PED guidebook main sxn rev6. FINAL.pdf - LGRC DILG 10

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Project Evaluation and DevelopmentExample (h): Consider the following possible time series indicating volume of riceproduction.ABCD1 2 3 4 5 6 7 8YearWe have plotted four possible scenarios – A, B, C and D. The actual time series isgiven by the black dots and the black lines. The forecast trend is given by the bluebroken line. Note that scenarios B and especially C are cases where the status quomay lead to desirable outcomes, even without the project. Scenario A warrants aproject to change the situation into a desirable one. In scenario D, the project maybe more interested in sustaining desirable outcomes.2.2.2 Why should government be engaged in providing this output? 8a. If the “without project” scenario will already result in desirable outcomes,the government need not undertake the project.b. The <strong>PED</strong> analyst should consider the alternative strategy of instituting theproper policy and regulatory framework in order to produce the sameoutcomes, instead of undertaking the project. Some guideposts to aid theanalysis are:• Can the output be packaged commercially?8 The Technical Appendix, page <strong>10</strong> discusses the Role of Government and Role of Projects in Development.RGEdillon January 200620
Project Evaluation and DevelopmentNote that to merit public provision, the answer to the previousquestion should be a NO. If the answer is YES, we need to resolvethe following issues next:• Will it be profitable to private entrepreneurs? At what price should theoutput be sold for it to be an attractive commercial undertaking?• At this price, will consumers be able to afford it? What is the adverseeffect if the intended beneficiaries will not “buy” the good or service?• Is there enough private capital to undertake the investment to producethe output?• Just how soon can private investment be expected to start?• In case of regulation, how will compliance be monitored?Example (i.1): If the interest is to produce irrigation services, the obviousalternative is for individual farmers to put up their own shallow tube wells.If government updates the hydrological map of the province, will this beenough to encourage farmers to undertake the investment?Example (i.2): The private sector is also engaged in providing educationservice. However, this means that they will charge tuition fees. Can thefamilies of the potential student afford the fees? Will this discourageschool participation?Example (i.3): The provincial LGU plans to showcase the province’sscenic spots by hosting a national event. However, there are not enoughlodging places to house the prospective delegates. Should the LGUconstruct lodging facilities? Or can the private sector be encouraged toconstruct the facility? What will it take? Suppose the LGU constructs aconference facility and present plans to encourage tourism and use of theconference facility, will this be sufficient “come-on” for the private sector?Example (i.4): In highly urbanized areas, the private sector may beenticed to build and operate the public market. BUT, they will want to beassured that the LGU will not allow sidewalk vendors to operate in closeproximity to the “strategic” site identified.2.2.3 It is also important to trace the output and outcome pathways of the project.This will identify any pre-conditions for the project to generate output. On thisbasis, we can classify the project as:a. (S) Stand-alone – meaning that it can produce output on its ownb. (R) Required project – meaning that it provides the enabling mechanismfor other projects to produce output. The project can be analyzed as astand-alone or as component of a package of projects.c. (C) Needs a Companion project – meaning that its ability to produceoutput depends on the success of another project. The project needs tobe packaged with the other project that provides the “enablingmechanism.”RGEdillon January 200621
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PED guidebook main sxn rev6. FINAL.pdf - LGRC DILG 10

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