PROJECT DEVELOPMENT CYCLE
based on the Reference Manual on Project Development and Evaluation by
the National Economic and Development Authority (NEDA)
AN OVERVIEW
Atty. DON DCA GALLARDO, REC REA REB
Purpose of the
Project Development and Evolution Manual
Aims to help develop and evaluate investment projects
to promote economic activity and social well-being;
Describes how investment possibilities can be
evaluated so these can proceed successfully from the
idea stage to implementation stage; and,
Provides a financial and economic accounting
framework for determining which investment
opportunities are attractive.
Specific Objectives of the
Project Development and Evolution Manual
To provide users an overview of the project development and
evaluation process and framework;
To provide evaluators a theoretical background and
foundation on project evaluation in line with government
objectives of promoting social and economic well-being;
To provide evaluators the necessary knowledge,
methodologies and skills in conducting project evaluation;
and,
To provide useful reference in the conduct of future training
programs on project evaluation.
Important Question:
How can the government efficiently address the need for
goods and services?
Stages of Project Development Cycle
A. Pre-investment Phase
Project concept or identification
Project definition or preparation
Project feasibility study
Project approval and financing
B. Investment Phase
Detailed engineering/design
Project implementation
C. Post-investment Phase
Project operation
Ex-post evaluation
Pre-Investment Phase
Concept or Identification
To establish the basic desirability of a project and to identify the
high-priority projects that fall within the public sector's responsibility.
Implies undertaking two (2) sets of activities: (1) identifying the gaps
in the economy, and (2) defining the public sector priorities.
Gaps in the economy could lie in one or more sectors, such as basic
infrastructure, food and agriculture, heavy (capital-intensive) or
basic industry, or social sectors, such as health and education.
What is difficult is laying down clear priorities for public expenditures
among competing claims on the limited resources of the country or
the region.
Sources of Project Identification
A project may be identified in a variety of ways:
a) It may emerge out of the process of formulation of plans at national
and regional levels by national government agencies, government-owned
or controlled corporations (GOCCs) or local governments;
b) It may be identified by people’s representatives;
c) It may come out as a demand from interest groups or beneficiaries;
d) It may be brought forward by private sponsors and enterprises; and,
e) It may be the product of dialogue between a country and bilateral
donors or international agencies.
Summary of Expected Results from
the Identification Phase
i) Determining existing needs, or potential deficiencies of existing facilities or
activities, and which are consistent with approved development priorities;
ii) Establishing the concepts that provide strategic guidance to overcome
these existing or potential deficiencies;
iii) Identifying initial technical, environmental and economic considerations of
the project;
iv) Examining alternative ways to accomplish the desired objectives;
Summary of Expected Results from
the Identification Phase
v) Making initial assessment of costs, time frame and the exact scope of
project;
vi) Identifying human and non-human resources to create and support the
facilities; and,
vii) Selecting an initial project design.
Pre-Investment Phase
Preparation Phase
It involves the refinement of the elements described in the
identification phase which includes all steps necessary to bring the
project to the stage of appraisal, which consists of the feasibility
study.
Preparation begins with the description of project objectives,
identification of principal issues and the setting up of a timetable
for the different phases of the development cycle.
Preparation must cover the full range of technical, institutional,
financial, and economic issues relevant to achieving the project
objectives.
Summary of Expected Results from
the Preparation Phase
i) Preparation of detailed plans required to support the facility;
ii) Indication of possible technical packages to be considered;
iii) More realistic assessment of costs, time schedule and operational
requirements;
iv) Identification of areas where high risk and uncertainty exists, and further
exploration of these areas;
Summary of Expected Results from
the Preparation Phase
v) Firm identification of human and other resources required for the project;
vi) Determination of necessary support systems; and,
vii) Identification and initial preparation of documents required to support the
project such as procedures, job descriptions, budget and funding papers.
Pre-Investment Phase
Feasibility Phase
It is the culmination of all the preparatory work that provides a
comprehensive review of all aspects of the project before a final
decision about its viability is taken.
An “ideal” feasibility study will contain the following modules which
provide the basis for project evaluation:
a) Demand-and-Supply or Market module
b) Technical or Engineering module
c) Manpower and Administrative Support module
d) Financial module
e) Economic module
f) Social module
g) Institutional module
h) Environmental module
Implementation Phase
After the appraisal and design have been executed and the
conditions for financing successfully negotiated, formal approval of
the project is sought from the competent authority. Formal approval
requires the acceptance of funding proposals and agreement on
contract documents including tenders and other contracts requiring
the commitment of resources.
Actual implementation covers both (1) the completion of
construction activities, and (2) subsequent operations.
Implementation is generally divided into three (3) time periods:
a) Investment period - when the major investments are made;
b) Development period - when production capacity is gradually built up;
c) Period of full operation
Post-Investment Phase
Project Operation
A project reaches the full operation stage after investments have
been made, i.e. after the physical structure has been constructed
and/or the development services have been completed; in other
words, when the expected project benefits start to be generated.
Thank You
