Framework for project preparation and appraisal

Overall Framework
for Project Preparation and Appraisal

Saeed Ahmed Rana

ADFD/WB Project Preparation and Appraisal Workshop Abu Dhabi, April 2010


Why A Project?

 This is an instrument to provide assistance to the billions in the developing world, who
need to overcome poverty and raise their standards of living.

 Investment projects contribute to the sustainable socio-economic development of member
countries.

 Such investment helps borrowers make the best use of their resources – natural, financial
and human – to alleviate poverty, protect the environment and enhance effectiveness of
public and private sectors.

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Why project preparation and appraisal?



Project preparation and appraisal processes play an important role in enhancing the
developmental impact of investments and building government capacity in national
planning and investment.



These processes are not intended to be document driven but to bring together multiple
perspectives on a project and various tools of analysis needed to assess, monitor and improve
on the different activities and expenditure components involved in the project.



A strong foundation of preparation and appraisal can ensure better performance and
disbursement during the life of the project and is the primary framework for conducting project
supervision and monitoring.

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A Framework for Project Preparation
and Appraisal

I.

Project Cycle

II. Project Rationale and Preparation
III. Borrower Roles
IV. Donor Roles
V. Project Appraisal
Costing Analysis
Environmental and Social Assessments
VI. Assessing Project Quality
VII. Early Signs of Project Failure

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The Bank Project Cycle

Project Cycle - The project cycle starts with a development strategy based on
selectivity and comparative advantage.
It is targeted to country’s development objectives. It is followed by:

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Identification
Preparation
Appraisal
Negotiations and Approval
Implementation and Supervision
Completion and
Evaluation

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Stages of the Bank’s Project Cycle (I)



Country Assistance Strategy-the Bank proposes lending and advisory services to help countries
identify their priorities and reach their main development goals.



Identification-Projects are identified that support country strategies and that are financially,
economically, socially and environmentally sound.



Preparation-The Bank provides policy and project advice along with financial assistance. Clients
conduct studies and prepare final project documentation.



Appraisal-The Bank appraises the economic, technical, institutional, financial, environmental and
social aspects of the project. The project appraisal document and draft legal agreements are
prepared.

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Stages of the Bank’s Project Cycle (II)



Negotiation and Board Approval-The Bank and Borrower agree on loan or credit agreement and the
project is presented to the Board for approval.



Implementation and Supervision-The Borrower implements the project. The Bank ensures that the
loan proceeds are used for the loan purposes with due regard for economy, efficiency and
effectiveness.



Implementation and Completion-The Bank team evaluates the performance of both the Bank and
Borrower.



Evaluation-The Bank’s Independent Operations Evaluation Department prepares an audit report and
evaluates the project. Analysis is used for future project design.

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Project/Lending Types


Development Projects can be original projects, pilot projects or repeater projects



Pilot projects test the design criteria and implementation strategy of new technologies before embarking upon a full scale investment.



Repeater projects adopt the design and practices of a successful project for the same Project Development Objective (PDO) under
similar implementation conditions and environments.



A SWAp is a sectorwide approach that supports locally owned programs for a particular sector in a comprehensive and coordinated
manner.
SWAps promote increasing reliance on country systems and procedures and use a common framework for planning, implementation, expenditure,
and monitoring and evaluation



Project Lending is primarily the Specific Investment type Loan (SIL). Lending is also extended for sector investment, maintenance,
financial-intermediary and technical assistance projects.

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Project Identification
Birth of a Project

Country Development Plans
Borrower Specific Request
Unforeseen Conditions (e.g.

natural calamities)

Set Project Development Objectives

 Basic Consideration:
If the project is successful, what will be its principal outcome for the primary target group?

 General Guidelines (see next slide)

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Project Development Objective Guidelines



What group is targeted directly by the project as the key recipient of project benefits?



Immediately after the close of the project what problem would have been solved for the target group?



What will the target group be doing differently after the project that should make it better off?



The PDO should focus on the outcome for which the project reasonably can be held accountable, given the project duration, resources
and the approach.



The PDO should not merely restate the project’s components or outputs. Efficient use of inputs or delivery of outputs must be translated

into outcomes or results for the primary target group.



KISS Your PDO (Keep – It – Short - and - Simple), concise and meaningful.



Don’t try to reach the sky in one go.



PDO should not encompass higher level objectives that depend on other efforts beyond the scope of the project.

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Strategic Areas of Focus for the Bank


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Achieving results on the ground
Country capacity building

Measuring and reporting on results
Enabling environment
Beneficiary participation/ownership
Communication/messaging on results
Gender balance
Harmonization with MDBs

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Bank’s Communication/Messaging on Results

Realistic DOs, Strategy, Quality,Risk
RX Frameworks,
Mgmt, RX based
Implementation
instruments
Realistic DOs, Strategy, Quality,Risk
RX Frameworks,
Mgmt, RX based
Implementation
instruments

•

Senior Management
attention

•
•

Recognition
Tools, IT systems,
RX Platform, CPRT

•
•

Harmonization with MDBs/Donors

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Training, KL
Resources


Project Preparation - Borrower Role



Review identification and results



Initiate project preparation



Identify/set institutional framework

 Determine need for TA
 Set up project preparation office
 Appoint project consultants
 Inter-agency/departmental coordination
Prepare a Project Information Paper (PInfP)
Approach donors

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Project Preparation - Donor Role

 Assign project preparation team
 Review borrower progress in project identification/preparation
 Identify shortcomings and suggest actions to complete
 Review alternative designs and justification for the selected design
 Prepare Interim Information document (PID) based on PinfP
 Set up peer reviewers
 Review consultant’s progress and propose strengthening, if needed
 Discussions
 Borrower
 Stakeholders
 Potential donors

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Sustainability Considerations At Preparation



Post project needs



Follow-up to sustain benefits



Institutional arrangements

 Implementation
 Follow up



Budget for O&M (Operation and Maintenance)



Beneficiary participation

 Are beneficiaries identified?
 Are they organized?
 Are they willing to participate in project activities? [Participation is important to ensure
ownership and sustainability.]



Any NGO participation?

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Project Preparation

Update Project Information Document (PID)
Field visit to assess preparation progress
technical, economic, environment, social studies
Completion of feasibility studies
Discussions with probable/potential co-financiers
Prepare Project Implementation Plan (PIP)
Project components
Implementation plan
Monitoring and Evaluation (M&E) Arrangements
Prepare Project Operation Plan (POP)
Guidelines
Arrangements for effective project operation
Risk analysis and mitigation measures
Performance Indicators PI. (see next slide)
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Performance Indicators and Guidelines

 Fewer is better. Identify a limited set of indicators for the Project Development Objective
both qualitative and quantitative

 However, make sure that the selected indicators measure all PDO dimensions
 Indicators should be S-M-A-R-T
S

M
A
R
T

Specific
Measurable
Attributable
Realistic
Targeted

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(PDO)–


The Project Concept Note (PCN)

Draft and Circulate Project Concept Note

[PCN] *hyperlink



Three to four page document



It focuses on project concept, not design

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It is prepared soon after project identification before project preparation costs become substantial

Functions



Examine the strategic rationale for Bank involvement

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Promote consideration of alternative project concepts



Seek a go/no-go decision from the Country Director

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Obtain early guidance/agreement on issues and approaches

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Flag risks and potential mitigation measures



Seek early guidance on potential safeguard issues, consultation and disclosure



Agree on a resourced estimate, schedule and team [See PCN Template 1]

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Sample PCN Cover Sheet

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Preparation Completed

Quality Enhancement Review (QER)
Consistency of design with approved project concept
Quality assurance of the technical aspects of the project
Establish fiduciary (Financial Management and Procurement) requirements that need to be met by
appraisal

Review safeguards needed and specify project’s environmental and safeguard classifications and the
requirements to be met by appraisal.

Review project feasibility and sustainability aspects.
Propose actions to update PCN
At Preparation stage all technical economic financial institutional social environmental M&E O&M aspects
must be fully analyzed with viable options presented

PCN review
Discussion at management Level

Follow up on PCN review and finalize PCN
Obtain management’s authorization for project appraisal.
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Project Appraisal

Project Appraisal is the process of assessing, in a structured way, the case for
proceeding with a project or proposal. It involves comparing various options,
based on economic and financial viability, technical feasibility and social and
environmental consideration/justification

Pre-Mission Actions

 Finalize appraisal arrangements
 Assign appraisal mission members
 Ensure all subject matter specialists are included
 Preferably Bank regular staff – consultants only in specialized areas
 Ensure staff continuity until mission accomplished
 Draft Project Appraisal Document

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Pre-Mission Actions

Critical elements of PAD are:

 Country background
 Sector background

 Project Development Objectives (PDO) Project Design (Tech. Institutional, Financial, Social,
Environmental, Procurement, M&E)

 Project cost and financing
 Project analysis (economic, financial)
 Implementation arrangements (PIM, Institutional etc.)
 Sustainability consideration

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PAD Cover Sheet (1)

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PAD Cover Sheet (2)

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Pre-Mission Actions (Contd.)

 Prepare issues paper
 Explain unresolved issues and proposed solutions
 Hold decision meeting
 Seek managerial guidance on unresolved issues
 [Note: Above two steps may be combined with activities under PCN Review]
 Finalize appraisal arrangements with the government, borrower and cofinanciers, if any.

 Prepare mission TOR

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