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Introduction

1.1. Conceptual Definitions of Project

There are many definitions of a project and many different types of projects.
For instance, FTP International (1994) defines a project as a series of
Inter-linked activities leading to the achievement of clearly defined
objectives in a situation where we want to solve a problem or further
develop some activities .More specifically project is defined as an
investment activity up on which resource costs are expended to create capital
assets that will produce benefit s over an extended period of time and which
logically lends itself to planning financing and implementing as a unit.
The easiest way to define a project is to out line the common characteristics
that it might be expected to have these are:
- A project involves the investment of scarce resources in the
expectation of future return (benefit);
- A project can be planned, financed and implemented as a unit.
Often projects are the subject of special financial arrangement;
- It has a specific starting and finishing time in which clearly
defined set of objectives are achieved;
- Often projects have their own management geographical or
organizational boundaries;
- A project focuses on specified groups of beneficiaries or large
group of beneficiaries or target groups; and
- Is bounded by resources (time, finance, material, and human).
From its inception a project should consider its sustainability and
maintainability. It has to consider the needs and interest of the beneficiaries.
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Co-operation with the beneficiaries in project panning, implementation,
monitoring and evaluation is very essential. A project has to be assessed
against the long-term possibilities and resources of the involved institutions
to operate the further develop established systems.

The Project Cycle.

Projects usually go through out a series of identifiable stage. A project

cycle refers to various steps through which project planning proceeds from
inception to implementation. This project cycle is an ideal model; not every
project will confirm exactly to it.
For analytical purpose, the project cycle is divided in to five cycles which
are not uninterrupted process rather continuous process.
These include:
1. Project identification
2. Project preparation/formulation
3. Project appraisal
4. Project implementation
5. Project monitoring and evaluation

2 Project Identification

It is the beginning stage of the project cycle with the purpose of finding
potential project, which could contribute towards achieving specified
development objectives.

The source of project idea can be:

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 Project ideas can emanate or originate from a multiplicity of sources.
These can be:
1. Unsatisfied demand and needs
2. The need to improve shortage of certain commodities
3. Existence of unused or under used resources
4. Need to compliment other investment
5. Government may be providing incentives
6. Occurrence of natural events such as draught, earth quake, flood, etc
7. Capacity building
8. Bilateral or multilateral agreement

1 Project Preparation/Formulation/

Generally in the project preparation, three main tasks will be carried out.
These include:
1. data gathering
2. analysis
3. decision making
In the wider sense project preparation contains the design of set of proposal
that is technically, financially and economically feasible. Moreover, the
detail of feasibility study depends on the complexity of the project.
Accordingly the important facets of project analysis are: -
 Market and demand analysis
 Technical analysis
 Financial analysis
 Economic analysis
 Ecological / Environmental analysis
 Social analysis
Market analysis and demand analysis

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 Market analysis is concerned primarily with two question
 What would be the aggregate demand of the proposed product / service in
the future?
 What would be the market share of the project under appraisal?
To answerer the above questions, the market analysis requires a wide variety
of information and appropriate forecasting methods. The kinds of
information required are:-
 Consumption trends in the past and the present consumption level
(demand forecasting).
 Past and present supply position.
 Production possibilities and constraints
 Imports and exports.
 Structure of competition/competitors analysis
 Cost structure
 Elasticity of demand
 Consumer, behavior, intentions, motivations, attitudes. Preferences and
requirements.
 Distribution channels and marketing policies in use
 Administrative, technical and legal constraints

 Technical analysis:
Analysis of the technical and engineering aspects of a project needs to be
done continually when project is formulated. Technical analysis seeks to
determine whether the prerequisites for the successful communing of the
project have been considered and reasonably good choices have been made
with respect to location, size, process, etc.
The important questions raised in technical analysis are:

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  Whether the preliminary tests and studies have been done or
provided for?
 Whether the availability of raw materials power and other inputs
has been established?
 Whether the selected scale of operation is optimal?
 Whether the equipment and machines chosen are appropriate?
 Whether the auxiliary equipments and supplementary engineering
works have been provided for?
 Whether provision has been made for the treatment of effluents?
 Whether the proposed lay out of the site, buildings, and plant is
sound?
 Whether work schedules have been realistically drawn up?
 Whether the technology proposed to be employed is appropriate
from the social point of view?
 Financial analysis
Financial analysis seeks to ascertain whether the proposed project will be
financially viable in the sense of being able to meet the burden of
servicing debt and whether the proposed project will satisfy the return
expectations of those who provide the capital. The aspects, which have to
be looked in to while conducting financial analysis, are:

 Investment out lay and cost of project.

 Means of financing.
 Cost of capital.
 Projected profitability.
 Break-even point.
 Cash flows of the project.
 Investment worth wholeness judged in terms of various criteria of
merit.
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  Level of risk.

 Economic analysis
Economic analysis, also referred to as social cost benefit analysis, is
concerned with judging a project from the larger social point of view.
In such an evaluation the focus is on the social costs and benefits of a
project, which may often be different from its monetary costs, and benefits.

The questions sought to be answered in social cost benefit analysis are:

 What are the direct economic benefits and costs of the project
measured in terms of shadow (efficiency) prices and not in terms
of market prices?
 What would the impact of the project on the distribution of
income in the society?
 What would be impact of the project on the level of saving and
investment in the society?
 What would be the impact of the project to the vulnerable groups
such as children and women?
 What would be the contribution of the project towards the
fulfillment of certain merit wants like self-sufficiently,
employment, and social order?
 Ecological analysis
In recent years, environmental concerns have assumed a great deal of
significance-and rightly so. Ecological analysis should be done
particularly for major projects, which have significant ecological
implications like power plants and irrigation schemes, and
environment-polluting industries (like bulk drugs, chemicals, and
leather processing). The key questions raised in ecological analysis
are:
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 What is the likely damage caused by the project to the environment?
 What is the cost of restoration measures required to ensure that the
damage to the environment contained with in acceptable limits?
Social Analysis
 How the project affects the people?
 What is the social implication of the project issues like
- Customs
- Traditions
- Culture
- Religion
- Demography etc

2.2 Project Design Content

Then development project proposal commonly prepared in such a way that it
could explicitly state the following issues in a sequential order.
 The project Title
 The title of the project should be worded in such a way that
it gives sufficient information a bout the nature of the
project.
 Executive summary
 The project Background/ Rationale
 Historical background of the project
 Describing the extent of the problem
 Show the effort made to solve the problem
 Describe why this method of solving the problem is
selected.
 Describe the situation if other methods were tried
 Describe steps-that helps to arrive in this idea.

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 Justification
 Why the project is proposed.
 Does is there consensus on the necessity of the project?
 Does it support the government policy
 Negative impacts if the project will not be implemented
 Contribution of the project to solve related problems
 Show beneficiaries and how they benefit
 Show new things that can happen after the implementation
of the project.
 Show if implementation is feasible
 Show the contribution and method of motivation of the
community.
 Objective
 Put the contribution of the project in a clear words
 Show its long-term and short-term contribution
 Put the objectives in “SMART” way

 Out-Comes
 Put the expected out comes in a planned manner
 How much people will benefit

 Activities
 Write activities that will be undertaken to made realistic the
objectives
 Put the activities in a sequential manner
 In puts
 Write the necessary inputs to met our objectives interms of

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  Human resource
 Material
 Finance and facility
 Identify the contribution of government, NGO, Community,
etc

 The project monitoring and evaluation

 Put clearly who will be responsible in administrating,
monitoring & evaluating the project.
 Project Budget
 Show a detailed description of all costs
 Financial, human and material

 Work plan
 Prepare a work plan. Your work plan should contain
 Objectives
 Activities
 That participates in implementation Bodies
 Source of labour, finance, material, physical facilities etc
that the project contains
 The project Administration and Management
 The project Report
 The project Sustainability
 The project Exit strategy

3. Project Appraisal
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Project appraisal involves a further analysis of the proposed project. At this
stage, a critical review of the proposal is undertaken. The systematic and
comprehensive review is usually undertaken by an independent team of
experts in consultation with the stakeholders of the project. This provides an
opportunity to re-examine every aspect of the project plan to assess whether
the proposal is justified before large sums are committed. The appraisal
process builds on the project plan but may involve new information if the
appraisal team feels that some of the data used at preparation of some
assumptions are faulty. The implications of the project in the society and the
environment are also more thoroughly scrutinized. On the basis of an
appraisal report, decisions are made about whether to go ahead with the
project or not. The appraisal may also change the project plan or develop a
new plan.

The question usually raised in the appraisal of a proposed project is the

extent to which it will contribute to the economy; that is, the benefits that
will accrue such as its profitability, jobs created, foreign exchange or taxes
earned, savings accumulated for further investment, and income for
unskilled labour. Some additional criteria include the effects of income
distribution, employment, national integration, and better life for the people,
and environmental pollution.

4. Implementation
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4.1 Planning for Implementation of Project

This is the stage either before actual implementation begins or before the
start of a new implementation phase of the project. The exercise is
conducted at the level of the project and involves the implementers, the
beneficiaries and the funding agency or all stakeholders.

For preparing the project implementation schedule the following information

is required to commencement of production.
 List of all possible activities from project planning to commencement
of production,
 Setting the sequences in, which various activities have to be
performed.
 Settle the time required for performing the various activities.
 The resources normally required for performing the various activities
 The implications of putting more resources or less resource are
normally required.

For small projects with few activities, a bar chart shearing when a particular
activity would begin and when it would end is a fairly simple tool for
drawing up the implementation schedule. For most real life projects, which
have numerous activities and are fairly large, PERT/CPM analysis is
required. PERT is an acronym for programmed evaluation review technique
and CPM is an acronym for critical path method. These are net work
planning techniques that can handle in numerable activities, complex
interdependency relation ships, resource constraints, probabilistic estimates
and cost time trade-offs lending institutions often insist on the use of net
work techniques by the project sponsors.

4.2 Work schedule

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 The work schedule, as its name suggests the plan of work concerning
installation as well as initial operations.
G. Drawing of Activity Chart
There are two commonly used methods for drawing activity chart: Gantt
chart & PERT diagram.

I Gantt chart

A Gantt chart is a horizontal bar chart that graphically displays the time
relationship of the subunits in a project. Each step (subunit) of a project has
to be represented by a line placed on the chart in the time period when it is to
be undertaken.
To construct a Gantt chart:
 List the subunits (steps) to complete a project (for which time is already
estimated) down the left side of the chart according to the sequence
already specified,
 Indicate time intervals along the bottom or upper part of the bar chart,
 Draw a line across the chart for each step (subunit), starting at the
planned beginning date & ending on the completion date of the steps.

Notice: Some parallel steps can be carried out at the same time with one
taking longer than the other. This allows some flexibility about when to start
the shorter step.

When drawing a Gantt chart is completed, one will be able to see easily: (1)
the minimum total time for the project, (2) the proper sequence of steps, and
(3) which steps can be underway at the same time (See Fig. 1)

Gantt chart is limited in its ability to show the interdependencies of

activities. In small projects, where the steps flow in a simple sequence of
events, Gantt chart can portray adequate information for project
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management. However, if the project is complex and with several steps
PERT (Program Evaluation & Review Technique) diagram is advantageous.

Fig. 2)

Activity Time in days

5 10 15 20 25 30 35 40 45 50 55 60

1
2
3
4
5
6
7
8
Fig. 1: An example of Gantt chart Notice:
Notice Activity Time slack Time

An example for preparation of Implementation Plan

Project Title: conduct a need assessment on provision of Micro credit
n Aanaa A with a cost not exceeding Birr 50,000.00
To plan for implementation of the project, the following steps can be used:

1. Setting Objective: identifying social needs in provision of micro credit

services.
2. Setting strategy: Questionnaire, check list & focus group discussion
will be used to gather primary data while secondary data will be
collected from concerned government offices.
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 3. Breaking project down into elements (sub units): One may
identify the following activities form the project stated.
 Planning a survey.
 Recruiting personnel,
 Designing personnel,
 Training personnel,
 Selecting PAS in the Aana
 Printing questionnaire & check list,
 Conducting a survey
 Conducting focus group discussion
 Secondary data collection from concerned government 1
offices, and
 Data analysis and write up of the assessment document.

Determining time: Duration of activities and/or of the project can be given in

months, weeks, days or even quarter according to the type of the project.
Here, for this example, day is used.

No Activities Estimated

1 Planning a survey (A) 7

2 Recruiting personnel (B) 3
3 Designing questionnaire & check list (C) 9
4 Training personnel (D) 6
5 Selecting Pas in the Aanaa (E) 4
6 Printing questionnaire & checklist (F) 2
7 Conducting a survey (G) 19
8 Conducting focus group discussion (H) 7
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 9 Secondary data collection from educational offices, and (1) 8
10 Data analysis and write up of the assessment document. (J) 21

Determining the proper sequence of activities: Before

Scheduling activities using Gantt chart of PERT diagram or
else, one has to list activities in a logical sequence, i.e.,
sequence of implementation. Accordingly, activities described
above can be sequentially stated as follow:
1) Planning of the survey must be done before recruiting personnel or
designing of questionnaire & checklist.
2) Designing of questionnaire & checklist, and recruiting personnel must
be carried out before training of personnel.
3) Selection of PAs & printing of survey instrument can take place after
the questionnaire & checklist is designed.
4) Surveying cannot be conducted before personnel are trained, PAs are
selected & survey instruments are printed. Focus group discussion &
secondary data collection can be carried out side by side with
surveying.
5) Finally, analysis & write up of the assessment document can only take
place after survey, focus group discussion & secondary data collection
are carried out.

Drawing of activity chart/diagram: After identification of logical

sequence of activities & determination of time needed to complete each
activity, activity chart can be drawn.

A) Activity chart using Gantt chart

Time in days
Activity
5 10 15 20 25 30 35 40 45 50 55 60 65

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 A
B
C
D
E
F
G
H
I
J

Notice:
 Form this chart one will be able to see the minimum total time needed
to complete the project (which is 62 days), the proper sequence of
activities and which activities can be under way at the same time.
 On this chart one can also chart the actual progress, which is usually
done by drawing a line in different color below the original line to
show the actual beginning and ending dates of each activity. This
allows one to quickly assess whether or not the project is on schedule.
b) Activity chart using PERT diagram
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6
E
H

D
A B G J
1 2 4 7 10 11

C F
I

3 5 8

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 Activity Event arrow Time in days
A 1-2 7
B 2-4 9
C 2-3 3
D 4-7 6
E 4-6 4
F 4-5 2
G 7-10 19
H 7-9 8
I 7-8 7
J 10-11 21

Notice:
 From this diagram one will be able to see the proper sequence of
activities and which activities can be under taken at the same time.
 There are eighteen (18) roués.
 For the entire project star and end events are single.
 There are five (5) non- activities (dummy activities) which indicate
the interdependence of activities.
 The longest time to complete the project is 62 days. This is given by
the longest path (called the critical path), which is (1-2)+(2-4-)+(4-
7)+(7-10)+(10-11) i .e., 7+9+6+19+21= 62
 One can easily monitor progress of the project by coloring each
activity line as it is completed.
Planning cost dimension: - One may distribute the budget estimated for this
ideal project as given by the following table.

Cost item

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No Activities Labor Overhead Supplies Fen& Total
Adm. (in birr)
1 Planning a survey 1875 - 250 375 2500
2 Designing questionnaire & check list 7480 - 520 - 8000
3 Recruiting personnel - - - 100 100
4 Training personnel 525 2625 175 175 3500
5 Selecting PAs in the Aanaa - - - 500 500
6 Printing questionnaire & checklist 250 - 2250 - 2500
7 Conducting focus group discussion 1090 8175 1635 - 10900
8 Conductional offices, and 500 3750 750 - 5000
9 Secondary data collection from 450 3375 675 - 4500
education offices, and
10 Data analysis and write up of the 9375 - 1875 1250 12500
assessment document.

5. Project Monitoring and Evaluation

Monitoring & Evaluation

Project Rectangle
Time (schedule) Cost (Budget)

Resources Scope (performance and Quality)=

work done that meets
specifications

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These two activities are an integral part of the project cycle
Project monitoring and evaluation yield benefits to project (avoiding waste
of resources during implantation is a benefit while staying on course during
implementation is another benefit).

5.1 What is monitoring?

Monitoring is the periodic review of the project inputs, activities, and out put
undertaken during implementation. It includes the review of the procurement
and delivery of inputs, the schedules of the activities, and the extent of
progress made in the production of out puts. It is an internal project designed
to provide constant feedback on a project, the problem it is facing, and the
efficiency with which it is being implemented. Monitoring, therefore,
involves the process of collecting information about the actual project
performance during implementation.

The gap between planned and actual performance is addressed using various
control strategies.

5.2 Purposes and uses of monitoring

- Monitoring helps project managers, and others to assess the

progress of project implementation and take timely decisions
towards efficient and effective Project completion. Its main
purposes are:
- Continuous monitoring of progress of all components;
- Comparison of actual and planned progress and identification
of delays;
- Rapid identification of problems;
- Control of costs and other resources;

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 - Constant feedback on attitudes of project monitoring and their
participation;
- Early identification of cost overruns and possible resources
follow problems and
- Monitoring of procurement.

5.3 Types of Monitoring

There are three types of monitoring that are commonly used in development
projects. These are (a) Management/administration (b) finance, and (c)
program monitoring.

Management/Administration monitoring is concerned with the staff/

personnel issues, vehicles, and supplies,
Finance monitoring concerned with the project budget and expenditure,
staff salaries and cash flow analysis; and
Program Monitoring is concerned with results of activities project out puts,
project in puts, progress of program according to objectives, the way
program is managed, style work and back ground information on target
population and context.
5.4 What is evaluation?

Evaluation is both the last and first stage in the planning process, and so
demonstrates the continuity of the latter. Though evaluation information is
obtained on significant deviations and on corrective action to be taken in
order to attain the plans, goals and objectives.

As an integral part of a plan, evaluation involves appraising reviewing,

regulation and controlling performance to ensure that it conforms to
standards. Standards are normally established during the derivation of
goal/objectives.
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Evaluation also constitutes an essential strategy for monitoring the degree of
execution of plans and the problems encountered during implementation. In
addition evaluation facilitates collection of data on the impact of the
resources used in plan, account being taken of there various, sources, their
quality. Furthermore, evaluation facilitates measuring the efficiency of a
plan or plans its quantitative and qualitative terms and the extent to which
the plan output corresponds to social and economic need. Evaluation is
valuable in generating data that will provide feedback on the impact of
Regional /sect oral plans in the socio-economic system with the analysis of
the contribution of the plan in the enhancement of national development and
satisfaction of establishment needs.

5.5 There are four types of evaluation:

1. Ex-ante evaluation under taken before the project starts and it

examines the feasibility of the evolution.
2. On- going (concurrent) evaluation under taken during the project
implementation, and it analyses the relationship between project out
puts and its effects for the purpose of adopting the project to changes
in the environment; and
3. Terminal (summative) evaluation. It is under taken at the end of the
project to assess the merits of whole project.
4. Ex- post (impact) evaluation under taken after the project has been
implemented, and it examines the effectiveness of project in achieving
its stated goals and the types of changes resulting from the project.

The following factors are, then necessary to carry out evaluation

 Clear and measurable objectives.

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  Setting of key indicators to measure what progress has been
made towards achieving the objectives.
 Establishment of information base about the indicators, which
can be, used to see whether there have been any changes as a
result.

5.6 Possible evaluation objectives include

 To find out.
- Whether the program is making progress towards achieving its
objectives;
- What the impact has been on the people (men, women, boys
and girls)
Who are supposed to benefit from the work: has the work
helped to improve their well being as stated in the
organizational objectives? Has the work had any undesirable
effects on people?
- How the situation of the target population has changed due to
external factors, such as political changes, other development
activities, natural disaster, etc;
- Who has benefited form the work? How have the benefits of the
work been distributed to different groups?
 To assess:
- Whether the impact, if there is one, is due to the work or to
other factors,
- Whether the aims and objectives are still relevant, and whether
there is a better way of achieving the objectives;
- Whether the work is being carried out efficiently, and what the
major problems and constraints are;

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 - The cost of the work, whether this is reasonable in the context,
and whether resources are used as effectively as possible;
- How changes in the situation of the target population will affect
the impact and relevance of the work;
- Whether the work is sustainable, and what factors will affect its
sustainability.
 To make recommendations:
- About how the program could be improved;
- About how the aims and objectives should be modified or
revised;
- About how the work can be monitored and evaluated in the
future;
- About how the work could be made more cost-effective.

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