AusGUIDE AusGUIDElines

4 Preparing project design documents

Copyright Commonwealth of Australia 2000

Australian Agency for International Development The Australian Governments Overseas Aid Program

AusGUIDElines

Preparing project design documents

CONTENT
4.1 4.2 Introduction Managing feasibility/design studies 1 2 2 2 4 4 7 7 7 7 7 8 9 14 20 25 31 31

Purpose Key tasks Clear thinking: the logical framework Implementation contracting issues 4.3 Map Table of contents Glossary Executive summary Project preparation steps Analysis The project Monitoring and management strategies Feasibility and sustainability Suggested appendices for the PDD Associated documentation Detailed project design document content

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AusGUIDElines

Preparing project design documents

This guideline should be cross-referenced with AusGUIDElines: Assessing
projects against quality standards.

4.1 Introduction
This guideline has been prepared to assist in detailed project preparation. It sets out a recommended format for preparing project design documents (PDD) and suggests the content for each part of the PDD. The requirements for information in a project design document can vary considerably. For this reason, this guideline should be considered as providing a generic model for the PDD. It should not be seen as a mandatory approach. It is the responsibility of feasibility design teams to adapt this format to the needs of the projects they are designing. This should be done in consultation with the Activity Manager. It is also the responsibility of feasibility design teams to ensure that the PDD is presented in clear, unambiguous language. This is particularly important given the wide readership of the PDD, which includes Activity Managers, appraisers, contracts staff and other specialists in AusAID. It also includes officials in the partner government as well as managing contractors, their staff and local counterparts. Project design teams are urged to consider contractual implications of their designs at an early stage. A range of contractual options exists. Teams should consult with AusAIDs Contract Services Group for further information.

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4.2 Managing feasibility/design studies

Purpose
The main purposes of feasibility/design are to examine and confirm work done to date and further develop the design proposal.

Examining and confirming

Collect additional objective data as required to clarify the development situation and constraints being addressed. Develop the rationale for undertaking the project. The rationale should take account of related activities by the partner government and other donors. Confirm the objectives of the project and ensure they are consistent with AusAIDs key results areas and sector strategies. Examine the viability of the options in detail and recommend whether implementation is feasible. Collect additional data if required. If implementation is feasible, recommend a preferred option. Confirm and refine the achievable outputs and outcomes of the project. Confirm partner government and other stakeholder willingness to commit resources to specific projects.

Developing the design proposal

Develop the design to the point where it is costed and can be tendered and implemented. This includes considering appropriate contracting mechanisms as part of design. Develop a full risk assessment which can be used by implementers in managing risk. Develop draft performance indicators as an integral part of the design (through the logical framework and reference to AusAIDs key result areas). Develop an implementation strategy. Develop draft scope of services, basis of payment and suggested inclusions for the memorandum of understanding with the partner government. If preliminary preparation has been undertaken, many of the main issues to be addressed by a feasibility design study will have been identified. The Activity Manager should therefore draw upon materials produced at earlier stages of the activity management cycle and make sure these are available to the feasibility design study team.

Key tasks
In the process of managing a feasibility design study, the Activity Manager should ensure that the following tasks are effectively undertaken by the study team:

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Initial consultations

Confirm the acceptability or otherwise of the project concept as documented to date and the commitment of various stakeholder organisations at the national level. Request information on counterpart budgets relevant to the proposed project. Confirm and/or update status of other relevant programs or projects. Request stakeholder advice on key risks associated with the project. Check progress of key preparations in country by the partner government and implementing agencies, eg community consultation/awareness activities, drafting new regulations/policy documents, submission of budget/resource requirements to finance/planning agencies.

Field Consultations

Visit locations and sites and undertake interviews with key beneficiaries and counterparts. Confirm project rationale. Undertake or refine benefit analysis. Check validity of chosen approaches. Work with counterparts to analyse the problem situation and develop the logical framework. Undertake participatory planning exercises using the logical framework approach and obtain stakeholders broad perspectives on risks to the project. Conduct detailed institutional analysis of the participating organisations, identifying training and other organisational development needs. Formulate institutional strategy for the project. Develop implementation strategy for the project. Undertake data collection as required to back up feasibility recommendations and design.

Analysis

Undertake detailed cost benefit analysis if this is possible or feasible. If not, provide a rationale as to why this cannot be undertaken. Undertake detailed social impact and gender analysis. Undertake environmental impact analysis to the extent required by AusAID. Develop project concept and performance indicators. Formulate statements on feasibility, impact and sustainability from technical, economic, financial, social, gender, cultural, environmental, institutional and governance perspectives. Formulate risk matrix. Note: It is at this point that a decision is required as to whether the project is feasible and viable and should proceed or not. If not, the remaining tasks are unnecessary. Formulate detailed logical framework, resource and cost schedules as required, including details of partner government proposed counterpart contributions.

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Identify inputs by Australian and partner governments essential to implementation of a successful project. Prepare a project design document narrative as per AusAID guidelines. Prepare a risk management plan addressing risks outlined in the risk matrix. In feasibility design missions it is possible that the team may recommend that funding for the project not proceed, ie a project rejection can occur. In this case the teams work is curtailed and contracts may need to take this into account. Also, the team needs to be briefed on the requirement to alert the Post quickly if the project proposal appears not to be viable. See AusGUIDElines: Managing Risk for detailed guidance on risk management.

Clear thinking: the logical framework

A completed logical framework matrix is a key product of the project design process. The matrix provides a clear and concise summary of the project structure, the assumptions on which development outputs and outcomes are based and the means by which project progress and impact will be measured and reported.
Detailed guidelines on using the logical framework approach and preparing a logframe matrix are provided in AusGUIDElines: The Logical framework approach.

Schedule development
At the design stage of the feasibility design study there is a requirement to develop a range of schedules using the logical framework as the basis. These are: an implementation schedule showing the timeframe for achievement of key outputs; a resources schedule which identifies the key resources in terms of people, equipment and training required to achieve the projects outputs; a cost assumptions table which calculates the unit costs for personnel, equipment, supplies and training and other events; and a cost schedule that combines the resource schedule and the cost assumptions schedule to give as accurate as possible an estimate of the likely cost of the project to AusAID and the partner government.
The construction of these schedules is covered in detail in AusGUIDElines: Preparing
project schedules.

Implementation contracting issues

The project preparation process must take due account of the requirement for the project to be contractible by AusAID. This means that the design team should consider carefully the contracting strategy that will be recommended to AusAID, and be aware of the documents required for tendering. The Activity Manager should therefore ensure that feasibility and design study teams consult with the Contract Services Group (CSG) prior to undertaking their mission. They should do this to ascertain the viable range of contract options for the type

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of project being considered, and the documentation requirements of different approaches. This could also be handled through a special session with CSG during the pre-departure briefing for the feasibility design team.

The scope of service and basis of payment

As part of the feasibility design study, the team is usually required to produce a draft scope of services and basis of payment for the project. There needs to be complementarity between the scope of service for the contract, the project memorandum of understanding (or subsidiary arrangement) and the project design document. The scope of service and basis for payment consist of: a definition of those responsible for project liaison between AusAID and the contractor in-Australia and in-country; an implementation strategy which clearly outlines the periods of time for which the contract applies; a summary description of the project with a reference to the project design document for full description; a definition of what the contractor is required to deliver including reports; a statement of the standards of service provision required from the contractor; and a statement of basis of payment for the contractor.
Refer to AusGUIDElines: Preparing draft scope of service and basis of payment and AusGUIDElines: The Logframe approach.

Suggested clauses for the MOU

Overall responsibility for preparing the memorandum of understanding (MOU) rests with AusAID. However the feasibility design team is expected to produce suggestions for inclusion in the MOU. These should include: a summary description of the project with a reference to the project design document for full description; a statement of the contributions of the Commonwealth of Australia and the partner government. This section should also outline the responsibilities of each government to sustain project benefits; and a summary (in tabular form) of cost estimates for the two governments, by component and time period.
Refer to the Treaties and MOU Guide (TAMOUG) for full details.

Required documentation during implementation

It should be noted that AusAID usually requires the following under an implementation contract: an annual plan to be submitted as soon as possible after project commencement and by 31 March for each subsequent financial year. The design should specify this requirement. The annual plan is covered in detail in the Feasibility and sustainability section of the PDD. an agreed monthly, bi-monthly or quarterly reporting framework and usually a six-monthly progress report to coincide with project completion committee meetings.

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The design should specify this. The reporting system is covered in detail in Feasibility and sustainability. a project completion report. The project completion report is covered in detail in Appendices for PDD. an agreed process for handover to the partner government of equipment and supplies at the end of the project. This is covered in Appendices for PDD. Design missions should include mention of the need for these documents and procedures in their project design documents.

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4.3 Detailed project design document content

Map
Provide a map of the project area showing key locations. This should also show locations in relation to the whole country.

Table of contents
Provide a table of contents including a table of tables and table of figures as appropriate. Use the headings in this section as a guide to the table of contents.

Glossary
If necessary, provide a glossary of terms used in the document. A glossary should not need to include acronyms as acronyms should be fully spelt out in any new major section of text (with the acronym supplied in brackets). Where possible, foreign terms should be explained when they occur. Glossaries can create additional work for a reader, as they reduce the immediacy of information.

Executive summary
The executive summary should be no more than 6 pages long. It should provide an overview of the PDD as included in the rest of the document. Suggested headings for the executive summary are:

Project origin and design preparation

Include a summary of the history of the request stating how it resulted in a decision to undertake a feasibility design study. Summarise the stages of the feasibility design study. Refer the reader to the section Project preparation steps for more details.

Problem analysis and strategies chosen

Summarise the development context for the project. Succinctly state the problem that the proposed project is aiming to solve. Summarise the overall strategy for the proposed project and state why it meets the needs of the target area and the stakeholders. Refer the reader to Analysis for more details.

Project description
State the goal and purpose of the project. Note its location and proposed duration. Provide a very brief description of each component and its outputs. Refer the reader to The project section for more details.

Implementation
State which part of the partner government will implement the project. Note major institutional, NGO and community stakeholders that will be involved.

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Note Australian involvement in the proposed project. Refer the reader to Monitoring and management strategies for more details.

Benefits, risks and justification

Summarise the benefits and risks attached to the proposed project. Summarise the justification for implementing the project.

Project preparation steps

The purpose of this section is to provide a concise but complete history of the request for assistance and how it has resulted in the current feasibility/design document.

Project origin
This summarises the history of the request ending in the decision to undertake a feasibility design mission.

The request
Provide background on the request noting: a summary of the formal request; dates, content and initiating organisation of original request and any request superseding or updating the original; whether other donor agencies have been approached, or other funding arrangements been considered by the partner government; and the steps the partner government has already taken to develop the project, including reference to any existing project documents. Ensure that any key documents are referenced in the bibliography.

Assessment and preliminary preparation

Provide a summary of AusAIDs preparatory activities to date. This should include reference to: relevant country strategies and sector studies, and relevant decisions made in high level consultations; receipt of the request and initial discussions undertaken between AusAID and the partner government, or a description of how the development opportunity was identified; results of initial assessment by AusAID and the preparation pathway chosen after assessment; and any prefeasibility study or equivalent undertaken and the preparation pathway chosen after acceptance of prefeasibility documents by AusAID. Ensure that key documents are referenced in the bibliography.

Study team and method

This section summarises how the current draft project design document has been prepared.

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Team and mission

Provide a brief overview of the composition of the team and the scope of its assignment. Do not describe the terms of reference. These should be appended and referenced from this section. Provide a brief summary of the duration and phases of the mission. Do not provide a detailed itinerary. This should be an appendix and referenced from this section.

Key aspects of method

Outline the key attributes of the teams methodology, referring for detail to the appended terms of reference and any relevant working papers. Key aspects of method should include collection of objective data on the development situation and analysis required during detailed preparation. Mention should be made of how local partners have been involved in the feasibility design process. This should include the target population, as well as government institutions. The use of workshops, field visits, participatory appraisal techniques etc should be discussed. Mention should be made of the analysis method used to produce the logical framework.

Analysis
The purpose of this section is to provide a clear, concise analysis of the development problems being addressed and the possible responses to the problems, and to recommend a design option. This section should summarise the analysis undertaken to arrive at a recommended option for the project. It should stand alone as a rationale for either proceeding to implementation or rejecting the project. This section should be developed alongside the projects logical framework, which should be presented in tabular form as an appendix. Where necessary the section should refer to individual working papers prepared by team members and added as appendices.

Development context
This section is used to define the development context within which the proposed project will operate. The aim is to provide an overview of key issues, not to deal with specific problems, which are covered in problem analysis.

Location and geography

Identify the location(s) for the proposed project and give a brief outline of the relevant geographic and climatic conditions in which the project will operate. Note any broad constraints that climate or location will place on the project.

Socio-economic and cultural context

Summarise the key features of the cultural and socio-economic environment in which the proposed project will operate. Make note of any broad constraints that cultural and socio-economic conditions will place on the project. Note the incidence of poverty in the area(s) of the project and describe its salient features.

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The people involved

Identify the various groups of people who will be associated with the project (often referred to as stakeholders). This should include those who will be involved as planners and project workers and those who will be in the target communities and groups. Gender analysis of each group should be undertaken to help ensure that equal opportunities are provided to women and men to participate and share in project benefits.

Institutional context
Provide an overview of the chief government and non-government institutions involved in the development context of the project, outlining their roles and responsibilities. Note relevant organisations at national and local level. If the project is likely to rely on commercial organisations these should be mentioned also. Make note of any broad institutional constraints that are likely to be placed on the proposed project.

Policy and program context

Summarise the key features of the partner governments policies and strategies relevant to the issues being addressed in this study. Note relevant legislation, policy documents, strategy papers or corporate plans available to inform on these issues, ensuring they are noted in the bibliography. Describe any relevant programs or projects from any funding source dealing with the problem area. This should include programs funded by the partner government and other donor or lender organisations. In each case, funding organisations should be clearly identified. Include in this programs and projects that have major elements to deal with the projects development context, even if the overall programs or projects have other aims.

Problem analysis
This section aims to provide a comprehensive understanding of the factors or problems that the project should address. It should also deal with problems and factors with which the project may not be able to deal. This analysis should cover all technical and cross-cutting areas that the team has identified or been asked to investigate. Note that the format of this section is likely to be variable, and no overall format has been suggested. It is likely that a range of different sub-heads will be required for each proposed project, varying with the technical and institutional circumstances of the project. While the analysis should be comprehensive, this section should only summarise the main points. If required the team should use working papers to examine issues and sub-sectoral areas in more detail. The main issues and conclusions of each working paper should be included in this section. Working papers should be clearly referenced from the Analysis section and should clearly reference back to that section. Where a minority view is expressed in a working paper this should be indicated in this analysis. A number of analytical methods may be used as part of the problem analysis. These should be used in combination with, or leading to, the development of the logical framework matrix. These include: reference to the objective data collected during the study and how this informs the analysis;

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the problem tree analysis which is recommended as a generally applicable methodology for analysing cause and effect; stakeholder analysis as also recommended in the guidelines on the logical framework approach; institutional analysis in which roles and functions of participating organisations are analysed as well as aspects like budgetary and planning arrangements. This analysis is particularly important for projects of sustainability in terms of requirements for on-going partner government inputs; training needs or career development analysis in which the skills and motivations of participating individuals are analysed (it should be noted that detailed analysis of this nature is usually only undertaken during implementation); financial and economic cost benefit analysis. This type of analysis is not always possible to undertake but should be carried out where practical. It is essential this is undertaken for investment projects in the economic sector; social impact analysis as covered in the AusAID policy publication Social Analysis and Community Participation; gender and development analysis as outlined in AusAIDs Guide to Gender and Development; participatory appraisal in which communities are encouraged to define and prioritise their own development problems and opportunities ; environmental impact analysis as in some cases required by the Environmental Protection Act. All project designs will have an element of environmental impact assessment. Teams should consult the Environmental Assessment Guidelines for Australias Aid Program; and analysis of all relevant technical issues. These will vary from project to project and sector to sector. Specialist team members will have specific technical analysis skills in their own fields. AusAID has a growing number of guidelines relevant to sectoral needs. Please refer to the list provided for details. This list will be updated on a regular basis. It should be noted that no single project design document is likely to need all of the above analytical methods. Some may only require a few analytical methods. Design teams will usually decide the best form of analysis to undertake based on the requirements of the project and the skills of the team. Please refer to AusAIDs Internet or Intranet sites for downloadable copies of the various policy and technical guidelines. It may be necessary for the feasibility design team to undertake baseline survey work during the mission. This is particularly important for institutional strengthening type activities and for establishing a basis for reporting against key results areas. In this case the baseline survey also forms part of the problem analysis methodology and its results should be summarised here. The full baseline survey document should be provided separately to the project design document. Alternatively the project design document may call for baseline survey work to be undertaken as a separate exercise, perhaps by a technical advisory group team or perhaps as an activity to be undertaken during project inception. Project

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feasibility design study teams should bear in mind the need for key results areas to be reported against in project completion reports (PCR). For this reason the establishment of quality baseline data is very important.

Responses to the problem

Decisions on the best strategies to be used in projects rarely occur as a direct and immediate result of problem analysis. More often, a range of options presents itself and the design team will have to reflect on the best response. Sometimes, after reflection a more obvious solution presents itself from the options considered. This is then tested through the construction of the logical framework. This section also allows for comment on Australias ability to respond to the problem, and on lessons learned in previously implemented projects or activities.

Strategy selection
In selecting strategies for projects a wide range of factors need to be taken into account. The feasibility design team first needs to decide on the criteria it is to use in the selection of strategies. These might include cost effectiveness, managing risks, sustainability issues or the need to focus on poverty alleviation. AusAID may also specify the development of particular strategies for areas such as monitoring and evaluation, gender and development or poverty alleviation. These should also be taken into account as appropriate. The team should provide a comparison of the major strategies considered. Different strategies are not necessarily mutually exclusive, in fact in many cases many they will be variations on a common theme. This section draws together the options that emerged from the analysis process. A comparison of the strengths (opportunities) and weaknesses of the various options should be presented. The team should indicate the strategies that it has chosen for the project.

Australian potential to contribute

Comment upon Australias capacity to contribute in the policy, strategy, program and project context. Summarise AusAIDs country strategy as far as it affects the proposed project and sector. Refer to the appropriate previous AusAID activities in the country and sector and show how proposed activities will link to these. It is useful to note whether the skills and services used at that time are still reflected in Australian industry. Refer to other Australian (nonAusAID) initiatives or established programs that may support the sector in the country concerned, including any increased likelihood of availability of technical assistance. This might for instance mention any concerted industry efforts at education in specific fields. Refer to current industry or other initiatives in Australia that may indicate increased (or decreased) ability to contribute in the future. If there is clearly a problem in providing relevant skills or services, because, for instance, they are in short supply in Australia, this should be noted. In extreme cases, this may actually preclude the project going ahead. New Zealand capacity to contribute in all regards should also be included.

Lessons learned
One of the necessary elements of analysis prior to design is the recognition of the experience obtained in similar projects and activities in the past.

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This section should include information on AusAIDs experience in supporting activities as follows: Previous and concurrent AusAID projects in the geographical area. This may include projects in other sectors. Previous and concurrent AusAID projects in the technical field or sector, notably those in the country concerned. However experience in other countries may be relevant. AusAIDs previous and concurrent program or non-project activities relevant to the proposed project. This may include NGO programs, linkages programs and projects supported by AusAID through other donor agencies. This section should also take into account where appropriate and available: Experience and lessons learned by participating communities. Much of this will be anecdotal and it will rarely be in written form. However, the experience of communities in their involvement in overseas funded development projects is very important indeed. Development rhetoric may just not stand up to the intense scrutiny of the people who are the ultimate doers in development, many of whom have seen projects come and go. The opinions of local community and religious leaders are important, and often vital for project success. Experience and lessons learned by the partner government. This may not be available in written form, but partner organisations, particularly at the local level may often be willing to report their experiences in the past. Local government agencies have a wealth of experience in implementing their sectoral programs. Experience and lessons learned by other donors. These are often available in printed, and in some cases electronic form. The multilateral banks, for instance, regularly publish monographs on sectoral experience. Teams should consult these as well as undertaking meetings with other donor staff; Experience and lessons learned from Australian government and industry. It cannot be automatically assumed that Australian best practice is appropriate for the country concerned. However, it should not be ignored. Design teams must consult AusAIDs lessons database. This can be found on the AusAID Internet pages at http://www1.ausaid.gov.au/business/lessons/lessons.cfm or on the Intranet. The team should search the database by sector and country and by appropriate key words. In addition the team should consult relevant evaluations documents (some of which can also be downloaded from the Internet. Teams should also consult the DAC Database of lessons learned minweb.idrc.ca/daclog.htm. This is believed to be available on the Internet and is available on the AusAID Intranet in Canberra. The DAC database contains materials from a wide range of donors for a wide range of countries. Specific project lessons are available in documentation from previous AusAID projects: including project design documents, mid-term reviews, project completion reports and individual project or cluster evaluations. Teams are recommended to consult AusAIDs library facilities.

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The project
The purpose of this section is to provide a description of the project as derived from the logical framework and to develop indicative activities and identify resources appropriate to the project. This section is written following the formulation of the logical framework matrix. It sets out in narrative form the goal, purposes, components, and outputs as expressed in the logical framework. It also includes a statement of indicative activities (activities that could be undertaken by the project contractor and the partner government to achieve the outputs of the project, but which are not prescribed). The logical framework matrix does not include these, but The project section of the PDD should refer to them. For a more complex project the description of the project may be broken up into several sections. In this case, one section will provide the overview of the goal, purpose and component structure. Each component can then be dealt with in an individual section. The relative hierarchy of the document will however remain as follows.

Goal and purpose

State the goal of the project as defined in the logical framework matrix. The goal of the project is the statement of one clear overall aim to which the project will contribute. It may be an expression of a national or sectoral policy and its links to these should be explained. It will also provide a statement of the overall development environment in which the project will exist. State the project purpose as defined in the logical framework. Demonstrate how this is consistent with the goal. The purpose refers to what the project is expected to achieve in development terms. Provide a summary of the components that the project has been divided into. This is often best given in diagrammatic form (see example in Figure 1). Show the links between the components and the purpose. Also demonstrate in this section how project goal, purpose and objectives are consistent with partner government policies and AusAIDs country strategy. Show how they reflect the needs and views of beneficiaries.

Component structure
Each component of the project should be dealt with in a separate section. Each section should contain information on the component objective and the outputs that the component aims to achieve. It should, where appropriate contain a description of indicative activities. These are possible activity sets that could be used to achieve the output.

Component objective and relationship between outputs

Provide a statement of the objective of each component as derived from the logical framework. Follow this with a list of the outputs that will need to be achieved. Conclude with an overall description of the component noting the relationship between outputs. This is often best given in diagrammatic form (see Figure 1 below). Components will have been defined in the logical framework. They are a way of dividing up the project to make it easier conceptually, and to give it a structure through which it can be managed. Components are commonly decided

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on the basis of sub-sector, institution or function. Each component should have an objective. Output description Begin with a statement of each output in the component as it is defined in the logical framework. Then describe the output in terms of what is intended to be achieved, and what the output will consist of. Outputs refer to the specific results and tangible products produced by undertaking a series of tasks or activities. Provide for each output a description of indicative activities. These are possible activity sets that could be used to achieve the output. This should not be an exhaustive list of possible activities, but an indication of the scope and scale of activities expected to be required to achieve the output. Care should be taken when discussing activities with partner government and other stakeholders to ensure if activities are indicative at the design stage, this is clearly stated. It should also be noted if there are any activities that the Partner Government wishes to be specified. Indicative activities for these strategies should also be noted. These may include monitoring and evaluation, gender and development or poverty alleviation. AusAID will be selecting a contractor for the project under Commonwealth procurement regulations. This usually includes a one or two stage tender process. See AusGUIDElines : Managing contractors. In the tenders submitted, bidders will be asked to describe their methodology for achieving the outputs of the project. This system allows for bidders to suggest their own activities for the project. This is one reason why the logical framework should not include activity specification Also, the specification to only output level helps to keep the logical framework clear and simple. If required indicative activities can be presented in an activity or phasing schedule, included as an appendix. The design team should provide some indication of the types of activity that may be appropriate for the project. There are two reasons for this: to provide a method for estimating the resources and timeframe required for the project; and to illustrate the outputs for the benefit of bidders and implementers. Responsibilities for outputs In the definition of outputs as part of project design, it is usually possible to differentiate between the responsibilities of a contractor and the responsibilities of other stakeholders in the project. The latter will include the partner government, and sometimes several different agencies within the partner government. It will often include other stakeholders, such as communities and NGOs who will be taking responsibility for achievements within the project. AusAID also has a responsibility for securing quality outputs. As the project design document is a document that will be used by all parties to a project, it is useful to differentiate what AusAID will be responsible for producing, through the contractor and what the partner government will be responsible for producing through its agencies. The former can be used for assisting in the drawing up of a contract between AusAID and the contractor, the latter in drawing up the memorandum of understanding between Australia and the partner government. Furthermore, it is useful to be able to clearly understand the responsibilities of other parties, such as NGOs and communities, and this will assist in the drawing up of letters of agreement or local contracts between the project and local groups (if this is appropriate).

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For this reason it is suggested that a table be added to the narrative description for each output defining the responsibilities of the parties that together will attain the desired output. An example is given below. It is suggested that this exercise is restricted to major groups and not broken down into individual responsible agencies (although that may be appropriate during implementation). The differentiation of outputs into responsibility areas in this way should not be included as part of the project logical framework. The inclusion of AusAID responsibilities will provide a complete overview of responsibilities and inputs.

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Table 1

Example of a Responsibility Table for an Output

Output 1.4 A training capacity will have been established in the national environmental management agency which will meet the need for training support for emerging local agencies having environmental management functions. It will also meet the need for development of training support by the national agency for communities and local groups involved in environmental protection. CONTRACTOR PARTNER GOVERNMENT AGENCIES
Provision of trainers and training managers; Commitment to discussions and negotiations on and eventual implementation of the training plan; Local government commitment to provide course trainees; Provision of facilities for training; and Provision of recurrent costs for future training events.

AusAID

COMMUNITIES AND NGOs

Commitment to participate in training; Provision of trainers as appropriate; Commitment to participation in environmental protection programs through, where appropriate, provision of labour and inkind support.

Training needs analysis at national and local levels; Technical assistance in the formulation of a training plan; Delivery of training courses for trainers and training managers; Conduct of post training evaluations; and Provision of equipment for training.

Scope of service including trained personnel as contractible output Monitoring through interactions with partner government counterparts,mo nthly reports, annual plans, project completion committee meetings, site visits.

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Figure 1 Example Relationship Between Goal and Components (from the Fiji Police Training Project) Project Goal and Component Objectives GOAL To improve the level of police performance and increase community satisfaction with the service provided by the FPF

PURPOSE To upgrade professional skills throughout the FPF

Component 1 Objective: Strengthening and Personnel Management To establish an effective institutional capacity and systems to support the training function within the FPF

Component 2 Objective: Training development section To establish a sustainable capacity to develop, coordinate and manage the provision of quality training for the whole force

Component 3 Objective: Training delivery To increase the quantity and quality of training available to members of the FPF

Component 4 Objective: Project management To effectively manage the delivery of project resources and monitor project progress and impact.

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Figure 2 An example diagram showing the relationship between outputs of a component (From Fiji Police Training Project)
Objective To establish a sustainable capacity to develop, coordinate and manage the provision of quality training for the whole f

Output 2.1 A comprehensive training needs analysis will have been carried out, and a capacity to continue TNA work established

Output 2.2 New courses will have been designed, existing courses reviewed and a capacity established to continue this work on an ongoing basis

Output 2.3 An annual training program and calendar will have been produced

Output 2.4 Quality control standards and validation systems will have been established

Resources and costs Australia

For components or individual outputs provide an estimate of likely resources. This should be derived from the attached resource schedule. One of the jobs the design team must do is to estimate the likely cost of the project for AusAID. This cost, if accepted by the Activity Manager, will form part of the submission for funding. The design team must also estimate the recurrent costs required to sustain the project beyond the cessation of AusAIDs interventions. AusAID may or may not issue the costs to bidders (and this depends on circumstances). However bidders do need to know the scope and scale of the project. For these reasons the design should include a summary of the likely resources required. In the narrative of the project design document this will be a description. It should refer to the resources and costs table appended to the project design document. These tables will provide the method for assessing costs. In many cases the contractor will be responsible contractually for delivering a mixture of outputs and inputs. AusAID would expect to pay for the achievement of contractible outputs and for a range of inputs that might be paid for on a reimbursable basis. Inputs might include: advisor staff time in cases where advisers contribute to a range of outputs, the actual final or full achievement of which is outside the control of the contractor or where it is important to ensure that the actual advisers offered during bidding are used in implementation; and purchase of larger items of equipment where the outputs are of a capacity building nature but they require supporting equipment.

Partner Government

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It is important that the design team work with appropriate PG staff to define and cost the PG contributions for the project period. These should be in the same detail as those for the Australian contribution. A comment should be included on the likely availability of PG funds.

Suggested timing
The section should conclude with a brief overview of the likely phasing of achievement of outputs. This means constructing a phasing or implementation strategy and schedule as a necessary. This should follow on from the production of the logical framework and be included as an appendix. In order for the design team to make a reasonably accurate assessment of the costs and resources required, it will often be necessary to include indicative activities in the implementation schedule.

Monitoring and management strategies

The purpose of this section is to provide an analysis of performance monitoring and risk assessment in the project, to establish the framework for measuring performance and managing risk and to suggest overall management strategies for the project. This section is intended to provide a starting point for project implementers in how they might monitor and manage the project. It will also be useful for bidders in assessing the level of risk they will have to assume in managing the project. The measurement of project performance and the management of the project are closely inter-linked. Through project performance measurement managers can tell if a project is being successful in working towards its aims. This feeds back into a process of fine tuning project activities to improve performance. The design team should also note that AusAID needs to report as an agency against a number of key results areas. Accordingly AusAID is devising a system that ensures that outcomes from projects are correctly identified and coded against the agencys key results areas. This section begins with the definition of key performance indicators for the project. It then examines risks and risk management strategies. It concludes with suggested overall management strategies to manage risk and maximise benefit. Feasibility design study teams should take time to read AusGUIDE: Stage 5 which describes in more detail the way monitoring and evaluation should be carried out during implementation. Monitoring and evaluation systems need to be considered during design, and the feasibility design study team will need to lay the foundations for the monitoring strategy in the project design document. Risk management is related to monitoring and evaluation, in that risks need to be monitored too. AusAID calls for a risk management strategy in each project. As with the monitoring and evaluation system, the foundations of this are laid at design. Please see AusGUIDElines: Managing Risk for further guidance.

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Performance indicators and benefits

Key results areas
AusAIDs key results areas constitute one component of its performance information framework for reporting to Federal Parliament. This section of the project design document records the key results areas that the proposed project will address.

Measurement of performance
Key performance indicators will have been identified in the logical framework. From a performance monitoring perspective the output and component objective level verifiable indicators are those that will provide the most useful feedback to project management. Purpose or goal level indicators are more likely to be useful at the evaluation stage. The following areas should be considered in this section: Comment briefly on the purpose and component objective level indicators as detailed in the logical framework stating how they might appropriately be measured. State at what stage during project implementation work might usefully be conducted in examining performance against these higher level indicators. In some projects it may be critical to examine progress against purposes at a relatively early stage. A mid-term review might take this function (amongst others). In other projects the measurement of higher level indicators may not be possible until after the project is completed. Comment briefly on the range of indicators that will be used to measure output (and if necessary activity) level performance stating the kinds of indicators that should be measured and how they might appropriately be measured. State what the information will be used for and by whom. Comment on the different roles of the contractor and the partner government in monitoring. It is very important to ensure that partner government agencies are linked into the collection and analysis of monitoring information, and that the monitoring exercise is not just for AusAIDs purposes. It is also important to ensure that monitoring exercises by the contractor and the partner government agencies are not developed in parallel It is also important to identify the respective roles of the partner government and contractor in collection and analysis of monitoring information and what the information will be used for. This includes identifying roles in the development of the monitoring system itself. In this regard relevant existing information sources should be mentioned, including baseline data. The need to establish baseline data as part of monitoring system development (if this is an appropriate option) should also be mentioned. Differentiate between output and outcome monitoring to the extent that this is possible before a full monitoring system has been designed. Show how these monitoring tasks will be achieved. The above analysis should help determine the frequency of monitoring tasks throughout the life of the project. Comment on this.

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It may also indicate the need for external monitoring assistance, from a monitoring and evaluation specialist or from a technical advisory group. If so this should be mentioned. This requires judgement as to the magnitude or complexity of the monitoring task, and the extent to which asking management to monitor might compromise monitoring quality. The inputs and activities needed to set up monitoring systems need to be included in the design of the project as these can be resource intensive.

Reporting requirements for the project

Summarise the reporting framework recommended for the project. Will monthly reports be required? Or will bi-monthly or quarterly reports suffice? Summarise the expected level of reporting (often exception reporting is required). State if there is a perceived need at design stage for a mid-term review, giving a rationale for why this is so. State that any mid-term review will be paid for separately by AusAID, ie outside the funds available for the project. State that a project completion report will be required (usually the draft will be due two months before the project is due to end).
For further details on monitoring and reporting systems refer to
AusGUIDE: Stage 5.

Risks and risk management

Risks are often identified from the assumptions column in the logical framework. They may also emerge from other techniques and sources. An assumption notes something that needs to happen in order for a project output to be achieved. A risk may turn this around and asks the question: what will happen to the project if this does not occur? State briefly how the risk assessment has been undertaken describing the methodology and who has been involved. For example, indicating any stakeholder consultation.

Key assumptions and risks

A full risk analysis matrix should be appended to the design as an Appendix. AusGUIDElines: Managing risk will be of assistance here. Refer also to risk analysis issues mentioned in AusGUIDElines: The Logframe approach. Use this section to summarise the risks. It may be useful to consider risks in the following categories, among others: political and economic; institutional; human resources; social and community; technical. AusAIDs Risk Management Policy (AusAID Circular No. 29 of 8 November 1999) identifies risk categories to be considered as: risk to effective aid outcomes; risk to output delivery/efficiency; risk to reputation/goodwill; and risk to capability.

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A more comprehensive listing of risk categories is given in AusGUIDElines: Managing risk (refer to step 2 of the process described in the guideline).

Indicate in the summary where risks may be sufficiently serious to warrant special attention or treatment. Outline a risk management strategy that implementers may adopt. Note key risk areas that AusAID will need to deal with. Note key risk areas for the partner government.

Management and coordination strategies

Management arrangements
Summarise the project management structure. This can usefully be done in diagrammatic form. It is important to highlight the respective roles of the contractor and the counterpart agency. It is also important to define as clearly as possible the roles envisaged for different parts of the partner government and for other stakeholders, noting where further role development may be required after project inception. In general terms the contractors role is to support with technical assistance and resources, while the counterpart agency takes overall carriage for the project. Note if there are any major divergences from this norm and give reasons. Note specifically where Australian based personnel are required. It is important for the design not to be prescriptive about how a project is managed. Much of this will be determined between the successful bidding contractor and the counterpart agencies. However the design team should summarise any key features of management. These may include: the need for administrative centres in different locations; arrangements for fostering close cooperative relationships between contractor and counterpart staff, eg sharing of resources location in the same offices etc. the need for liaison mechanisms between national and local agencies or between different regions of a country; the need for liaison with other donors both to avoid duplication, and to promote complementarity; and special arrangements for liasing with local NGOs and communities, or with local industry. Note any peak bodies that need to be involved. Note the roles of local communities, local or Australian NGOs and any arrangements NGOs must undertake to register for work with the partner government. Summarise the contractual framework for the project. Although the memorandum of understanding is generally not a legally binding document it does form the basis against which Australian and partner government inputs are provided. The design team will be expected to make suggestions as to major inclusions in the MOU and these should also be included as an appendix. Refer
to TAMOUG for guidelines on the preparation of the MOU.

Indicate the need for subsidiary agreements between the partner government and regional, provincial or local authorities. These would usually be handled in the implementation stage. Indicate the need for subsidiary contractual arrangements between the project and/or the contractor and local groups and NGOs and summarise the contractual arrangements that should be undertaken. In exceptional cases AusAID may require these to be presented in draft form at the design stage.

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Finally, note the respective roles of AusAID and the AMC in the implementation of the project. Refer to the need for the annual plan to be the opportunity for making adjustments as the project progresses. It should be noted that there is a need to develop a contracting strategy for the project which will need to fit very closely with the management arrangements suggested in this section. This will be reflected in the separate scope of services and basis of payment that the design team will be required to produce.

Coordination
This section should summarise the needs for a coordination body for the project. AusAID usually requires a project coordination committee (PCC) for a project. The purpose of this is to ensure that both AusAID and the partner government have the opportunity for a regular joint briefing on project progress, and to develop a common understanding of this. It also affords the opportunity to make decisions jointly on issues of importance to the project. Note the likely participants in the PCC. AusAID will always want to send a representative from the Post and will reserve the right to have a desk officer in attendance. The partner government will usually want a senior person in the implementing agency to be the chairperson and will often stipulate a number of other members of the group including representatives from other participating sectoral agencies. The project manager from the partner government will be a member as will the team leader of the Australian advisers. If the contractor provides a Project Director that person should also have the right to attend as required. Any key NGO or local community organisations or other key stakeholders may also be represented, subject to agreement between AusAID and the partner government. Suggest the frequency of meetings stating where they should take place. Rotation between different project sites is an option that encourages different project coordination committee members to have a better understanding of project conditions as they can combine their meetings with site visits. Note the resources that may be required to ensure that project coordination committee meetings can be held. Suggest whether alternative arrangements for the coordination of the project might be possible, especially if there are logistical difficulties in bringing people together. A useful option, particularly in more complex projects, is to include a brief terms of reference for the project coordinating committee. This should provide a background to the project, a brief scope for the project coordinating committee, the composition of members, their respective interests and roles in the project and their roles in the project coordinating committee and the expected frequency and duration of meetings. This may be included as an appendix to the project design document.

Planning and budgeting systems

It is important for all parties to understand the respective systems for planning and budgeting that the project will rely on. In most cases this will be AusAID and the partner government, although in cases where a project is being implemented in more than one country, several partner government systems may need to be described. Briefly describe the planning and budgeting cycle for each party. State the start and finish of the financial year and describe the main steps in planning and

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budgeting that must be undertaken for project resources to be made available. It is particularly important to ensure that a description is given of how the counterpart budget will be allocated. Mention should be made of any optimum timing for implementation resulting from the budgetary cycles of Australia and the Partner Government. Note, also, any potential problems with differences in these systems, particularly parts of the year when funding may be difficult from any funding party.

Skills required from Australia

In some cases it will be appropriate for the design team to identify positions for Australian technical assistance staff. If this is the case duty statements should be drawn up and appended as an appendix. This should include a staffing schedule. Under these circumstance the team should list the advisers required in this section summarising their duties and time requirements. However in many cases it is not appropriate to prescribe the positions and duties of Australian technical assistance staff. This may be better determined by bidders. However for the benefit of bidders and of the design of the project it will be necessary to state the range of skills required. This is included in the scope of services that should be drawn up and provided to AusAID separately. In this section the range of skills should be summarised. Under these circumstances the team will need to indicate approximate total time requirements for Australian advisers. This is appropriately covered in the resource schedule.

Feasibility and sustainability

The purpose of this section is to provide a justification for proceeding with the project through summarising the projects feasibility. This section provides the starting point for project appraisal. Appraisers will need to check the conclusions drawn by the design team. They will examine each conclusion made about the different aspects of project feasibility. They will draw upon the analysis, project description and consideration of management issues in earlier sections to check that the assumptions and conclusions of the design team are correct. AusGUIDE: Stage 3 describes the appraisal process and includes a checklist for appraisal. Feasibility is to be considered in terms of the likely impact the project will have on the development problem, the people and organisations involved. Summarise the situation expected at the end of the project and state the overall impact the project is expected to have, assuming that risk management strategies are successfully in place. Consider each of the following areas of impact:

Manageability of the project

This section gives the design team the opportunity to comment on the likely manageability of the project (the feasibility of it being adequately managed). This is partly an expression of proposed risk management arrangements. It also reflects key features of the project that promote flexibility. There are a number of elements that need to be summarised here: the capacity of the Australian and New Zealand market to respond to the project;

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the likelihood of Australian and partner government resources and staff being made available in a coordinated manner at the right time for project outputs to be achieved; the suitability of proposed contracting arrangements to deal with likely problems in the project; the projects dependency or otherwise on very specialised skills being available; the flexibility of the project structure to take account of possible risks and opportunities; the simplicity of the project structure to enable AMC and PG systems to cope with it; and the level of commercial risk that an AMC would be required to bear.

Technical feasibility
Assessment of the technical feasibility of a project will depend very much on the type of technical activities it calls for. The judgements on technical feasibility will be very much the concern of the technical specialists on the team and they will need to draw heavily on their professional experience. Note the appropriateness and cost effectiveness of the technical arrangements proposed. Assess this within the context of management, skills requirements and institutional capacity. This requires an answer to the question: Are the technical approaches proposed appropriate to the situation and are participants involved capable of absorbing the technical innovations proposed? Note any negative affects of utilising the technical approaches recommended. Finally assess how the technical innovations and methodologies will be sustainable in the local context.

Financial and economic feasibility

This asks the question: Does the project promise a positive economic impact? Ideally every project of a significant size should have had a costbenefit analysis undertaken before appraisal. This is strongly encouraged within Australias development assistance program. If a cost benefit analysis has not been undertaken, this must be stated and the expected economic benefits of the project described. Explain how the investment required for the project is justified in terms of economic returns (even if this is estimated by a qualitative method) and show that it is sustainable. Note the expected economic benefit to the local communities, to the national economy or to private sector groups. Note if the project could possibly have a negative economic impact on one or more groups and explain why. Discuss how these negative impacts, which are either certain or are risks, can been dealt with in the risk management strategy proposed.

Impact on poverty
This section answers the questions: How does the proposed project impact upon poverty in the area concerned? and what specific strategies does the project incorporate to combat poverty?. The issue of the aid program

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impacting on poverty is the one clear objective of the Australian overseas development cooperation program and must be addressed, even if the effect of the project on poverty is not a direct one. Note the effect the project will have on the poor in the target area and how the projects strategies for benefits to communities are likely to be self-supporting in the long-term. Refer to economic cost benefit and other analyses to illustrate this if the impact is direct. If the impact is not direct the indirect effect of the project must not be in doubt and needs clear explanation. Not all projects produce totally positive results for the poor. Negative results of the project and its approach should also be mentioned. Discuss how these negative effects, which are either certain or are risks, can been dealt with in the risk management strategy proposed. Show how the benefits of the project for the poor will be sustainable and that the situation of the poor will not revert once project activities end.

Social and cultural impact and gender implications

Assess the likely overall impact of the project on communities and cultures in the project area. Refer to any key issues arising from any social impact analysis undertaken. It is important to identify the potential negative effects on cultures and to discuss how these can be ameliorated as well as to justify the project through pointing out the positives. Discuss how benefits will be sustained beyond the life of the project. There are a wide range of key questions that can be asked about the social and cultural environment in which a project is to operate. AusAIDs forthcoming Guide to Social Analysis and Participatory Development will assist. In particular the acceptance of project objectives by local communities and beneficiaries should be noted The team must also assess the likely impact of the project on women, men and children as separate groups. The share of benefits to women and men in regard to participation in project preparation and implementation should be noted, and the increased access to and control of resources by women should be addressed. Note gender specific aspects of the choice of technologies. Discuss how benefits will be sustained beyond the life of the project. Show how the project will be consistent with AusAID gender policy.

Institutional and governance feasibility

Key institutional arrangements affecting viability and sustainability of the project need to be assessed. Describe the commitment of the partner government (at various levels) to the project. Note the capacity of organisations to absorb new ideas and programs and of the partner government to finance ongoing activities after the project has been completed. Note any strategies employed by the project that will either encourage income generation to cover additional activities or minimise additional calls on recurrent budgets. Note also strategies for encouraging long-term planning for human resource needs resulting from proposed activities. Show how proposed activities are consistent with current roles and functions, or how those roles and functions are to change as a result of the project. Risks of negative institutional impacts need to be pointed out. In all cases, the team should demonstrate how these risks can be ameliorated.

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The impact the project may have on good governance should be noted, particularly if the project is aiming to achieve better and more transparent government mechanisms. Many institutional development projects aim to do this.

Environmental impact
The environmental impacts of the project are to be stated. In many cases they may be negligible or indirect, but if this is so the team must say why. The team must also recommend whether a separate environmental impact statement should be sought by AusAID. Guidelines for this are contained in the Environmental Assessment Guidelines for Australias Aid Program.

Factors in the design to promote sustainability

The issue of sustainability will have been discussed earlier. This section should draw this together by summarising factors and strategies in the design that will promote sustainability as well as identifying any constraints to sustainability. The project design document should conclude with a definition of sustainability for the project.

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Suggested appendices for the PDD

The following are a range of appendices that are usefully attached to the PDD. Those marked with an asterisk are required. The remainder are optional and should be included as appropriate. Study TOR (see AusGUIDElines: Preparing terms of reference) Persons met (a list of persons consulted during the mission) Aide memoire or exit report Working papers (to be appended only when required) Bibliography Logical framework (see AusGUIDElines: The Logical framework
approach)

Implementation schedule (see AusGUIDElines: Preparing project

schedules)

Resources schedule (see AusGUIDElines: Preparing project

schedules)

Cost assumptions (see AusGUIDElines: Preparing project schedules) Cost schedule (see AusGUIDElines: Preparing project schedules) Risk matrix and risk management plan (see AusGUIDElines:
Managing risk)

Financial and economic cost benefit analysis (if this has been undertaken) TOR for the PCG (optional) Duty statements and staffing schedule (if required)

Associated documentation
The following is a selection of documentation that AusAID may also require as a result of the feasibility design study. This documentation is not appended to the project design document, but is provided separately. The Activity Manager will determine the associated documentation required in the feasibility/design team terms of reference. Suggested inclusions in the memorandum of understanding (see
TAMOUG for guidelines on the MOU)

Draft scope of services and basis of payment (see AusGUIDElines:

Preparing draft scope of services and basis of payment)

Update activity preparation brief (refer to Operational Guidelines for

the Activity Preparation Brief)

Baseline survey documentation

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