Project M&E (unit 1-4)

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Unit 1
Lecture Notes 01 – 04
Monitoring and Evaluation Concept
Introduction of faculty, students and the course module was conducted at the very outset. Objective of
the Module is “To illuminate to the students to different aspects of project implementation and project
management and its output together with involving students in practical realism of project through
rigorous field exercises.” It is a 3 credit course module comprising of 42 hours (28 lectures), 6 hours of
presentation of learnings from a 2/3 days field visit, 3 assignments, 3 internal assessments, 1 guest lecture
(if available) and 1end semester examination. Various issues according to bellow given tentative session
plan will be discussed with the perspective of overall project management. Rather than deriving
mathematical equations, our discussion will be focused towards understanding the physical meanings and
importance each have in in total project management.
1. Introduction to Project M & E, Project environment, ex-ante, ongoing and ex-post evaluations
2. Project cycle, M & E logic and M & E cycle
3. Definition of key concepts, M & E need and design
4. M & E types, Clients of Eavaluation output, difference between M & E
5. Ex-ante evaluation (Appraisal), economic eveluation
6. Social evaluatio
7. Impact evaluation
8. Evaluation techniques
9. Logical framework, participatory M & E
10. M & E Indicators
11. M & E practices in Nepal
12. Utilization of evaluation results
13. Current issues and practices with example of result oriented evaluation and MDG
14. Data collection for M & E
15. Field Visit (3 days) and Presentation
We may have to readjust the certain part of discussion as per students’ need.
Reference books are:
1 S Chaudhari, Project Management – 4th
Edition
2 Meredith and Mantle, Project Management – 6th
Edition
Further recommended readings are:
1 J P Gittnger, Economic Analysis of Agriculture and Rural Development
2 Prasanna Chandra, Project: Preparation, Appraisal, Budgeting and Implementation
3 Harold Kerzner, Project Management: A Systems Approach to Planning, Scheduliong and Controlling
4 Public Works Directives, Organizational Directive, GoN
5 Development plans of GON, NPC
6 Economic Surveys of GON and Portfolio reviews, Ministry of Finance
7 Various project monitoring and evalaution documents availabel in World Bank and Asian Development
Bank websites
Project Management is a mix of all best practices in general management in project scenario, that is to
achieve a set objective within given time, cost and quality. It utilises innovative processes/techniques to
achieve the end result as desired and utilises indicators and their measurements to identify the gap
between the plan and the execution level so that corrective measures can be taken it time to achieve the
set objective. All the stages in project cycle have their own importance. However, the implementation is

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considerd more challenging as it trasforms the paln into reality. The role of human resources play a huge
role in achieving success. Control measures shall be made efficient and effective to compare the paln with
execution, to implement corrective measures and to achieve the set target.
Today, we will try to test the level of understanding amongst the students regarding bellow given aspects
related with project management before entering into the topics according to session plan.
1. Management, Administration, Governance and Differences between them
2. Project, Types (Private, Public, PPP/Central, Local/Sectoral, Integrated) etc
3. Project Mangement, Result achievemnt, how to measure?
4. Project Indicators (Financial, Technical, Time wise, Socio-environmental) etc.
5. Efficiency and Effectiveness, Inputs, outputs, effects and impacts
6. What do we want at the end of the day, How do we achieve and measure what we want etc…
Projects are defined as a series of activities which requires various types of resources (investments) to
achieve a set target, objective, and Goal to produce value addition within defined time and with given
quality. Shift in one of priority does create visible
effects on remaining two priorities, such as
focusing on time will, will first on cost (most
probably, it will go up), then on quality (certain
adjustments may be required there). Time and
cost are more closely associated with resource
requirement, where as quality has its
implication directly on project products
Further, human resource management has
to dealt with very sensibly, as it is a resource
which is not inert and has its own aspiration,
can organize themselves and may improve or
regress industrial relationship in organization.
Project cash flow and cummulative cash flow as given below help to understand the project environment.
Project cash Flow Diagram Cumulative Project Cash Flow
ma
Project follows various stages in its own cycle. It shall be discussed in detail in relevant session.
A project is a unit of management that clearly specifies what is to be accomplished, over what period of
time, and at what cost. The clearly specified "what" to be accomplished are the project objectives. Project
Time
Cost
Project
Quality
Money
Revenue
Expenditure
Time
MaximumBreak Even
Minimize
+ve Money
Time
-ve Money
Break Even
Maximize
Minimize Balance

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implementation is usually associated with cost/time overrun, and requires project redesign. That is the
reason why project life is on a continuum and planning is also re-adjustment of procedure, time, and/or
cost based on the feedbacks from on going evaluation. Planning and preparation is the primary and very
imporatnt stage of a project cycle when the mould of the project is cut, objectives are defined, strategies
outlined, Working procedure established, Financial and socio-economic benefits quantified, Required
resources identified, Bench mark fixed against which the project and its effects, outcomes and impact will
be judged and the INDICATORS against which its success or failure will be measured are set.. Aspects
that have to be considered during project planning and preparation in general are; Technical,
Institutional/organizational, Social/political/cultural,Economical and Financial, Environmental, and Legal
aspects. All these areas are to monitored and evaluated to measure achivement vis a vis plan. There are
cross cutting issues such as; corporate governance, value based management and earned value analysis
etc. Shareholder, stockholder and stakeholder dynamics will have to visited.
Overall objective of public sector project is to increase economic benefit to citizens whereas it is
increasing wealth to shareholders in private sector projects. PPP demands for both, hence are more
challenging. Performance evaluation of past activities is not adequate, performance based motivating
model linked with future activities shall be talk of the day. If one has money, go invest; if one has
knowledge, go manage for value addition to nation, investors as well as own.
Lec_02_Project Cycle and ME Logic and Cycle
Systems Approach
1. Financiers, Donors, Proponents, Shareholders etc.
2. Project executing agency, implementation agency, service and good providers etc.
3. Beneficiaries, customers, communities etc.
Time
Schematic diagram of a systems approach to Project Management
Time
Cost Quality
Beneficiary
Customer
Community
Financier
Donor
Shareholder
s
Executing,
Implementing
Service providers
Project
Project as a SYSTEM - a
whole comprising of sub
systems
Change in system
Resulting Change in
system elsewhere

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Types of Projects and its Enviroments
Based on Who is involved:
o Private Sector Projects – Product based, service based
o Public Sector Projects – Sectoral projects, Integrated projects,
o PPP – Huge Infrastructyure project, Service providing projects
Based on Fund providing agencies:
o Public sector projects
 Domestically funded project
 ODA supportred projects
Bilateral
Multi lateral
INGO
o Private sector projects
 FDI projects
 100 % equity
 Balanced equity and loan funding
Domestic lenders
International lenders such IFC and Private wing of ADB
Based on impact on economy
o Huge projects having impact on national economy (Macro Economy)
o Small localized projects having impact on local economy (micro economy)
Based on who governs or managesd the project
o Central level project
o District level project
o Local level project
Based on product
o Project with hard core engineering product
o Soft ware Projects intended towards social upliftment and awareness building
Rural Development Projects
Projects with a targeted group
Community based projects Etc.
M & E Logic
Logic is derived from the management functions: POSDCoRB simplified in project management as
PODC.
P – Planning
O – Orginizing
D – Directing
C – Controlling
M & E in a part of controlling function in order to control Time, Cost and Quality aspects of a given
project.

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PROJECT CYCLE
13. Learning for Future
12. Audit Achievement for future project formulation
11. Completion
1. Identification
10. Monitoring and Evaluation 2. Planning
PROJECT
CYCLE
9. Implementation 3. Approval
4. Preparation
8. Procurement of Goods, Services, and Works
7. Agreement [Approval]
5. Appraisal
6. Negotiations
Monitoring is required also during Project Appraisal and Project Impact Study
Definitions of Key Concepts and Need of ME
Inputs: It is the answer to question “What resources are used”? The resources; financial, human,
technological and others, if any, which are identified and estimated as required in order to carry out the
project activities
Activities: It is the answer to question “What is done”? Work Breakdown Structure of works of similar
nature.
Output: It is the answer to question “What is produced or delivered?” It is the intended products or
deliverables as envisaged to be generated after the project activites are complete.
Effects/Outcome: It is the answer to question “What do you wish to achieve”? It is the targeted
immediate changes brought about by a project in the targeted customesr, beneficieries, and organisations
with whom it works.
Ex-ante Evaluation
Project Appraisal
On-going Evaluation
Monitoring
Ex-post Evaluation
Project Impact
Study

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Monitoring and Evaluation Cycle
Learning for Future
Achievement for future project formulation
M & E
CYCLE
Impacts: It is the answer to question “What long term changes that you are aiming for?” It is the long
term change in in the behaviour of people, groups, and organisations with whom a project is concerned
directly.
Planning:
- Task
- Process
- Resources
Design:
- Task
- Process
- Resources
Implementation
Approval and
Procurement of
Services
Decsion
Coorective
measures
Data Collection
Analysis
Reporting
Useful
information

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Risks: Events or conditions that may occur and whose occurrence, if it does takle place, has a harmful or
negative effect on project process
Monitoring: MONITORING is the continuous review by management of the implementation process to
ensure that input deliveries, work schedules, output and other activities are proceeding as planned.
Monitoring is a recurring task already beginning in the planning stage of a project or programme.
Monitoring allows results, processes and experiences to be documented and used as a basis to steer
decision-making and learning processes. Monitoring is checking progress against plans. The data acquired
through monitoring is used for evaluation.
Evaluation: EVALUATION, on the other hand, is a discontinuous function, concerned with ascertaining
the degree to which objectives have been achieved through the activities. Evaluations appraise data and
information that inform strategic decisions, thus improving the project or programme in the future. It uses
information gathered in relation to these aspects during the monitoring process.
Monitoring and Evaluation Need: Purposes, hence the need of Monitoring are:
To learn from experiences to improve practices and activities in the future;
To have internal and external accountability of the resources used and the results obtained;
To take informed decisions on the future of the initiative;
To promote empowerment of beneficiaries of the initiative.
Similarly, the need of the Evaluation is reflected by its scope which helps to draw conclusions about five
main aspects of the project:
Relevance
Effectiveness
Efficiency
Impact
Sustainability
Monitoring and Evaluation Design
M&E is an embedded concept and constitutive part of every project design (“must be”). M&E is not an
imposed control instrument by the donor or an optional accessory (“nice to have”) of any project. M&E
is ideally understood as dialogue on development and its progress between all stakeholders.
Having ways to check on progress (monitoring) and take stock of where things are at on a regular basis
(evaluation), are important for projects to function effectively and also to 'learn as we go'. Monitoring and
evaluation can help to identify issues, measure success and learn from any mistakes. This notion is closely
linked to the 'learning' principle of successful projects.
Why M & E ? Keeping records and monitoring activities helps people see progress and builds a sense of
achievement. Records can be useful and even essential when promoting a project or applying for funding.
Monitoring also has significance for the wider fields like ; conservation, health service, securities etc.
What to M & E : The following list of questions will help you decide on your monitoring objectives:
What information will help us make informed decisions?
What will help us know that our project is on track?
What's the appropriate scale for monitoring (e.g. catchment, district, reserve boundary, whole
forest or whole ecosystem)?
What are our timeframes for monitoring (e.g. days, months or years)?

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Do we need input from others (groups or agencies)?
Features of effective monitoring: Monitoring can be considered to be effective when:
Scientifically valid techniques are used.
Aspects relevant to your project are measured.
It's carried out regularly and consistently.
Accurate records are kept.
It is used as part of your evaluation to support or adjust project goals and actions.
In general, monitoring is integral to evaluation. Monitoring focuses on the measurement of the following
aspects of an intervention:
On quantity and quality of the implemented activities (outputs: What do we do? How do we
manage our activities?)
On processes inherent to a project or programme (outcomes: What were the effects /changes that
occurred as a result of your intervention?)
On processes external to an intervention (impact: Which broader, long-term effects were
triggered by the implemented activities in combination with other environmental factors?)
EVALUATION: The evaluation process is an analysis or interpretation of the collected data which
delves deeper into the relationships between:
Results of the project,
Effects produced by the project and
Overall impact of the project.
Evaluation provides an opportunity to reflect and learn from what you've done, assess the outcomes and
effectiveness of a project and think about new ways of doing things. In other words, it informs your future
actions. You may decide that you will:
Refine your project as you go, so that evaluation is part of your regular project activities.
Evaluate the project at agreed milestones e.g. on a yearly basis or after major activities.
Carry out an initial baseline exercise against which you compare progress at the end of the
project.
To ensure your evaluation is effective, it is important to consider:
Your purpose - what to evaluate: When designing your evaluation, make sure you're clear about your
purpose. It's helpful to determine what questions you want answered - make sure everything you ask or
investigate during evaluation relates back to these questions.
Your approach - how to evaluate: There are many different ways to evaluate your project, depending on
what your purpose is. However, it's important to make sure the evaluation process involves valid and
sound methods for information gathering and analysis. Once evaluation data has been gathered and
analysed, remember to check your conclusions against your goals and objectives. So the process design of
M & E shall address to its scopes.
Basically M & E design is concerned with:
Number of critical Indicators which reflects progress and the impacts
Data collection, methodology and volume of data (How, What and to what level of accuracy)
Data processing (Tools, instruments, softwares)
Data Analysis (Basis, baseline, evaluation, interpretation and forecasts and projections)

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Creation of useful information
Reporting system (best done by using the recent achievements in information and computer
technology)
Storage and retrival system
Resources (Financial, human, institutional)
Types to be adopted (inhouse, thirdparty, independent, participatory, public etc)
Types of M & E
In-house: Project proponent group/organization carries it out by itself. Such projects should have
planned a separate M & E Cell in the project itself and equip it with adequate human resources in
terms of quantuty and quality, adequate financial resources in order to effectively carry out M & E
activities, and other logistics required to successfully implement the M & E process.
Third Party: This is opposite of the first option. Here project organization does not have its own
separate M & E setup. But it outsources the job to service providers, consultants and experts based on
procurement of consulting service. TOR are drawn, SOW are defined as planned and srvice procured.
However, project financial resources are utilized for this purpose.
Independent: There is a management proverb, “the loyalty shifts towards those who hold the string
of your purse”. In above version of outsourcing, the financial resources used belongs to the project
people and they are the ones from whom the assigned consultants receive their payments for the
works carried out. Thus there is always chances of having the scenario described by above adage.
Independent M & E, hence could avoid this dynamics. But reality, this is very difficult because
required financial resources has to be allocated to some independent organization. In Nepal, money
has to be provisioned by project to be paid to NVC, which is mandated to carry out independent
Technical Audits of public sector projects. Apart from TA, other independent M & E are elusive in
our country, as well as elsewhere too.
Participatory: We all know that there has been a significant paradigm shift in development process.
It is more moving towards need based and participatory approach. Participation means involvement
of stakholders whose livelyhood is affected by project activities and products in decision making
process of the project from inception to completion, operations to maintenance. In this case, they shall
be equally made responsible for identifying whether project process and achievements are as planned
(M & E). In this model, the M & E process is also made participatory with key stakeholders.
Public: This is further ahead than participatory M & E. In this model public opinion is the main
source of information for M & E of a given project. This is rather difficult to implement in project
targeted toward improving microeconomy, let alone the projects targeted towards improving
macroeconomy of the country as a whole.
Clients of Evaluation Products Basically clients of the project evaluation outcomes are:
Project proponent organization
Corporate body
Sectoral organizations
Regulatory organization
Financing organizations
Organized group of beneficieries

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Academic and policy advocating agencies
Development partners
National Planning Commission
National Development Commission etc etc
Difference between M & E: There is clear difference between M & E as follows.
Temporal aspect: Continuous versus Spontanious
Coverage aspect: Inputs – Output (Monitoring) vis a vis Effects – Impacts (Evaluation)
Perception aspect: Efficiency (doing things right) in Monitoring and Effectiveness (doing right
things) in Evaluation
Views aspect: Efficiency is internal views based on facts whereas Effectiveness is rather other
people’s version, impression and views.
An example from an Irrigation project is as follows.
Monitoring Evaluation
(Efficiency) (Effectiveness)
Unit 2
Project Evalution Techniques
Ex –ante Evaluation of Project
Identification [PCN] Design of
Planning [Feasibility Study] M & E
Preparation [DPR and DED] Appraisal
Appraisal (External) [Donor’s Appraisal/Due diligence]
Negotiations [Between Provides and Recivers]
Approval [By both Provider and Receiver]
Planning Approaches: There are few planning approaches.
SWOT – Strength, Weakness, Opportunity, and Threats
Rapid Appraisals [RRA, PRA, Appreciative enquiries]
Cost benefit Approach or Value Added Approach [Popular Approach]
Logical Frame Work Approach [Objective Oriented Project Planning] [Popular Approach]
Cost benefit Analysis method is based on the comparison of two streams; a) of Cost and b) of Benefits.
The common indicators that are understood by the development practitioners are:
1. Net Present Value [NPV]
Impacts
Increased access
to goods and
services
with multiplier
effects
Effects
Increased
farm
income
Outputs
Increased
paddy
production
level
Inputs
Irrigation
Seed
Fertilizer
Extension

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2. Benefit to Cost Ration [BCR]
3. Internal Rate of Return [IRR]
Feasibility study: It derives above indicators and provides basis for the approval of the project. In our
context, however, the feasibility study deals with:
Technical,
Financial, Economic, Social
Environmental
Legal and
Institutional aspects.
Steps of Feasibility Study
1. Preparation of Terms of References
2. Invitation of Bids, Tendering and Appointment of Feasibility Consultant
3. Developing Project objectives and scopes
4. Data Collection
5. Developemnt of Project Works
6. Stakeholder Participation
7. Preliminary engineering
8. Preliminary cost estimate
9. Economic and financial analyses
10. Analysis of institutional and training requirements
11. Proposed implementation modalities
12. Proposed funding modaities
13. Assessment of project risks in different alternatives
14. Initial implementation plan
15. Feasibility report
Financial Analysis: Value added approach or the cost benefit analysis at first requires:
1. Generation of stream of cost
Land and site development
Construction cost [Buildings and civil engineering works] and Plant and Machinaries
Technical know-how [fees payble to various consultants (including foreign)]
Expences for training local technicians
Fixed assets, Preliminary and capital issue expences
Cost of capital, Inflation, and depreciation
Pre-operative cost and Provision for contingencies
Expenditure for advertizement, research and development
Margin money for working capital
Operation and maintenance cost
Taxes
2. Generation of stream of benefits:
Direct revenue [by selling the product or by toll or service charge – telephone]
Time saving [Time saved by women to fetch water]
Saving on operation cost [eg VOC]

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Secondary benefits; Enhanced production, Life savings
Immediate need postponded [school across the river after bridge construction]
Terciary and Other social/cultural benefits
Time Value of Money: Money has time value. A Rupee today is more valuable than a rupee a year later.
As the project life involves many years all the costs and benefits are to be translated in its value related to
certain single year. There are two ways to do this; a) Compounding, b) Discounting
Compounding
S = P ( 1 + i ) n
, Where: S = Future value after n years; P = Present amout invested today; i = internal
interest rate for the period and n = number of year.
Discounting
S
P =
[ 1 + i ] n
Financial Net Present Value [NPV]
It is defined as the net worth of the project as of today. If NPV is positive, the project is acceptable
financially. Higher the NPV greater is the viability and acceptability.
n Bi - Ci
NPV = Σ
i =1 (1 + d)i
Where: Bi = Total discounted Benefit in year I; Ci= Total discounted [compounded] Cost in the year I; d =
Rate of discount and I = No of years in active project life considered in economic analysis.
Financial Benefit to Cost ratio [BCR]
Σ Bi
BCR = It should be greater than 1
Σ Ci
Financial Internal Rate of Return [FIRR]
It is the rate at which the net benefits are discounted so as to arrive at the cost of the project, meaning rate
of return when NPV is ZERO. It provides a measure of the project profitability. IRR > DR
n Bi - Ci
NPV = Σ = 0
i =1 ( 1 + d)i
Economic Analysis
Financial viability provides a measure of the commercial profitability of a project, while the economic
profitability indicates the real worth of a project to the country. Economic analysis is must for public
sector projects. Indicators of economic analysis are; a) ENPV, b) EBCR and c) EIRR

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In economic analysis, benefits are defined in terms of their effects on national outputs, while costs are
defined in terms of their opportunity cost, i.e. the benefits foregone by not using the resources in the next
best available alternative.
In developing countries the market prices of goods, services, capital, and foreign exchange are distorted
for a variety of reasons. For instance:
Many developing countries suffer from large degree of unemployment. In this situation the real
cost to society of withdrawing labor from other sectors for use in the project will be far bellow the
financial cost.
Similarly market price do not provide a good measure of the benefits if there is no freely
operating market for project output e.g. water or electricity.
Willingness to pay [WTP] on the part of consumers provides the economic measure of the benefit
of the project.
Traded and non traded goods are valuated in different way.
Foreign exchange at border price and its conversion into local currency using shadow exchange
rate is used in economic analysis.
Internal transfers within the national economy are not counted for in it.
Few important concepts
“With” and “Without” Comparison: New project reduces the supply of inputs [consumed by the
project] and increases the outputs [produced by the project] and thereby changes the availability
of inputs and outputs in the economy compared with what it would have been without the project.
Identifying the difference between these inputs and outputs “with and without” project is the
basic method of identifying the costs and benefits of the project. It should not be confused,
however, with the before and after scenario. For instance certain changes may take place in both
inputs and outputs even if the project is not implemented. These changes should be excluded from
the project cost and benefit analysis.
Transfer Payments: Economic analysis excludes from both the costs and benefits streams all
transfer payments, i.e., payments made by one sector in the economy to another sector, because
these transfers do not impose any direct claim on country’s resources. Taxes, subsidies, interests,
borrowing and repayment of loans, and royalty payments within the country are all examples of
transfer payments.
Externalities: A project may involve positive and negative impacts with significant effect in the
economy which are not reflected in the financial analysis. These effects known usually as
“externalities” should be taken into consideration in estimating the overall net economic impact
of a project. On the cost side the externality may include increased pollution caused by a
chemical or cement plant, or the adverse effects of chemical fertilizers on health and fisheries.
External benefits may include health benefits of a water supply scheme or recreational benefits of
a storage dams.
Economic Price of Traded Goods and Services: Traded goods are goods and services that are
actually imported to or exported from a country, either in whole or in parts. Economic analysis
has its own way to fix the price of traded goods involving CIF, Transport and handling costs,
FOB etc.

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Economic Price of Non - Traded Goods and Services: A commodity is non-traded when it
cannot be exported or imported or due to economic reasons and legal restrictions. Valuation of
non-traded goods is more complex because its production affects the domestic prices, which in
turn affects the use and production of these goods by others and is beyond our consideration.
Economic Price of Labor: Labor is the single most important component among non-traded
goods and services. Labor wage, apart from entirely being determined by the supply and demand,
it is influenced by; a) Market structure, b) Government regulations and control, c) Labor unions,
d) Collective bargaining, and e) Lack of labor mobility etc. Economic price of labor or the
economic wage rate [EWR] is derived in two steps; a) Estimate the EWR in domestic prices and
b) Convert the domestic price into border price by using conversion factors. Based on the level of
skill the EWR or sometimes also called as the shadow wage is calculated differently for; a)
Skilled labor, b) Semiskilled labor, and c) Unskilled labor
Price Changes, Exchange Rates and Conversion Factors are usually defined by Central Bank or
Ministry of Finance.
Identification of Economic Costs: In economic analysis, costs include only those items which, when
used, affect the availability of resources to the rest of the economy. For example, economic cost of
unskilled labor is ~ zero in a society with very high un-employment. Followings are to be considered:
1. Contingencies – economic cost of additional real resources required beyond the base cost
2. Sunk Cost – It is the cost of existing facilities
3. Depletion Premium – It is the cost of exploitation of non-renewable natural resources
Identification of Economic Benefits: The difference between what the consumers are willing to pay and
what they actually have to pay is the consumer’s surplus. This surplus accrues to the consumer if when a
project contributes to a reduction in price and should be treated as a benefit.
In order for a public project to be feasible, EIRR should be > OCC
Social Analysis
What we have done up to now is also referred to as the Traditional Cost Benefit Analysis [TCBA], in
which the valuation of the inputs and the outputs is done in terms of the opportunity cost for the country.
The objective of public investment is considered to maximize the economic growth of the country.
TCBA, however, does not concern itself as to whom the benefits accrue and as to the purpose for which
they are used. In order to look into these matters, the Social Cost Benefit Analysis [SCBA] was developed
in early 1970s in recognition of the inadequacy of public sector resources to address persistent problems
of poverty and inequality of income distribution in developing countries.
The determination of social accounting price is influenced by two basic assumptions:
1. Extra consumption is worth more to the poor than to the rich;
2. An extra unit of consumption may be worth less than an extra unit of savings today.
The general effect of social accounting prices is that projects which generate greater consumption benefits
to the higher income groups are not favored. Projects which favor the lower income group of society are
preferred as they show higher social returns because of the way the social accounting prices are defined.
Consistent use of SCBA is expected to raise the level of investment over the time, to change the sectoral
allocation of public investment, to reduce income disparity, and to influence the choice of technology.

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There are ways developed for it already.
Net Social Cost of Inputs = Foregone output at efficiency price + Cost of foregone savings because of
extra consumption – Benefit accruing from extra consumption
Net Social Benefit = efficiency benefits – Value of foregone savings because of extra consumption +
Benefits accruing from extra consumption
Issues concerned are:
Valuation of income distribution
Valuation of public income
Diminishing marginal utility of extra consumption
Social Wage Rate
Value of private savings
Project Appraisal: Project appraisal (external) is an independent study of the proposed project by the
client, financier, and donor in order to check whether the proposal is a sound one or not in aspects related
with Market, Technical Financial, Economic, Environmental and Social Appraisal
Risk Analysis: Project planning and its implementation is always associated with various hazards and
risks. The risk arises due to many factors such as;
a) Assumptions made during project planning may go wrong,
b) Cost could rise in any area and in unpredictable magnitude,
c) Benefits could be lessened,
d) Government regulation, control on market, and Taxation policy changes,
e) Market forces do not work properly and
f) There are too many regulations
Sensitivity Analysis: This is the most practiced tool of assessing sensitivity in a project. In this method
few unfavorable scenarios are considered and the three indicators – NPV, BCR, and IRR – are calculated
for different scenarios such as; a) 10 % rise in cost with constant benefit, b) 10 % fall in benefit with the
same cost and c) 10 % rise in cost and 10 % fall in benefit. The change in values of the indicators can be
plotted graphically and the risk assessed in most likely worst scenario.
Evaluation techniques have to be developed during project planning and preparation in order to facilitate
a proper evaluation later on. There are varieties of such techniques such as:
Cost benefit review: Benefit and Costs are reviwed in order to establish that B > C
Earned value analysis: EVM is calculated to find out the status of project interms of cost and
time overun
Benefit incidence: It refers to the availability of intended benefits to the targeted people.
Equilibrium model: This is a complex model of looking at project output, effect and impacts in
equillibrium with other sets of policy, socio-economical and development level, domestic and
beyond the border situations etc. Like we talked about project with a Systems approach, similarly
it is all abpout looking for effects of projects deliverables on targeted people in a wholistic
manner.
Effects analysis (social and economical and on income distribution): It is all about looking for
intended short term changes brought about by the project producs, may they be goods or services.
Project impact evaluation including experimental design: Here the long term changes in
behaviours, living conditions and social standings anticipated by the project due to its

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deliverables is looked upon amongst the involved stakeholders of the projects, including the
proponent.There are PIE without an experimental design, with quasi-exprimental design and full
experimental design. These referres basically to the setting of PIE objective, its methodology,
data collection (to what level of accuracy), analysis and reporting including resource allocation,
time line setting and the moidality of utilization of output of the PIE.
PERT, CPM, Slack (float) time analysis, Gannt chart: Gannt chart and Critical Path Method
are basically tools utilized for projects scheduling and rescheduling. Project Evaluation and
Review Techniqu (PERT) is based on network diagram. All three; GC, CPM and PERT allows
project managers to evaluate, how their project is progressing, is there already any time overrun,
over/under utilization of other resources and the possibility of utilizing the Float time to recover
these damages, if any.
SCHEDULING and CHARTS
Thus scheduling is defined as the process of establishing the sequence of work tasks and activities on time
scale. Some scholars have differentiated planning as a process of devising the work tasks and the order in
which they are to be undertaken and the scheduling as putting the plan in time dimension. It involves
following studies.
Time study: It is a principle technique of work measurement. Analysis defines standard time required for
standard production output or for carrying out a specified job at defined level of performance. It has to
make allowance for Relaxation time based on Personal need, Fatigue need, Environmental allowance and
Climatic allowance
Method study: It concerns with the systematic recording and critical examination of ways of doing
things in order to make improvements.
Process charts:Process charts provide diagrammatic means for recording the sequence of activities in an
existing method under study.
Multiple activity charts: This chart incorporates a time scale against which various activities are plotted.
It is used to illustrate the inter relationships between the activities of two or more objects.
Method statement: This details the method of carrying out every operations of consequence and the
combination of equipment and manpower established as being the worst suitable for the said work.
Work Breakdown Structure: Work task/activity is a specific item of work that can be clearly identified
and delineated in such a way that its commencement, content, and the completion can be recognized. A
work task uses resources including time. It is to establish inter relationships and future schedule for work
tasks. It is the basis for the scheduling.
Manpower requirement: it basically has to deal with the requirement of labor and requirement of staff.
Incentive schemes for manpower: Whenever some work is carried out by certain person, he/she should
be provided with some remuneration or the incentives.
Bar chart also referred to as Gantt chart is the most popular type of scheduling for projects of reasonable
size and involving reasonable number of activities. This was developed by Henry Gantt - a scientist
involved in developing theories and practice of better management practices in France during the 19th
century.

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Activity (Work) ( 1st, 2nd, etc. are weeks from the start of assignment)
1st 2nd 3rd 4th 5th 6th 7th 8th 9th
Field Work Preparation
Field Work
Draft Report Preparation and
Submission
Final Report Preparation and
Submission
Bar charts could incorporate the time, resources [both cost and manpower] required for an activity.
Alternatively, the most popular way of presenting a bar chart is with a set of charts as follows: a) Work
schedule, b) Manning schedule, and c) Cost schedule
A lot of works have to carry out to arrive at this point. The most important one is defined as the
identification of the work duration for any specific activity.
Quantity to be carried out
Work Duration =
Average productivity of operatives * number of operatives
This is influenced by: Weather; Availability, quality, and training of the operatives; Familiarization with
the work, with the place of work, and with the people with whom to work together; Quality of specified
workmanship; Quality of supervision; Size of the project; Completion date and the time pressure for the
project; Length and incidence of holidays; Repetitiveness of work nature leading to learning advantages
Physical constraints such as access etc.
PERT and CRITICAL PATH METHOD (CPM)
Project Evaluation and Review Technique [PERT] was developed by US Navy to evaluate project of fleet
of ballistic Missile weapon [Polaris Missile]. This mega-project involved the services of more that 3000
contractors. This method used brought the time overrun in such a project to a level of 36 %, which was
then considered to a great achievement. PERT can make allowance probable errors in time dimension
regarding the duration of activities.
Critical Path Method [CPM] was developed by engineers at the DU PONT plant in France based on
simple calculation, whose result is the definition of a critical path through a network diagram. Its
implication is that, activities in the critical path, if completed in time lead to timely completion of project.
Other activities which are not in the CP can be managed if the CP is met. It was piloted in DUPONT and
a 125 hour operation was completed within 93 hours. After this the CPM has established its root in the
project planning and scheduling.
Critical Path Analysis is a dynamic model, which utilizes the techniques of Network Analysis to present a
project plan by systematic diagram which represents the sequence and interrelationships of activities
within a given project. It also gives the time dimension.
Foundation for both is the Network Diagram, which is a Display of series of operations, their inter
relationships, their inter dependencies, and duration with various arrows and nodes.
Before preparing a CP Analysis, following basics have to be understood:

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a. Resources: Men, Material and Machines and the Time
b. Activities: This is the work breakdown structure [WBS] which consumes resources. WBS analyses
any activity in terms of its type of work/type of resource required, location of work, and any restraints
on the continuation of the activity.
c. Logic: It is the relationship and interdependence between activities. It is analyzed in terms of the
earliest possible time of start.
d. Duration: It is the duration of each activities depending upon level of resource allocated to the
activity, output of those resources, and quantity of work to be completed within the said activity.
e. External Restraints: These are specified completion dates of the whole or the part of work, access
problems, any other situational problems related to specific activity.
f. Other anticipated problems: If there are any. It might include many problems which arise in a
construction project.
An arrow is used in CPM to represent one activity within the WBS, the tail of which represents the
starting time and the head the completion/end time and the direction of represents the direction of work
flow. At either end of the arrow [activity] an event shall occur. This is a milestone where an
activity/operation is complete and another activity/operation could start. All networks are constructed
logically on the principle of DEPENDENCY.
Example
Setting out Foundation Order Make Erect
Excavation Timber Formwork form
Setting out Foundation excavation erect formwork
Order timber Make Formwork
Here in this example, erection of formwork can not take place without Foundation excavation and without
formwork preparation. But, two sets of work can be undertaken in parallel.
Activity identification is usually done by so called I – j convention, i denote the number of event at the
tail and j denotes the number of event at the head. Forward numbering [0 – 1] is used in CPM
Electric conduits
Built Wall Plumbing Plaster
Joints fixation
Electric Conduits
Built wall Plumbing Plaster
1 2 3 4 5 6
1 2
3
4 5
4321
1 2
4
3
5 6

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Joints fixation
In the second example activities 3 -5 and 4 – 5 are called dummy activities. Dummy activities can
represent logic in certain situation where the use of activity arrow would not allow this. If the activities
would follow only in a clear sequence it will be very simple linear diagram. But the actual logic is very
complex. This is also because a number of activities could start after an event and an activity may be
dependent upon a number of earlier activities.
In a network, the objective of a project is the last event in the network, to which all other arrows should
converge. In network construction three questions are very important; a) What activity must immediately
precede, b) What activity must immediately follow, and c) What activities could be taking place
concurrently
Once the planning logic of network is established, then the time dimension is added to it. Start from the
first event and based on the simple arithmetic add on the duration and work out a forward pass defining
the earliest start time. Once the end event is reached then make a backward pass similarly by subtracting
the duration from each event for each activity. This gives the latest event time. These two figures for
each activity could be different for many activities. But there will be one or a few more paths in which
these two figures for earliest start time and late finish time are equal. These events are called critical
events which have to occur as planned in order not to have negative effect on project schedule.
The path that passes through these critical events is called the Critical Path. Other paths are associated
with floats, which is the difference between the earliest start time and the latest finish time. Activities
which have floats could be achieved easily utilizing these floats for carrying out the work. But the critical
path, by its name itself suggest that it is the most critical, to achieve which is the prime priority of each
project manager.
Another important aspect of the CPM is of the resource optimization. For an example, if we consider the
network diagram on a given unit of time and draw a cross section, we can identify all the activities that
are to be carried on that unit of time. Based on this we can easily compute the resources such as money,
men, and machines required for that particular day. If it is too unbalances, say for example we require
many machines today and don’t require them tomorrow, but again need them day after tomorrow; this is
hard to manage. Similar case is with the labor. Machines and men cannot be manipulated in such a way.
The money requirement identified thus could be helpful to work out the cash flow of the company.
Basically most of the techniques involve data collection as raw material, its processing and analysis
according to accepted design in order to generate the useful information. There are many tools for data
collection. Secondary data is consolidated from existing documents and primary data is collected in fields.
Surveys, RRA/PRA (tools), Appreciative enquiries ets are the popular models.
Starting from simple logical analysis and growing along the way; SPSS, mathematical tools such as linear
and regression analysis, developing mathematical models are the potential tools utilized for data analysis.
Selection of the tools depends upon characteristics, size, affordabilty and requirements set forth during the
project appraisal.
Project Concept Note (PCN)
This is a conceptual paper which introduces a paper to all itys stakeholders. It is beyond Brochure level
and less than a Project Proposal and detailed Project Report.

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PCN is a device used to introduce a project to all its stakeholders, supporters to enhance the confidence
level and opposing groupm to sensitize about its positive points and to convince them. A PCN could be of
any type of projects such as; a) New project, b) Expansion of existing project tec.
From propent’s standpoint, a PCN is the primary source of information from which the concerned
individuals and institution comes to learn about your project idea. It should be able to convey in brief:
 Ideas, Concept, Capability
 Project Description, location, type of work etc
 Objectives, Scope, Purpose
 Financial assessment (cost versus benefit)
 Time requirement assessment
 Human Resource requirement assessment
 Implementation arrangement
 Project Engineering, operations, Manufacturing, procurement etc.
 Environmental and social assessment
Preparation of a PCN is important as it forms the basis for future involvement of stakeholders.
Home Work : Prepare a PCN. 4 pages A4. Use your wildest imagination. Within 7 days.
Unit 3
Logical Framework Approach and Project M & E
OBJECT ORIENTED PROJECT PLANNING
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know
yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the
enemy nor yourself, you will succumb in every battle. (Sun Tzu, Chinese general. The Art of War)
Every project is besieged by at least one of these enemies:
Inadequate requirements
Unstable requirements
Inadequate customer communications
Poor team communications
Unnecessary complexity
Ineffective team behavior
Conquering Enemies with Object Technology: Objects are program components that accomplish a
limited task, such as maintaining a list, or drawing a line. Objetcs entails followings:
Dynamic and static descriptions of requirements. Capturing not only what but also how
Dynamic and static descriptions and design. Not only how but how the objects interact
Encapsulation. Hiding the internal working of the object from the rest of the system, which permits
division of state, function, labor.
Inheritance. Allowing for more than one kind of type of object, which enables reuse and a focus on
new functionality.
Aggregation. Creating a large object from a small simpler object
Packages. Encapsulating objects into larger components with hidden internal workings

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It is by taking advantage of these features that you can improve productivity of your team and quality of
your product. Simply put, object-oriented projects achieve the manager’s mantra, “faster, cheaper, better,”
for three reasons:
Objects provide the flexibility and control necessary to deal with evolving requirements.
Object use facilitates collaboration.
Objects help manage complexity.
Project Palnning Matrix – Logical Frame Work (LOGFRAME)
Logical Framework Approach [LFA] to planning projects is a product of object oriented project planning
and MfDR. It is adopted by many international agencies. It is very important for us for us because the
National Planning Commission demands a Logical Frame Work Matrix with every project proposal prior
to its approval. The LFA is an analytical tool for object oriented project planning and management. LFA
also is a set of interlocking concepts which must be used together in a dynamic fashion to permit the
elaboration of a well designed, objectively described and evaluate projects.
It is: a) objective oriented, b) target group oriented and c) participatory. It helps to:
Clarify and justify a projects
Indentify information requirements
Analys the project setting at early stage
Facilitate communication between all parties involved
Identify how the success or failure of a project is measured
Basic premises of LFA are:
 Projects are designed to achieve quantifiable and measurable objectives and outputs;
 Project success and quality needs to monitored and measured by the extent to which projected
objectives outputs are actually achieved;
 Projected achievements of objectives and outputs is based on a series of hypothesis, of cause and
effects relationship, that should be clearly agreed to and monitored; and
 Stakeholders are in agreement on validity of these hypotheses, which become the basis of project
design.
The end product of LFA planning is a Logical Framework Matrix [LFM] or Project Planning Matrix
[PPM]. In short it is called the LOGFRAME. Development of Logframe involves following steps, which
we shall discuss about each in its own time.
1. Sectorial performance and stakeholder analysis;
2. Problem analysis;
3. Objective analysis;
4. Alternative analysis
5. Project design
Logical Framework Matrix [LFM]/Project Planning Matrix [PPM]/LOGFRAME.
Logframe usually is a 4 by 4 matrix comprising of 4 columns and 4 rows as follows. The content of each
column is arranged in a logical sequence that corresponds to the logical structure that was developed
during objective analysis.
First Column cells are as follows. The first level of the hierarchy of the objective tree corresponds to the
first row of the Logframe and contains overall goal of the project. The second level hierarchy of the

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PURPOSE
INPUTS OUTPUTS
PRESENT SCENARIO FUTURE SCENARIO
National and
sector area
objective tree is taken as the purpose. Third level hierarchy of the objective tree is taken as outputs or
results and the fourth level is considered as the inputs or the activities.
Second Column describes the indicators of the objectives. Third column indicates the source of
information for the verification of the indicators later during monitoring and evaluation. Fourth column
shows the important assumptions or risks for the successful achievement of the project objectives.
Example of a LOGFRAME
PROJECT
DESIGN
[Narrative
Summary]
PERFORMANCE
INDICATORS
[Objectively Verifiable
Indicators]
PROJECT
MONITORING
MECHANISM
[Means of
Verification]
RISKS
[Important
Assumptions]
GOAL
PURPOSE
OUTPUTS
INPUTS
Goal: The higher level objective towards which the project is expected to contribute.
Purpose: The effect which is expected to be achieved as the result of the project process
Outputs: The result that the project management should be able to guaranttee
Activities: The activities that have to be carried out by the project in order to produce the outputs
Inputs: Goods and services necessary to undertakr the activities
Indicators: Measure (direct or indirect) which verify to what extent the outputs are produced, purpose
fulfilled and goal achieved
Assumptions: Important events, conditions and decisions outside the control of project management
necessary for the achievement of the immediate objective.
LF deals with three major areas related with the projects. They are:
A schematic diagram which heklps to understand LFA
GOAL
The project
environment
The objectives
The project
Project area
National and
sector area
Project area
Activities
Resource Book by NORAD on LOGFRAME has been referred to while preparing these lectures

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Logframe development; stakeholder and problem analysis
Logical framewors are developed in a workshop scenario. LFA Workshops are considered as a major
instrument for project palnning and analysis. It can be organized in different ways. In simplest form, it
can be a brief, internal exercise carried out at an early stage to decide whether or not to continue palnning
the project further. It could be an extensive exercise depending upon the type of projects and can last up
to for 12 days.
Extensive workshops shall be participated by representatives of development partners, donors, affected
and involved organizations, relevant specialists, and stakeholders (beneficieries, sffected people,
supporters and opponents) in order to make it more inclusive and to seek early “consensus” on project
objectives and “road map:. Preferably, the WS should be conducted in project area. It sahould be
facilitated by a professional specialist, who should be independent and shall not enter into substantial
discussion apart from managing the methodological part of the LFA.
Visualization teckniques are used. Mostly used are Meta Cards. All participants write down their
contribution in those colored cards, which are then pinned to a wall for everyone to see. Discussions are
rationalized and deepened, the results are gradually improved. Followings are the basic rules for
visualization:
1. Write dow suggestions rather than time consuming discussion
2. One statement in one card
3. Clear and distinct message with sticking to facts and avoiding speculations
4. Cards with general statements replaced by specific statements
5. Statements can be changed or moved by moderator on participant’s request
6. Statement can be removed or changed only when all participants agree (consensus)
7. Unproductive discussion shall be checked by moderator using so called “traffic signs”
8. Line indicatinf causal relationships should not be drawn until end of session
Traffic signs: Needs clarification later More information required
Disagreement, controversy Discontinue discussion
Sectorial performance and stakeholder analysis
Sector Analysis: General sectoral performance analysis: it is carried to assess the present scenario in the
concerned sector.
Stakeholder Analysis: Lack of knowledge among development planners both on donr and partner sides
about people affected by development project has proved to be a common cause of project problems as
evidenced by numerous evaluation reports and studies. At the very outset, therefore, a comprehensive
picture of interest groups, the individuals and intitutions involved has to be developed. Organizations and
authorities at different levels and interest groups have different motives and interests, expectations all of
which have to be analysed at early stage of project planning and implementation. Fundamental
requirement is that the objectives reflect the needs of the society and interest groups and not merely the
internal needs of an institution. All parties whose views are necessary to investigate in order to understand
the problem should be listed together with project affected groups, may they be positively affected or
negatively affected and for that matter directly or indirectly affected. Equal representation should be
? Info
?
Stop
?

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sought frominterst groups, individual specialists, organizations, authorities, stakeholders. Geographical,
gender, and other sociual aspects also have to be assessed while selecting participants. Group analysis
shall be based on:
Problems affecting them
Their interests
Their potentials
Linkages
It can be summarized as follows:
 Identification of stakeholders;
o Participation analysis and analysis of interested groups:
 Institutions
 Groups
 Persons
o List of participants
o Classification of participants
 Beneficiaries
 Supporters
 Opponents
Problem analysis: Existing situation is analyzed on the basis of available information. Major problems
are identified and main causal relationships between these problems are visualized in a problem tree.All
possible options should remain open during problem analysis. The aim at early stage is to establish an
overview of the situation. Later in the process, the perspectives could be narrowed and developed in order
to prepare for the design of the project. Few tips are useful as follows:
Identify EXISTING problems, not imagined ones
Problem is not the absence of solutions, but are merely an existing “negative state”
Example: No pesticides are available (wrong statement); crop injfected with pest (right statement)
Each participant writes down a suggestion for the focal problem. The theme guidiong the discussion and
solution of the focal problem is the INTERESTS and PROBLEMS of interest groups, persons and
institutions involved in project process. LFA converges to ONE focal problem drawn by vigorous
discussion.
Developing a Problem Tree:
Subatantial and direct Causes of the focal problem are palced parrallel underneath it
Subatantial and direct Effects of the focal problem are palced parrallel above it
Causes and effects are further developed along the same principle to form the problem tree.
Identify substantial and direct causes of focal problem
Identify substantial and direct effects of focal problem
Construct a problem tree showing the cause and effect relationships between the problems
Review the problem tree, verify its validity and completeness and make necessary adjustments.
 Core problem analysis [method]
o Problem as negative statement, One problem from one participant
o Problem listing, Selection of core problem [unanimous]
 cause and effect analysis of core problem
o causes bellow the core problem

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o Effects above the core problem
o Multi-level cause/effect links
o Use of exact words in explaining cause/effect
Example of a Problem Tree
Loss of confidence in Road transport
Effects
Loss of life Delays
High frequency of accidents
Causes
Driver Bus Road
Bad license Inexperienced Old Not maintained Bad No Tr. /control
Objective Analysis and Alternative Analysis
In the objective analysis the problem tree is transformed into a tree of objectives – future solutions of the
problems identified – and analyzed. Working from TOP to BOTTOM, all problems are reworded, making
them into objectives – positive statements. Focal problem is also reworded and transformed in primary
objective – Goal.
Problem: “If there is a cause A, then the effect B is produced”
Objective: “Provide means X in order to achieve end Y”
Working from BOTTOM to TOP ensure that “Cause – Effect” relationships have become “Means – End”
relationships. Finally draw lines to indicate the “Means – End” relationship in the objective. Now, in
order to formulate aproject, identify Project Elements from Top to Bottom as follows:
Goal
Purpose
Outputs
Activities
Inputs
Summarised
 Negative statement in problem tree are reworded to become positive conditions
 Cause and effect in a problem tree become means and ends in objective tree based on further analysis
of objectives [every cause - effect relationship does not automatically is transformed to the means –
end relationship, it is situational]
 Objective at one level should be consistent with the one in other level. Each objective should be
realistic, attainable, and measurable
 Objective of higher level Logframe could be goal to lower level Logframe.
Example of objective tree

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Better confidence in Road transport
Ends
Passengers not hurt Timely services
Frequency of accidents reduced
Means
Cable Driver Bus Road
Good license Experienced New Maintained Good Traffic control
Alternative analysis: This analysis is all about following:
Identify different “Means and End” ladders as possible alternatives
Eliminate objective which are obviously not desirable or not achievable
Eliminate objectives which are pursued by other projects in the area (remove duplications)
Discuss and draw implications on affected group
It should identify potential alternative solution to a problem and to achieve the objective. Criteria for
selection of alternatives are:
 Development policies and priorities
 Specific condition
 Availability of resources – funds, human resource
 Sustainability
 Past experiences
 Effect on target group
 Cost Benefit Analysis
 Social and political feasibility
 Implement ability
Select the best alternative based on:
Total cost
Benefit to priority group
Probability of achieving goal
Social risk
and further
Technical aspects
Financial and economic aspects
Institutional aspects
Social and Environmental aspects
OVI, MOV and Assumptions, Vertical Cause and Effect
OBJECTIVELY VERIFIABLE INDICATORS
Indicators determine how we can measure to what extent the objectives have been achieved at different
times. Measurements can be:

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Quantitative (km of road length maintained)
Qualitative (farmer’s cooperative functioning effectively)
Behavioural (increased use of sanitary facility)
Qualitative indicators should also me made measurable tp the extent possible.
There are two types of indicators:
Direct indicators: These are the ones that can be directly measured and reflects the achievements
Proxy indicators: These indicators are linked with the achievement of objectives
Direct indicators have to be supplemented by additional proxy indicators. For an example:
Purpose:
Increased income of small
farmers
Direct Indicator:
Sales of the Crop
Indirect (Proxy) Indicators:
Purchase of consumer goods
Thatch roof replaced by Tin
roof
Several indicators are preferred as they provide better picture of the improvement made and objectives
achieved. Indicators should specify the performance standard to be reached in order to achieve the goal,
purpose, outputs etc. They should specify:
Target Group (For WHOM)
Quantity (how MUCH)
Quality (how WELL)
Time (by WHEN)
Location (WHERE)
These indicators provide basis for and are very important for Monitoring and Evaluation purpose.
A good indicator is:
Substantial – reflects an essential aspect of an objective in precise terms
Independent – each indicator is expected to reflect evidence of one achievement, cross
referrences are usually avoided
Factual – It shoud reflect fact rather than subjective judgement
Palusible – recorded changes can be directly attributed to the project
Based on obtainable data – should drwa upon data that are readily available or that can be
collected with reasonable extra effort and resources
Measures provided by indicators should be accurate to make them “Objectively Verifibale”. An indicator
is called objectively verifiable when different persons using the same measuring process independently of
one another will obtain the same measurement.
MEANS OF VERIFICATION
Along with the indicators, the sources of information necessary to use them should be specified as
follows:
What information is necessary
In what form the information is required
Who should provide the required information
Sources outside the projects should be assessed for:

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Accessibility
Reliability and
Relevance
The volume of work and the additional cost involved in producing such infprmation should also be
assessed and added in the total project cost. It should be kept minimum to the extent possible. Indicators
for which means of verification can not be identified should be discarded. Simple and cheaper (cost
effective) indicators and means of verification shall be used.
ASSUMPTION and VERTCAL LINKAGE
Assumptions describe conditions that must exist if the project is to succeed, but which are outside the
direct control of the project management. Assumptions are worked out from BOTTOM to TOP, as
follows:
Examine whether inputs are sufficient (including from outside the project environment)
Some of the assumptions are derived from the objective tree (If, then scenario)
Have to be identified for each level (project elements); Input, output, purpose
Each level of project element should contain the necessary and sufficient conditions to achieve the next
level. Examples:
Fellowship recipients return to workplace
Local institutions collaborate in project planning activities
Changes in price can be accomodated within given budget
Obvious assumptions as follows shall be eliminated.
Not important for outcome
Very likely to occur
Assess the probability of ocurence for remaining assumptions as follows:
Quite likely to occur: Monitor, Report change, Influence
Not likely to occur(Killing Factor) : Redesign the project
This is not possible: reject the project
Basic of the assumptions is based on the fact that it clearly states the IF, THEN condition in the project
planning, making it clear to every level concerned in decision making.
Vertical Linkage
If input is supported by its assumption then output is achieved. If output is associated with its
assumption, then the purpose if achieved. If purpose is commensurate with its assumption then the goal is
achieved. This is the reason why the cell [1r * 4c] is kept usually empty unless in specific case.
+
+
+
Goal
Purpose
Output
Assumptions
Assumptions
Assumptions

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+
+
Pros and Cons, Use and Practical approach vis a vis Logframe
Advantages:
It ensures that fundamental questions are asked and weeknesses a re analyzed in order to provide
decision makers with better and more relavant information
It guides systemetic and logical analysis of thee inter related key elements which constitute a well
designed project
It improves planning by highlighting linkages between project lements and external factors
It provides better basis for systematic monitoring and anbalysis of the effects of a given project
It facilitates common understanding and better communication between decision makers,
managers and other parties involved in the project
It provided support to management and administration by standardized procedure for collecting
and assessing information
Its use and systematic monitoring ensures continuity of approach when original project people are
replaced
It may facilitate communication betwwen government and donor as more and more agencies are
using this tool
Widespread use of LFA format makes it easier to undertake both sectoral studies and comparative
studies in general
Limiatations:
Rigidity in project administration may arise when objectives and external factors specified at the
outset are overemphasized. This can be avoided by regular project reviews where the key element
can be revaluated and adjusted
LFA is a generic analytical tool. It is policy – neutral on such questions as; income distribution,
employment opportunity, access to resources, local particiapation, cost and feasibility of
strategies and technology or the effect on environment.
LFA is only one of several tools to be used during project planning and preparation,
implementation and evaluation
It should not be understood to replace target group analysis, cost benefit analysis, time planning
(scheduling), impact analysis and most important of all – the Feasibility Study
Full benefit of utilizing LFA can be achieved only through systematic trainig of all parties
involved and methodological follow ups.
Uses:
Its use is growing by number of international agencies working as development partners in
developing countries
However, the format have been even enhanced to meet the new standards set by management for
Development results (MfDR)
In Nepal, NPC has made it mandtory to draw LF for any project that has to be approved by it
Inputs
Activities Assumptions
Assumptions

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Following are the combined use of LFA in different types of projects.
Large Project: LFA (must) + Feasibility Study
Experimantal projects: LFA necessary regardless of size of the project
Programmes: LFA on each projects and that of the Program itself
Small Projects; LFA is the simplest way to plan them
It is used during various stages of project development in each of its stages such as; Identification,
Feasibility Study, Project Design, Project Planning, M & E, Progress review
Practical approach:
The best thing in it for a project manager is the vertical linkage. This saves him/her from unnecesary
hassles as the non achievement of one level of project element can be directly linked with non complying
of an assumption associated with predecessor element.
Home Work: Develop a LOGFRAME for your Project. Just Matrix. 7 days.
Unit 4
Lectures 13 & 14
Monitoring and Evaluation Indicators
Developing Indicators for Project Monitoring and Evaluation
In order to reap out efficiency and effectiveness from M & E process, the INDICATORS against which
project activities shall be monitored and evaluated shall be established already at the outset. The first set
of indicators could be taken from Logical Framework of a project (if Logframe exists). Second and third
column of Project Palnning matrix (Logframe) are;
Objectively veriable indicators (OVI) and
Means of verification (MoV).
Development of indicators may vary from project to project based on their types, size, time frame,
expected output, effect, and impact. Indicators developed during project planning and preparation shall
avoid the future confusion, and should be defined as:
Quantifiable and qualitative,
Objective and subjective
Quantifiable indicators shall be measured objectively and exactly reflected in monitoring reports in terms
of their achievements. Qualitative indicators could be only explained in subjective way to show the
correlation in plan and achievement in terms of input/output and or effect/impacts for monitoring and
evaluation respectively.
Basic Features of Indicators including Reliability, Validity and Sensitivity
Indicator for technical types the projects is more quantifiable and tangible indicators. Software and social
sector type of projects may suffice with few quantifiable and more qualitative indicators. Indicators in
themselves should be SMART:
S - Sensible
M - Measurable
A - Attainable
R - Reasonable

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T - Timely
Further its validity and reliability should be established.
Monitoring and evaluation need not be expensive or complicated, nor do they require specialists or
grand calculations. The complexity and extent of the studies can be adapted to fit the project/program
needs.
The job of the project manager in this process is to point out those areas in need of monitoring or
evaluation. If this is left to the researchers, the studies may tend to be too academic and not as useful to
project management.
If the INDICATORS are designed correctly, Evaluation and Monitoring systems can be an effective
way to:
Provide constant feedback on the extent to which the projects are achieving their goals.
Identify potential problems at an early stage and propose possible solutions.
Identify accessibility of the project to all sectors of the target population.
Ascertain the efficiency with which the different components of the project are being implemented
and suggest improvements.
Evaluate the extent to which the project is able to achieve its general objectives.
Provide guidelines for the planning of future projects
Influence sector assistance strategy. Relevant analysis from project, program and policy
evaluation can highlight the outcomes of previous interventions, and the strengths and weaknesses
of their implementation.
A reasonable set of INDICATORS helps further to:
Improve project design. Use of project design tools such as the logframe (logical framework)
results in systematic selection of indicators for monitoring project performance. The process of
selecting indicators for monitoring is a test of the soundness of project objectives and can lead to
improvements in project design.
Incorporate views of stakeholders. Awareness is growing that participation by project
beneficiaries in design and implementation brings greater “ownership” of project objectives and
encourages the sustainability of project benefits. Ownership brings accountability. Objectives
should be set and indicators selected in consultation with stakeholders, so that objectives and
targets are jointly “owned”. The emergence of recorded benefits early on helps reinforce
ownership, and early warning of emerging problems allows action to be taken before costs rise.
Show need for mid-course corrections. A reliable flow of information during implementation
enables managers to keep track of progress and adjust operations to take account of experience).
Types of Indicators used in M & E
Good monitoring and evaluation design during project preparation is a much broader exercise than just
the development of indicators. Good design has five components:
1. Clear statements of measurable objectives for the project and its components, for which indicators
can be defined.
2. A structured set of indicators, covering outputs of goods and services generated by the project and

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their impact on beneficiaries.
3. Provisions for collecting data and managing project records so that the data required for
indicators are compatible with existing statistics, and are available at reasonable cost.
4. Institutional arrangements for gathering, analyzing, reporting project data, and for investing in
capacity building, and to sustain the M&E service.
5. Proposals for the ways in which M&E findings will be fed back into decision making.
Examples
1. Project objectives: Projects are designed to further long-term sectoral goals, but their immediate
objectives, at least, should be readily measurable. Thus, for example, a health project might be designed
to further the sectoral goals of a reduction in child mortality and incidence of infectious diseases, but
have an immediate, measurable objective of providing more equitable access to health services.
Objectives should be specific to the project interventions, realistic in the timeframe for their
implementation, and measurable for evaluation.
Input indicators are quantified and time-bound statements of resources to be provided. Information on
these indicators comes largely from accounting and management records. Input indicators are often left
out of discussions of project monitoring, though they are part of the management information system.
A good accounting system is needed to keep track of expenditures and provide cost data for
performance analysis of outputs. Input indicators are used mainly by managers closest to the tasks of
implementation, and are consulted frequently, as often as daily or weekly. Examples: vehicle operating
costs for the crop extension service; levels of financial contributions from the government or
cofinanciers; appointment of staff; provision of buildings; status of enabling legislation.
Process indicators measure what happens during implementation. Often, they are tabulated as a set of
contract completions or milestone events taken from an activity plan. Examples: Date by which
building site clearance must be completed; latest date for delivery of fertilizer to farm stores; number of
health outlets reporting family planning activity; number of women receiving contraceptive counseling.
Output indicators show the immediate physical and financial outputs of the project: physical
quantities, organizational strengthening, initial flows of services. They include performance measures
based on cost or operational ratios. Examples: Kilometers of all-weather highway completed by the end
of September; percentage of farmers attending a crop demonstration site before fertilizer usage; number
of teachers trained in textbook use; cost per kilometer of road construction.
Impact refers to medium or long-term developmental change. Measures of change often involve
complex statistics about economic or social welfare and depend on data that are gathered from
beneficiaries. Early indications of impact may be obtained by surveying beneficiaries' perceptions about
project services. This type of leading indicator has the twin benefits of consultation with stakeholders
and advance warning of problems that might arise. Examples of impact: (health) incidence of low birth
weight, percentage of women who are moderately or severely anemic; (education) continuation rates
from primary to secondary education by sex, proportion of girls completing secondary education;
(forestry) percent decrease in area harvested, percent increase in household income through sales of
wood and non-wood products.
Exogenous indicators are those that cover factors outside the control of the project but which might
affect its outcome, including risks (parameters identified during economic, social, or technical analysis,
that might compromise project benefits); and the performance of the sector in which the project
operates. Concerns to monitor both the project and its wider environment call for a data collection

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capacity outside the project and place an additional burden on the project’s M&E effort.
Data Collecting and Managing Project Records
The achievement of project objectives normally depends on how project beneficiaries respond to the
goods or services delivered by the project. Evidence of their response and the benefits they derive
requires consultation and data collection that may be outside the scope of management. Indications
that beneficiaries have access to, are using, and are satisfied with project services give early indication
that the project is offering relevant services and that direct objectives are likely to be met. Market
research information is an example of a leading indicator of beneficiary perceptions that can act as a
proxy for later, substantive impact. Other leading indicators can be identified to give early warning
about key assumptions that affect impact. Examples would include price levels used for economic
analysis, passenger load factors in transport projects, and adoption of healthcare practices. When
planning the information needs of a project there is a difference between the detail needed for day-to-
day management by the implementing agency or, later, for impact evaluation, and the limited number
of key indicators needed to summarize overall progress in reports to higher management levels.
Project field records. Indicators of inputs and processes will come from project management records
originating from field sites. The quality of record keeping in the field sets the standard for all further
use of the data and merits careful attention. M&E designers should examine existing record-keeping
and the reporting procedures used by the project authorities to assess the capacity to generate the data
that will be needed. At the same time, they should explain how and why the indicators will be useful to
field, intermediate, and senior levels of project management.
Surveys and studies. To measure output and impact may require the collection of data from sample
surveys or special studies (including, where appropriate, participatory methods). Studies to investigate
specific topics may call for staff skills and training beyond those needed for regular collection of data to
create a time series. Where there is a choice, it is usually better to piggyback project-specific regular
surveys on to existing national or internationally supported surveys than to create a new data collection
facility. Special studies may be more manageable by a project unit directly, or subcontracted to a
university or consultants.
Data comparability. Some desired indicators of impact, such as mortality rates, school attendance, or
household income attributable to a project, may involve comparisons with the situation before the
project, or in areas not covered by the project. Such comparisons may depend on the maintenance of
national systems of vital statistics, or national surveys. Before data from such sources are chosen as
indicators of project impact the designer needs to confirm that the data systems are in place and reliable
and that the data are valid for the administrative area in question and for any control areas. Potential
problems in making comparisons with existing data include incomplete coverage of the specific project
area; the use of different methods to collect data, such as interviewing household members in one
survey and only household heads in another; and changes in techniques such as measuring crop output
in one survey and collecting farmers’ estimates in another.
Participatory methods of data collection can bring new insights into peoples’ needs for project
planning and implementation, but are no less demanding on skills than questionnaire surveys. They are
time-consuming and require substantial talent in communication and negotiation between planners and
participants.

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4. Institutional arrangements; capacity building
Good M&E should develop the capacity within an organization and build on existing systems. Capacity
building is widely acknowledged to be important but is often poorly defined. It means: upgrading skills
in monitoring and evaluation, which include project analysis, design of indicators and reporting
systems, socioeconomic data collection, and information management; improving procedures, to create
functional systems that seek out and use information for decisions; and strengthening organizations to
develop skilled staff in appropriate positions, accountable for their actions.
Referrence: Monitoring and Evaluating Urban Development Programs, A Handbook for Program
Managers and Researchers. Bamberger, Michael and Hewitt, Eleanor. World Bank Technical Paper no
53. (Washington, D.C.: 1986)

Project M&E (unit 1-4)

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