Lecture 1_ PED Overview

Project Evaluation and Development: 

Project Evaluation and Development Overview

Linkage of PED with Planning, Investment Programming and Budgeting: 

Linkage of PED with Planning, Investment Programming and Budgeting PPAs that are deemed essential to achieving the development goals and objectives of the province are identified in the PDPFP. These PPAs undergo screening, ranking and matching with available investment funds to arrive at a six year PDIP with the annual slices serving as the basis for the AIP and incorporated as the capital component of the annual budget. PED takes off from the investment program derived from the planning and programming process and does project preparation and appraisal as inputs into the finalization of the capital budget . 26-28 April 2011 PED Refresher Workshop 2

PLPEM in the Overall Project Development Cycle: 

PLPEM in the Overall Project Development Cycle The project development cycle include the following processes: 1 . Pre-investment a. Project identification b. Project preparation c . Project appraisal and financing 2. Investment a. Detailed engineering and design b. Project implementation 3 . Post-investment a. Project operation b. Ex-post evaluation The PDPFP and the PDIP covers the project identification and financing phases. The PED guideline covers the project preparation and appraisal phase. 26-28 April 2011 PED Refresher Workshop 3

PED and the Effectiveness and Efficiency of Public Expenditures: 

PED and the Effectiveness and Efficiency of Public Expenditures EffeCtiveness And Efficiency Role of PED Effectiveness - refers to the extent by which goals are met by the investment or project. Efficiency - refers to the relation of the amount of resources required to produce a unit of output. PED improves the effectiveness of public expenditure by explicitly establishing: The value of PPAs in meeting the stated development goals of the province; Potential conflicts between the outputs of certain PPAs with other goals of the province . PED improves the ( allocative ) efficiency of public expenditure by: Improving the PDIP investment scheduling process by explicitly identifying and giving weight to the enabling effects of certain projects; S creening out projects that meet their stated goals but at a very high cost. 26-28 April 2011 PED Refresher Workshop 4

PED Procedures: 

PED Procedures Basic PED Remaining Steps of Comprehensive PED Know the project to be able to Identify and characterize the output of goods and services of the project. Understand the project in sufficient detail to ensure that. Output will indeed result in desired outcome. Project is an efficient use of public funds. Steps are formulated to enhance the effectiveness of the project to result in the desired outcomes. Analyze it thoroughly Market situation for project’s output of goods and services. Technical feasibility and is the project the best alternative to meet the stated goals and objectives. Project cost and sustainability of the project in terms of project cash flow. Judge it fairly in terms Economic costs Economic benefits Benefit-Cost Analysis Risk Analysis 26-28 April 2011 PED Refresher Workshop 5

Projects to be subjected to PED: 

Projects to be subjected to PED The Project Brief that is part of the PDIP process along with the updated and/or additional information contained in the Situational Profile and the project Log-Frame in PED will constitute the basic PED for small projects to be funded by the LGUs. Big projects to be fully funded by the LGU will be subjected to comprehensive PED and if accepted, the proposal packaged for consideration by the LCE and the SP. Projects to be funded in whole and in part from external sources such as borrowings, grants, etc. will have to go through the evaluation procedures required by the funders. Local banks and financing institutions will generally be satisfied with an F/S that demonstrates financial feasibility established via discounted cash flow analysis – up to step 3. Multilateral and ODA sources will require in addition to the financial feasibility indicators economic viability indicators – step 4.. 26-28 April 2011 PED Refresher Workshop 6

What constitutes a Big Project: 

What constitutes a Big Project 26-28 April 2011 PED Refresher Workshop 7 The distinction between big and small projects should be made in relation to the competing needs for the fiscal resources of the province. Projects will be considered “big” and subjected to the complete PED if the investment cost meets the following : Investment Cost ≥

PowerPoint Presentation: 

26-28 April 2011 PED Refresher Workshop 8

PowerPoint Presentation: 

26-28 April 2011 PED Refresher Workshop 9

PowerPoint Presentation: 

26-28 April 2011 PED Refresher Workshop 10

Composition of the PED Team: 

Composition of the PED Team Project Proponent to supply the required information about the project not covered in the Project Brief prepared for the PDIP. PPDC who will advise on the relevance of the project to the development goals of the province. Statistician who will do the data gathering and analysis including the conduct of primary surveys if deemed necessary. Engineer who will carry out the technical analyses to establish alternative project designs, cost estimates, economic life, and stream of physical outputs. 26-28 April 2011 PED Refresher Workshop 11

Composition of the PED Team: 

Composition of the PED Team Accountant who will finalize the cost estimates provided by the proponent and the engineer including the time phasing of project costs and the conduct of discounted cash flow analysis. Environmental Specialist who will look into the potential environmental impacts of the proposed project, and the design of preventive or mitigating measures. Economist who will perform the economic analyses. 26-28 April 2011 PED Refresher Workshop 12