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Chapter 10: STRUCTURAL INSTRUMENTS (part III)
STRUCTURE OF THE COURSE 12: 10.5.: Identifying and Justifying the project 10.6.: Introduction in the Project Cycle Management 10.6.1.: Theoretical approach 10.6..2: When and why PCM has been introduced? 10.6.3: The phases of the Project Cycle 10.7.: Logical Framework Approach 10.7.1.: Background 10.7.2.: How do we develop a project idea? 10.8.: Project Examples
10.5: Identifying and Justifying the project
What is a good quality project? A good project is a project which is: Relevant Feasible Sustainable Relevant projects are those which: Are linked to the sectoral and national objectives of the Commission; Involve the beneficiaries even from the beginning in the programming process; Are based on an analysis of problems; Have clearly defined objectives in terms of benefits for the target groups. Feasible projects are those which: Have logic and measurable objectives; Take into consideration risks and assumptions. Sustainable projects are those which: Are viable from economic and financial point of view and generate long-term profit; Used adequate technologies (i.e. regenerating resources); Take into consideration the socio-cultural environment of the population; Take into consideration the management capacity of the involved institutions (public and private); Take into consideration the gender-related problems and try to reduce them. A good quality project keeps on bringing benefits to its beneficiaries a long period AFTER its finalization. The quality / sustainability factors are: 1. The beneficiaries feeling of affiliation; 2. Support for the public policies; 3. Adequate technologies; 4. Environment protection; 5. Socio-cultural elements; Page 1 of 18
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6. Equal opportunities (gender, etc.); 7. Institutional and management capacity; 8. Economic and financial viability. How do we develop a project idea? The analysis of the reality represents the basis for the project ideas. There are different modalities to analyze the reality: Subjectively (personal vision/approach) Problems Challenges When looking for a project idea we may: - interview persons that have the same preoccupations like us; - interview persons that have connection, professionally or not, with our preoccupations; - read studies, analyze facts and trends; - design or request studies for identifying the lacks / imperfections / drawbacks on which our preoccupations focus; - organize meetings with persons having the same preoccupations like we have (or that know about them, or are linked with them, etc.) and to achieve together brainstorming sessions; - search within relevant national documents and strategies. How to elaborate SMART objectives? SMART is the acronym of the features considered as essential for a correct formulation of the projects objectives. These features are: Specific to the objective it is supposed to measure Measurable (either quantitatively or qualitatively) Available at an acceptable cost (or achievable) Relevant to the information needs of managers Time-bound so we know when we can expect the objective/target to be achieved. Note: There are several variants of these features, and implicitly of the SMART acronym. Specific: means an objective indicates exactly what it is intended to be achieved. It is clearly expressed, there is no place for doubts. Measurable: means that an objective can be quantified, either quantitatively or qualitatively. It allows to establish very precisely if it has been achieved or not, or, to what extend it has been achieved. It permits the monitoring of the progress for its achievement. Available/achievable: means that an objective really may be achieved (it does not rely/depend on the actions of another entity except that one having responsibilities in its achievement). It is linked to the capacity of the organization(s) submitting the project. Relevant: means the achievement of the objective contributes to the impact envisaged by the project. The relevance of an objective is evaluated in relation to the general objective of the project. Page 2 of 18 Objectively (studies, surveys, data)
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Time-bound: means the objective contains the deadline until when it is foreseen to be realized (it answers to questions like When?, Until when?, Which period?, etc.).
10.6: Introduction in the Project Cycle Management
10.6.1.: Theoretical approach Definition: A project is a series of activities aimed at bringing about clearly specified objectives within a defined time-period and with a defined budget1. A project is developed into a certain geographic region, with certain material, human, informational resources, etc., for a certain target group, for a pre-established period, having the purpose of solving specific problems or to improve a given situation. A project may be described as a process during which: available resources are spent, activities are performed and outcomes are achieved in the view of reaching a pre-defined impact. A project should also have: Clearly identified stakeholders, including the primary target group and the final beneficiaries; Clearly defined coordination, management and financing arrangements; A monitoring and evaluation system (to support performance management); and An appropriate level of financial and economic analysis, which indicates that the projects benefits will exceed its costs. Development projects are a way of clearly defining and managing investments and change processes. Types of project: Development projects can vary significantly in their objectives, scope and scale. Smaller projects might involve modest financial resources and last only a few months, whereas a large project might involve many millions of Euro and last for many years. Examples of projects could include: A health service reform and expansion project, implemented primarily by the Ministry of Health of the partner government and with financial support of other donors, costing Euro 30m over 10 years; Business promotion projects, providing grants to non-profit organizations of up to Euro 200,000 over a maximum time line of 2 years; A road and bridge building project, using a contracted project manager, costing Euro 50m over 5 years. Relationship between projects, programmes and policies: A well-formulated project should derive from an appropriate balance between the ECs development policy priorities and the partners development priorities. Within the scope of these policy priorities, the executive arms of government or nongovernmental agencies formulate the broad areas of work required to implement policy
In the context of the Logical Framework Matrix, a project is defined in terms of a hierarchy of objectives (inputs, activities, results, purpose and overall objective) plus a set of defined assumptions and a framework for monitoring and evaluating project achievements indicators and sources of verification).
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decisions. These broad areas of work are often called programmes, which, like projects, may vary significantly in scope and scale. The definition of what a programme is depends essentially on how the responsible authority(ies) choose to define it. Definition: A programme represents a series of projects whose interlinked objectives contribute to a common general objective. We may speak about programmes when several projects from a specific sector, sub-sector or region linked through a clearly defined concept. A programme the strategic basis of the projects, it has a wider range of action, it provides the guidelines and the principles and for Structural Funds it contains priorities and measures. In order to get financial support from the European Commission, projects have to be designed in the framework of a certain programme. Definition: Project Management represents the structuring and organization of processes with the purpose of reaching a pre-established objective. The Project Management is divided in functions in order to cover the whole scale of tasks. These functions are: - establishing/formulating the objectives; - programming; - decisions-taking; - motivating; - organizing; - informing; - monitoring; - evaluating. Definition: Project Cycle is the whole life of a project, from the idea to its finalization. The project cycle assures the framework for consulting the interested parts (stakeholders), defines the key decisions, the necessary information and the responsibilities. It has also an evaluative role, because it takes over the experience in elaborating the future programmes and projects. Project Cycle Management is a term used to describe the management activities and decisionmaking procedures used during the life-cycle of a project (including key tasks, roles and responsibilities, key documents and decision options). Definition: Project Cycle management (PCM) defines the phases in the life of a project, the level of involvement of different stakeholders, the management activities and the decisionmaking procedures. In fact, PCM constitutes a methodology for preparing, implementing and evaluating projects, based on an integrated approach, which ensures the framework for focusing on objectives and on sustainability issues. Page 4 of 18
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PCM helps to ensure that: projects are supportive of overarching policy objectives of the EC and of development partners; projects are relevant to an agreed strategy and to the real problems of target groups/beneficiaries; projects are feasible, meaning that objectives can be realistically achieved within the constraints of the operating environment and capabilities of the implementing agencies; benefits generated by projects are likely to be sustainable. To support the achievement of these aims, PCM: requires the active participation of key stakeholders and aims to promote local ownership; uses the Logical Framework Approach (as well as other tools) to support a number of key assessments/analyses (including stakeholders, problems, objectives and strategies); incorporates key quality assessment criteria into each stage of the project cycle; and requires the production of good-quality key document(s) in each phase (with commonly understood concepts and definitions), to support well-informed decision-making. 10.6..2: When and why PCM has been introduced? In 1992 the European Commission adopted Project Cycle Management (PCM) as its primary set of project design and management tools (based on the Logical Framework Approach), and a first PCM manual was produced in 1993. The manual was subsequently updated. The European Commission has adopted PCM for managing its external cooperation actions, in the view of: Focusing on clear and realistic objectives; Making a clear difference between objectives and ways of achieving them; Using the demand-based approach instead of offer-based approach; Detailed analyzing the situation/problem; Pursuing the verifiable impact; Focusing on long-term effects (ensuring the sustainability instead of short-term visions); Collecting the information in a standardized way, on a regular basis. The cycle of operations for managing the ECs external assistance projects has five phases, as shown in figure below. The PCMs phases
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This cycle highlights three main principles: 1. Decision making criteria and procedures are defined at each phase (including key information requirements and quality assessment criteria); 2. The phases in the cycle are progressive each phase should be completed for the next to be tackled with success. 3. New programming and project identification draws on the results of monitoring and evaluation as part of a structured process of feedback and institutional learning. 10.6.3: The phases of the Project Cycle Management The project cycle starts by identifying an idea which will be transformed into an action plan to be implemented and evaluated. As emphasized before, the PCM has five main phases: 1. Programming; 2. Identification; 3. Formulation; 4. Implementation (including monitoring and reporting); 5. Evaluation. To these, audit may be added as well. 1. Programming phase: During this phase, the situation at national and sector level is analyzed to identify problems, constraints and opportunities which cooperation could address. This involves a review of socio-economic indicators, and of national and donor priorities. The purpose is to identify the main objectives and sector priorities for co-operation, and thus to provide a relevant and feasible programming framework within which programmes and projects can be identified and prepared. For each of these priorities, strategies that take account of the lessons of past experience are formulated. 2. Identification phase: The purpose of the identification stage is to: identify project ideas that are consistent with partner and EC development priorities; assess the relevance and likely feasibility of these project ideas (relevance in relation to beneficiaries and programmes); prepare a Financing Proposal or an Identification Fiche for individual projects (see Annex in Romanian, a this Fiche has to be filled in in the national language); prepare a financing decision for a Programme of projects, or determine the scope of further work required during the formulation stage for individual projects. Mainly, during this phase, it is decided which ideas should be selected to be studied during the formulation phase. 3. Formulation phase: The purpose of the formulation stage is to: Confirm the relevance and feasibility of the project idea as proposed in the Identification Fiche or Project Fiche;
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Prepare a detailed project design, including the management and coordination arrangements, financing plan, cost-benefit analysis, risk management, monitoring, evaluation and audit arrangements; Prepare a Financing Proposal (for individual projects) and a financing decision. During this phase project ideas are developed into project operational plans by stakeholders and beneficiaries. Also, an evaluation of the feasibility and sustainability is done. The detailed implementation programme is proposed within this phase, including the Logical Framework Matrix of the project (Logframe Matrix). The result will be the decision of accepting or rejecting the project for financing support. The financing agency analyses the proposal and decide if the aid will be provided or not. In this phase, a legal document stipulating the decision for projects financing and the ways of implementations is issued. 4. Implementation phase: The purpose of the implementation stage is to: Deliver the results, achieve the purpose(s) and contribute effectively to the overall objective of the project; Manage the available resources efficiently; Monitor and report on progress. The implementation stage of the project cycle is in many ways the most critical, as it is during this stage that planned benefits are delivered. All other stages in the cycle are therefore essentially supportive of this implementation stage. The implementation stage is usually composed of the following main periods: Inception period; Main implementation period; Phase-out period. Key tasks associated with each of these periods are summarized in figure below:
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5. Evaluation phase: The purpose of evaluation is to: Make an assessment, as systematic and objective as possible, of an ongoing or completed project, programme or policy, its design, implementation and results. The aim is to determine the relevance and fulfillment of objectives, developmental efficiency, effectiveness, impact and sustainability. An evaluation should provide information that is credible and useful, enabling the incorporation of lessons learned into the decision-making process of both recipients and donors. Principles underpinning the approach to evaluation are: Impartiality and independence of the evaluation process from the programming and implementation functions; Credibility of the evaluation, through use of appropriately skilled and independent experts and the transparency of the evaluation process, including wide dissemination of results; Participation of stakeholders in the evaluation process, to ensure different perspectives and views are taken into account; Usefulness of the evaluation findings and recommendations, through timely presentation of relevant, clear and concise information to decision makers. The Programme Cycle is similar with Project Cycle. The Sector programmes have three main characteristics: 1. By a sector policy strategic document the administration assumes the responsibility to establish policies, priorities and standards which apply to all public activities of the sector, including those financed by donors. 2. All financings for the sector support one single sector policy and the expenditures programmes of the administration. 3. Partners adopt common approaches for the sector and sub-sectors and try to develop, when the conditions permit, the co-financing and the budgetary support.
10.7: Logical Framework Approach
10.7.1.: Background The Logical Framework Approach (LFA) was developed in the late 1960s to assist the US Agency of International Development to improve its project planning and evaluation system. The LFA has since been adopted as a project planning and management tool by most multilateral and bilateral development agencies. The EC has required the use of LFA as part of its Project Cycle Management system since 1993, and it provides a core set of tools with which to undertake assessments of project quality. Over time, different agencies have modified the formats, terminology and tools of the LFA, however the basic analytical principles have remained the same. Knowledge of the principles of LFA is therefore essential for all staff involved in the design and delivery of EC development assistance. The LFA is a methodology for strategic programming that may be used for elaborating many types of projects. The LFA is also an analytical process and set of tools used to support project planning and management. It provides a set of interlocking concepts which are used as
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part of an iterative process to aid structured and systematic analysis of a project or programme idea. The LFA should be thought of as an aid to thinking. It allows information to be analyzed and organized in a structured way, so that important questions can be asked, weaknesses identified and decision makers can make informed decisions based on their improved understanding of the project rationale, its intended objectives and the means by which objectives will be achieved. The utilization of the LFA is required by many international institutions providing financing (i.e. World Bank) and it is compulsory for the projects financed by the EU programmes. The result of LFA is the Logical Framework Matrix or Logframe Matrix (LFM). The LFA is a core tool used within Project Cycle Management: It is used during the identification stage of PCM to help analyze the existing situation, investigate the relevance of the proposed project and identify potential objectives and strategies; During the formulation stage, the LFA supports the preparation of an appropriate project plan with clear objectives, measurable results, a risk management strategy and defined levels of management responsibility; During project/programme implementation, the LFA provides a key management tool to support contracting, operational work planning and monitoring; During the evaluation and audit stage, the Logframe matrix provides a summary record of what was planned (objectives, indicators and key assumptions), and thus provides a basis for performance and impact assessment.
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) which, while requiring further analysis of objectives, how they will be achieved and the potential risks, also provides the documented product of the analytical process. The Logical Framework Matrix consists of a matrix with four columns and four (or more) rows, which summarise the key elements of a project plan, namely: The projects hierarchy of objectives (Project Description or Intervention Logic); The key external factors critical to the projects success (Assumptions); How the projects achievements will be monitored and evaluated (Indicators and Sources of Verification). The Logframe also provides the basis on which resource requirements (inputs) and costs (budget) are determined. The typical structure of a Logframe Matrix is rendered below:
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10.7.2.: How do we develop a project idea? The use of the Logical Framework Approach fulfills several functions: develops project ideas by clarifying the objectives and the expected results; provides a clear, succinct and logical description of the proposed project; helps in identifying the possible risks of implementing the project; provides a useful basis for projects evaluation. Drawing up a Logframe has two main stages, Analysis and Planning, which are carried out progressively during the Identification and Formulation phases of the project cycle. There are four main elements of the Analysis Stage, namely: 1. Stakeholder Analysis, including preliminary institutional capacity assessment, gender analysis and needs of other vulnerable groups such as the disabled (profile of the main players); 2. Problem Analysis (profile of the main problems including cause and effect relationships); 3. Analysis of Objectives (image of an improved situation in the future); 4. Analysis of Strategies (comparison of different options to address a given situation). This analysis should be carried out as an iterative learning process, rather than as a simple set of linear steps. For example, while stakeholder analysis must be carried out early in the process, it must be reviewed and refined as new questions are asked and new information comes to light. In the Planning Stage the results of the analysis are transcribed into a practical, operational plan ready to be implemented. In this stage: the logframe matrix is prepared, requiring further analysis and refinement of ideas; activities and resource requirements are defined and scheduled, and a budget is prepared. This is again an iterative process, as it may be necessary to review and revise the scope of project activities and expected results once the resource implications and budget become clearer.
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The figure below summarises the two main phases of LFA.
Stakeholder analysis: How do we use the stakeholder analysis? Any individuals, groups of people, institutions or firms that may have a significant interest in the success or failure of a project (either as implementers, facilitators, beneficiaries or adversaries) are defined as stakeholder. A basic premise behind stakeholder analysis is that different groups have different concerns, capacities and interests, and that these need to be explicitly understood and recognized in the process of problem identification, objective setting and strategy selection. The key questions asked by stakeholder analysis are therefore Whose problems or opportunities are we analyzing and Who will benefit or loose-out, and how, from a proposed project intervention? The ultimate aim is to help maximize the social, economic and institutional benefits of the project to target groups and ultimate beneficiaries, and minimize its potential negative impacts (including stakeholder conflicts). Below there is a synthetic presentation of what categories are involved in this analysis.
1. Stakeholders: Individuals or institutions that may directly or indirectly, positively or negatively affect or be affected by a project or programme. 2. Beneficiaries: Are those who benefit in whatever way from the implementation of the project. Distinction may be made between: (a) Target group(s): The group/entity that will be directly positively affected by the project at the Project Purpose level. This may include the staff from partner organizations;
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(b) Final beneficiaries: Those who benefit from the project in the long term at the level of the society or sector at large, e.g. children due to increased spending on health and education, consumers due to improved agricultural production and marketing. 3. Project partners: Those who implement the projects in-country (who are also stakeholders, and may be a target group).
Problem analysis: It identifies the negative aspects of an existing situation and establishes the cause and effect relationships between the identified problems. It involves three main steps: 1. Definition of the framework and subject of analysis; 2. Identification of the major problems faced by target groups and beneficiaries (What is/are the problem/s? Whose problems?); 3. Visualization of the problems in form of a diagram, called a problem tree or hierarchy of problems to help analyze and clarify causeeffect relationships. The analysis is presented in diagrammatic form (problem tree) showing effects of a problem on top and its causes underneath. The analysis is aimed at identifying the real bottlenecks which stakeholders attach high priority to, and which they wish to overcome. A clear problem analysis thus provides a sound foundation on which to develop a set of relevant and focused project objectives. How to establish a problem tree?
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Problem Tree Effects
Week absorption capacity of EU fund by Romania
Causes
Analysis of objectives: Analysis of objectives is a methodological approach employed to: Describe the situation in the future once identified problems have been remedied; Verify the hierarchy of objectives; Illustrate the means-ends relationships in a diagram. The negative situations of the problem tree are converted into solutions, expressed as positive achievements. For example, river water quality is deteriorating is converted into quality of river water is improved. These positive achievements are in fact objectives, and are presented in a diagram of objectives showing a means/ends hierarchy. This diagram aims to provide a clear overview of the desired future situation. The main steps in the process are summarised below:
Once again the analysis of objectives should be undertaken through appropriate consultation with key stakeholder groups. Information previously gained from undertaking stakeholder analysis should also be taken into account.
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Once complete, the objective tree provides a summary picture of the desired future situation, including the indicative means by which ends can be achieved. Objective Tree Outcomes
High absorption capacity of EU fund by Romania
Means
As with the problem tree, the objective tree should provide a simplified but robust summary of reality. It is simply a tool to aid analysis and presentation of ideas. Its main strength is that it keeps the analysis of potential project objectives firmly based on addressing a range of clearly identified priority problems. Analysis of strategies: This phase has the aim to select the strategies to be used in achieving the objectives and also deciding upon the objectives which to be included in the project and the ones which will remain outside of the project (it is the so-called IN-OUT analysis). This analysis contains: Identification of possible strategies for achieving the objectives; Selecting the project strategy(ies), based on clear criteria. This analytical stage is in some respects the most difficult and challenging, as it involves synthesizing a significant amount of information then making a complex judgment about the best implementation strategy (or strategies) to pursue. In practice a number of compromises often have to be made to balance different stakeholder interests, political demands and practical constraints such as the likely resource availability. Nevertheless, the task is made easier if there is an agreed set of criteria against which to assess the merits of different intervention options. Key criteria for strategy selection could include: Expected contribution to key policy objectives, such as poverty reduction or economic integration; Benefits to target groups including women and men, young and old, disabled and able, etc. Complementarity with other ongoing or planned programmes or projects; Capital and operating cost implications, and local ability to meet recurrent costs; Financial and economic cost-benefit; Contribution to institutional capacity building; Technical feasibility; Page 14 of 18
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Environmental impact. The results of the stakeholder, problem, objectives and strategy analysis are used as the basis for preparing the Logical Framework Matrix. LFM is a modality of presenting the substance of a project into an easy-to-be-understand form. The matrix should provide a summary of the project design, and should generally be between 1 and 4 pages in length. The length of the matrix will depend on the scale and complexity of the project, and how many objective levels are included in the matrix. In general, it is recommended that the matrix only includes the project Overall Objective, Purpose and Results, and that Indicative Activities be described / documented separately. As explained above (paragraph 10.7.1), the basic matrix consists of four columns and a number of rows (usually three or four rows). A description of the type of information provided in the Logframe matrix is shown in figure below (including Activities in this example).
The preparation of a Logframe matrix is an iterative process, not a just a linear set of steps. As new parts of the matrix are drafted, information previously assembled needs to be reviewed and, if required, revised. Nevertheless, there is a general sequence to completing the matrix, which starts with the project description (top down), then the assumptions (bottom-up), followed by the indicators and then sources of verification (working across). This general sequence is illustrated below.
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The Logframe helps to indicate the degree of control managers have over the different levels of the projects objectives.
10.8. Project examples
1. A motorway from afar (Greece) If any transport route has played a key role in Greece over the centuries, it is the Via Egnatia. This was the ancient Roman road through northern Greece which linked the Adriatic to Byzantium. The present day motorway of the same name recreates the link with this historic route and its strategic importance has made it one of the 14 priority projects in the transEuropean transport network. Under construction since 1990, the Egnatia motorway (680 km long, with two lanes and a hard shoulder in each direction, except in certain mountainous areas) is due to be completed in 2006. Once completed, the journey from Kipi, on the Turkish border, to the port of Igoumenitsa, near Albania, will be reduced to six hours. It will serve seven airports and five major ports. The construction project will include 50 road interchanges, 350 slip roads, 1 650 bridges, spanning a total of 40 km, and 76 tunnels, totaling around 50 km in length.
Total cost (M inclusive of VAT)
PROJECT PROGRESS OF EGNATIA AXIS Section constructed before 1994 (common section with PATHE) Projects after 1997 Egnatia Odos A.E. responsibility (Program funded by CFS II & CFS III) Completed and opened to traffic (December 2006) Under construction (will be completed and opened to traffic in 2006/beginning 2007) Other sections under construction TOTAL OF THE AXIS
Length in km 25
453 27 165 670
2.900,00
3.000,00 5.900,00
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2. Holiday and health (Austria): The Gars Bio-Training Hotel was established in 1986 and now has over 146 beds in the four-star category. With 100 employees, the hotel is the leading tourism enterprise in the Kamptal region. An additional hotel featuring similar activities was opened in Gars in 2001, creating 12 new jobs and appealing to new target groups. With the establishment of a health centre on the banks of the River Kamp, additional training programmes for doctors and seminars for laypeople on Chinese health practices and on alternative therapies will be offered in the future. It is anticipated that 22 new jobs will be created there. It is envisaged that these projects will create a momentum for development in this structurally weak region which will boost the regional economy, employment and the supplier industry.
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Hotel extension Total costs: EUR 4.6 million European Union contribution (ERDF): EUR 0.7 million Health centre Total costs: EUR 4.1 million European Union contribution (ERDF): EUR 0.6 million
Bibliography: 91. Project Cycle Management, 2004, http://www.europa.eu.int/comm/europeaid/qsm/index_en.htm 92. Curs de formare Cum se finaneaz proiecte din Fondurile Structurale 2007-2013 , 16-17 Octombrie 2006, Institutul Romn de Training, Sibiu. 93. Regions in action, a country on the move: A selection of successful projects supported by the Structural Funds in Greece, http://ec.europa.eu/regional_policy/sources/docgener/presenta/greece/greece_en.pdf 94. EGNATIA ODOS A.E., http://www.egnatia.gr/flash/en/index.html 95. Regional Revival Successful projects financed by the Structural Funds in Austria, http://ec.europa.eu/regional_policy/sources/docgener/presenta/brochures/osterreich_en.pdf
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