Project Preparation and Analysis

To design and analyze effective projects, those responsible must consider many aspects that together determine how remunerative a proposed investment will be. All these aspects are related. Each touches on the others, and a judgment about one aspect affects judgments about all the others. All must be considered and reconsidered at every stage in the project planning and implementation cycle. A major responsibility of the project analyst is to keep questioning all the technical specialists who are contributing to a project plan to ensure that all relevant aspects have been explicitly considered and allowed for. Here we will divide project preparation and analysis into six aspects: technical, institutional-organizational-managerial, social, commercial, financial, and economic. These categories derive from those suggested by Ripman (1964), but alternative groupings would be equally valid for purposes of discussion.

Technical aspects

The technical analysis concerns the project's inputs (supplies) and outputs (production) of real goods and services. It is extremely important, and the project framework must be defined clearly enough to permit the technical analysis to be thorough and precise. The other aspects of project analysis can only proceed in light of the technical analysis, although the technical assumptions of a project plan will most likely need to be revised as the other aspects are examined in detail. Good technical staff are essential for this work; they may be drawn from consulting firms or technical assistance agencies abroad. They will be more effective if they have a good understanding of the various aspects of project analysis, but technical staff, no matter how competent, cannot work effectively if they are not given adequate time or if they do not have the sympathetic cooperation and informed supervision of planning officials.

The technical analysis will examine the possible technical relations in a proposed agricultural project: the soils in the region of the project and their potential for agricultural development; the availability of water, both natural (rainfall, and its distribution) and supplied (the possibilities for developing irrigation, with its associated drainage works); the crop varieties and livestock species suited to the area; the production supplies and their availability; the potential and desirability of mechanization; and pests endemic in the area and the kinds of control that will be needed. On the basis of these and similar considerations, the technical analysis will determine the potential yields in the project area, the coefficients of production, potential cropping patterns, and the possibilities for multiple cropping. The technical analysis will also examine the marketing and storage facilities required for the successful operation of the project, and the processing systems that will be needed.

The technical analysis may identify gaps in information that must be filled either before project planning or in the early stages of implementation (if allowance is made for the project to be modified as more information becomes available). There may need to be soil surveys, groundwater surveys, or collection of hydrological data. More may need to be known about the farmers in the project, their current farming methods, and their social values to ensure realistic choices about technology. Field trials may be needed to verify yields and other information locally.

As the technical analysis proceeds, the project analyst must continue to make sure that the technical work is thorough and appropriate, that the technical estimates and projections relate to realistic conditions, and that farmers using the proposed technology on their own fields can realize the results projected.

Institutional-organizational-managerial aspects

A whole range of issues in project preparation revolves around the overlapping institutional, organizational, and managerial aspects of projects, which clearly have an important effect on project implementation.

One group of questions asks whether the institutional setting of the project is appropriate. The sociocultural patterns and institutions of those the project will serve must be considered. Does the project design take into account the customs and culture of the farmers who will participate? Will the project involve disruption of the ways in which farmers are accustomed to working? If it does, what provisions are made to help them shift to new patterns? What communication systems exist to bring farmers new information and teach them new skills? Changing customary procedures is usually slow. Has enough time been allowed for farmers to accept the new procedures, or is the project plan overly optimistic about rates of acceptance?

To have a chance of being carried out, a project must relate properly to the institutional structure of the country and region. What will be the arrangements for land tenure? What size holding will be encouraged? Does the project incorporate local institutions and use them to further the project? How will the administrative organization of the project relate to existing agencies? Is there to be a separate project authority? What will be its links to the relevant operating ministries? Will the staff be able to work with existing agencies or will there be institutional jealousies? Too often a project's organization simply builds up opposition within other agencies; at the very least, the project analyst must be sure such friction is minimized. He should arrange for all agencies concerned to have an opportunity to comment on the proposed organization of the project and ensure that their views enter in the deliberation to the fullest extent possible.

The organizational proposals should be examined to see that the project is manageable. Is the organization such that lines of authority will be clear? Are authority and responsibility properly linked? Does the organizational design encourage delegation of authority, or do too many people report directly to the project director? Does the proposed organization take proper account of the customs and organizational procedures common in the country and region? Or, alternatively, does it introduce enough change in organizational structure to break out of ineffective traditional organizational forms? Are ample provisions included for managers and government supervisors to obtain up-to-date information on the progress of the project? Is a special monitoring group needed? What about training arrangements? Does the project have sufficient authority to keep its accounts in order and to make disbursements promptly?

Managerial issues are crucial to good project design and implementation. The analyst must examine the ability of available staff to judge whether they can administer such large-scale public sector activities as a complex water project, an extension service, or a credit agency. If such skills are scarce or absent, should this be reflected in a less complex project organization? Perhaps the technical analysis of the project should be consulted and the project design concentrates on fewer or less complex technological innovations. When managerial skills are limited, provision may have to be made for training, especially of middle-level personnel. In some cases expatriate managers may have to be hired, and this may raise other problems, such as the acceptance of the project manager by the local people and the loss of the experience the expatriate manager gained while working on the project when the manager leaves the country. In many instances it would be preferable if possible to design the organization of the project to avoid the need for management services of expatriates.

In agricultural projects the analyst will also want to consider the managerial skills of the farmers who will participate. A project design that assumes new and complex managerial skills on the part of participating farmers has obvious implications for the rate of implementation. If farmers with past experience limited to crop production are to become dairy farmers, enough time must be allotted for them to gain their new skills; the project design cannot assume that they will be able to make the shift overnight. There must be extension agents who can help farmers learn the new skills, and provision must be made for these agents in the organizational design and in the administrative costs of the project.

In considering the managerial and administrative aspects of project design, not only are we concerned that managerial and administrative problems will eventually be overcome, but that a realistic assessment is made of how fast they will be resolved. The contribution an investment makes to creating new income is very sensitive to delays in project implementation.