Project Cycle Management
Project Cycle Management (PCM)
Project cycle management (PCM) can be defined as the process of managing the main elements that projects have in common, and how they relate to each other in sequence. A PCM approach ensures each part of the project cycle is considered in the management process and changes in all parts are noticed and taken into account for future project planning and design.
The PCM approach incorporates two important ideas: the concept of a sector programme and/or project proceeding through various stages from programming to evaluation, forming an identifiable cycle of development; and, secondly, the need for management of the process through all its various stages, rather than contributing to a one-off event – such as a construction – with a beginning and end. Managing of one-off events may be a characteristic of funding, but not of the larger process of development to which sector programmes and/or projects are intended to contribute.
Although the word ‘Project’ is part of PCM, it is worth bearing in mind that this term tends to carry restrictive connotations, and that the phrases ‘programmes and projects’ or ‘water-related activities’ have been preferred in these Guidelines. The word ‘project’, therefore, should be interpreted as broadly as possible and it includes sector programming. It might also include the construction of a major installation or of multiple constructions such as boreholes or catchment dams; but equally it might not. Project components might be confined, for example, to research, systems assessment and institutional capacity building. In PCM, the term ‘project’ is primarily used for convenience and simply means the collection of related activities for which a contribution is provided to meet a specified objective.
The PCM approach has been adopted by several agencies e.g. ADB, World Bank, EC and national governments. The European Commission (EC) has produced a “Project Cycle Management” (PCM) manual, which has been subsequently adopted by other development partners as one of the system for project development, funding and evaluation.
The approach of the PCM
The PCM presents a project cycle with five phases: Programming, Identification, Formulation, Implementation and, Evaluation. The approach is constructed around the idea of carefully planned phases leading logically from each other, each with mechanisms of assessment and verification. To this effect, for every project, a logical framework is prepared showing the intervention logic of the project as it evolves gradually through its various stages; it is a key part of all project documents. Although originally designed by the EC to improve and streamline the development partners’ programmes of co-operation, and make them more effective in realising their development objectives, including that of producing lasting benefits (sustainability), it is also used by governments to prepare sector programmes and/or project proposals.
Four Key principles have been identified by PCM practitioners to improve the quality of judgment and decision making at all stages of the project cycle. These key principles are:
- Projects are supportive of overarching policy objectives of the development partners and national governments;
- Projects are relevant to an agreed strategy and to the real problems of target groups/beneficiaries;
- Projects are feasible, meaning that objectives can be realistically achieved within the constraints of the operating environment and capabilities of the implementing agencies; and
- Benefits generated by projects are likely to be sustainable.
These four principles are important measures of the quality of the project, and should inform judgments and decisions of managers and advisors not only during the planning stage, but at points during the project cycle when amendments and course corrections are indicated.
To support the achievement of these aims, the PCM:
- Requires the active participation of key stakeholders and aims to promote local ownership;
- Uses the Logical Framework Approach (as well as other tools) to support a number of key assessments/analyses (including stakeholders, problems, objectives and strategies);
- Incorporates key quality assessment criteria into each stage of the project cycle; and
- Requires the production of good-quality key document(s) in each phase (with commonly understood concepts and definitions), to support well-informed decision-making.
The Logical Framework Approach (LFA) is an analytical and management tool, which is now used by most governments, multi-lateral and bi-lateral aid agencies, international NGOs. Development of a Logframe Matrix is required as part of any project formulation procedure either for external assistance or not. It is the principal tool used for project design during the identification and formulation phases of the project cycle. Using the LFA during identification helps to ensure that project ideas are relevant, while during formulation it helps to ensure feasibility and sustainability. However, it is not a substitute for experience and professional judgment and must also be complemented by the application of other specific tools (such as Economic and Financial Analysis and Environmental Impact Assessment) and through the application of working techniques which promote the effective participation of stakeholders
Reconciliation of PCM with key concepts for water-related activity
Recent thinking regarding development, stemming from lessons learnt during several decades, has brought to the fora certain key concepts; many of these have been explored with regard to water-related sector and project development earlier in these Guidelines (see Part I, under International thinking on water: the consensus). The reconciliation of these key concepts with the PCM process will require flexibility. These concepts, all of which are inter-related, are as follows:
- Development as a process: Development is a process to which sector programmes and project contribute; sector programmes and projects alone do not themselves necessarily constitute development. A project can be immaculately executed in technical terms, but if it is out of line with social, economic or environmental realities, it may end up as a costly and irrelevant development failure. To try to ensure that programmes and projects do contribute effectively to development, a process of dialogue with stakeholders and beneficiaries is needed, not only in the planning and preparatory phase of a project, but throughout the entire project cycle. This process may throw up a need for longer time-frames, extra studies or experiments, even major project re-direction. Thus, PCM should not be used as a rigid blueprint; no project cycle can be mapped out and set definitively in advance.
- Ownership: Evaluations show that many of the problems and failures in development programmes occur because the intended beneficiaries do not feel a sense of ownership of, or care for, the product. PCM sets evaluation and audit at the end of the cycle feeding back into programming and the identification of potential new sector programmes and/or projects proposals. A user-beneficiary perspective, i.e. the project viewed as the creation of assets over which they hold responsibility, will yield sustainable benefits after funding has ceased.
- Stakeholder involvement: A sense of ownership cannot be created without the involvement throughout the project cycle of all actual or potential stakeholders. These are individuals, groups or organisations that have an interest in a project (see also Part III). Beneficiaries and implementing organisations are the most important stakeholders, but others of significance might include religious groups, NGOs, traders, developers, the private sector, and agencies concerned with complementary or competing activities in the programme or project environment. Stakeholder interests may therefore be positive or negative towards the project. Effective PCM needs to take account of stakeholder interests at every phase of the project cycle, and make suitable adjustments.
- Participation: All the above concepts entail a paramount concept: the need for participation. Much water-related development activity depends heavily for its success on active and real participation by the intended beneficiaries. It is now recognised that effective participation, as opposed to an exercise in consultation or a communications campaign, can be a long process with unpredictable results. It is a vital component of the stages of identification and formulation, and should be present to some degree in other stages of the project cycle. (See also Part III.)
The application of the PCM tools must be sensitive and flexible to prevent that other imperatives and procedures take precedence over development imperatives. At any time during the project cycle, adaptations may be needed to take account of changed circumstances or previously unknown factors. The criteria of relevance, feasibility and sustainability should be used to inform the judgments and decisions about changes to be made.
PCM and EC Funding Instruments
Different funding instruments allow for a range of different kinds of support, including the traditional study or project approach, sector approach and budgetary aid, sector investment programmes, fiscal support measures and policy or strategy development.
Budget support http://ec.europa.eu/development/policies/consensus_en.cfm; DAC Guidelines on Sector-Wide Approaches "Harmonising Donor Practices for Effective Aid Delivery Vol. 2" http://www.oecdbookshop.org/oecd/display.asp?CID=&LANG=FR&SF1=DI&ST1=5LG... ; ""EU AID: Delivering more, better and faster” http://europa.eu/scadplus/leg/en/lvb/r12553.htm ; Guidelines for the EC support to Sector Programme http://ec.europa.eu/europeaid/multimedia/publications/publications/manua... ; Guide to the programming and implementation of Budget Support to sector programme http://ec.europa.eu/development/icenter/repository/F45_GBS_fin_en.pdf -->is the transfer of financial resources of an external financing agency to the National Treasury of a partner country, following the respect by the latter of agreed conditions for payment. The financial resources thus received are part of the global resources of the partner country, and consequently used in accordance with the public financial management system of the partner country
The Paris Declaration on Aid Effectiveness, includes twelve indicators of progress on ownership, alignment, harmonisation, managing for results, and mutual accountability. Many of these indicators of progress implicitly lend support to the use of budget support, and encourage the use of partner country public financial management systems.
Sector budget support (SBS) is the modality of choice, wherever appropriate, and consists of a transfer of funds to the partner government national treasury to be used in pursuit of an agreed set of sector outputs and outcomes.
General Budget Support (GBS), representing a transfer to the national treasury in support of a national development or reform policy and strategy. It can be
Medium-term to support development or reform policies and strategies.
Short-term to support stabilisation and rehabilitation
Both General Budget Support (GBS) and Sector Budget Support (SBS) involve a transfer of funds to the National Treasury of a partner country, and there is therefore no procedural distinction between GBS and SBS.
Common pooled funds or common basket funding (resources from a number of donors pooled using one agreed set of procedures) in support of a specific set of activities in the sector programme.
EC Funding sources for the application of the strategic approach