Assosa University

College of Agriculture & Natural Resources

Department of Agricultural Economics

Project Planning & Management (SRWM 4th Year)

Agricultural Project Planning, Evaluation & Analysis (PlSc 4th Year)

Firomsa M. (PhD, Assistant Professor of Agricultural Economics)

February 2025 (II Semester)

 Chapter 1: Introduction (Basic Concepts)
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1.1 Definition of a project: Project

✓ is an investment of capital in a time bound intervention to create productive
assets.
✓ is a temporary endeavor undertaken to create a unique product, service or
result.
✓ is a unique set of coordinated activities, with definite starting and finishing
points, undertaken by an individual or team to meet specific objectives
within defined time, cost and performance parameters.
✓ is a planned undertaking of interrelated and coordinated activities designed to
achieve certain specific objectives within a given budget and period of time
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1.2 Framework of project

 is a set of processes, tasks and tools that provide guidance and structure for
the execution of a project.
 The framework helps organizations map out the progression of the individual
project steps, from beginning to completion.
 A project framework is a document that helps you organize and track the
progress of your projects.
 It can be helpful for both individuals and teams, as it provides a common
structure for all stakeholders to follow.
 It can be used as a planning tool, to keep track of progress, and to document
results.
 It can help you organize your thoughts and stay on track as you work on
your project, ensuring that everything comes together as planned.
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1.3 Project characteristics

 Projects in general need to be SMART.
S- Specific
 Specific in its objective.
 Specific activities.
 A specific group of benefits.
 A specific group of people.
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M- Measurable:
✓ Projects are designed in such a way that investment and production activities
and benefits expected should be identified and be valued (expressed in
monetary terms) in financial, economic and if possible social terms.
✓ Though it is sometimes difficult to value especially secondary costs and
benefits of a project, attempt should be made to measure them.
A- Area Bounded
✓ As projects have specific and identifiable group or beneficiaries, so also have
to have boundaries.
✓ In designing a project, its area of operation must clearly be identified and
delineated.
✓ Though some secondary costs and benefits may go beyond the boundary, its
major area of operation must be identified.
✓ Hence projects are said to be area bounded.
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R- Real
 Planning of a project and its analysis must be made based on real
information.
 Planner must make sure whether the project fits with real social,
economic, political, technical, etc situations.
 This requires detail analysis of different aspects of a project.

T- Time bounded
✓ A project has a clear starting and ending point.

✓ The overall life of the project must be determined.

✓ Moreover, investment and production activities have their own time

sequence.
✓ Every cost and benefit streams must be identified, quantified and valued
and be presented year-by-year
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1.4 Project classification

There are a number of ways of categorizing projects:

(i) New, Extension and Rehabilitation/Maintenance projects

(ii) Single versus Multiple-intervention projects

(iii) Productive, Social and infrastructure projects

(iv) Single and Multi-purpose projects

(v) Slow and quick benefit yielding projects

(vi) Gender sensitive and age/culture specific

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1.5 The project environment

What is the project environment?

✓ Project environment represents a connection, where the project is processed.

✓ It impacts the project and is, therefore, conditioned.

✓ Such an interaction is provided by numerous factors as operational, physical,

ecological, social, cultural, economic, psychological, financial,
organizational etc.
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1.6 Plan, program, and project

Planning:
✓ Planning is the first function of management.
✓ It is the determination of objectives and formulation of plans, strategies,
programs, policies, procedures and standards needed to achieve the desired
organization objectives.
Why Need Planning?
Four concrete reasons for the principal importance of planning are :
1. Minimizes risk and uncertainty
2. Leads to success
3. Focus attention on the organization’s goals
4. Facilitate control
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There are many reasons why planning is a good idea.

Planning helps to:

✓ Think ahead and prepare for the future

✓ Ensure the right direction and identify issues that will need to be addressed

✓ Consider whether a project is possible and make the best use of resources

✓ Clarify goals and develop vision

✓ Projects are specific activities of a program.
✓ Projects are the smallest operational elements prepared and implemented as a
separate entity in national plan or programme of development.
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
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1.6 Aspects of project preparation and analysis

 All of the following aspects are related.
 Here we will divide project preparation and analysis into six aspects:
i. Technical aspect
 This will examine the issues in a proposed development project:
• The soils in the region of the project
• The availability of water, the rainfall and its distribution;
• The crop varieties and livestock species suited to the area; the production supplies and
their availability;
• The potential and desirability of mechanization; and
• pest endemic in the areas and the kinds of control that will be needed.
 On the basis of these the technical analysis will determine the potential yields in the
project area, potential cropping patterns, and the possibilities for multiple cropping.
 Chapter 1: Introduction …
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ii) Commercial aspects

◼ Market and demand forecasts
◼ Marketing system
◼ Marketing of Input
◼ Financing and Price policies
iii) Financial aspects
◼ Market prices
◼ Incentive effects
◼ Financing Policies of institutions
◼ Taxes
◼ Subsidies
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v) Institutional-Organizational-Managerial Aspects
✓ Customs and Culture of farmers
✓ Land tenure and size of holding
✓ Extent of new cultivation practices and skills
✓ Use of local institutions
✓ Communication system
✓ Management ability of farmers
✓ Government policies
✓ Rate of acceptance
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vi) Social aspects

✓ Income distribution
✓ Job creation
✓ Regional development
✓ Social effects
✓ Role of women
✓ Improvement of rural living
✓ Environmental impact

vii) Environmental considerations:

➢ The financial and economic analysis has been a focus in rural
development project.
➢ Recently, economists' effort has been directed at including
environmental factors in their analysis.
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➢ In general a feasible project should at least satisfy four conditions:

A. Technical feasibility: refers to whether it is possible to implement the

project as planned i.e. to put the work designed into practice. For
instance, a project aims to grow vegetables in arid areas without
irrigation is not technically feasible.

B. Financial feasibility: refers to whether the project generates sufficient

financial returns to cover costs and the ability to identify financial sources
with terms and conditions acceptable to both the borrower and lender.
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C. Economic feasibility: the project should generate sufficient benefits to the

society. This could be in the form of employment, increased foreign exchange,
better living conditions, etc.
D. Political stability: this is associated with political risks (uncertainties) of project
implementation.
➢ Political feasibility requires projects to be accordance with the political goals
of the country where it is implemented.
➢ This means the objectives of the project should not be conflict with government
objectives.
➢ Political risks such as nationalization of investors’ assets or in general issues
related to property rights are important sources of political risks.