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ON ENTOF ENTATION

AL GUIDE FOR IMPLEMENTORS PORTED PROJECTS

published by Asian Development Bank Revised Edition. 1988

TABLE OF CONTENTS

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FOREWORD
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. I. IN'TRODUC'TION'

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II. PURPOSES AND SCOPEOfPR<iJE<!:t"~\::, ';":;'. IMPLEMENTATION MANAGEMENT,'...::::;;;;::::: A.: Purposes of Project . -'. . 21. 1'< I ;, ,: " .. Implementation Management.:::.:.::.,'..:: ..::.:.;;.,..................................... B. Scope 'of Project fmplementatioN!5::~ 2 \::,. :"'~ c r_' Management..................................... III. PLANNING FOR IMPLEMENTATION : ~_.....................................

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6 6 7
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A:

The' Project 'and the Project Environment .'........................... 8. Problems Arising During Project Execu~Jili.-.......................................... t> FlnalizinqtheProjectWork Plan.:::;:::::,::;......... 0, Organizing for Project Implementation E:' Planning for Financial., ... ; ~_J~ ;':' Management and Accounting............................................................ ~.~'Preparation 'of. ProjectControli'Plan:):.-::.:.:. ..'}.i. ;, . ..:.; G. Preparation' of-a .Project " .. .. ..'., .:. Procedures Manual...........................................................................
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IV. THE PROJECT MANAGER .".".................................................................


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A. Functions and Responsibilities of a Project Manager.............................................................................. B. Qualities of a Good Project Manager....................................................


V. MANAGING PROJECT IMPLEMENTATION

16 16
18

A. Preparing for Project Implementation................................................... 18 ".. 20 B. Making the Loan Effective C. Engaging and Supervising the Work of Consultants................................................................................... 20 D. Procuring Goods and Contracting . 23 for Civil Works ; E. Supervising Construction of Works or Installation of Equipment L..;..".................................................... 27 F. Executing Project Covenants................................................................ 28 G. Controlling Costs ;...................... 28 H. Withdrawing Loan Funds." """ .."" " ..,,.............. 29 I. Controlling Project Changes.................................................................. 29

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J. Coordinating with Other Implementation

and Support Agencies....................................................................... K. Project Monitoring and ControL............................................................ L. Procedures for Monitoring and ":-i Control of Projects M. Preparing Project Progress. Reports.i., :::::::.'. :: : ~~ . -;:;-,, .. PROJECT INTERACTION BETWEEN. 'FHfrHANK.AND THE. EXECUTING AGENCY. ::::.::: ..:.. ..~.:~.~~~~:,:~~~.:.~:;. i::: ,'..: : .. :;:'_~ , .. '.',

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A. Need for Close.and Frequent Consultations ,.: ;.<.:, .. : .,. , <, 36 (:;,:. :,: . .. " . , ;:-:';':'_.~'j36 B. Visits of Bank Missions " ;::..c.: : t C. Orientation for Executing Agency s :::;taff.'.'.+b~: .. '.~;'.)'.,!,..,.,:1.. '.i:.. j,i .. 1i',::: .... 37 . PRO,JECT COMMISSIONING.... '.i.:',
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A. Transferring Responsibility for Project Operations ,.,

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PROJECT REVIEW AND E\I, ,LUATION


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A. Project Benefit Monitoring ,<;1Oq .. ~.vqh~,at.~t>n<.; ::).,.}.<,~.:/.}.~e.,-".~':.:;';'~'':'~''~ ..,; 4q B. Project Completion Report. "~;.,,,:., .. l'"fn!: :':"1"0,." (', :,.;c; 41 {..:i. -;;;
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APPENDICES.............................................................................................
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FOREWORD

One of the major challenges that confronts international developmental institutions is ensuring that the projects they support are implemented successfully and that the 'Objectives of the projects are being realized. This requires that project implementation be carried out in accordance with the plans, schedules, and other parameters set out during project preparation and appraisal, by staff who possess the technlcal and management know-how relevant to the demands of the job. In most developing countries, however, the lack of properly trained and experienced managers often emerges as an obstacle; because of this, the need for assistance in the area of project management has become an essential element of any program of development assistance. The experience of the Asian Development Bank indicates that problems in project implementation are oftentimes due to poor management. Traditions, habits, customs and even bureaucratic practices often prevail over rational management decisions, resulting in delays or losses to the project. Unfamiliarity with sound management concepts and techniques or the inability to apply them in complicated project situations is also a major cause of inefficiencies in the implementation process. To help address these problems, the Asian Development Bank has prepared this handbook with the assistance of Arthur D. Little International (ADL), an international management consulting firm. It is hoped that project managers would find this handbook as a useful practical guide in implementing projects supported by the Asian Development Bank. -,

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MANAGEMENT OF PROJECT IMPLEMENTATION

I. INTRODUCTION

1. This handbook is intended to be used by executing agencies 1 of projects financed by the Asian Development Bank/ as a guide to the management of project implementation. However, while designed primarily to assist an executing agency's designated project manager." this handbook will also be useful to Bank staff involved in supervising the implementation of Bank-financed projects. 2. The functions of project implementation management are: (i) planning the execution of the project; (ij) directing the activities required in executing the project; (iii) monitoring the progress of the project and controlling or solving problems that do occur; and (iv) gathering lessons from experience that will assist better planning and management of future projects. Project implementation management encompasses all activities that an executing agency undertakes in transforming a project from plans to physical reality, as well as the subsequent initial operation of the completed project. When funding support is received from an external source such as the Bank, project implementation management would also include ensuring compliance with the relevant regulations and requirements of the assisting agency. 3. Strictly speaking, project implementation starts with the signing of the loan agreement. It should be realized, however, that many of the actions and decisions taken before the signing of the loan agreement, - during project preparation, appraisal and negotiations for example - are to a great extent, critical to the successful implementation of the project. This handbook, therefore, covers the preapproval stage of the project cycle insofar as it refers to activities that are carried out during the implementation stage. 4. Discussed in this handbook are detailed procedures for project planning, as well as procedures for subsequent project organization and staffing, interfacing of activities, implementation and control, commissioning, and. review and evaluation. This handbook also contains examples and a sample form to serve as models and to make easier the task of managing project implementation. Some of the materials included may not be relevant to some types of projects; as appropriate, the material in the handbook should be modified. Moreover, what is contained in this handbook will always be subject to the provisions of the loan documents or financing agreements that relate to a specific loan. In case of conflict, the specific provisions of the loan agreement will prevail.
I "Executing agencv" refers to the agency directly responsible for implementing the project. ? Hereinaiter refelT~d to as "the Bank."

:l The term "executing agency's desiqnated project manager" refers to the individual responsible for implementation individual will be referred to as "Project Manaqer."

of a project. Henceforth. this

II. PURPOSES AND SCOPE OF PROJECT IMPLEMENTATION MANAGEMENT

Purposes

of Project Implementation

Management

Project implementation management has two major objectives. On one hand, the ~:::c'.JLOng agency must be concerned that a project will meet its goals and objectives, and will be completed on time, within budget, and in conformity with sound technical per;> ce standards. On the other hand, the Bank must be concerned that the funding pro- ~ or a project is used only for the purposes for which the funding was granted, and that z: consideration is given economy and efficiency. The purposes of project implementation :- gement, therefore, from both the executing agency's and Bank's points of view, are - _.ementary and interdependent. Scope of Project Implementation Management

In a general sense, project implementation management encompasses all the acand actions undertaken by both the executing agency and the Bank. In actual project arnentation management, the following specific functional areas emerge: l. Project Management. Under the functional heading of project management are the actions taken to implement a project, including planning, scheduling, organizing a project team, recruiting and training staff, supervising preparation of detailed project plans and designs, directing and coordinating the work of the project participants and other outside parties, and project monitoring and reporting. Financial Management. Financial management includes actions taken to mobilize, employ, and control the financial resources invested in a project. This includes sourcing funds, preparing detailed budgets, forecasting and controlling expenditures, establishing procedures for receiving and disbursing funds, instituting and maintaining a project accounting system, and auditing project expenditure accounts. Procurement and Contract Administration. Procurement and contract administration encompass actions required for the procurement of goods and services, including administration of the relevant contracts entered into between the executing agency and suppliers, contractors, and consultants.

2.

3.

- ~2Lailedlist of tasks involved in managing the implementation of a project is presented in dix 1. The activities comprised by project implementation as discussed in this handbook, dertaken in three stages after approval of the financing for a project. The first stage, ..-.-:-In as the loan effectiveness period, runs from the date of the signing of the loan agree 0 the date when conditions for loan effectiveness have been met and the loan red effective. The second stage is the period following effectiveness, during which time - main investment of project resources (human, physical and financial) takes place. The _ stage is the operating stage, the period after project completion, when the project starts zra 'ng the benefits intended.

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8. Figure 1, "Scope of Activities in the Project Cycle for Bank-Financed Projects", presents the various stages of the entire project cycle and the activities that take place during each stage. Figure 1 also shows the principal participants and the outcome of the activities. The specific activities are discussed in the following paragraphs. 9. During project preparation, feasibility studies are conducted to examine the technical, institutional, economic, and financial aspects of the project. Consultants are frequently used in project preparation, and their services are often procured by the Bank directly, through technical assistance funding. It is important that the Project Manager review the feasibility studies to apprise himself about the parameters, assumptions, and alternatives used in developing the project. Feasibility study review would also help the Project Manager better understand how a project fits into the overall country development program and priorities. 10. Appraisal, which is undertaken by Bank staff, involves a detailed review of the feasibility studies relating to a project. It is through the appraisal process that the Bank makes judgments on whether a project is consistent with 'the Bank's own operational policies and programs and whether a project is suitable for Bank financing. It is also at the appraisal stage that the Bank determines what measures would be necessary to ensure the successful implementation of a project and the realization of project goals. The direct end result of the appraisal exercise is an appraisal report describing the project - sectoral background, objectives, scope and components, and technical, economic, and financial justifications - and setting down the various project parameters and requirements relating to organization, staffing, cost estimates, sources of funds, schedules, procurement, and other project-related activities. To assist the executing agency in the implementation of a project, the Bank sometimes provides sample forms, reports, and documents during appraisal. 11. During loan negotiations, the borrower and the Bank agree on various matters relating to the loan and the project, such as the terms and conditions of the loan, use of loan proceeds, particular covenants dealing with the manner loan funds will be utilized, how the project will be implemented, and conditions for loan effectiveness. These agreements are embodied in a loan agreement, which in addition to incorporating, by reference, the Bank's loan regulations and guidelines, includes a number of schedules that form part of the loan agreement. Such schedules usually consist of the following: Schedule 1. Schedule 1 contains a detailed description of the project components and the expected completion date. 2. Schedule 2. Schedule 2 contains an amortization schedule for repayment of the loan as well as provisions for payment of premiums for early repayment. 3. Schedule 3. Schedule 3 sets out the allocation of loan proceeds by various categories and the conditions for withdrawal thereof. 4. Schedule 4. Schedule 4 describes the procedures and requirements for the procurement of goods and services (except consultants) . .5. Schedule 5. Schedule 5 describes the types of consultant services to be procured and the procedures and requirements for the recruitment of consultants. 6. Schedule 6. Schedule 6 describes the various activities and requirements for the execution of the project and for the operation of the project facilities. 12. In cases in which the borrower is not the executing agency, there would be a need for a separate project agreement to be entered into between the Bank and the executing 3 1.

project agreement would define the specific obligations of the executing agenating to the implementation of the project. Reference would also be made to certain ,_ ....;;cions the loan agreement that would be equally binding on the executing agency, . of arly the schedules in the loan agreement. After the signing of the loan agreement, the period for loan effectiveness comes, which generally runs between 60 to 90 days after the date of the loan agreement. g this period, the borrower must comply with certain requirements before the loan can eclared effective. The requirements generally relate to the submission of evidence and _ opinions attesting that the loan agreement (and other agreements) have been duly -- rized and ratified through all necessary corporate or governmental action and that the .:: ernents constitute valid and binding obligations of the borrower. In some cases, the loan - _ ement specifies additional requirements for loan effectiveness considered critical for the _;.>- ful implementation of the project. The execution stage is the most critical period of the project cycle, as it involves a - ranqe of activities that require substantial investments of money, time, manpower. ~.~-.~-ement expertise, and other resources. It is also the time when the difficult problems es that come to the fore must be dealt with efficiently and expeditiously in order to project delays and failures. The scope of the Project Manager's activities at this stage ::::::::::[25 he organization and staffing of the project team, engagement and supervision of ts, procurement of goods and contracting of civil or other technical works, _--,-.-,,~tion supervision and contract administration, and start-up and commissioning of e:ed facilities. In undertaking these activities, the Project Manager must adhere to the -' ns of the loan and project agreements, comply with the requirements and guidelines -- _ Bank, consult with Bank staff, and interact with outside agencies and possibly with .:== users.
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Strictly speaking, project implementation management ends when a project has ompleted and is ready for operation. Thereafter, the project facilities are turned over - _ operating unit, which may be headed by an Operations Manager who may not -.::::::c~~Jly~e the Project Manager responsible for project implementation. This does not b o 'ever, that the interest of the Project Manager should cease after such turn-over 2 Project Manager has a stake in the successful operation of the project and should _ide whatever assistance is required for the project to operate successfully.

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Figure 1.

Scope of Activities in the Project Cycle for Bank-Financed Projects


PRINCIPAL PARTICIPANTS
0 0

PROJECT PERIOD

PROJECT CYCLE STAGES 1. Project Identification

PR Ir.JCIPAL EV ENTS Review of national and sectoral priorities, plans and programs. rdent if ication of project.

PRINCIPAL

RESULTS

Borrower Bank

(P)

Definition of project goals, objectives, principal issues, general scope and time frame. Feasibility studies examining the economic, financial, technical and institutional aspects of the project. Appraisal report.

2. Project
Preparation

Feasibil ity studies to establ ish project viabil itv .

0 0

Borrower (P) Consultants (often through Bank)

Project Pre-approval Period

3. Appraisal

Comprehensive project review by Bank Appraisal Mission.

0 0 0

Bank (P) Borrower Consultants with Bank) Borrower Bank

(often Minutes of loan negotiations, draft loan agreement.

4. Loan
Negotiations 5. Consideration and Loan Approval

Negotiations agreement.

toward loan

0 0

Review of project and loan proposal by Management and Board of Directors.


0 0

Bank President Board of Di rectors

Bank approval of loan. Signing of loanaqreernent.

6. Loan Effectiveness 7. Project Execution


Project Implementation Period

Compliance with Bank loan effect iveness requ irements. Consultant recruitment, detailed design, procurement of goods and services, construction, completion of other project requirements, operational testing, start up, and training. Project administration by Bank staff. Review of project preparation, appraisal and implementation. Review of project benefits.

0 0

Borrower (P) Bank Executing Agency (P) Bank Consultants Suppliers Civil Works Contractors Other project participants Bank (P) Executing Agency

Declaration of loan effectiveness. Completion of project. Commissioning of project.

0 0 .0 0 0 0

-8. Evaluation

-- >-0 0

Project completion report. Project performance audit report .

(P)
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Organization having primary responsibility for activities in the particular stage. Where this symbol is not used in a particular stage, the participants at that stage share responsibility.

III. PLANNING FOR IMPLEMENTATION


The Project and the Project Environment

As stated earlier, planning for project implementation starts during the early stages -: the project cycle - during project preparation and appraisal. However, planning during e preapproval stages is generally broad and tentative, and the Project Manager will have - prepare more detailed and updated plans as soon as the project has been approved and es more specific information becomes available. Apart from prescribing specific measures for -::plementation, changes may have to be made in work schedules, assignments of responility for inputs, cost estimates, staffing, and other project elements. Detailed planning is a key activity in the successful implementation of a project. -ed on project goals and objectives, detailed planning covers strategies and work plans, :::- [ect organization and staffing, schedules and budgets, management control systems, --ancial plans, evaluation methods, work authorization procedures, and interfacing and roordmetion of activities. The Project Manager involved in detailed planning may have to rk closely with the Bank and, if required, would obtain the services of consultants. Bank - rpericnce has shown that errors in detailed planning can have extremely unfavorable ef-2 15 on costs, implementation schedules and technical performance. The Project Manager must know the persons and agencies that will be involved in ::-e implementation of the project, as well as the nature and extent of their involvement. -]ncies may include government ministries, national planning agencies, autonomous :: . lie bodies, and even user groups; agency participation may be required in the approval _: roject expenditures, release of funds, procurement of goods and services, and execution := other project activities. For some projects, there may be multiple executing agencies, h with its own Project Manager responsible for implementing a specific component of the oject. Skillful coordination and interaction would be required to achieve effective integraof all project activities. Funding for some projects may come from various sources, as in co-financed pro. In such cases, the Project Manager should know which part of the project is funded which source and the specific requirements or conditions applicable to the use of funds -- each financier. As far as the Bank is concerned, in addition to the provisions of the loan =:eement, there are requirements and procedures embodied in guidelines, handbooks and .- er Bank documents - it would do well for the Project Manager to become familiar with __ h documents, and, if necessary, to incorporate these procedures and requirements - in the framework of the executing agency's own systems and procedures. One important step the Project Manager must take, preferably before the start of ject implementation, is to gather all the documents related to the project, as well as the evant Bank publications, and become fully familiar with their contents. Such documents Id include the following: 1. Feasibility study for the project. 2. Appraisal report for the project. 3. Minutes of loan negotiations.

4. Loan agreement and project agreement, if any. 5. Ordinary Operations (or Special as applicable) Loan Regulations of the Asian Development Bank. 6. Guidelines for Procurement Under Asian Development Bank Loans. 7. Handbook on Policies, Practices and Procedures Relating to Procurement Under Asian Development Bank Loans. 8. Guide on Prequalification of Civil Works Contractors. 9. Sample Bidding Documents - Procurement of Civil Works. 10. Sample Bidding Documents - Procurement of Goods. 11. Sample Bidding Documents - Supply, Delivery and Installation of Goods.12. Handbook on Bid Evaluation. 13. Eligibility Requirements Under Special Funds Loans. 14. Guidelines on the Use of Consultants by Asian Development Bank and Its Borrowers. 15. Handbook for Users of Consultants. 16. Loan ~sbursement Handbook. 17. Guidelines on Project Benefit Monitoring and Evaluation (for Agriculture, Irrigation and Rural Development Projects).

B.

Problems Arising During Project Execution

21. As a part of planning the implementation of a project, the Project Manager should identify potential problem areas. Some problems can be anticipated, but many cannot. Each sector and each country has its own unique problems and risks - these must be dealt with taking into account the circumstances relating to each particular situation. A detailed list of problems appears in Appendix 2. Some of the more common types of problems are described below. 22. Many projects fail to get off to a good start because of delays in establishing a project implementation organization and in appointing a Project Manager. Likewise, projects may be delayed for long periods at the outset by delays in selecting and appointing consultants, in procuring equipment and materials, and in awarding construction contracts. In some cases, problems are encountered by the executing agency in complying with some of the conditions for loan effectiveness, particularly the acquisition of rights-of-way and the organization of a Project Management Office (PMO). Financial problems are also often experienced during project implementation. The more common of these problems are inadequate local counterpart funds and cost overruns resulting from underestimation, price escalation, or inadequate allowance for physical contingencies. Sometimes, withdrawal of loan funds is delayed by the executing agency's failure to comply with the Bank's disbursement requirements and procedures.
23.

Certain external factors can also impede the speedy and successful implementation of a project. Such factors would include local inhabitants resisting the projects, strikes or other labor disputes, difficulties in site access because of rough terrain, work stoppages due to adverse weather conditions, problems in coordinating with other project organizations responsible for implementing some project components, and shortages in equipment and materials.
24.

Personnel-related problems often encountered in project _ ~ges of skilled labor, inability to recruit adequately trained or --2 central PMO or for assignment to geographically scattered lack of trained staff to operate and maintain project facilities, - ions in the project site that make it difficult to induce personnel ~_.,~.e training facilities,

implementation include reliable PMO staff either or remote project subpoor social or economic to relocate, and lack of

Finalizing

the Project Work Plan

Planning for implementation involves the preparation of a project work plan - ibinq the various project tasks and activities, indicating how the tasks will be accom-ed and managed and identifying the resources necessary to carry out the various _ t activities, The scheduled start time of each activity should be clearly indicated, To --=:r:--e control, tasks should where possible be broken down into their component parts. - component parts should be identifiable, measurable, and manageable units. Such a of detail is needed by the Project Manager so that slippages can be predicted and p remedial action taken. If the steps necessary to complete an activity are not uled separately, delays may be discovered only when it is too late for any remedial o be taken or when remedial measures would be costly or no longer effective. In establishing a work plan, it would be necessary to think through what each party oed must do, as well as to schedule all events that may affect the meeting of the overall ule. Those events that can be influenced by timely follow-up, procedural adjustments, - er such measures should be identified. Measurement and reporting systems must be .rp 0 keep project management informed about the progress achieved in relation to the - .iule such that decisions can be made when changes are needed or when problems

Planning for more complex projects, which may include several components or in --;, several contractors may participate, usually involves the preparation of several sub- ~:,- schedules, These schedules are then combined and summarized in a master - - le. The subsidiary schedules would contain all necessary details, while the master ::. ... would show only those events that would permit an assessment of overall pro. ule _ ss. lor the purpose of overall project management control. The preparation and monitorsubsidiary schedules should be done by the functional unit responsible for a specific --=_ 0 activity. The integration of the subsidiary schedules into a master schedule must be by a central planning team. to insure uniformity and consistency.

= :

:=;::::::;J.ort for delegation

schedules facilitate better coordination among participants and provide of authority, By segregating these schedules. project management e er focus on each activity and can determine how progress within each unit is affect~ overall project A suggested general framework for delineating functional areas com- :0 most projects is given below:
J

Subsidiary

bject

Suggested Contents
Materials and equipment required, including transportation, warehousing and site arrival sequence, and, as appropriate, acquisition of land for structures,

_ogistics Schedule

Procurement Schedule Manpower Schedule Financial Schedule Construction Schedule Evaluation Plan

Procurement and contracting events for obtaining project goods and services. Recruitment, training and personnel placement activities. Sequence for commitment of funds and timing of project expenditures. Sequential activities for the physical construction of project components. Data collection activities and timing of review actions.

30. A number of methods for preparing schedules are available. The choice among these methods should be based on considerations of suitability for the project to be scheduled, familiarity of users with the scheduling methods to be used, and ease in updating the schedule. A simple, relatively unsophisticated schedule that all parties concerned can readily understand and use is better than one that is difficult to comprehend and that would neither be used nor updated. Schedules may be prepared in t~e following forms: 1.
Table of Activities and Events. The simplest way of scheduling is the tabular listing of activities or events, in the sequence in which they are expected to occur, with an indication of the time they should occur. This method is usually adequate for simple projects, for which only a few parties have responsibilities for taking action. Bar Graph. When several activities are scheduled to occur simultaneously or to

2.

overlap in time, presentation of the schedule in bar grapn form has the advantage of giving the user a picture of the sequence in which activities will begin and end. A bar graph would indicate the starting and terminal points constituting an event, the simultaneous timing of events and the overlap of events. The latter aspect permits conclusions, based directly on information shown in the graph, about the effect a delay in one activity might have on another. Preparation and reading of a bar graph usually is not difficult; use of such a graph should be considered in scheduling projects of moderate complexity. 3
Networks.

Networks like CPM or PERT are ideally suited for complex projects for which numerous activities must be analyzed, scheduled and integrated. However, networks have the disadvantage of requiring considerable expertise for both preparation and use, and, unless computerized, are often time-consuming to update. As a practical matter. CPM or PERT methodology should be used only if scheduling is assigned to an individual familiar with the CPM and PERT methodology. Simplified networks showing the relationship between project elements and specific activities are not difficult to prepare, but updating may be cumbersome and might be neglected. However, as networks show visually the points at which specific activities affect other activities, simplified networks are useful in establishing the initial project schedule and the form in which the final schedule is to be cast. Appendix 3 of this handbook contains a discussion of the development and use of network schedules for planning and control. Also included is discussion relating to the balancing of resources as a part of the planning effort.

31. The date of the loan agreement is the reference date from which all activity periods appearing in a schedule are normally based. Finalization of the implementation schedule 9

~~----

-----

begin after the Bank has approved the project, but at the latest when the loan agreent is signed. The preparation of the final implementation schedule is in most cases a task sre ching over a considerable period of time. It may therefore be advisable that the plan - "allycover only those activities and events that can be estimated reasonably and that can easily controlled. Scheduling the remaining activities of a project can be completed when ution can be forecast with reasonable certainty. Breaking a project into its component parts makes estimating the resource requirets for each task easier. Tasks can be sequenced by precedence or can be shown in 'ork diagrams and then for project control purposes consolidated into overall network crams or bar charts. The cost of the various smaller tasks can be estimated. then summed :0 the major tasks, and finally totalled for the overall project. The work plans can be - - 'bed in detail at the lowest breakdown levels and then prescribed in more summary -"on, as in an overview of major project elements. Further guidance for breaking down project, using a standard called the work breakdown structure (WBS), is shown in dix4.
Organizing for Project Implementation

One of the main tasks involved in planning for project implementation is ::e:;~ating the executing agency for the project and identifying the type of organization suitable for carrying out the various project activities. This is usually done during apof the project. Once this has been decided upon, determination of the kinds of experd skill levels required, including the need for consultants services, will have to be Within the executing agency, there might be a need for a core group that would be e responsibility for implementing a particular project. This group is commonly ~::l:A~ as the Project Management Office (PMO), although it is sometimes called by some name. This unit is normally tasked with the planning, execution, control, and g of a project. Staff of the PMO can be drawn from existing personnel in the ~""""":~g agency or can be individuals engaged from outside sources for the duration of the ample functional descriptions for staff in the PMO are shown in Appendix 5 ..
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nning for Financial Management

and Accounting

P.anning for financial management and accounting involves formulating a budget roiect and setting up a cost control and accounting system that will record and e various items of project expenditures. Planning for financial management and also involves adoption of measures designed to ensure the timely infusion of eir disbursements in accordance with established procedures and practices; it es for the auditing of funds to ascertain the appropriateness of project expendi~-- to assess the financial position of the executing agency.
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Project Budgeting
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an icipatinq and estimating the financial requirements of

a project, identifying sources of funds, and adopting measures to ensure that such funds are made available on time. Although the budgeting process is initiated during the preparation of the project when costs of the various elements of the project are estimated, the budgeting process continues through the appraisal stage, when the estimates are reviewed and further refined, and even up to the execution phase, when allocation and reallocation of funds is carried out to meet current project expenditures. 38. Project budgets are built up from cost estimates generated from detailed work plans. These costs are summed up through the various higher levels of the project tasks, as displayed in the work breakdown structure, until the overall direct cost for the project is obtained. Cost estimates for work to be performed by consultants and other contractors may have to be confirmed or adjusted following negotiations. To these direct project cost estimates, overhead, contingencies and other financial charges would have to bevadded. The end product should reflect a fairly realistic estimate of costs, in order to avoid any financial complications arising from a cost underrun or cost overrun. A cost underrun could entail carrying the cost of committed money that eventually is not used, while a cost overrun might result in project delays if problems in obtaining supplemental funds are encountered. 39. Adoption of the budget is not the end of the budgeting cycle; during project implementation, budgets should be reviewed to determine whether they are still realistic. It should be borne in mind that budgets are derived from project cost estimates made at the start of a planning period, and that these may be invalidated by significant developments in the course of implementation. Adjustments may be necessary when additional or more updated information becomes available, after contracting has been completed or when changes have been made in the scope or components of the project during implementation. An up-to-date budget is vital for developing an estimate of the cost to complete each element of the project. The Project Manager must be able to accurately forecast final budget needs well before a project reaches the end of its scheduled completion, so that ample funds could be provided on time, thus avoiding work stoppages. 40. In addition to the direct expenditures for the project, indirect expenses, such as administrative expenses and fixed overhead, are likewise incurred. Such costs must be provided for in the project budget, and must be closely controlled to avoid such costs becoming too high in relation to the direct costs of the project. At the same time, it is necessary to budget for contingencies that may increase the cost of the project. In providing funds for project implementation, the borrower does not normally include in one annual budget all the funds required for the entire project. Appropriations are made on a yearly basis, based on an expenditure forecast for the year. It is therefore important that the Project Manager provide to the budgeting authority the necessary estimates of funds to be included in the government's annual budget. The problem that may be encountered is a funding constraint - not enough money being appropriated. Even if there is an appropriation, the actual release of funds may be delayed or not made at all if the money simply is not available in the national treasury. 42. Expenditure forecasting is based on the implementation schedule, from which scheduled inputs such as payments to contractors and suppliers, land acquisition, and salaries for PMO staff can be determined. For purposes of financial control, it is advantageous to divide a full year's budget into monthly or quarterly amounts - this enables the Project Manager to plan and balance cash flows, either to optimize the use of funds or to ensure continuity in funding.

4fj

sa

p 41.
,t
.~

ell
C(

di

11 1

2.

Cost Accounting

3. The primary object of cost accounting is to provide the borrower, the executing _ ncy and the Project Manager with financial imformation that can be used in monitoring d controlling the cost of a project. To be useful, the information must be accurate, _ to-date, and informative. This means that there should be a system for authorizing and proving expenditures, for maintaining books of account and for classifying, recording, ad reporting transactions. Additionally, loan covenants normally require the executing _ ency to maintain appropriate project accounts and to submit annually to the Bank audited ancial statements. Executing agencies often have been unable to comply with this requirement because of delays in the closing of the books of account. -ri-. A good project cost accounting system must be able to account for all project penditures, compare such expenditures with forecasted amounts, identify the reasons for .. y deviations, indicate funding balances, facilitate payments, and provide a clear picture of e cost position of the project at any given point of time.
""%"5.

Generally, the Project Manager will be responsible for setting up the cost accounting _ stem and for submitting to the Bank annual audited financial statements. The loan _ eement stipulates the requirements in this regard and the Project Manager must make a soecial effort to comply with these requirements. If there is no qualified accountant on the ~ oject implementation team, the Project Manager should not hesitate to engage a suitable oerson for the job. The basic elements of a project cost accounting and auditing system are - own in Appendix 6. 3. Funds Disbursement Procedures

A smooth flow of funds is essential to expeditious project implementation. Planning ; r disbursements relates primarily to the development of procedures for verifying the - rrectness of expenditure payments, for making payments to contractors and suppliers, and for requesting withdrawal of loan proceeds from the Bank. Disbursement schedules for each major project component must be prepared on a quarterly basis and actual disburse. ents compared therewith over time. Keeping such planned versus actual disbursement schedules and comparing them with physical progress are key features in "cost to com.ete" forecasting and cost control activities. The Project Manager must know the sources of -' burscrnent practices and procedures of each financing - ncerned, the Project Manager should be familiar with , bursements, as contained in the Bank publication,Loan Preparation of Project Control Plans The fully developed work plan, discussed in Section III-C, deals with thp. rlE'velop .ent of a project master schedule, an organizational structure with assignment of responsi. ities, and a network schedule of properly sequenced project tasks and activities. Each a tivity in the network schedule is assigned a duration and a budget amount, arrived at through the processes of work planning, resource allocation, cost estimating and manpower and construction equipment usage scheduling. A completed work plan, therefore, is comfunds for the project and the agency. As far as the Bank is the Bank's guidelines on loan Disbursement Handbook.

posed of activities and tasks whose costs and schedules have been in egra ed. e completed work plan also describes how technical requirements for a project will be me Procedures must be planned for controlling these project parameters in order to complete the project on time and within budget, while meeting technical performance specifications. 1. ) Budget. Cost and Schedule Controls

49. Once the project budget is developed, control is exercised by knowing how much money has been allocated for the various project components, who in the project organization is assigned the responsibility for managing the budget, and what arrangements and procedures have been set up for obtaining funds from specified sources and for monitoring project expenditures. 50. An important responsibility of the Project Manager is cost control. Cost control is the optimizing of the expenditure of funds relative to work accomplishment, or getting the most work accomplished from a given budget. Cost control means promoting efficiency and avoiding waste and unnecessary or unauthorized 'expenditures. Accordingly, planning for cost control should include establishing procedures for work authorization; comparing project expenditures and performance against the project budget; controlling administrative and personnel expenditures; comparing bid results against owner's estimates; monitoring costs to complete; controlling project changes; monitoring quantities of work completed for payment to contractors; ensuring cost effective designs and construction/installation activities; and taking corrective action when actual expenditures are unjustifiably out of line with projections. 51. Planning for project schedule control should include controliinq potential sources of delay by establishing clearly defined approval action and decision rnakinq channels that involve the minimum possible number of decision makers; controlling detects in design; monitoring quality of equipment and construction works; providing for adequate in-progress reviews or monitoring systems; controlling strikes and potential outside interference; controlling shipping and delivery delays; performing risk analysis and risk management; examining schedule estimates for realism; and controlling changes in scope and resource allocations. Further, the Project Manager should periodically assess project status and progress trends and review the estimated project completion date. Corrective action should be taken to bring any time overruns back on target.
2.

Technical Performance Control

52. The Project Manager must plan to control the third critical project element - the technical quality of the completed project. Procedures to accomplish this should include the institution of quality control measures such as review by qualified staff of technical specifications and consultant's technical reports; provision for inspection of equipment before shipment and after arrival on site; inspection of construction and equipment installation; testing of materials (soils, concrete, asphalt, etc.) during construction for compliance with technical specifications; and testing of equipment and systems before the user takes over. Planning for technical control also includes the development of test procedures, check lists and reporting formats for tests and inspections. The Project Manager should obtain the services of qualified personnel to install a quality control system.

13

-----

---

3.

Project Reporting Requirements and Procedures

53. Project reporting is a key element in enabling the Project Manager to compare actual developments during project implementation with projections made during detailed planning. If actual developments vary from what were originally expected, the Project Manager must ascertain immediately the reasons for the variances so that early corrective actions can be taken. 54. The Bank needs project reports that are current and that show deviations from original estimates and identify potential problem areas. The Bank also needs reports dealing with compliance with covenants contained in the loan documents, and, upon completion of the project and during its operation, reports that provide information from which it would be possible to assess how the benefits flowing from the project compare with its costs, and whether benefit flows correspond to original expectations. 55. The system of progress reporting must be designed to provide the types of information that will satisfy the user's needs. The individuals responsible for establishing the progress reporting system must review the project appraisal report and the loan documents o determine the kinds of information required, the periodicity of submission, and the form in which the information will be submitted. The kind of information needed in progress reports will vary from project to project and from sector to sector. 56. A project completion report (PCR) is required from the executing agency after physical completion of the project. The Project Manager must be aware of this requirement and must include in his data generation system the information that will be required in the preparation of the PCR. 4. Control of Changes

57. Changes in projects may occur during the detailed design stage, during procurement of goods and services, during installation/construction, and even during the project commissioning phase. Changes may be initiated by the Project Manager, by project consultants, or by suppliers or construction contractors, and may cover variations from original plans and estimates resulting from changes in scope, technical requirements, or requirements for goods and services. Changes mayor may not affect implementation schedules, project costs, or project technical performance requirements, or may affect only one or two of these critical project elements. 58. The Project Manager should formulate procedures for introducing and controlling changes to the project. Such procedures may involve a study of the implications of the proposed change on cost, benefits and technical performance before the change is authorized. Such procedures should also include approval procedures that identify the approving authoritv and the manner by which approval could be obtained. 5. Project Data Management

13

59. Another important function of project management is the maintenance of adequate project records. Rapidly moving events, and the need for project control make it imperative that data concerning project plans, implementation progress, needs, trends, and changes be gathered in a timely fashion, and then analyzed and used as the basis for decision making. 14

60. The Project Manager should determine the types of documentation and data necessary to plan and control the project and to fulfill project reporting requirements. For the inexperienced Project Manager, this may pose some difficulties. Appendix 7 provides a listing of the kinds of project records that may be considered in establishing some sort of a project data bank that can serve as the basis for a management information system.

6.

Management of Consultants, Suppliers and Construction/ Installation Contractors

61. The Project Manager is responsible for ensuring that project consultants, suppliers and construction/installation contractors perform in accordance with their contractual commitments. Accordingly, the Project Manager must plan how to supervise the actions of these participants in the project. This may be carried out as explained in the following paragraphs. 62. Procedures for managing consultants' actions include: (i) review of technical performance at various points during the period of the consultant's services; (ii) review of prescribed periodic progress reports required from the consultant; (iii) evaluation of the consultant's interaction with the Project Manager and the PMO staff at periodic meetings; (iv) close monitoring of the consultant's adherence to the terms of the contract; and (v) final review before acceptance of the work performed. 63. Procedures for managing suppliers' actions include; (i) monitoring the supplier's adherence to contract requirements regarding submission of shop drawings and materials certifications; (ii) review of periodic progress reports for the manufacture and delivery of the goods; (iii) inspection of goods while they are being manufactured to ensure adherence to technical specifications; (iv) inspection of the packaging of goods before shipment; and (v) inspection of goods delivered on site or at a port of destination before final acceptance. 64. Procedures for managing construction/installation contractors' actions include: (0 frequent physical inspection of the contractor's works to gauge adherence to technical specifications and generally accepted international construction standards; (ii) review of prescribed periodic progress reports; (iii)" requiring contractor's attendance at periodic project meetings with the Project Manager; (iv) ensuring the contractor's adherence to change order procedures; (v) close. monitoring of the contractor's compliance with the provisions of the contract; and (vi) final inspection of the contractor's completed works before acceptance. G. Preparation of a Project Procedures Manual

65. To enable the individuals of the PMO staff when first assigned to the project to .properly perform their assignments, it is essential that a project procedures manual be developed at the beginning of project implementation. This manual should cover the most important activities relating to project implementation, particularly those involving the actions of a large number of staff, and should describe how such activities will be carried out. Sample forms, letters and documents should be included in the manual. The project procedures manual should be updated as required and should contain a listing of serially numbered revisions with appropriate references to the page, paragraph, figure or table number revised. Suggested outline for a project procedures manual is shown in Appendix 8.

15

IV. THE PROJECT MANAGER 66. The appointment of the Project Manager is a critical factor in the success of project implementation, and it is also important that the Project Manager be assigned to the project full time. The appointment can be made from a number of sources - an individual permanently employed within the executing agency; an individual who is a permanent member of a project management group within the executing agency or in another department or agency of the borrower; an individual specially hired by the executing agency from outside the government; or an outside consultant or consulting firm specializing in project management (and perhaps specializing in operating and maintaining facilities as well). After the project has been completed, the Project Manager responsible for implementing the project may become the manager for operating the facilities. A. Functions and Responsibilities of a Project Manager

67. As the person responsible for implementing and completing a project on time, within budget and in accordance with technical performance requirements, the Project Manager will have full resqonsibility for the following: 1. Project Planning. Completing the final detailed implementation plan. 2. Project Coordination. Integrating all project participants, consultants, suppliers and constructionlinstallation contractors into a smooth working group. 3. Project Staffing and Training. Recruiting the personnel necessary to staff the project organization, and providing training whenever required. 4. Project Implementation. Managing the various project implementation activities. 5. Project Management Control and Reporting. Implementing cost, schedule, technical performance control systems and reporting procedures. 6. Project Interfacing or Linkages. Establishing procedures for interacting and cooperating with other agencies and parties involved in or affected by the project, including local government, private groups and end-users. 7. Conflict Management. Resolving conflicts among the project participants. 8. Change Management. Controlling project changes and functioning as the contact point for change requests, notifying all project participants of authorized changes. 9. Project Financial Management. Arranging the timely provision of funds, control of costs, maintenance of an effective accounting system. 10. Compliance with Terms of Loan Agreement. Insuring compliance with all requirements and covenants in the loan agreement. 11. Project Turn-Over and Commissioning. Carrying out responsibilities for preparing the procedures and resources for turn-over of the project facilities when completed. B. Qualities of a Good Project Manager

68. A good Project Manager should possess as many of the following personal qualities as possible: strong human relations and leadership skills; sense of fairness; ability to comromise and to arbitrate personal concerns;' successful experience in managing similar pro5 6

jects; a project-oriented outlook; sound knowledge of proicctmanaqement principles, tools and techniques; strong personal interest in managing projects; ability to concentrate on the overall picture and to delegate responsibilities; ability to exercise effective control of difficult and complex situations; and willingness to face risks, make decisions, and take responsibility for decisions. The Project Manager should be aggressive, honest, unafraid of confrontation, mature, energetic, an effective communicator, intelligent, discerning, dependable, loyal, and, last but not least, physically and medically fit to perform the duties and to meet the challenges of the position.

17

v. MANAGING

PROJECT IMPLEMENTATION

9. This section discusses the activities the Project Manager undertakes in implementing _ project and describes the Project Manager's actions in preparing for project implementan; making the loan effective;' complying with loan covenants; procuring goods and ices; supervising the work of consultants; monitoring construction works; controlling s, schedules and technical performance; obtaining disbursement of loan funds; controllproject changes; and coordinating with outside agencies. Preparing for Project Implementation At the start of the project implementation phase, the Project Manager must set up ~ project office; organize the project management staff and allocate duties and responsi__. ies, establish information and accounting systems, and initiate actions to commence the rarious project activities. 1. Organizing the Project Management Office

Whenever possible, the Project Management Office (PMO) should be located at the e of the project. If this cannot be done because the project site is in a remote area, sideration may be given to locating the project office at the nearest town that has ommodations, utilities, transportation and communication facilities. If there are multiple ~oject sites, a satellite office may be put up in each area. It is important that the PMO and its _ H have ready access to the project site and that the requisite services and communications . ities for the project are available. The PMO should have facilities adequate to serve the needs of its staff. The PMO d be spacious enough to provide space for drafting tables, and should include a closed :erence room, a closed office for the Project Manager, a closed negotiating room, space ffice files, a storage area for office supplies and office and field equipment, a space for a - 19 laboratory if needed, a publications room, a communications room, and wall space arts, graphs, schedules and bulletin boards ..The project office should be provided with ~~u,ate and reliable utilities such as air conditioning or heating, water, electricity, lighting - sewerage. Vehicle parking areas and open storage areas should be provided if needed. -"--'--........ vehicles and storage areas should be protected from fire and adverse weather gs, - ions such as wind, rain, dust, and flooding, Arrangements should be made to ._-cally secure the office facilities, equipment, files, storage areas and vehicles from theft, -;:0 ism and access by unauthorized persons. Arrangements should also be made for - protection, such as immunizations and medical services, including first aid and "-~lDncy treatments. Special personal protective gear (clothing and equipment) should be .,;;.....c:<,uJe , to PMO staff when necessary. 2. . Recruiting and Training Personnel

The Project Manager should endeavor to engage only qualified personnel and to to the extent possible, unwarranted external pressures for the employment of persons o do not possess the requisite qualifications. However, even with qualified staff there -- ht still be a need for orientation or training courses to improve staff skills in certain
. t

specialized fields. Of great importance is having staff assigned to the PMO on a full-time basis during the implementation of the project. 74. Staffing of the PMO may be done by reassigning personnel occupying permanent positions within the executing agency or in other agencies of the borrower for the duration of the project, or by directly hiring local or expatriate personnel, either as regular employees or as contractual or temporary employees for the specified period. Technical competence should be a major consideration in the selection of personnel and they should be assigned to positions wherein they can make full use of their talents and capabilities. 75. The need for training should be carefully assessed and if necessary, it should be done before the recipients become heavily engrossed in their work. Training can be accomplished through formal classroom instructions or through actual on-the-job training carried out by competent and qualified instructors. Such training can be enhanced by attendance at seminars, workshops or other training programs conducted by organizations with expertise relevant to the training needs of the individual staff member.
(

3.

Defining and Assigning PMO Staff Responsibilities

76. The Project Manager should define the functions and responsibilities of the various PMO units as well as of key individual staff. Appendix 5 shows some examples of PMO staff functions. Additionally, job descriptions should be written for each member of the PMO staff. These functions, responsibilities and job descriptions should be included in the project procedures manual and should be updated or revised as circumstances warrant. The extent to which staff are authorized to make decisions in the field should also be clearly defined in the project procedures manual.

4. Establishing

a Project Records

System

77. With the establishment of the PMO, the Project Manager must set up and activate the project records and administrative files and procedures. A detailed recommended listing of project records and administrative files to be maintained in the PMO for the duration of the project is shown in Appendix 7. 78. The person in charge of administration should be assigned the responsibility of establishing administrative procedures for a project. This individual should be responsible for receiving all incoming correspondence and data, assigning control or reference numbers to the incoming items, and distributing the items to the appropriate staff within the PMO or to individuals outside the PMO. If necessary, the administrative officer should assign suspense dates for PMO action, enter these dates clearly on the documentation, and implement and maintain a follow-up system. The administrative officer should see that completed action and all incoming documentation and copies of outgoing correspondence are properly filed. At the completion of the project, the administrative officer should determine the disposition of project files and records. To control the flow and filing of all project documentation, the administrator should and apply a specific system of document numbering. In assigning file numbers to those documents and data referring to or having bearing on project costs, schedules and scope - records of invoices or expenditures, change order requests, purchase orders, manpower reports, etc. - the administrator should use a project code of accounts number
develop

79.

19

; em, such as that discussed in Appendix 4. For other correspondence, such as withdrawal uests or project reports, the project administrator should establish an appropriate file mbering system. 5. Obtaining Funds Required for the Initial Works

The funds initially required for the project may be provided by the borrower or the 3ank. The Project Manager must be ready to request commitment and release of funds both sources, and if applicable from other donors. The Project Manager should review e regulations and procedures relating to the allocation of local funds by the borrower, the _ uirements and procedures for the withdrawal of loan funds from the Bank or other :: nors, and the procedures for payment of expenditures for the project. The Project ager should ensure that funds are available for immediate disbursement before underinq any work that will involve a financial commitment.
Making the Loan Effective

Approval of a loan does not mean that funds to meet project expenditures can be it drawn immediately; this can be done only after the loan has become effective. For the to become effective, the loan agreement provides that the borrower (not necessarily e executing agency) comply with the conditions for loan effectiveness; this must be done 7- in the period prescribed in the loan agreement. Failure to do so could result in the Bank :ancelling the loan, unless the deadline for loan effectiveness has been extended by the :xmk. Although compliance with the conditions for loan effectiveness is primarily the -: ponsibility of the borrower, the Project Manager should monitor the actions taken to ke the loan effective. If there is any possibility of delay, the Project Manager should zmind the authorities concerned that any such delay might adversely affect the timely - mpletion of the project.
Engaging and Supervising the Work of Consultants

It is common practice to engage consultants when the executing agency does not e sufficient in-house expertise to undertake a particular activity. A loan normally includes - ds to cover such services. With regard to project implementation, a consultant is .:::~nerallyengaged to prepare detailed engineering designs and draft bidding documents, ertake or assist in the evaluation of bids, supervise the construction of civil works, and :crry out other specific project activities. The Project Manager has responsibility for properly defining the scope of services -eeded, laying out the terms of reference, supervising the consultant's work, and accepting e results. The Project Manager will have to decide whether to use the services of an inidual (self-employed) consultant or the services of a consulting firm. Individual consultant services can be engaged more quickly and are less expensive than the services of consulting s, but the range of an individual consultant's experience and knowledge is confined to --- particular expertise. Moreover, an individual consultant's continuous involvement over I1gperiods may be affected by sickness, injury or other commitments. Also, peer review of individual consultant's work is often not easily arranged, and coordinating the work of - eral independent individual consultants might prove difficult. A consulting firm, though

generally more expensive' and requiring a longer time to engage, offers a wider range of expertise, provides continuity of services should an assigned staff become sick or disabled, facilitates peer review, and assures availability of continuous services over an extensive period, including services in the home office. 84. In compiling a list of consultant candidates, the Project Manager can obtain the names of individual consultants or consulting firms from, among others, the following external sources: 1. 2. 3. The Bank's registry of consultants - from this registry the Bank can provide a long-list of consulting firms or individual consultants with relevant experience; Professional societies and associations, if they exist, in the borrower-country and in other AOB member countries; International Federation of Consulting Engineers (FIOIC), at: P.O. Box 86, CH 1000, Lausanne 12 Chailly, Switzerland; Telephone No. 21-335-003; Telex No. 24698 FIOI CH; and Embassies, consulates, and trade offices of ADB member-countries borrowing country. in the

4.

It should be remembered that only consultants from eligible source countries can be considered for selection for projects funded by the Bank. 1. Procedures for Selecting Consultants

85. The Project Manager must make adequate preparations for recruitment of consultants. The Bank's requirements in this regard are quite specific and must be adhered to closely -- these requirements are set out in the Bank's Guidelines on the Use of Consultants by the Asian Development Bank and Its Borrowers, dated April 1979. Reference may also be made to the Bank publication, Handbook for Users of Consultants. Failure to follow the proper procedures and requirements may cause delay in obtaining Bank's approval of the award of contract and could prompt the Bank to withhold financing. 86. It may happen that the Bank's procedures and requirements are in conflict with those of the borrower or executing agency. If such is the case, the Project Manager should try his best to find an acceptable solution, if necessary, with the assistance of higher authorities concerned. If the conflict cannot be resolved, the Bank's procedures and requirements will prevail, the borrower having agreed to these procedures in the loan agreement. 87. Individual consultants are usually selected based on qualifications, following a fairly simple procedure. The Project Manager prepares a list of suitable candidates from a reasonable number of ADB member-countries and inquires about their availability and interest in the assignment. The Project Manager then ranks the individuals, primarily on the basis of qualifications. Price negotiations then are begun with the first-ranked consultant, and so on, until an agreement is concluded. Figure 2 shows a flow diagram of the process followed in selecting individual consultants, noting the points in this process for which the Project Manager must get Bank approval before proceeding with the next step.

21

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-----.-~

Figure 2.

Flow Diagram for Selection of Individual Consultant

Develop Terms of Reference (TOR)

;;: d \...,H

Prepare List of Consultants & thei r Qual ifications

Prepare Draft Con tract

o.

(/)

>-

QJ

>-

a)

(/)

:he

be

Issue Invitations for Expressions of I nterest and Availabil itv

Evaluate and Rank Consultants

Negotiate with First-Ranked Consultant

Notify Consultants Not Selected

Execute Contract

Furnish Signed Contract to Bank

21
22

88. The selection of consulting firms follows a more complicated process. This process includes a detailed examination of the experience and capabilities of the firms included in a long-list of firms claiming expertise in the field; this examination should result in a short-list of five to seven firms wiht sufficient geographical spread and considered to be most qualified and best suited to receive invitations for proposals. 89. Short-listed firms are invited to submittechnical proposals, without price proposals. The technical proposals are evaluated and ranked on the basis of technical merits, with the first-ranked firm being invited for price negotiations. If no agreement is reached, negotiations are conducted with the next highest ranked firm, and so on. Figure 3 shows a flow diagram of the process for selecting a consulting firm. Note the points in this process at which the Project Manager must secure Bank approval before proceeding with succeeding steps. Further explanation and guidance for selecting consultants may be found in Appendix 9. 2. Supervising Consultants

90. It is important that consultants be adequately supervised. Any serious defect in a consultant's performance may later have a profoundly adverse effect on the implementation of the project. Procedures for supervising consultants may include visual inspections, i.e., design reviews and physical inspections, as well as discussions during reviews and briefings concerning the consultant's performance, and evaluation of performance as reflected in periodic progress reports. Responsibility for reviewing the consultant's report should be defined and identified so that the reports can be reviewed expeditiously and prompt feedback provided to the consultants. 91. The Project Manager should provide full logistic and administrative support to the consultant upon arrival, to enable the consultant to settle down quickly and comfortably and start work at the earliest time possible. These would normally consist of counterpart personnel and support staff, housing, office facilities, and transportation. The consultant should also be briefed fully about the project and be provided any necessary information and data. Channels of communications between the consultant and the PMO, the executing agency, the borrower, and other project participants should be clearly established and the procedures for information flows laid out.
D. Procuring Goods and Contracting for Civil Works.

92. The cost of goods (machinery, equipment, materials, supplies, etc.) and civil works (including installation of equipment) are major items of expenditure in a project, and the act of procurement is in itself usually a long drawn out process. Delays in procurement have often caused project delays and therefore it is necessary that the Project Manager carefully plan procurement activities. Furthermore, he must submit to the Bank as required projections of contract awards. 93. The sequential steps involved in procuring goods are shown in Figure 4; the procedures for procuring the services of. construction/installation contractors are shown in Figure 5. Note the points in each of the processes at which Bank approval must be obtained before the next step can be undertaken. Detailed guidance for procuring goods and construction/installation services through international competitive bidding (lCB) is provided in

23 24

pi

Figure 3.

Flow Diagram for Selection of Consulting Firms

Develop Evaluation Criteria Yes

issue Invitations tor, Proposals

Information CoPY to Bank

Receive Proposals

Evaluate Proposals Select Consultant


Cf)

>-

<lJ

Negotiate Contract
Cf)

>-

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Execute Contract

nformation Copi to Bank

Notify

Consultants \

Not Selected

1 if provided in loan agreement.

Figure 4.

Flow Diagram for Procuring Goods Under International Competitive Bidding

Pr epero
List of

Goods to be Procured

YES

Issue Invitations to Bid and Receive Tenders

Report Advertisement Procedures to Bank

Evaluate Bids and Propose Award


YES

Award Contract

Report Results to Bank

Receive and Install Goods

25
26

19ure5.

Flow Diagram for Procuring Civil Works and Technically Complex Supply Contracts Under International Competitive Bidding (With Pre qualification Procedure)
Prepare No. and Scope of Civil
Works Contracts

to be Awarded

I
Invite and Receive Prequalifications Proposals

I I

'1,
Report Advertisement Procedures to Bank

Evaluate Prequalification Proposals Formulate List of Prequalifieu Firms

YES

Issue Invitations to Bid

Notify Firms Considered Not Qualified

Evaluate Bids and Propose Award

YES

Award Contract

Report Results to Bank

26

Appendix 10. Reference may also be made to the various Bank publications relating to procurement which are listed on page 7, numbers 6 to 13. F.
94.

There may be special circumstances wherein other methods of procurement (nonICB) would be more economical and efficient. Some of these other methods are listed below:
1. 2. 3.

98.

4.

5.
6. 7.

International shopping Local competitive bidding Direct purchase/negotiations/single tender Force account Limited tendering/repeat order Purchase of equipment for use of small private subborrowers Procurement under loans to development financing institutions

are SP{ with agreen projec agers


99.

A more detailed explanation of these methods and the conditions and procedures for using

them may be found in Section III of the Guidelines for Procurement Under Asian Development Bank Loans and in Section X of the Handbook on Policies, Practices and Procedures Relating to Procurement Under Asian Development Bank Loans. E. Supervising Construction of Works or Installation of Equipment

that it I of sup; bring out, su the 0

G.
100. to foci action' cornpe measu and se satisfa tive e: costs) time 10l. compl Projec projec The P contrc 102. paym delive escala the p contrz 103. unit c refere type _
Projei

95. The Project Manager is responsible for supervising the construction of works or installation of equipment and should ensure that there is frequent or continuous independent on-site inspection of work done by the contractor. Inspection may be carried out by the executing agency's own technical staff or by the consultant responsible for detailed engineering design and construction supervision. 96. The inspection should verify the contractor's compliance with the technical specifications and adherence to international construction standards and practices. For example, the inspection team should check equipment delivered against approved shop drawings and civil works completed against approved technical plans and designs. Materials tests should be conducted to determine compliance with prescribed technical standards. The inspection force should also undertake other activities, such as review and approval of equipment operations and maintenance instructions, warranties, spare parts lists, as-built drawings, and requests for partial progress payments. The actual progress of the works should be closely monitored and compared against the construction schedule, preferably with the use of a bar chart or a PERT -CPM network.
97. Contract provisions generally place strong emphasis on the contractor's responsibility to maintain a suitable management organization and to adopt appropriate and sound management practices. This would include the requirements that the contractor's site manager will not be removed or changed without approval of the project owner and that the contractor will institute quality control measures. Neither the Project Manager nor the PMO staff should interfere with or usurp these responsibilities. The procedures for monitoring and controlling the contractor's work are discussed in Section L on page 31.

to

COJ

27
28

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-~

---------"---~--

F. Executing Project Covenants 98. Apart from the standard loan covenants that appear in the loan agreement, there are specific undertakings the borrower or executing agency must carry out in connection with the implementation of the project; these are usually detailed in Schedule 6 of the loan agreement. These project covenants are intended to facilitate the implementation of the project and help ensure that the objectives and benefits will be achieved. The Project Manager should therefore make every effort to carry these out in an efficient and timely manner. 99. It is recognized that delays could occur in complying with the project covenants, or . at it may become extremely difficult or impossible to comply with the covenants because of supervening circumstances. In such a situation, the Project Manager should immediately bring the matter to the attention of the Bank so that a satisfactory solution can be worked out, such as the adoption of alternative measures that would achieve the same purpose as - e original covenant. G. Controlling Costs

00. The principal objectives of cost control are to execute a project within budget, and :0 focus attention on potential cost problems in time to take corrective or cost-minimizing actions. These objectives are achieved by closely monitoring project expenditures and comparing expenditures against cost estimates contained in the project budget. Cost control measures include adopting authorization procedures for incurring expenditures for goods and services; controlling disbursements to consultants, suppliers and contractors, based on satisfactory contract performance; controlling project change orders; controlling administraive expenditures (e.g., travel, vehicle usage, and telephone and other communications :osts); and controlling personnel expenditures, e.g.,controlling staff assignments and overme services. 01. Each month, the Project Manager should prepare a forecast of costs to project ompletion and should continuously disseminate cost information to all concerned. The Project Manager should also establish a format for forecasting, tabulating and reporting project cost commitments and ensure that entries to this record are maintained up to date. The Project Manager should also conduct periodic cost control meetings and assign cost control duties to a cost control engineer or to another suitably qualified PMO staff member. 02. The Project Manager should know the implications of the different forms of contract payments on the cost control system. In fixed-price contracts, the contractor agrees to diver goods or to perform work at an established price and assumes the risk for any cost escalation. Contracts involving prices subject to escalation are more difficult to manage as :he price first agreed upon is subject to adjustment when the cost components of the .ontract fluctuate during the life of the contract. 03. Unit price contracts involve a contractor's agreement to be paid on the basis of per nit of work performed (e.g., dollars per cubic meter of soil excavated). The terms of reference for unit price contracts will indicate the owner's estimate of the quantities of each e of work to be performed. To exercise proper cost control in unit price contracts, the Project Manager must review the actual units of work accomplished before payment is made 0 contractors. 8

104. In general, the Project Manager's cost control efforts involve selecting the appropriate type of payment provisions in the contract, ensuring the preparation of accurate project estimates (cost or quantities) for budgeting and bid validation purposes, ensuring that the terms of reference for detailed design services require the consulting engineer to select the most cost effective alternatives and design specifications for equipment and construction/ installation work. and closely monitoring project expenditures against budgets and against physical completion of the project components. H. Withdra"",Jng loan Funds

105. Decisions on the sources and allocation of funds for the various project elements are generally made during the pre approval stage in the project cycle and are shown in the loan agreement. However. the procedures for the withdrawal of loan funds are usually determined and agreed to between the executing agency and the funding source, after the loan is approved but well in advance of the expected time of the first disbursement under the project. ,. 106. It is the desire of the Bank that withdrawal of loan funds to cover expenditures as they are actually incurred for a project be expedited. However, the Bank must ensure that such expenditures are consistent with the purposes for which the loan has been granted, with due consideration for economy and efficiency. Accordingly, the Bank has devised a system under which requests for withdrawals from the loan account require the submission of appropriate support documentation. 107. This system for withdrawing loan funds consists of four standard disbursement procedures. These are: 0) direct payment procedure; (ii)reimbursement procedure; (iii) commitment procedure; and (iv) imprest fund disbursement. These procedures me discussed in detail in the Loan Disbursemenr Handbook, which is provided to the executing agency together with a disbursement letter immediately after the loan agreement has been signed. This handbook also contains, among others, standard forms for withdrawal applications and accompanying documents. commercial bank's report of payment and request for reimbursement and application for amendment of letter of credit. 108. It is important that the Project Manager designate a staff member who will be primarily responsible for the withdrawal of funds for the project. His functions would include following up the release of funds coming from the borrower's resources under approved budget allocations and preparing applications for withdrawal of loan funds from external sources, including the Bank. The staff member assigned will also be responsible for preparing and updating disbursement projections as well as producing periodic reports that would enable the Project Manager to conduct regular reviews of fund utilizations. Timely action is essential, as delay in the receipt of funds can impede the smooth progress of a project. The Project Manager must also be aware that withdrawal of loan funds is subject to the loan closing date stipulated in the loan agreement, beyond which no disbursements under the loan can be made. I. Controlling Project Changes The Project Manager should formulate specific procedures for reviewing and ap-

sl-

J 1

tli

P.
ti

109.

29

proving changes in the project. Proposed changes must be studied carefully and the implicaions relating to costs, schedules, and technical performance and their consequential effects on expected project benefits carefully assessed. When the proposed change involves substantial modification of the project, the change should be approved by the Bank. 110. Specific administrative procedures for processing change orders under contracts etween the executing agency and a supplier or contractor must also be established. A standard change order request form should be developed, along the lines of the example shown in Appendix J 1. Every request should be logged in a change order status register, filed separately, and assigned a document control number from an established numbering system. A suspense date for completing action should also be established. The control number should come from the project code of accounts system (see Appendix 4). The routing of the change order request must be recorded in the register and the final action taken should be reflected in the register and change order file. Any contract modifications should be cross-referenced to these records and files.
J. Coordinating With Other Implementation and Support Agencies

111. The Project Manager may be required to interact with persons or agencies outside the project organization who are involved in some part of project implementation; the actions of such persons or agencies may be essential to the success of the project. The Project Manager may also be required to deal with other parties affected, adversely or beneficially, by the project. Such persons or agencies or groups may include the Bank and other donors, national budget and planning offices or finance ministries, the contracting agencies of the borrower, other executing agencies and their project managers responsible for implementingspecific components of the project, project coordinating committees, user agencies or their personnel, local inhabitants affected by the project, and even the general public. 112. Some of the problems encountered during project implementation may be outside the direct control of the Project Manager. To obviate such problems, it is important that the kinds of linkages required to establish rapport with the people involved be considered. One way of doing this is to bring the agencies or institutions concerned into the project planning process, or at least keep them informed of developments that may require their participation.
K. Project Monitoring and Control

113. Project monitoring implies reviewing, inspecting and controlling what is being accomplished during project implementation. Project monitoring is a positive, active, on-going performance by the Project Manager to ensure that the project is completed on time and within the budget, and that the completed project meets technical performance and specification requirements. This section briefly discusses the features of the project that must be monitored. The discussion of project monitoring and control includes a brief review of project planning leading to the development of a project monitoring and control system, as weil as aspects of monitoring and controlling the time, costs and technical aspects of a project

30

114. The features of the project that must be continuously monitored and controlled include: 1. 2. Project work plans, to assess their continued validity and to identify potential problem areas. Tae project organization, staffing and performance of personnel, to ensure that qualified and efficient staff are available in the following functional areas: (a) (b) (c) (d) (e)
(f)

(g) 3. 4. 5. 6. 7. 8.

scheduling and schedule analyses; cost estimating, budgeting and cost analyses and cost accounting; project performance analyses; project administration (data management, correspondence control and report generation); contract administration; engineering and construction management; and property administration

I'

Technical control, to ensure that the owner's technical specifications are complied with. Supervision of consultants, to ensure that the consultants comply with the provisions of their contracts. Procurement effort, to ensure that items procured conform with the requirements of the project and that the guidelines and procedures of the Bank and other donors are being followed. Disbursement procedures, to ensure that payments are made correctly and on time and that the guidelines and procedures of the Bank and other donors for withdrawal of loan funds are adhered to. Construction of civil works and installation of equipment, to ensure that 'construction and installation activities are carried out in accordance with accepted standards and are as per contract requirements. Commissioning procedures including detailed planning for equipment and systems start-up; supply of fuel and other materials necessary for operational testing and future operations; operational testing of equipment and systems; compilation of operations and maintenance instructions, parts lists, parts inventory control systems, and as-built drawings; training of operations and maintenance personnel or other end-users; turn-over of completed facilities to the end-users, including installed property, special tools, spare parts and equipment; and completion of administrative requirements such as completion certificates, warranty documentation and bonds, insurance and claims releases.

1
a
a

r t L. Procedures for Monitoring and Control of Projects

115. The Project Manager and project staff should continuously monitor the progress of [he various project activities. Some of these activities may require periodic visual inspection to confirm that progress is actually achieved. If detailed designs are done in a foreign consultant's home office, the Project Manager may assign a representative to be in residence at that office or arrange for periodic visits by a representative. The Project Manager should review the design drawings and engineering calculations at certain stages (e.g., at the 30 per cent, 60 per cent, 90 per cent and final design completion stages). The Project Manager

31

may send staff or may contract outside assistance to perform factory inspections of critical equipment being manufactured, or, as an alternative, may require' written reports, in addition to visual inspection of the equipment. Submission of consultant and contractor reports should be monitored closely and the reports thoroughly reviewed. Key project staff, e.g. Project Manager, Deputy Project Manager, and project on-site subordinate managers for geographically separated project components, should maintain official diaries or journals, to be accomplished daily, to provide the following information: 1. 2. 3. labor, equipment and materials brought to and employed at site; work completed for the day; problems or potential problems and actions taken or plans made to overcome these problems (including technical and safety problems and problems affecting personnel and facilities outside the project area); important questions raised and answers given or actions to be taken that might affect contract time, cost or quality of performance; work plans for the next day; visitors to the site, including purpose and results: significant telephone conversations; specific site inspections performed by the project staff: site conditions - weather, soil conditions, etc., as appropriate.

4. 5. 6. 7. 8. 9.

Photographs of the project site should be taken, to provide permanent, visual records of project status, quality and progress. This should be done before the project commences and periodically thereafter as the works progress. All photographs should be identified with a brief title or description, and should be dated and arranged in proper sequence - photographs are invaluable as evidence in settling contract disputes or claims and can be important as a part of reports. . 116. The Project Manager should establish clear channels of communications (messengers, mail, telephone and radio) to establish linkages with consultants, suppliers and contractors as well as with outside implementation and support agencies. The Project Manager should play an active role in eliciting action on project matters from higher authorities and outside agencies and should maintain records of the results of such interactions with outside agencies. 117. In controlling the project, the Project Manager must make extensive use of projeci control and project accounting systems. The typical project control system provides for review of schedules, progress and performance measurement, equipment and material tracking, cost monitoring, and cost forecasting. Project accounting systems include the use of the books of account earlier described. These systems are often computerized for iarge projects, while undertaken manually for smaller projects. 11 S. The project control system's key function is to provide early warning to Project Management about any potential problems. This system does not provide precise cost information but it can supply vital current key information for managing a project. Much of the cost information comes from the project cost accounting system. Information can be collected, sorted and reported via a WBS coding structure, though the project control system may also use the same coding system for monitoring cost, for scheduling and schedule monitoring and for future planning. The following illustrates the kinds of information each system can supply:

32

1.

Information that may be provided from the project control system to the project cost accounting system could include: (a) (b) (c) purchase orders for equipment and materials ordered but not yet delivered; requests for payments from consultants or contractors; and time sheets for salary payments to PMO staff or those involved in force account work.

2.

Information that may be furnished from the project cost accounting system to the project control system could include: (a) (b) (c) (d) (e) expenditures from the last reporting date to the current reporting date and total expenditures to date; salaries paid to personnel working on the PMO staff, as gathered from the time sheet reports; status of actual expenditures against budget estimates; funds available for project payments; and payments due on procurement orders for equipment and materials that have not yet been received.

119. Standard tools and techniques are available to the Project Manager for monitoring and controlling project implementation; the tools and techniques for cost and schedule control are discussed in detail in Appendix 12 and follow directly from the planning techniques for project control discussed in Appendix 4. Using the integrated costs and schedules developed as a part of the initial detailed planning, the techniques for monitoring and controlling involve the periodic (generally monthly) comparison of actual progress and expenditures against original estimates and budgets. 120 Appendix 12 describes how to measure .costs and project progress against original and totals at completion. Measuring project progress at a particular date involves totalling the budgeted value of the portions of each project element or work task that have been physically completed, and comparing that total value against the total budgeted value of the portions of the project tasks scheduled to be completed by that date. The difference (called schedule variance) gives the amount of schedule overrun or underrun at that date (in dollars or other units of measure that can be converted graphically to time measure). To measure cost status, the total budgeted value of work physically completed as measured above is compared to the actual value of the work physically completed 0. e., actual value of resources expended to date). The difference (called cost variance) gives the amount of cost overrun or underrun to date. Procedures for computing revised estimates of cost at completion are also discussed in Appendix 12. 121. Of increasing concern to Project Managers and the Bank is the control of project works done by force account (i.e., carried out by agencies of the borrower, such as a Department of Public Works). Project works commonly implemented under force account are those that involve small amounts; that are widely scattered geographically or located in remote areas, and that generally are labor-intensive. Problems that are encountered usually relate to the quantity of the scope of work to be done, the accuracy of the original cost estimates, the control of the quantities and costs of materials used in the work, the adherence to time schedules, and the quality and timeliness of project staff reports from remote project sites. Close physical monitoring of such projects involves much time and 33

consequently entails higher costs; nonetheless, the Project Manager should undertake supervision of the work. In addition to the usual early validation of design and cost estimates, frequent (perhaps monthly) site visits by qualified staff to verify progress and expenditures may be the best way to control costs. 122. Monitoring the technical performance aspects of the project requires a carefully planned course of action. Contracts with consultants, suppliers and contractors should clearly state that they will be responsible for the technical quality of their work. The contract should also stipulate that work and technical control measures will be subject to inspection by designated parties and that measures will be taken to correct any weaknesses in control systems or any defects in the quality of the works. It is important, however, that technical and performance specifications in the contract be clear and complete. 123. The Project Manager's planning for quality inspections, development of inspection checklists, completion of documentation of inspection results, and review actions to assure compliance with the terms of the contract are generally known as quality assurance (QA) measures. Quality control (QC) measures on the other hand include visual inspection of detailed design drawings, equipment and materials during manufacture, packaging of goods prior to shipment, and inspection of items on delivery and again upon installation at the project site. QC measures also cover operational testing of equipment prior to turnover and other such activities, including follow-up actions for correction of any deficiencies. These QA/QC measures must be adopted throughout the life of the project to assure that the end product performs as planned and meets required technical specifications. 124. To control project costs, progress and technical performance, the Project Manager should first analyze the variances in project costs and progress as computed and shown graphically in Appendix 12. The variances over previous periods should be analyzed together with the latest results to establish trends, such as continuing increases in cost overruns or persistent slippages. For example, at a given point, a project may be ahead of schedule but experiencing an overrun in costs - investigation might show that the contractor accelerated work during a particular period, or that the schedule sequence was temporarily altered, resulting in variations, that could be made up as the work gets back on schedule. Price escalations in delivered goods may also result in a cost overrun for the project. Technical performance variances might be discovered through visual inspection of equipment and construction and through testing, using prescribed technical specifications and standards. 125. Tracking of variances through the work breakdown structure (WBS) (see Appendix 4) will help pinpoint the specific work elements from which deviations in cost plans, schedules and technical performance have occurred; the Project Manager should then require the functional managers to determine the causes of these variances. Through this procedure, implementation problems can be discovered and responsibilities assigned for corrective action. Not all cost and schedule variances cause serious bottlenecks, but those affecting the critical path must be addressed immediately. 126. Some problems can be corrected by increasing productivity, assigning better skilled workers and managers to the problem areas, relaxing schedule or technical requirements, adjusting budgets and schedules, making advance preparation, and establishing better coordination and information flows among project participants and between project participants and outside agencies or personnel. It may be impossible to correct all problems - some pro34

blems might require adjustment in schedules, scope of work, or acceptance of lesser technical performance.
M. Preparing Project Progress Reports

127. During detailed implementation planning, the Project Manager should prescribe reporting schedules and procedures to meet the requirements of the Bank, the borrower and other outside agencies, as well as the executing agency. As stated previously, information needed for progress reports will vary according to the nature of the project; the format and depth of detail will also vary according to the level of management receiving the report. This implies that reports for the Project Manager require greater depth than the much more condensed reports that would be submitted to superior officials and to the Bank. The information that the Project Manager needs from within his organization for project control purposes must be detailed enough to enable him to identify and to address himself to problems that are being encountered. 128. The extent of the detail required in the reports, as well as the frequency of reporting, must be discussed with each end-user - Bank requirements will be indicated at an early stage of project implementation. Reports required from consultants and other contractors should be spelled out in their contract agreements. As a general guide, the kinds of information needed at all levels should cover: 1. 2. 3. 4. 5. 6. 7. 8. principal work accomplished during the reporting period, such as detailed engineering, preparation of tender documents, evaluation of bids, and awarding of contracts and construction works; actual or potential deviations from original plans or schedules and the reasons therefor; the expenditures incurred for the project, and disbursements made from the proceeds of the loan; .. problem analysis, including circumstances that could affect costs or schedules (e.g., reasons for delay in procurement and disbursement, difficulty in collecting information from the field, or unavailability of qualified project staff); fulfillment of the borrower's and executing agency's covenants as contained in the loan documents; financial position of the project; implementation plans for the next reporting period; and actions required by outside agencies.

35

VI. PROJECT INTERACTION BETWEEN THE BANK AND THE I;:XECUTING AGENCY Need for Close and Frequent Consultations _29. It is essential that close consultations between the executing agency and the Bank _ undertaken. Such consultations enable all parties to work effectively in discharging their respective obligations under the loan or project agreements and in identifying and solving ....,~oblems indering the smooth implementation of the project. It is also important that the h ?roject Manager, in obtaining the concurrence or approval of the Bank on certain project atters, submit complete documentation and provide all the information required to enable rie Bank to act intelligently and expeditiously. B. Visits of Bank Missions

_30. The Bank periodically sends out missions to conduct consultations with the executg agency and to undertake an overall review of the progress of the project. Moreover, the 3ank also stands ready to send out special missions to provide assistance to the executing agency on various matters relating to project implementation, such as procurement, project reporting, technical reviews and disbursements. 131. The Project Manager must make adequate preparations to receive missions from e Bank. The Project Manager should ensure the provision of administrative support for the mission, such as communications facilities, office facilities, and, if required, secretarial upport. The Project Manager should be prepared to make project files and records available for review; develop an agenda for discussions involving Bank staff, government officials and project staff and make appointments in connection therewith; arrange for visits o the project site; and provide any information and assistance that may be required to enable the mission to perform its tasks. Minutes of discussions or memoranda of undertanding should be provided to those participating in the meetings and follow-up actions to implement anything agreed upon with the mission should be undertaken. 132. The following is a list of the types of Bank missions that visit the borrower or the executing agency during the implementation of the project.
1.

2.
3.

4. 5. 6. 7.

project inception mission review mission special project administration mission project completion report mission country projects review mission country loan disbursement mission disbursement mission

For a more detailed description of these missions, see Appendix 13.

36

C.

Orientation for Executing Agency's Staff

133. As soon as the PMO has been organized, it would be useful to conduct project orientations for PMO staff. This is particularly important when PMO staff were not involved in the preparation and appraisal of the project. The orientation may be conducted with the assistance of Bank staff and should cover at least the following:
1. 2. 3. 4. 5.

13<
pre to

6. 7.
8. 9.

project goals and objectives; project scope, components and location; project time schedules; provisions of loan and project agreements; organization for project management; project costs and funding sources; procurement strategies for goods and services, including the requirements of the Bank; procedures and arrangements for working with outside organizations, agencies and individuals involved in the project;' and economic and social benefits to be derived from the project.

A.
Mal

13~ tors dis cea nm

In addition to such orientation, staff of executing agencies are invited to participate in semi .. , nars/workshops on various aspects of project implementation that are conducted hy the .Bank, either in the Bank's headquarters or in the borrowing countries.

13( pre
ahr

she Pre em the


tes

fen the

Ma
cOJ

sUI tee the op

37
38

VII. PROJECT COMMISSIONING 134. Project commissioning is a critical project milestone and requires early planning and preparation of procedures such that operational tests and turn-over of the completed works to the user(s) can be accomplished. A. Transferring Responsibility for Project Operations

135. Overall responsibility for the completion of the project facilities rests with the Project Manager. However, other project participants, such as consultants, suppliers and contractors, are also responsible for the successful completion of their individual tasks. There is a distinct point at which the responsibilities of the Project Manager and the project contractors cease and are transferred to the operators or end-user(s). The transfer of responsibilities normally involves the following: 1. Physical elements. Physical elements include individual items of equipment (if not installed in constructed facilities), installed equipment systems, constructed facilities, tools and other goods that are not a part of constructed facilities, spare parts, spare equipment, special tools, and special fuels and lubricants. Administrative elements. Administrative elements include as-built drawings, shop drawings, equipment and systems operatioris and maintenance instructions or manuals, warranties, parts catalogues and lists, spare parts lists, and special tools lists. Physical control element. Physical control elements include facilities to secure works, equipment and goods against theft, destruction and vandalism, as well as fire protection and maintenance of equipment and facilities. Trained operators must be ready to operate the completed project facilities.

2.

3.

136. Completed physical facilities should be transferred as provided in the contract and project documents though some individual items may be transferred to the user(s) well ahead of or later than the scheduled date of turnover of the major works. Major works should be turned over when physically completed, inspected, tested and accepted by the Project Manager, perhaps with the arrangement that minor deficiencies be corrected by the contractorls) after turn-over. There is generally a period following physical completion when the contractor retains responsibility for works while acceptance inspection and operational testing are being performed. The administrative and physical control elements are transferred when the individual items of equipment and the constructed works are transferred to the operators. The individuals or organizations involved in this transfer include the Project Manager, the PMO staff, the consultants who supervised construction, the installation/ construction contractors and the various manufacturers' technical representatives who supplied the equipment and systems specified in the contracts, and the operations staff. The technical representatives, under the terms of their contracts, will tome to the site to inspect the equipment before start-up, to supervise start-up and operational testing, and to provide operations and maintenance instructions to the operations staff.

38

I ,

137.

The following procedures should be employed for transferring responsibility: 1. 2. 3. 4. 5. 6. 7. Inspect equipment, materials and equipment installation for compliance with contract; Inspect civil works and interfaces with installed equipment for compliance wi the contract; Provide fuels and utilities for operational start-up and testing and subseque . operations after turn-over; Conduct equipment and operational systems start-up and operational performance testing; Accept and turn over equipment, systems and facilities to operators; Turn over equipment spares, spare parts, special tools and special fuels anc lubricants to operator; Turn over project documentation to operator, including: (a) (b) (c) (d) (e) as-built drawings and approved engineering shop drawings; operations and maintenance manual and instructions; equipment and components catalogues, parts lists, listing of spare parts. etc.; completion certificates and warranty documentation; and bonds, insurance and claims releases. to projec

Appendix 14 contains guidelines for transition from project implementation operations.


B. Providing Advice and Training to Operations Staff

138. The responsibility for recruiting personnel to operate the completed facilities rests with the operating agency, which may not necessarily be the executing agency. The Project Manager could assist in indicating the qualifications, position titles, and assignments of the staff needed to operate the facilities. 139. In many circumstances, the Project Manager will be involved in the development and administration of a training program for the operation of the project. The training program may be developed and carried out by experienced training consultants. In some cases, the manufacturer's representatives may be asked to propose programs applicable to the items they have supplied. The training consultants will develop courses for formal classroom and on-the-job training, provide advice about the training facilities and equipment, indicate the reference materials and training supplies required, recommend suitable training locations, and recruit qualified trainors or instructors. 140. 1 training schedule should be conducted in advance of project completion. This he would afford trainees the opportunity to observe the on-going construction of the facilities and the installation of the equipment and systems.

39

VIII. PROJECT REVIEW AND EVALUATION A. Project Benefit Monitoring and Evaluation
141. Project benefit monitoring and evaluation (PBME) activities, introduced in recent years, are encouraged by the Bank. PBME is concerned with identifying the benefits expected to be derived from a project, monitoring the chances of achieving such benefits during implementation, and evaluating the extent and impact of benefits received upon project completion and use. PBME helps executing agencies and the Bank ensure that benefits are achieved by adopting appropriate measures at several phases of the project cycle. During project preparation and appraisal, for example, basic information concerning the beneficiaries and the sectoral socio-economic conditions are obtained to enable projects to be prepared on the basis of realistic assumptions about beneficiary response to the project. Project benefits are monitored to ensure that beneficiaries receive and use project goods and services in accordance with original expectations. Provisional impact evaluation studies are undertaken to help identify follow-up activities needed after physical completion to ensure that benefits are achieved, to help on-going development programs; and to provide a guide for the preparation of new projects. 142. Very early in the project cycle the borrower generally appoints an agency to be responsible for PBME throughout the project period and for as long as needed after project completion. This agency must prepare itself to carry out the PBME program. At the start of project implementation, the borrower must update its knowledge concerning the sectoral socio-economic conditions influencing the project. The agency responsible must update its information about the beneficiaries at this time, to include comprehensive identification of beneficiaries and user preferences where applicable; the effect of the project on their economic and social well-being; how the beneficiaries are organized; the interest of beneficiaries in the project; and the risks and actions that must be taken by beneficiaries to obtain project goods and services. 143. Even with full. knowledge about the beneficiaries, the agency responsible for PBME must expect to deal with problems in achieving benefits that arise during implementation. These problems often arise because insufficient attention is given to ensuring the delivery of project goods and services and their use by beneficiaries. Accordingly, the agency responsible for PBME must establish a system for verifying the receipt and use of project goods and services by beneficiaries, measuring their effects, and initiating or recommending necessary action to ensure that benefits are received. 144. The executing agency should schedule PBME activities to begin as soon as project goods or services start flowing to beneficiaries. PBME activities for the early delivery components (e.g., a fertilizer distribution program) should be initiated first as these activities and the accruing benefits often begin long before overall project completion. PBME activities involve the collection of information needed to confirm that project goods or services are received and used by the beneficiaries and that benefits are derived from their se. The PBME reports should be brief but sufficiently detailed to identify differences between actual and expected performance in important operational areas and to enable nalysis of problems and adoption of remedial measures.

145. The Project Manager is expected to make significant contributions to the PBME efforts. He could assist by allowing easy access to project records and by providing data on goods and services delivered and their use by the beneficiaries. In the event that project developments reveal that changes may be required to achieve the benefits desired, the Project Manager should be involved in instituting these changes. B.
Project Completion Report

Ap

146. Within three months of physical completion of a project, the executing agency is required to prepare a project completion report (peR). The purposes of the peR are to provide a concise project history from identification to physical completion, to evaluate the completeness and adequacy of the preparation and appraisal process in relation to implementation, to review experiences in the implementation of the project, and to gather lessons that could be learned for application to future projects. Suggested topics for a peR to be submitted by the executing agency are given in Appendix 15. The peR should be prepared under the direction of the Project Manager; the Project Manager's concern should .be to provide a factual and objective report of how the project was conceived, prepared and implemented. The Bank in turn will prepare its own peR within six months after physical completion of the project.

41 4

APPENDICES Appendix
1. 2. 3. List of Project Implementation Management Tasks Problems......................................

Page
45 49 53 77 89

List of Common Project Implementation

Project Scheduling and Resource Planning..................................................

4. -- Planning and Control by Work Breakdown Structure................................... 5. _. Project Management Office Staff Functions................. 6. System for Project Cost Accounting and Auditing................................................................................................. Project Records and Files............................................................................. Suggested Outline for a Project Procedures Manual................................... Procedures for Selection of Consultants Procedures for Procurement of Goods and Works Change Order Request Form................................................................... Tools and Techniques for Project Cost and Schedule Control.................... Description of Bank Project Administration Missions

93 97 101 105 111 117 121 131

7. 8. 9. 10. 11. 12. 13. 14. -

Guidelines for Transition from Project Implementation to Project Operations.................................................... Report

137 141

15. --- Suggested Topics for a Project Completion

-.~

-------

APPENDIX 1 LIST OF PROJECT IMPLEMENTATION MANAGEMENT TASKS

II I
"

Appendix

I
LIST OF PROJECT IMPLEMENTATION MANAGEMENT TASKS
Project Management

Planning and scheduling project activities Organizing the Project Office Recruiting, assigning and supervising project staff Monitoring and controlling project activities Coordinating with the Bank and other donors Reviewing reports from project consultants, suppliers and contractors Preparing reports required by the Bank
Financial Management

Establishing a detailed, time-phased financial plan, including a project budget Establishing and maintaining a project accounting system Establishing with the Bank suitable procedures for disbursing loan funds Certifying invoices for payment Establishing procedures for project audit Preparing financial reports
Procurement and Contract Administration

1.

For Consultants: Preparing a short-list of consultants 47

Appendix 1
Continued

Preparing and issuing invitation documents for consultants' proposals Evaluating consultants' proposals and negotiating contracts Supervising the work of consultants

2.

For Goods and Civil Works: Preparing list of goods and contract packages Preparing tender documents and issuing tender invitations Evaluating bids and negotiating contracts Inspecting goods and supervising construction works

APPENDIX 2 LIST OF COMMON PROJECT IMPLEMENTATION PROBLEMS

Appendix2

LIST OF COMMON PROJECT IMPLEMENTATION PROBLEMS In Making the Loan Effective (a) Delay in preparation of legal opinions necessary to make the loan effective. (b) Delay in obtaining approval from the ratifying agency. (c) Delay in complying with special conditions for loan effectiveness such as organization of a project office, appointment of a Project Manager, and acquisition of land or rights-of-way.
2.

1.

In Organizing and Staffing of Project Office (a) Delay in obtaining approval of an organizational structure. (b) Lack of qualified technical personnel. (c) Difficulty in recruiting qualified personnel due to poor payor absence of proper incentives. (d) Political interference in the appointment of project staff. (e) Weak or inappropriate organizational structure. (f) Staff appointed for project implementation not being involved in the preparatio or appraisal of the project.

3.

In Engaging and Supervising

Consultants

(a) Difficulty in establishing qualifications and terms of reference. (b) Inadequate response from consultants due to unfavorable local work conditions. (c) Difficultyin assessing actual capabilities of consultants through curriculum vitae or proposals. (d) Cumbersome, stringent, or restrictive government procedures and requiremen for recruiting foreign consultants. (e) High cost of foreign consultants compared with local consultants. (f) Settlement problems on the part of the consultant. (g) Inability of the government to provide adequate logistical support to the consultants. (h) Disagreements between the executing agency and the consultant.
4.

In Procuring Goods and Works (a) (b) (c) (d) (e) (f) (g) (h) Lack of suitable expertise for procurement in the executing agency. Complex and cumbersome procurement procedures. Problems in understanding or adhering to the Bank's requirements/guidelines. Difficulties or delays in obtaining approvals from higher authorities. Rigid government procurement regulations/rules. Lack of counterpart funds for local procurement or delay in release of such funds. Failure of supplier to comply with the provisions of contract. Cost overruns.

Appendix 2 Continued

5.

In Construction Management (a) (b) (c) (d) (e) (f) (g) (h) (i) Delay in providing engineering designs. Changes in work specifications/contract conditions. Poor quality of contractor's work. Financial problems on the part of contractor. Right-of-way problems. Security problems at project site. Technical problems. Poor working conditions at project site. Labor problems. Delay in reimbursing contractor's expenditures.

0)
6.

In Withdrawing Loan Funds (a) Cumbersome government procedures for submission of withdrawal applications. (b) Lack of familiarity with the Bank's disbursement practices and procedures.

7.

In Project Commissioning and Operation (a) Lack of coordination between implementing personnel and operating staff. (b) Lack of provisions for spare parts and maintenance. (c) Operating personnel not qualified or trained to operate and manage the completed project.

S2

APPENDIX 3 PROJECT SCHEDULING AND RESOURCE PLANNING

Appendix 3

PROJECT SCHEDULING AND RESOURCE PLANNING The following discusses several scheduling techniques and their use together with procedures for effective employment of project resources.
A.

Scheduling Techniques 1. Table of Activities and Events This is the simplest way of scheduling implementation activities and events. The method shown in Figure 1 is usually adequate for simple projects involving activities of just a few responsible managers.

Figure 1. Activity No. l.


2. 3. 4.

Table of Activities and Events Schedule Period February 15 - June 15, 1985 May 1 - September 1, 1985 June 1, 1985 August 1 - November 15, 1985

Activity Description "Task X" "Task y" "Event No.4" "Task Z"

2. Bar Graph (Gantt Chart) This is a chart depicting work to be done and some of the interrelationships between and among all phases of the work. Figure 2 illustrates a bar chart. This chart, with the time scale across the bottom, shows how long it will take to accomplish a specific project. Each of the circles (milestones) represent accomplishment of a specific phase of the total undertaking and each of the rectangles represents a task. The three rectangles considered together in this example represent an entire project. Figure 2. Bar Chart
TASK X

o
100
Feb 1 Mar 1 Apr 1

TASK

TASKZ

May 1

Jun 1

Jul 1

Aug 1

Sep 1

Oct 1

Nov i : Dee 1

55

Appendix 3

Continued

The bar chart shows the relationship between the milestones within the same task. Figure 2 shows that while Mi!estone 2 cannot be started until Milestone 1 has been completed. and that Milestone 4 cannot begin until Milestone 3 has been completed, the relationship between Task X and Task Y. or between Task Y and Task Z, however, is unclear. The bar chart does no: tell whether Milestone 6 can be started before Milestone 2 has been completed, nor whether Milestones 6 and 7 are at all dependent upon the milestones in Task X. This is the big limitation of this particular tool. Therefore, one can tell from a bar chart the relationship between two specific milestones within a task, but the relationship between and among milestones contained in different tasks is not indicated on the chart. The bar chart is an effective scheduling tool with respect to simple projects involving a minimum of coordination among the various tasks making up the entire project, but it is quite ineffective as a planning and control tool or for use in trying to represent the enormous number of interrelationships among the phases of the development of a complex project. 3. Networks Networking was developed as a means to develop a project schedule to show the interrelationships between and among all the milestones and tasks in an entire project. For illustration purposes, the following discussion shows how the initial developers of network scheduling progressed from bar charts to networks. This will be done in three steps. a. Figure 3 indicates the results of the first step in the transition from a bar chart to a network. This step removes the rectangles signifying tasks and illustrates the interrelationships between milestones within a specific task by the use of arrows connecting

Figure 3.

Results of the First Step in Transition from Bar Chart to Network

0
(2)

"0-----+0

TASK X

TASK Y

0
56

TASK Z

Appendix 3 Continued

the milestones. Although this results in a somewhat neater chart, still unsolved is the problem of interrelationships between milestones not contained in the same task. For example, it is not clear whether Milestone 4 can be completed before Milestone 7 can begin, nor can one tell whether Milestones 3 and 4 contained in Task Y must both be completed before Milestone 2 can begin, or whether only Milestone 3 can be undertaken. b. The second transition step between the bar chart and the network involves adding the relationships among the milestones contained in different tasks, as in Figure 4. The addition of arrows representing the necessary flow of the work shows what milestones must precede other milestones, and which milestone can be completed without being coordinated with others. For instance, Milestone 4 cannot be started before Milestone 3 has been completed, and because Milestone 3 depends on Milestone 1, one can say that Milestone 4 also depends on Milestone 1. In short, the relationship between and among all milestones in the entire project (regardless of which task the milestone is a unit of) are clearly shown on this chart by use of the added arrows. Milestone 1, of course, is the beginning point of the entire project, and Milestone 7 is the ending point of the entire project. Now that Figure 4 indicates by the arrows all the interrelationships between and among all the milestones, the third transition step omits the term "task" entirely, as Figure 4. Results of the Second Step in Transition from Bar Chart to Network

c.

TASK X

TASK Y

TASK Z

L_
shown in Figure 5. In addition, the horizontal time scale is omitted in favor of individual time notations on the arrows themselves. Because all times are given, a time scale is unnecessary. The completed transaction is shown in Figure 5, with some arbitrary times in weeks indicated over the arrows.

57

-- ~

~_----""'! "---

Appendix 3 Continued

Figure 5.

Bar Chart Completely Transformed Into a Network

Thus, the bar chart, which showed milestone or achievements within defined and linked tasks, to form a finished project, gave way to a diagram. The major advantages of the network over the bar chart are that the network: Indicates all the interrelationships among all milestones. Makes redundant the designation of the task because the project is viewed as an integrated whole and not as a number of tasks. Substitutes for the previous time scale an individual time value for each leg of the network. Allows the use of the network for highly complicated projects.

B.

Developing the Network 1. Definitions. Before proceeding further into the details of networking, the reader should understand some basic definitions and symbols. a. b. An event (or milestone) is denoted by a circle. It represents the start or end of an activity. An activity is denoted by an arrow. It requires time to finish an activity - waiting for curing of concrete or waiting for delivery of materials for example. An activity starts and ends with a circle. Thus, Activity A is represented as:

O- __
c.

__

~O

A network is a graphical representation of the logic or sequence of activities, events and their relationships. Thus we show sequence logic graphically with networks.

58

Appendix 3 Continued

Sequence Logic Job B cannot start until A is completed, or, B depends on the completion of A Job H can start only after the completion of both F and G Job C must be completed before either of the activities D or E can be started Both of the Jobs J and K must be completed before Land M can be started.

Graphical Representation

d. A dummy is an artificial activity, represented in the network by a dotted arrow. It indicates that an activity following the dummy cannot be started until the activity preceding the dummy are completed. It requires no time or cost. Dummy activities are introduced to provide consistence in logic. For example: Sequence Logic Jobs Nand P must be completed before Q can start; Job R depends only on the completion of P; X is a dummy to show dependence of Q on P Graphical Representation

0 0

-Q -6
x
I
I
Eat

-0 -0

A common example of this graphic logic would be the preparation and cooking of rice, preparation and cooking of meat, and eating both afterwards.
Prepare rice Cook rice

Prepare meat

59

.,

Appendix 3 Continued

Generating the network is partly a trial-and-error process. Three questions that will help to plot activities and that should be asked for each activity are: What can be done at the same time this activity is being performed? What must be done before this activity can be started? What cannot be started until this activity is completed? 2. Project Time To this point the network represents only the logical interconnection of the vbrious activities. By introducting the TIME element, much more can be done with the model. The basis of this is the duration of each activity, which is the single best estimate of how long it will take to complete the activity. Depending on the type of project, activity times may be calculated in days, weeks or months, as long as a single measure is used consistently. Given the duration time of each activity, event times can be calculated. Each event has two times: a. "Early Start" is the earliest time at which an event can occur - when all the activities leading into the event have been completed. If there is more than one chain of activities leading to an event, the early start is given by the largest chain or largest sum of durations. For purposes of discussions, the early start is denoted by an underlined number placed under the circle (event). "Late Start" is the latest time at which an event can occur without extending the project duration time. To calculate a late start, one starts with the final event and works backward toward the start. When there is more than one chain of activities, the latest event time is determined by the earliest of the various possibilities. The late start is denoted by a number with a line over it. This is placed above the circle.

b.

3. Critical Path Most projects with any degree of complexity will contain both critical and non-critical activities that must be performed in proper sequence. Some actvities may be performed simultaneously; others may not begin until certain related activities are completed. Plotting project activities according to network techniques results in the depiction of the project as a collection of parallel paths from project start to finish. The network will show several courses of paths of project completion. The critical path will present the sequence of activities requiring the longest time for project completion. The total duration along one critical path equals or exceeds the duration along the others. Project duration equals the duration along the criuical path. If one critical path equals the duration along another path, project duration equals the duration along either path. One method for determining the critical activities consists of establishing the earliest time and latest times that each event can occur and then applying simple tests to see if an activity lies on the critical path.

60

Appendix 3 Continued

To illustrate, examine a simple project .whose component activities, duration and sequence are shown below: Activity A B C D
E

Normal Duration 3 days 5 1 2


2

F
G

3
1

The project activities are shown with the duration denoted under the arrow as a matter of convention.

~~----:------~{

___

H__

~0

Next, one determines how long the project implementation would take and what the critical activities are. (Note: It may be useful to look at the network again to make sure that the logic involved is understood. For discussion purposes, the events are arbitrarily numbered.) Step 1: Determine the early start of each event. It was stated that the early start (ES) will be denoted by an underlined number under the circle. Assign an ES of 0 to Event 1, and add the duration of the activity to the ES. Whenever one comes to an event into which two or more arrows end, such as in Events 4 and 7, several ESs will be arrived at. In such cases take the LARGEST VALUE as the ES of this "Merge Event." For example, in Event 4, Path A-B takes 3 + 5 = 8 days while Path AC will take 3 + 1 = 4 days. Take 8 as the ES of Event 4. The reader should prove that the ES of Event 7 is 12 days.

61

Appendix 3 Continued

~~--~:~----~~~(
o

______ ~H----~.~~
13

Step 2: Determine the late start of each event. Also. as previously stated, the late start (LS) will be denoted by a number with a line over it and located over the circle. Take whatever ES one gets for the last event and assign that as the LS of the last event. In this example, take 13 and put it on top of the circle. Proceed to subtract the LS less the duration of the preceding activity to get the LS of the previous event. Whenever one gets to an event from which two or more arrows emanate, note the various LS's and simply TAKE THE LAST VALUE. In the case of Event 4 again, two activities (E & F) emanate from it. Back-Path H-E results in 13-1-2 = 10 days while Back-Path H-F results in 13-1-4 = 8 days. Take 8 as the LS of Event 4.
8

o o

~~~

13

12

Step 3: Note the total project duration. It is important to check that the initial event (Event 1, in the example) must end up with ES = and LS = 0. If not, something is wrong with the addition or subtraction or in the determination of greatest or least values. If the LS = 0, then one concludes that the total project duration is the ES or LS of the final event. In the example, a total project duration is 13 days.

62

Appendix 3 Continued

ppe

Step 4:

Identify the critical path.


(

Connect the events that have the same numbers on top as the one below them, or ES= LS. This is the critical path (CP); in the example; the CP is AB FH. (Note: C and E ar not in the CP since their ES = LS condition was arrived at with another path.) 4. Significance of the Critical Path The critical path is the chain of activities which determines the project duration time; there may be more than a single critical path. If the duration of an activity along the critical path is lengthened/shortened, total project time will increase/decrease. The EA Project Manager will want to devote extra effort and attention to the activities along the critical path - these are the priority activities. It must be noted that as a project proceeds, the critical path may actually shift to another path depending on the actual performance.
C.

1=

The Time-Phased Diagram In the network, one first establishes three things: the logic sequence, the total project time, and the critical path. To make further analyses, the time-phased diagram (TPD) is constructed from out of the network In the previous networks, the length of the arrows were not proportional to the duration in the network; in the TPD, they are. The time-phased diagram is essentially the same as the network except that it is drawn scaled with respect to time. The TPD of the example is drawn below: Figure 6. Time-Phased Diagram

(ii

(h {

,...--.--~
E

B F

'c>
~
13

O--_G_-.~----_J
2 3
.4

7 DAYS

10

11

12

PERIODS,

63 64

Appendix 3 Continued

In TPD construction, it is suggested that one first draw the criticalpath along a straight line

(note how ABFH is drawn). Next, one draws the other non-critical paths and activities. Dotted lines or slack are drawn to indicate where the non-critical activities must be finished. One then notes that the critical path has no slack, while non-critical activities do. Critical paths do not have margin for delays while non-critical activities do. One can afford to delay, intentionally or unintentionally, non-critical activities. Exercise: Networking and Critical Path Identification A project has seven well-defined activities. Their sequence logic are as follows:
(i) (ii] (iii]

(iv) (v) -

A, Band C are starting activities and may take place after the start event. D and F must wait for completion of A. E follows C. G follows B, D and E. F and G complete the project. Develop the network. Assume normal duration as follows: Activity A B C Duration 3 weeks 6
2

D E F
G

5 2
7

-- Compute the total project duration and identify the critical path. -- Construct the preliminary time-phased diagram.
3 SOLUTION:

12

~---4---+0
12

Critical Path is ADG Total Project Duration

= 12 weeks

64

Appendix 3
Continued

Figure 7.

Time-Phased Diagram (Solution to Exercise)

~
"-

~~~---------D-----------.-~------------: ------~
...
E

J ,
,

~-----4~O---- - - - - - - . ~--2 3
4 5

10

11

12

D.

Analysis of the Time-Phased Diagram


This section shows how the time-phased diagram is used for various aspects of project analysis and scheduling. The TPD is the basis for analysis because of one major feature - its ability to describe the whole project GRAPHICALLY. The following describes and illustrates, using the data in the example in Paragraph C, how the analysis is done. It is important that one understands what is going on as the TPD is shifted. The reader should concentrate on the concept, not on procedures. The following concepts and suggested procedures will be demonstrated. -Project Crashing Least -Cost Analysis Manpower/Equipment Leveling Manpower/Equipment Scheduling Project Finance Planning p

AC

1. Project Crashing Under the circumstances, where the total project duration is excessive and faces very rigid time constraints, or when the project has been delayed and efforts must be accelerated to meet the deadline, the EA Project Manager may have to conduct a crash program. Project activities can generally be performed in a number of ways, between two limits. Normal conditions refer to minimum cost at optimum time: crash conditions refer to minimum time at maximum feasible cost. If a project is under a crash program, it may be necessary to do any or all of the following: (i) increase the number of personnel; (ii) increase the availability of materials; and (iii) work overtime. All these alternatives entail a higher cost. One does not crash programs by eliminating activities. It should be remembered that in crashing a program, it would be useless to increase the work rate (or shorten the time spent) for activities that are not on the criticai path. and that crashing a program may cause a shifting of the critical path. .

65

66

Appendix 3 Continued

In the following example, which is a continuation of the example in Paragraph C, and using Figure 7, suppose that the 12-week duration is unacceptable. One studies thoroughly each of the activities and notes the "crash-ability" of the activities and the cost implications. This study should yield crash durations and crash costs. The cost slope gives the rate of increase in cost for decrease in time. The cost slope is determined from the following formula:

Cost Slope

Crash Cost - Normal Cost Normal Time - Crash Time

It would be useful to check the validity of the cost slope formula in the example in Paragraph C. This formula assumes a linear and divisible increase in cost for every reduction in time period. In the example, it is desirable that the project be completed in nine weeks instead of the normal 12 weeks. In this case, a rational choice as to which job can be crashed can be made by shortening the time duration of activities in the critical path with the least cost slope. Example: PROJECT CRASHING

(1)
ACTIVITY A
B

(2)
Normal Duration 3 6 2 5 2 7 4

(3)
Normal Cost$ 8,000 9,000 3,000 7,000 4,000 8,000 5,000 $44,000

(4)
Crash Duration 2 4 2 4 2 6 2

(5)
Crash Cost$ 8,280 10,300 3,000 7,400 4,000 8,100 6,000 $47,080

(6)
Possible Reduction N-C 1 2

(7)
Cost Slope $280 650 400 100 500

C 0
E

F
G

1 2

* Normal (or Crash) Costs include those directly attributable to the activity only.

66

Appendix 3 Continued

Step 1.1.

Compute possible reduction (Column 6) Possible Reduction - Normal Time - Crash Time Compute cost slope. Crash Cost - Normal Cost Normal duration - Crash Duration

Step 1.2.

Cost slope

Examp!e, for Activity A:


8,280 - 8,000 280

Cost slope

3 -2

280

Step 1.3. Step 1.3.A.

The problem here is how to reduce implementation time from 12 weeks to nine weeks, as required, in the most economical manner. By looking at the time-phased diagram and the cost slopes, one can best achieve the first week crashing by reducing Activity A by one week. The cost slope of A is $280. If it were done in any other way, it would be more expensive. The second week crashing is more complicated because there are many ways of achieving it. For example, it can be achieved by: a. Alternative L Reduce G by 1 week; cost = $500 b. Alternative 2: Reduce 0 by 1 week; cost = $400 Therefore, Alternative 2 is selected as having less additional cost.

Step 1.3.B.

Step 1.3.C. Note:

Crashing for the third week is similar to step 1.3.B. The most economical alternative is to reduce G by one week; cost

$500

1. Notice that as one tries to compress further, the other activities may lose their slack (causing the critical path to shift).

67

Appendix 3 Continued

2. Likewise, as one compresses the critical path further, some noncritical activities may turn out to be critical. Step 1.4 Redraw the time-phased diagram reflecting the crashed durations.

o
B

~ 0------4.~----c
E

_.J

2. Least-Cost Analysis In least-cost analysis, the objective is to determine the optimal duration for which total project costs are minimized. Generally, as the total project duration is compressed, direct costs are increased, but as one compresses the total project duration, the overhead and indirect costs are decreased. Furthermore. provisions of bonuses for early completion may also be in effect. Through least-cost analysis, one takes these factors into consideration to find out the optimal least cost duration. In short, minimum total project costs are determined by: Total Project Cost Example: Step 2.1 Compute cost slopes of crashable activities. This was previously shown in Step 1.2. (that is, we are continuing to use the example in Paragraph C and Figure 7).

Direct Cost + Indirect Cost - Bonuses

Appendix 3 Continued

Step 2.2
I

Identify the most economical way to achieve various completion targets. Looking at the TPD and the cost slopes, the most economical way to complete the projects at the indicated target completion are:

Target Completion 12 weeks 11 weeks

is by: Normal Schedule Reduce Activity A by one week Cost slope = $280/wk. Reduce Activity 0 by one week Cost slope = $400/ wk. Reduce Activity G by one week Cost slope = $500/ wk. Reduce Activity G by another week Cost slope = $500/wk. Reduce Activity G by one week Cost slope = $100/wk.

Additional Cost

Total Direct Cost $44,000

$280

$44,280

10 weeks

$400

$44,680

-------------------------------------------------------------------

9 weeks

$500

$45,180

8 weeks

$600

$45,780

Week 8 is the maximum CRASH POINT, that is, it is the maximum limit for crashing and the project cannot be shortened any further. Usually. however, it would also represent the most expensive way of proceeding with the project. Step 2.3 Compute the total project cost for each of the target completion dates. Note the duration for which the cost is minimum. This is the optimal point

69

Appen

Continued

Recall that Total Project Cost = Total Direct Cost + Indirect Cost - Bonuses. Therefore:
Total Direct Cost
,---,----

Target Completion

Supervision Cost"

Bonuses

00

Total Project Cost

12 weeks 11 weeks 10 weeks


9 weeks H weeks
*
Supervision/Indirect

$44.000 $44.280 $44.680 $45.180 $45,780

$6.120 $5.610 $5,100 $4.590 $4.080

80 160

240
320

$50,120 $49.810 $49,620 $49.530 $49,540

Cost is estimated to be $51O!week.

* Bonus Provision of $80,week for every week earlier than 12 weeks,

50,000

TOTAL

PROJECT

COST

One can readily see that the least cost is incurred if the project is executed weeks. The Total Project Cost is $ 49.530. '

within nine

70

Appendix 3
Continued

E.

Manpower and Equipment

-.

Levelingand

Scheduling

Another application of the network schedule is in the scheduling of manpower and equipment resources. The objective of this analysis is to ensure that the adequate number and type of manpower and equipment are known in advance and made available when they are needed. 1. Example of Resource Management (Figure 7) with its manpower requirements. Let us consider our previous illustration

(1)
Activity A B

(2)

(6) Manpower

Normal Duration

Equipment ------------~~---Y Z 1 1

3 weeks 6
2

5 3
2

C
D

5
2
"7 I

E F
G

3 4 4
Y is analysts: Z is specialized equipment.

4
X is technicians:

Where

Taking the original time-phased diagram of 12 weeks (we could also take the 10-week time-phased diagram), Jet us first determine when the manpower and equipment will be needed. by using the technique below and Figure 8. Figure 8.
r---
.!

Manpower/Equipment
., f; } 'l

Count
9 1,; 11 12

.~-.-.-'.'

r--------~---_J 4

---~--------.~-------~.--~--~

-.'-' .-..o)----...- - - - - - - ~~
].( 1'" 3X

Appendix 3

Continued

From here on, several types of information or analyses are possible, depending on what the project planner considers crucial resources; in this case, X, Y and Z. a. We can proceed to do resource leveling, i.e., try to make the manpower equipment requirements as constant or as "smooth" as possible. and

b. We can look at the available manpower and equipment which we currently have and identify resource constraints (and when they will occur). This analysis will also identify some alternatives. Looking at each of these applications in turn: a. Manpower and Equipment Leveling Among the types of manpower and equipment needed, some will be more important (more scarce, more expensive, etc.) than others, depending upon the conditions under which the project will be implemented. For purposes of illustration, assume that Manpower Resource X is more crucial than Manpower Resource y, and that Manpower Y is more crucial than Equipment Resource Z. Manpower X will be examined first, then Y and finally Z. Step 3.1 Construct a Manpower Loading Chart for Manpower Resource X
8

x
.D
<lJ

..

E
Z

:l

ot
0

--~I--_~ _
2 3 4 5 6

~ __~I__ --L
7 8 9

~
10

~ __-J
11

12

DURATION

72

Appendix Continu

Note that there is wide variation in the number of Xs required. This variation is usuall not desired and a constant level of X should be maintained for the duration of the projec; Note that this can be done by shifting the non-critical activities (activities with slack) X-requirements towards the direction of the durations with minimum demand. That'
2 3 4 5

10

11

12

~------------------------~-----, 4Y \
F A D G

, ,
\

2X
B "'"_

+-

,
.J I

4X

II I I

,
5
2

~------5

3/4Y ~1--3:-~~~-.J
5
8

x
Y

5
2

5
8

5 4

5 4

2 4

4 4

4 4

By simply shifting activities C and E to the right, one ends up with a much "smoother' manpower loading pattern. .
6

x ... 0 ..
Q.J

.0

:l Z

0 0 2 3 4 5
6 7

10

11

1-

Although coming up with a perfectly constant requirement doe= revision is certainly much easier to manage.

~"',t

seem possible, the

Generally, one tries to achieve a constant requirement or a smoothly rising or falling requirement in manpower and equipment Wide variation between the maximum ana the minimum requirements and sharply rising and falling requirements hardly ever happen in the field. By not analyzing manpower and equipment, one usually ends up with wasted, idle equipment and manpower.

73

a:q

Appendix 3 Continued

In this specific illustration after analysis of X, we proceed to the next priority resource Y. The manpower loading chart for Y shows:
8r-

6f-

....
0

>-

:::J Z

~ .0 E

..

4-

2I I

0 0

,
3

,
8

,
9
10

11

12

If we shift Activity F to the right by two weeks, note that. this will result in a perfect leveling of Y at four men. The loading of equipment Z may be considered acceptable. However, note the effect of shifting activity B two weeks to the right. Finally we end up with:
2 3 4 5

8
F 4Y

10

11

12

r--

\ \
5

, '--A 5X.Z

/
0
2X B

\.
G
4X

z
c
3X.4Y

1(
i 3X

-------5

~O
5
4 1 5 4 1

~
5

J
2
4 1

X Y Z

5
2

5
4 1

4 4

4 4

4 4

4 4

"
1

74

Appendix 3 Continued

2. Analysis considering manpower and .equipment constraints - Suppose that only one unit of Equipment Z is available. Normally, problems of this nature may be solved by shifting noncritical activities so that activities requiring the same equipment are not scheduled simultaneously. In making a decision, one may consider the following alternatives: Crash Activity B. Rent or borrow another Equipment Z. Determine if finishing the project in 12 weeks is critical. Others. Note how the technique shows what the alternatives are. If one uses a least-cost criteria, all the alternatives can actually be costed and a decision made.
F.

Project Finance Planning Project finance planning can also be done based on network scheduling. Again, taking the original 12-weeks time-phased diagram (or any of the modified time-phased diagrams):

------- ----------------------------------------------------------(2) (3) (4) (1) Unit Cost (Cost/Period) Duration Normal Cost Activity A
B

C D
E

F G ._--------- ._---------------------_._-----------

3 6 2 5 2 7 4

8,000 9,000 3,000 7,000 4,000 8,000 5,000

2,667 1,500 1,500 1,400 2,000 1,143 1.250

Step 4.1_

Compute Cost Per Period. Costlp eno d (W ee k) = Normal CostlD uration . .

For example: Activity A: Cost/p . d enD 8,000/3 $2666.66 say $2667.00 75

Appendix 3 Continued

Step 4.2.

Compute periodic costs and cumulative costs. Assume for purpose of illustration that payments will be made on a weekly basis.

d
B 1500 E 2000 4

1143

G
1250

--~

11
0

0
1400

_JI
______
5
M

"

JI
8 9
M

6
M

10
M

12
0

..
U

CD CD

.. .., .., ..,


'" '" '"

..
'"
CD

'"

16

..

~ ~ '"

~
g

..,

:J

\l)

~;g

l'.2

.. '"

U .~O

:8

:e

.., "'
N

.. ..

'"

..,
N

'"

..,
M

M N

en

M N

en

~
N N

'~ " '" ..,


0 0

'" ;;;

~
:; ..,

CD

..
'"
M

'"

en ..,

"' ..

:e ..

..

Under actual conditions, payment may be made monthly and the cost of supplies and equipment may not actually be paid at the end of the activity. The planner should make the appropriate modifications. The periodic cost is computed by adding the unit costs of all the activities taking place in a specific week. For example: For Week 1, Per. Cost = 2,667 + 1,500 + 1,500 = 5,667 For Week 4, Per. Cost = 1,143 + 1.400 + 1,500 + 2,000 = 6,043 The cumulative cost is the running total of the projected expenditures. For example: For Week 7, Cum. Cost = 31,630 + 2.543 = 34,173 The cumulative costs represent the project cash flow. Ifthe project involves a fixed cash release schedule developed independently of the project schedule. it would be instructive to match the cash release schedule and the projected expenditures: Cash shortfalls may be eliminated by shifting the activities so that the cost of the activity is postponed or deferred to a time when the project finance can cover these costs. Step 4.3. Note the other indirect costs, special costs, bonuses, etc .. and the time they occur. Add up all the costs and note the cash outflow.

In project finance planning, one can determine by a cash flow approach whether financing will be a constraint. If so, some alternative modifications in the schedule can be effected. 76

----------------

--

--

APPENDIX

PI.ANNING

AND CONTROL

BY WORK BREAKDOWN

STRUCTURE

Appendix

PLANNING AND CONTROL BY WORK BREAKDOWN STRUCTURE

1. A standard method for planning a project is the work breakdown structure (WBS). Tr: WBS is a detailed breakdown of the overall project level into its component parts, call work elements. The WBS defines the project in a structured format via the facilities and .... 2items required to build the facilities, or the contracts required to complete construction of r z facilities. The WBS structure should reflect on paper as accurately as possible the physi project to be completed. This breakdown is continued until a work package level is reach at which distinct tasks are small enough for detailed planning. The work elements, therefore are portions of the overall completed project, e. g., parts of the constructed facilities portions of the overall effort, such as "training the instructors" in an education project. Ea work element is a complete entity, separate and distinct from all other elements and und the management responsibility of a single person. See Figure 1 for an illustration of a sam WBS. Sample WBSs for several types of other projects are shown in Figure 2 through 4. must be remembered that there are no "approved solutions" for developing a WBS for '" project.

2. It is essential that the WBS be established early in the project life. The borrower's s who originally prepare the outline and the concept of the project defines the WBS to a sta_: from which it can be prepared. Thus, the first phase is the complete definition of a proj and its associated WBS. The WBS works as an effective tool in organizing the work in-logical groupings. The next phase is formulating the project organization, consisting of z: PMO, consultants, contractors, etc., and assigning functional responsibilities, formulati :: detailed work plans and establishing estimates of resources required, and cost estimates: those resources, and establishing schedules for the conduct of the work plans and use of _ resources. 3. Concurrent with the development of the WBS is the development of the project mas milestone schedule. This consists of the identification and display, usually in bar chart forrr; of the broad project tasks that must be accomplished in order to meet the project complctior da.e objective. Examples of such milestones are planned project start dates, engineerir:: periods, procurement and construction periods, and commissioning dates. This mas schedule provides the schedule framework and boundary constraints with which final sched ing, resource procurement and usage, project organization formulation, and work task pia ning must comply. These schedule milestone dates (and constraints) must be distributed :c and known by all project participants engaged in development detailed work. The effort er:compassed by a work package is planned in detail. The period of work represented by c work package is usually of short-duration, three months or less; but if longer, may be brokedown further into plans at the work package level. These milestone constraints will opera = to establish start and completion dates of various project subtasks. These schedule co straints will, therefore, affect planning on how the various subtasks will be performed an how resources of men, materials, equipment, consultants and contractors will be employed. Following detailed planning, final project network schedule development and resour-ce

"\)

00

Figure 1.

Sample Work Breakdown Structure -

Irrigat~n Project

n> 0"0
~"O

~ :s s:: _ ro Q..
0000 CONTRACT 8501

t:1:~

o.~
~
PROJECT X Levell

IRRIG.A.TION

Level 2

0100 A Site Clearance

1000

2000

3000 Irrigation

,
Sit . Improvement

I
H Consuiting Services

4000

I
I
Project Manager

Works

1100

Level 3 1200 C Roads and Paths 1300

I
E

2100 F Canal Lining

2300 G Pump Equipment

B Drainage Ditches

Road Surfacing

2310 Procurement

Installat ion

~'

Figure 2.

Sample Work Breakdown Structure -

Agricultural Education Project

AGRICUL SECTOR

TURE PROJECT

EDUCATION

I
Project Management

I
Educational Programs Development Building Construction

I
Equipment

'I
Fellowships

I
Consulting . Services

I
I

r
VEDCA' Agriculture Sector Schools Vocational Education Development Center for Agriculture

I
Procu rement

I
I nstallat ion

eQ. =' ~ c ro
-.

n:g o ~.

o..~

.1

r-;

(il

fFigure 3.

CJ:;
t\.)

Sample Work Breakdown Structure -

Irrigation Project

n> 0'0
tt(\) ::3

::3'0

0000
FIRST IRRIGATION SECTOR PROJECT

SQ.
o..~
\\I

:s
~

010000
Core Project

0200
Sub Projects

0300

Project Management

010100

011000
Procurement of EQuipment

012000
Project Facilities

013000
Civil. Works

014000

015000

Preparatory Works

Pilot Demonstration Tanks

Consulting Services

013100

013200
Construction

013300
Canal Structures

013400
Service Roads

013500

013600

Diversion Works

On-Farm Facil ities

Drainage Facilities

013410
Sitework

013420
Roadway Construction

013430

Surfacing

Wf--

" ample Work Breakdown Structure Urban Development Project

Figure 4.

0000

rI I
l::l

'.JRSAN ' F -E""t~OPMH -RAM PRO~--..-J

I ,

'C n~ o ~ C

::l = C:c. ::l _

><

~~

Appendix 4
Continued

usage determinations, the project master schedule milestones and task durations are adjusted, with others added as needed. This final project master schedule then becomes a tool for use in reporting project status, performance and trends to higher authorities. A sample project master schedule is illustrated in Figure 5. . 4. In developing a WBS, project managers and planners should: 1. 2. 3. 4. 5 6. 7. Subdivide total effort into discrete and logical sub-elements. Check proposed WBS and planned efforts for completeness, compatibility and continuity. Determine that WBS satisfies both functional and project requirements. Check that WBS provides for local subdivision of all project work. Establish assignment of responsibilities for all identified effort to specific orqanizations and organizational elements. Check proposed WBS against the reporting requirements of the organizations involved. Limit WBS development to subdivision of work to the work package level.

A key issue in constructing a WBS for a project is the depth to which the WBS should be extended. Two principles are particularly important and bear repeating: (1) each part of the WBS should be subdivided to the number of levels useful for managing the project: and (2) no effort should be made to extend the WBS to the same number of levels for all project tasks. A large percentage of the problems experienced with the WBS device have occurred because of the tendency often to break the WBS down into too many subdivisions. creating an unproductive administrative burden, or because of insistence on a uniform number of subdivisions for all tasks, resulting in final subdivisions that are too small in some cases and too large in others. Some criteria generally applicable to subdividing tasks provide that it should not be difficult to understand what the WBS task is. nor should lowest-level WBS tasks involve excessively small costs. Additionally, it should be possible to construct a schedule or a network for a WBS task. if that is desired, while routine, repetitive work should not be excessively subdivided. While it is undesirable that the management of a project should be encumbered with too many work packages, the project manager should IV)t be constrained from subdividing work in areas that are complex, high-risk, or otherwise critical to project SI1CCCSS. 5. Detailed project planning and assiqnmcnt of responsibilities for planning and rnanaqcment are perlorrned at the work package level. Work packages ore discrete elements or units of work ilt Ihe level where work is performed. The effort represented by a work package is clearlv distinguishable from effort in any other work package. A work package is assigned to a single individual or contractor as that individual's or contractor's responsibility for accomplishment. The effort encompassed by a work package is planned in detail. The period of work presented by a work package is usually of short duration - three months or less -- though if longer may be broken down further into activities. These activities within a work packaqe would then be of relatively short duration and could be sequenced for

--_.----_._'--.-----~

"

Figure 5. Sample Project Master Schedule IRRIGATION PROJECT X MASTER SCHEDULE

Schedule (Months)

TASKS

I I I I I I I I
3
4

10\

11

12

Site Clearance

I
I

Drainage Ditches

y
I
I I

Complete Drainage Ditches

Roads and Patches

Canals and Flow Structures

Road Surfacing

I
I

Complete' Roads Complete Project

~.,

Canal Lining

Complete Pump Procurement


G

Pump Equipment

\J H.

Consulting Engineering

I Complete

Detailed Design

Project Management

n:g o ~
::3 c:t.Q. ::3 _

CJ1

00

ro . .po 0

c: ~

Appendix 4

Continued

scheduling purposes by a network diagram. Short durations for work packages facilitate objective measurement of work. Budgets are assigned to the work packages or activities within a work package as appropriate, in terms of monetary value (dollars, yen, etc.}, man-hours, or other measurable units. This integrates budgets and schedules. Work packages are then scheduled in order of precedence for the project by an overall project network diagram. 6. Detailed planning at the work package level is done by the functional manager responsible for that packaqe. The functional manager may be a member of the PMO staff, a consultant, a supplier, or a construction contractor. Working within a general schedule duration and budget given by the next-level manager to whom the functional manager reports or as contained in the contract bid price, the work package functional manager proceeds to develop a work plan that displays how the job will be done. The functional manager determines the activities within the work package, schedules and schedule sequences, and the costs of the various resources - labor, materials, equipment - required to perform the work. The functional manager must ensure that the final schedule for the work package falls within any critical milestones imposed by the project master milestone schedule and as included in the contract agreement. The functional manager may have to adjust the work plans and resources to accomplish any required overall work package schedule. The functional manager will have to plan under budgetary constraints as well, and balance the parameters of work effort, schedules and budgets as best can be done. In some instances, the preparation of detailed work plans for some portions of a project may have to be delayed until later in the implementation phase, when more definite or accurate information will be known for planning purposes. In these instances, budgets and schedules will be estimated, assigned and held at higher levels of the WBS until such time as the subordinate-level work packages may be assigned for planning in detail. Budgets and schedules are then developed and verified as falling within the originally alloted budgets and schedules. 7. A WBS dictionary is generated as an attachment to a WBS to define each element. This dictionary provides a disciplined method for assuring that all work is included in the WBS and that each element is exclusive of all others. The WBS dictionary also provides the basis for work descriptions appiicable to each responsible organization. A sample WBS dictionary item is shown in Figure 6. Each WBS element down to the work package level, should have a written description, such as in Figure 6, to be included in the WBS dictionary. The purpose of the WBS dictionary is to have all project work adequately described so that there is no misunderstanding between the Project Manager and the responsible functional manager about what the work clement includes. The reader should note that the dictionary description for the WBS element "Piping," shown in Figure 6, fully explains what the item is and where it fits into the project, what the material for the item consists of, what functions are included in the item (e.g., design, procurement or construction), and, where needed for clarity, what items are not included in this work element.

86

Appendix Continu -

Figure 6.

Sample Work Breakdown Structure

Element Dictionary Description

Piping The piping components element refers to all system piping in this plot area regardless whether the piping is for a utility or process system. Both aboveground and underground piping are included. Aboveground piping may be broken down at the ne: WBS element level, by piping block or groupings of piping blocks (batch Ref. No. depending on the number of categories of blocks that are best for internal rnanaqerner.; control of the work. Types of piping materials.include carbon steel, stainless steel, allo tile, concrete, and other non-metallic piping, as well as piping supports. Abovegroun piping includes the following systems: cracking .and quench, gas compression antreating, propylene refrigeration, ethylene refrigeration, flare, stem distribution/water treating, fuel supply, instrument air, and cooling water. Underground piping includes the fire. sewer and cooling water systems. The work for aboveground piping encompasses detailed design from routing and planning studies through completion of the bill 0: material and vendor print checks. It also encompasses the vendor providing piping materials and all assembly work starting with prefabrication and ending with final chec of each of the system lines. The work for underground piping encompasses all assembly work starting with installation of the piping and ending with the final check of each of the system lines. 8. The Project Manager, in developing a WBS for planning and control, should conside establishing a coding structure to be assigned to each element of the WBS. Such a coding structure is shown in Figures 1, 3 and 4. The purpose of this structure is to provide a mean for easily referring to the work element for management or administrative control purposes. The key to the usefulness of the coding structure is to assign a unique number to each element, a number which will essentially not change for the duration of the project. The system for developing this coding structure is to assign a particular number as a basic number to each of the upper-level elements of the breakdown structure and to alter .tha number to the extent of changing certain digits or adding additional digits to the element's basic number when assigning numbers to the lower level subtasks of the element. For an example, Figure 3 illustrates a work element coding system down to the work package level for "Service Roads" and assigns code number 013400 to that work element. These numbers are used for management control purposes. Other numbers can be added to each of these WBS numbers either on the front end of these numbers for administrative' control purposes or on the rear of these numbers for resource usage control. 9. As an example only (there is no specific way to develop coding system of 14 positions that may ing sketch depicts ment application to planning and control of projects. Under tions are administrative and used to designate the contract

a coding structure), the followbe useful for project managethis system, the first nine posinumber, management control 87

Appendix 4 Continued

areas and special (for example, administrative control) requirements. The last five positions comprise the code of accounts which define work tasks, resource usage and schedule activities for management control. [1]-[2]-[3]-[ 4]-[5 ]-(6]-[7]-[8]-[9]-[10]-[11]-[12]-[13]-[ 14] Administrative To further explain these positions: 1. 2. Positions 1 through 4 may be used to designate the contract number. Complete cost reports (summary or detailed) can be produced for each contract. Positions 5 and 6 are used to identify control areas of the project, such as different portions of the project scattered geographically over a large area, or portions of the project that are distinctly different in character from each other. Positions 7, 8, and 9 are available for special uses (perhaps administrative uses), e.g., to collect costs of vendor backcharges, claims, change orders, etc. Positions 10, 11, 12, and 13 are code numbers that may be applied to all project components, work elements and sub-elements down to work packages, to identify the individual components and elements of the project. Position 14 is the indicator position designating the classification of resources (costs, man-hours, etc.) being reported. For example, Indicator I might be material, Indicator 2 labor, Indicator 3 subcontract, etc. Code of Accounts

3. 4.

5.

10. To illustrate the use of this 14-position coding system: the work package "Surfacing of Service.Roads" in Figure 3 bears the code of accounts number 013430. The portion of this number shown as 01 has been used to designate the control area (Positions 5 and 6), that is, it is a part of the "Core Project" and not "Subprojects." The numbers 3430 are used for Positions 10 through 13. If one wished to code labor costs for this work package, the number 013430-2 would be used on all man-hours time cards of personnel working on this task (the number "2" is used for Position 14). If one wished to open a change order file for this work package, an administrative control number of 8501-01-100-3430 might be used, where 8501 is the contract number (Positions 1 through 4) where the number series 01 is used for Positions 5 and 6, where the number series 100 is arbitrarily used for a change order file number for this work package (101, 102, etc., would be the successive change order file numbers) and where 3430 is the code of accounts number. If one wished to assign a purchase order number to an order for pilot demonstration tanks, the number used might be 8501-01-200-4000, where the number series 200 is arbitrarily used for purchase orders (201 would be the next purchase order number, etc.). For a labor time charge number to be used by the PMO staff engaged in the procurement of equipment, the code of accounts number under this system would be 011000-2. 88

"I
I

I
APPENDIX 5

PROJECT MANAGEMENT OFFICE STAFF FUNCTIONS

Appendix 5

PROJECT MANAGEMENTOFFICE STAFF FUNCTIONS The following are sample staff position functional descriptions for a project managemen office (PMO) organization. Some positions may be omitted or functions described below may be combined and assigned to a single individual. Project Manager - The Project Manager is totally responsible for the management and technical performance of the project. Deputy Project Manager - The DPM performs the functions of the Project Manager when the latter is absent. Depending on background and expertise, the DPM assists the Project Manager by controlling the activities of designated functional managers within the PMO. For example, the DPM may supervise all the PMO functions under the Projec .", Technical Manager, may be assigned the added functions of the Project TechnicalManager, may operate as the Project Control Manager, or may closely supervise all the functions 'under the manager. Project Technical Manager - The Project Technical Manager is directly responsible to the Project Manager for the quality of technical performance throughout the project. The Project Technical Manager supervises quality control/quality assurance activities and supervises the performance of the Project Engineering Manager and the Project Construction Manager. The Project Technical Manager also reviews the quality of the technical specifications contained in all tender documents for goods and services. Project Engineering Manager - The Project Engineering Manager is responsible for supervising the performance of all technical engineering work done for the project, including the quality of management and the contract deliverables from consulting engineers and other technical engineering consultants. Specific technical areas of concern are technical specifications, construction/installation contract documents, approval action regarding shop . drawings and field engineering changes, etc. Project Construction Manager - The Project Construction Manager is responsible for the management and quality of performance for the construction of works and installation of equipment into the works in the field. The Project Construction Manager is responsible for the preparations for and conduct of project commissioning and turnover to the user(s) and coordinates this latter activity closely with the Project Engineering Manager. Project Control Manager - The Project Control Manager is reponsible to the Project Manager for the business and project management control functions within the PMO. These functions include project cost/schedule analysis and control and performance measurement; project procurement, including procurement of goods and services for the project; miscellaneous purchases of equipment and supplies for the PMO; project cost accounting; and project administration.

91

Appendix 5 Continued

Project Procurement Manager - The Project Procurement Manager is responsible to the Project Control Manager for all project procurement, including procurement of consultant services, construction/installation, and contractor services and goods (equipment and materials) and is responsible for the purchase of equipment, supplies and services for the PMO. Project Scheduling Specialist - The Project Scheduling Specialist is responsible to the Project Control Manager for formulating and updating project schedules and for analysis and control recommendations concerning project scheduling and progress. Project Cost Specialist - The Project Cost Specialist is responsible. to the Project Control Manager for project cost estimating and budget development and for analysis and control recommendations concerning project costs and performance. Project Accountant - The Project Accountant is responsible to the Project Control Manager for the recording and reporting of project costs and for the performance of such project business matters as invoice payments, billings, commitments, record keeping, etc. The Project Accountant maintains the project accounts, including a cash disbursement book, an account ledger, and a journal, and prepares the annual project financial statement for auditing. Project Administration Manager- The Project Administration Manager is responsible to the Project Control Manager for the administration of project records, files and correspondence, including data management for project cost/scheduling reporting from contractors, change order/contract modification, administration control procedures, project report generation and dissemination, contract administration files, and PMO office management. PMO Office Manager - The PMO Office Manager is responsible for the day-to-day operations for the office, including keeping records of PMO staff time sheets; fulfilling needs for office purchases of supplies, equipment and services (utilities, custodial, security, etc.); dispatch and maintenance of office vehicles; performance of office secretaries and other services staff; etc. The PMO Office Manager operates under the management control of the Project Manager and administrative supervision of the Project Administration ,Manager.

92

APPENDIX 6 SYSTEM FOR PROJECT COST ACCOUNTING AND AUDITI .

Appendix 6

SYSTEM FOR PROJECT COST ACCOUNTING AND AUDITING


1. The Bank includes in its loan agreements a covenant that requires borrowers to mai tain appropriate accounts and to annually submit audited financial reports to the Bank Perio -and properly prepared statements of project expenditures, together with loan disbursernen; documentation, are meant to provide a level of assurance that the Bank's funds are bei _ used for their intended purposes, and to aid in evaluating project progress. Effective reports may also provide a basis for post evaluation and be a source of data in designing future pr _ ects. Specifically. the Bank requires assurance that the project accounting system will provide complete, timely and accurate recording of project accounting data and that a doc -. mentation trail will exist from the reports generated for the Bank back to the original boo ~ of account and transaction documents. The most basic system of accounting that will be a propriate for the administration of Bank-financed projects will include the following elemen 1. Cash disbursement book - Records date, amount, and identity of payee for cash and check disbursements. In essence, this is a check register with additioncolumns to spread the accounting for the payment among the various official memo accounts in use. There should exist some notation in the cash book as to final account destination of each payment. Account ledger - From the amounts in the cash book, entries to the account ledgers may be posted on an item-by-item basis, or, more frequently, on a month'; summary basis. The project accounts should be organized by the ultimate destinetion of payments (component and category) and, within accounts, be seqrcgatec by funds source (ADB, IFAD, local etc.) so that report preparation is a relative_ simple process. Journal - A journal is an accounting record for non-cash transactions, such as reclassifications and adjustments. Entries made in the journal (and then posted: the accounts) are identified as to date, amounts, and accounts affected, and usu include short narrative description of the transaction. Withdrawal application memorandum register - Records details of withdraw applications submitted to the various agencies under the different types of disbursement procedures and by project component and category and the disbursements thereunder. This would facilitate monitoring the status of disbursements by Proje Managers. In addition, it will constitute a record of project expenditures that are n : recorded in the cash book - project expenditures that are financed under tha direct payment and commitment procedures.

2.

3.

4.

-;

2. The Bank will stipulate at the outset the timing of the statements, accounts and reports to be submitted. The minimum requirement generally includes for each fiscal year a sched ~ (by project component and category) of the expenditures of local, Bank and other agen _ funds (i.e., the total investment in the project). An additional report section that presents the

Appendix 6 Continued

total commitments to date (whether or not yet expended) is recommended. In defining the report content, it is imperative that the report categories for the final results and physical completion status materially agree. A summary project status report (with measurement in physical units) should be firstdesigned; the financial report sections will then use the same or similar project component categories. The accounting system can be set up later to facilitate report generation, provided that the reporting needs are precisely defined at the onset. 3. The concepts and practices of audit vary significantly throughout the region. Generally, in the case of Bank-financed projects, audit that are conducted by an independent government agency include an evaluation of internal accounting controls. The reports submitted to the Bank should be audited by the Auditor General's office (or a similar independent agency) of the borrower to ensure the greatest level of auditor independence. The financial report sections submitted to the Bank should be accompanied by a report of the auditor that indicates that these report sections have been examined in all material aspects and are considered to present fairly the expenditures on the project. The actual report may take many forms, but it is necessary that the auditor expresses an opinion that indicates an independent look at the various report sections has been taken and that the underlying detail has been sufficiently tested to indicate that the report sections are materially correct.

APPENDIX 7 PROJECT RECORDS AND FILES

Appendix

PROJECT RECORDS AND FILES

1. The following is a recommended listing of project records to be maintained in the P C files for the duration of the project implementation period: A. Project planning documents 1. 2. 3. 4. 5. 6. 7. 8. B. Project work breakdown structure Project master milestone schedule Organization and task responsibility matrjx Project network schedule Project budget Project financial management plans Code of accounts Project procedures manual

Project authorization documents 1. 2. 3. 4. Loan/project agreements Loan effectiveness date letter from the Bank Master work authorization from the executing agency in the form of a notice of funding and disbursement authorization for the project. Project Manager work authorization in the form of memoranda to the PMO key managers, letters of notice to proceed to consultants and other contractors, and purchase orders for equipment and materials.

C.

Project control documents (and data and correspondence relating thereto).


1.
q
L-.

3. 4.

5. 6.
" I .

8. 9. 10. 11.

12.

Cost expenditure and commitment records Budget expenditure records Performance measurement records Funds disbursement records Manpower expenditure records Project progress reports from consultants. suppliers and construction/installation contractors Technical (quality) inspection records Consultant agreements Construction/installation contracts Procurement records for goods and services Change order and contract modifications records Minutes of project meetings - internal PMO staff meetings, PMO staff meetings with consultants, suppliers and other contractors, and Project Manager meetings with higher authorities and with Bank staff.

99

Appendix 7
Continued

D.

Project reporting documents 1. 2. 3. 4. 5. 6.

(and data relating thereto) to higher authorities and to the

7.

Monthly progress reports of Project Manager Bank and other project donors. Quarterly progress reports (if applicable) Semiannual status reports (if applicable) Annual reports (if applicable) Emergency spot reports Technical reports (if applicable) Project completion report

2. The following is a listing of project administrative records to be maintained files for the duration of the project implementation period: A. Contract administration ing: 1. 2. 3. 4. 5. 6. files for each agreement, purchase

in the PMO

order and contract, includ-

7. 8. B.

Correspondence between the PMO and the consultants/contractors relating to contractual matters, e.g., complaints, questions and responses, etc. Partial payment requests from the consultants/contractors. Notices from contractors of potential claims and disputes. Project Manager directives to the consultants/contractors. Contract bonds and insurance certificates. Contract deliverables records, including final drawings, materials certificates of compliance, approved shop drawings, warranties, equipment operations and maintenance instructions, spare parts lists and records of delivery of special tools, equipment, spares and special fuels and lubricants, if applicable. Records of inspections and tests. Records of operations and maintenance training. other agencies and indivi.

Correspondence files between PMO and higher authorities, duals and the Bank and other donors. Personnel records of PMO staff.

C. D.

PMO records of expenditures such as purchase of office supplies and equipment, payment of utilities and office rental, payment of travel expenses and payment of other authorized expenses. Vehicles records for project vehicles, including assigned and maintenance records. drivers listings, and dispatch

E.

100

-------

--

APPENDIX 8 SUGGESTED OUTLINE FOR A PROJECT PROCEDURES MANUAL

Appen

SUGGESTED OUTLINE FOR A PROJECT PROCEDURES MANUAL


1. General (with introduction 1.1 1.2 1.3 to manual)

Objectives of the project. Description and scope of the project.

Projection identification - project name, location and any identifying num to distinguish these from other projects. Project organization - identification of all organizational participants, by nama address, and responsible manager's name, with telephone, cable and re. numbers, as applicable, and the functional responsibilities of the organiza ioc include organizational charts here; list all responsible PMO position titles ar.::. describe functions; list names of key PMO staff.

1.4

2.

Personnel 2.1 Personnel staffing assignments the project. Hours of work. Relocation procedures and requirements for project staff. description of how personnel are assigned tc

2.2 2.3

2.4
2.5

Travel
Changes in status promotions, etc.

3.

Program Management 3.1 3.2 General Planning - WBS, master schedules, network schedule, budget, code of accounts, and task responsibility matrix. Work authorizations Control - performance corrective action. measurements, meetings. change order control,

3.3 3.4

-..1.0

~ r-

R eporting requirements

103

Appendix 8 Continued

4.

Procurement 4.1 4.2 Procurement of services procedures. Procurement of materials, equipment and supplies.

5.

Correspondence Control 5.1 5.2 Correspondence Correspondence handling procedures tracking procedures. incoming/outgoing.

6.

Document Control 6.1 6.2 6.3 6.4 6.5 Scope Procedure general

Incoming material Outgoing material Project file

)
104

APPENDIX 9 PROCEDURES FOR SELECTION OF CONSULTANTS

Appe

PROCEDURES FOR SELECTION OF CONSULTANTS


The following information supplement those found in the Bank publication "Guide on the Uses of Consultants by the Asian Development Bank and Its Borrowers" re~procedures for the selection of consulting firms and individual consultants.

A.

Procedures for the Selection During Project Appraisal Period 1. 2.

of Consulting Firms

Finalize scope of work and terms of reference for consultants. Gather information on qualifications of firms. A long-list of firms will be g: _ by the Bank appraisal mission if so requested by the borrower. Prepare a long-list of firms. Prepare a short-list of firms and evaluation criteria. Prepare invitation documents, including letter of invitation, background info mation and terms of reference. Request a copy of standard invitation le-:from the appraisal mission. Prepare draft consultant mission. contract. Use standard contract provided by appraise

3. 4. 5.

6.

During Loan Negotiations 7. Submit short-list of firms, evaluation criteria, invitation documents consultant contract to Bank for concurrence. Receive Bank's concurrence Revise the documents with, or comments about, the above. and d.ef:

8. 9.

by incorporating by the Bank

Bank's comments.

After Project is Approved 10.

Issue invitation documents to the short-listed firms. Sixty days should be giIJP to the firms for submission of proposals. Evaluate proposals without delay after the submission After evaluation of proposals, write the first ranked negotiations. Request Bank assistance if needed. deadline. firm for face-to -Iace

11. 12.

107

Appendix 9 Continued

13.

Upon completion of negotiations, send draft negotiated contract to the Bank together with the breakdown of billing rate, breakdown of social charges and overheads. Receive Bank's approval/comments. Revise the contract by incorporating Bank's ccmments. Sign contract with the consultants. Send signed contract to the Bank. Advise all other unsuccessful firms on the selection, giving the name of the selected firm and in case a two-envelope system was used, return unopened all envelopes containing the financial proposals.

14. 15.
116.

17. 18.

After the Loan has been Declared Effective 19. 20.


B.

Give notice to proceed with the work to the selected firm. Provide copy of notice to the Bank. Give notice to proceed with the work to the selected firm. Provide copy of.notice to the Bank.

Procedures for the Selection of Individual Consultants 1. 2. 3. 4. 5. 6. 7. 8. Prepare a long-list of consultants. Bank is prepared to provide a long-list of consultants if requested. Finalize the short-list and rank the candidates in order of preference on the basis of their qualifications and experience. Submit short-list to the Bank for concurrence together with the terms of reference. Upon receiving the Bank's concurrence, inquire about consultants' interest in and availability for the assignment, using Bank's standard letter. Negotiate financial terms with the highest-ranked and available candidate. Send draft negotiated contract to the Bank for approval, using Bank's standard contract. Upon receipt of Bank's approval, sign contract with the selected candidate. Send a required number of copies of the signed contract to the Bank.

108

Append"

Continuec

9. 10.

Give notice to proceed with the work to the consultant. Advise all other unsuccessful candidates of the selection.

109

.~~
~--:-------

)
~--------

APPENDIX 10 PROCEDURES FOR PROCUREMENT OF GOODS AND WORKS

Appendix

PROCEDURES FOR PROCUREMENT OF GOODS AND WORKS


The following procedures apply to the procurement international competitive bidding procedure. A. Procurement of Goods 1. List the goods to be procured and group them into suitable contract packages . such sizes as to attract international competition. Prepare tion to (general dule of draft tender documents, which generally consist of the following: invi bid; instructions and conditions for tendering; conditions of contra and special); technical specifications; bill of quantities; pro forma scheprices, pro forma bid bond, and pro forma performance guarantee. of goods and civil works un

C
are

2.

2.

3.

After obtaining Bank approval of the tender documents, advertise the invitation bid in an English newspaper of general circulation in the borrowing country. the same time, send a copy of the invitation to bid to local representatives of th Bank's member countries based on a list of addresses provided by the Bank. Th Bank will also arrange to have a specific procurement notice published ir

Development Business.
4. Provide at least 60 days for the submission of bids. At the time set for the opening of bids, the bids should be opened in public and the bid prices (including for alternative bids and discounts offered) should be read aloud and recorded in the minutes of public opening. Representatives of bidders attending the bid opening should be requested to sign the record of bid opening. After bid opening, examine the bids to determine compliance with the tendering conditions and instructions and responsiveness to the technical specifications. The substantially responsive bids will then be evaluated in accordance with the methods, terms and conditions laid out in the bidding documents. Adjustments should be made in the bid prices, as necessary. Compare the bid prices, as adjusted, select the lowest evaluated bid. of the substantially responsive bids and 6.

3.
4.

5.

5.

6.

7.

Submit to the Bank (i) an account of the public opening of the bids; (ii) a summary and evaluaiion of the bids; (iii) the proposal for award, together with the consultants' recommendations, if applicable; (iv) draft contract if such draft differs substantially with the draft previously approved by the Bank; and (v) a certificate of eligibility of the goods, if required. The proposed award of contract should be made to the lowest evaluated bidder.

113

_ 4

ppendix 10 ntinued

8.

After obtaining the Bank's approval, negotiate and award the contract. Submit three copies of the contract signed to the Bank.

Contracting of Civil Works In most civil works contracts, prequalifications of contractors is required before bids are invited. Only the contractors who have been prequalified will be invited to submit bids. The procedures are as follows: 1. Prepare prequalification documents, which consist of the prequalification invitation, background information describing the project, location, and scope of contract and other relevant data, prequalification questionnaire, and proposed prequalification methodology and criteria. After obtaining Bank approval of the draft prequalification documents, advertise the invitation to prequalify in an English language newspaper of general circulation in the borrowing country. At the same time, send a copy of the invitation to bid to local representatives of the Bank's member countries based on a list of addresses provided by the Bank. The Bank will also arrange to have a specific procurement notice published in Development Business. The proposed prequalification methodology and criteria should not be included in the documents to be provided to applicants for prequalification. Allow at least 60 days for the submission of prequalification proposals. Evaluate the prequalification applications received based on the prequalification methodology and criteria agreed upon with the Bank. After evaluation has been completed, submit to the Bank (i) a list of the applicants for prequalification; (il) a summary and evaluation of the applications; and [iii) list of contractors proposed to be prequalified (together with the consultant's recommendations, where applicable). After obtaining the Bank's approval of the list of prequalified firms send invitations to bid to all the pre qualified contractors. The tender documents should be approved by the Bank before issue as in the case of procurement of goods. Allow at least 90 days for the submission of bids. At the time set for the opening of bids, the bids should be opened in public and the bid prices (including for alternative bids and discounts offered) should be read aloud and recorded in the minutes of public opening. Representatives of bidders attending the bid opcninq should be requested to sign the record of bid opening.

2.

3. 4.

5.

6.

Appendix 10
Continued

7.

After bid opening, examine the bids to determine compliance with the tendering conditions and instructions and responsiveness to the technical specifications. The substantially responsive bids will then be evaluated in accordance with the methods, terms and conditions laid out in the bidding documents. Adjustments should be made in the bid prices, as necessary. Compare the bid prices, as adjusted, of the substantially select the lowest evaluated bid. responsive bids and

8.

9.

Submit to the Bank: (i) an account of the public opening of the bids; [ii) a summary and evaluation of the bids; (iii) the proposal for award, together with the consultants' recommendations, if applicable; (iv) draft contract if such draf differs substantially from the draft previously approved by the Bank; and (v) a certificate of eligibility of the goods, if required. The proposed award of contract should be made to the lowest evaluated bidder. After obtaining the Bank's approval, negotiate and award the contract. Submit three copies of the contract signed to the Bank.

10.

115

APPENDIX 11 CHANGE ORDER REQUEST FORM

Appendix

CHANGE

ORDER REQUEST FORM

CONTRACT MODIFICATION PROPOSAL 1, ISSUING OFFICE 2. CONTRACT NO.

AND ACCEPTANCE 3. MODIFICATION NO_

4.

TO (CONTRACTOR)

5.

PROJECT LOCATION AND DESCRIPTION

---------------------------------~---------------------------------------------6. A proposal is requested for making the hereinafter described change in accordance with specification and drawing revisions cited herein or listed in attachment hereto. Submit your proposal in space indicated on page 2, and attach detailed breakdown of prime and subcontract costs. (see the clause of this contract entitled, "Modification Proposals -- Price Breakdown") DO NOT start work under this proposed change until you receive a copy signed by the Contracting Officer or a directive to proceed.

Date

Typed Name and Title

Signature

L-.-----------------------------------------------------------

7. DESCRIPTION OF CHANGE: Pursuant to the clause of this contract entitled, "Changes", the contractor shall furnish all plant, labor and material, and perform all work necessary to accomplish the following described work:

'II

Except as hereby modified, all terms and conditions of said contract as heretofore modified remain unchanged and in full force and effect. mod;f;caHon h,by ""pted, ;,

l=~~-:,go;ng

I
i
j

(Executing Agency)

CONTRACTOR

~----------------------1
!

BY --.--------------------.-----I-----------------~ Signature

Signature .nd

I--~~D-d-te--------T-y-p-e-d-N-a-m-e-a-n-d--T-it-Ie--------~--D-a-t-e-------T-y-p-e-d-N-a--m'

T~,

119

' ...-.......a

APPENDIX 12 TOOLS AND TECHNIQUES FOR PROJECT COST AND SCHEDULE CONTROL

Appendix 1

TOOLS AND TECHNIQUES FOR PROJECT COST AND SCHEDULE CONTROL


1. This appendix discusses detailed procedures for establishing and employing a system 0 record and tract project progress (schedules), costs and budgets, variances from origina. estimates, trends in progress and costs, and estimates at completion. This discussion refer to a hypothetical project, Irrigation Project X, whose WBS is shown in Figure L Appendix 4. Each of the blocks is a work element and each of these work elements has an individual responsible for the completion of that element. That individual may be the borrower's Project Manager, a member of the project management staff, a responsible member of a project participating agency, a consultant, a supplier, or a construction contractor. These assignments determine the overall project organization. 2. The individual responsible for his work element (task) plans the task in detail, establishing schedules, sequence of schedules and costs for each of the activities comprising the task (or for the task itself if the task does not lend itself to further subdivision into activities). Costs (budgets) are computed for each of the activities such that the task itself is a summation ot these activities. Costs are computed from the costs of labor, materials and equipment resources required to perform the activities or task. 3. In the case of the work element Task C, Roads and Paths, for example, a task plan may be represented as in Figure 1. The total time interval for Task C in Figure 1 is the time distance from X to Y. This total time interval can be presented by a single bar time span with other project tasks on a project bar chart. The total cost for Task C over the time interval X to Y is $4,000. The cost is thus integrated with the schedule for Task C. It should be noted at this point that only the time interval (schedule) for Task C has been determined and that interval has not yet been fixed in terms of calendar dates. This procedure is followed for all project tasks, resulting in costs integrated with schedules for each task. 4. Next. by careful precedence determinations for these tasks, tasks are sequenced into an overall (CPMIPERT) network schedule. Tasks displayed as a time-phased network diagram showing individual task costs with each activity as indicated in Figure 2. The project network and the overall schedule critical path is determined and the overall schedule analyzed to see that it meets project milestone constraints. The cost of each of the network activities has been determined previously. If necessary or desired, the network schedule in Figure 2 may be revised using such techniques as project crashing, least-cost analysis, etc. Costs of the various tasks are summarized to higher WBS levels to develop the overall project budget. which is then distributed back down to the tasks for control purposes. Once finalized. the CPMiPERT network schedule becomes an integrated budget (costl/schedule project baseline aqamst which project status determinations and performance measurements are made for project monitoring. It is extremely important that neither these budget estimates nor these schedules be changed except by authorized change orders (variation orders) and contract modifications.
_...-

--9

These

123

124

Appendix 12
Continued

Figure 1.
ACTIVITY

Task Plan for Task C


SCHEDULE AND COST

1.

Right of Way IROW) Clearance

V.-

[-------.
$1,200

$800

$ $

L+M+E L+M+E

lor S/C)' 10rS/C)

2.

ROW Subgrade Improvement

3.

Sub-base Course

and Base Construct ion

.,----------)
lor subcontract/contract - If a subcontractor price is used in place of L +M+E.)

$2,000

L+M+E

lor SIC)

L +M+E lor SIC) = Labor + Equipment + Materials contractor is used to perform the task, his contract

or

Figure 2,

Project x Time-Phased Schedule


Months

,...-------4~>-------~:::>-- -:-- -, - A!3,OOOl

e'l.000)

E 12 OOO!

I _-------.(l ------
816.000)

,
I I

. ~ -

\
HI8,OOO)

'

I
G (8 ,0001

\\ \\ \

\ '--0-------------\
~_~ \ FI18,000)

Dll0.000)

__J

. Tbese are to tat cos t s Ibudqe

estimates)

tor each

activity

24

Appendix 1 Continu

5. This subsection discusses how project status is determined and how project pertermance is measured in terms of cost/schedule variations and trends from those estimated a :. reported periodically throughout the life of the project. The primary purposes for these actions are to be able to identify immediately any problems as they occur and to corre these problems in time to avoid adverse effects on project schedules, costs and technicz, performance. It may be helpful, though it is not necessary when the time phased netwo schedule diagram is used, to display the project schedule in bar chart form in order to appr; project status determination and performance measurement techniques. The bar char: schedule for Irrigation Project X is shown in Figure 3. As indicated on this bar chart, projec status and performance to date at the end of the 4th month will be determined. These are the steps: 1. Compute the total amount of the budgeted value of work scheduled (BVWS) ir: dollars (or other currency), equal to the total project costs, as the sum of the budgeted values of all project activities as scheduled to be completed. This totals' BVWS (tot)

3,000

+ 6,000 + 1,000 + 10,000 + 2,000 + 18.000 + 8,000 + 8,000 + 12,000 = 68.000

2.

Compute the BVWS at the end of Month 4 in dollars or other currency as the total of all the budgeted values of the scheduled project activities to the left of the Mont. 4 reporting line. This becomes: BViNS = 2,000 + 2/6 (6,000) + 1,000 + 1/5 (10,000) + 1/9 (18,000) + 8,000 + 4112 (12,000) = 21.000

3.

Compute the actual value of the work performed (AVWP) in dollars or other currency up through Month 4. This is the actual value of all items expended i doing the portions of the work as completed up through Month 4. i.e .. the blackened portion of the bars in the above figure. It does not include expenditu.re . for items obtained early but not yet included in completed work. It does include items put into the completed work but which will be paid for later. In other words. AVWP at any point does not necessarily correlate with cash flow. Information for AVWP comes from the project administration and cost control staff based on records of man hour- expenditures and costs of materials. equipment and construe tion equipment-hours expended in performing completed work. It has nothing to do with budgeted ua/ues or estimated ualues of blackened portions of the bars in Figure 3. For purposes of this example. let us say that AVWP reported for the various tasks are: AVWP Task A B H I Amount = 4,000

+ 2,000 + 8.000 + 4.000

lS.0()O

125

126

,~
N 0'\

Figure 3.

Project x Bar Chart Schedule

(J~

0"0
::l"'O :1:~

WBS Tasks
Oeser rpt Ion

::l
Schedule (Monthsl

c Q.. ro _.

Code

I
I

I
(6,0001

I
I

10

11

12

o..;.! ~

1\00:)

(3,0001 A 0100
Site Clearance

1100

Ora inaqe Oi tches

(1,000)
C

1200

Roads

and Paths

I (10,000)

2100

Canals and Flow

Structures

I (2,000)

1300

Road

Surfacing

I (18,000)

2200

Canal

Lining

I
(8,000) I (8,000)

2300

Pump

Equipment

3000

Consulting

Engineering

(12,000) I

4000
estimates

Project

Management

I
Total budget for the activities are shuwn. The blackenedportton of the bar. indicate

I
work completed at the dates shown.

Appendix Continu

ppen Contini

Therefore, with actual expenditures less than scheduled expenditures, i.e., AVWP less thez BVWS, or 18,000 less than 21,000, one may be tempted to say that the project is in a cos; underrun status. There is, however, no quantitative indication of schedule status despite ha areas shown as shaded portions of the schedule bars. Moreover, some tasks turn out to different in costs from those budgeted, so, again, such an early appraisal may be inaccura e_ Indeed there is no indication of inefficiencies, final costs different from those estimated. _ effects on costs due to schedule variances. 4. The key factor to be computed, then, for comparison with the BVWS and AV factors above in determining progress and cost status is the budgeted value of wo . performed (BVWP) (in dollars or other currency). This is obtained by determining the percent of physical completion of the various tasks multiplied by the tota. budgeted values of the respective tasks. For example, for Task B above, BVWP = 1/6 x 6,000 = 1,000 or 16 percent complete. Determining percent physical completion is done by establishing in advance a set rule of measurement of war' for each of the tasks (e.g., cubic meters, square meters or linear meters of work or percentage of like units installed) and visually inspecting to see how much has been done. Once selected, the rule must not be changed for the project duration. There are other standard rules used as follows: Task
A B
C

D
E

F G H I

0) 0 - 100 per cent - a task must be completely finished before the task receives
any credit for BVWP. This is used for relatively short-duration (one to two months) lower-valued tasks that are not easily measured. One can easily determine visually whether or not a task has been completely finished. No other measurement is needed.
(ii) 50 per cent - 50 per cent rule -

Varianc follows:

if a task has been started, no matter how far along, the task is credited for 50 per cent of the budgeted value of that task. The task. however, receives no further credit for BVWP until the task is completely finished; then the remaining 50 per cent is credited. This rule is used for longer duration tasks (say two to six months), that are quite low in estimated value when compared with the other tasks and which are not easily measured. Again, it is easy to determine visually if a task is started and when it has been entirely finished. No other measurements are needed.

A grap perforn values)

127

128

Appendix 12
Continued

These two rules are used for convenience; under the circumstances described above for their use, any temporary inaccuracies in computing total BVWP will not materially affect performance measurement. For this example, let us say that our visual inspection of the work at the end of Month 4 reveals the following, which we have tabulated:

Task A B C 0 E F G H I

Physical Status Completed 2/3 of Area 1,000 out of 6,000 m Completed Not Started Not Started Not Started Not Started Not Started Completed Full PMO Staff Worked full time

% Completion
Rule Used % Units (Hectares) % Units (Meters) 0-100% % Units (km) 50% - 50% % Units (Meters2) % Units (No. of pumps) 50% - 50% Level of Effort (No. Manhours)

BVWP Computation 2/3 x 3,000

BVWP 2.000 1.000 0 0 0

1/6 x 6,000

a
0 8,000 4/12 (12,000) TOTAL BVWP
=

8.000 4.000 15.000

Variances ollows:

from estimated

values at any particular

reporting

period

are determined

as

Schedule Variance = BVWP - BVWS, that is, the budgeted value of what was actually done compared to the budgeted value of what was scheduled to be done. In this example at the end of Month 4:
BVWP - BVWS = 15,000 - 21,000

= 6,000 (i.e., behind schedule)

Cost Variance = BVWP - AVWP, that is, the budgeted value of what was actually
done compared to the actual value of what was actually done. In this example at the end of Month 4: BVWP - AVWP = 15,000 - 18,000
= -3,000 (i.e., cost overrun)

- graphical display of the above situation is shown in Figure 4, indicating the Project X rformance curves (note: all values of BVWS, BVWP and AVWP are cumulative current ues).

Appendix 12
Continued

pperu ....ontinu

Figure 4.

Project x Performance Curves

As

cost bas 80

EAC Cost Overrun

n other _0 per ( :-emainil "7leansl

70 65--/

Original

Completion

Cost ECO

=OR EJ

60

EA

/ /
/
50

~ co
0
rn

...
0 0 0
Ql

'0 o,
Q)

/ / / /
/

, ,/
/

~ 40
...
ro :J

a:

>

E
u 30 BVWS~ AVWP-\ \ \
:"J

//

.: ./

./

./

fOR EI
c

...

0
Ql

//./

./

a.
E

EC
...
(\)

ro

20

BVWP

-/-/~f\j -.~~~_-__-~~I
4

.: /

ro c

...
0

rn

15

BVWP - A VWP = Cost Variance (here, an overrun)

10 5

BVWP- BVWS = Schedule Variance (here, behind schedule)

In one me units ( pedorr that is I compu

Actual
....J-

J..~

8 TIM

9 E

10

11

12

14

15

16

Schcdi

129

130

ppendix 12
..... ontinued

5.

As an approximation,

the estimate at completion 18,000 x 68,000

(EAC) for the final estimated project 81,600 overrun by $13,000, or the costs to complete all in this example. Other (ECD) follows:

cost based on the project status at the end of Month 4 may be computed by:
AVWP x Total Budget
= =

BVWP 15,000 a other words, as indicated at Month 4, the final project costs will 20 per cent. A more accurate determination would be to reestimate :emaining work and add that to the AVWP at the end of month eans for computing the EAC and the estimated completion date ::OR EAC: Cost index (CI) = BVWP AVWP Remaining CI 68,000 - 15,000 + 18,000 0.833 15,000 18,000

= 0.833

EAC

$ + AVWP = (Total Budget - BVWP) + AVWP CI $81,600 or a 20 per cent overru n

?OR ECD:

Schedule

Index (51)

BVWP BVWS

15,000 21,000

0.7143
=

ECD

Remaining Time + Time Spent 51

12 - 4 + 4 mos. 0.7143

15.2 months or a 26.7 per cent late time completion In place of using dollars or other currency for measuring BVWS, AVWP and BVWP, one may use man-hours, say, for consultant efforts. The point to remember is that the same .mits of measure must be used for all the project activities. One may also establish nerforrnance curves plotting percentage completed against time, or scheduled vs. actual, if at is useful. The total project percent completion percentage at the end of Month 4 may be computed as follows: ctual percentage complete: BVWP (At Month 4) x 100 Total Budget cheduled percentage complete: 15,000 x 100 68,000 . 22%

BVWS (at Month 4) x 100 = 21,000 x 100 = 30.9% Total Budget 68,000

The
execi

also
A.

soon

agen for H finan are:

APPENDIX 13

DESCRIPTION OF BANK PROJECT ADMINiSTRATION MISSIONS

(\

Appendix 13

DESCRIPTION OF BANK PROJECT ADMINISTRATION MISSIONS


The following is a list of project administration missions that visit the borrower and the executing agency after a loan has been approved. The purposes of each type of mission are also described. A. Project Inception Mission. The Bank generally sends a project inception mission soon after the signing of the loan agreement, particularly in cases in which the executino agency of the project approved by the Bank is having operational relationship with the Bank for the first time or is relatively inexperienced in dealing with the execution of projects financed by international lending institutions. The functions of a project inception mission are: 1. To estabiish working relationship between Bank staff and the staff of the executing agency who are directly involved in the implementation of the project both at the executing agency's administrative headquarters and at the project site. Earlier contacts might have been with persons who are concerned only with securing the loan. To advise the borrower on the preparation the loan effective. of legal documents necessary to make

()

L.

')
<J

To further explain procedures and relevant Bank requirements of consultants, procurement and disbursement.

for the recruitment

To assist the Borrower in setting up records and accounting systems for the loan. To explain the reporting requirements of the Bank for the project.

To discuss implementation of the various loan covenants and assist in workinq out a suitable timetable for carrying them out. Problems likely to arise in connection with the borrower's compliance with its undertakings should be anticipated and correc five actions taken.
'7

I .

To check on the arrangement

and provisions for local financing for the project.

8. 9.

To review with the borrower the tentative timing for the first review mission. To review in general the preparatory work undertaken by the executing aqcncy, particularly with regard to requirements for personnel, and to provide such assistance as may be necessary to start implementation of the project.

133

Appendix 13 Continued

B. Review Mission. The Bank sends review missions at scheduled intervals du '-project implementation to conduct a detailed analysis of the overall progress of the proj Their principal functions are: 1. To review the overall progress of project implementation and to update. consultation with the executing agency, the schedule of project implementatio To review the problems that the project is encountering or is likely to encounter 'its implementation, and to work out with the executing agency measures to so these problems. To review expenditures on the project and make realistic estimates as to wheth the project can be expected to be completed within the original cost estimates (foreign currency and local currency); where a cost overrun is anticipated, to reviev the arrangements made by the borrower for financing the cost overrun. To review the progress of procurement and disbursement and verify, based 0:comparisons of the Bank's and executing agency's records, the contracts awarded and disbursements made. To review compliance by the borrower/executing agency with particular loa covenants and, where there is any non-compliance or delay in compliance .. 0 discuss proposed remedial measures with the borrower/executing a~~cncy. To look into such other matters related to the projects requiring the attention (,~ Bank staff.

2.

3.

4.

5.

6.

C. Special Project Administration Mission. Bank missions that are sent to deal with specific problems or matters of project implementation that are not generally covered by an inception mission or a review mission, such as those mentioned hereunder art: classified as special project administration missions. Among their principal functions are: 1. To assist executing agencies contract negotiations. during evaluation of consultants' proposals or
1'1

F p in the field.
C4 .1"

2. 3. 4.

To review draft tender documents To discuss specific procurement

problems. agency on specific institutional. technical or

To consult with the borrower/executing financial matters.

t34

Appendix 13
Continued

D. Project Completion Report Mission. A project completion report mission is sent in connection with the preparation of a Bank's project completion report after the physical completion of a particular project. During such a mission the responsibilities of staff are

1.

To evaluate the adequacy and appropriateness of the actions taken in connection with the formulation. appraisal. and implementation of the project. on the part of both the Bank and the borrower. To assess the record of the borrower/executing agency in the implementation of the project. with specific reference to such aspects as consultant's services. procure ment. construction. compliance with loan covenants. project costs. disbursements and institutional improvements. To review the problems encountered during the implementation the effectiveness of the measures taken to solve these problems. the Bank and the borrower. To recommend to the borrower/executing the operation of the project. agency of the project and both on the part of

2.

3.

4.

steps to be taken with respect

to

A country projects review mission undertakes E. Country Projects Review Mission. discussions with senior government officials on broad institutional, financial and procedural issues related to ongoing projects in a particular country. Among its functions are: 1. To discuss with central government agencies concerned on country-specific corn man project implementation problems and constraints and to work out appropriate remedial measures for such problems. To review problem projects with executing agencies solutions for specific problems being encountered. To visit projects for more concrete identified problems and issues. observation concerned and to propose

2.

:3.

of the

rnaqnitudc

ad ",ffeets of

F.

Country Loan Disbursement

pose of accelerating procurement country are called country loan missions are:

Mission. Bank missions sent for the specific pur and disbursement under loans extended to a particular disbursement missions. The principal function's of such

1.

To review the progress of procurement


records with those of the executing withdrawals made.

and disbursement and compare the B21l1k" s agencies with regard to contracts awarded and

2.

To review the borrowers'rcxecutmq agencies' compliance with the Bank's rcqulations concerning procurement and disbursement and to assist the agencies in the timely submission of related documents.

135

.-

Appendix 13 Continued

3.

To review projections of contract awards and disbursements for the current year and for the following year. The projections to be reviewed would cover: (i description of items; [ii] loan category; (iii] estimated amount of contract; and {i projected dates of awarding of contracts. To ascertain shortfalls in contract awards and disbursements, to identify problem or bottlenecks being encountered in relation thereto, and to extend assistance in resolving such problems or in eliminating the bottlenecks. To ensure that adequate records are kept for contracts awarded and disbursements made. To obtain copies of approved contracts that have not been submitted to the Bank.

4.

5.

6. 7. 8. 9.

To identify possible savings or cost overruns that may materialize under the loan. To ascertain the need for reallocating loan proceeds from one category to another. To ascertain the need for extending the loan closing date; where such a need exists, to work out with the executing agency the most suitable extended closing date.

G. Disbursement Mission. Disbursement missions are sent by the B~nk to solve project-specific financial and disbursement problems. The principal functions of such missions arc: 1. To review the accounting system, the budgetary system, and the internal control and audit arrangements of the borrower and of the executing agencies, and to review the commercial banking arrangements for handling import and export business through letters of credit. This review is necessary to smooth out loan disbursement and enable the Bank to approve special disbursement procedures such as the imprest account and statement of expenditures. To explain the exchange risk pooling scheme and to follow-up on payment by the borrower of principal and interest due under the loans. To give advice and counsel to the executing agencies with regard to financial and accounting problems and to devise measures to assist in solving cash flow problems such that sufficient funds would be made available on time for project implementation.

2.

3.

136

..

APPENDIX 14 GUIDELINES FOR TRANSITION FROM PROJECT IMPLEMENTATION TO PROJECT OPERATIONS

<,
)

,.

Appendix

GUIDELINES

FOR TRANSITION FROM PROJECT IMPLEMENTATION PROJECT OPERATIONS

T
(

Preparing for a smooth transition into the operations phase normally begins during pr -design. As such, transition should be carefully covered in negotiations and planning. preparations should also be coordinated with other implementation elements. Howe er, -realities are that the initial phases or "physical" parts of the project get more atte because they are tangible and of more immediate management concern. The following "" _ a few suggested actions for maintaining perspectives on project operation needs and mas =. the transition a timely and successful one. Keep the "operating" project activities. phase and objectives in management's focus during all ea.._

re

Op
ae

eq

Ensure that project planning recognizes all elements of operations and that schcdu' "lead times." especially for technical assistance, training and borrower or execu "-agency administrative and organizational development are realistic. Check original project assumptions necessary as the project environment regarding operational or design change. elements and realig

1
fin,

Do not assume that executing agency or PMO project construction monitoring perso nel will be available to support training and start up activities. This is seldom possib because of the demands of implementation problems and delays. Also, do not assume that "operating" personnel can manage construction phases. Do not delay excessively the initiation of training/operations activities if construction is delayed, as preparations for training and operations are just as subject to extenso, delay. The economic cost of an empty facility is usually far greater than a few months 0: extra "trainee' operator salaries. Reserve a sizeable contingency factor in the training and operations budget to cover salary extensions, losses of original trainees. and unforseen expenses Use pilot facilities for testing training assumptions and bringing trainees "up to speed" in actual operations wherever possible. Expose future operations personnel to design/construction activities to increase familiaritv and understanding of the physical "plants" within which they will work. Operation and maintenance will be enhanced. Attempt to retain executing agency or PMO construction nance support during operations. phase personnel for mainte-

139

40

Appendix 14 Continued

Review the borrower's or executing agency's budget planning, appropriation and administrative mechanisms for obtaining and utilizing operating and maintenance funds. Make sure the project operating cycle is compatible with the borrower's budget cycle to avoid funding availability problems. Review borrower or other donor guarantees for provision of timely and sufficient recurrent costs financing. Operations manuals and procedures for all equipment must be complete and translated, if necessary, and understood by the intended users. Mechanisms must be set up for the future procurement, storage and utilization of capital equipment, consumables and spare parts. If the entity requires external ingredients for operations (raw materials, etc.), review financing, materials availabilities, lead times, and procurement methods.

40

A.

B.

APPENDIX 15 SUGGESTED TOPICS FOR A PROJECT COMPLETION REPORT

c.

Appendix 15

SUGGESTED TOPICS FOR A PROJECT COMPLETION REPORT


A.

Project Description
1. 2. 3. 4. Objectives of project. Components of project Implementation methods used. Description and justifications for changes in project components tion methods, if any.

or implementa-

B.

Project Implementation
1. Comparison between original implementation schedules and actual performance; indicate areas of delay, length of delay, causes of delay and remedial action taken. Comparison between cost estimates made durinq appraisal and actual costs (foreign and local); factors that contributed to any significant overruns or underruns. Statement of problems or difficulties encountered in the recruitment of consultants, with reference to the procedures prescribed by the Bank; assessment of consultants' work and the working relationship between executing agency and the consultant. Statement of problems or difficulties encountered in the procurement of goods and services (including civil works) with reference to the Bank's procedures and requirements; assessment of supplier's or contractor's performance vis-a vis the terms cf the contract. Extent of borrower/executing agency's compliance with loan covenants: reasons for non-compliance or delays in compliance and the remedial actions taken. Reasons for any delays in loan utilization: appropriateness of the disbursements methods used. If there was reallocation of loan proceeds, justification therefor

2.

3.

4.

:.J.
S.

C.

Initial Operations
1. Description of initial operations of the project; transitional problems encountered from the completion of project to initial operation. Measures taken to insure continued smooth operation of project relative to management, staffing, funding, and maintenance of project facilities: prospects for project benefits being realized. Need for and types of future Bank assistance in operation of project.

2.

143

Appendix 15 Continued

D.

Bank's Performance 1. Assessment of the Bank's performance in supervising the implementation of the project; effectiveness and timeliness of assistance extended by the Bank to the solution of problems encountered during implementation. Comments on the Bank's guidelines, procedures and requirements; problems encountered and measures taken to resolve these problems; suggested changes in such procedures and requirements.

2.

144

INDEX

INDEX supervising work of, 23, 31 training, 39 Contingencies, 7, 11 Contractors managing contractor's action, 15 reports, 15, 32 Coordination, 6 Cost accounting, 12 Cost control measures, 28 objectives of, 13, 28 scope of, 13 tools and techniques, 29 Cost estimates, 10, 28, 31 Costs direct, 11 indirect, 11 overrun, 11, 34 underrun, 11 variances, 33 Cost to complete, 11, 12 Counterpart funds, 7 Covenants, 3, 28 Critical Path Method (CPM), 9 Data bank, 15 Delays Bank approval, 21 compliance with project covenants', 28 procurement, 7, 23 Delegation of authority, 8 Deputy Project Manager, 32 Diaries, 32 Disbursement procedures, 29, 31 Environment, 6 Equipment installation, 31 Evaluation, 1, 5, 40 Executing agency definition of, 1 multiple, 6 Expenditures administrative, 11 forecasting of, 11 indirect, 11

Accounting cost, 11, 12 project, 32 Administration contract, 2, 4, 31 project, 19, 31 property, 31 Administrative expenses, 11 Administrative procedures, 19 Agreements, financing, 1 Allocation, loan proceeds, 3 Appropriations, 11 Asian Development Bank (Bank), 1, 2, 3, 4, 12,

?acili Fea . Finar Exec Fixec ForCE Fo Funo ini

SOl

Grap Guid

Pre
Pn

20, 21, 29, 33, 35, 36,


37, 41 Auditing, 10, 12 Authority, delegation of, 8

Us

Bar Graph, 9 Benefits, 37, 40 Books of Accounts, 12 Borrower, 3, 20, 21, 28,

Wi
Hanc

35, 36
Budget, 11, 13, 33 Budgeting, 10, 31 Change order, 30 Changes, control of, 14, 29 Charts, 10, 27 Civil works. See Construction Code of Accounts, 19 Co-financed projects, 6 Communication, channels of, 23, 32 Conflict management, 16 Construction management, 15, 31 supervision of, 4, 27, 31 Consultants consulting firm, 20 engagement of, 20-23 external sources of names, 21 individual, 21 procedures for selecting, 21 reports, 32, 35 short list of, 21

Impa Infor Initia Inpu InspE Integ Inter.

Inten

Inten bic Intro Inves

Job ( Lead Loar ag

de
do ne Loar pe

147

148

INDEX Facilities, 38 Feasibility studies, 3, 4 Financial statements, 12 Fixed overhead, 11 Fixed price contracts, 28 Force account, 27, 33 Forms, 3, 15, 19,30 Funds initial work, 20 sources and allocation of, 29 Graphs, 9 Guidelines Procurement Under ADB Loans, 7 Project Benefit Monitoring and Evaluation, 7 Use of Consultants Under ADB Loans, 7 Withdrawals of Proceeds of ADB Loans, 7, 12 Handbooks, 6, 7 Impact Evaluation, 40 Information, 32, 33, 35, 40 Initial works, 20 Inputs, 6, 11 Inspection, 32, 34 Integration, 6 Interaction, 36 Interfacing, 6, 16 International competitive bidding, 23 Introduction, 1 Investment, 4 Job description, 19 Leadership, 16 Loan agreement, 3, 6, 9, 36 closing date, 29 documents, 1 negotiations, 3 Loan effectiveness period for, 4, 20 requirements, 4, 20 Loan negotiations minutes of, 3 Loan regulations, 3 Management consultants, suppliers, contractors, 15 financial, 2 project data, 14 Management Information System, 15 Master schedule, 12 Missions description of, 36 preparations for, 36 types of, 36 Negotiations, loan 3 Networks, 9 Operating agency, 39 Operations Manager, 4 Organizational structure, 12 Orientation, 37 Overhead, 11 Photographs, 32 Planning complex projects, 8 cost control, 13 detailed scope of, 6, 35 disbursements, 12 financial management! accounting, 10 schedule control, 13 technical performance, 13 Price escalation, 7, 28, 34 Problems types of, 7, 33, 34 Procurement of goods/works 4, 23-27, 31 Project agreement, 3, 36 changes, 14 commissioning, 4, 31, 38 covenants, 28

148

INDEX
documents, 6-7 interfacing, 30 management control system, 6 measuring project progress, 33 records, 14, 19 reporting, 13 staffing, 18 turn-over, 38 Project Benefit Monitoring and Evaluation, 40 Project changes, controlling, 29 Project commissioning, 38-39 Project cycle scope of activities, 3, 5 stages of, 3-4 . Project data, 14 Project Evaluation and Review Technique (PERTl. 9, 27 Project implementation preparing for, 18 stages of, 2 start of. 1 Project implementation management functional areas, 2 list of tasks, 2 purposes of, 1 scope of. 1-2 Project management, 2 Project management office facilities of, 18 functions of staff, 19 Project Manager activities during execution, 18 definition of, 1 functions and responsibilities, 11, 13, Quality control, 13, 27, .34 Reports appraisal, 3 progress reports, 14, .35 project completion reports, 14, 41 Resources, 2, 9, 10, 12 Responsibility, transferring, .38-39 Reviews changes, 30 fund utilization, 29 Right-of-way, 7 Schedules in loan agreement, 3 integration of, 8 master schedule, 8 methods of preparing, planning, 8 subsidiary, 8 types of, 8, 9 Specifications, 30 Staffing, 6 Start-up, 4, .38 Suppliers managing supplier' Systems, 19, .30, 32

action,

15

16, 19,20,21,2.3,27,29,30, .31, 32, .36, 38, 39, 41 qualities, 16-17 Project monitoring, 30-34 Project organization, 18, 30, 31 Project procedures manual, 15, 19
Project reports Bank requirements, 14, 35 information needed, 14 project completion reports 14, 41 Project work plan, 8, 10, 12, 31, 32 Quality assurance, 34

Table of activities and events, 9 Technical assistance, 3 Technical performance control quality assurance, 34 quality control, 13, 34 scope of, 34 technical specifications, 31, 34 Training, 18, 39 Unit price contract, 28 Usage scheduling, 12 Variances, 33, 34 Withdrawals, 29 Work authorization procedure, 6, 13 Work breakdown structure, 10, 32, 34

149

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