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Module 5 Session 6
Notes: Project Appraisal
Summary
This session will defne project appraisal and introduce dimensions o
project appraisal, including issues o social acceptability/desirability,
environmental riendliness, technical easibility/ appropriateness,
gender sensitiveness, economic soundness and ability to be
sustainable and most importantly fnancial viability.
Introduction
Project appraisal is the process o assessing and questioning
proposals beore resources are committed. It is an essential tool or
eective action in community renewal. It!s a means by which
partnerships can choose the best projects to help them achieve what
they want or their community.
"ut appraisal has been a source o conusion and diiculty or
projects in the past. #udits o the operation o $ingle Project "udget
schemes have highlighted concerns about the design and operation
o project appraisal systems, including%
•
&echanistic, in'e(ible systems• # lac) o independence and objectivity
• # lac) o clear defnition o the stages o appraisal and o
responsibility or these stages
• # lac) o documentary evidence ater carrying out the appraisal
It!s no surprise that audits or inspections aren!t impressed with the
quality o appraisals, and are specifcally ound with problems li)e*
• Individual appraisals which do not cover the necessary
inormation or provide only a superfcial analysis o the project
• Particular problems in dealing with ris)s, options and value ormoney
• #ppraisals which are considered too onerous/burdensome or
smaller projects
• +ushed appraisals
Project appraisal is a requirement beore unding o programs is
done. "ut tac)ling problems li)e those outlined above is about more
than getting the systems right on paper. (perience in projects
emphasi-es the importance o developing an appraisal culture!
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which involves developing the right system or local circumstances
and ensuring that everyone involved recogni-es the value o project
appraisal and has the )nowledge and s)ills necessary to play their
part in it.
What can Project Appraisal Deliver?
Project appraisal helps project initiators and designers to*
• "e consistent and objective in choosing projects
• &a)e sure their program benefts all sections o the community,including those rom ethnic groups who have been let out in the
past
• Provide documentation to meet fnancial and audit requirements
and to e(plain decisions to local people.
• Appraisal justifes spending money on a project.
#ppraisal as)s undamental questions about whether unding is
required and whether a project oers good value or money. It can
give confdence that public money is being put to good use, and helpidentiy other unding to support a project. etting it right may help
a community ma)e its resources go urther in meeting local need
• Appraisal is an important decision making tool.
#ppraisal involves the comprehensive analysis o a wide range o
data, judgments and assumptions, all o which need adequate
evidence. This helps ensure that projects selected or unding%
• 0ill help a partnership achieve its objectives or its area
• #re deliverable
• Involve local people and ta)e proper account o the needs o
people rom ethnic minorities and other minority groups
• #re sustainable
• 1ave sensible ways o managing ris).
• Appraisal lays the oundations or delivery.
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#ppraisal helps ensure that projects will be properly managed, by
ensuring appropriate fnancial and monitoring systems are in place,
that there are contingency plans to deal with ris)s and setting
milestones against which progress can be judged.
Getting the system right
The process o project development, appraisal and delivery is
comple( and partnerships need systems, which suit local
circumstances and organi-ation. ood appraisal systems should
ensure that%
• Project application, appraisal and approval unctions are separate
#ll the necessary inormation is gathered or appraisal, oten as parto project development in which projects will need support
• +ace/tribal equality and other equality issues are given proper
consideration
• Those involved in appraisal have appropriate inormation and
training and ma)e appropriate use o technical and other
e(pertise
• There are realistic allowances or time involved in project
development and appraisal• 2ecisions are within a implementers! powers
• There are appropriate arrangements or very small projects
• There are appropriate arrangements or dealing with novel,
contentious or particularly ris)y projects.
Appraising a project
Key issues in appraising projects include the following.
•
3eed, targeting and objectivesThe starting point or appraisal% applicants should provide a detailed
description o the project, identiying the local need it aims to meet.
#ppraisal helps show i the project is the right response, and
highlight what the project is supposed to do and or whom.
• Context and connections
#ppraisal should help show that a project is consistent with the
objectives o the relevant unding program and with the aims o the
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local partnership. #re there lin)s between the project and other
local programs and projects 4 does it add something, or compete5
•Consultation
6ocal consultation may help determine priorities and secure
community consent and ownership. &ore targeted consultation,
with potential project users, may help ensure that project plans are
viable. # )ey question in appraisal will be whether there has been
appropriate consultation and how it has shaped the project
7ptions
7ptions analysis is concerned with establishing whether there are
dierent ways o achieving objectives. This is a particularly comple(part o project appraisal, and one where guidance varies. It is vital
though to review dierent ways o meeting local need and )ey
objectives.
• Inputs
It!s important to ensure that all the necessary people and resources
are in place to deliver the project. This may mean thin)ing about
unding rom various sources and other inputs, such as volunteer
help or premises. #ppraisal should include the e(amination o
appropriately detailed budgets.
• Outputs and outcomes
2etailed consideration must be given in appraisal to what a project
does and achieves% its outputs and more importantly its longer8term
outcomes. "enefts to neighborhoods and their residents are
re'ected in the improved quality o lie outcomes 9jobs, better
housing, saety, health and so on:, and appraisals consider i these
are realistic. "ut projects also produce outputs, and we need a more
realistic view o output orecasts than in the past.• Value for money
This is one o the )ey criteria against which projects are appraised.
# major concern or government, it is also important or local
partnerships and it may be necessary to ta)e local actors, which
may aect costs, into account.
• Implementation
#ppraisal will need to scrutini-e the practical plans or delivering the
project, as)ing whether staing will be adequate, the timetable or
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the wor) is a realistic one and i the organi-ation delivering the
project seems capable o doing so.
•Risk and uncertainty
;ou can!t avoid ris) 4 but you need to ma)e sure you identiy ris) 9is
there a ris) and i so what is it5:, estimate the scale o ris) 9i there is
a ris), is it a big one5: and evaluate the ris) 9how much does the ris)
matter to the project.: There should also be contingency plans in
place to minimi-e the ris) o project ailure or o a major gap
between what!s promised and what!s delivered.
• Forward strategies
The appraisal o orward strategies can be particularly diicult,given inevitable uncertainties about how projects will develop. "ut is
never too soon to start thin)ing about whether a project should have
a f(ed lie span or, i it is to continue beyond a period o
regeneration unding, what support it will need to do so. This is
oten thought about in terms o other unding but, with an increasing
emphasis on mainstream services in neighborhood renewal,
appraisal should also consider mainstream lin)s and implications
rom the frst.
•
ustaina!ility In regeneration, sustainability has oten been tal)ed about simply in
terms o whether a project can be sustained once regeneration
unding stops but sustainability has a wider meaning and, under this
heading, appraisal should include an assessment o a project!s
environmental, social and economic impact, its positive and negative
eects.
0hile appraisal will ocus detailed attention on each o these areas,
none o them can be considered in isolation. $ome o them must be
clearly lin)ed 4 or e(ample, a realistic assessment o outputs may be
essential to a calculation o value or money. 3o project will score
highly against all these tests and considerations. The fnal judgment
must depend on a balanced consideration o all these important
actors.
Checklist or project appraisal
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0hether you are involved in a partnership with an appraisal system
in place, or starting to design one rom scratch, these questions are
worth as)ing.
• #re appraisals systematic and disciplined with a clear sequence o
activities and operating rules5
• Is there an independent assessment o the project by someone
who has not been involved with the development o the project5
• 2oes the appraisal process culminate in clear recommendations
that inorm approval 9or rejection: o the project5
• Is the approval stage clearly separate5
• Is the appraisal process well documented, with )ey documents
signed, showing ownership and agreement, and allowing the
appraisal documentation to act as a basis or uture management,
monitoring and evaluation5
• 2oes the appraisal system comply with any relevant government
guidance
• #re the right people involved at various stages o the process and,
i necessary, how can you widen involvement5
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Proposed real lie project Appraisal Case Study:
Case study: !uilding a Pit "atrine #ith $ stances at one o the schools in%asese& %ya'arungira Su' County:
This case study is sourced rom the 3ew <ision o &onday, #ugust
=th >??@. $ummary data o the proposed project%
A. 3ame% &odern Pit 6atrine in Basese 2istrict, Byabarungira sub
county.
>. 6ocation% Byabarungira $ub County
@. Proposed goal% Improvement o sanitary conditions in Basese
suering rom shortage o 6atrines.
=. Project (ecution% $chool authority, parent associations, civil
society and Byabarungira sub8county authorities.
D. Einancing% $chool authorities, Byabarungira sub county council,
Basese 2istrict Coucil, &inistry o ducation and possibly a donor
and international 37s.
Project description% #ccording to the 3ew <ision te(t, 9see page >D:
shortage o latrines has hit Basese schools. It is revealed that
&inistry o ducation!s policy stipulates one stance or only >D
pupils. In contrast, the current status in Basese schools is one stance
or A>? pupils. This reveals that there is urgent need or about our
e(tra stances or one stance in use.
The proposed project is thereore to initially build = pit latrines o @?
eet deep, = eet wide and >? eet long with D separate square
stances =F=, D doors and D windows at one o the schools in
Byabarungira sub county.
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Eor the participants to apply their newly acquired or enhanced
project appraisal competencies to a practical case study. 3amely*
building =t by >?t and @?t deep, with fve stances, fve doors, fve
windows, school latrine at one o the schools in Byabarungira sub
count see 3ew <ision article in ro ect identifcation a e
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"roject #usti$cation
This will immediately improve sanitary conditions at the school,reduce the incidence o terminal sic)ness and enhance learning
conditions at the schools.
"roject risks
There are e(pected to be project ris)s mainly due to lac) o unds,
lac) o appropriate building s)ills, bureaucratic corruption, and
intererences rom local politicians and there may be lac) o space.
These aspects are normally presented in a project analysis log rame
matri( or a ocused appreciation o the main eatures and theirlin)ages. # typical project log rame matri( is summari-ed below.
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%a!le &."roposed project 'nalysis (og frame )atrix
*arrati+e ummary Veri$a!le
Indicat
ors
,OVI-
)eans Of
Veri$cation
,)OV-
Important
'ssumpti
ons
A. oal
Improvement o
sanitary conditions
and elimination o
total disease inBasese $chools,
Byabarungira $ub
County
Provision o
one stance
latrine or
only >D pupils
• Progress report
by*
• $chool
authorities
• Parent
#ssociation• Byabarungira
sub county
• 2istrict Council
• #vailability o
unds
• #vailable
space
• 6ocal councils
• ducation
policy
compliance
>. Purpose
Construction o =
latrines at one o the
schools in
Byabarungira subcounty
2imensions o
= t wide, >?
t long and @?
t deep with
fve stances
with a
loc)able door
and window
Progress and
status report
• Eunds
• "uilding s)ills
• 6ocal politics
• (ternal
support
A. 7utput
Completion o Glatrines
= latrines
with fve
stances
Completion report +espect o contractualterms and timing
>. #ctivities
• 1iring builders
• Procurement o materials
• Training localsta
Eunds
available$pace
allocated
&aterials
purchased
Completion report • Timely ollow8
up!
• $chool
authorities
• County
council
@. Einancing
• $chool
Eunds
available
Progress report 0illingness to
support the
project
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• Contributions
• Council
• 2istrict
• 7thers
H. Commissioning = modern pit
latrines
Completion report 7icial
commissioning
(easi'ility Study
2uring the process o project appraisal a easibility study may be
underta)en to establish the justifcation o the identifed
project in all o its relevant dimensions, including its technical
design, economic and fnancial viability, environmental
compliance and social acceptability* as well as its conormity
with the national development objectives and priorities and the
relevant policy, legal and regulatory ramewor). The aim o a
easibility study is to initially identiy the ollowing aspects%
i. 2evelopment objectives against which the project proposed
conorms
ii. Policy ramewor) and detailed project objectivesiii. Technical soundness o the project
iv. #dministrative easibility o the project
v. The economic and fnancial viability o the project proposal
vi. The status o demand or the project benefciaries
vii.Considerations o customs and traditions o project
beneactors, issues o compatibility
viii. 7ther important policy and cross cutting issues 9gender,
environment, 1I</#I2$:
The results o a easibility study in'uences decisions to commit or
not commit scarce resources to a given project proposal
#n important analytical tool that underpins the value o underta)ing
a easibility study is the use o production possibility curve. This tool
is e(tremely useul in underscoring the eicient allocation o scarce
fnancial and human resources, as e(emplifed below by the trade
os between production o mil) and matoo)e.
The natural resource bases o districts in ganda are largely in the
conte(t o land and human resources. The process o transorming
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these resources involves a choice in the use o land and human
power. In the bac)ground o traditional land use with majority o the
population largely rural and with very little education, these actors
limit the level o production in the districts. This situation
notwithstanding, the government is determined to fght the current
high levels o poverty in rural areas through a number o government
policies. In particular, poverty reduction policies, P and P&#. The
implementation o these policies implies ma)ing a choice with
respect to the use o available land and human resources. # tool
)nown to illustrate the eect o choice in the use o such resources
to bring about the desired change in the social economy is the
ollowing Transormation Production Possibility Curve.
In other words, a district can choose only to be involved in livestoc)
production, only agricultural products, or to produce both at a
certain level o output combination as indicated by the curve below.
The curve indicates the units that would be sacrifced i one more
units o agricultural products are produced 9i.e. the o tradeos:
The curve illustrates that the economy would be at an optimal level
o production when total output is comprised o G,??? liters o mil)
and A,??? tones o matoo)e. #t this point, producing one e(tra litre
o mil) would cost ?.A= tones o matoo)e and vice versa.Transormation Production Possibility Curve8 6itres o &il) <s Tons
o &atoo)e
*ote
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A. Production at%
a: 2 represents optimal utili-ation o available resources
b: C is sub8optimal utili-ation o resources, being inside theproduction possibility curve
c: J is an impossible case as it is outside the production possibility
curve
>. Trade os and 7pportunity costs
A litre o mil) K ?.A= tons o &atoo)e
A Ton o &atoo)e K G litres o mil)
The curve depicts that the economy would be at an optimal level oproduction when total output is made o G??? litres o mil) and A???
tons o &atoo)e. #t this point producing one e(tra litre o mil) would
cost ?.A= tons o &atoo)e and vice versa.
Project appraisal in relation to technical& economic& inancial& social& and
environmental analyses)
2uring project appraisal, hard questions will be as)ed and the
answers will determine whether the project proposal will be adopted
or rejected. The questions raised will include concerns such as the
appropriateness o project objectives, si-e, scope, implementation
methods and modalities, implementation time scale, and the project
technical, fnancial, economic, institutional, environmental, social
and distributional justifcation o the project.
# well prepared and assessed project preparation and an appraisal
consumes large amounts o data and thereore requires an equipped
oice with computer acilitation as depicted in the fgure below*
Eigure* # modern oice with computer access
,a- %echnical analysis
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Technical analyses o a project is aimed at ensuring the ollowing%
i. To confrm the source o the project proposal, nature o the
studies 4 including easibility studies underta)en beore theproposal, and the nature o decisions ta)en by all relevant
authorities involved
ii. That the problem or the need to be resolved by the project has
been clearly stated
iii. That the project has been clearly spelled out with the correct
technical design details 9such as si-e, location, timing, and
technology:
iv. That the required materials have been correctly determined
and their source identifed
v. That the costs o the project have been clearly established,
e(pected product prices projected, and payment modalities
and schedules agreed to
,!- conomic 'nalysis
The need or economic analysis arises out o the act that 1igher
6ocal overnments 916s: operate within limited resources. #s a
result, some diicult choices o where to commit limited resources
rom a large pool o deserving and competing priorities and needsmust be made by 16 oicials. The economic costs and benefts o a
project are estimated through the application o a cost8beneft
analysis, i.e. evaluating both the implicit and social cost8benefts o a
project. Eor proft ma)ing projects, proftability tools li)e 3et
Present <alue, Internal fnancial rate o return, Pay "ac) Period and
Incremental Proft are used to estimate the viability o the project.
16s do not generally operate on proft motivation when consideringprojects* thereore, social cost8beneft analysis is most applicable or
16s. In a cost beneft analysis, one must as) basic questions as to
what costs and benefts should directly and indirectly accrue to the
target benefciaries in terms o poverty reductions, enhanced
savings, improved medical care, educational, water and health
services.
The fgure below illustrates the participatory process including
especially the benefciaries o medical, water and sanitation in the
design and discussion o project ormulation. The participatory
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process allows or more ideas to be incorporated into the project,
and oten increases the success o the project.
Figure/ "articipatory "lanning
9c: Financial 'nalysis ta)es a hard loo) at the unding sources
or the project both in terms o completing the project and or its
sustained operation. This analysis should question i*
i. The 16 would und the project rom internal resources5ii. The 16 would und the project rom e(ternal resources5
iii. The e(ternal resources would be borrowed unds5
iv. I the unds are to be borrowed, would the 16 be able to pay
bac) the loan with accrued interest5
v. 0ould the e(ternal resources be a grant rom the central
government or rom any other source5
vi. 0ould the 16 co8und the project with an outside donor,
whether it is a central government or another development
partner5 vii.0ould eective cost recovery mechanisms aimed recouping
the project costs be put in place5
viii. 0ould fnancial management modalities be put in place
to record the transactions during implementation and
operation o the project5 2ocuments could include cashboo),
assets register, ban) statements, balance sheet 9accruals
accounting:, income statements 9or receipt and payment
schedules:, etc
d- n+ironmental 'nalysis
2epending on the nature o the project, it is important that the
project is seen to comply with the various environmental
requirements as administered by the 3ational nvironmental
&anagement #uthority 93&#:. $pecifcally, the project should
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comply with the provisions o the 3ational nvironment
$tatute 9ALLD: and the nvironmental Impact #ssessment
9ALLM:. nvironmental aspects that projects would have to
address include*
• Public health and occupational saety
• Control o air, water and land pollution
• &anagement o renewable natural resources 9plants and animals:
• icient use o natural resources through multiple use, recycling
and erosion control
• Conservation o unique habits 9orests, game reserves: or rare
species and cultural preservation
Figure/ n+ironmental pollution and degradation
e- ocial 'nalysis
The validity o the planners! assumptions about the social conditions
are tested through social analysis. 0here necessary, adjustmentsshould be made so that the project goals are e(pressed in terms that
have more meaning or both the project population and the
implementing agencies. $ocial analysis ocuses on our areas
indicated below*
i. The social8cultural and demographic characteristics o the
project population 4 its si-e and social structure, including
ethnic, tribal and class composition
ii. 1ow the project population has organi-ed itsel to carry out
productive activities, including the structure o households andamilies, availability o labor, ownership o land, and access to
and control o resources
iii. The project!s cultural acceptability* in other words, its capacity
both or adapting to and or bringing about desirable changes
in people!s behavior and in how they perceive their needs
iv. The strategy necessary to elicit commitment rom the project
population and to ensure their sustained participation rom
design through to successul implementation, operation and
maintenance
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The fgure below depicts a situation still prevailing in certain areas in
ganda where the girl child is relegated parental duties at an early
age while the brother goes to school
Figure showing gender discrimination
f- Cross cutting issues
The above mentioned principles o social analysis are equally
relevant in appraising the impact o cross cutting issues, such as
1I</#I2$, environment, and gender issues, on the viability o a
project. This is particularly relevant when ma)ing sure that the
indirect costs and benefts attributable to crosscutting issues are
ully articulated and considered in estimating the overall cost beneft
o the proposed project.
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