavily involved and participate in all interviews with possible candidates. The success
of the project will depend on the quality and commitment of the team. Once the team has been
assigned to the team the next step is to develop the team. Team development includes hard and soft
skills, hard skills like technical training to learn new methodologies or practices, and soft skills
such as time management, communications, facilitating and negotiating skills. Team management
also includes team evaluation; this should be done continuously on the basis to provide feedback
and opportunities for staff to know about their performance and identify ways to improve it.

33
vi) Stakeholder Management
Stakeholder management is one of the areas that receive the least amount of thought and planning
in development projects. Stakeholders are all the people who have an interest in the project and
they are the most critical element for the success of the project. Stakeholders include donors,
beneficiaries, local government, partner organizations and anyone who will be impacted by the
project.

Stakeholder management includes the processes of stakeholder analysis, planning, and

communication. Stakeholder Analysis is the technique used to identify who are the project
stakeholders, the next step is to identify their level of interest and influence in the project, and
identify their fears and concerns about the project. The final step is to develop a good
understanding of the most important stakeholders and develop a communications strategy and a
stakeholder map that will help manage the relationships.

Failing to identify stakeholders can lead to difficult situations, especially when the project has to
deal with a key stakeholder who has the power to disrupt the project. By identifying early in the
project the needs, concerns and issues of the stakeholders, the project has developed an advantage
that can use to its favour. Insufficient involvement and infrequent communication with
stakeholders is a leading cause of project failure. A project should never try to take stakeholders for
granted, or assume they will all support the project unconditionally; good stakeholder management
helps manage the politics that can often come with development projects. It helps win support for
the projects and eliminates a major source of project stress. The success or failure of the project is
ultimately judged by stakeholders, not project managers.

vii) Information Management

This includes the processes required to ensure timely and appropriate generation, collection,
dissemination, storage, and ultimate disposition of project information. 80% of a project
managers’ time is spent communicating via reports, email, telephone, meetings and presentations.
The first step of the plan is to define the information’s needs of the stakeholders, determine when
they need it, how the information will be distributed and how to evaluate the relevance and
effectiveness of the information.

34
The information management plan contains a list of information that needs to be communicated by
the project. It identifies who will be responsible for collecting, editing and distributing the
information. Donors have specific information needs from the project and provide formats that
describe the content and timing of the information required. Information management also includes
an analysis or evaluation of the effectiveness and relevance of the information distributed. This
step is useful when information is used as a tool to build stakeholder support and build
relationships with beneficiaries, communities and other key stakeholders. A key component of the
information management is the development of a communications plan. The communication plan
is influenced by the type and needs of the project stakeholders.

Communication is not just about sending information, but learning to listen first and then define
what information is missing. The goal of communication is the acceptance of the project’s
message by receiving audience. If the receiver understands the meaning of the message which asks
for action, but fails to act, the goal of communications is not achieved. But if the receiver responds
to the message by taking the appropriate action, the goal of the communication has been achieved.

viii) Risk Management

Risk Management is concerned with identifying, analyzing, and responding to project risk. Risk in
projects is defined as something that may happen and if it does, will have an adverse impact on the
project. There are four stages to risk management planning, these are: risk identification, risk
analysis and quantification, risk response, risk monitoring and control.

Risk identification deals with finding all possible risks that may have impact on the project. It
involves identifying potential risks and documenting their characteristics. The project team
members identify the potential risks using their own knowledge of the project and its environment.

The next step is the quantitative and qualitative analysis of the project risks. Qualitative risk
analysis assesses the importance of the identified risks and develops prioritized lists of these risks
for further analysis. The team assesses the identified risk for its probability of occurring and its
impact on project objectives. Quantitative risk analysis is a way of numerically estimating the
probability that a project will meet its cost and time objectives. It is based on simultaneous
evaluation of the impact of all identified and quantified risks.

35
Risk monitoring and control keeps track of the identified risks, residual risks, and new risks. It also
ensures the execution of risk response plans and evaluates their effectiveness. Risk monitoring and
control continuous throughout the life of a project. The list of project risks changes as the project
matures and new risks develop, or anticipated risks disappear. Risk response planning focuses on
the high risk items evaluated in the qualitative/quantitative risk analysis. It identifies and assigns
staff to take responsibility for each risk event. The project manager and the team identify which
strategy is best for each risk, and then design specific actions to implement that strategy.

ix) Contract Management

Contract Management focuses on the processes required to acquire goods and services needed by
the project from third parties. For most projects the procurement process is usually managed by a
support or administrative function of the organizations. Contract management consists of four
steps; develop the resource plan, implement the plan, review the plan and update the plan. The
resource plan identifies the what, when and how many of the goods and services needed within the
budget limits. It also identifies potential sources and the strategies that the project will use to
procure. Most of the time spent in contract management consist of following the due attentiveness
process required to ensure the project obtains the goods and services under the required
specifications. This is a process of systematically evaluating vendor information, to identify risks
and issues relating to the proposed transaction and then select the offers that meet the requirements
of the solicitation.

Monitoring the plan involves managing the relationship with the supplier, monitoring contract
performance. When all contract obligations have been achieved (or when they have not) the project
will close the contract and, completion and settlement of the contract, resolution of open issues,
final verification, formal acceptance and, if required by the donor, a contract audit.

Contract management will not only identify all the goods and services that the project needs and
acquiring them, but also identify the organizations procedures, donor restrictions and host country
government regulations that apply to them. This process involves deciding how to procure, when to
procure, what to procure and how much to procure. This process has as an objective to ensure the
projects gets what it needs without creating risk to the project and the organizations. Risks can
come in the form of improper or inadequate controls to manage the contract relationships between
the vendor and the organization. There are also risks related to the inappropriate use of donor funds
to purchase the goods and services that do not meet the donor requirements; the purpose is to

36
ensure the goods and services meet the needs of the project and ultimately the needs of the
beneficiaries.

vi) Time Management

Project time management is the process of individuals recording their efforts or time spent
working on a specific task in order to report status. It encompasses the reporting of progress on
projects at both a task and a resource level. Time tracking provides the organization with the
transparency needed to determine who is working on what project, how many hours are
scheduled, and how many have been worked. Unfortunately, organizations that do not have good
resource management processes, specifically time management, are left asking questions like:
 “Who is working on what?”
 “How do I get this project back on schedule?”
 “How much more work will it take to finish?”
The process of time management provides project managers (PMs) with the information they need
to determine why a project is falling behind schedule and enables them to react before it is too
late. It also allows management to evaluate the original work efforts and durations to determine if
they were accurate.

Project time management requires the use of tools and policies in order to create a standard for
monitoring and measuring project work. The tools utilized in this process must be able to capture
and manage time, both by individual and assigned tasks. Most organizations use a combination of
tools to accomplish the tasks. While tools are necessary, they are not sufficient. Effective project
time management requires policies for the processes of creating, changing, recording, and
managing time records. Project time management policies also improve the accuracy of project
data, such as status reporting and staff utilization. One example of a policy is the definition of a
standard work week.

This would include the number of hours per day, and the start and end of the reporting period. If
the organization does not enforce the use of the same policy, the project data will not be usable for
benchmarking or forecasting.

Activity 6
1. Define the following terms in your own words before going into the detail reading
a. Scope management d. Team management

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 b. Budget management e. Risk management
c. Quality management

2.4 Implementing Project Time Management

The specific implementation of good project time management solution depends on the
organization’s culture and processes for managing projects. Here are four general steps to follow
when implementing your project time tracking solution.

1. Decide on the processes and policies that you will establish and enforce. Sometimes this is
dependent on the organization’s cultural norms and its ability to accept change.
2. Determine which tools you have, which ones you want to procure or implement, and how they
will affect the processes you want to follow.
3. Develop and implement a change management strategy to ensure that the organization “buys
in” and supports the new processes for project time management.
4. Follow a project plan and schedule to develop, implement, and rollout your new solution.

2.4.1 Skills and Competences of Project Managers

Project Management can be defined as the implementation of knowledge, skills, methods and
modern techniques or tools to activities in projects in order to satisfy the needs or to overcome the
expectations of all stakeholders. The implementation of principles and techniques of Project
Management has expanded rapidly in many enterprises throughout the world. The modern Project
Manager understands that effective teams have interdependent members. The productivity and
efficiency of an entire team is determined by the coordinated, interactive efforts of all its
members. As a matter of fact, Project Managers must deal with team members or external
negotiators with different perceptions and values, especially critical to the management of
conflicts and crisis. On this account, apart from technical competences, behavioural competences
are also a vital prerequisite in order of the project to be completed successfully. A Project
Manager needs strong communicative and interpersonal skills. To some extent, the deficiency of
some behavioural competences is considered to be a significant obstacle for project success.

Activity 7
1. What are the major steps of project implementation?

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 2. What is expected of project managers?

2.4.2 Behavioural Competences

There can be 15 behavioural competences which are relevant to the profession of project
management and in the context of the project. Their importance may differ depending on the
situation. These behavioural competences are listed and analyzed as follows.
1 Leadership: Leadership refers to patterns of behaviour as well as attitudes about
communication, conflict resolution, criticism, teamwork, decision making and delegation.
2. Engagement Motivation: Engagement with and motivation of the project manager and the
team members reflect the personal buy-in from all individuals associated with the project.
3. Self-control: Self-control or self-management mirrors a systematic and disciplined approach
to deal with daily routine as well as stressful situations.
4. Assertiveness: Assertiveness involves the ability to state views persuasively and
authoritatively taking into consideration their impact on decision making and consequently on
project success.
5. Relaxation: Relaxation is focused on the relief of tension in difficult situations in order to re-
energise individuals.
6. Openness: Openness refers to the cultivation of an open climate among individual so as to
benefit from their input, suggestions, worries and concerns, avoiding discrimination on the
grounds of age, gender, sexual orientation, religion, cultural differences or disability.
7. Creativity: Creativity describes the ability to think and act in original and imaginative ways in
order to achieve project success.
8. Results orientation: Results orientation outlines project team’s attention on key objectives to
obtain the optimum outcome for all the parties involved.
9. Efficiency: Efficiency refers to the efficient allocation and exploitation of all resources
available to the project.
10. Consultation: Consultation is focused on rational decision making and solid arguments
presentation in order to find solutions.
11. Negotiation: Negotiations establish the means by which the involved parties can resolve
disagreements towards a mutually satisfactory solution.
12. Conflict and crisis: Conflict and crisis in a project can be described as a time of acute
difficulty, demanding risk analysis and scenario planning in order to handle these obstacles.
13. Reliability: Reliability reflects the ability to meet time and quality project’s specifications.

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14. Values appreciation: Values appreciation is based on mutual respect and on the
receptiveness of others’ opinions, value judgments and ethical standards.
15. Ethics: Ethics embraces the morally accepted conduct or behaviour representing personal and
professional freedoms as well as boundaries.

2.5 The Logical Framework Approach to Educational Project

The logical framework approach (LFA) was developed in the late 1960’s and has since then been
adopted as a project planning and management tool by most multilateral and bilateral development
agencies. Over time, different agencies have modified the formats, terminology and tools of the
LFA but the basic analytical principles have remained the same.

The LFA is an analytical process and a set of tools that is used to support project planning and
management. It provides a set of interlocking concepts which are used as part of an iterative
process to aid structured and systematic analysis of a project or program idea.

The LFA should be thought of as an ‘aid to conjecture’. It enables information to be analyzed and
organized in a structured way, so that important questions can be asked and weaknesses can be
identified. Decision makers are then also able to make informed decisions based on their improved
understanding of the project rationale, its intended objectives and the means by which objectives
will be achieved.

It is useful to distinguish between the LFA, which is an analytical process (involving stakeholder
analysis, problem analysis, objective setting and strategy selection), and the logical framework
matrix (LFM – or more concisely the log frame) that whilst requiring the further analysis of
objectives, the means of achieving them and the potential risks involved, also provides a
documented version of the analytical process.

One of the main components that have made the log frame become the dominant planning tool in

the development field was the introduction of the workshop approach , which was mainly
conducted by GTZ under the trademark of ZOPP. If used properly, a logframe can be a very
powerful tool that can and should be at the core of program management.

40
The LFM consists of a matrix with four columns and four (or more) rows (see table 1), which
summaries the key elements of a project plan, namely:
 The project’s hierarchy of objectives (project description or intervention logic)
 The key external factors critical to the project’s success (assumptions)
 Monitoring and evaluation methodology of the project’s achievements (indicators and sources
of verification)

Typical Structure of a Log Frame Matrix

Project Description Indicators Source of Assumptions
Verification
Overall objective The How the overall How and when will
project’s contribution to objective is to be the information be
policy or program objectives measured collected, and also by
(impact) quantity, quality, time? whom?
Purpose – Direct benefits to How the purpose is to be As above If the purpose is
the target group measured including achieved, what
quantity, quality, and assumptions must
time? hold true to
achieve the
overall objective?
Results – Tangible products How the results are to be As above If results are
or services delivered by the measured including achieved, what
project Quantity, quality, time? assumptions must
hold true to
achieve the
purpose
Activities – Tasks that have to If activities are
be undertaken to deliver the completed, what
desired results assumptions must
hold true to
deliver the results

The log frame is a simple but potentially powerful participatory tool. If used correctly the log
frame approach can help us to:
 Achieve stakeholder consensus
 Organize conjecture
 Relate activities and investment to expected results
 Set performance indicators

41
 Allocate responsibilities
 Communicate concisely and unambiguously with all key stakeholders
The development of a log frame has two main phases namely: analysis and planning, which are
carried out progressively. The analytical and planning steps are most effectively executed by
conducting a participatory workshop, or – as may be necessary in larger program – a series of
such workshops .The analysis should be carried out as an iterative learning process, rather than as a
simple set of linear ‘steps’. For example, while the stakeholder (or participants) analysis must be
carried out early in the process, it also has to be reviewed and refined as new questions are asked
and new information is provided. In addition to the steps that have been described here, one can
also suggest to identify different alternatives for intervention using an alternative analysis.

A log frame can systematically be developed based on the results of the analytical phase. Once
completed, it is not supposed to be altered as it usually forms the basis of formal agreements
between the funding agencies and the implementing or executing agencies. The log frame then
serves as the basis for a more detailed definition of the activities and responsibilities, which are
drawn up in the form of an operational plan (e.g. plan of operation or work plan). This is a separate
planning document that is usually updated more frequently, that being mostly on a bi-annual or
annual basis

2.5.1 Main Phases and advantages of the Logical Framework Approach

A) Main Phases of the Logical Framework Approach
There are two phases of logical framework approach analysis namely: the planning phase and the
analysis phase.
i) Planning phase: it is concerned with developing logical framework matrix that helps to define
project structure, testing internal logic and risks, and formulating measurable indicators of success.
Beside this it includes activity of scheduling and determining the sequence and dependency of
activities; estimating their duration, and assigning responsibility
ii) Analysis phase:
This phase of logical framework approach deals with Stakeholder analysis (Identifying and
characterizing potential major stakeholders; assessing their capacity); problem analysis (identifying
key problems, constraints and opportunities; determining cause and effect relationships); objective
analysis (developing solutions from the identified problems); and strategy analysis (identifying
different strategies to achieve solutions; selecting the most appropriate strategy).

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B) Advantages of the Logical Framework Approach
Most major donor agencies use logical frames approach for planning, implementation and
evaluation because of the following reasons.
 The logical framework approach draws together all the key components of the planned activity
and presents them in a clear set of statements. This provides a convenient overview that is
useful for busy staff. It can also act as an aid to facilitate the exchange of views amongst all of
those involved.
 It enables the identification and documentation of possible responses to weaknesses that
occurred in past designs, which also entails the lessons learned.
 It is easy to master its application.
 It anticipates implementation and helps to plan out development activities.
 It sets up a framework for monitoring and evaluation, whereby planned and actual results can
be compared.

C) Disadvantages of Log Framework Approach

However, the log frame approach also has limitations as it begins with the identification of
problems (problem analysis), which can have the following consequences
 The process of problem analysis can sometimes produce poor results and if this is the case a
negative focus may permeate the rest of the logical frame procedures, possibly resulting in a
limited vision.
 Commencing with a problem analysis can be difficult in cultures where it is considered to be
inappropriate to openly discuss problems or be critical of others.
 Starting with a problem analysis is often not a suitable strategy in cases where there is a great
deal of uncertainty or where agreement cannot be reached on the main problem.
Activity 8
1. Explain the concept of logical frame work approach

2. What can be the purpose of logical framework approach?

3. Mention some advantages and disadvantages of logical frame work approach in project
preparation?
2.5.2 The Purposes of Logical Framework Approach
LFA, the Logical Framework Approach, is an instrument for objective-oriented planning of
projects. The method may also be used for analysis, assessment, follow-up and evaluation of
projects. What the method is used for depends on the role of its users and their needs.

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LFA is based on the idea that the user (the project owner) assumes the main responsibility for the
planning process. However, assistance with planning may be needed and useful. LFA has the aim
of improving the quality of project operations and can only achieve this if the user has a good grasp
of the method and uses it throughout the entire project cycle. Therefore, it is useful to start
cooperation by integrating information on LFA in the dialogue between the parties concerned.
Most steps in the LFA method are often used during participatory workshops.

The purpose of logical framework approach is to provide guidance for the cooperation partners in
project planning procedures. It contains a description of the theory of LFA, which summarizes
approaches and principles, the different planning steps and how they are implemented, and the
different roles in a planning procedure.

What is the purpose of LFA?

LFA is used to:
1. Identify problems and needs in a certain sector of society
2. Facilitate selecting and setting priorities between projects
3. Plan and implement development projects effectively
4. Follow-up and evaluate development projects.
What the method is used for depends on the role of and the needs of its users. LFA was developed
during the 1960s and has been widely spread all over the world since the 1970s. Today, it is used
by private companies, municipalities and by all most all international development organizations,
when assessing, and making follow-ups and evaluations of projects/programs.

Multilateral organizations like the UN, GTZ (Germany), CIDA (Canadian), USAID, NORAD
(Norwegian) and SIDA (Sweden) encourage their counterparts to use the LFA method when
planning, implementing and evaluating a process of change, a project/program. The international
donor agencies use the method for assessing, following-up and evaluating projects and programs,
while implementing parties use the method for planning, implementing and following-up
projects/programs. Therefore, LFA is:
 An instrument for logical analysis and structured thinking in project planning
 A framework, a battery of questions which, if they are used in a uniform way, provide a
structure for the dialogue between different stakeholders in a project.
 A planning instrument, which encompasses the different elements in a process of change
(problems, objectives, stakeholders, plan for implementation etc).The project plan may be

44
 summarized in a LFA matrix, the log frame,
 An instrument to create participation/accountability/ownership

Objective-oriented planning means that the point of departure of the planning process is the
problem analysis, which leads to the objectives and finally makes it possible to choose the relevant
activities. Hence, before making a plan of activities, an analysis of the problems and objectives is
necessary.

The LFA is not a control instrument and does not replace different controlling systems such as
environmental assessment studies, gender analysis or financial control systems. The LFA method
should be used during all phases of a project cycle (i.e. during preparation, implementation and
evaluation). When the LFA analysis has been performed, the plans made with the aid of the
analysis should be used and followed-up actively at each project meeting. Normally, it is necessary
to make certain adjustments throughout the project implementation phase. The LFA method must
be used with flexibility and with a great sense of feeling of what is required in each situation.

The LFA is a suitable tool to use for capacity development, “the effort to facilitate for individuals,
groups or organizations to better identify and deal with development challenges” by facilitating a
discussion among stakeholders to identify obstacles to change. During the problem analysis the
needs and approaches for different forms of capacity development can be recognized and made
transparent. The problem analysis shows whether professional knowledge is needed among the
individuals involved, or whether it is necessary to use a broader approach – for example to
strengthen organizations, or whether there is a need to improve institutional frameworks
(legislation or policies). One basic idea in the LFA method is that one should not start talking about
what one wants to do (the activities), but about the problem that needs to be solved and about what
one wants to achieve/the objectives.
What is regarded as Success in a Project?
The LFA method has been developed from experience gained of what makes projects successes or
failures. Evaluations of projects have shown that certain factors are very significant for achieving
good goal fulfilment. The factors of success for good goal fulfilment most frequently mentioned in
evaluations of projects/programs include:
 The commitment of all parties involved the project owner’s sense of ownership and
responsibility,
 definite roles for all parties involved (division of work & responsibilities),

45
 Realism, realistic objectives, specific and clear goal fulfilment ,
 Specific links between what is done within the framework of the project (the activities) and
what will be achieved (the objectives),
 Capacity, the project group’s ability to deal with risks,
 Flexibility to adjust processes if conditions change,
 Projects in which the users (beneficiaries) have participated in and exerted an influence on the
planning of the project.

Activity 9

1. What can be the purpose of logical framework approach?

2. Mention some advantages and disadvantages of logical frame work approach in project
preparation?

2.5.3 The Nine Steps in the Logical Framework Approach

The LFA method contains nine different steps:
1. Analysis of the project’s Context;
2. Stakeholder Analyze;
3. Problem Analysis/Situation analyses;
4. Objectives Analysis;
5. Plans of Activities;
6. Resource Planning;
7. Indicators/Measurements of Objectives;
8. Risk Analyses and Risk Management; and
9. Analyses of the Assumptions
Different stakeholders/parties have different roles and are needed for different parts of the planning
procedure. There is an interrelationship between the different steps. The project groups may need
to go back and revise one of the earlier steps, such as the objective analysis, after having received
more information through the later steps in the procedure. For example, when making the risk
analysis, new activities may have to be included in the plan of activities.
Some LFA guidelines have another number of steps in the method. In such cases the guidelines
have, for example, integrated the plan of resources (step 6) with the plan of activity (step 5), and/or
the analysis of the assumptions (step 9) with the risk analysis (step 8). It is clearer for the reader to
have 9 separate steps, as used in this guideline. It is important to adapt the framework of the

46
analysis, the different steps, to each situation and to be flexible. All the steps shall not be gone
through by all the different categories of stakeholders. Further, it is it not always necessary that all
the steps have to be completed before certain decisions are made. For example, it can be difficult to
draw up an activity plan initially for a program of sector support. However, it is important that the
relevant participant make an analysis of stakeholders, problems and objectives for the sector at an
early stage when planning major programs such as programs of sector development.

Step 1: Context analysis: it refers to the projects environment/background information. All

projects/processes of change are part of a wider context. The project is influenced continuously by
different economic, social and political processes taking place in society. It is essential that the
project group has a clear picture of the context when planning the project. It is therefore necessary
to make an initial overall “scanning” of the project’s context (an exhaustive analysis of risks and
assumptions is made later, in steps 8–9).This step is often performed by making a study, for
example of a sector or a region etc, and/or by making a SWOT analysis (strengths, weaknesses,
opportunities and threats). Making a SWOT analysis of, for example, an organization would
preferably be done in an initial stage of a participatory project planning workshop. The result
would give a broad idea of where the organization stands. In the project document, the context
analysis is presented under the chapter “Background” or “Information on the sector”.

Avoid making additional studies, if they are not necessary! Very suitable updated information on a
sector, a region, stakeholders etc may be available on the Internet or in other studies provided by
ministries or from donor organizations. The background information should be gathered as close to
the “owner of the problem” as possible. When analyzing the context of a project Ask questions!
Relevant information needs to be put together in order to obtain good background information on
the project in its entirety.

Step 2: Stakeholder Analysis/Participation Analysis: is concerned with those who should be

involved in planning and implementing the project. Stakeholders are those who are influenced by
and exert an influence on those things that take place in the project directly or indirectly. They can
be individuals or organizations and they can be both for and against a change. SWOT analysis was
invented by an American author, Philip Kotler, in the1960s. Originally it was intended to be a
marketing management tool for analyzing the possibilities of marketing new products. However,
during the last few years it has also been used frequently for analyzing organizations in
development projects. Kotler’s section “Marketing Management –analysis, planning and

47
control” was published in 1967. New editions have been published on several occasions.

Different stakeholders have different opportunities to exert an influence on a project. Stakeholders

can be divided up into four main groups:
1. Beneficiaries/Target group 3. Decision-makers
2. Implementers 4. Financier

Some stakeholders may belong to several of the above-mentioned groups. During the project
planning process, information should be obtained from all the different stakeholder groups. All of
them have important information to give to the future project group. For the project group it is
crucial to structure all the reasons/causes of problems in order to find sustainable solutions. This
can only be done with the aid of the information gathered from local stakeholders.
When making a stakeholder analysis, think broadly of those who are influenced by or exert an
influence on the activities that take place in the sector! Do not forget to include the information
from important stakeholders, such as the target group, when planning a project. The different
stakeholders’ combined knowledge about the situation is a key to the identification of appropriate
solutions. The stakeholder analysis should be made by local personnel.

Step 3: Problem /Situation Analysis: an analysis of the problem that shall be solved by the
project and the reasons for its existence prior to prescribing a relevant medicine or cure, a doctor
needs to meet the patient and find out why, the reasons for, the person is in pain – a pill might not
cure the patient for good. A number of projects are started in which the solution is given, without
an analysis being made of the focal problem and its causes and effects. The causes are analyzed in
order to find the reasons for the focal problem and, thereby, the solutions/the relevant activities.
The effects demonstrate the arguments (the needs) for implementing the change/the project. A
complex problem is easier to deal with if its causes and effects are thoroughly analyzed. The causes
could be divided into several groups of problems or clusters. Sometimes this has the effect that, in
the end, the project is divided into different projects. If the project is to be manageable, limitations
must be imposed and priorities set, see assumptions (step 9).

The priorities are based on relevance, needs, mandate and resources. Therefore, it is necessary to
get a total picture of the situation by making a complete problem analysis. The basic questions that
a problem analysis should answer can be as follows:

48
  What is the main/focal problem that shall be solved with the aid of the project? (Why are a
change/a project needed?)
 What are the causes of this problem? (Why does it exist?)
 What effects does the problem have? (Why is it important to solve the problem?)
 Who is affected by the problem and who “owns” the problem?

A problem analysis is sometimes made by drawing a so-called problem tree during a participatory
workshop. The problem analysis is made by having the stakeholders writing down the problems
(causes and effects), which are related to the subject. This procedure makes it possible to clearly
visualize the causes of the focal problem and its effects and to find out how different problems are
related to each other. As mentioned above, the causes of the problem shall be treated by the
activities, which are implemented within the framework of the project. The effects are handled
automatically by treating the causes of the focal problem. Hence, no separate activities are needed
for handling the effects.

When the project group later starts to plan the activities, they should try to eliminate as many
causes as possible by activities. It is important to find the relevant activities in order to eliminate
the causes of the problem. Often several activities are needed in order to eliminate one problem,
one cause. The possibilities of solving the focal problems are higher the further down in the tree
the causes are tackled by activities. In other words, the further down towards the bottom of the
tree, in the roots, we tackle the problems, the better the possibilities are of solving the focal
problem in a sustainable way and hence, the more relevant the project plan becomes. A problem
analysis should preferably be made during a workshop to which different stakeholders are invited.

When establishing relationships between causes and effects, avoid taking up/writing “lack of ”,
for example lack of funds, as a problem. These types of statements are called absent solutions.
They do not describe the current negative situation. It is not the lack of funds in itself that is the
problem. It is rather what the lack of funds leads to that is the problem. Another example of an
absent solution is “lack of pesticides in agriculture”.
Replace this by the problem “the seeds are being attacked by vermin”. Otherwise there is a risk
that there will be a tendency to see just one solution to the problem. In the above-mentioned case,
the acquisition of pesticides would then be the solution to the problem. The problem would not be
opened up to alternative solutions with statements beginning “lack of...” One should always
extend one’s thinking to find solutions. There might be several different solutions.

49
Another mistake often experienced during problem analysis is “inadequate problem
specification”, when a problem is specified in insufficient detail so that the true nature of the
problem is not described. A good example is “poor management”. This problem needs to be
broken down in order to understand what the real problem is. The management problem might
include poor financial control, poor administrative skills, poor planning of human resources or
weak IT strategy etc. During the workshop, ensure that the stakeholders write one problem per note
– a problem and not a solution – and that it is clear and understandable to everybody. Without a
problem analysis it will be very complicated, if possible at all, to find the right sustainable
solutions (activities) to solve a problem. The problem analysis has to be made by the relevant
stakeholders, including the owners of the problem, the people who know the situation, not by
consultants or financing agencies.

Step 4: Objective Analysis: the picture of the future situation When the stakeholders have
identified the problems that the project shall contribute to eliminating, it is time to develop the
objectives, to make an objective tree/analysis. If care has been taken on the problem analysis, the
formulation of objectives shall not result in any difficulties. The objective analysis is the positive
reverse image of the problem analysis.
During the objectives analysis, the project group should set three levels of objectives namely:
overall objectives, project purpose and results.

When arranging a workshop, the problems are written on yellow cards and made into a problem
tree, while the objectives are written on green cards. The colours of the cards make it easier to
clearly visualize the analysis. The objectives should answer the following questions:
 What shall the project contribute to achieving in the long run? Why is the project important?
What are the long-term policy objectives to which the project will contribute? (Overall
Objectives)
 What is the project-owner’s picture of the ideal situation? It is expected that the purpose will
be achieved as a direct effect of the project’s results. It clarifies why the target group needs the
project. What is the focus of this project? (Project Purpose)
 Which different components/sub-goals is needed in order to achieve the purpose and the
overall objectives? (Results)
Hence, the objectives are explanations of what the project is going to achieve in the short, medium
and in the long run. A more comprehensive explanation of the three levels of objectives is given

50
below:

i) Goal/Overall Objectives/Development Objectives

The highest level of objectives is the overall objective, which states the direction the project shall
take, i.e. the changes which will take place in the long term partly as a result of the project. One
example of an overall objective is increased incomes for small scale farmers or higher completion
rates for girls in primary education, improved social welfare or poverty reduction. It cannot be
expected that this goal will be achieved until possibly some 5–10 years after the project has ended.
The goals constitute the long-term vision for the project owner.
Moreover, external factors outside the scope of the project are important for the fulfilment of the
overall objectives. Hence, this objective level is often difficult to measure. It is difficult to assess
how much one particular project has had an influence on, for example, improvements in welfare in
a society. Therefore, the use of indicators is often avoided at the overall objective level. Overall
objectives/Development objectives/goals: State the long-term social and/or economic (impact)
benefits to which the project will contribute, and describe why the project is important for the
beneficiaries and for the society.
ii) The Project Purpose/Immediate Objectives
The project purpose is the very reason why the project is needed. The purpose describes the
situation which is expected to prevail if the project delivers the expected results, and the
assumptions made of the external factors, which must act together with the project. The project
purpose and the results shall be: specific; measurable; approved by the project owner and the
project group; realistic; and time-bound in which the abbreviation “SMART” often used to
express the purposes of a project. The project purpose is the objective that should have been
achieved directly or one to three years after the end of the project. If it is achieved, the causes of
the problem will have been eliminated and, hence, the focal problem itself will disappear.
Example: The purpose of Universal Primary Education (UPE) project can, for example, be:
“ensure access for every school-age children by 2015”. Therefore, the immediate objective of the
project helps to state the expected outcomes, or direct effects, of the project. This is the benefit
which the beneficiaries derive from the project. The purpose states why the project is needed by the
beneficiaries.
iii) Results/Outputs:
The outputs are the direct results of the activities that are implemented within the framework of the
project. They are a description of the value of the services/products produced by the project within
the framework of what the project stakeholders can guarantee. Outputs are actual, tangible results

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that are a direct consequence of the project’s activities. Several activities are often necessary in
order to reach one result/output. Results, as well as the project purpose, should be “SMART”
(Specific, Measurable, Approved; Realistic and Time-Bound).
Step 5: Plan of Activities: means to achieve the objectives means to eliminate the causes of the
focal problem Activities constitute the means to achieve the goals. Hence, they are not the goals of
the project themselves. One common mistake made in project documents is to focus attention on
the activities of the project and to confuse them with the goals. It is not possible to draw up a
relevant activity plan until a problem analysis and an objective analysis have been made. If the
activities are planned and implemented in a suitable way, the results will be achieved. This, in turn,
will lead to the achievement of the project purpose and, in the long term, will also influence the
overall objectives. The activities shall tackle the causes/reasons of the focal or core problem(s), the
roots of the tree. The activities are the work that is done by those involved in the project. Examples
of activities are:
 A three-day workshop on universal primary education (UPE) plan preparation for 12
Woreda Education Officers responsible for forma education program;
 Elaboration of school material in mathematics for primary schools students;
 Construction of a primary health care clinic;
 The plan of activities is drawn up by the project group with guidance from the problem
analysis made by the stakeholders and based on the objective analysis. The project group
has usually obtained advice for activities from the participants at the initial planning
workshop. N.B. It will be necessary to add activities to the plan of activities when the
project group has made the risk management plan.
Step 6: Plan of Resources, inputs in order to implement the activities: Before the project starts,
the project group needs to make a detailed plan of the resources which are needed to implement the
project. The project plan, including the plan of resources, is formulated in the scope of work, an
appendix to a contract. Resources provided for implementing activities within the framework of the
project can consist of: technical expertise (local and/or foreign expertise: what kind of know-how
is needed to support the development of capacity); equipment /spare parts /training in the use of the
equipment; Premises; Funds; and time.

Financing for the project can be provided in different forms, for example grants, funds or credits. It
can sometimes be the case that the resources provided by the local cooperation partner are not
described in the contract, for example the financing of local costs, local staff, premises etc. An
unspecified division of responsibilities may create problems during the implementation of the

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project. The budget, particularly in respect of cost-sharing should also preferably be decided before
the start of the project and be clearly stated in the contract. Time is an important resource, often
planned too optimistically. If equipment is needed, the equipment has to be adapted to local
conditions and training in the use of the equipment should be integrated as an activity in the project
plan.
Step 7: Indicators: are measurements of results. They are used to answer questions like; is the
project achieving its goals? To answer this question, the project group needs to identify indicators,
which make it possible to measure the progress of the project at different levels. Establishing a
suitable indicator for an objective is a way of ensuring that an objective becomes specific, realistic
and tangible. There should be at least as many indicators as there are results and some for the
project purpose. An indicator may be, for example, a statistical source – if it is possible to see
from the statistics that a change has occurred as a result of the project. It is important to think about
the following when establishing indicators of the fulfilment of objectives and results:
 What shall the project achieve in the terms of quality?
 What shall the project achieve in terms of quantity?
 During which period of time? When shall the fulfilment of objectives have taken place?
 Which group is the target group?
 Which geographical region or sector is affected by the project?
The process of setting up indicators reveals whether the objectives are non-specific and
unrealistic. The project owner, the cooperation partner, is the stakeholder that can best establish
indicators. Try to find several indicators to measure each result and the project purpose and try
to find easy understandable indicators. An indicator shall be objectively verifiable. In other
words, anybody shall be able to measure the results. It shall be clear where data for
measurement purposes can be found (state sources of verification in the project document).

In order to see if the situation has improved as a result of the project, it is necessary to know the
basic facts about the situation prior to project start. Hence, it may be necessary to make a so-
called baseline study. What is the picture before we start, what values exist? Without a study of
this type, it is difficult to measure the results after the project has been implemented. There are
indicators for all types of projects, even HR/D (Human Rights and Democracy) projects, for
example:
 Increased membership of political parties
 Greater access to media
 Increase in percentage of voters registered

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  Change in population believing in equal rights etc.
Some of these proposed indicators need to be evaluated through interviews. Indicators for HR/D
projects need to capture the complexity of the process. Hence it is advised that participatory
indicators should be used.
Step 8: Risk Analysis and Risk Management: analysis of the risks affecting the project’s
objectives and plans to avoid these risks. The persons/the project group that are responsible for the
project must identify, analyze and assess different factors, which, in different ways, affect the
possibilities available to the project to achieve its objectives. An analysis of possible critical
external and internal factors /risks gives us an opportunity to assess the conditions that the project
is working under. In the risk analysis it can be the case that the so-called “killing factors” arise,
i.e. factors that make goal fulfilment in a project impossible, for example political developments in
the country. After having made a risk analysis, project management has to make a risk
management plan, i.e. a plan of how to avoid the potential risks. Include risk management in the
project plan, as activities to overcome risks.

The external factors/risks: These are risks that exist outside the framework of the project (for
example political developments, natural disasters, corruption etc.) It is most often the case that the
project group cannot exert an influence on these risks. If they are triggered off, these external risks
can lead to difficulties in fulfilling the objectives of the project, some of them might even be
“killing factors”
Internal factors/risks: These are risks of the type that are possible for the project to exercise control
over issues of the project. They can be practical matters such as delays in deliveries, personnel
turnover etc. In most cases project management can minimize the effects of these internal risks.
The project group should preferably take the opportunity to let the stakeholders make the first risk
analysis during an initial workshop during project launching.

However, the project group must make a revised risk analysis when the detailed project plan has
been finalized, looking at each result set and determining the risks of not achieving the result. This
usually has the effect that new activities (in order to avoid risks) need to be included in the project
plan. Hence, a risk management plan is made, a plan of how to deal with the risks.

Step 9: Assumptions- factors important for goal fulfilment, but outside the project’s scope:
A project does not exist in a social, economic and political vacuum. For its success it is dependent
on norms, laws, ordinances, policies, political will and commitment, allocation of funds etc. This is

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what is normally referred to as the institutional situation in a country. It is not always possible for
the project group to exert an influence on this situation and it creates assumptions for the project,
which can be favourable or not so favourable. These assumptions should be analyzed through the
problem analysis before the project is started. A project’s priorities should be set with reference to
resources, mandate, and limits and with reference to what the project group needs to rely
on/assume that other parties/projects are handling.

Example of assumptions: Provided that a new traffic law is approved by the Parliament, the
number of road accidents may decrease by x%. The project group assumes that the law will be
approved. However, it has no power to ensure that the law is approved or not.
Assumptions are set at the different levels in the objective hierarchy. An assumption for achieving
a project purpose may be, for example, a long- lasting stable political situation. Project
management is aware that the political situation is important for the project’s objective fulfilment.

However, it is unable to exert an influence on the political situation. It may only assume that a
stable political situation prevails, if it is a reason- able assumption. If it is not a reasonable
assumption, it might be a risk, and the project group has to analyze whether a change in the
political situation is a killing risk/factor. If the project group considers the political situation to be a
killing factor, that it is most possible that a change will occur on the political scene, it might be
necessary to postpone the implementation of the project.

If an assumption is found to be a risk, i.e. that nobody else will deal with this factor, but the project
group knows that it is a very important factor in order to achieve the results, then the project group
needs to consider if it should include activities dealing with this risk (in order to avoid the risk
occurring) in the plan of activities. Assumptions are included in the project document for fulfilment
of each objective level. The project group is aware that the assumptions are important for
fulfilment of the objectives. However, it is not possible to include all the possible scenarios in the
project.

Assumptions are the causes of the focal problem which are important for goal fulfilment, but which
the project group does not have direct control over. However, the project group assumes that others
are dealing with these causes. The project group has to look at the causes in the problem analysis
and consider which causes that may not be possible for them to handle. These causes are
nevertheless important for goal fulfilment. The assumptions are set with regard to the resources and

55
the mandate the project group has, and with regard to what the project group knows that others are
handling. The project group should state the assumptions in the project proposal. The assumptions
have to be realistic; otherwise they are considered to be risks and should be handled in the risk
management plan.

Activity 10
1. Before you go for the detail reading, list your assumptions about the nine steps of logical
framework approach in project preparation

2. Why it is necessary to analysis about project stakeholders?

3. What are the methods of logical framework approach in project preparation?

2.5.4 Is it Necessary to Have Different Steps in Logical Framework Approach?

The logical framework analysis (LFA) helps to ensure the relevance, feasibility and sustainability
of a project.
a) Relevance: With the assistance of steps 1–4(context analysis, problem analysis, stakeholder
analysis and objective analysis) we can make sure that we are doing the right thing by
involving the relevant stakeholders dealing with the right problems and establishing the correct
objectives, which enables us to select the right activities at a later stage. These steps ensure that
the project idea is relevant in a problem-solving perspective.

b) Feasibility: With the assistance of steps 5–7(activity plan, resource plann, indicators of
objective fulfilment) we can see that we are doing things in the right way, that the program is
feasible, with the right activities and with sufficient resources (personnel, equipment, budget,
time) to solve the problem.

c) Sustainability: With the aid of steps 8–9 (analysis of risks and assumptions) we can assess
whether the project can continue by itself, without external support or not, and that the project
purpose is sustainable in the long-term.

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2.5.5 Roles and Responsibilities when Making a LFA Analysis
It is very important to observe that the right stakeholders perform the right steps in the planning
process/analysis of the project. For example, it is the project owner, that the beneficiaries, the
implementers and the decision-makers etc, of the local stakeholders in the partner country that
primarily shall make stakeholder analysis; problem analysis; objectives analysis; risk analysis; and
the analysis of the assumptions.

It is neither the consultant nor the financier who “owns the problem” which shall be solved.
These parties are not sufficiently well informed, and hence cannot and should not perform these
steps. However, the financing agencies and/or consultants may assist in the project planning
process by, for instance, providing expertise in the LFA method and suggesting solutions to the
problem (plan of activities and plan of resources).

Involving the wrong parties, or not involving different stakeholders in the different steps in the
project planning process, is a common mistake made in project planning. This has the consequence
that cause-and-effect relationships are incorrectly analyzed, which leads to a situation in which
incorrect activities are implemented to solve the “wrong” problems. The effect will be that the
results/objectives are never achieved.

Giving the wrong treatment to a patient may have fatal effects. Sincere cooperation and a correct
division of roles in the planning process prior to implementation increase the likelihood of smooth
implementation and the degree of local ownership and readiness to work towards sustainable
results.
The division of roles and responsibilities can vary due to the character of the project and the
availability of skilled officers, but the main principle is that the local cooperation partner shall bear
the main responsibility for both planning and implementation to as great an extent as possible

Activity 11
1. Explain the necessary elements to be included in the steps of logical frame work approach
2. Who is responsible for the preparation and implementation of logical framework approach?

Unit Summary
Project management is a branch of management used to handle project activities. It involves
planning, organizing, leading, and controlling projectized activities in a sense of global thinking,
goal-oriented, flexibility, and uncertainty. Project management has distinct feature that attract more

57
management attention. It is used to maintain integrity between different projects. The projects’
functional structure involves facilitation of supervision. It has both advantages and disadvantages.
As an advantage, it involves the creation of separate and self-contained organization.

Matrix organization is characterized by simultaneous presence of both project and functional

components that are interdependent in the execution of the project. It has different dimensions and
functional responsibilities.
Project management has its own strategies such as setting objectives, choosing strategies and
designing the use of technologies. There are nine project management processes such as scope
management, schedule management, budget management, quality management, team management,
stakeholder management, information management, risk management and contact management. It
also has different behavioural components and phases of implementation. There are nine steps in
logical framework approach which are determined by the relevance, feasibility, and sustainability
of the project

Review Questions
PART I: TRUE or FALSE items
Write TRUE if the statement is true and FALSE if it is not true
_____1. Project management is a traditional activity that focuses on maintaining efficiency.
_____2. An autonomous project management minimizes the effect of conflicting environment
_____3. Functional projects are structured in terms of the benefits of economic scale
_____4. Effective project implementation needs to be free from any political influence
_____5. The logical framework approach to planning includes all activities from planning step to
evaluation of the effect of the project.

PART II: MULTIPLE CHOICE Items

Choose the best answer from the given alternatives
_____1. One of the following is not among the culture of project management
A) Development of global thinking
B) The focus on goal achievement
C) Admitting the inevitability of changes
D) All of the above
____2. One of the following is among the project matrix organization. Which one is it?

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 A) the matrix project plan is flexible in nature
B) the matrix project plan increases potential conflicts between managers
C) the matrix project plan focuses on efficient utilization of resources
D) none of the above
_____3. Project management may face problem if ________________________
A) its objectives are not clear
B) it is poorly financed
C) there is change in external environment
D) all of the above
_____4. One of the following is not among enabling process of project management
A) scope management C) budget management
B) time management D) none of the above
_____5. One of the following is not among behavioural competence used to settle team work
A) leadership C) assertiveness
B) self control D) openness

UNIT THREE
Educational Project Cycle and its Successive Stages
Unit Introduction

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Unit three of the module deals with the stage of project management. Issues like project cycle,
project priorities and feasibility studies are dully emphasized. In addition to this, environmental
analysis, social analysis, and economic analysis of a project have got due attention. Important
elements used to justify and design project the methods used to identify educational project are also
included in this part of the module. Project negotiation and evaluation as well as components of
project proposal are also entertained in this unit.

Unit Objectives
After successful completion of the unit, you will be able to:
 Employ the successive stages of project development;
 Explain the similarities and differences between project identification and project
preparation;
 Identify the importance of project appraisal
 Explain the importance of project negotiation in a process of project development
 Prioritize project works
 Conduct feasibility studies on project works
 Explain the importance of project market analysis in project development
 Forecast the demands of stakeholders
 Undertake environmental analysis in project work
 Employ the skills of estimating cost analysis

Pre-reading Activity
1. assume the necessary stages needed for new project development for an organization

2. Explain the similarities and differences between project preparation, project

implementation and project evaluation

3.1 The Successive Stages of Educational Project

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The life of a project is usually divided into several consecutive stages. This sequence is often
known as the project cycle, because each stage is the logical successor of the preceding one,
while the last stage prepares the first of the next cycle.
i) Identification iv) Negotiations
ii) Preparation v) Implementation
iii) Appraisal vi) Retrospective Evaluation
These stages are theoretically seen as consecutive stages, where each stage is the logical successor
of the proceeding one. In practice the distinctions between the various stages are not always
sharply drawn. In some projects, the first two or three stages are more or less merged, and in others
there is no retrospective evaluation. On the other hand, projects financed by international aid
sources generally follow the cycle quite closely. Despite these variations, it can be stated that, the
broad outline of the cycle is followed by most education projects. We now briefly review the
different stages, examining the purpose, the agents and the process of each.

In some projects, the first three stages of the cycle, those occurring before project execution, have
two complementary objectives: first, to select high priority projects, likely to contribute
substantially to the country's development and second, to study them in detail so as to be sure of
their feasibility, and prepare their implementation. At the end of this first part of the cycle, some
projects are chosen and included in the national investment budget, while others are eliminated.

This selection is justified by the fact that the resources available for investment over a given time-
period — for example, the duration of the plan — are limited, and therefore not all proposed
projects can be chosen. The proper management of national resources requires keeping only the
best projects, i.e., those that will contribute most usefully to national development and are the most
liable to succeed. Too often in the past, considerable human and financial resources have been
invested in enterprises that were not in line with national needs, were poorly designed from the
technical point of view, unrealistic, or too costly, leading almost inevitably to mediocre results.
Selection is intended as protection against these risks of failure.

3.1.1 Identification

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The identification step involves selecting one or more project ideas with high priority use of the
countries resources to achieve developmental objectives, and then developing project profiles that
describes their objectives, strategy and major characteristics. It basically covers project ideas
generation, development of project profile, preliminary screening of ideas, and in some cases
undertaking pre-feasibility study. The output of the pre-feasibility study is project identification
brief.

This early selection means that the long and expensive stage of preparation can be reserved for
those projects whose priority is justified. Thus the main function of identification is to justify the
priority of identified projects. To justify an education project is to show that it has high priority, in
that it is likely to substantially improve the performance of education. It is also to show that the
project is in conformity with the national development and education policies. The responsibility
for identifying education projects usually falls on the Ministry of Education, and in particular the
unit entrusted with planning. Given the scope and the complexity of the sector, it is often
necessary, before identifying a project, to conduct a study of the education sector as a whole, in
order to identify major priorities or areas of potential projects. The project identification report
often serves as the basis for initial discussions with expected funding sources, with a view to
securing their preliminary agreement before undertaking preparation.

Project preparation has two main purposes: (1) studying in detail all the aspects of the project, so as
to ensure that it is reasonably feasible; (2) planning its execution, so that it can start without delays.
As in the case of identification, responsibility for the preparation of education projects generally
falls on the Ministry of Education concerned.

3.1.2 Project preparation

The preparation stage has two major elements namely: (I) project formulation, and (2) project
proposal formulation. The first element is the feasibility study and the second element is
preparation of a project document or proposal with all the annexes. The project needs to be
designed, by considering alternatives, technical, economic and financial feasibility and other
aspects of the project. Project preparation takes the project that has passed the identification test
and studies in detail the aspects of the project so as to ensure that it is reasonably feasible and plan
its implementation. Contrary to identification, project preparation is a long and costly operation.
The project preparation report and its attachments (pre-feasibility study, architecture documents,
call for tender documents, etc) are submitted to the financing bodies for approval and investment

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decision. Appraisal is a more or less in-depth study of the project by the external agency or donors
to assess the overall soundness of the project, and its readiness for implementation.

Contrary to identification, project preparation is a long and costly operation. It studies all the
aspects (technical, institutional, socio-political, economic and financial) that have a bearing on the
project's success. It details the necessary investment items, quantifying their costs, as well as the
additional recurrent expenditure generated by the project. It envisages the organization to be
provided and the measures to be taken for project execution, as well as the subsequent functioning
of the institutions concerned. Preparation often requires carrying out pre-investment studies, with a
view to selecting the most appropriate technical or institutional approaches. All this takes time, but
this is far from wasted if the work is well done. Experience has shown, in fact, that detailed
preparation is one of the keys to project success, and can result in significant savings on the
required outlay.

The project preparation report and its attachments (pre-investment studies, architect's drawings,
and call for tender documents) are transmitted to the authorities responsible for financing, and are
studied by the competent services before the decision to approve or reject the project is taken.

Activity 1
1. What is the relationship between project identification and preparation?

3.1.3 Project appraisal

Like identification and preparation, appraisal has the goal of ensuring that the project is justified
and feasible. In addition, it must verify that the project has been sufficiently well prepared for
implementation to start as soon as the project has been approved. Coming under the responsibility
of financial decision-makers, in the appraisal of an education project particular importance is
attached to its integration with the overall set of national activities, as well as to its economic and
financial aspects. Thus. the working group entrusted with appraising a project has to review in
minute detail the various issues already examined during the preceding stages.

The scope and the degree of formality of the appraisal process depend on the human and financial
resources devoted to it. But the criteria it uses remain logically the same. Appraisal is therefore the
more or less in-depth study of the project by the government departments or organizations that are

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to arrange for financing (Ministry of Planning or of Finance, external aid sources) before approval
is given.

3.1.4 Project Negotiation

Negotiation mainly involves reaching out to project financiers and reaching on agreements on
project’s objectives, design, contents and modes of financing. Though it seems to start at the end of
the appraisal stage, negotiation may start as early as towards the middle or end of the identification
step, and may continue throughout the preparation and appraisal steps. The appraisal steps may end
with a significant agreement on approved project document and commitment to finance it, but even
after this at the implementation stage some sort of negotiation or renegotiation may happen, as
needed.

The appraisal stage usually closes with negotiations between representatives of the Ministry of
Education and of the financial decision-makers. The negotiations result in an agreement as to the
project's objectives, design, content and mode of financing. The Ministry of Education
representatives obviously have a better chance of having their point of view accepted if the project
documentation is well prepared, and if they are perfectly familiar with the different aspects.

3.1.4.1 The 7 Elements theory of negotiation

the 7 Elements theory of negotiation briefly outline the purpose and a summary of the
theory, its applications , and the definitions of each of the Elements. Each time you
negotiate, you have to make choices about what to say and do to achieve your purpose:
influencing someone else’s behaviour. How do you make those choices? Most people act on
the basis of instinct (i.e. without really thinking), or on the basis of what seems to have
worked for them or for others in the past. In either case, by acting without understanding
what’s going on in the negotiation you run the risk of jeopardizing your success. You
need a sound theory for negotiation that can support you in two critical ways:
 by helping you understand what’s going on, and what your choices are (i.e. a descriptive
theory)
 by guiding your choices about how to prepare for and conduct the negotiation (i.e. a
theory with prescriptive or advisory applications).
Such a theory needs to be specific enough to be helpful and, at the same time,
comprehensive and flexible enough to cover the range of negotiations that you face. It
needs to apply to negotiations with family and friends, employers, service providers and

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many others ; and it needs to apply to negotiations you conduct on your own and on behalf
of others (e.g. friends, clients or employers). The descriptive 7 Element theory of negotiation,
from which the prescriptive approach known as Principled Negotiation is derived, meets
these needs.

The 7 Elements theory, in a nutshell, is that every negotiation can be broken down into
seven distinguishable yet interconnected elements such as relationship, communication,
interests, options, standards, alternatives and commitments . All seven elements are present
in every negotiation regardless of the style or approach adopted by the negotiators. In
each negotiation, however, the elements will be managed in a unique way by the negotiators.
A set of brief working definitions for each element appears as follows.
 Relationship: The state of connection between two or more people.
 Communication: The transfer of messages by speech, writing or other means.
 Interests: The needs, concerns, goals, hope and fears that motivate the parties.
 Options: the use of all possible alternatives to negotiate with concerned parties
 Standards: Criteria that the parties use to legitimize their perspectives.
 Alternatives : Steps each party could take to satisfy their own interests outside the
current negotiation.
 Commitments: Promises made to build or finalize agreement.

The 7 Elements theory is a conceptual tool that helps you see the components of negotiation
more clearly, just as a glass prism breaks up white light into its seven constituent
colours. Like the colours of light, the elements are always there in negotiation, but they
are often mixed up together. The 7 elements theory helps you to separate them out and
bring each one into focus. Taking the analogy further, we assign labels (names ) and
definitions to distinguish the colours of light. Similarly, the 7 Element labels give us a
common language that we can use to talk about the Elements of negotiation. But, if you find
the labels we use unhelpful, you can use different ones – so long as you understand what
each element represents and the distinctions between them.

3.1.4.2 What the Seven Elements are?

We’ve said that having the 7 element theory is like having a prism that enables you to
break up negotiation into its seven components. But what are these components, in essence? The

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simplest answer takes us back to the definition of negotiation: the process of interacting with
others to influence decision- making (theirs and your own). The 7 elements are the factors at
play in that process, that is, the factors that account for how and why people make decisions
through engaging with others.

So, in a negotiation, I will only commit to an option (i.e. my behaviour will only be influenced) if
minim standards of fairness has established. Our communication about these factors will be
shaped by (and will shape) our relationship. Your effort to influence me – and my response –
will inevitably involve both of us in managing each of these factors.

Negotiators constantly make choices about how to use each of the elements: which ones to
emphasize, how to raise them, and so on. As a result, one element (perhaps interests, or
standards) may appear to be a more significant factor in one negotiation, a combination
of Elements in another. Nevertheless, when analyzing negotiations you can identify all of the
Elements, and trace the impact they have as factors influencing the negotiators.

3.1.4.3 What the Seven Elements are not?

In order to understand what the 7 Elements are, it’s also important to distinguish what they
are not. They’re not habits or skills that one can acquire, but rather aspects of every
negotiation that you’ve been managing since childhood. And they’re not “steps to
success” that need to be taken in a particular order. In some negotiations the elements might
be discussed in stages. In others, they may be woven together intricately, with several
elements “appearing” in close succession, or even in a single sentence. Some elements
(alternatives, for example) might not be discussed in a negotiation at all, although they will
still influence the process and outcome of the negotiation (in this case, by affecting the
parties’ levels of confidence in seeking particular commitments). So, just as the content of
every element is different in each negotiation, there’s no universal order in which they are (or
should be) discussed.

3.1.4.4 Managing the Seven Elements

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The key to improving your negotiation is learning how to identify and consciously work with
the 7 Elements in any given negotiation so as to achieve your goals. A skilled negotiator
manages the process of negotiation by making informed choices about how to use the 7
Elements, adapting their strategy flexibly as each negotiation unfolds.

i) Practical applications of the theory

Earlier, we noted that the real value of any good descriptive theory lies in its capacity
to provide a solid foundation for practical applications and, ultimately, advice. Here’s a
summary of the descriptive and prescriptive applications of the 7 element theory. Not
surprisingly, there’s a close connection between the 7 elements of negotiation and the
factors that influence how individuals make decisions on their own. These choices are often
made intuitively, rather than consciously. Awareness of the 7 elements is the first step towards
making well-informed and effective choices about how to use them.

ii) Descriptive applications: observation & analysis

The ability to systematically observe and analyze negotiations – first others’, and then
your own – is a critical first step towards improving your negotiation outcomes. The 7
Elements theory helps you to understand what’s going on in any negotiation, by
providing a conceptual framework within which you can analyze the thoughts, speech and
actions of easier, more comprehensive, and more systematic.

iii) Prescriptive applications: Principled Negotiation

Using the 7 Elements theory to analyze thousands of negotiations, the Harvard Negotiation
Project have identified “best practice” advice for goal-setting, preparation, “at the table”
strategy and measuring success in negotiation. This best practice approach is known as
Principled Negotiation.

iv) Setting goals for negotiation

If you want to manage the 7 Elements most effectively, you need to identify goals in relation to
each of them so that you know what you’re aiming for. The other practical applications
and advice all follow from these goals.

v) Preparing to negotiate

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Success in negotiation, like most endeavours, depends on comprehensive and systematic
preparation. The 7 Elements cover the field of negotiation and therefore serve as a primary
checklist for effective preparation.

vi) Strategic advice for achieving your negotiation goals

The 7 Elements also provide a framework for advice on how to negotiate “at the table.” This
advice is based on years of research into what approaches are most successful at achieving
the 7 Element goals , irrespective of the approach taken by your counterpart.

Finally, the 7 Element goals can serve as a checklist for evaluating your success at the
end of your negotiation. Having such a comprehensive framework for reviewing your experience
is invaluable for explaining results to clients, constituents or supervisors, and for enhancing
your own ability to learn from the experience.
You may come across the terms “interest-based”, “mutual gains”, “problem-solving” “
collaborative” and “win-win” negotiation being used to describe similar approaches.
While these terms and the approaches they describe overlap to some extent, they are not
synonymous.
Activity 2
1. Explain the importance of negotiation in during project preparation.

2. What are the necessary elements in a process of project negotiation?

3.1.5 Project Implementation

Project implementation involves putting the project in to effect by constructing buildings,
procuring and installing machinery, training, etc. and ends in the project starting its operation. It
includes monitoring all aspects of project's worker activity as it proceeds and supervision by over
sight agencies within the country or by external lenders. A retrospective or ex-post evaluation of a
completed project seeks to determine whether the objective has been achieved and to draw lessons
from experience for future projects.

Project implementation also includes all the investments and other actions provided for by the
project: construction of buildings, purchase of equipment, training of staff, technical assistance,
miscellaneous services, project monitoring and evaluation. It ends when the schools or other

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institutions developed by the project can function normally. The responsibility for execution of an
education project can lie with the Ministry of Education, with another ministry, such as Public
Works, or with the donor agency as regards the components they have financed.

All projects encounter difficulties, in the course of their implementation, and some of these are
unforeseeable. Monitoring and evaluation aim to detect and analyze such problems, so as to solve
them in a timely manner. The purpose of monitoring is to provide project officers with periodic
information regarding a number of indicators. This allows the officers to detect difficulties quickly,
so as to apply early remedies. Evaluation during the implementation of the project (for example,
mid-term evaluation) provides a provisional assessment of the project. If it brings serious potential
problems to light, its analysis may induce the officials concerned to decide on certain changes in
the objectives, the strategy or the content of the project.

Monitoring and evaluation are of great importance for the successful implementation of projects,
and have proved to be especially useful for educational reform projects, whose execution is
particularly tricky because of their uncertainty. The role of monitoring and evaluation has
increased in recent years, with the new and more pragmatic approaches to educational planning.

Activity 3
1. What is meant by project implementation?
2. What do we mean by project feasibility? What is it purpose?
3. What are the factors affecting project feasibility?

3.1.6 Retrospective Evaluation

The retrospective evaluation stage involves studying the project's results after its completion, and
hence when its final costs are known. It compares actual outlays and results achieved with the
project's original estimates. Its main purpose is to identify the reasons for apparent successes and
failures, so as to inform the competent authorities and to draw lessons for future projects.
Retrospective evaluation is carried out by the Ministry responsible for execution of the project, or
by another governmental organization. In addition, external aid sources often carry out
retrospective evaluations of projects they have financed.

In summary, the identification, preparation and management of projects are complex tasks,
requiring the availability, within- an educational planning unit, of an adequate number of

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experienced specialists having received appropriate training. Relying on such specialists, Ministers
can make their education policies more operational, by translating them into sufficiently well
elaborated projects to be submitted, and successfully defended, to national planning authorities and
external aid sources. A carefully constituted reserve of projects can make it possible to take
advantage of ad hoc funding offers, which, in the absence of well elaborated proposals, might not
always find useful application.

3.2 The Complexity of Project Cycle

At the end of this overview of the project cycle, the length and complexity of the process, and the
large number of stages apparently dealing with the same issues may seem excessive. Indeed, when
the entire cycle is followed through, it often takes three years or more to move from initial
discussions to the final decision on financing. During this interval, even if the project has preserved
its priority for national development, it may have lost a good part of its political relevance, because
of changes in the economic situation, shifts in public opinion, or changes within the government.
Difficulties in execution and uncertainty of results may then be accentuated. Would it not be
preferable to devote less time to a process that may seem perfectionist, and to strike while the iron
is hot, as counselled by conventional wisdom?

These considerations of political urgency are apparently not without relevance. Nevertheless,
experience has shown that the time taken and the care given to preliminary studies and to
successive analysis of the project by different teams, and later to its attentive evaluation, are lot
lost. These precautions make it possible to reject inappropriate or unrealistic projects, and to avoid
wasting scanty resources, be it in terms of competent managers or of financial means.
Improvements introduced into the design of a project allow for substantial savings, avoid
implementation difficulties, and facilitate subsequent adjustment to changes in the political, social
or economic environment. This interactive and experimental approach is particularly appropriate in
the social and human domain, in which there are hardly any sure-fire action techniques. In actual
sense, planners involve in designing an education project end up looking for a compromise
unacceptable balance between the contradictory requirements of political urgency and technical
cautiousness. The experience of previous projects is probably the best guide to finding this balance.

Designing and preparing good projects, and then executing them under good conditions, are
difficult tasks, requiring a sense of detail and reflection, method and rigor, and also constant
attention to social and economic developments. Rigor is not synonymous with rigidity: inflexible

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projects that are incapable of adapting to changes in their environment rarely achieve their
objectives, especially in social domains. This is why practitioners now attach growing importance
to project monitoring and evaluation. This perspective of a method that is both rigorous and
adaptable to reality will be dealt with in the following Chapters.

In our previous discussion, we distinguished different stages in the first part of the project cycle,
namely: identification, preparation and appraisal. In reality, as we have seen, the border line
between the first two stages is not clearly drawn because both are the responsibility of the same
national departments, which preferably delegate the same staff for both functions. They have the
same purpose, but differ in the degree of detail of the elaboration. The third stage (appraisal) is
more distinguishable to review the project, and in that the responsibility lies elsewhere, namely
with those who hold the purse strings.

Nevertheless, these three stages are part and parcel of the same interactive process of project
elaboration, they use the same methods, and their common goal is to bring the design and the
execution plans of the project to a level sufficient to allow for commencement of implementation
with maximum probability of success. It is not just a truism to say that, in the long run, the quality
of a project cannot really be judged until after it is finished.

Experience acquired in the elaboration and implementation of education projects has made it
possible to draw up a number of criteria that such projects must meet in order to be selected at the
appraisal stage, and to have good chances of achieving their objectives. We shall refer to them as
the appraisal criteria. It is obvious that those responsible for elaborating a project must pay very
close attention to these criteria.

3.3 Feasibility of a Project

3.3.1 Priority Criteria of Feasibility Study

The priority of a project is expressed by its objectives. Given the limits of available resources, and
the virtually infinite character of needs to be satisfied, logic demands that priority be given to
projects that are well justified; in other words, whose objectives:
• are clearly set out and consistent with one another,
• respond to needs or to a demand that are well defined and of recognized importance;

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 • are in conformity with the national education development policy and plans.

The retrospective evaluation of education projects shows that meeting these requirements is also a
significant success factor.

Experience has taught us many lessons about the feasibility conditions of education projects, in
educational, technical, socio-political, administrative, institutional and financial terms. For each of
these aspects, it has been possible to draw up feasibility criteria, which are applicable in the design
of projects and of their implementation strategies. Experience also points to the necessity of
preparing projects in detail before their execution, taking into consideration these same criteria.

i) Educational Feasibility
The educational design of a project has two dimensions, the qualitative and the quantitative. In
qualitative terms, it requires the elaboration of a strategy for improvement of education quality
and/or efficiency; this strategy sometimes includes the introduction of pedagogical innovations. In
quantitative terms, an educational expansion project raises a large number of issues concerning, in
particular, the pupils, the staff and the production of teaching materials. It often influenced by
socio-political, administrative, and financial feasibilities.

ii) Socio-political feasibility

A project cannot achieve its objectives under good conditions if it is not socially and politically
acceptable. It is up to the appraisal commission to verify that the groups concerned by the project
(pupils, parents, teachers, and employers if vocational training is involved) are not opposed to its
objectives, to the measures it contains and to the repercussions it is likely to generate. The
commission also ensures that the project provides for prior sensitization and information of the
interested parties.

iii) Administrative Feasibility

The most important criterion of administrative feasibility has to do with the capacity for project
implementation. The appraisal commission verifies that the complexity of the project is well
adapted to existing or potential administrative abilities. It makes sure that appropriate recruitment
and training measures will be taken to strengthen these abilities if required. It also examines the
compatibility of administrative modalities and of the project's timetable with prevailing legislation

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and procedures, in order to avoid excessive delays. Finally, it studies the appropriateness of the
monitoring and evaluation system, with a view to giving project implementation a certain degree of
flexibility, and to preparing the way for drawing lessons from it.

iv) Financial Feasibility

Many education projects have suffered in the past from under-estimation of the financial resources
needed for their implementation. On the other hand, the capacity of national budgets to support
recurrent costs generated by projects has often been over-estimated, leading to even more serious
consequences, especially for the quality of education, as teaching materials are often the first
expenditure to be sacrificed in the event of budgetary restrictions. Striving to minimize these
difficulties, appraisal commissions look through capital and operating cost estimates with a critical
eye, avoiding any excess optimism.

3.3.2 Project Feasibility Study

Feasibility study is required to investigate the viability of options in detail with all project aspects
and propose or recommend whether implementation is possible. The major aspects to be
considered in the feasibility are market and demand assessment, technical assessment and design,
environmental, social, institutional, financial, economic, and implementation planning. It mainly
originates from the pre-feasibility study recommendations or findings. However, whether or not a
pre-feasibility has been made, a feasibility study should form the central core of the preparation
process. While the need is most obvious for large infrastructure projects; the discipline and
systematic approach of such study is desirable for all projects, except for the most routine and
repetitive

3.3.2.1 Purposes and Scope of the Feasibility Study

According to Turner and Semester (2004), the objective of the feasibility study should be specific
to the project, but its major aims are:
 Exploring all possible options for implementing the project,
 Achieving a clear understanding of the issues involved,
 Producing enough information to be able to rank the options, and
 Obtaining a clear future of the way forward.

Similarly, Baum and Tolbert (1985) noted that the purposes of the feasibility study are:

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 To provide decision makers, both national and donors, with the bases for deciding whether or
not to proceed with, the project and for choosing the most desirable option or alternative from
among the few remaining.
 To establish the feasibility or justification of the project as a whole in all of its relevant
dimensions (technical, financial and so forth). Each of these dimensions is analyzed, not only
separately but also in relation to all the others, through a process of successive approximation.
In terms of scope, feasibility studies can vary as widely as the project themselves.
The scope and duration of the study will depend on such conditions as:
 The inherent complexity of the project,
 How much is already known about it, and
 Whether it is innovative or repetitive.

In terms of duration the feasibility study can take as little as three months or as much as two years
or more. Costs can range from several thousand dollars to tens of millions, for industrial or
infrastructure projects involving substantial technical work, a rule of thumb is that the feasibility
study represents about 5% of the overall project cost.
Activity 4
1. What do we mean by project feasibility? What is it purpose?
2. What are the factors affecting project feasibility?

3.3.2.2 The Seven Aspects of Feasibility Study

A) Market and Demand Analysis
Market and demand analysis is in most cases the first step in project formulation and it involves
estimating the size of the market (demand for products and service) and market share of the
proposed project's products or services.
It demands an in-depth study and analysis of various factors such as: existing pattern of
consumption and growth, composition of the market, nature of competition, income level of the
society, available substitutes, systems of distribution channels etc.
According to Ministry of Finance and Economic Development's (MFED) project preparation
guideline (2006) the objectives of market and demand analysis in preparing a project are to:
 Identify potential consumers or buyers
 Indicate the total current demand
 Identify the pattern of demand temporally as well as geographically

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  Know customers willing to pay for the proposed services or products
 Determine price and warranty that will ensure the intended out puts
 Identify appropriate channels of distribution for the products or services
 Explore the prospect of immediate and future sales
 Formulate strategy that intends to convince potential consumers about the proposed output.
Given the importance of market and demand analysis in project formulation, it should be carried
out in an orderly and systemic manner. According to Chandra (2006), the key steps involved in
market and demand study are:
 Situation analysis and specification of objectives
 Collection of secondary information
 Conduct of market survey
 Characterization of the market
 Demand forecasting
 Market planning

i) Situation Analysis and Specification of Objectives

In order to get a general understanding of the relationship between the product and its market, the
project analyst may informally talk to customers, competitors, middlemen, and others in the
industry. Wherever possible, he may look at the experience of the company to learn about the
preferences and purchasing power of customers, actions and strategies of competitors, and
practices of middlemen. The primary purpose of situational analysis is to generate 'enough data
about the market, without formal study, which normally demands time and cost. The analyst should
articulate the goals that guide situational analysis.

ii) Collection of Secondary Information

Information for market study may be obtained from secondary and / or primary sources. Secondary
information is information that has been gathered in some other context and is already available.
Primary information is information that is collected for the first time to meet specific purpose on
hand. Secondary information provides the base and the starting point for the market and demand
analysis. It indicates what is known and often provides leads and cues for gathering primary
information required for further study, Secondary information may be obtained from central
statistics office, sample survey reports, planning reports, academic studies, etc. However, their
reliability, relevance and accuracy for the intended purpose should be carefully examined.

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iii) Market Survey
Secondary information, though useful, often does not provide a comprehensive basis for market
and demand analysis. It needs to be supplemented with primary information gathered through a
market survey, specific to the project being appraised. The market survey may be a census survey
or a sample survey. In a census survey the entire population is covered and is employed principally
for intermediate goods and investment goods when such goods are used by small number of firms.
In other cases a census survey is prohibitively costly and may be unfeasible.

Due to the above-mentioned limitations of the census survey, the market survey, in practice, is
typically a sample survey, where a sample of population is contacted or observed and relevant
information is gathered. On the basis of such information, inferences about the population may be
drawn.
The information gathered in a market survey includes:
 Total demand and rate of growth of demand
 Demand in deferent segments of the market
 Income and price elasticity of demand
 Motives of buying
 Purchasing plans and intentions
 Satisfaction with existing products
 Unsatisfied needs
 Attitudes toward various products
 Distributive trade practices and preferences
 Socio-economic characteristics of buyers.

iv) Characterization of the Market

Based on the information gathered from secondary sources and through the market survey, the
market for the product/ services may be described in terms of the following:
 The past and present effective demand
 Consumers or customers
 Distribution and sales promotion
 Supply and competition
 Government policy,

a) Effective Demand

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 To get the past and present effective demand, the starting point typically is apparent
consumption which is defined as: production + exports _ changes in stock level. In a
competitive market, effective demand and apparent consumption are equal. However, in most
of the developing countries, where competitive markets do not exist for a variety of products
due to exchange restrictions and controls on production and distribution, the figure of apparent
consumption may have to be adjusted for market imperfections. The consumption series, after
such adjustments, may be obtained for several years.

b) Breakdown of Demand
To get deeper insight in to the nature of demand, the aggregate or total market demand may be
broken down in to demand for different segments of the market.
Market segments may be defined by:
 Nature of product (finished, semi-finished, packed, big, small, etc) .
 Consumer groups (industrial, domestic, foreign, household, etc) ·
 Geographical division (high land, low land, etc)
In doing this, the formulator needs to identify appropriate bases for segmentation that are
conducive to the proposed project. Segmental information is helpful to formulate market
strategies that are appropriate to different market segments.

c) Consumers or Customers
Customers may be classified based on demographic (age, sex), economic (income), sociological
(profession’s, residence, social background), attitude (preferences, intentions, habits, attitudes,
responses). This is not an exhaustive classification and the formulators may be able to find
meaningful groupings or categories based on targeting processes.

d) Distribution and Sales Promotion

The existing methods of distribution and sales promotion have to be analyzed. This is essential
to identify patterns of consumption and the problems encountered in marketing the proposed
product/service. Price statistics should also be gathered pertaining to physical quantities.

e) Supply and Competition

The project formulator must identify the present sources of supply for the intended product or
service and information related to this may be collected based on location, capacity utilization
level, expected expansion and constraint in production and cost structure. Competition from

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 substitutes should be explored including product replacement possibilities by other products due
to quantity, availability, price changes, promotion, etc.

f) Government policy
Government policy may influence the market and the demand for a product or service.
Government policies are generally reflected in the national plans, production targets, import
duties, taxes, licensing, credit controls, subsidies, etc. The implication of these policies,
legislations, plans and facts on the proposed product/ service should be spelt out and included in
the marketing plan.

Activity 5
1. Why it is necessary to conduct market analysis while developing a project?
2. Mention some characteristic of a project

B) Demand Forecasting
Demand assessment is a means of estimating the actual demand for services that will exist over
time. An investment in a project intends to create productive assets that can generate a return that is
much greater than initial investment. To guard against the possibility of both under-designed
(where economies of scale are not maximized and the projects outputs fail to satisfy demand) and
over design (where there is insufficient demand to justify the investment of capital in a project
whose facilities are underutilized), forecasting the future demand for goods and services is
necessary.

Forecasting is an attempt to represent future occurrences in the most likely set of circumstances.
The basis for forecasting is to examine data over an existing period of time (the observation period)
in an attempt to identify trends, which can be projected in to the future (the forecast period).
Forecasting is central to aspects of project preparation. The forecasting techniques used for project
formulation may be categorized in to:
i. Qualitative methods
These techniques are based on the utilization of existing knowledge and expertise to draw
objective conclusions. They are particularly useful in times of great uncertainty when the
quantitative analysis of historical trends is liable to be inaccurate. The two major qualitative
methods are Jury of Executives' Opinion technique and Delphi technique.

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ii. Time series projection methods
These techniques are based on the principles that analysis of historical movement such variables as
demand or production provide a basis for the extrapolation of these variables in to the future. Time
series data analysis should only be seen as a reliable for short-term reports. The major time series
projection methods are trend projection method and moving averages method.

a. Casual methods
Causal methods forecasts are based on variations in those factors (the casual variables) that cause
the variable in question to change. These methods seek to develop forecasts on the bases of cause-
effect relationship specified in an explicit quantitative manner. The important methods under this
category are chain ratio method, consumption level method, leading indicator method, end use
method, and economic metric method.

b. Marketing Plan
The primary purpose of the marketing plan is to meet the customers’ needs better than their
competitors. A marketing plan usually contains: current marketing situation, opportunity and issues
analysis, objectives, marketing strategy, and action programs.

c. Technical Analysis
Technical feasibility study of a project is the first to be studied, because the technical aspects of the
project provides the bases for all other forms of project design and analysis, and a technically
unfeasible project must be revised or abandoned, regardless of its performance in other areas.
Besides these, the technical issues are interwoven with economic, financial, institutional, and other
issues and cannot logically be examined in isolation. Technical feasibility must be conducted on
the basis of the project's ability to meet its objectives using a technology and standards that are
appropriate to the situation for the country. Viewed from this perspective the project objective is a
key to technical analysis. If the objective has not been clearly analyzed then the technical design of
the project is liable to be inappropriate.

d. Problem analysis

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An in-depth analysis of problems is important to isolate core problem from its causes and effects,
will enable the formulators design projects to overcome the core problem (underlying factors) and
not their symptoms. An example of this situation would be an education project, which provides a
variety of new buildings and teaching materials in an area with low educational achievement. This
project would have a very little developmental impact if the core problem were actually a lack of
investment in teacher training.

e. Technical Design
Many issues of the technical design are specific to a project and must be addressed in that context.
Nevertheless, certain broader issues are relevant to many. These issues can be grouped in to four
categories: size, location, timing, and the technology package.

1. Size
The size, scale or scope of operation of a project is almost always a variable that must be
determined in the course of its preparation. These are a variety of factors, which must be
considered when contemplating the size or scale of operation of a project design.

The capacity of the implementing agency (say local water company) or project beneficiaries (say
farmers). The absorption capacity, the nature of largest groups as well as experience of the
implementing organization, etc need to be analyzed in determining the size of the project.
 Resource limitations or physical constraints of the project site may be decisive. In planning
resource-based projects like water supply, oil, timber, minerals, etc- the formulator must
ensure that the required quantity, quality and other conditions are also adequately available.
 Economies (or diseconomies) of scale in the technological process may impose minimum
(or maximum) limits on the size of the population. Larger scale technologies are liable to
produce at a comparatively larger scale than smaller scale technologies. In the case where
the market size and demand of a given output is lower, the type of project that has to be
formulated should base on the minimum economic size.
 Recurrent cost demand- the burden of recurrent costs to operate the project once it is
completed may determine project size (for example, the cost of teachers' salaries may limit
the number of schools to be constructed and teachers to be trained).
 Absence of a proven technology package may dictate a phased approach, starting with
research or adaptive work and continuing with a pilot project that is scaled lip subsequently
as experience warrants.

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2. Location
In most cases site selection, like project size, entails a trade off among various considerations,
such as:
 The availability of suitable site for the project- i.e. both physical suitability (in terms of
landscape, soil type, rainfall, etc) and legal suitability (in terms of who is the owner of the
land).
 Government priorities in terms of stimulating development. Governments may wish to
encourage investment in underdeveloped areas or protect areas of ecological importance.
 The tradeoffs among proximity to factors such as market, energy sources, infrastructure,
raw materials, etc.
 Population living within the project's catchment's area. Population density and service area
will determine the number and location of school buildings or health and family planning
clinics.

3. Timing
The timing of the project investment should also be a matter of separate consideration during
preparation stage. The appropriateness of a project's timing should be explicitly determined.
The factors that should be thoroughly analyzed in determining timing are:
 The existence of currently, sufficient demand for the goods or services provided by the
project.
 The likely impact of postponing or delaying implementation in increasing the demand for
the output.
 The suitability or the implementability of the proposed technology to the current
condition (capacity) of the implementers or beneficiaries.
 The level of advancement of some complimentary investments.
 The existence of presently, favourable potential as well as opportunities to reap the
greatest benefits from the project.

4. Choice of Technology
The technology selected for a project should be appropriate. Appropriateness is a relative
concept. It is generally taken to mean that the technology chosen should be suited to the

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 development objectives of the project, to the intended users, and to local conditions- including
the availability and cost of local capital, row materials, and labour, as well as the size of the
markets and the actual and potential capacity for local planning and implementation. This
implies that the technology chosen need not be the most modern that is available
internationally, nor the traditional one widely used in the country, it can be selected, and
perhaps designed, specifically to meet the objectives of the project. Hence, the factors to be
considered in choosing the appropriate technology package are:
 The project's ability to utilize local resources: this is to maximize the usefulness of
these resources.
 The project’s wider application: this is being operated under similar conditions and in
similar circumstances before. Consider easily adaptable techniques.
 The project’s suitability: How feasible and cost effective are the maintenance and
repair procedures for the technology under consideration?
 Project’s reliability: Its tolerance and flexibility during implementation, operation and
maintenance. How reliable is the chosen technology?
 The government policy on the proposed technology.
 Project’s cost effectiveness: how cost effective is the chosen technology in
comparison to the alternatives? Consider techno- economic viability.
Activity 6
1. What are the necessary elements to be forecasted during project identification, prioritization
and preparation?

2. What are the techniques to be used while forecasting a project?

3.3.3.3 The Logical Framework and Assumptions

Logic in terms of technical design refers to the ability of project activities to satisfy project
objectives. The logical framework (log frame) is useful planning tool that serves a number of
purposes, such as:
 To identify and clarify the elements which form the basis of the project document.
 To specify how project inputs and activities that lead to the achievement of output which in
turn will lead to the project's purpose?
 To identify how this project purpose relates to a wider development goal.
 To specify the means by which to verify the successful completion of each stage.

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 To identify the assumptions and external conditions necessary for the project to successfully
achieve its purpose.
The logical framework, presents a concise summery of the projects and identify any flaws in the
logical linkages of activities, inputs, outputs and objectives.

3.3.3.4 Choices of Alternatives

The objective of environmental management should be to achieve a balance between human
demands on the natural resource base, from future as well as present generations, and the ability of
that resource base to meet these demands on its sustainable basis in the interests of future
generations as well as those alive today.

When conducting technological analysis of a project it is necessary to consider any alternative

methods of meeting the same objectives. When analyzing alternatives, it is important to relate them
to the project objectives. They must be capable of overcoming the core problem identified earlier
in the problem tree. In fact the problem tree and its related objectives tree provide a useful starting
point for the considerations of alternative project design. The alternative design must, therefore, be
assessed in the logical framework.

3.4 Environmental Analysis

Environmental concerns encompass a broad range of issues, including public health and
occupational safety; control of air, water and land pollution; sound management of renewable
natural resources; more efficient use of natural resources through multiple use, recycling, and
erosion control; conservation of unique habitats, especially for rare or endangered species; and
cultural preservation.

It is now widely recognized that environmental analysis is necessary for a country to ensure the
sound management and use of its natural resources as an integral part of its strategy for economic
growth. Desertification, deforestation, soil erosion, over exploitation of such renewable resources
as fisheries, and air and water pollution are lowering the carrying capacity of the environment.
Usually the poor are disproportionately affected by environmental degradation.

The objective of environmental management should be to achieve a balance between human

demands on the natural resource base, from future as well as present generations, and the ability of

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the resource base to meet these demands on a sustainable basis in the interest of future generations
as well as those alive today.

When considering environmental aspects into project formulation exercises there are a number of
issues that should be taken into considerations which include:
 A clear understanding of the meaning of sustainability
 Assessment of the potential environmental impact of the project;
 To suggest ways in which that impact could be reduced at a reasonable cost;
 To formulate mitigation strategies and a plan of action.
It should be remembered that project alternatives must be assessed on a whole range of criteria, not
just technical suitability.

3.4.1 Environmental Sustainability for Project Development

Environmental sustainability is defined as development that meets the needs of the present without
compromising the ability of future generations to meet their own needs (World Commission on
Environment and Development sited in MOFED: 2006).

To help resolve the problem and also to provide guidance for the formulators a distinction needs to
be valued among the following capitals: manmade capital, critical natural capital, and other natural
capital. The implications of these classifications of capital stock are that project formulators must
seek to:
 Maintain if possible increases the value of manmade capital
 Avoid damage to critical natural capital at all costs;
 Limit exploitation of renewable natural capital to sustainable level; and
 Internalize the cost of depleting non-renewable resources through some form of
compensation measures.

3.4.2 The Potential Environmental Impact Assessment

Environmental impact assessment (EIA) is concerned with the identification, prediction and
evaluation of the impacts of proposed project alternatives and measures aimed at eliminating or
minimizing damaging impacts and optimizing beneficial impacts. Not all projects require

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environmental impact assessment to the same degree and intensity. Thus the classification of
projects to determine the level of assessment is very useful for project formulation.

The first stage in the identification and assessment of environmental impact is environmental
screening. The purpose of this screening process is to assess the type of complexity of
environmental analysis techniques, which are likely to be necessary. The criteria used in
environmental screening may include location, type, size and the complexity of the project to be
implemented.
In identifying significant environmental impact assessment, project formulators must consider the
following criteria:
 The length of time and geographical coverage over which the effects will be felt;
 The urgency which refers to how quickly a natural system might deteriorate and how long it
takes to stabilize; and
 The degree of irreversible damage to the environment, natural resource and life supporting
systems.

When conducting the process of EIA, there are clearly defined stages or procedures that should be
taken in to consideration. These are:
 Identifying the various potential impacts of the project on the environment.
 Predicting of the extent of the environmental changes.
 Assessing of whether or not the identified and predicted changes are of any environmental
significance.
 Planning of mitigation measure or alternatives that could reduce the project's environmental
impacts.

EIA will lead to an eventual decision to accept, reject, or modify a project. If the project is seen to
have a potentially serious impact on the environment then it is necessary to prepare an
environmental management plan (EMP) with the requirement of financial expenditure.

3.4.3 Assessment of Mitigation Measures, Strategies in Environmental Analysis

If potentially negative environmental impact were identified as a result of assessments, it is
necessary to consider ways in which these impacts can be overcome. This involves suggesting
various measures and strategies to avoid, reduce or overcome these impacts. These various
measures and strategies can be defined as forms of mitigation.

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It is essential that mitigation measures be planned in a coherent and integrated manner to ensure
that they work effectively in combination and do not simply transfer the negative impact to another
area. In the projects where serious environmental impacts have been identified it will be necessary
to collate these mitigation strategies in the form of an environmental management plan (EMP).

3.4.4 Environmental Valuation Techniques

Valuation of environmental effects includes the measurement of environmental costs and benefits.
The methods of estimating environmental costs and benefits can be categorized as:
i) Objective Valuation (Ova): this is based on physical relationships describing cause and effect to
value the physical effect. It includes effect on production or changes in productivity approach lose
of earning approach and replacement cost and compensation approach.
ii) Subjective valuation (SVa): based on subjective assessment derived from real or hypothetical
market behaviour. Subjective evaluation (SVa) methods include hedonic methods and contingent
valuation.

The valuation techniques can also be derived from those that attempt to: Value both costs and
benefits that can be included in an overall cost and benefit calculation. Concentrate on the cost side
and might be used in either in cost effectiveness analysis or in some other form of analysis.
Whatever strategy is chosen, it will be necessary to consider the associated costs and who has the
responsibility to provide funds to cover these costs.
Activity 7
1. What is the implication of logical framework analysis in project development?

2. What are the elements to be considered when using logical framework approach in project
preparation?

3.5 Social and Cross-Cutting Issues Analysis

The process of development is inherently social, dealing as it does with the improvement of social
conditions and working through social structures to achieve these objectives. It is, therefore, crucial
to integrate comprehensive social assessment into the project formulation process. The precise role

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of social assessment can be defined as ensuring that people, their capacities, values and needs are
put at the centre of the development process.
A project that runs counter to or ignores the traditions, values, and social organization of the
intended beneficiaries, or that is based on objectives which they do not share, has little prospect of
success. Predicting social behaviour is even more uncertain than forecasting financial or economic
behaviour. Project planners have often made unduly optimistic assumptions about local people's
interest in and need for a project, the economic and social incentives for them to participate, and
the rate at which change in their social condition can be brought about.
If social assessment is primarily concerned with ensuring that projects, and consequently the
development process, are 'people cantered' then the following points must be taken into account in
any project formulation exercises. These are:
 Identifying of stakeholders and target groups;
 Participation issues;
 Social impact assessment (SIA); and
 Assessing of mitigation measures, strategies and costs of SIA.

3.5.1 Identification of Stakeholders and Target Groups

Stakeholder analysis is the process of identifying the people, groups, communities and institutions,
which are liable to be affected in some way by a proposed project. These people, groups,
communities and institutions are classified as 'stakeholders'. Stakeholder analysis is important
because it enables the project planner to gain a fuller understanding of the specific social
conditions in which the project will be implemented. This allows the planner to give the potential
social impact of the project activities.

The first stage in stakeholder analysis is to identify the various stakeholders who are liable to have
an interest in the proposed project. Once these stakeholders have been identified it is important to
establish key information about them such as: their interests, their potential impact on the project,
and the relative priority of their interest.
When assessing the importance of each stakeholder one should consider stakeholders in terms of
project objectives. It is desirable to establish certain criteria in order to properly identify target
beneficiaries. It is, therefore, essential to bear the following points in mind during the project
formulation process in order to tackle problems effectively and to appreciate the specific needs of
different segments of the population. These are:
 Importance is different from influence, here it relates to project priorities.

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  These should be in line with national policy objectives in terms of target beneficiaries.
 The importance of various stakeholders can be derived from the project framework's
immediate and wider objectives.
 For whose benefit is the project undertaken? (The unemployed, farm poor, vulnerable
women and children, non-farm poor, for those employed in the informal sector, etc.)
 Need and problem identification has to be undertaken, (what are these beneficiaries'
needs?); and
 Identify stakeholders’ interests that are most closely aligned with the national policy
framework.

3.5.2 Participation Issues

The aim of participation is to produce a situation where stakeholders are willing to contribute to
the successful implementation of the intended project and its future sustainability. Participatory
approaches, which create awareness amongst stakeholders of their own situation, of the socio
economic environment they live within, and of measures they can take to begin changing their
environment, should be considered during project formulation.

A useful place to begin when analyzing the level of participation expected and actually present in
project formulation, with the level of participation with the construction of a participation matrix

Inform Delegate Consult partnership control

Identification
Planning
Implementation
monitoring and evaluation

3.5.3 Social Impact Assessment (SIA)

Social impact assessment (SIA) is a term used to classify the process of assessing how the benefits
(and costs) of a project are distributed amongst various stakeholders over time. It is essentially
concerned with three distinct areas:
 Impact of the project on its stakeholders;
 Impact on the stakeholders in terms of achieving the project objective; and

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  People's response to the opportunities created by the achievement of the project objectives.
SIA has five distinct stages. These are:
i. Stakeholder identification;
ii. Baseline and impact identification: a consultative process of information gathering
regarding community baseline data;
iii. Development of mitigation measures: formulate measures to minimize those negative
impacts whilst maximizing the positive impacts
iv. Production of draft SIA
v. Production of final SIA and social impact management plan

3.5.4 Assessment of Mitigation Measures, Strategies and Costs

The assessment of mitigation measures, strategies and costs will form the social impact
management plan produced along with the SIA report. The analytical work carried out in previous
stages of social assessment (stakeholder analysis, participation and gender analysis etc.) is likely to
have identified potential options to limit the negative impact on stakeholders. These options now
need to be studied in more detail in order to develop a comprehensive strategy to mitigate negative
impacts. Stakeholder consultation is essential in order to suggest both feasible and desirable
mitigation measures. Both costs and benefits of mitigation strategies should be calculated.

i) Crosscutting Issues
Crosscutting issues, recently, have received great attention in preparing any development projects.
Underestimation of these issues have resulted in undesirable outcomes which include the loss of
active human labour, reduced productivity, under or over utilization of the intended output/inputs,
social disruption, poor human health etc. Currently project promoters/implementers, nevertheless,
have shown increasing concerns about the effects of these factors on the development project and
policy makers may also initiating these points to be entertained in any development projects
preparation and implementations. In this context, crosscutting impacts have come to play a
determinant roll in the project formulation exercises. These issues focus on HIV / AIDS,
population and gender issues.

ii) HIV / AIDS Issues

HIV/AIDS is one of the most serious development challenges to Ethiopia. As a part of the national
efforts to mitigate the negative impacts of HIV / AIDS in to project formulation becomes a critical
need for comprehensive work place based or project area based response. In preparing a project,

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assessing the stages and patterns of HIV / AIDS epidemic is important in order to formulate coping
strategies.
In assessing the HIV / AIDS issues the formulator may need to find answers to the following
questions:
 Is HIV/AIDS an issue in the project area or/ and workplace (and vice versa)?
 Do local people and institutions recognize HIV / AIDS as an issue'
 Who are the main stakeholders, communities and institutions that playa dominant role in
relation to HIV/AIDS epidemic?
 How do the proposed project strategies address the problems faced by HIV / AIDS victim
groups?
 What is the project activities designed to mitigate the negative impacts of HIV / AIDS,
including collaborators?
 Does the institutional arrangement for project implementation considered the potential
impact of HIV / AIDS on the project performance?
 Are performance indicators on HIV / AIDS epidemic control and prevention intervention
presented clearly?
 What will be the impact of the HIV / AIDS on the Sustainability of the project?

Before submitting the proposal for appraisal and/or approval of project promoters or formulators
need to verify that HIV / AIDS issues are adequately treated in various sections of the document.

iii) Population Issues

The purpose of integrating population in to a project is to obtain a general view or understanding of
the situation (the livelihood) in the intended area of sector and identify any major differentiating
characteristics or patterns within the population that can be significant for the formulation of the
project.

It involves gathering population information for project planning, projecting demographic changes
in the proposed project area, analysis of population movement and decides on pertinent population
variables to be considered in project formulation. The exact kind of population data to be collected
and analyzed depends on the nature and type of proposed projects. The population data analysis
will indicate if and where the objectives and strategies proposed for the project should be modified
to improve the chances that the project will succeed as well as to maximize the likelihood of that
population in the project area will benefit or induce pressure as a result of it.

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iv) Gender Issues
Planning with gender needs to look at what role men and women can play in the development
process of the project and / or the country and integrate their needs in the project planning,
appraising and implementation from the outset.

Gender mainstreaming in the project planning has to concentrate on firstly, collection of data on
activity profile (who does what?), access and control profile (who has what'), factors and trends
analysis (what is the socioeconomic context?) and project analysis or design (what gender
considerations are needed (the project?). These data will assist in identifying and analyzing the
socio-cultural factors and trends influencing project activities, access and control over resources in
the project area sector.
Collecting and analyzing gender related data would enable the planner to formulate a project that
reduces any negative impact on particular groups or to enhance any positive impact.

Activity 8
1. Why it is necessary to consider social and cross-cutting issues during project preparation?

2. What to be considered during social impact assessment of a project?

3.5.5 Institutional Analysis

Institutional problems have been compounded as more complex development objectives have been
assigned to projects. Executing multi component projects or projects focused on alleviating poverty
or upgrading social services has placed heavy demands on institutions knowledge of the economic,
social, and behavioural characteristics of small farmers, urban squatters, or disadvantaged tribal
peoples is still rudimentary. Understanding of the management and institutional techniques for
dealing with such projects is also at an early stage.

Institutional assessment covers both the institution and the environment in which it operates. It is
concerned with two major concepts, namely project management and organization. The basic point
of conducting institutional analysis of a project is to establish a suitable organizational structure for
the purpose that adequately manages the proposed task.

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Many projects which have appeared sound from technical, economic and financial viewpoints have
been partly or fully frustrated by institutional constraints. This applies equally to non-revenue,
mixed revenue and revenue projects.
Institutional analysis therefore focuses on describing:
 Institutional setting and legal frame work
 Organizational capacity assessment.
 Capacity building strategies

3.5.5.1 Institutional Setting and the Legal Framework

When assessing the institutional setting in which an organization functions it is essential to
consider the way in which other institutions and stakeholders will perceive the proposed project. It
is possible that the implementing body may create conflict of interest. Thus the following aspects
should be given attention in the process of project formulation
 The objective of the project should be consistent with the mandate and term of reference of
the organization.
 The project objectives should be achieved within the framework of the existing legal
system;
 Avoid duplication of efforts by assessing other similar project under implementation by
another/or the same organization.
 Express key features of the project in terms of legal and constitutional obligations;
 Set the implementation arrangement of the project by considering the current roles and
responsibilities of regional as well as federal institutions.
 Involve the concerned stakeholders in the process of planning institutional arrangement for
implementation.

3.5.5.2 Organizational Capacity Assessment

When assessing the Capacity of an organization it is useful to identify which organizational form
is being assessed. In general there are three basic types of organizational arrangements for
implementing project as appropriate. These are:
a. Functional organization-involves the use of existing structural lines within an
organization.

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 b. Projectised organization-involves the creation of a separate and self contained organization
with the specific goal of project implementation.
c. Matrix organization attempts to integrate the strengths of both the functional and
projectised organization.

Organizational capacity assessment involves a detailed and comprehensive analysis of all aspects
of the implementing agency. Its main objective is to determine whether a project is viable or not
given institutional constraints.

In assessing the capacity of an organization, the following points should be considered:

 Suitability: fit to carry out required activities;
 Legitimacy: the acceptance and embedding of the organization in its environment;
 Effectiveness: the extent to which the products and services actually meet the needs of the
customers/clients/;
 Efficiency: the utilization of resources-input in relation to outputs;
 Continuity: capable of sustaining core activities for an extended period of time;
 Flexibility: the ability to adapt to a changing environment; and
 Accountability: vertical and horizontal accountability

i) Capacity Building
The purpose of organizational capacity assessment is to provide a picture of the strengths and
weakness within an organization. Once these weaknesses have been identified, there are a variety
of capacity building strategies, which can be undertaken to eliminate them.

Capacity development is an activity, which works at individual, institutional or societal level.

Capacity building is, therefore, a process, which goes beyond the simple acquisition of skills to
encompass the creation of capabilities and opportunities to put these skills to productive use.

ii) Financial Analysis.

There are different aspects of project preparation. Some of these aspects involve the question of
project feasibility while others relate to the question of desirability. Questions of feasibility are
really questions of what will work, to approaches relevant for the type of project concerned.

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Questions of desirability apply particularly to the financial and economic analysis of projects
where attempts are made to compare the cost and benefits of the project to decide whether the
project is worthwhile. The purposes of financial analysis are:
 To determine the long term budgetary implications and provide an adequate financial plan for a
proposed project;
 To determine the profitability of the proposed project from the perspective of either owners or
beneficiaries; and,
 To provide management information, to aid the operation and control of the project.

iii) The 'With' and 'Without' Project Situation

The value of any project is determined by comparing two fundamental concepts namely 'with' the
project and 'without' the project. Only if the resources concerned are completely unused without
the project. It is possible to estimate the value of the project by just looking at the situation of the
project.

iv) Types of Cost and Benefit

Cost can be defined as anything that reduces the achievement of a project objective. Benefit is
anything that contributes to an objective. Investment costs, sales revenue, operating costs. And
working capital are the major categories of costs when we consider about the desirability of a
‘with’ project situation.
An investment cost on the other hand includes costs such as land buildings, machinery, vehicles,
equipment and some technical assistance. These costs should be entered as and when they occur as
part of cost benefit analysis and cost effectiveness analysis. Sales revenue basically deals with the
expected quantity and anticipates. It is more applicable to commercial projects. Operating costs
includes all costs which are important for the proper functioning and running of a given
organization in a competitive world .They includes costs for production, repair and maintenance,
raw materials, labour and other utilities.

v) Methods of Estimating Financial worth

Methods of estimating financial worth are basically important to select the best project for
implementation. By estimating and comparing the benefit and cost of different project proposals,
someone can easily select the best project proposal. Measures of project financial worth can be
either being non-discounted measure" or discounted measure. Non-discounted measure of financial

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worth includes simple rate of return and the back pay period which are commonly used by small
businesses. However, they are not reliable and should not be used for making judgments on the
desirability of medium to large scale projects.

Simple rate of return method is the ratio of net profit in a normal year to the initial investment in
terms of fixed and working capital. We call express this method by the basic advantage of simple
rate of return is that it helps in making a quick assessment of investment profitability, particularly
for small projects with its draw backs. It is based on one year's data and it may be difficult to find
the representative normal year in its computation, it is only relevant for commercial projects and it
does not take into account the value of resources over a time.

On the other hand, the payback period is the length of time required to recover the initial cash
outlay on the project. Its basic advantage is that it may be a useful criterion in the case of risky
projects and relative capital scarcity. On the contrary, it also leads to adopting projects with higher
inherent risk.

vi) Financial Viability

Financial viability can be defined as a situation where the cash balance is always positive and is
therefore sufficient to meet all financial commitments. It is also a situation where all stakeholders
have sufficient financial incentives to participate in project implementation and operation.

Cash flow, profit and loss account and balance sheet are the determinant factors of financial
viability of a project. The cash flow statement contains information regarding the movement and
availability of physical cash within the project where as the trading account provides information
on the value and case of sales. The balance sheet on the other is used to enable stakeholders and
lenders to review the status of the project at a given point in time with a view to determining the
relative security of their investment.

vii) Liquidity Ratios

Liquidity is related to the continued availability of funds in order to finance activities throughout
the implementation and operations phases of the project cycle. It is also determined by analyzing
the cash flow.

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viii) The Financial Plan
It is related to the liquidity of the project in terms of the cash flow statement. The basic purpose of
financial plan are: it sets out how the project is to be financed, identifies source of funds, ensure the
cumulative balance cash flow equity capital, loans, sales and other recurrent revenue are the source
of funds than plan formulator need to include in his/ her financial plan.

ix) The Stakeholder Incentives

Stakeholders’ incentives deal with the benefit those stakeholders get from project. It is important
to know the extent of these net benefits because it provides an indication from a financial
perspective of the willingness of various groups to participate in the project. Owners, banks,
debtors, creditors, land cultivators, ox-cultivators, villagers, workers and government are some' of
the stakeholders in a given project.

x) Cost Effectiveness Analysis

To know their cost effectiveness first we must classify projects in to three major categories namely:
directly productive which includes agriculture, industry and tourism. Economic infrastructure,
which includes roads, railways, ports, air ports, powers. Social infrastructure accommodates:
education, health, housing, water supply, wastewater (sewage) and waste matter.

It is possible to conduct cost benefit analysis for the first two categories of projects because their
benefits can be quantified and valued. However, it is difficult valuing the benefit of the social
sector projects because of the following problems difficulties in quantifying the benefit, the
existence of sizable external benefits, and the problem of determining willingness to pay for the
services.

xi) Financing of Maintenance and Recurrent activities

Some times because of generalized financing, some projects fail to achieve their designed
objectives. So, this topic deals with the adequate financing plan to cover the cost of maintenance
and requirement activities. For each project there must be specified financial plan and budget.
Activity 9
1. What do we mean by institutional analysis?
2. What are the elements to be considered during institutional analysis?
3. What is the importance of capacity building in project management?

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3.6 Economic Analysis of Educational Projects
Economic analysis is an assessment of project's costs and benefits from the national point of view
and is therefore concerned with the impact of a proposed project on the national economy.

Economic viability is concerned with public profitability which is based on economic resource
flow. The use of the word 'economic' implies the analysis from confining attention to the project
itself to investigating the impact of the project on the national economy.
 Purpose of Economic Analysis;
 Transfer payment; and
 Externality is the critical and important issues to be discussed in economic analysis

3.6.1 Purpose of Economic Analysis

The fundamental purpose of economic analysis is to identify whether the project being designed
is beneficial to the national economy. Economic analysis is therefore, conducted to identify
costs and benefits where there is a significant divergence between market prices and economic
costs or values.
The aims of economic analysis in the context of project preparation are:
 To ensure that public investment of funds are used only for economically viable projects
and
 To ensure that a convincing economic case can be made for PIP or PEP projects to benefit
from external funding (MOFED... 2006:153).

3.6.2 Stages of Economic Analysis

First stage: The starting point for economic analysis is a statement on a year by year basis of
costs and benefits at constant market price.
Second stage: It involves the identification of linkages and externalities.
Third stage: involutes the adjustment of prices of goods and services taking into account their
relative scarcity or estimation of economic price.
3.6.3 Transfer of Payment
Direct transfer payments are payments that represent only the transfer of claims to real resources
from one person in the society to another for not using real resources. The most common transfer
payments are:
 Taxes, and

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  Direct subsidies and credit transactions that includes loan receipts, repayments of principal
and interest payments.

3.6.4 Identification of Externalities and Linkages

Externalities can be defined as effects that are imposed by project on another group of people
without proper compensation being made. Moreover, externalities are costs or benefits caused by a
project for which there is no corresponding payment or compensation. It is not included in the
project's valuation being designed in advance.

The basic principle involved in dealing with externalities is to measure and value the effects as far
as possible and then include these costs and benefits in economic analysis. This process is known
as 'internalizing the externalities'. Technological externality and pecuniary externalities are the two
distinctive categories of externality.

Technological externality: Technological externality occurs when group is affected directly by the
activities of the project without any payment being involved.

Pecuniary externalities: this kind of externality occurs when the project affects the prices paid or
received by others outside the project. In a project externalities linkage effects occurs when the
activities of one project cause an increase or a decrease in economic activities.

3.6.5 Identification of Education Projects

The purpose of identification is to make a selection among several projects, and opt for those that
are justified by indisputable priorities, that are in line with national policy orientations. An
education project can be justified by a high priority need of the society for example, demand by
parents for new primary schools, or a dearth of engineers. Another type of justification might be
the need to solve a serious problem confronted by the education system, such as poor achievements
of pupils. In addition, the project is feasible only if the country has enough human and financial
resources for its implementation. Therefore, before identifying projects, it is necessary to analyze
the educational situation, its socio-economic context and the government's policy.

Activity 10
1. The process of project development needs the consideration of economic analysis. Explain

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 2. Is it necessary to establish external link in project preparation and implementation? Why?

3.6.6 Education Sector Studies

Education sector analysis is generally called sectoral study. This may be a general study of the
entire sector, or several partial analyzes aimed at updating or filling in a previous study. The
approach adopted in such a study is that of education system diagnosis. It consists in first collecting
and analyzing data about the system and the way it meets societal needs. On the basis of this
analysis, the study proposes an education development strategy within the framework of the
national policy's broad thrusts. These proposals are translated into a number of project priorities or
areas, which concern either education sub-sectors, such as the training of primary education
teachers, or services of interest to the system as a whole, such as the production and distribution of
school textbooks,- or the planning of human resources. To be realistic, the proposed strategy must
be consistent with the country's possibilities: the additional personnel and operating costs resulting
from its implementation must not exceed foreseeable resources, otherwise the proposed strategy
risks increasing the education systems dependence on foreign aid. On the other hand, the financing
of capital investments by external sources results only in temporary dependence. Thus an education
sector study involves a series of analysis pertaining to:
a) The country's socio-economic situation, especially that of human resources and
employment, and the general objectives of national development;
b) The public finance situation, the costs and financing of education;
c) The national education policy;
d) The situation and the main problems facing education;
e) The prospects for education development over the next ten or fifteen years; and
f) The implementation strategy of the national education policy, and the priorities flowing
there from.

At the present time, when national budgets are subject to strong pressures, the financing of
education is, even more than in the past, a crucial area of investigation in a sectoral study. For this
purpose, classical techniques of financial analysis are used: analysis of total and unit costs,
international and regional comparisons, etc. The centre-point of an education sector study remains
the analysis of the problems of the education system itself. The most frequently encountered
problems concern:

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  Access to education and equality of opportunities: for example, a low rate of school
attendance in primary education, or a certain degree of inequality in school access among
geographical regions, between towns and rural areas, or between the sexes;
 The internal efficiency of education: for example, high rates of drop-out and repetition;
 The external efficiency: for example, a shortage of accountants or agricultural extension
workers, or unemployment of post-secondary education graduates;
 The quality of education: for example, poor achievement of pupils, unsuitability of the
curriculum to its goals or teaching in a language other than the mother tongue, scientific
education without any practical application, or unavailability of school textbooks;
 The teaching staff: for example, a pupil/teacher ratio that is too high or too low, a shortage
of qualified teachers, or the use of a large number of expatriate teachers;
 The administration of education: for example, weakness of education inspection services,
of planning or statistics, or poor organization of project implementation;
 School buildings and equipment: for example, disrepair and poor maintenance of school
buildings and unsuitable for the climate or education requirements, inadequacy and/or poor
condition of furniture, inadequate utilization of laboratories, etc. are challenges of
education sector development.
To analyze these problems, a precise description is not enough; it is also necessary to study:
1. Their causes, so as to be able to propose appropriate solutions;
2. Their educational, social and economic consequences;
3. The obstacles to their solution (human and financial resources, legislation, administration).

Analysis techniques common in educational planning are used for this purpose: calculation of
enrolment rates, analysis of school drop-out and output, curriculum development techniques based
on objectives, international comparisons. One of the most delicate tasks of a sectoral study is
projecting the development of an education system, since this is dependent on internal variables, as
well as on external ones. Hence it is advisable to prepare alternative projections, taking into
consideration the different development strategies, and different possible changes of the socio-
economic environment.

3.7 Justification and design of projects

Once priorities have been identified and approved by the government, planners are in a position to
select projects, to specify their justifications, their objectives and the broad outline of their design,
and to make initial cost estimates. Project ideas can stem from various sources: central or regional

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public departments (especially the Ministry of Education), sectoral studies, bilateral or
international aid organizations, private initiatives.

3.7.1 Project Justification and objectives

The first task of project identification consists in specifying the justification of selected projects,
by describing the priority needs or problems they meet, and in establishing their conformity with
the national education policy. It is clear that justification is better documented and more objective
if it is based on an education sector study. A project's justification can be social (for example, to
increase the primary school enrolment rate), pedagogical (to improve the quality of education),
economic (to meet the demand for qualified manpower), or financial (to reduce unit costs by
constructing larger classrooms to increase the pupil/teacher ratio).

Project justification often requires surveys of potential beneficiaries, to make sure that needs are
real, to specify and quantify them. The definition of objectives is an integral part of the project's
justification. A distinction is made between quantitative expansion objectives, which have to do
with increasing school enrolment, educational reform objectives, which aim to improve the quality
of education through changes or innovations, and institutional objectives, whose purpose is the
creation or strengthening of institutions, schools or departments contributing to the education
system's development.

The definition of a project's objectives is of capital importance for its future, because the resulting
decisions may be irreversible. Explicitly and clearly formulated objectives avoid
misunderstandings and promote co-operation among future project officers. If there are several
objectives, it is necessary to be sure of their compatibility. A project is feasible only if its
objectives are realistic, and if its effects are sustainable; in other words, only if the expected results
have a good chance of being achieved, and then maintained after completion of project
implementation. Many projects have failed in the past because of unrealistic objectives. To judge
the realism and durability of a project, planners need a lot of experience. They must obtain
information about the outcome of similar projects, executed within the country and in neighbouring
countries, and about obstacles they encountered.

A project's chances of success are greater if its complexity is in line with the management
capacities of national cadres. A priority in countries lacking experienced administrators, a simple
project with a limited number of objectives has better prospects than a complex project. The

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objectives of a project should be quantified to the extent possible. They are then translated into one
or several 'targets' (for example, to improve the training of 10,000 under-qualified teachers). They
can be expressed in the form of "expected results" (for example, at the end of the project, 60 per
cent of working teachers will be able to teach in the national languages). The concrete expression
of objectives as quantified targets and expected results offers two main advantages. By making it
possible to measure progress in the course of project execution, it facilitates personnel motivation.
And above all, it allows for more precise and more objective monitoring and evaluation.
Once the objectives of selected projects have been specified, the planners study their overall
design, that is:
i. The strategy applied in their implementation;
ii. The investments to be made for this purpose;
iii. The approximate cost of these investments;
iv. The order of magnitude of the annual recurrent costs to be supported by the government.

A project generally includes physical investments (construction, furniture, equipment and supplies)
and intellectual investments (training expenditures, technical assistance, etc.). The former
constitute the major share of the project when it pursues only quantitative expansion objectives.
The latter are often important in projects with qualitative or institutional objectives.

i) Physical Investments
The planners study the location and size of premises called for in the project, as a first
approximation. They may decide to recommend a more detailed study of the school map before
project preparation as such. They consider the appropriate construction quality: for example,
should preference be given to durable, low-maintenance but costly buildings, or to less solid but
inexpensive buildings? Similarly, as regards equipment, consideration must be given to its degree
of sophistication and provision for maintenance. They examine various options for project
administration and for the operation of institutions created by the project. For example, should a
vocational training centre have a board of trustees with employer representation?
ii) Intellectual Investments
If national personnel are insufficiently qualified or experienced, planners study ways and means of
providing training, and the advisability of resorting to external technical assistance to reinforce it,
and possibly to intervene in the execution of certain studies.
Moreover, while generally effective in operational tasks (teaching, management, planning, etc.),
technical assistants have certainly not always provided good training of national personnel. Finally,

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many aid sources, and bilateral ones in particular, offer free technical assistance, especially in
small countries. Thus it is well to exercise caution in the identification of a project's technical
assistance needs. While these disadvantages are very real, they may turn out, in the final analysis,
to be minor in comparison with a crucial need for external intellectual contributions to the
development of under-equipped countries. The success of technical assistance seems to depend on
three often neglected factors:
 agreement by all parties concerned (starting with the Minister) on the need for and the
objectives of the assistance;
 elaboration of an action strategy for the technical assistance;
 Preparation of a detailed but flexible program for training and promotion of the staff in the
department concerned. These issues must be weighed as of the identification stage, and then
reconsidered during preparation.

iii) Initial cost estimate

Identification requires a preliminary study of the project's costs. The acceptability of the
foreseeable investment costs is verified, as well as whether their national or possible external
financing does offer reasonable prospects. On the basis of such estimation, it is possible to solicit a
provisional commitment from funding sources. One also makes sure that the project's recurrent
costs can be borne by the national budget. As we have seen, this condition is indispensable for the
project's success.
The preliminary financial estimates made at the time of project identification are based on average
unit costs observed locally or in neighbouring countries. More precise and detailed costs are
calculated at the preparation stage.

Activity 11
1. Is it necessary to prepare a project for education sector development? Why?
2. What are the most important elements to be justified during the preparation of education
project development?
3.7.2 Methods used to identify Educational projects
Education sector studies and project identification require varied expertise, particularly in
education and in economics. Consequently, such studies are usually entrusted to multi-disciplinary
teams formed by educational planning departments. Depending on the requirements, teams may
include: a planner and one or several education specialists (primary, secondary, post-secondary,
technical, agricultural education); a specialist in curriculum development; one or two economists

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(human resources, finance); and sometimes other specialists as well (for example, in sociology,
school construction or textbook production). Like any other team effort, education project
identification requires co-operation and dialogue among the different specialists. Co-ordination
often falls on the educational planner or the economist, given the central role of their disciplines.

Education project identification involves collecting available data, visiting schools, and engaging
in numerous consultations. It requires confirmed experience with and good practice of the
techniques of educational planning. The work is based very closely on the appraisal criteria that
condition project approval.

An education sector study or project identification effort cannot rely solely on the analysis of
documents collected in the capital city. The team must contact a number of schools, training
centres, and central and regional administrative offices, in different regions of the country. It
should interview not only education sector civil servants, but also teachers, pupils, parents, etc.
Since the education system is an integral part of the country's socio-economic fabric, the team must
also consult experienced officials from other sectors (ministries of the economy, planning, finance,
labour, agriculture; public and private enterprises; municipal councils; rural groups; etc.).

The project identification report generally includes proposals for its preparation, and in particular a
timetable, which may provide for the execution, before project preparation as such, of pre-
investment studies, aimed at shedding light on specific issues, for example: the prospective school
map; the demand for a specific type of education; employment opportunities for graduates;
curricula; the future organization of an institution; a particular aspect of education financing. These
studies in fact constitute the first phase of preparation, which we will now consider.

i) The design of educational reform projects:

Educational reform projects turn out to be full of pitfalls, for they imply changes in behaviour, on
the part of pupils, teachers and administrators that cannot be predicted with certainty. The human
environment is often poorly understood, and strategies need to be tested and adapted to the local
context. As a result, educational reform projects are difficult to identify, in terms of objectives and
overall design, with as much precision as other projects. They have greater inherent uncertainty, in
other words a greater ultimate failure risk. But the risk is worth taking if it is reasonable, because
innovation and change are at the heart of the development process. One strives to minimize the risk
by anticipating obstacles, and by closely monitoring reform implementation. This involves

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formulating the project in an exploratory manner, with sufficient flexibility to allow for subsequent
adaptation to the observed evolution. For example, it may be useful to provide for:
• Surveys of future beneficiaries and participants, in order to assess the acceptability of reforms
before their implementation;
• Public opinion campaigns to make them popular,
• An experimental phase to develop appropriate pedagogical methods.

ii) Project administration:

The preparation document devotes a section to the project's management, to its organization and
procedures, and to the monitoring and evaluation arrangements. The preparation document also
contains a provisional implementation schedule. Its purpose is to set out the time-frame of planned
operations, so as to achieve the project's objectives at least cost and within the shortest period. The
schedule takes into consideration the constraints imposed by the projects (national and
international) physical, economic and human environment, leaving some margin for inevitable
delays. It is often presented in the form of a bar graph and sometimes as a critical path diagram
(PERT), when justified by the project's complexity.

iii) Feasibility of the project

The preparation must demonstrate the project's feasibility in socio-political, administrative,
institutional and financial terms. For this purpose, planners refine the analyses made at the
identification stage. They may, for example, bring together representatives of parents, students,
teachers and administrators, to make sure that the project is socially and politically acceptable, to
work out feasible solutions to administrative problems, or to explore the possibility of extra-
budgetary financing.

At the preparation stage, planners can more precisely evaluate the additional operating costs
generated by the project once it has been completed. These costs will then be borne entirely by the
government, even if external aid covers part of recurrent costs under the project. To calculate them,
planners estimate the annual operating expenses of each assisted institution, once fully developed
after project implementation, in terms of staff, materials, the maintenance of buildings, furniture
and equipment, food and bursaries for pupils, etc.
These costs are calculated on the basis of unit costs observed in the country, possibly corrected in a
realistic manner to make them compatible with the project's objectives. On the basis of these
estimates, planners calculate additional operating costs generated by the project, and demonstrate,

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with reference to national financial forecasts, that this additional expenditure can be supported. If
not the project should be revised downward.

iv) Organization and methods used for preparation

Planners entrusted with a project's preparation have to make numerous proposals in areas falling
within the jurisdiction of various departments of the Ministry of Education, and of other
governmental bodies of the country concerned. These departments should be involved in the
preparation, in order that agreement is reached on these proposals. Their representatives may, for
example, sit on one or several commissions officially created for the project's preparation. The role
of these commissions can vary. If their members have good experience in project preparation, they
can be given direct responsibility for drafting certain sections of the document. If not, the
educational planning department can appoint a preparation team, which draws up a draft document
and submits it to the commissions for approval.

It is useful to associate external financing sources in the preparation of the project for which their
assistance will be requested. This precaution avoids having later to rewrite the project documents
in order to meet the particular requirements of the aid source, a time- and manpower-consuming
effort.

Education project preparation methods are similar to those of identification. The preparation of a
project requires not only experience with this type of work, but also specialized professional
qualifications. It is always better to use national specialists who have a good understanding of the
country's milieu, institutions, legislation and social traditions. They are particularly indispensable
for field studies. Thus it is in the strong interest of Ministries of Education to constitute teams of
well trained experts with experience in these tasks. Ministries can also call upon national
universities or firms with competent staff.

Nevertheless, there are cases when the government must use foreign consultants. Experience
proves that the most important criterion for their choice is competence for the specific tasks to be
executed, and not cost, even though this is generally very high. Project preparation is expensive
and many countries cannot undertake it with their resources alone. Complementary funding can be
obtained from some external aid sources. This issue is dealt with in the next chapter, together with
financing of projects.

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The search for funding sources starts right at the beginning of what we have called the project
cycle. It is in fact preferable to know from what source financing for the project is to be found
before the identification and preparation phases are undertaken. Firstly these processes must take
into consideration the particular requirements of the funding source. Secondly, it would be unwise
to undertake the preparation of a project, which is both costly and time-consuming, without any
serious prospects of financing. We will first examine national sources of finance, and then external
sources.
Activity 12
1. What are the methods used to identify education projects?

2. Can you mention the phases of educational project?

3.7.3 National Financing Sources of Education Projects

In most countries, national sources finance almost all educational investment: more than 90 per
cent on average in developing countries. Only the poorest countries take massive advantage of
external aid, which finances, for example, an average 50 per cent of educational investments in
some twenty sub-Saharan African countries.

i) National budgets
Generally speaking, education projects are mostly financed by national budget which usually called
the state budget in countries where education management is centralized and regional or local
budgets located elsewhere. However, projects take up only a limited share of education budgets.
Throughout the world, such budgets are consumed in large part by committed expenditure and also
referred to as compulsory or fixed budget. This term refers to operating expenses corresponding to
the continuation of the previous year's activities: payment of teachers, other staff and pensioners,
operating expenses of existing classes, university departments and administrative offices. Because
of predictable increases in salaries and prices, committed expenditure is generally slightly higher
than the corresponding expenditure of the previous year. Other almost obligatory costs are added
on to this fixed expenditure:
 Additional operating expenditure resulting from recently completed projects;
 Funding needs for the annual set of projects under implementation.

Finally, when establishing the annual education budget, the margin available to cover capital and
operating expenditures connected with new projects is rather scanty, usually ranging from 3 to 10

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per cent. In theory, budget estimates set out in the plan should take into consideration the above
funding needs. But the reality is often different, and annual budgets are rarely in step with the plan;
to achieve this, the plan would have to be updated every year on the basis of investments already
made, but this is not yet very common. Integrated annual budgets, incorporating the proposals of
the plan, are even rarer. And yet such tools would make it possible to better adjust investment
programs to available resources, avoiding drastic reductions in non-salary recurrent expenditure
which impair the quality of education.

The share of national budgets available for financing projects has been further reduced recently
because of the economic crisis and the resulting dearth of foreign currency, which is indispensable
to pay for imported materials and equipment. This is particularly true of many developing
countries, crushed by heavy external debt, slow economic growth, and fast demographic
expansion.

The rigour policies set up to deal with this situation often result in giving priority to salaries over
development and equipment expenditure in national budgets. Moreover, given the scarcity of
available funds, competition among ministries for capital funding from the national budget has
intensified. Despite official statements to the contrary, education often has a weak position in this
competition: with the aim of stimulating economic growth, financial authorities often favour so
called productive investment to the detriment of social investment. These difficulties have given a
new impetus to the search for alternative sources of financing for education projects.

ii) Other Budgetary Sources

In most countries, regional and local authorities contribute to the development of education. Such
decentralization has the noteworthy advantage of providing for better adjustment of projects to the
education demand, which local authorities are generally better placed to judge. Also, the latter can
more easily consult interested parties in a timely manner. Some countries have instituted special
taxes, whose revenue is assigned to educational activities, especially the implementation of
projects. In many countries, the revenue from payroll taxes paid by employers is assigned to
technical education and vocational training, and especially to certain investments that can be part
of projects.

Domestic borrowing is another budgetary resource which a government may use to finance
education program or project. However, domestic loan is possible only in a country with a fairly

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well developed capital market. This solution requires serious preliminary study of the potential
market, of the impact of such borrowing on the country's internal debt, of the promotion campaign
needed to sensitize the public, etc.

iii) Non-Budgetary Sources

The most important type of non-budgetary sources for the funding of educational investments in
developing countries is without doubt the collective effort of local communities. For a long time
now, mainly in rural areas and in urban districts populated by recent immigrants from the
countryside, people have banded together to construct by themselves the public or private schools
needed for the instruction of their children. This community effort is often known as 'self-help. It is
estimated, for example, that ‘more than 50 per cent of existing primary schools in the countries of
sub-Saharan Africa were built in this way. In some cases, in order to improve the quality and the
durability of the construction, subsidies from the state, from regional bodies or from external aid
sources supplemented the effort of local communities, by financing the procurement of
construction materials and the hiring of qualified workers, or by providing model blueprints.
Special community effort support teams have been constituted in the past, either by national
civilian departments, or by associations of volunteers financed by certain external aid sources.

Another part of educational investment, of varying significance depending on the country, is

financed through private or community education. However, despite the financial difficulties of
governments, the share of private education continues to decline in most countries of the world.
From time to time, enterprises and other private donors contribute to the financing of education
projects, whether to enlarge existing institutions or to build new schools, in either the public or the
private education sector. These contributions can have a purely altruistic objective, or they may
have other goals, economic in nature or publicity oriented. It is obvious that such inputs should be
sought out, to the extent that they are in line with the general interest, and especially the national
education policy, as well as that of the institutions involved. Several countries promote such
initiatives by granting tax exemptions for contributions by enterprises or individuals to the
development of education. This is true of Brazil, for example.

All in all, national resources for project financing are numerous and varied; they are far from being
fully utilized in many countries. Nevertheless, the savings capacities of countries with limited
development and their foreign currency reserves are often too small for them to finance all their
projects. The difficulty is particularly acute for projects in post-secondary education, technical

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education and vocational training, as these projects require the procurement of sophisticated and
expensive equipment, which the national industry does not produce, and specialized personnel that
have to be trained or sometimes recruited abroad. Such projects are often impossible to implement
without resorting to external sources of financing.

iv) External financing Sources: Various means of financing

Owing to their inadequate resources, many countries approach external sources for the financing of
part of their educational investments and to procure the necessary foreign currency. Countries
whose economic and financial prospects are good can turn to commercial banks, or, in the case of
larger countries, borrow on financial markets under prevailing capital market conditions.
Developing countries can also turn to external aid, i.e., donations and loans at low interest rates
and/or with long reimbursement periods, which are granted by funding sources with a view to
supporting the development of recipient countries. The origin of such aid may be a state (bilateral
aid), or an international organization or community of states (multilateral aid), or a private group,
foundation or other non-governmental organization (private aid).

The normal interest rate loans of the multilateral development banks (the World Bank and the
regional development banks) are often included in development aid. In fact, such loans can be
granted to countries and for projects that would be ineligible for private bank lending; moreover,
their conditions (interest rate and repayment terms) are generally slightly more favourable than
those prevailing on the world capital market.

In this section we deal only with aid, generally the only type of external financing accessible to
developing countries. Among the various types of external aid, it is obvious that grants are more
helpful than loans, since they do not have to be repaid. Low interest loans are more helpful than
normal interest loans; in addition, the longer the repayment period, the less the impact of debt
service on the borrowing state's budget. This advantage is measured by the grant element of loans.
Another decisive feature of the various types of aid is the distinction between tied and non-tied aid.
Aid is tied when the goods and services supplied must come from the financing country or group of
countries. This is true of many bilateral aid sources. Resort to tied aid obviously limits the
government's choice as far as the quality and cost of goods and services are concerned, and
increase the risk that they may be unsuitable.

v) Limitations of Resort to External Aid

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Resorting to external aid increases the resources available to governments of under-equipped
countries for the implementation of their priority projects. Apart from the direct results expected
from such projects, their indirect effects are often considerable: stimulation of business activity and
employment, injection of foreign currency, meeting social demand, increasing the government's
popularity. Side by side with these advantages, the involvement of external aid sources can result
in serious disadvantages:
 Increasing the future financial burden;
 The risk of dependence on donors
 Slow action;
 Unsuitability for local needs.
The grant element of a loan is a percentage comparing the loan's reimbursement conditions with
those prevailing on private capital markets. It is defined as the percentage difference between the
loan's nominal value and the value, discounted in the year of its signature, of payments to be made
by the borrower to reimburse his debt. In principle, the discounting rate applied is the one
prevailing on world capital markets at the time of calculation. It goes without saying that the
resulting grant element varies with prevailing open market interest rates.

But even grants can be Trojan horses, if they generate excessive future expenditure for the national
budget. Many external aid sources finance mostly foreign currency investment; counterpart
investment expenditure in local currency, and operating expenses, must then be covered by the
government. Ministries of Education and Finance are responsible for keeping such commitments
within reasonable limits. They may well be quite right in rejecting a project to be financed by
external aid because of the future burden on the national budget. These are the risk of dependence
and the risk of unsuitability
a) The risk of dependence
Resorting to external aid sources can generate a risk of greater dependence, putting in danger the
sovereignty of the country concerned, especially in the field of education. Aid sources in fact
pursue objectives that do not necessarily coincide with those of the recipient governments.
Bilateral aid is not prompted solely by humanitarian considerations, and also has, quite naturally,
national motivations: increasing the political and economic influence of donor states, developing
their trade, etc. Multilateral and international institutions, whose aid is almost exclusively aimed at
the development of member countries, can shelter them from excessive influence of bilateral aid.
But both may use their assistance to influence the policies of the beneficiaries where this is
considered to be in the interests of those countries. In practice, the risk of dependence is most

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serious when external aid finances a significant proportion of a country's investment. Efforts by
donors to extend their dialogue with the government into the development policy area, while
ensuring a better link between national policy and projects, increase this risk of dependence. In
extreme cases, national planning sets aside its prerogatives, and is reduced to preparing
documentation for external aid. Dependence is even stronger in countries which, being short of
competent officials; have to call on foreign specialists for the identification and preparation of their
own projects.

The multiplicity of external aid sources can aggravate these problems, and even generate situations
which are the opposite of those desired, such as internal contradictions in the development effort,
or overlapping projects. An avalanche of documentation and study missions, when the personnel
able to deal with them are in short supply, tends to increase the confusion.

Thus, it is of capital importance for governments to preserve their ability to co-ordinate external
aid, while ensuring its consistency with national development objectives. Such co-ordination is
more difficult in poor countries, because of their acute needs. Co-ordination among aid sources
themselves, which could have advantages, would further undermine the sovereignty of states.
Slowness: When reacting to dramatic situations such as destruction caused by war, natural disasters
or flows of refugees, external aid sources can act fast. Under normal circumstances, on the other
hand, most donors follow a rather long project cycle, as described earlier. In the case of the World
Bank, for example, at least two years elapse between project initiation and signature of the loan
agreement. As we have seen in connection with project appraisal, such cautiousness is justified by
the need to make sure that applications for financing are well founded. But it involves serious
disadvantages for the applicant countries: at the end of such a long period, it may turn out that the
aid finally accorded has partly lost its justification. Moreover, some bilateral aid programs have to
be approved every year by the parliamentary body of the donor country, with a risk of
discontinuity.
Only a few organizations with decentralized management, such as UNICEF and some NGOs, can
act with speed and flexibility. Their example should be followed, although a minimum period
necessary for project appraisal must be preserved.

b) The risk of unsuitability

External aid sometimes turns out to be unsuitable for the recipient country. This applies to certain
projects accepted by governments under donor pressure, in order to meet a national need for fresh

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money. We have already looked at such examples. Sometimes this is also the case when aid is tied.
Sophisticated construction and equipment designed for developed countries can lead to
unaffordable maintenance and replacement costs. Technical assistants are sometimes poorly
prepared to serve in the recipient country and not receptive enough to the realities of the local
situation. Training programs abroad that is financed by tied aid can be inappropriate for the
country's needs, in terms both of the quality and type of training, and of the language of instruction.

Activity13
1. What are the sources of budget for educational project?

2. What do we mean by non-budgetary resource?

3. What are the risks in educational project management?

3.8 Components of Project Proposal

a) Cover Letter
The cover letter is so important because, it is the first piece of information about your proposal
read by fund providers. In writing the cover letter you should:
 Quickly gain the reader’s attention
 Show why the particular agency should be interested in your proposal
 Convey the importance and urgency of your project
 Keep it short
 Make it look good

b) Proposal Title
 In choosing your proposal title, keep interests of your reader in mind.
 Make it persuasive, positive and one that will capture attention.
c) Executive Summery
 Concisely summaries the content of the proposal
 It should be short.
 It should be easily understandable.

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  It should provide adequate and pertinent information.
d) Organizational Information
 Briefly summarizes the proposing organization's history, mission, clients and truck record
of achievements.
 Include current ongoing programs of the organization.
 Organizational chart or other attachments that explain may be added.
 Some background information about the location, how the organization is managed and
does work, and other details that builds the credibility of the organization should be
included.
e) Background and Justification of a Project
 Situation analysis,
 Problem analysis,
 Market and demand analysis,
 Stakeholder analysis, and
 Policy context and implications

f) Project Goals and Objectives

 The project goal- a broad statement of the ultimate result of the change being undertaken,
 Specific objective- an objective to be achieved by the project under consideration.

g) Project alternatives
 Possible alternatives,
 The chosen alternative,
 Bases for the chosen alternative and rejection of others.

h) Design of the Chosen Project Alternative

 Feasible technology to be employed by the project,
 Potential impact of the project on environment and possible measures,
 Social acceptability of the project,
 Potential impact of the project on cross cutting issues (e.g. gender, population),
 Institutional frameworks and capacities to undertake the project.

i) Components, activities and corresponding outputs of a project

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  Components (if any) of the project,
 Expected outputs of a project by components or otherwise, and
 Activities of a project by component or otherwise.
j) Project inputs, costs and benefits
 Properly identified and quantified inputs such as materials, labour (skilled, unskilled),
technology and the corresponding financial requirements, Properly identified, quantified (if
possible) and valued (if quantified) benefits of the project, and
 Properly compared costs and benefits of the project from financial and economic
perspectives and
 Properly conducted cost effectiveness analysis when necessary.
k) Financial plan of the project (Project funding and terms of Finance)
 Funding sources (budget, bilateral aids, multilateral aids, etc),
 Terms (grant, loan) and conditions (specific if any) of finance.
l) Assumptions, uncertainty and risk management strategy
 Considered assumptions,
 Analyzed and identified risks,
 Design risk mitigation strategy, and
 Considered scenarios for sensitivity and sensibility analysis.

m) Project Implementation and Management Arrangement

 Clearly defined work breakdown structure of a project,
 Clearly assigned works of a project to appropriate professionals,
 Clearly defined project monitoring, evaluation and reporting mechanisms,
 Exhaustively prepared physical and financial plan of a project,
 Clearly defined organizational setting of a project.
n) Project preparation information summery format for decision
 Project profile,
 Summary of project analysis, and
 Overall decisions.
o) Arrangements for project handover, operation and maintenance
 Outline procedures for project handover,
 Identify responsible institution for project operation,
 Identify the capacity and readiness of responsible institution for project operation,
 Outline of maintenance needs of the project during operation.

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Activity 14

Explain in brief the over concepts of the following terms in project proposal development.
1. Executive summary 4. alternatives

2. Background 5. inputs, process and output

3. Goals and objectives

3.9 Educational Project Evaluation

3.9.1 Concept of Project Evaluation
Evaluation is an important tool that your organization can use to demonstrate its accountability,
improve its performance, increase its abilities for obtaining funds or future planning, and fulfil the
organizational objectives. By communicating the results of the evaluation, your organization can
inform its staff, board of directors, service users, fund providers, the public, or other stakeholders
about the benefits and effectiveness of your organization’s services and programs, and explain
how charities work and how they are monitored. Although there are many benefits in conducting
evaluation, it will be a waste of your organization’s resources if the evaluation results are not
used.
The purpose of evaluation is to provide information for actions such as decision-making, strategic
planning, reporting, or program modification. Project evaluation helps you understand the progress,
success, and effectiveness of a project. It provides you with a comprehensive description of a
project, including insight on the:
 Needs your project will address;
 People who need to get involved in your project;
 Definition of success for your project;
 Outputs and immediate results that you could expect;
 outcomes your project is intended to achieve;
 Activities needed to meet the outcomes; and
 Alignment and relationships between your activities and outcomes.

Evaluation is a systematic investigation of the worth or significance of an object. Evaluation

normally involves some standards, criteria, measures of success, or objectives that describe the
value of the object. Evaluation can identify criteria for success, lessons to learn, things to achieve,
ways to improve the work, and the means to move forward.

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Evaluation is the systematic collection of information about activities, characteristics, and
outcomes of projects to make judgments about the project, improve effectiveness, and/or inform
decisions about future programming (adapted from Patton, 1987). Evaluation is not merely the
accumulation and summary of data and information about a project. Importantly, evaluation
provides managers with well-documented and considered evidence to support the decision-making
process.

Project evaluation assesses activities that are designed to perform a specified task in a specific
period of time. For example, a three-day workshop on volunteerism, a one-year fundraising
program, a three-year HIV prevention intervention, a five-year career development innovation, or
an ongoing newcomer youth orientation and integration training program are all projects that you
can evaluate.
Project evaluation and project management are interrelated. Evaluation can help you complete a
project successfully, provide evidence of successes or failures, suggest ways for improvements,
and inform decisions about the future of current and planned projects. Project evaluation is an
accountability function. By evaluating a project, you monitor the process to ensure that appropriate
procedures are in place for completing the project on time, and you identify and measure the
outcomes to ensure the effectiveness and achievements of the project. All these efforts make your
organization capable of reporting, answering all inquiries, and being accountable for its plans. You
can use the results of a project evaluation to:
 Identify ways to improve or shift your project activities;
 Facilitate changes in the project plan;
 Prepare project reports (e.g., mid-term reports, final reports);
 Inform internal and external stakeholders about the project;
 Plan for the sustainability of the project;
 Learn more about the environment in which the project is being or has been carried out;
 Learn more about the target population of the project;
 Present the worth and value of the project to stakeholders and the public;
 Plan for other projects;
 Compare projects to plan for their futures;
 Make evidence-based organizational decisions;
 Demonstrate your organization’s ability in performing evaluations when searching for funds;
 Demonstrate your organization’s concerns to be accountable for implementing its plans,

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 pursuing its goals, and measuring its outcomes.

Creating an evaluation plan is the very first stage of conducting an evaluation. This section
explains the essential steps to help you create an evaluation plan for your project. Your plan should
answer questions such as:
 What is being evaluated?
 Why is it being evaluated?
 Who wants the evaluation?
 Who will do it?
 How will it be done?
 What results do you expect?
By the end of this section, you will have a project evaluation plan. You can share this plan with
internal and external stakeholders when inviting them to participate in the project or in its
evaluation. Your plan will be a working document that you should revisit and revise periodically.

A considerable amount of time, effort, and other resources go into the

d e v e l o p m e n t a n d implementation of education projects. Quite obviously, the goal is to create effective
projects that can serve as models of excellence. Whether the project is an hour-long endangered species
walk, a family day festival, marine resources monitoring, or a community forum, the aim of providing
quality educational experiences remains the same.

In the course of implementing a project, various types of information are

g a t h e r e d . P r o j e c t managers often want to know how many individuals participated in an event,
whether participants were satisfied with the logistics, and whether staff members and volunteers
feel confident in their ability to deliver a particular educational experience. Answers to these
questions provide useful information. They help managers monitor specific aspects of the project.
However, in practice, this type of information gathering tends to be more sporadic and patchy than
methodical and comprehensive.

3.9.2 Designing Evaluation of Education Projects

Project evaluation serves two general purposes. Evaluation helps to determine the project’s merit
(does it work?) and its worth (do we need it?). Evaluation helps decision-makers determine if a
project should be continued and, if so, suggests ways to improve it. Additionally, evaluation

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documents project (and program) accomplishments. If the project has been designed properly with
well-articulated objectives that specify what must be accomplished, to what degree, and within
what time period, the evaluation can determine whether or not the objectives are being met. The
evaluation can gather information as to why a project is or is not meeting its objectives.

Why is Evaluation Important to Project Design and Implementation?

 C o n d u c t i n g p r o j e c t e v a l u a t i o n : Perhaps the most common reason revolves around
the desire to understand, in a systematic way, what is and is not working in a project. All
too often, how projects work (or don’t work) is understood primarily through a
combination of instincts, anecdotes, and numbers on a balance sheet. The passionate
instructor who is wrapped up in the moment of teaching is probably not in a position to
make defensible claims about the long-term impact of a lesson on a learner’s education.
Likewise, one cannot generalize from a series of anecdotes, however informative and even
satisfying. Evaluation provides perspective evidence. It also provides the types of
information necessary for a sound decision-making. The following outlines additional
benefits of conducting project evaluation.
 Participants: Participants are core to the success of the project. In the long run, project
sustainability will depend on the degree to which participants benefit directly, short-term
and long-term, from the experiences or services. The evaluation will provide evidence of
the ways in which participant learning is impacted.

 Project Improvement: Project strengths and weaknesses can be identified through an

evaluation. Of equal importance, an evaluation can map out the relationships among
projects.

 Components: refers to how the various parts of a project work together. This information
can be used to re-design the project and increase both efficiency and effectiveness.

 Public Relations: data generated by an evaluation can be used to promote the products and
services of the project within and outside of the agency. Instead of vague claims and
uncertain assertions, statements based on evaluation results will be viewed as more
substantial and justifiable. Importantly, if designed with sufficient care, an evaluation
should be able to shed some light on why and how the project works.

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 Funding: more and more program managers require the design and implementation of a
comprehensive, outcomes-based evaluation. They want to know what types of impacts the
project has had. Even if evaluation is not required, an evaluation can provide evidence of
project effectiveness; such evidence may be important when limited resources are being
distributed internally. Evaluation results are often helpful in determining if a project should
be continued scaled backed, discontinued, or enhanced.

 Improved Delivery: Projects evolve over time. What was once a coherent, discrete set of
activities may have grown into a jumbled set of loosely related events .An evaluation can
help clarify the purposes of the project, allowing decision-makers to examine project
components against well-thought-out criteria. Valid comparisons of projects and activities
can be made and duplication of efforts can be limited. It is quite possible that the evaluation
will uncover a gem hidden in the jumble.

 Capacity Building: Engaging staff members, volunteers, and other stakeholders in the
design and implementation of an evaluation will provide opportunities for skill building and
learning. As the project or program is examined, those involved will also develop insights
into the workings of the project and perhaps even the workings of the organization. These
insights can be used to inform a strategic examination of projects and programs by
identifying priorities, overlap, gaps, and exemplars.

 Clarifying Project Theory: When the project was designed initially, it was based either
explicitly or implicitly on a project theory that explained how things work or how people
learn or even how organizations change. An evaluation asks those involved to revisit that
project theory. Based on experiences with the project and information taken from research
literature, the evaluation provides an opportunity to revise the project theory. By making
the project theory explicit, the underpinnings of the project and what makes it work will be
better understood and thus, better implemented. Staff members and volunteers who
understand why a particular set of teaching methods was selected or why the project
activities were sequenced the way they will be more likely to actually follow the plan. They
will also feel more ownership in the project if they understand the theory behind the project
more fully.

 Taking Stock: Engaging in evaluation provides a precious opportunity to reflect on the

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 project. It is an opportunity to document where the project has been and where it is going,
and consider whether the project is doing what its designers hoped it would do. Taking
stock is more than accumulating information about the project, it is learning through the
project.

3.9.3 Planning for Evaluation

As mentioned earlier, evaluation is the systematic collection of information
a b o u t a c t i v i t i e s , characteristics, and outcomes of projects to make judgments about the
project, improve effectiveness, and/or inform decisions about future programming. Consequently,
great care must be made in the planning of any evaluation effort. The following outlines 12 steps of
project evaluation. The outline is intended to break down a complex process into manageable steps.
Please recognize, however, that in providing an overview of the process, nuances and detail are
necessarily omitted.

Stage I: Planning
Step 1: Reiterate the Issue, Audience, and Project Objectives
Before a project evaluation can be designed, it is essential to understand fully the project – its
components, the relationships among the components, the audience(s), and the intended outcomes
(short-term, medium-term, and long-term). The project logic model should be examined and used
as a roadmap for evaluation planning. With the logic model and the associated performance
objectives in hand, evaluation planners will be able to articulate how the project is supposed to
work. From this foundation, the rest of the evaluation design will follow.

Step 2: Establish Planning Team (Including Stakeholders, Audience, and Evaluators)

The project, in all likelihood, involves a variety of players. Project managers, resource managers,
staff members, volunteers, participants, and community members all have a stake in the overall
success of the project. Each plays a different role and sees the project through a different lens.
These perspectives should be tapped when planning an evaluation. To ensure that ideas and
perspectives are represented, members of stakeholder groups should be invited to participate in an
evaluation planning team. The team, depending on the particulars of the evaluation, may play a
purely advisory role or may take a more hands-on role in the actual data collection. The exact
expectations of planning team members need to be decided and articulated early on in the process.

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Step 3: Establish the Goals and Objectives of the Evaluation
The project logic model, created during the early phases of project planning, illustrates the
relationships among the various project components (initial situation, identified priorities, inputs,
outputs, and short-term, medium-term, and long-term outcomes). The logic model should help
guide project evaluation, by serving as a tool for clarifying program elements, on-going self-
evaluation, and identifying evaluation questions and indicators. At some point, however, the
evaluation team will need to determine the scope of the evaluation – that is, to define the purpose
of the evaluation, what is going to be evaluated, and who will use the evaluation.

Given time and resource constraints, it may not be realistic to expect that all aspects of the project
will be evaluated. The project team will need to set specific goals and objectives that can be used to
focus evaluation planning reiterate the issue, audience, and project design. A careful consideration
of the objectives of project theory should be included in this discussion. To get the most out of an
evaluation process, the project theory should be made explicit and put to a test. In doing establish
the goals and objectives of so, the evaluation should be able to shed light on the evaluation on
deeper questions related to how and why the project works the way it does.

Step 4: Clarify the Time Frame in which the Activities and Impacts Perform
The relationships between overall project implementation and project evaluation design should be
integrated to project design. The evaluation time line must be integrated into the project
implementation time line and vice versa. Otherwise, important opportunities, such an ability to
collect baseline data or assess critical impacts, can be easily missed and lost forever.

Stage II: Data Analysis and Reporting Evaluation Time Line to Ensure Effectiveness.
Step 5: Set Appropriate Standards
Evaluation, like overall project planning, rarely takes place in a vacuum. As mentioned previously,
projects are developed based on explicit or implicit theories of how the world works. In designing
an evaluation it is helpful to consider the related literature and use this literature as a touchstone.
Likewise, research into evaluation processes, practices, and standards is useful. This is particularly
true if the evaluation team does not include an outside evaluation expert or someone with
significant evaluation expertise. Finally, existing sources of information (previous evaluations,
census data, reports, budgets, etc.) should be tapped.

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Step 6: Select Data Collection Methods
Develop questions based on the evaluation goals and objectives. By this point in the process, the
evaluation team has determined why an evaluation is being conducted, who will conduct it, what
will be evaluated (including defining project theory, expected outcomes, and indicators), who
will be evaluated, and when the evaluation will take place. Each of these decisions begins to
define the type of evaluation (e.g., formative, summative) to be conducted (see below) as well as
the data collection tools (e.g., survey, interview, case study, focus group) that are most
appropriate (see discussion of tools).

Stage III: Data Collection

Step 7: Determine the Audience Sample
Except in rare cases when a project is very small and affects only a few participants, evaluations
will be limited to a subset of the total anticipated audience. The preferred method for selecting
the subset is random sampling
 Using procedures that will reduce sample bias and response bias by selecting a sample that
accurately reflects the population. A sample represents the population if every person in the
population has an equal chance of being selected. In general, to reduce sampling errors,
make the sample as large as feasible in terms of time and money. The larger the sample, the
more generalizable to the population – that is, it more accurately reflects what would be
obtained by evaluating everyone in the population.
 In determining audience sample, some basic questions will need to be answered: How many
audiences do you wish to sample? (For example, a project might identify teachers, parents,
and students as its audiences. Each audience would be sampled independently.) How many
individuals do you hope to assess? How can you best reach the audience(s) to collect data?
(Visitors to a marine sanctuary might only be accessed during a short window of
opportunity; members of an advisory group might be more readily available.)

Step 8: Design and pilot data collection instrument

Just as the initial design of the project required careful design and pilot testing of instructional
materials to see how they worked, the data collection methods or tools (e.g., interview, focus
group, survey, observation) need to be crafted and pilot tested. The evaluator will need to answer
a series of questions that will help establish the nature of the data collection instrument(s), such
as: How important is statistical precision? How important is in-depth information about one or

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 more aspect of the project? How will data collection be standardized? Is contact information on
target audience(s) available? What method would the audience be most receptive to? How many
questions can be asked?

Step 9: Gather and Record Data

Again, just as the design of a project requires the consideration of various logistics (e.g., staff
schedules, availability of facilities), the data collection process must be thoroughly scoped. The
evaluation team will need to determine how data will be collected (Who will conduct interviews
or administer questionnaires? How will data be recorded?). Depending on the expertise of those
who will be responsible for data collection, training of interviewers, focus group facilitators, or
observers may be appropriate. Additionally, evaluators will need to design a system that assures
anonymity and that all aspects of ethical standards are practiced.

Stage IV: Data Analysis and Reporting

Step 10: Perform data analysis
Analyzing quantitative and qualitative data is often the topic of advanced research and evaluation.
It is always a good idea to include a planning team member with survey and statistical analysis
and/or qualitative data analysis expertise on the evaluation team. When that isn’t possible, there
are a few basics that can help in making sense of the data.
a.Have a plan in place for how to analyze, synthesize, store, and manage data before starting the
data collection.
b. Develop a plan to guarantee an unbiased analysis and reporting of the data.
c.Always start analyzing the collected data with a review of the evaluation goals and objectives.
(Why was the evaluation undertaken? What question did you want to answer?)
d. Make copies of all data, and store a master copy of the original data in a safe place.
e. For qualitative data, anticipate responses (the pilot test will help with this), and have a plan for
categorizing and coding the data.

Step 11: Manage data

After the data are collected and even after the data have been analyzed, a plan must be put in
place to continue the effective and ethical management of the data. In most cases, the data remain
viable for some period of time. After reading the evaluation report, decision-makers, other
stakeholders, and other evaluators may generate questions that can be answered by revisiting the
data. Consequently, it is important to develop a plan for continued access to uncorrupted data. If

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 data are to be retained for some period of time, the project must also make certain that the
confidentiality and anonymity of respondents is maintained. Finally, intellectual property rights
need to be defined (for example, who “owns” the data?)

Step 12: Synthesize information and create report

After the data have been collected and analyzed, an evaluation report must be written. Obviously,
knowing when the evaluation report and its recommendations will be needed impacts the overall
time line as well as decisions related to evaluation design and data collection strategies. Although
the nature of the evaluation report (e.g., length, style of writing) is determined to some extent by
its intended audience, they invest heavily in planning.

Integrate the evaluation into ongoing activities of the program. Participate in the evaluation and
show program staff that you think it is important. Involve as many of the program staff as much
as possible and as early as possible. Be realistic about the burden on you and your staff. Be aware
of the ethical and cultural issues in an evaluation.

3.9.4 Who Should Conduct Evaluation?

Early in the evaluation planning process, the decision will need to be made whether or not to hire
an outside evaluator. In some cases, the decision may have been made for the team. Many program
managers require that an outside evaluator be contracted. An outside evaluator is seen as an
objective third-party who may be able to bring a fresh perspective to the project. In addition, a
professional evaluator has expertise that may not exist in-house. If evaluation expertise does exist
and an outside evaluator is not required, it is possible to run major components of the evaluation
in-house.

However, managers should proceed with caution. Those with strong ties to the project (e.g., project
Manager, staff members, volunteers, advisory committee members) may find it difficult to shed
their biases, particularly if evaluation results are to be used in decision-making. Project staff
members, volunteers, and other stakeholders should be involved in the evaluation. They should
play a role in determining both the focus and objectives of the evaluation. However, at a minimum,
an outside evaluator should be responsible for data analysis and interpretation.

3.9.5 Evaluation Cost Analysis

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Depending on the size and complexity of the project, it is typically recommended that 5-15% of
project costs be set aside for evaluation. Costs may be lowered if some or even most of the
evaluation is conducted in-house. (Remember, however, that even though a check may not be
written to an outside evaluator, staff time still costs.) It should also be remembered that a great deal
of data may already exist.
Activity 15
1. What is project evaluation?

2. what are the steps to be followed during project evaluation

Unit Summary
The life cycle of a project often includes identification, preparation, appraisal, negotiation,
implementation and evaluation. The identification stage focuses on the selection of project title
based on priority needs and feasibility of the outcome of the project.

The feasibility study includes market analysis and demand forecasting. The ability of the project to
satisfy demands often analysed through logical framework approaches. Environmental analysis is
essential to ensure the sustainability of the project. The considerations of social and cross-cutting
issues are important factors to determine the success and failure of project management and its life
cycle.

Similarly, the analysis of stakeholders, participation, social impact assessment, mitigation measures,
and institutional analysis are important factors in understanding the influence of cross-cutting issues
in project management and it life cycle. Economic analysis is another factor in analysing project life
cycle. Economic analysis of a project includes purpose of the project, transfer of payment,
identification of external links, justification of the project and sources of finance.

The preparation of project proposal needs due attention right from the cover page to the
arrangement for project handover and implementation. Project evaluation is a systematic
investigation of the significance of a project. It often begins with planning stage and proceeds
through data collection, and data analysis and interpretation.

Review Questions

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PART I: TRUE of FALSE Items
Write true if the statement is true and false if it is not true
_____1. A project identification step can be called pre-feasibility study
_____2. A project usually face critical problems during implementation
_____3. A project may get into complexity when there is a shift in public demand and political will
_____4. Priority of a project usually expressed through its objectives
_____5. Educational project feasibility has multiple dimensions

PART II: MULTIPLE CHOICE Items

Choose the best possible answer from the give alternatives
_____1. _____________ is not among the seven elements theory of project negotiation.
A) monitoring C) leadership
B) communication D) commitment
_____2. Which of the following is more challenging than others in project management?
A) project preparation C) project negotiation
B) project implementation D) project evaluation

____3. One of the following does not belong to educational feasibilities. Which one is it?
A) social feasibility C) job satisfaction
B) administrative feasibility D) financial feasibility

____4. One of the following is among determinant factors to select the project site.
A) physical suitability C) proximity to market
B) government priorities D) all of the above

_____5. One of the following is not part of social impact assessment in environmental analysis
A) stakeholders identification
B) ignoring impact identification
C) developing necessary measures
D) maximizing the positive aspects of impact assessment

PART III: ESSAY Items

Give short and precise answers for the following questions

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 1. Explain the necessary methods used to develop educational project

2. What are the sources of educational finance?

UNIT FOUR
PROJECT ANALYSIS
Unit Introduction
Unit four of the module deals with the economic analysis of a project. Project risk management,
social and environmental assessment, institutional assessment, and program development and
implementation are included as issues of the unit.

Unit Objectives
After successful completion of the unit you should able to:

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  Explain the concept of economic analysis;
 Develop basic questions necessary for economic analysis;
 Explain the importance of risk management in project planning;
 Differentiate the roles of social analysis from institutional analysis;
 Prepare programs of development; and
 Explain the importance of stakeholder analysis.

Pre-reading Activity
Before you go into the detail study of the unit, attempt the following questions
1. Why economic analysis is required in project management?
2. What are the risks in project management?
3. Who should be a stakeholder of project management?

4.1Economic Analysis of a Project

4.1.1 Purpose of Economic Analysis
The main purpose of project economic analysis is to help design and select projects that contribute
to the welfare of a country. Economic analysis is most useful when used early in the project cycle,
to catch bad projects and bad project components. If used at the end of the project cycle, economic
analysis can only help in the decision of whether or not to proceed with a project. When used
solely to calculate a single summary measure, such as the project’s net present value (NPV) or
economic rate of return (ERR). Economic analysis serves only a very limited purpose.

The tools of economic analysis can help us answer various questions about the project’s impact on
the entity undertaking the project, stakeholders and project’s risks and sustainability. In particular,
they can help to: (a) decide whether the private or the public sector should undertake the project;
(b) estimate the project’s fiscal impact; (c) determine whether the arrangements for cost recovery
are efficient and equitable; and (d) assess the project’s potential environmental impact and
contribution to poverty reduction.

4.1.2 The Economic Setting

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A project cannot be separated from the context in which it takes place. The links between the
project and country’s strategy need to be established early in the presentation of the project. The
key role of the policy and institutional framework also needs to be discussed. Researches indicate
that projects do better in environments with low distortions than in highly distorted environments.

One of the first questions to be asked during project analysis is to see whether the sector and macro
preconditions are satisfactory for the project or not. In particular, the questions should inquire
whether there are key distortions that should be removed prior to project implementation or not to
ensure project effectiveness. With projects increasingly stressing policy reform, project appraisal
needs to include an evaluation of the project’s policy and institutional components. The
relationship of the project to the broader development objectives of the sector and of the country’s
needs is an integral part of the economic justification. The economic analysts should always
ascertain that the project fits with the broader country’s and sector strategies. These aspects of the
evaluation normally derive from the economic and sector work on which the project is based.

4.1.3 The Questions that Economic Analysis Should Answer

i) What is the objective of the project?
The first step in the questions of economic analysis of a project is to define clearly the
objective(s) that the project is trying to achieve. A clear definition of the objective is essential to
reduce the number of alternatives considered, and to select the tools of analysis and the
performance indicators. Is the project trying to achieve a narrow objective, such as improving
inequity in ensuring access to schooling for both male and female? Or, is it trying to achieve a
broader objective of education such as improving quality? If the former, then the analyst will
only look at alternative ways of ensuring access to both sexes, and will judge the success of the
project in terms of the equality of sexes in education. If the latter, then the analyst will look not
only at alternative ways of ensuring access but also at alternative ways of reducing dropout and
maintaining outcome-based education and will judge the success of the project in terms of its
impact on education quality status.

The appropriate tool of analysis also depends on the width of the objective. For example, if the
objective is to reduce school dropouts, community involvement might be considered as
alternative. If the objective is to improve quality education, then the interventions need to be
compared in terms of the outcome-effectiveness of the graduates. If the objective is even
broader—say, a national education policy reform-then the comparisons need to be done in terms

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 of common goals of education and usually a political measure. In short, a clear objective is
essential to define the set of feasible alternatives for obtaining the desired result, and to select the
tools to analyze the problem and the indicators of success.

ii) What will happen if the project is undertaken? What if it is not?

One of the most fundamental questions concerns a counterfactual: What would the world look
like without the project and what would it look like with the project? What will be the impact of
the project on various groups in the society? In particular, what will be the impact of the project
on the provision of goods and services in the private sector? Will the project add to the provision
of goods and services, or will it substitute for (displace) goods and services that would have been
provided anyway? The difference between the situation with and without the project is the basis
for assessing the incremental costs and benefits of the project. Both the financial and economic
analysis of the project are predicated on the incremental net gains of the project, not on the
before/after gains.

iii) Is the project the best alternative?

A second important question concerns the examination of alternatives. Are there any plausible
(mutually exclusive) alternatives to the project? Alternatives could involve, for example,
different technical specifications, different policy or institutional reforms, different location,
different beneficiaries, different financial arrangements, or differences in the scale or timing of
the project. How would the costs and benefits of alternatives to achieve the same goal compare
with those of the project? Comparison of alternatives helps planners choose the best way to
accomplish their objectives.

iv) Are there any separable components? How good are they?
A closely related question concerns the reparability of the components. Is the project an integrated
package? Or, does it have separable components that could be undertaken, and justified, by
themselves? If the project contains separable components, then each and every separable
component must be justified as if it were the marginal component. Omitting a component whose
presence cannot be justified always increases the project’s net benefits. Unsatisfactory
(separable) components should always be deleted from the project.

v) Winners and losers: who enjoys the music? Who pays the piper?

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A good project contributes to the country’s economic output; hence it has the potential to make
everyone better off. Nevertheless, normally not everyone benefits, and someone may lose.
Moreover, groups that benefit from a project are not necessarily those that incur the costs of the
project. Identifying those who will gain, those who will pay, and those who will lose gives the
analyst insight into the incentives that various stakeholders have to see that the project is
implemented as designed. It is especially important to identify the benefits accruing to and the
costs borne by the “poor” or “very poor,” as defined for the country by poverty assessments.

vi) What is the project’s fiscal impact?

Given the importance of fiscal policy for overall macroeconomic stability, the fiscal impact of
the project should always be analyzed. How and to what extent will the costs of the project be
recovered from its beneficiaries? What changes in public expenditures and revenues will be
attributable to the project? What will be the net effect for the central government and for local
governments? Will the cost recovery arrangements affect the quantities demanded of the services
provided by the project? Are these effects being properly taken into account in designing the
project? What will be the effect of the cost recovery on the distribution of the benefits (gainers
and losers)? Will the cost recovery arrangements contribute to the efficient use of the output from
the project (and resources generally)? Is the non recovered portion factored into the analysis of
fiscal impact?

vii) Is the project financially sustainable?

The financing of a project is often critical for its sustainability. Even a project with high benefits
undergoes a lean period when it must be sustained by funds external to the project. The cash flow
profile is often as important as the overall benefits. For these reasons, it is important to know
how the project is to be financed and who will provide the funds and on what terms. Is adequate
financing available for the project? How will the financing arrangements affect the distribution of
benefits and costs of the project?

viii) What is the project’s environmental impact?

A very important difference between society’s point of view and the private point of view
concerns costs (or benefits) attributable to the project but not reflected in its cash flows. When
these costs and benefits can be measured in monetary terms, they should be integrated into the
economic analysis. In particular, the effects of the project on the environment, both negative
(costs) and positive (benefits), should be taken into account and, if possible, quantified and

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 assigned a monetary value. The impact of these external costs and benefits on specific groups
within society, especially the poor, should be borne in mind.

ix) Techniques for assessment: is the project worthwhile?

After taking into account all the costs and benefits of the project, the analyst needs to decide
whether the project is worth undertaking. Costs and benefits should be quantified whenever
reasonable estimates can be made. But given the present state of the art, it is not always feasible
to quantify all benefits and costs, and various proxies or intermediate output may have to suffice.
For projects whose benefits are measurable in monetary terms, the appropriate yardstick for
judging whether the project is acceptable is the project’s net present value.

To be acceptable on economic grounds, a bank-financed project must meet two conditions: (a) the
expected net present value of the project must not be negative, and (b) the expected net present
value of the project must be higher than or equal to the expected net present value of mutually
acceptable project alternatives. For other projects, physical indicators of achievement in relation
to costs (cost-effectiveness) are appropriate. In some other cases, a qualitative account of the
expected net development impact might have to suffice. In all cases, however, the economic
analysis should give a persuasive rationale for why the benefits of the project are expected to
outweigh its costs, that is, why the net development impact of the project is expected to be
positive. When quantitative analysis carries out economic and market prices should be applied.

x) Is this a risky project?

Economic analysis of projects is necessarily based on uncertain future events and involves
implicit or explicit probability judgments. The basic elements in the costs and benefit streams are
seldom represented by a single value, but more often by a range of values with different
likelihoods of occurring. It is desirable, therefore, to take into consideration the range of possible
variations in the values of the basic elements and to reflect clearly the extent of the uncertainties
attaching to the outcomes. At the very least, economic analysis should identify the critical
variables that determine the outcome of the project, that is, the values that increase (decrease) the
likelihood that the project will have the expected positive net development impact. These critical
variables should emerge from the economic and risk analysis of the project.

The analysis should also identify and reflect the likelihood that these variables may deviate
significantly from their expected values, as well as the major factors affecting these deviations.

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 The analysis should assess how likely such deviations are, singly and in combination, and
identify the factors that are likely to create the greatest risks for the project. Finally, it should be
explicit about actions taken to reduce these risks. If the analysis of risk is based on “switching
values,” it should identify the critical variables, individually and in plausible combinations, and
determine by how much they can change before the net development impact of the project
becomes unfavourable.

Activity 1
1. What is the purpose of economic analysis in project management?

2. What are the major environmental factors affecting project management?

3. What is project sustainability?

4.1.4 The Process of Economic Analysis

After identifying with- and without-project situations, selecting the best the alternatives considered
and dropping bad project components, the analyst prepares the financial analysis of the project.
This step, which examines the net benefits to the project implementing agency, conveys
important information about incentives. It helps assess whether the project would be of interest to
the private sector. Once the financial analysis is complete, the analyst needs to adjust the flows
and prices to reflect net benefits to society. The analyst must get the flows right by removing all
subsidies and taxes from the adjusted financial flows and taking into account the project’s
externalities, especially the environmental externalities. To assess the project’s fiscal and
financial sustainability, it is important to keep track of who receives or pays for the benefits and
costs of the environmental externalities and for the implicit and explicit transfers (typically,
income taxes, direct subsidies, and property taxes).

After correctly identifying the streams of costs and benefits, the analyst needs to price them right.
Market prices seldom reflect the economic values of inputs and outputs, and adjustments need to
be made. Information about the sources of divergence between border and market prices and
between shadow and market exchange rates will help identify the groups that benefit from and
pay for the differences.

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 The final price adjustments affect non-tradeables. If non-tradeables are a sizable part of project
costs, their prices need to be adjusted to reflect opportunity costs to society. Labour is one of the
most important non-tradeables. In many cases, especially in projects in health and education,
volunteer labour is an important component. If project costs and sustainability are to be assessed
correctly, such contributions need to be priced at their opportunity costs.

Next, the analyst needs to put this information together and identify sources of divergence between
the financial and the economic analysis of the project. The sources of divergence convey very
useful information that enables the analyst to answer a number of important questions. First, by
identifying the groups that enjoy the benefits and pay for the costs of the project, this comparison
helps identify the impact of the project on the main stakeholders and assess its sustainability. In
particular, since taxes and subsidies are usually important sources of difference, this step is
essential to assess the project’s fiscal impact.

Second, by identifying the causes of the differences between the financial and the economic
evaluations, the analyst can tell whether the differences are market-induced or policy-induced. If
they are policy-induced, the analyst needs to consider whether any types of policy changes would
bring the economic and financial assessments closer to each other; in short, is the project timely, or
might it be preferable to convince the authorities that what is needed is policy reform. Finally, the
comparison also sheds light on the size and incidence of the environmental externalities that can be
evaluated in monetary terms.

Transparency
It is important for the analysis to indicate the extent to which the success of the project depends on
assumptions about macroeconomic, institutional, financial, behavioural, technical, and
environmental variables, including assumptions about government implementation capacity,
macroeconomic performance, and availability of local cost financing. The analysis should indicate
the key actions—by the government and the borrower—necessary for project success; these actions
include implementing policy and procedural measures and ensuring the requisite degree of
government commitment to and popular participation in the project. The analysis should include a
comparison of project assumptions with the relevant historical values, and spell out the rationale
for any differences. When all these points are made clear, the economic analysis provides an easily

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understandable and transparent product that policymakers can confidently factor into decision
making.

4.2 Project Risk Analysis and Management

Project risk analysis and management offers a simple but strong and practical framework to help
new users gets start new project. It is not a definitive explanation of all the techniques and methods
that can be used in the process. Project risk analysis and management can be used on all projects,
whatever the industry or environment, and whatever the timescale or budget is there.

Project risk analysis and management is a process which enables the analysis and management of
the risks associated with a project. Properly undertaken it will increase the likelihood of successful
completion of a project to cost, time and performance objectives. Risks for which there is ample
data can be assessed statistically. However, no two projects are the same. Often things go wrong
for reasons unique to a particular project, industry or working environment. Dealing with risks in
projects is therefore, different from situations where there is sufficient data to adopt an actual
approach. Because projects invariably involve a strong technical, engineering, innovative or
strategic content a systematic process has proven preferable to an intuitive approach. Project risk
analysis and management have been developed to meet this requirement.

There are many reasons for using project risk analysis and management, but the main reason is that
it can provide significant benefits far in excess of the cost of performing it.
Benefits: the benefits gained from using project risk analysis and management techniques serve not
only the project but also other parties such as the organization and its customers. Some examples of
the main benefits are:
 an increased understanding of the project, which in turn leads to the formulation of more
realistic plans, in terms of both cost estimates and timescales;
 an increased understanding of the risks in a project and their possible impact, which can
lead to the minimization of risks for a party and/or the allocation of risks to the party best
able to handle them;
 an understanding of how risks in a project can lead to the use of a more suitable type of
contract;
 an independent view of the project risks which can help to justify decisions and enable
more efficient and effective management of the risks;

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  a knowledge of the risks in a project which allows assessment of contingencies that
actually reflect the risks and which also tends to discourage the acceptance of financially
unsound projects contribution to the build-up of statistical information of historical risks
that will assist in better modelling of future projects;
 facilitation of greater, but more rational, risk taking, thus increasing the benefits that can be
gained from risk taking; and
 Assistance in the distinction between good luck and good management and bad luck and
bad management.

4.2.1 The Project Risk Analysis

Experienced risk analysts and managers hold perceptions of this process which are subtle and
diverse. In order to simplify the process this divides the overall process into two constituents or
stages risk analysis and risk management.
i)
The risk analysis stage of the process is generally split into two 'sub-stages'; a qualitative analysis
'sub stage' that focuses on identification and subjective assessment of risks and a quantitative
analysis 'sub-stage' that focuses on an objective assessment of the risks.

a) Qualitative Risk Analysis

A Qualitative Analysis allows the main risk sources or factors to be identified. This can be done,
for example, with the aid of check lists, interviews or brainstorming sessions. This is usually
associated with some form of assessment which could be the description of each risk and its
impacts or a subjective labelling of each risk (e.g. high/low) in terms of both its impact and its
probability of occurrence. A sound aim is to identify the key risks, perhaps between five and ten,
for each project (or part-project on large projects) which are then analyzed and managed in more
detail.

b) Quantitative Risk Analysis

A Quantitative analysis often involves more sophisticated techniques, usually requiring computer
software. To some people this is the most formal aspect of the whole process requiring:
 measurement of uncertainty in cost and time estimates
 Probabilistic combination of individual uncertainties.

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Once all risks have been identified, during the qualitative analysis, it may be appropriate to enter
into a detailed quantitative analysis. This will enable the impacts of the risks to be quantified
against the three basic project success criteria such as cost, time and performance. Several
techniques have been developed for analyzing the effect of risks on the final cost and time-scale of
projects. However, such techniques do not always readily apply themselves to the analysis of
performance objectives.

The main techniques currently in use are:

 Sensitivity analysis often considered being the simplest form of risk analysis. Essentially, it
simply determines the effect on the whole project of changing one of its risk variables such
as delays in design or the cost of materials. Its importance is that it often highlights how the
effect of a single change in one risk variable can produce a marked difference in the project
outcome. In practice, a sensitivity analysis will be performed for more than one risk;
perhaps all identified risks, in order to establish those which have a potentially high impact
on the cost or time-scale of the project. The technique can also be used to address the
impact of risk on the economic return of a project.

 Probabilistic analysis specifies a probability distribution for each risk and then considers
the effect of risks in combination. This is perhaps the most common method of performing
a quantitative risk analysis and is the one most people consider, incorrectly, to be
synonymous with the whole project risk

4.2.2 The Project Risk Management

Risk management uses the information collected during the risk analysis phase to make decisions
on how to improve the probability of the project achieving its cost, time and performance
objectives. This is done by reducing the risk where advantageous to do so and monitoring and
managing the risk which remains.

The project manager uses the information at his disposal to choose between the feasible responses
to each risk identified during the qualitative phase. This may involve amending the project plans to
reduce the risk e.g. moving high risk activities off the critical path, developing contingency plans
to allow rapid response if certain risks occur or setting up monitoring procedures for critical areas
in order to get early warning of risks occurring. There are two types of response to a risk
immediate and contingency which can be defined as follows:

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  Immediate response: an alteration to the project plan such that the identified risk is
mitigated or eliminated;
 Contingency response: a provision in the project plan for a course of action that will only
be implemented should the adverse consequences of the identified risk materialize;

Responses to risks can do one or a combination of five things;

 Remove: risks that can be eliminated from the project and therefore no longer propose a
threat;
 Reduce: risks that can be decreased by taking certain actions immediately;
 Avoid: risks that can be mitigated by taking contingency actions should they occur;
 Transfer: risks can be passed on to other parties, unfortunately this does not normally
eliminate the risk it just makes someone else worry about it; and
 Acceptance: the benefits that can be gained from taking the risk should be balanced against
the penalties.

The risk management phase begins immediately when the qualitative analysis is complete and is
then a continuing process through the complete life-cycle of the project. The information gained
during the quantitative analysis allows the project manager to trade off taking actions now against
the likelihood and impact of risk occurring. The project manager may choose to immediately
amend his overall time and cost plan in order to increase the probability of achieving his time and
cost objectives.

Activity 2
1. What are the elements to be considered in the process of economic analysis?

2. What is the implication of risk in project management?

4.2.3 Social and Environmental Analysis

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Social analysis is undertaken to ensure that social issues arising from a proposed investment are
clearly identified and accounted for in the decision process.

 An analysis of the social impacts of a proposal should:

 Identify any significant social issues or opportunities directly attributable to the
proposal;
 Identify the stakeholders involved;
 Outline the nature and extent of the impact on each group or individual;
 Develop strategies and options to capitalize on opportunities and manage negative
issues;
 State clearly in the business case so that they are transparent to decision-makers and
inform them of any policy implications employment opportunities or community
reactions to the proposed initiative; and
 The extent and nature of the social analysis element of the business case should
reflect the scope of the social impacts.

An environmental analysis is required for all proposals to ensure that they meet all relevant
legislative requirements and that likely community concerns are identified. Proposals should be
consistent with government environmental policy.

 The environmental analysis should assess:

 The extent and nature of both on-site and off-site environmental consequences;
 The short and long-term environmental effects of the proposed initiative; and
 Opportunities to deliver environmental benefits from the proposed initiative.

Where an assessment confirms areas of significant environmental concerns, possible intervention

strategies and options should be developed to feasibly address these concerns. The costs and
benefits associated with these strategies should be identified, valued or ranked, and then accounted
for in the assessment of options.

Social and environmental impacts should be identified as either quantified (e.g. carbon emissions)
or non-quantified (e.g. sense of security) as a different methodology for integration into the
economic and financial analysis. For some major proposals, a formal public interest test may be
required and public interest may be addressed separately.

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4.2.4 Institutional Analysis

The process of institutional analysis is complex and potentially time and resource intensive. While
it offers considerable benefits in terms of generating more appropriate and sustainable
interventions in support of poor people, it is not a process that can be undertaken lightly.
Experienced users might benefit from elements in the analysis in a more abbreviated form, but a
commitment to a full institutional analysis in the context of the design of rural development
interventions requires careful thought.

Besides the potential resource requirements, the sensitivity of the issues being addressed through
an institutional analysis needs to be taken into account in deciding when, where and by whom such
an analysis should be carried out.

i) Who should be involved?

An institutional analysis involves analyzing a broad range of features of people’s everyday lives
and work. Often, these features will be clearly identified by the “subjects” – the people directly
concerned who participate in the institutions being addressed as elements that merit analysis and
discussion. Particularly where institutional “problems” are widely recognized, it can be relatively
easy to encourage discussion and debate. But many features of institutions are so “normal” that
the people directly involved may not even be aware of them or consider them worth analyzing at
all. In particular, the way that institutions work and the unwritten “rules of the game” that govern
them are often so ingrained that the idea of change may be completely inconceivable for
“insiders”.

These features of institutional analysis mean that it is one form of “diagnostic” activity in which
the role of an “outsider” – someone who is not a participant in the institutions or mechanisms
that are the subject of the analysis – is often not only helpful but necessary. Only someone with an
“outsider’s” point of view is likely to be able to step back from the institutions in question and
look at them from a perspective that allows them to see issues that “insiders” would probably
miss.

At the same time, many of the issues under consideration in an institutional analysis require a
detailed knowledge and sensitivity to local practice, history, precedent and culture which an
outsider may have little possibility of acquiring, at least in the short term. Hence, the importance

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of assembling a team of people to carry out an institutional analysis that combines an
“outsider’s” perspective with an “insider’s knowledge. Where the exercise is being led by
“outsiders”, there will be a need to identify potential collaborators from within the institutions
who can support them and provide them with the kind of intimate knowledge required to make a
meaningful analysis.

Selecting such people can be problematic, for the reasons already mentioned above: “insiders”
are inevitably stakeholders who may have a personal or professional interest in some of the issues
being analyzed and could therefore be biased. However, “insiders” who have a degree of critical
awareness that allows them to “critically” analyze their own environment, can play an effective
role even though they are “insiders”. Indeed, from a strategic point of view, these individuals
may constitute potential champions for change; if they participate in the analytical process they
might contribute to leading change in the future.

ii) When to do institutional analysis?

Institutional analysis can play a role at almost any stage in the development of pro- and-post
interventions but will have particular relevance depending on when it is deployed.

4.2.5 Strategy and Program Development Analysis

Ideally, the development of a strategy for intervention or a program of interventions at the country
or regional level would include an analysis of the key institutional issues that strategy or program
seeks to address. Almost by definition, a strategy or program should be looking to achieve longer-
term changes in institutional arrangements and in policies and legal frameworks that would be
beyond the reach of individual projects. Institutional analysis can contribute directly to defining the
desired changes and how they might be achieved through a series of more specific interventions. In
particular, the analysis of linkages between livelihood outcomes of the poor, delivery and
governance results and action arenas, together with additional linkages with the institutional
context, can help clarify the pathways by which particular interventions at the field level might
contribute to wider change at the policy and institutional level.

The deployment of institutional analysis should also help those preparing a country strategy or
program to identify trade-offs between “quick-wins”, or short-term interventions with possible
immediate impact that garner support and credibility, and longer-term programs to inform and
influence policy processes and the institutional structures they generate.

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At the level of project design, institutional analysis has an obvious role in generating the specific
forms of intervention that might be required to obtain appropriate and sustainable institutional
support for the types of activities being promoted by the project. As such, it should always
constitute an integral part of the diagnostic process that should precede the design of new activities.

Particular areas of importance are likely to be:

 The identification and design of institutional mechanisms and processes to support
interventions in the field, through a detailed knowledge of existing roles, responsibilities,
capacities and incentives within key institutions.
 The detailed identification of action arenas that are required to produce desired governance
results and delivery results. This information is typically necessary for including it in
project implementation (or operations) manuals, which can be updated as implementation
experience accumulates.
 The identification of institutional factors that might enhance or inhibit the chances of
project sustainability and success.
 Understanding the potential for broadening the coverage and impact of projects through
synergies with other institutions and their programs are trouble-shooting and needs proper
project supervision, monitoring and evaluation.

Institutional issues are among the most widespread causes of problems faced by development
projects during implementation. The limited attention paid to many institutional issues in the past
has often meant that implementing agencies have found themselves unable to effectively perform
the tasks expected of them. Their lack of understanding of the broader institutional context has
meant that interventions have been subject to very different interpretations by the various
institutional actors involved.
It is unlikely that a complete institutional analysis can be performed as part of the supervision or
the monitoring and evaluation of an on-going project. However, the approaches suggested can be
applied to specific sets of issues or problems that arise in the course of project implementation. The
initial suggestion to focus on results in the field, looking at how they are connected to up-stream
institutional issues, can be applied to the investigation of particular problems. “Trouble-shooters”
can use the approach to focus on key areas of concern, including the action arenas around specific
project activities. In particular it can help to analyze the extent to which perceived problems in a
project or intervention affect delivery and governance results. Reference to the guiding principles

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of pro-poor institutional analysis should help to maintain the focus on how interventions ultimately
affect the livelihood outcomes of the poor.

There is also potential for using the same approach to better understand the mechanisms behind
successful interventions and to identify the critical elements that have contributed to effective
institutional change. Often the “reactions” of institutions to particular interventions will not
follow the expected patterns and an institutional analysis that begins with the successful outcomes
seen in the field can contribute significantly to understanding how these successes were achieved,
and to replicating or adapting them elsewhere.
Activity 3
1. Does educational development project have risk in management?

2. Mention some strategies helpful to manage risks in project work

4.2.6 Stakeholder Analysis

A “stakeholder” can be defined as any individual, group, or institution that has a vested interest
in the natural resources of the project area and/or who potentially will be affected by project
activities and have something to gain or lose if conditions change or stay the same. Stakeholders
are all those who need to be considered in achieving project goals and whose participation and
support are crucial to its success. Stakeholder analysis identifies all primary and secondary
stakeholders who have a vested interest in the issues with which the project or policy is
concerned. The goal of stakeholder analysis is to develop a strategic view of the human and
institutional landscape, and the relationships between the different stakeholders and the issues
they care about most.

i) Why Stakeholder Analysis is Important?

Ultimately, all projects depend on selecting stakeholders with whom they can jointly work
towards goals that will reduce or reverse the threats to your key conservation targets. A
stakeholder analysis can help a project or program identify:
 The interests of all stakeholders who may affect or be affected by the program/project;
 Potential conflicts or risks that could jeopardize the initiative;
 Opportunities and relationships that can be built on during implementation;

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  Groups that should be encouraged to participate in different stages of the project;
 Appropriate strategies and approaches for stakeholder engagement; and
 Ways to reduce negative impacts on vulnerable and disadvantaged groups.

The full participation of stakeholders in both project design and implementation is a key to – but
not a guarantee of – success. Stakeholder participation:
 Gives people some say over how projects or policies may affect their lives;
 Is essential for sustainability;
 Generates a sense of ownership if initiated early in the development process;
 Provides opportunities for learning for both the project team and stakeholders themselves;
and
 Builds capacity and enhances responsibility.

ii) When to use Stakeholder Analysis?

Stakeholder analysis can be undertaken throughout all stages of the project cycle, but it definitely
should be undertaken at the outset of a project or program. In particular, during the define phase,
stakeholder analysis is a crucial component of situation analysis. As you go through your situation
analysis, stakeholder analysis provides a preliminary identification of key stakeholders, indicating
who is important and influential and how they can be involved in the program during the design
phase, a detailed stakeholder analysis, involving all key stakeholders, will help shape the
development of strategic actions and inform risk analysis.

In the implementation phase, stakeholder analysis will help identify who, how and when
stakeholders should be involved in project/program activities. Later, during the analyze/adapt and
share phases, the stakeholder analysis serves as a reminder, providing a benchmark against which
projects can monitor and evaluate the effectiveness of their engagement with stakeholders, both
supportive and opposing. Stakeholder analysis is also an appropriate time to explore whether or
not gender will be a factor in the elaboration and implementation of future efforts. It is well
documented that discrimination by gender is likely to diminish the impact and effectiveness of
projects and policies. Furthermore, the inclusion of women as stakeholders has the potential to
achieve both better management of the resource base and improved community welfare. Gender
analysis involves the assessment of:
 The distribution of tasks, activities, and rewards associated with the division of labour at a
particular locality or across a region;

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 The relative positions of women and men in terms of representation and influence; and
 The benefits and disincentives associated with the allocation of tasks to women and men.

iii) How to develop and Use Stakeholder Analysis?

There are a number of ways of undertaking a stakeholder analysis. Workshops, focus groups and
interviews are three common approaches. During the course of the project cycle you may use all
three, matching the technique to the evolving needs of the project. Whatever approach is used,
there are three essential steps in stakeholder analysis: 1) Identifying the key stakeholders and their
interests (positive or negative) in the project; 2) Assessing the influence of, importance of, and
level of impact upon each stakeholder; and 3) Identifying how best to engage stakeholders. We
describe key questions to ask at each of these steps and provide an example of a tool.

1. Identifying the key stakeholders and their interests (positive or negative) in the project
As outlined in the basic guidance to situation analysis, any given threat or opportunity factor has
one or more stakeholder groups associated with it. To analyze stakeholder groups, you can thus
either start with your situation analysis and think about the key stakeholders associated with each,
or start with an analysis of the stakeholders and then link them to specific threat and opportunity
factors. Some of the key questions you should ask at this step include:
 How are the threatened project targets being used? Who is threatening the conservation target?
 Who is most dependent on the resources at stake? Is this a matter of livelihood or economic
advantage? Are these resources replaceable by other resources?
 Who possesses claims over the resources at stake? Are several government sectors and
ministry departments involved?
 Are the stakeholders and their interests geographically and seasonally stable, or are there
migration patterns?
 Are there major events or trends currently affecting the stakeholders (e.g., development
initiatives, land reforms, migration, and population growth)?
2. Assessing the influence and importance of each stakeholder as well as the potential impact
of the project upon each stakeholder. Key questions for this second step in a stakeholder
analysis include:
 Who is directly responsible for decisions on issues important to the project?
 Who holds positions of responsibility in interested organizations?
 Who is influential in the project area (both thematic and geographic areas)?
 Who will be affected by the project?

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  Who will promote/support the project, provided that they are involved?
 Who will obstruct/hinder the project if they are not involved?
 Who has been involved in the area (thematic or geographic) in the past?

3. Identifying how best to engage stakeholders

Finally, the third step involves determining how to involve the different stakeholders. Different
types of stakeholders will be engaged in different ways in the various stages of the project, from
gathering and giving information, to consultation, dialogue, working together, and partnership.

Determining who needs or wants to be involved, and when and how that involvement can be
achieved provides the basis for developing collaborations. Once stakeholder views are understood,
a decision can be made on whether to pursue collaboration. The importance of the process in
planning and conducting successful collaborations cannot be overemphasized. Good-faith efforts
are often derailed because the parties are not skilled in the collaboration process, and because
insufficient attention is given to designing and managing it. Using an inclusive, transparent
approach during project development and implementation will help build ownership and
commitment. If it is not possible or realistic to have all key stakeholders involved from the outset,
then a process for gradual involvement may be needed.

Activity 4
1. Who is expected to be a stakeholder in educational project management?

2. What is the importance of undertaking stakeholder analysis in project management?

Unit Summary
The overall purpose of economic analysis of a project is to design and select a project that has
economic value and cost effectiveness. Such analysis helps to answer questions like: what is the
purpose of a project? How do we select the best alternative for project life cycle? What is the
impact of economic analysis on project work?

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The project risk management helps to increase the success of project implementation because risk
analysis focuses on the minimization of subjective nature of the project by improving project
benefits. Project risk management needs the consideration of social and environmental analysis.
Further more; project risk management involves institutional analysis in order to generate
potential resources, design institutional mechanisms and support the intervention of project
implementation.

The increasing scope and ambition of many projects require a commitment to dialogue and
collaboration with a diverse range of stakeholders. Dialogue that is open and transparent is critical
to long-term success.

It is fundamental that enough time be budgeted to explore stakeholder views, values and
perspectives so that an understanding of the human and institutional landscape can be established.
All stakeholders will come to the process with their own biases. Stakeholder collaboration is a
process that requires the opportunity and space for participants to listen to and learn from one
another. It is important to create spaces for stakeholders to come together to develop and share
their visions and agendas. Monitoring and evaluating the nature of the collaboration is as
important as measuring specific project outcomes

Review Questions
PART I: TRUE or FALSE item
Write true if the statement is true and false if it is not true
_______1. A project can equally be effective both in distorted and health environment
_______2. The first step in project economic analysis is setting achievable objective(s)
_______3. The process of project economic analysis needs adjusted financial flows
_______4. Project risk analysis helps to make two or more projects to be identical
_______5. Project risk analysis and management are interchangeability used in project cycle
PART II: MULTIPLE CHOICE ITEMS
Choose the best possible answer from the given alternatives
____1. Which of the following elements helps to differentiate technical specification of project
analysis?
A) identification of project objectives
B) development of different alternatives

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 C) limitation on the cost of the project
D) identification of winner and looser
____2. Which of the following refers to project risk analysis?
A) quantitative analysis of the risk
B) elimination of risk environment
C) reducing risk factors
D) all of the above
____3. Which of the following is true about environmental analysis of a project?
A) internal and external environment should be analyzed
B) short and long term impact assessment should be conducted
C) opportunities and threats should be identified
_____4. _______________ is complex and usually resources intensive in nature
A) social analysis
B) environmental analysis
C) institutional analysis
D) risk analysis
____5. One of the following is considered to be important to identify primary and secondary
needs of the beneficiaries
A) social analysis
B) stakeholder analysis
C) institutional analysis
D) environmental analysis

References
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Belli, P., et al. (2000). Economic Analysis of Investment Operations: Analytical Tools and Practical
Applications. The World Bank, Washington, D.C.

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Cable, Dwayne, P. and J.R. Adams. (1997). Principles of Project Management. Upper Darby, PA:Project
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