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UNIT ONE INTRODUCTION TO PROJECT 1.1 BASIC CONCEPT OF PROJECT The modern concepts and methodologies of projects have been developed since the end of the 2nd world war. Since then, projects have been widely used to solve different kinds of technological, economical and social problems. What exactl...

UNIT ONE INTRODUCTION TO PROJECT 1.1 BASIC CONCEPT OF PROJECT The modern concepts and methodologies of projects have been developed since the end of the 2nd world war. Since then, projects have been widely used to solve different kinds of technological, economical and social problems. What exactly is a project? Three project managers met at a training course. In the first session, they introduced themselves and described the projects on which they were currently working: „I‟m in charge of the construction of a retail development in the centre of a large town. There are 26 retail units and a supermarket in the complex. My main responsibilities are to co-ordinate the work of the various contractors to ensure that the project is completed to specification, within budget and on time.‟ „I am directing a team of research scientists. We are running trials on a new analgesic drug on behalf of a pharmaceutical company. It is my responsibility to design the experiments and make sure that proper scientific and legal procedures are followed, so that our results can be subjected to independent statistical analysis.‟ „The international aid agency which employs me is sending me to Central America to organize the introduction of multimedia resources at a teachers‟ training college. My role is quite complex. I have to make sure that appropriate resources are purchased – and in some cases developed within the college. I also have to encourage the acceptance of these resources by lecturers and students within the college.‟ On the face of it, these three projects appear to have little in common. They have been set up to achieve very different outcomes: a shopping complex, a new drug and a new method of teaching students. Clearly, a project is not defined by the type of outcome it is set up to achieve. It is not, as they say, what you do, but the way that you do it. Projects can be set up for a wide variety of purposes. They exist in all sectors of industry and in every type of organization. Some projects are also much more complicated than others. The Association for Project Management recognizes four levels of projects: An in-house project involving a single disciplinary team An in-house project involving a multidisciplinary team A multi-company multidisciplinary project A multi-country multi-company multidisciplinary project. Project management skills are needed at each of these levels, but the challenges increase as projects become more complex. In a single disciplinary in-house project, the people involved have probably worked together before. They understand each others‟ functions and are familiar with how things are done within the organization. At the other end of the scale, the project manager may have to coordinate the efforts of people who: Are geographically distant Do not speak the same language Are working within different cultural and legal frameworks Are working for different organizations Do not understand each other‟s roles. However, all projects, whatever their scale and proposed outcome, share certain basic characteristics. 1.1.1 Definition of a Project Dear Learners! You might have heard the term „project” in different occasions and over the media. Even also you might have been involved in a certain project undertakings. Hence, would you have any idea about it? What is the meaning of a ‘project’? What is the definition of a ‘project’? Give your own answer before you proceed to the following paragraphs. Project is defined in different ways by different authors and all relate it to endeavor and investment to produce a product or provide services. The following are some of the definitions of a project as used by different authors. Project Management Institutes defines project as a “temporary endeavor undertaken to create a unique product or service” (PMI, 2008). According to Lake (1997 :): A project is a temporary endeavor involving a connected sequence of activities and a range of resources, which is designed to achieve a specific and unique outcome and which operates within time, cost and quality constraints and which is often used to introduce change. This is a complex definition. We need to look at its separate elelhe very start of the project. Because projects invariably result in something new, they always bring about change of some kind. The change may be relatively unimportant, and be easily assimilated by the people it affects. Or it may have very significant consequences. A project manager therefore needs to be aware of management techniques which can be used to overcome resistance to change.  Every project is unique. If you have built an office building in one location and are then asked to build an identical building on another site, you will find that you are faced with a new set of challenges. The geology may be slightly different. The weather conditions may not be the same. You will probably be working with a different team, with different skills and personalities. The uniqueness of projects calls for a distinctive approach to management. Instead of trying to maintain an established and stable process, you must constantly think of new solutions to new problems. Projects have time, cost and quality constraints. The triangle of time, cost and quality lies at the heart of project management. It is the project manager‟s task to achieve the required outcomes within a pre-determined schedule and budget, whilst maintaining quality standards. When a project is being planned, and also while it is underway, it is necessary to balance these three interrelated elements. The outcome of a project can only be achieved by the completion of a variety of separate, but linked, activities. In a small project, these activities may be performed by the same multi-skilled individual or individuals. More usually, they require a team of people who have different types of technical skill or specialist knowledge. Most of the tools and techniques which are associated with project management are used as aids to plan and monitor this sequence of activities. As a project progresses, different types of resources are required. Among other things, these resources may include: people with specific skills, equipment, raw materials, premises, information and tratraresources are available when they are required. Projects need leadership. Projects involve the co-ordination of different resources to achieve a predetermined result. One person, the project manager, needs to maintain an overall vision of the goal and a detailed understanding of the progress that has been made towards this goal. Project teams are usually made up of people with complementary, and consequently different, areas of expertise. It is up to the project manager to co-ordinate – and provide direction to – their efforts. Activity 1.1: 1) Explain the meaning of a project. 1.2. Primary Features of a Project Dear learners! Are you known about the typical features of a project? Try to give some of the characteristics of a project tin writing before you go through the following discussions. Traditionally work in the construction industry and defense procurement were seen as projects, but in recent times pro – active companies restructuring their work as projects (management – by – projects). Projects range in size, scope, cost and time from mega international projects to small domestic projects. To mention few examples: Designing and constructing a building, a house. Launching a new product (advertising and marketing project). Planning and conducting an audit (quality management project). Disaster Recovering (limiting the damages of fire, floods or any type of accident). Olympics ( a sports Project ). Going on Holiday (a domestic project). Generally, all projects are characterized by a certain features which may be common to all. Thus, the following are typical features of a project: A start and finish. The start may have been crystallized over a period of time and the end may by a slow phase out. This shows that every project has a beginning and certain definite end. It is not like other ordinary course of business activities which are having an indefinite term of existence – going – concern. A life cycle. This means that there will be a beginning and an end, with a number of distinct phases in between. A budget. It is going to be unthinkable to undertake any project without sufficient cash flows. During the planning stage adequate budget allocation is mandatory for the smooth flow of all project related activities. Non – repetitive. As it was discussed in the definition part all project activities are essentially unique. The project activities are rare and new. In a project, once a certain activity is completed it would not be repeated. Generally, projects may found to be similar but no two projects are exactly alike. Use of resources. In a project undertaking resources are quite necessary for successful accomplishment of its activities. The resources i.e. material, human, financial may be coordinated from various sources. A Single Point of Responsibility. All Projects have a well defined responsibility. In general the head or manager of the project ultimately takes the responsibility of the project, therefore in the project, responsibility should be specifically identifiable.  Team Roles. A project is a team work activity of different professionals. In a project, team roles and relationships that are subject to change need to be developed, defined and established (team building). Activity 1.2: 1) List certain primary features of a project. 1) Every project is characterized by „start and finish‟. What type of concern a project is? Explain briefly. 1.2 Meaning and Types of development plan Dear students before going to development plan, lets us see some definition regarding to planning. What Is Planning? Planning is a term that is widely used and means different things to different disciplines Planning a head is characteristic of human beings. Planning is one of the most powerful tools available to societies to shape their future. Many agree that planning is a mode of action in which activities are arranged in a sequence to meet envisaged objectives. Involves choosing between alternative Concerned with the efficient use of scarce resources. Land, for instance is a finite resource yet it has to be allocated for many competing uses (residential, commercial, industry, public purpose, infrastructure, recreation, transport, etc. Objective /Goal oriented and Concerned about the future What is the development plan? The development plan is the main public statement of planning policies for the local community. It sets out the land use, amenity and development objectives and policies of the planning authority, for a 6 year period. The plan consists of a written statement of objectives and a map or series of maps. What makes a good development plan? While all development plans will differ in their policies and objectives, it is possible to identify some of the common criteria likely to be shared by high quality development plans, in that they should: Create a clear strategic framework for the proper planning and sustainable development of the area over the duration of the plan, consistent with longer- term planning and sustainable development aims, including those set out in the National Spatial Strategy and any Regional Planning Guidelines in force. Set out an over-arching vision for the development of the area to which the plan relates. Give spatial expression to the economic, social and cultural aims of the County or City Development Strategy. Be grounded in public and political consensus around the plan‟s strategic framework. Provide a clear framework for public and private sector investment in infrastructure and in development in the area, having regard to both national and regional plans and policies. Protect and enhance the amenities of the area. Offer clear guidance to developers in framing development proposals and to the planning authority in assessing such proposals. Establish a policy framework within which more detailed plans (such as local area plans or plans for architectural conservation areas) can be drawn up for specific parts of the planning authority‟s area. Be capable of implementation and monitoring. Development plans should be user friendly, logical, internally consistent and up-to-date and in a format which is suitable for hardcopy, Internet and CD versions. Type of Plan Time Frame Specificity Frequency of Use Strategic Long Term Directional Single Use Tactical Short Term Specific Standing Operational Ongoing Very detailed Day-to-day Policies, procedures, and rules Varies Varies Varies Types of Plans G Dessler, 2003 April 6, 2006 LIS580- Spring 2006 24 Chapter Two Projects and Development Plans 2.1 The Link between Plans, Programs and Projects Planning, in general, is defined as the process of determining organizational goals and the courses of actions for attaining these goals. There are three levels of planning that are different from each other in terms of scope, timeframe, complexity and preparation. The three levels of planning are: 1. Strategic planning is the process of setting organizational long run goals/objectives through gathering external and internal information and developing alternative courses of actions needed for achieving the set goals of an organization. The time frame for strategic planning is between five to ten years. The top managers are mainly responsible for preparing strategic plans. 2. Tactical (Intermediate planning): This is the process of translating strategic plans in to specific objectives that must be achieved and specific actions that must be done by each individual department/division of an organization. The time frame for tactical planning usually covers between two and five years. Usually the middle level managers are responsible for preparing departmental plans with the aim these plans contribute to the achievement of organization‟s broad goals. 3. Operational plans- this plan show how departmental plans can be implemented by each section of the department on a daily basis. In most cases the time frame for this kind of planning is between one and two years. The operational level managers are responsible for preparing daily, weekly and monthly schedules of activities and targets of their units in line with the objective and goal set for their departments. Based on the above levels of planning, the essential point is to understand the logical relationships existing between planning and projects. The first step of organizations is to determine what and when to achieve their goals. The second step is to formulate strategies on how to achieve their goals. Strategies answer the “how?” question of planning. The levels of courses of actions are strategies, programs and projects. The major difference between a project and a program is not so much in the objectives stated, but lies more in scope, details, and accuracy. A project is designed with a high degree of precision and details as regards to its objectives, features, calculation of return and implementation plan. A Program by contrast, is general and comprehensive and aims at a broader goal often related to a sectoral policy of a country or departmental policy of an organization. A Program may cover a large sector of the economy, thus contributing to increased national output, and having an important impact to the society. In most cases, it may be difficult to calculate the returns of a Program because it has no details of activities amenable for estimating and calculating costs. Hence, a project can be defined as a specific component of a broad Program. Program in turn may consist of a number of specific projects. However, there is no clear line of demarcation to separate a strategy, a program and a project. A project can be considered as a program when the Program is addressing a narrow scope of a problem, when it is not necessary to break into major specific components and when there is no a higher level system for which a project is a component. Projects, which are not linked with others to form a program, are sometimes referred to as “stand alone” projects. Let us consider the following example how a strategy, a program and projects are interrelated. Government Vision: Freeing the Ethiopian People from poverty and seeing economically strong and prosperous Ethiopian people (used as example). Government Goal: Improving the living standard of the Ethiopian People by 50% within ten years (example). Government Strategy: Agricultural Development Led Industrialization.  Government Program: Moving farmers from highly densely populated areas to uninhabited arable lands (Villegisation Program, which is one of the many programs for the above strategy) Government Projects: The villagization Program contains different projects such as education projects (opening elementary and secondary schools), Road construction project, Health projects such as establishing clinics and hospitals, Water and sanitation projects, etc that are essential for a new village. Though investment decision is the responsibility of the top management, project implementation is the responsibility of the operational level management. Therefore, projects are the means by which investment and other development objectives stated in the plans can be clarified and realized. Sound development plans require good projects, just as good projects require sound planning. Almost all developing countries have national plans to speed up their economic growth and social development. Sound planning depends on the availability of a wide range of information about existing and potential investment opportunities and their impacts on the growth of the national economy and other national objectives. The top management can conduct a project to get information needed for planning. Realistic planning involves identifying the resources (financial, human, material, plant and assets) needed for implementing a particular project. Governments allocate financial and administrative resources among many sectors and many competing programs. If the project needs to have a significant effect on the whole growth of the economy, then it must be very carefully planned in coordination with other investments. Therefore, project analysis can help to prioritize this allocation. Effective project preparation and analysis must be set in a framework of broader development plans. Projects must fit appropriately to the overall development strategy and a broader planning process. In addition, projects should be planned within an appropriate policy framework of the national plan. Usually economists state "a good policy beats a good project any day". This is simply to mean that a policy affects the whole sub sector where as a project affects only a part of the sub- sector. For example, setting the price of rice at an economically efficient level can make farmers to produce the „right‟ quantities of rice. However, providing irrigation water below cost to compensate for the distorted price of rice will affect only those farms that receive the subsidized water. If there is no organic link between policies, plans and projects, then the effectiveness and efficiency of investment decisions could be compromised. Accordingly, one has to ensure adequate and proper responses to the following questions. 3. What is the major objective of the project? The actual aims / quotas / milestones to be reached within a specified time, according to client requirements specified. 4. What is the basis for the demand or need for the goods/services to be produced by the project? 5. What problem or opportunity is the project addressing? 6. How does the project contribute to the wider goals of the sector/organization/ region? I.e. whether the project is consistent with the priorities set in policy and development plan documents of a country, region, zone, woreda or a specific organization. 7. What alternative ways of addressing the problem/opportunity/ have been considered? What Path (Strategy) to be followed and actions to be taken to reach the aims and objectives. 8. Why is the proposed project the most appropriate way of addressing the problem/opportunity; 9. What is the approximate cost and timescale Schedules of the project? This is a plan showing when individual / group activities will start and end and at what cost. 10. Who are the major stakeholders and beneficiaries of a project? In what ways are they expected to participate? 11. Which institution is the most appropriate for implementation? This is about organizing and Assigning specific people to a specific objective, as well as the specific responsibilities for each task 12. Are there additional or special circumstances relevant to the project? 13. Standards and Determining quality for each action The act of planning, in essence, is about the creation of a plan and that plan can be a diagram, a table of figures, a programme of dates or a sequence of actions. From a system point of view, management must make effective utilization of resources. This effective utilization over several different types of projects requires a systematic plan in which the entire company is considered as one large network subdivided into smaller ones. Program Plans Dear learners! Have you heard about program plan? If so, try to forward your own answer in writing. Fundamental to the success of any project is documented planning in the form of a program plan. The program plan provides the following framework: Estimates conflicts between functional managers Eliminates conflicts between functional management and program management Provides a standard communications tool thought the life time of the program.  Provides verification that the contractor understands the customer‟s objectives and requirements. Provides a means for early identification of problem areas and risks. The program plan is a standard from which performance can be measured, not only by the customer, but by program and functional management as well. The plan serves as a cook book for the duration of the program by answering these questions for all personnel identified with the program. What will be accomplished? How will it be accomplished? Where will it be accomplished? When will it be accomplished? Why will it be accomplished? Activity 1.4: 1) What is a program plan? Developing a Project Plan: What to Include? Dear student, I think you are clear with plan, project and program. In writing project key contents should be included. You may take it as aspect of good project planning and those are: 1. An executive summary/project vision – comprising a brief description of the project and clearly demonstrating the aims and objectives (e.g. SMART targets) of the project. 2. A description of the target audience and the desired learning outcomes. Think about the USP (Unique Selling Point) of your project to the target audience. 3. Details about the content and context of the project – is it a new project, or does it build on previous experience? Will it utilise an existing platform? 4. Key roles and responsibilities – details of individuals involved in the design and delivery of the project and the tasks assigned to them. Who is ultimately responsible for the project and final decisions e.g. the principal funding applicant. This is extremely important for any project, but even more so when a project is a collaboration between different organisations. (You should also establish who is accountable within each partner organisation). 5. Keys tasks and deliverables required to achieve the objectives of the project (key tasks broken down into sub-tasks if required). 6. Resources necessary to achieve the aims of the project, (real, virtual, people, organizations etc.) 7. Project timeline and key milestones – all tasks put into a sensible order with sufficient timescales. Start and end dates should be clearly identified. Gantt charts are a useful planning tool for this: http://www.jiscinfonet.ac.uk/tools/gantt-charts. 8. Budget and Costing – a budget showing a breakdown of all the project costs linked to key tasks and deliverables e.g. salaries, consultancy fees, communication with stakeholders, materials & consumables, venue/access charges, events, equipment, travel & subs, consumables, evaluation etc. This should also include any funding that has been secured „in kind‟ e.g. room hire that has been waived. This will demonstrate the true cost of the project. 9. Contingency plans – allow time and budget for „contingencies‟ and detail how any project issues and changes to the scope of the project will be managed. Risks to the project should be continuously assessed and mitigated for as far as possible. 10. Communication strategy/mechanisms – how will communications with all stakeholders be managed? Including methods of and frequency of communication. This should also include plans for marketing and promotion, dissemination and sharing any learning. 11. Monitoring and evaluation strategy – what are the intended impact(s) and outcomes, and how will you measure success? 12. Record keeping/document management system –The person(s) responsible for record keeping and managing all the project documents (i.e. funding proposal, detailed project plan, interim reports, stakeholder communications, processes for change, health and safety documents etc) needs to be agreed at the start of the project. (This is often the Project Manager). 13. Legacy – what is the intended legacy of the project e.g. working towards a sustainable activity? Chapter Three 3.0 Project Development 3.1 Generation and Screening of Project Idea Introduction The search for promising project ideas is the first step towards establishing a successful venture. Searching opportunities requires imagination, sensitivity to environmental changes, and realistic assessment of what a firm can do. The task is partially structured, partly unstructured; partly dependent on convergent thinking, partly dependent on divergent thinking; partly requiring objective analysis of quantifiable factors, partly requiring subjective evaluation of qualitative factors; partly amenable to control, partly dependent on fortuitous circumstances. Many of the most important projects in developing countries emerge from the political commitments of national leaders, as response to crisis, emergencies and external threats or foreign governments‟ policies and assistance agency priorities, etc. Stimulating the Flow of Ideas Often firms adopt a somewhat casual and haphazard approach to generation of project ideas. To stimulate the flow of ideas, the following are helpful: 1. SWOT Analysis: SWOT is an abbreviation for strengths, weaknesses, opportunities and treats. SWOT analysis represents and a systematic effort by an organization to identify opportunities that can be profitably exploited by it. Periodic SWOT analysis facilitates the generation of ideas. 2. Clear Articulation of Objectives: The operational objectives of a firm may end up with one or more of the following: Cost reduction Productivity improvement Increase in capacity utilization Improvement in contribution margin Expansion into promising fields A clear articulation and prioritization of objectives helps in channel sing the efforts of employees and encourage them to think more imaginatively. 3. Fostering Conducive Climate: To tap the creativity of people and to harness their entrepreneurial urges, a conducive organizational climate has to be fostered. 3.2 Project Identification and Selection The first stage in the project life cycle is to find potential projects. Such projects usually start as new ideas which are carefully examined and if found feasible and desirable are translated into projects. 3.2.1 Sources of project ideas There are many sources from which ideas or suggestions for projects may come. a. Project ideas from technical specialists For industrial projects, ideas will visually tend to come from technical specialists, who by virtue of their experience and/or research findings will give useful information which may lead to the manufacturing of new products or improving the existing products. b. Project ideas from Local leaders For community or social projects, local leaders will usually have important ideas, which they, together with the local people, have identified as being important in improving the welfare of the people. In the case of social projects, depending on which one is identified, there may be a number of other projects which are linked to the identified project. For example, a project for constructing a dam for the generation of hydro-electric power will bring about suggestions for the start of an irrigation project, a fishing project and a water communication project. c. Project ideas from entrepreneurs For commercial and industrial projects, entrepreneurship is an important source of ideas. Entrepreneurship, according to Srivastava (1981), includes the characteristics of perception of managerial competence and motivation to achieve results. Although entrepreneurship skills have been passed on from one generation to another, along family and socio-economic circles, it has been recognized that programs for entrepreneurship development will help individuals to come up with useful ideas which can be translated into viable projects. d. Project ideas from government policy and plan From time to time, governments produce guidelines such as the national development plans, sessional papers which spell out the direction of what the government is likely to do to achieve certain targets in various sectors of the economy and guidelines to various organizations and individuals. The information contained in these documents is useful in generating ideas for new projects. Individuals using government policy guidelines as a source for project ideas must make sure that they operate within the overall national policy framework as contained in the relevant documents 3.2.2 Participatory analysis Participation or stakeholder‟s analysis seeks to identify the major interest groups involved (all those affected by or involved) in the project. The conditions and characteristics of local community groups and organizations likely to be affected are identified and analyzed to establish whose problems merit priority solution. The idea is to involve at least a representative of each interest group, if possible, in the subsequent analysis of problems. If not possible, the workshop should try to perceive problems from each of their perspectives. It should be noted that even if people come from a particular area their interests and problems may differ, depending on the organization and on social classes to which they belong. Even within a group, men and women can have different problems. Moreover, several groups with conflicting interests may exist within a community and in extreme cases; some groups may even be anti- development. Therefore, it is desirable at the outset to identify to clarify different social, political, economic, cultural and religious background of potential target group members. The following is an example of how the stakeholders can be categorized in to groups before subjecting them into a detailed analysis. a. Target Group Identification A target group is the main group for which positive change is desired and intended by implementing the project. Usually, it is selected from among the groups identified in the group categorization stage of participation analysis. Selection is through a process of considering which groups‟ interests should be given the highest priority or which group is the most deserving. Once a target group is identified, their unique or core problems. The causes of the core problem and impact of the core problem can be identified and easily analyzed. in cases where a consensus is hard to reach out on the deserving target group, a tentative group can be selected for the purpose of initial analysis and be changed later if an alternative group is found to deserve a higher priority. b. Group Categorization Group categorization can be done in many ways but the following is the generally accepted one: Beneficiaries: groups likely to benefit from the expected projects; Negatively affected groups: groups likely to be adversely affected by the expected project Decision makers: groups with decision making authorities Funding agencies: groups which can bear expenses Implementing agencies: groups which can implement the expected project Community leaders: groups representing the community Potential opponents: groups which may oppose or obstruct a project because before design ; and Supporting groups : groups likely to cooperate with the expected project c. Detailed group analysis Detailed group analysis is done using several factors. Characterize the common members to be affected by the project by considering the following major issues: interests; potential or actual conflicts; inter-dependencies; social –relationships (social capital) Structure, organization, size and leadership are important aspects in a group. Religious and cultural backgrounds and gender issues as well as economic, political, institutional aspects should be given consideration. Problems, needs and demands of the group should be identified and be related groups. Also to be identified are: potentials, strengths, weaknesses, constraints and opportunities. 3.2.3 Problem analysis Planners use a problem tree analysis techniques to identify all the problems surrounding a given problem condition and displaying this information as a series of cause and effect relationship. A problem tree approach can also be used for a general diagnosis of a problem in some situation or organization. In this case no specific problem needs to be taken as the starting point. Instead all existing problems are identified and then interrelated in the cause and effect linkages for the situation as a whole. The problem analysis begins with identifying a core problem. The tree is then expanded upwards and downwards as the causes and effects of the problem are identified. a. Procedure of a problem analysis Begin with the specific problem or need to be solved. List all other interdependent conditions and problems. Brainstorming or other group‟s idea generating techniques can be used, or simply ask the following questions for each problem as it is identified: What is this problem caused by? What does this problem cause? To ensure a more complete diagnosis, include as many relevant perspectives as possible as discussed in the participation analysis earlier. The clientele- those affected by the problem Top decision makers Ordinary people with the organization or setting Appropriate experts National or regional planning organization The view of unbiased outsiders Others involved Using separate sheets of paper for each, arrange identified problems and interdependent conditions in their logical, cause and effect relationship, in the form of a “tree”. Make sure all elements are correctly connected by arrows indicating the directions of causal linkage. The resulting diagram represents a rough but effective casual model of the complete problem environment from the root cause of the problem to the impact of the problem. For easy reference, the main procedural elements are stated below as a sequence of analytical steps. b. problem tree steps Identify major interest groups involved (all those affected by or involved in the project Involve a representative of each, if at all possible, in your analysis of problems. If not possible, try to perceive from each of their perspectives as described in the participation analysis section. List as many problems as possible from each of the above perspectives, remembering that a problem is not the absence of a solution but the difference between what is desired and what the current state of affairs is; For each of the problems you have listed above ask yourselves what are (could be) the major causes. add any new problems that you have discovered to the list; For each of the problems on the list ask : what are the most important problems to your list; Structure the above problems in cause –effect relationships, checking to see that you have not overlooked linkages or other important causes or effects. Review your logic to see if your cause effect relationships are correct and to see if you have omitted any linkage or major causes or effects. (It may help to show it to someone who have not been involved in its development for an objective technique); and change as needed. 3.2.4 Objective analysis An objective tree is a technique for identifying the objectives that will be achieved as a result of solving the problems cited in the problem tree. The objectives are also displayed as a series of cause and effect relationships. A. Procedure Examine the problem tree to determine which problems can be simply reversed into objectives by restating negative conditions as positive conditions. Recognize that not all causal relationships are simply reversible, so that solving one problem automatically solves those it caused. For example, although flooding destroys crops, pumping out the water does not thereby restore the crops to health. For such problem relationships, other types of objectives must be formulated to represent solutions. Recognize that some problems in the problem tree may actually be symptoms of other deeper problems. Add new objectives if these appear relevant. Determine the cause and effect relationships among the objectives and draw the objective tree. The level of detail required is a judgment that must be made by those developing the problem tree. In general it is the amount of detail that permits a clear understanding of the problem and its environment. If the analysis is too superficial, the solution chosen could itself cause a whole series of additional problems because the cause – and –effect relationships of the first analysis were not well-defined. 3.2.5 Alternative Tree Analysis or Project Selection An alternative tree analysis is a technique for identifying alternative solutions or course of action that can be used to achieve the same or alternative objectives and the display of this information in a simple format. 3.2.6 Logical Framework Approach A logical framework is a four by four matrix, which enables the decision maker to identify project purposes and goals and plan for project outputs and inputs. The log frame is useful in planning a project and to provide measures of evaluating the project. Important assumptions about the causal linkages in the project are stated on the log frame, and these are useful when it comes to project implementation. It is important to understand the meaning of various terms which are used in a log frame. 3.3 The Preparation and Analysis Appraisal This is the phase of making detailed project planning because this phase gives detail answers for questions like what to do, when to do it and how to do it. This phase is mainly concerned with the pre-feasibility and feasibility study of a project. Once projects have been identified, the process of project preparation and analysis starts. The process of project preparation and analysis includes: undertaking of pre-feasibility and feasibility studies and preparation of the feasibility report. 3.3.1 Pre-feasibility study A pre-feasibility stage is stage of rough assessment on the financial, economical and technical viability of the project. The identification of project ideas is followed by a preliminary selection stage on the basis of their technical, economic and financial soundness. This is known as the pre- feasibility study stage. The principal objectives of pre-feasibility study are to determine whether: All project alternatives have been examined. A detailed analysis through feasibility study is required. Functional or support studies [such as market surveys, laboratory tests or pilot tests] are necessary. The investment opportunity is viable or not on the basis of the available information.  The environmental situation at the planned site and the potential impact is in line with the national standards. At this stage, the various alternatives in the scale of production, technology to be adopted and location of plant should be compared and the overall project viability should be assessed. However, the assessment of viability at this stage includes only analysis of costs and benefits of all alternatives without going into the details of financing and organization. The emphasis here is the overall viability of the project with little consideration as to how the project is to be financed or organized. A pre-feasibility study should be viewed as an intermediate stage between a project opportunity study and a detailed feasibility study. The difference lies in the degree of detail of the information obtained and the intensity with which project alternatives are discussed. The structure and contents of a pre-feasibility study are, hence, the same as that of a detailed feasibility study. Particularly, the contents of the pre-feasibility should cover the following main components of the study. A clear definition of the project idea and objectives; and its scope. Market analysis and marketing concept. Raw material and supply requirements. Location, site and environmental impact. Engineering and technology (including production process) Organization and overhead costs. Human resource; especially managerial staff, (labor costs and training requirements & costs). Project implementation schedule and budgeting. The financial and economic impact of each of the above-mentioned factors should be assessed. If the opportunity study is well-prepared and comprehensive enough, the pre-feasibility stage could be by-passed. Hence, it is not always necessary to undertake the pre-feasibility study. Rather, if an opportunity study provides sufficient information, the pre-feasibility stage could be dropped and the feasibility study could be conducted instead. 3.3.2 Support study Support or functional studies cover specific aspects of an investment project. They are required as prerequisite for or in support of pre-feasibility and feasibility studies. Such studies are particularly important for large-scale investment proposals. Examples of these studies are:  Market studies of the product to be manufactured, including demand projections. Raw material and factory supply studies, covering current and projected availability of raw materials and their respective prices. Laboratory and pilot-plant tests to determine the suitability of particular raw material or products. Location studies where transport costs constitute a major determinant. Economies-of-scale studies generally conducted as part of technology selection studies. Equipment selection studies when large plants with numerous divisions are involved and the sources of supplies and the costs are widely divergent. Environment impact assessment which covers current environmental conditions in the area surrounding the envisaged site The contents of a support study vary depending on the nature and type of the project. However, the result of such a study should be clear enough to give direction to subsequent stage of project preparation. 3.4 Feasibility study Feasibility stage is detail research and data gathering of economic, financial, technical, social and environmental (ecological) impacts of the project. The major difference between the pre-feasibility and feasibility studies is the amount of work required in order to determine whether a project is likely to be viable or not. If the preliminary screening suggests that the project is prima facie worthwhile, a detailed analysis of the marketing, technical, financial, economic, and ecological aspects is undertaken. Feasibility study provides a comprehensive review of all aspects of the project and lays the foundation for implementing the project and evaluating it when completed. In developing countries, it is not uncommon to find a situation where only a few projects (implemented by governments and big organizations) are sufficiently prepared and carefully selected. This happens because of several reasons. Some of the reasons could be: There aren‟t enough skilled people to perform this task; There is some unwillingness to spend money in this process and The use of non-numeric selection models like: a. Sacred cow: in this model, a project is usually suggested by senior and powerful individuals in an organization and the idea is passed to the officers below. b. Operating necessity: in this model, projects are initiated because they are required to keep a system in operation. c. Competitive necessity: projects are usually initiated and given a lot of support if they will help an organization to maintain a competitive edge over other originations. d. Product line extension: this approach is used when a project is intended to develop and distribute a new product(s) e. Comparative benefit model: this model is used when a firm has several projects which must be considered and some ranking given. However, the application of these models to the project selection may be limited to projects, which do not involve huge investment resources. For those projects which involve huge resources especially those involving governments and other institutions such as that of the WB and IMF, feasibility studies must be usually carried out before a project is selected for implementation. A feasibility study should provide all data necessary for an investment decision. The commercial, technical, financial, economic and environmental prerequisites for an investment project should therefore be defined and critically examined on the basis of alternative solutions already reviewed in the prefeasibility study. 3.5 Elements of feasibility study The feasibility study should contain the following elements: 1. Market analysis 2. Technical analysis 3. Organizational analysis 4. Financial analysis 5. Economic analysis 6. Social analysis, and 7. Environmental analysis 1. Market analysis Market analysis indicates the demand potential of the output of the project. Such potential is determined by examining a number of factors such as the demographic statistics of the areas or regions where the outputs will be sold, the income levels of the people in these regions and what is contained in the development plans of these regions. It is important to establish whether or not there are competitors who are already producing similar outputs and how much share of the market they command. The gap in the market which competitors are unable to satisfy will form the basis establishing the demanded potential. In sum, the market analysis should address the following questions: Is the product for domestic or export consumption. Is the market large-enough to absorb the new product without affecting the price? What share of the total market will the proposed product have? What marketing strategies and distribution channels are required? The objective of undertaking market analysis is, therefore, to assess whether there exists an unsatisfied demand for the product and to determine the share that can be captured by the project through appropriate marketing strategies. 2. Technical analysis The technical analysis is concerned with the projects inputs (supplies) and outputs of real goods and services and the technology of production and processing. The other aspects of project analysis can only proceed in light of the technical analysis. This aspect may include the works of engineers, soil scientists and agronomists in case of, say, agricultural projects. The primary objective of technical appraisal is to evaluate the type of technology, its capacity, and degree of integration (flexibility of manufacturing system), the production processes involved, as well as the inputs and infrastructure facilities envisaged for the project. Technology is examined at two levels: first, the technology used must be suitable for the realization of the specific objectives of a given project. The imported machinery might be obsolete and inefficient that leads to high cost of production and maintenance. Second, technology must be examined for suitably according to the socio-economic environment. The imported technology may not be appropriate. for example, due to the need to provide employment to people, government sponsored projects would usually prefer projects with technology which is labor intensive as opposed to those which encourage less human labor. 3. Organizational analysis A whole range of issues in project preparation revolves around the overlapping institutional, organizational, and managerial aspects of projects, which clearly have an important effect on project implementation. To have a chance of being carried out, a project must relate properly to the institutional structure of the country and region. What will be the arrangements for and use them to further the project? How will the administrative organization of the project relate to existing agencies? Is there to be a separate project authority? What will be its links to the relevant operating ministries? The organizational proposal should be examined to see that the project is manageable. Are authority and responsibility properly linked? Does the organizational design encourage delegation of authority or do too many people report directly to the project director? Does the project have sufficient authority to keep its accounts in order and to make disbursements promptly? Managerial issues are crucial to good project design and implementation. The analyst must examine the ability of available staff to judge whether they can administer such large-scale public sector activities as a complex water project, an extension service, or a credit agency. 4. Financial analysis It is concerned with assessing the feasibility of a new proposal for investment on the basis of financial requirements and their availability. The project‟s direct benefits and costs are estimated at the prevailing market prices to appraise the viability of the project as well as to rank projects on the basis of profitability. In order to measure the profitability of a business, various methods and instruments may be used as appropriate. To facilitate the analysis and to rationalize the conclusions, financial statements and schedules should be compiled. Financial analysis also deals with the identification of sources of funds required for implementation of the project. For the purpose of determining the financial viability of the project, estimates of cost of the project, profitability, cash flow and projected balance sheets have to be prepared. In sum, the main objective of financial analysis is to determine whether an investment proposal described and analyzed under certain assumptions will render a return acceptable to the investor. Hence, it is a crucial part of project appraisal to check on the assumptions that form the basis for the estimates and forecasts in the study. 5. Economic analysis Economic analysis is basically concerned with the following: how to identify effects of the project on the society ; qualification of the effects of the proposed projects; and pricing of costs and benefits to reflect their values to society Financial analysis aims at appraising the financial and commercial feasibility of a project from the view point of an entrepreneurs, investor or financier. On the other hand, economic evaluation deals with the economic contribution and impact of a project at the macro or national or society level. The economic evaluation of a project uses the same financial statements and schedules as a financial analysis. However, market prices and costs will have to be adjusted to eliminate distortions resulting from social factors and government measures. In so doing, market values are converted to economic values. For this reason, financial appraisal covers only private costs and benefits, while economic analysis takes into account social costs and benefits. The most important distinctions between financial and economic analysis are: In economic analysis, taxes and subsidies are treated as transfer payments. But in financial analysis, taxes are treated as costs and subsidies as a return. In financial analysis, market prices are used. In economic analysis, however, market prices may be adjusted to reflect social benefits. These adjusted prices are called shadow or accounting prices. In financial analysis, interest paid to external suppliers of money may be deducted to obtain the stream of benefit available to the owner of the project. But, in economic analysis, interest on capital is never separated and deducted from gross return because it is part of the total return to the capital available to the society as a whole. 6. Social analysis Social Analysis examines carefully the broader social implications of proposed investments. This includes: 1. Weights for income distribution so that projects benefiting lower-income groups will be favoured. 2. Considering carefully the adverse effects of a project on particular groups of people in particular regions. 3. The impact of the project on improving the quality of life. 4. Considering the contribution of alternative projects in furthering the same objectives. 7. Environmental analysis Environmental Analysis is assessing the impact of the project on nature and its habitat such as plants (forests), water, air, wild and domestic animals, human beings, etc. Some of the examples of the questions to be asked are: What chemicals and wastes are emitted from the project that will pollute air and water? What hazardous chemicals are used that will harm the health of employees and the people living around the project area? For example, a dam constructed can be the cause of the spread of malaria or increase the incidence of Schistsoma in regions where snail- transmitted disease is endemic. It is recognised that projects are important vehicles for development. However, people are at the centre of this development. Therefore, people, animal and plant life must not be affected in the name of development.