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 holidays. 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. Outputs: - 50 kilometres of road improved; - 200 additional parking places provided; - increased frequency of bus service (6 return journeys to the city per day). Activities - 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 manager/engineer Design Documents Project Document files preparation of detailed design submitted Feasability Study Prepare feasibility TOR tender process appoint consultants feasibility work leading to final report and EIA Construction 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 Municipality Regional Governor Private companies NGOs 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?