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									Programming and Project Proposal Formulation

                                      Project Formulation:
                                     Case Study and Example

                                 CASE STUDY OF 'COUNTRY X'

Introductory Comments

This case study will enable you to try out some of the techniques and approaches for identifying and
preparing a project in country X. It will take you through the key steps in the project identification
and preparation process and provide you with information on the following topics.

1. Background information and key facts about Country X;
2. Identification of the main problems facing the country;
3. Identifying possible solutions to these problems;
4. Drawing up a list of possible projects;
5. Defining the objectives of the projects and the desired outputs;
6. Developing log frames for selected projects;
7. Deciding who are the key project stakeholders/ actors;
8. Developing a work plan for selected projects;
9. Considering appropriate funding sources.

An Introduction to Country X

Country X is very rich in natural resources. Its forests are of international interest because of their
biodiversity and pristine condition. In the north east of Country X an enormous mountain area -
over 20,000 hectares in extent - is the pride of the country. This forest-covered area is the richest in
Europe in terms of plant and animal species. From the park small mountain streams flow,
coalescing into the river Arbo that eventually becomes a tributary of the Danube.

The Ministry of Environment in Country X has made the protection of its national heritage,
including this valuable forest area, a high priority in its latest National Environmental Programme.
Much of the forested mountain area has been designated as a national park, and there is a desire to
maintain its quality by controlling access and exploitation.

Tourism is also a growing concern. As the forest area has not had protected status, access has not
been controlled and the number of tourists and visitors has grown enormously. Country X has been
discovered as an international tourist destination. Travel agencies from all over the world have
identified the tourism potential of the mountains and forests, and are seeking to promote package

Until now the tourist industry has comprised a number of small hotels, and tourists have been
brought to the area almost exclusively by bus. Plans have recently submitted a plan to the national
government of Country X to extend the infrastructure to enable tourists to reach the area by car. The
plans include the construction of more hotels and restaurants, as well as a swimming pool and a golf
course. They also propose the construction of a small civil airport.

Just outside the national park boundary, to the north, lies the small town of Arbor. The traditional
source of employment for the people of the town has been forestry, with some small farm holdings
providing feed for dairy cattle as well as fruit and vegetables. Based on the surrounding forest, a
Programming and Project Proposal Formulation

small timber processing plant was established. This is finding it very hard to compete in the more
open market, and many workers have been laid off.

Two years ago a foreign company invested in a joint venture with a Country X company for the
production of wood. The company is situated on the north west edge of the forest. Its main activity
is logging. Several roads have been constructed for the trucks that transport the wood. The joint
venture has used 75 hectares of forest for its activities to date.

A further small plant processes milk for transport to the nearest large city but, again, the operation
is limited and the plant is operating at well under capacity.

The management and workers at the two factories also have ideas for expansion and diversification.
However, they do not have the required business skills.

Some people from Arbor supplement their income by picking fruit and mushrooms, and by hunting
in the park area, though this is now illegal and damages the ecology.

Unemployment in the town has risen and there are limited job prospects for its young people. The
municipality and townspeople are keen to diversify their economy and improve employment
prospects, but it seems that all the possibilities have important environmental costs and benefits. In
particular, any development is constrained by the need to control waste products entering the local
streams. This problem is made worse by the fact that the town has no waste treatment works.

Arbor is connected to the main national road system, but this is by a small, winding country road
that is in poor repair. If the road remains in its present state the potential for new tourism
development is limited, and the factories cannot easily export their products. Skiing could be a
possibility in the mountains, and this could provide the basis for an all-year tourist season.
Programming and Project Proposal Formulation

Key Facts about Country X

Town population: 3,200, increasing to 6-7,000 in the summer
Houses: 1,200 plus 400 seasonal holiday homes
Height of town above sea level: 600 metres
Hotel development: 3 small hotels, 2 with swimming pools and sports facilities
Industry and commerce: (a) timber works - used to employ 700 people (40% of the town's work
force) with 90% exported to the former Soviet Union; now employs only 300 and is working at
30% of capacity (b) a milk processing plant - also working at below capacity (c) a small tourism
sector (d) forestry and agriculture - unprocessed products
Sewerage: pipes were laid to the dairy but not to the houses; sewage goes into septic tanks
Waste water: the construction of a waste water treatment plant was halted by lack of money and the
waste is discharged into the river

Your Task

You have to decide:

What are the main problems?
What possible solutions are there?
What projects could be implemented?
Which of these projects appear feasible and promising? Why?
What type of funding seems most appropriate?
What possible funding sources can you identify?
You will then take the most promising project and work it up into an initial description

The Problems

What are the main problems facing Country X?

You may want to use a table or matrix to set out the problems, as follows:

Problem                         Hard' Solutions        ''Soft' Solutions
Threats to National Park        Build visitor centre   Improve forest management
- commercial forestry                                  education for local people
- violations for local people
Water Pollution                 Build full waste water Education on water usage
- lack of an effective          treatment plant
drainage system
- incomplete waste water
treatment plant
Unemployment                    Build new hotels       Training in small business skills
- lack of jobs
Need for Economic               Improve the access     Diversify factory products re-
Development                     road                   train workers
- poor access

Some Possible Solutions
Programming and Project Proposal Formulation

What are the possible solutions? Here you may wish to brain-storm some ideas, for example:

There is an urgent need to create new employment opportunities, especially building on existing
local resources. However, any such development will have to take careful consideration of
environmental issues.

Some of the options could include:

1. Developing the National Park as a tourism resource (rural and mountain tourism) whilst
ensuring its protection through good management. This could also involve improvements to the
access road, park management systems and services. It could involve controls on commercial
forestry and, of course, tourists would not expect the forest or the water supply to be polluted.
Measures might be taken to improve the usage of the existing hotels, for example, by up-grading
their facilities and adding other leisure services. Rural tourism could include: planting fruit for
picking, traditional crafts, eco-tourism or controlled hunting. Skiing could be developed, but is it
compatible with the area's ecological status?

2. Encouraging the timber works to diversify its products and to recycle waste. At the moment the
plant is not adding much value to the raw timber product. Perhaps it could seek to develop new
product lines such as chipboard furniture. This would require extensive management and staff
training. New products would need to be identified and markets tested.

3. Encouraging the dairy to produce ecological sound milk for urban markets - to obtain a green
eco-label for its products. This might involve the creation of a milk producers co-operative - using
the existing buildings, retraining management and workers, and carrying out marketing studies.
New markets would improve the usage of the dairy's production capacity and possibly lead to the
creation of new jobs. Improving the road would make access to markets easier, and something
would need to be done to address the waste disposal problem.

4. Reducing the threats to the National Park. This could involve the creation of a management
structure to manage the National park more effectively. This body would need to work closely with
local people in order to cut down on violations. It would also want to shut down the illegal timber
felling operations. Visitors to the park could be routed to a visitor centre, which could provide an
educational as well as entertaining programme of events and displays, and help to manage access.

5. Reducing water pollution. This might involve the construction of a waste water treatment plant to
deal with all Arbor's liquid wastes. Alternatively it might only deal with the major sources of
pollution i.e. the timber and milk processing factories.

Nearly all the above projects would require investment in 'hard' infrastructure, but they would also
require 'soft' actions involving training and retraining, improved awareness and information.

Can you think of any other possibilities?

List of Possible Projects

Some possible projects suggested by the above analysis include:

1. Improve the access road;
2. Develop the dairy;
3. Build a park information/visitor centre;
Programming and Project Proposal Formulation

4. Develop a local recycling programme;
5. Improve the National Park service/management systems;
6. Build a waste water treatment plant;
7. Develop a crafts training programme for the unemployed;
8. Develop a programme to raise local awareness of environmental issues.

Project Development – Objectives, Outputs and Activities

We will now take an example from the above list and 'test out' what the objectives might be and the
kind of outputs and activities we should be looking for.

Project to Improve the Access Road

Goal(s) (Development Objectives:

- develop sustainable tourism in the region;
- improvement of transport systems and services;
- strengthen the regional economy and create new jobs;
- support development of visitor attractions.

Purposes (Immediate Objectives)

- reduce travel time and cost;
- improve access for goods transport;
- improve access for tourists, thereby increasing their number.


    -   50 kilometres of road improved;
        - 200 additional parking places provided;
        - increased frequency of bus service (6 return journeys to the city per day).


    -   Inception Phase
    -   appoint project manager/engineer
        preparation of detailed design

    -   Feasability Study
    -   Prepare feasibility TOR
        tender process
        appoint consultants
        feasibility work leading to final report and EIA

    -   Construction Phase
    -   work specification
        tender process
        choice of construction company contract signed
        construction period
        progress monitored
    Programming and Project Proposal Formulation

    You can see that we have already generated some 'new' projects. For example, in order to develop
    the dairy we are going to have to design a number of staff training and retraining projects.

    Log Frame Analysis

    We have already developed the first column of the Log Frame - commonly called the 'vertical
    logic'. We now need to examine the rest of the Log Frame.

    Log Frame: Improvement of the Road

               Summary                             Indicators         Verification/Source Assumptions
Development - support the sustainable - jobs and income                 - official statistical    - government supports
Objective   development of the        growth                            reports                   sustainabledevelopment
               region                         -environmental quality - pollution and
                                                                        - ecological monitoring
Immediate      - improve access for           - average travel time     - traffic survey          - economic development
Objectives     tourists                       between Arbor and the - questionnaires              priorities of Arbor remain stable
               - improve export of dairy city                           - bus timetable           - bus company can provide
               and timber products            - bus frequency           - accident records        service
               - improve bus service          - accidents numbers
               - reduce road accidents
Outputs        - 50 km of road repaired - volume of traffic             - traffic survey          - no unforeseen technical or
               - improved bus service(6 - frequency of bus              - site inspections        construction problems
               return journeys to city/       service                   - bus timetable           - land available for parking
               day)                           - availability of parking                           places
               - 200 extra parking            spaces                                              - buses are properly maintained
               spaces                                                                             and drivers available
Actvities      Inception Phase
               appoint project                Signed contracts          Project Personnel Files
                                              Design Documents          Project Document files
               preparation of detailed design
               Feasability Study
               Prepare feasibility TOR
               tender process
               appoint consultants
               feasibility work leading to final
               report and EIA

               work specification
               tender process
               choice of construction company
               contract signed
               construction period
               progress monitored

    Do you agree with the choice of indicators and methods of verification? Can you suggest other
    sources of information that can be used in verification?

    Are there any missing inputs? How would you set about giving these some preliminary costings?

    Are all the assumptions clear? What are the implications of these assumptions?

    What policy documents would you use to justify these projects?
Programming and Project Proposal Formulation

You may like to complete a Log Frame for one of the other possible projects or for your own idea.

Some Questions Raised

From the initial presentation, the improvement of the road seems a good way of achieving a number
of related objectives. However, there does not seem to have been any consideration of other
possible forms of transport, or of the adverse effects of road improvement on the immediate
environment. Construction of the road will also have knock-on effects on other areas of the
environment, e.g. increased pollution from the higher number of vehicles, increased pressure on the
environment from more visitors.

Assuming that the road is a good project, is improvement of the existing alignment the best option -
or should a completely new route be considered?

Assuming that improvement of the existing alignment is the best option, to what standard should it
be improved? Can the materials and labour for the construction be obtained locally? How will the
new road be maintained when completed?

Clearly, there are a number of areas where further research is necessary before any decision to go
ahead with a particular scheme can be taken. These may require feasibility studies, and your job
will be to write terms of reference for the consultants. You may like to consider:

      which aspects need further research?
      what kind of consultants would be most appropriate?
      what would you include in their terms of reference?

Additional Consideration

Improving a road is expensive. It would be best if the resources could be made available from
domestic transport budgets, but these are likely to be under heavy pressure from competing projects.
Whatever the source of funding, the improvement will have to be justified in terms of the economic
benefits that it will bring to the local economy. What kind of arguments do you think would be
appropriate here?

More likely, you would be looking for a combination of funding sources including a loan from a
domestic bank and/or an IFI. This will require the preparation of a full proposal, giving financial,
economic and social justifications. It is certainly going to involve one or more feasibility studies to
compare options, and it will probably require an environmental assessment.

You could approach a number of bilateral sources to obtain technical assistance funding for these
feasibility studies.

Project Description

At this point you could go on and develop a more detailed project proposal
Programming and Project Proposal Formulation

Who are the Main Stakeholders/ Actors?

If you are going to go ahead and develop a project proposal, what individuals and organisations
should you involve and consult? Some suggestions include:

Ministries of Regional Development, Transport, Environment, Forestry
Regional Governor
Private companies

Target beneficiaries - drivers/commuters, state owned transport companies, private transport
companies, tourism operators

Developing a Rough Work Plan

You can then develop a work plan for your chosen project, including consideration of the following:

      What are the main activities?
      How do they relate to each other?
      What is a reasonable timescale for the project and each of its activities?
      What sort of resources will you need?

For example:

Inception Phase (6 months)

1. appoint management board
2. appoint project manager/engineer
3. preparation of detailed design
4. application for funds

Phase 1 Feasibility Study (9 months)

5. feasibility study terms of reference
6. tender process
7. appointment of consultants
8. feasibility work leading to final report and EIA
9. modification of design and identification of remedial measures

Phase 2 Main Construction Phase (12 months)

10. work specification
11. tender process
12. choice of construction company - contract signed
13. construction period
14. progress monitored
15. completion and final report
16. evaluation

Are any items missing?

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