Agri. Project Planning and Analysis: (Agec522)

AGRI.
PROJECT PLANNING AND

ANALYSIS
(AgEc522)
By: Saleamlak F. (Assistant Professor)
1
1. The project concept
 Project planning and analysis has a long history in financial

and business analysis.
 It has always been used as a means of checking the
profitability of a particular investment by private firms.
 Recent experiences show that project analysis has attracted
the attention of development economists.
2
Cont.
 Projects are now assessed from the economy’s viewpoint

instead of only from the firm’s perspective.
 The selection criteria have also included economic criteria on
top of financial criteria.
 Project planning and analysis is essentially a process of
“seeking alternative choices” to reach an agreed upon set of
objectives in the most efficient manner.
3
Figure 1: The Project Concept
4
Cont.
A project can also be viewed as a “Proposal for capital investment to create

opportunities for producing goods and services”.
Recently defined a development project as follows:
“Project can be defined as an investment activity in which financial

resources are expended to create capital assets that produce benefits over
an extended period of time”.
A project is a complex set of activities where resources are used in

expectation of return and which lends itself to planning, financing and
implementing as a unit.
5
The linkage between projects and programs
 It is necessary to distinguish between projects and programs

because there is sometimes a tendency to use them
interchangeably.
 A project is an investment activity where resources are used
to create capital assets, which produce benefits over time
and has a beginning and an end with specific objectives.
6
Cont.
A program is an ongoing development effort or plan which may not
necessarily be time bounded.
E.g. a road development program, a health improvement program, a
nutritional improvement program, a rural electrification program, etc.
A development plan is a general statement of economic policy.
National development plans are further disaggregated into a set of
sectoral plans.
7
Cont.
A development plan or a program is therefore a wider concept than a
project.
It may include one or several projects at various times whose specific
objectives are linked to the achievement of higher level of common
objectives.
For instance, a health program may include a water project as well as a
construction of health centers both aimed at improving the health of a given
community, which previously lacked easy access to these essential facilities.
8
Cont.
Projects, which are not linked with others to form a program,
are sometimes referred to as “stand alone” projects.
Perhaps the distinction between projects and programs
would be clear if we see the basic characteristics of projects.
Projects in general need to be SMART.
9
S – Specific
 specific in its objective.

 specific activities.
 a specific group of benefits.

 a specific group of people.
10
M - Measurable
 Projects are designed in such a way that investment and production

activities and benefits expected should be identified and if possible
be valued (expressed in monetary terms) in financial, economic and if
possible social terms.
 Though it is sometimes difficult to value especially secondary costs
and benefits of a project, attempt should be made to measure them.
 Measure costs and benefits must lend themselves for valuation and
general projects are thought to be measurable.
11
A – Area bounded
As projects have specific and identifiable group of beneficiaries,

so also have to have boundaries.
In designing a project, its area of operation must clearly be

identified and delineated.
Though some secondary costs and benefits may go beyond

the boundary, its major area of operation must be identified.
Hence projects are said to be area bounded.
12
R – Real
 Planning of a project and its analysis must be made based on

real information.
 Planner must make sure whether the project fits with real
social, economic political, technical, etc situations.
 This requires detail analysis of different aspects of a project.
13
T – Time bounded
 A project has a clear starting and ending point.

 The overall life of the project must be determined.
 Moreover, investment and production activities have their

own time sequence.
 Every cost and benefit streams must be identified, quantified
and valued and be presented year-by-year.
14
Why do developmental projects fail?
 The reasons for the failure of projects could be different.

 A comprehensive list of “where things went wrong” will
include the following:
1. A lack of local ownership and responsibility, i.e. participative
planning and development.
2. Problems of project design and implementation.
3. The use of inappropriate technology, cropping systems and
animal husbandry.
15
Cont.
4. Inadequate or inappropriate infrastructure.
5. Failure to appreciate the social and political environment.
6. Administrative problems.
7. Changing economic situations and market conditions.
8. Externally driven project initiatives.
9. Problems related to poor project analysis.
10.Unrealistic expectations.
11.Unsupportive policy environment
16

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AGRI.

PROJECT PLANNING AND

By: Saleamlak F. (Assistant Professor)

 Project planning and analysis has a long history in financial

 Projects are now assessed from the economy’s viewpoint

A project can also be viewed as a “Proposal for capital investment to create

Recently defined a development project as follows:

“Project can be defined as an investment activity in which financial

A project is a complex set of activities where resources are used in

 It is necessary to distinguish between projects and programs

A program is an ongoing development effort or plan which may not

necessarily be time bounded.

E.g. a road development program, a health improvement program, a

nutritional improvement program, a rural electrification program, etc.

A development plan is a general statement of economic policy.

National development plans are further disaggregated into a set of

A development plan or a program is therefore a wider concept than a

objectives are linked to the achievement of higher level of common

For instance, a health program may include a water project as well as a

construction of health centers both aimed at improving the health of a given

community, which previously lacked easy access to these essential facilities.

Projects, which are not linked with others to form a program,

are sometimes referred to as “stand alone” projects.

Perhaps the distinction between projects and programs

would be clear if we see the basic characteristics of projects.

Projects in general need to be SMART.

 specific in its objective.

 a specific group of benefits.

 Projects are designed in such a way that investment and production

As projects have specific and identifiable group of beneficiaries,

In designing a project, its area of operation must clearly be

Though some secondary costs and benefits may go beyond

Hence projects are said to be area bounded.

 Planning of a project and its analysis must be made based on

 A project has a clear starting and ending point.

 Moreover, investment and production activities have their

 The reasons for the failure of projects could be different.

4. Inadequate or inappropriate infrastructure.

5. Failure to appreciate the social and political environment.

7. Changing economic situations and market conditions.

8. Externally driven project initiatives.

9. Problems related to poor project analysis.

11.Unsupportive policy environment

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