PROJECT ANALYSIS AND

EVALUATION

CHAPTER ONE

INTRODUCTION TO PROJECT
 Projects vs. Operational Work
Organizations perform work to achieve a set of

objectives.
Generally, work can be categorized as either projects or

operations, although the two sometimes overlap.

They share many of the following characteristics:
 Performed by people
 Constrained by limited resources
 Planned, executed, and controlled.
 Differences of Projects and operations:

 operations are ongoing and repetitive,

 while projects are temporary and unique.
Their differences in terms of objectives:

 The purpose of a project is to attain its objective

and then terminate.

 Conversely, the objective of an ongoing
operation is to sustain the business.
Projects can be undertaken at all levels of the
organization and
they can involve a single person to many thousands of
people .
Their duration ranges from a few weeks to several
years.
 Definition of Project
It is very difficult to find a single comprehensive definition

of project b/c projects are d/t in terms of their nature and

objectives.
 Some of its definitions are:

According to Gittinger (1982), a project is defined as:

1. a complex set of activities where resources are used in

expectation of returns and that lead itself to:
 planning,
 financing, and
 implementation as a separate unit.
Gittinger explains more as:

A project usually has:

 a specific starting point and a specific ending point,

intending to achieve specific objectives.

 a well-defined sequence of investment and production

activities and
 a specific group of beneficiaries that can be identified,

quantified, and valued, either socially or monetarily.

 Other definitions of Project
Project- is an investment activity in which:
 specific resources are committed within a given time
frame,
 to create capital assets over an extended period of time
 in expectation of benefits that exceed to the committed
resource.
Project- is a task of considerable magnitude that must
be completed within a budget and by a specific time.
Project- is a non repetitive activity that:
 is goal oriented, that
 has a particular set of constraints, the output of which
is measurable, and
 that changes something when carried out.
 Common Characteristics of Projects
 Project involves the investment of scarce resources in
expectation of future benefits.
 Project is an activity that is capable of being planned,
financed and implemented as a unit.
 It has a defined set of objectives and specific start and end
dates.
 Project has geographical or organizational boundaries. .

 It is an activity w/c is likely to have a partially or wholly

independent administration.
 Classification of Projects
Projects can be classified based on several criteria. These
are:
1. Based on Ownership:
a. Private sector- mostly projects undertaken by
business enterprise.
b. Public sector- projects undertaken by national and
local government body.
c. NGO’s – development projects are most often
undertaken by non-government and not for profit
organizations
 2. Based on the Sources of Finances:
a. Government treasury- projects may be entirely financed by
government budget as per its priority.
Ex. construction of regional airport.
b. Government treasury and external sources- most projects are
financed by the joint partnership of the gvt and donor groups.
Ex. a road project may be financed 50% by gvt and 50% by
foreign donors.
c. External Sources of Finance- Projects may be financed totally by
parties other than the government
 but established for the wellbeing of the citizens and the
ownership may be for the government or the public.
 3. Based on the Forces Behind;

a. Demand driven/need driven- based on:

 identified unsatisfied demand project can be created or

 on unsatisfied basic needs like food, water and shelter.

b. Donor Driven- the force behind the financing

organization.
 Donors will have their own say and influence the types of

projects to be established.

c. Political Driven- Projects may be established in response

to some political situation such as for example because of
National Elections, etc.
4. Based on their Nature:

a. Civil engineering, Construction, petrochemical,

mining, quarrying projects-

b. Manufacturing projects- conducted in a factory or

other home based

c. Research Projects- established for pure research

consuming:
 large sum of money and
 lasting over years resulting in dramatic profitable
discovery or proving waste of money.
d. Management projects- projects that require:
 the employment of an external project manager or managing
contractor for d/t issues.

 Projects can also be differentiated by the following:

 Long-term Vs short term projects
 Regional, national, international projects
 Agricultural Vs industrial projects.
 Capital, labor or energy intensive projects.
 Project Management
It is defined as the set of concepts involved in the
realization of goals through:
 efficient,
 effective,
 transparent and
 responsible administration of a given set of activities.

It is associated with accountability for the outcomes in

the process, so as to:
 meet basic objectives and
 enhance the satisfaction of stakeholders.
In this process, all stakeholders should be consulted
in matters affecting a project to ensure co-ordination
in project activities.
 Project, Plan and Program
There are some degree of relationships between
 projects,
 plans and
 programs.

 There are also significant differences.

 Their hierarchical relationship is given based on the

following chart.
 Exhibit 1.2.docx
 Development Goal/Objectives
It is a statement of intension or aspiration of a gov’t to

improve living conditions of its people – Vision of the

government.
 For example:

 growth,
 equity in income distribution,
 reduction of unemployment.
 It is a comprehensive statement which guides development.

It determines the environment or framework within which

development is expected to take place.

 Development Strategy
A strategy is defined in various ways by different authors.

In general it refers to the general methods of achieving

specific objectives at national or organizational levels.

It mainly describes the essential resources which will be

committed to achieve objectives.

It also explains how these resources will be organized.

Example, it may ask how to organize the labor force of

organization or the object.

 Development strategy is likely to involve:

 Establishment of sector goals-

Example:

 what is the goal of agriculture sector in the next 5 years, 10 years;

 what is the goal of the industry sector in the coming 10 years.

 Defining of the means to achieve the sector goals.

 Determining of the feasibility of achieving the stated goals from the

political, technical, organizational and resource point of view.

 Preliminary assessment of costs and benefits of goals and objectives.

 Setting priorities- which sub-sector should be provided more attention

in each sector.
 Plans and Projects
Planning defined as a “continuous process that

involves decisions or choices about alternative

ways of using available resources with the aim of
 attaining a particular goal or set of goals at some time
in the future.”

Planning serves as a tool for enhancing the

effectiveness in:
 mobilizing resources and
 as well enables allocation of resources into priority
areas of development.
Plans are designed as a means to accomplish development

strategies.
 National Plan should identify priority areas and set a
specific objective.
 The specific objective can be achieved through various
means (fiscal policies and development projects).
Virtually, every nation, be it developed or developing:

 should have a systematically elaborated national

plan
 to hasten economic growth and further a range of
social objectives.
 The Relationships b/n development plans and projects

1. Projects provide an important means by which investment and

other development expenditures foreseen in plans can be clarified
and realized.
 Sound development plans require good projects, just as good

projects require sound planning.

 The two are interdependent.

2. A sound plan requires a great deal of knowledge about existing

and potential projects.
 Sound planning rests on the availability of a wide range of
information about:
 existing and potential investments and
 their likely effects on growth and other national objectives.
It is project analysis that provides this information, and the

projects selected for implementation become the

vehicles for using resources.
3. Since projects commit scarce resources,
 project selection is meaningful only when it is placed

within a broader development framework.

 This framework could be medium or long-term
development plans and policy statements issued by the
government.
 The best economic appraisal of projects cannot be made

without referring to such plans and policies.

4. As projects rightly called the “Cutting Edge” of dvt:
 they are powerful means to achieve the dvt objectives;

 they are the crucial building blocks of a dvt structure.

5. Projects aim mainly at increasing the production of

goods and services,
 which are fundamental components of people’s
welfare, and
 the main objective of any development effort is to
advance social well- being.
 Projects and Programs
It is necessary to distinguish and understand the d’ce b/n

projects and programs b/c there is sometimes a tendency to

use them interchangeably.
 A project refers to an investment activity where:
 resources are used to create capital assets that produce
benefits over time,
 having a beginning and an end, and

 specific objectives pursued;

 Whereas a program is an on-going development effort or plan.

 A program is, therefore, a wider concept than a project.

 A program may include one or several projects at various
times whose specific objectives are linked to the
achievement of higher level of common objectives.
Example: a health program may include:
 A water project as well as construction of a health center;

Both are aimed at improving the health of a given

community that previously lacked easy access to these

essential facilities.
 Differences
Projects Have: Programs Have:
 Specific objectives  General objectives/wide/diverse
 Specific projects area (location)  No specific area (location)/diffused

 Specific beneficiaries group  No specific beneficiaries group

 Clearly determined and allocated  No clear and detailed financial

funds resource allocation

 Specific lifetime  No specific lifetime

 Similarities
 Projects and programs have similar characteristics
in that both are:
 Having objectives;
 Requiring financial, human, material, and
other inputs (or resources)
 Generating outputs of value (i.e. goods/services);
 Serving as instruments for the execution of
development plans and attain national goals.
 Project Planning
 To be effective, the project planning should be approached
systematically.
 Some activities to be done and questions that need to be asked at

planning stage of a project may include:

1. Situational analysis-

 is identification of the current situations and assessing the

factors that leads to current position.
 This involves answering questions such as:

 Where are we now?

 How we reached to this point?
 Why we reached to the current position?
 Is this where we want to be?
2. Setting Objective-
This involves answering questions such as

 Where should we find ourselves in 5 to 10 years time

from now?

3. Identification of alternatives and strategies-

 How can we reach to the place that we want to go in the

indicated time limit?

4. Identification of strengths, weakness, opportunities

and threats- SWOT Analysis
 what might prevent us from getting there and what

might help us to get there?.

5. Action plans and implementation
 What do we need to do,

 where do we need to do it,

 how will we do it and

 who will do it?

6. Monitoring and evaluation

 What do we need to do to be on course,

 can we do it, and

 how do we know where we have arrived?

7. Budgeting

- Involves quantification of the costs involved.

 Why projects are Undertaken
The principal purposes or goals of undertaking projects

depend on the nature of the project.

a. Development Project (usually undertaken by
government or NGOs) –
 They have the following objectives:

Projects are very powerful and efficient means to

achieve development or growth.
 They are said to be cutting edge of development.
They are mechanisms for improving income distribution.
Example: implementing a project that enhance the income
of the poor people or that benefit the majority poor

They are mechanisms to solve immediate problems.

Example: implementing a project to solve specific

problem in the society such as projects to:
 eradicate malaria such as Anti-Malaria Association

 prevent the spreading of HIV/AIDS such as Tesfa Goh

Ethiopia,
 project to eliminate poverty.
b. Project undertaken by Business Organizations
 have a primary objective of maximizing the wealth of
current shareholders.
 They will also have indirect objectives of creating
employment opportunities, and other social
benefits.
 Project Parameters
Five constraints operate on every project:
Scope
Quality
Cost
Time
Resources

These constraints are an interdependent set.

Change in one can cause a change in another

constraint to restore the equilibrium of the project.

 Scope
 It is a statement that defines the boundaries of the project.

 It tells not only what will be done but also what will not be

done.
Scope may also be referred to as:

 a document of understanding,
 a scoping statement,
 a project initiation document, and
 a project request form.
This document is the foundation for all project work to follow.

It is critical that scope be correct

 Quality
Two types of quality are part of every project.

a. product quality.
 refers to the quality of the deliverable from the project.

b. process quality,
 is the quality of the project management process itself.

 is how well the project management process works and

how can it be improved.

 Continuous quality improvement and process quality

management are the tools used to measure process

quality.
A sound quality management program:
 contribute to customer satisfaction,
 helps organizations use their resources more
effectively and efficiently
 by reducing waste and rework.

This is one area that should not be compromised.

 Cost
The dollar cost of doing the project

 It is best thought of as the budget that has been

established for the project.

This is particularly important for projects that create

deliverables that are sold either commercially or to an

external customer.
 Time
To a certain extent, cost and time are inversely related

to one another.
The time a project takes to be completed can be reduced,

but cost increases as a result.

 Time is an interesting resource.

 It can't be inventoried.

 It is consumed whether we use it or not.

The objective for the project manager is to use the

future time allotted to the project in the most effective and
productive ways possible.
 Resources
Resources are assets, such as people, equipment,

physical facilities, or inventory that:

 have limited availabilities,
 can be scheduled, or
 can be leased from an outside party.
Some are fixed; others are variable only in the long

term.
In any case, they are central to the scheduling of project

activities and the orderly completion of the project.

 Project Cycle
Every project, from beginning to completion,

passes through various phases of a life cycle

synonym to life cycle of living beings.
There is no universal consensus on the number of

phases in a project cycle.

An understanding of the life cycle is important to

successful completion of the project as it facilitates to

understand the logical sequence of events in the
 Cont..
Typical project consists of four phases- Conceptualization,
Planning, Execution and Termination.
1. Conceptualization Phase
Conception phase, starting with the seed of an idea, it
covers
- identification of the product or service,
-Pre-feasibility, Feasibility studies and
-Appraisal and Approval.
The project idea is conceptualized with initial
considerations of all possible alternatives for achieving the
project objectives.
 Cont..
2. Planning Phase
In this phase the project structure is planned based on
project appraisal and approvals.
Detailed plans for activity, finance, and resources are
developed and integrated to the quality parameters.
 In the process major tasks need to be performed in this
phase are
 Identification of activities and their sequencing
 Time frame for execution
 Estimation and budgeting
 Staffing
A Detailed Project Report (DPR) specifying various aspects
of the project is finalized to facilitate execution in this phase.
Cont..
3. Execution Phase
- Under this phase the plans are put into operation.
Each activity is monitored, controlled and coordinated
to achieve project objectives. Important activities in
this phase are
 Communicating with stakeholders
 Reviewing progress
 Monitoring cost and time
 Controlling quality
 Managing changes
Cont…
4. Termination Phase
This phase marks the completion of the project
wherein the agreed deliverables are installed and
project is put in to operation with arrangements for
follow-up and evaluation.
 THE END

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