European Structural Funds and Project Preparation & Management

Romania
Business Development Support Services (BDSS) Project March, 2006

Day 1 INTRODUCTION

SEMINAR AGENDA

STRUCTURAL FUNDS: BASICS AND PROCEDURES

STATE AID PRINCIPLES EXAMPLES OF BUSINESS SUPPORT PROGRAMMES FROM SPAIN AND PORTUGAL

Day 2

PROJECT CYCLE MANAGEMENT

ECONOMIC AND FINANCIAL ANALYSIS
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Seminar Objectives
Learn SF as trainers and differences with Phare and other EU programmes (leonardo, VIth Framework Pr) Role of consultants in SF projects , what do you do? And of consulting/engineering/law associations? Networking ; how and when? Public services and bodies , how do they propose and involve themselves. Role of associations in SF programming/ implementation of SME support. RDAs, what is role ????? Can you make money with SF projects?? In which areas? What are the qualifications/skills which count? Manuals, procedures, public procurement?? What do training centres do and how much is training in SFs? Evaluation, quality control, PM ? 3

What is the role of regional networks of institutions in the programming and administrating of Structural Funds?

What does Regional Networking mean? - Structural funds are a bottom-up process, not top-down as pre-accession support - Regional bodies (county councils, city halls, consortia of public and private bodies, chambers, etc.) have to network to propose, justify and CO-FINANCE potential programmes, projects , etc.- and help monitor
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What is the your role in SFs ?

Networks of institutions propose and administrate the programmes

National Policies
Financial and Operational Mon. Regional Operating Pr. + Implementation Pr.

Ministries of European Integration, Agriculture, Public Works

Regional Programming and Monitoring

Programme status Programme approval

ADRs (ERDF Infrast.), Sapard (EAGF), Employment Agency (ESF), ANIMMC (ERDF SMEs)? Regional networks (have to cofinance 25% in Objective 1 reg.) - local authorities and private bodies (CCIs, Associations, etc) Business Service Providers (ROCA associated and nonROCA), experts, private and public Institutions
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Programme Administration (up to 7%)

Project Reports
Tenders/grants

Project Implementation (management and delivery)

What is the your role in SFs in Business support ? National, Regional and Local Bodies Clients (MEI, ANIMMC, SAPARD, ADRs, County Councils, City Halls, etc. Host
organisations

Information /Counselling Networks (EICs, IRCs, CDIMMs, Foundations, ANIMMC local, CCIs etc.) Technical Services Networks (ROCA, University networks, BICs, etc.) Private Firms and Individual Experts

Chambers and Business Associations

Professional associations (AMCOR, Auditors, Evaluators, Engineers)

DAY 1
STRUCTURAL FUNDS: BASICS AND PROCEDURES

Definitions and Terminology of EU- Funded Projects

The EU Budget 2000 - 06

Average annual budget 100.400 million
Common Agricultural Policy STRUCTURAL AND COHESION FUNDS Internal Market Policies External Actions/EUROPEAID Administration Reserves

0.6% 4.8% 4.6% 6.0% 3.1% 8.3% 42.4%

Pre Accession/Phare, ISPA, Sapard Enlargement/New Members

30.3%
The EU Budget finances Internal Actions, Structural and Cohesion, the CAP, External Actions, Enlargement Pre-Accession and Administration - this amounts to around 100 billion EUR per year/ 200 billion for Structural and Cohesion funds for the 7 years.
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Introduction: Review of European Structural Funds and other external Programmes

Of the overall EC Budget, spent in grants, tenders and studies are most of the structural funds and other financial support schemes, the CAPGuidance section, and Studies and direct actions E. Commission Budget
Common Agricultural PolicyGuidance section Temporary Human Resources Loans and Shareholdings Studies and Direct Actions Structural and Financial Support Programmes

Paid directly to the beneficiary by the Commission

Paid to the beneficiary/ies indirectly, either through a Member State (SF and Initiatives), a foreign government or an agency appointed by a State (EuropeAid)- in decentralized programmes 9

EU Grants and Programmes by Type of Management

European Commission
National decentralised management E. Commission management Mixed management Direct Actions (Pilot, Innovative.)
Budgetary lines, funds not exhausted, pilot projects

Structural and Cohesion Funds: ERDF, ESF, Fisheries and EAGGF

Programmes, actions and other support activities called and negotiated directly in Brussels

E.U. Initiatives: 5% of Structural funds

Publication in EU website PUBLICATION: E.U. Official Journal, National Journals

PUBLICATION: in national and regional Journals

PUBLICATION: E.U. Official Journal

Management and PUBLICATION:

Management and Official Announcement: National Government and Regions (RDAs)

Management and Official Announcement: Commission

Management and Official Announcement: Commission plus Regional and national units of coordination

Commission and European Parliament

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The EU Budget : Main support programmes and initiatives

Direct Support Programmes: - Directly applied to EU Administration - Proposals to Brussels / Luxemburg - Support Funds and Programmes given to the best projects, Europe wide

Indirect Support Programmes: - Specific budget assigned to Member States: STRUCTURAL FUNDS AND EC INITIATIVES (URBAN, INTERREG, LEADER, EQUAL) - Member States must propose their budget support priorities - EU Commission can accept ,reject or adapt MSs proposals)

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Main support programmes and initiatives

Direct Support Programmes

EC Initiatives (5% of Structural funds):
Direct Programmes Framework programme R+D (now to the VIIth) TEN-TELECOM LIFE ALLURE SAVE LEONARDO ALFA JOPP ECIP CDI
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Main support programmes and initiatives

Direct Support Programmes (2)

ENTERPRISE INNOVATION EUROPARTENARIAT ETP - Japan PHILOXENIA - Tourism CULTURE 2000 EURATHLON ENVIROMENTAL NGOs GRANTS MEDIA etc...420 in total by the last count

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Structural & Cohesion Funds

Indirect Support Programmes :

- Specific budget assigned to Member States - Member States must propose their budget support priorities - EU Commission can accept ,reject or adapt Member States proposals - Some budget funds applied directly to Commission-managed projects (ex.European key road network, telecoms, etc.) - The rest of fund programmes ,managed by National and /or Regional Administrations Purpose: reduce developmet and and life condititons disparities among Member States convergence
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Structural & Cohesion Funds

ERDF

ESF

EAGGF

STRUCTURAL FUNDS (Obj.1, 2, 3)

195 M EUR for 2000/6

COHESION FUNDS < 75% average GDP

26,5 M EUR for 2000/6

FIFG
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Structural Funds 2000- 06

Reserves for effective projects (4%)

Innovative actions (0,65%), Pilot Projects and studies will increase in 2007-13

General Programmes (90%), as presented in General Community Support (GCS) or the Single Programming Document (SPD) (for small countries)

Community Initiatives (5,35%): measures proposed by the EC and managed jointly: they are four in 2000/06; Interreg III, Urban II, Equal , Leader+. They are planned to disappear in 2006?

These funds are partially disbursed by national and regional governments as tenders, grants, studies and other forms of financial support.
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Structural Funds

There are 4 Structural Funds namely:

- European Agricultural Guidance and Guarantee Fund (EAGGF); - Financial Instruments for Fisheries Guidance (FIFG);

- European Regional Development Fund (ERDF);

- European Social Fund (ESF).
Adjoining the four Structural Funds, the Cohesion Fund provides structural assistance to the four least developed Member States Portugal, Spain, Greece and Ireland, financing projects concerning the environment or transport infrastructure. The Transition Facility Fund is targeted to enhance the capacity building of Accession States

17

Structural Funds

European Regional Development Fund (ERDF): Aims to reduce socio-economic imbalances between regions of the Union: essentially it is aimed at business
growth and economic regeneration.

European Social Fund (ESF): Aims to put people into employment by developing skills and training opportunities by supporting: Active labour market policies; Equal opportunities for all and promoting social inclusion; Improving training and education and promoting lifelong learning; Adaptability and entrepreneurship; Improving the participation of women in the labour market. 18

Structural Funds

European Agricultural Guidance and Guarantee Fund (EAGGF) It is included within the CAP ,and Aims to finance rural development projects ,such a s young farmers,,investments and training, rural product marketing,and rural areas development. (including the LEADER+ ,EU Initiative). Financial Instruments for Fisheries Guidance (FIFG) Aims to finance fleet modernization,fishing quotas programmes,protection specail marine cultivation ,area protection.It is an instrument to complement the Overall EU Fishing Policy.Marketing and Promotion of products,Port infrastructure investment
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Structural Funds

Funding: Between 2000 and 2006, 95% of the Structural Funds

Objective 1 is funded by ERDF: Allocated to regions where
gross domestic product per head is less than 75% of the EU average.

finance, is distributed according to the EU's 3 'Objectives, of which, 5% is allocated to the so-called Community Initiatives.

Objective 2 is funded principally by ERDF but also by ESF: The Funds aim to help reduce the gaps in socio-economic
development between the various regions and member states. It covers 18% of the European population.

Objective 3 is funded by ESF: The objective

funding training and skills development.

is aimed at

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Structural Funds

(%)
12,3 11,5 0,5

69,7
Objective 1 Objective 3 Objective 2 Fisheries

195.00O Million ,2000-06 period

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EC PROGRAMMES ARE SUPERSIVED BY THE DGs DG REGIO DG AGRICULTURE DG EMPLOYMENT, etc. Leader + EUROPEAID Tacis ALA Meda Structural funds Interreg III URBAN Social Fund Equal DG ENLARGEMENT Phare (incl. Twinning) ISPA Sapard Transition facility

Cards/ EAR
FED

EUROPEAN COMISSION

DG RESEARCH

DG ENTERPRISE
Innovation, etc

DG EDUCATION
Leonardo Tempus, etc.
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VIth Framework Pr. Competitiveness & Entrepreneurship

Proposed SF Budget for 2007 2013 Period (under discussion)

Last proposals by the Commission

(Billion EUR) Regions subject to statistical effect: 22.14 Cohesion Fund: 62.99 Special programme for outermost regions: 1.1 Regions outside convergence: 48.31 Phasing- in for regions that were Objective 1 between 2000- 2006: 9.58 Cross-border cooperation: 4.7 External borders: 1.6 Transnational cooperation: 6.3 Networks: 0.6 Regions below 75 % of average GDP (Obj. 1): 177.8 (52%)

TOTAL 2007-13 : 336.1 Billion EUR

EAGGF, FIFG and two Initiatives would disappear, with only ERDF, ESF and Cohesion Fund remaining, plus a fund for cross-border cooperation (EGCC). How much will Romania finally get of this?
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Structural Funds: Principles

Clarity Member States & enterprises must understand why an incentive has been introduced, what it seeks to achieve and the activities it is able to support Simplicity The incentive should not be too complex to administer. It should be simple and fast to apply as otherwise the take-up rates would be low Certainty Mechanisms must be put in place to limit the amount that an incentive will cost. Enterprises need to obtain a quick decision from Member States as to whether an activity qualifies for support or not

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Structural Funds: Principles

Compliance Any scheme must comply with relevant national and EU legislation in force, including EU State Aid Non-discriminatory - Schemes should not benefit one firm at the expense of another, nor adversely distort existing market factors

Effectiveness A measure of the number of benefiting firms, a method of impact assessment and cost monitoring
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Structural : principles
All programmes co-financed within SFs are responsibility of the Institutions of the State Members. They propose and classify the projects within the National/Regional Strategic Plans and select the best projects. All projects financially supported by EU must be co-financed by local public or private sector. A Follow up Committee supervises and controls implementation. SF are not reimbursable. In each Member State ,social and economic players can propose and obtain SF support ,through the appropriate authorities on each Programme.
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Structural Funds

EUROPEAN COMMISSION

Negotiates, approves, assigns & pays MS Manage, select, implement &evaluate

STATES AND ITS REGIONS

MANAGEMENT AUTHORITIES

Application of Programme and monitoring

Follow up

FOLLOW UP COMMITTEES

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Structural Funds: Procedures

1.- EU Commission decides SF Regulations. 2.- EU Commission designs Priorities for each Objective. 3.- Member States design their own National Strategies and negotiate with the EU Commission their own priorities, financial assignments and implementation rules. 4.- Programming Documents (Regional Dev. Plan, Reg. Oper. Programme, Sector Oper. Programme, etc.): They describe the socio-economic context of the country or of the target regions of the SF, in accordance with the EU Objectives, pointing out priorities, objectives, management and financial tools, implementation, evaluation and control systems.
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Structural Funds: Procedures

5.- Member States create a document for each Programme called: Programme Complement, elaborated by the Institution that will manages them locally.
6.- Annual Management Report 7.- Follow up Committee Report

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Structural Funds: Procedures

Co-financing
Objective 1: up to 75% total cost, and minimum 50% public expenses in some cases, the % can reach 80 y 85% for certain Regions of a State under Cohesion Fund or in ultra-peripheral Regions or peripheral islands. Objective 2 and 3: up to 50% of the project total cost. A limit for investments in income-generating infrastructures : 50% for Member States beneficiaries of Cohesion Fund 40% in all other regions under objective 1 25% in areas accepted under objective 2
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Structural funds - Instruments

Structural funds

Programme administration (7%)

Financial instruments regional VCs, guarantee funds, credits, etc.)

Projects (Infrastructure, industrial, employment, etc.)

Grants (for social, training, to local bodies, SMEs, NGOs, etc.)

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Cohesion Fund

It is a tool to enhance the economic and social cohesion among EU Countries,helping less developed ones within the EU. The CF for 2000-06 is 18.000 million .

Beneficiaries of CF are those countries with a GNP lower than 90% of the EU average,and follow a plan for economic convergence: Ireland,Spain,Greece,Portugal.
Condition: If Beneficiary countries of the CF have an excessive public deficit,CF are frozen until it is remedied.

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Cohesion Fund
Projects fall into two categories: Environment: Projects that contribute to the overall EU objectives in Environmental Policy. Priority is given to drinkable water supply, residual water treatment,and solid waste management.Reforestation ,erosion control and protection of the environment are also eligible for finance. Infrastructure of Transport Projects The financial support goes up to 80-85% total of Public investment cost. Presentation of projects to Brussels is made exclusively by the countrys central Government.

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Contracting and implementing other EU programmes

European Commission D.G.

Services, Works & Goods (tenders) or Grants

Calls for proposals:

MEASURES/ ACTIONS

Contractors of projects or grants (private sector, regional and local administrations)

Contracted by the corresponding Directorate General or Implementing Agency

DUTIES OF TASK MANAGER (OFFICER)

Definition and design of contents

Technical aid to projects Monitoring and evaluation Administrative and technical control Facilitates the relationships with

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Structural Funds :Community Initiatives They are special Interventions by the EU Commission ,proposing them to the Member States .These programmes can be applied throughout the EU territory and are co-financed with SF ,with the aim to solve specific problems. In the 2000-2006 period 4 Community Initiatives have approved.Each financed with Structural Funds: INTERREG III: cross-border cooperation, transnational and interregional (ERDF). URBAN: regeneration of urban deteriorated areas (ERDF). LEADER+: rural development (EAGGF). EQUAL: against discrimination in labour market (ESF).

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Structural Funds :Community Initiatives They have a budget of 10.440 million , that is to say, 5,3% of total Budget of Structural Funds They are special EU Commission interventions for specific problems which serve as small SF actions. They have 3 characteristics that give them added value versus the rest of the support tools of the Structural Funds: Enhancement of cross-border, trans-national cooperation. European integration and convergence Intense participation of economic and social agents. Promote the real cooperation among all participants.
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Community Initiatives : Interreg III

EU Community Initiative to promote integration and balanced development of the EU territories,where national borders must not be an impediment Areas Objective 1 : up to 75% and 2 : up to 50 Beneficiaries: maritime,interior border regions 1. Interreg A: Cross-Border Cooperation 2. Interreg B: Transnational Coperation 3. Interreg C: Inter-regional Cooperation Approach: Nature,Heritage,SMEs,work integration,sharing R+D and Culture,small infrastructures,legal and administrative cooperation,Transport,Experiences exchange,Tourism,Maritime cooperation.Bottom-up

Selection criteria: unemployment,low income,social problems,environment

Budget : 4.875 + 480 PHARE million
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Community Initiatives : Urban

EU Community Initiative to regenerate socially and economically towns and/or neibourghoods to promote a sustainable development,by using innovative strategies in medium and small towns. Areas Objective 1 : up to 75% and 2 : up to 50% Beneficiaries:Affected population per project :min 10.000 Approach: innovative solutions to existing problems Selection criteria: unemployment,low income,social problems,environment Budget : 700 million

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Community Initiatives : Equal

EU Community Initiative to fight all forms of discrimination and inequality in labour market ,especially for asylum seekers Areas Objective 1 : up to 75% and 2 : up to 50% Beneficiaries: geographical and sector Development Associations Facilitate access to employment to handicapped people Fight racism and xenophobia Promote entrepreneurship Reinforce social economy Selection criteria: cross-border cooperation,training,innovation,intergated focus ,equal opportunities men and women. Budget : 2.847 million

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Community Initiatives : LEADER+

EU Community Initiative to promote integrated development in rural areas Areas Objective 1 : up to 75% and 2 : up to 50% Beneficiaries: Rural areas 10.000-100.000 inhabitants .Local Action Groups(all socialeconomic groups) Coherent strategy for the territory Interaction of different groups,network creation Upgrade natural and cultural heritage Help create jobs,better comunity organization,partnerships Selection criteria: to be established by state members,and always in rural areas. Budget : 2.020 million

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GRANTS from SFs: Size of EC grants Any EC grant funded by Structural funds or by direct Actions must fall between a range with a minimum and maximum amounts A grant may not be for less than 50 % of the total eligible costs of the Action. In addition, no grant may exceed 75 % (for Obj.1, with some exceptions going to 85% or even 100%) of the total eligible costs of the action.

The balance must be financed from the applicant's or partners' own resources, or from sources other than the European Community budget. WB and bilateral funds are accepted, if properly negotiated.
Example of call for proposal for a grant from DG Enterprise: http://europa.eu.int/comm/enterprise/funding/grants/themes_2005/calls_prop_ 2005.htm

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Eligibility criteria

There are sets of eligibility criteria, relating to organisations which may request a grant, actions for which a grant may be awarded, types of cost which may be taken into account in setting the amount of the grant. Eligibility of applicants: who may apply Partnerships and eligibility of partners Eligible actions: actions for which an application may be made Eligibility of costs: costs which may be taken into consideration for the grant

1. 2. 3. 4.

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Eligibility criteria
1.

Eligibility of applicants: who may apply- generally:

Non-profit-making legal persons Organisations with their headquarters in the European Union Be directly responsible for the preparation and management of the action, not acting as an intermediary

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Partnerships and eligibility of partners

Applicants

may act individually or in consortium with partner organisations; or, if partnership is obligatory under the programme, applicants must act in consortium with partner organisations. Other organisations may be involved in the action. Such associates play a real role in the action but may not receive funding from the grant. Associates do not have to meet the eligibility criteria, however, they must fulfil the general eligibility criteria. Subcontractors are neither partners nor associates, and are subject to differents rules. The applicant will act as the lead organisation and, if selected, as the contracting party (the "Beneficiary"), private bodies will usually be subcontractors.
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Eligible actions: actions for which an application may be made

Duration The duration of an action may not exceed a number of months Sectors or themes Description of the specific sectors or themes to which the actions must relate Location Actions must take place in one or more of the EU / Pre-accession countries: Type of actions Description of the type of actions which may be financed under the programme. The following types of action are ineligible: individual sponsorships for participation in workshops, seminars, conferences, congresses, individual scholarships for studies or training courses; Number of proposals and grants per applicant

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Cost Eligibility

Eligible direct cost

Ineligible costs Eligible indirect costs (overheads) Contributions in Kind

46

Eligible direct costs

To be eligible under the call for proposals, costs must: be necessary for carrying out the action, have actually been incurred by the beneficiaries or their partners during the implementing period for the action; be recorded in the Beneficiary's or the Beneficiary's partners' accounts or tax documents, be identifiable and verifiable, and be backed by originals of supporting documents.

47

Eligible direct costs

Normally eligible direct costs include: the cost of staff assigned to the action, corresponding to actual salaries plus social security charges and other remunerationrelated costs; travel and subsistence costs for staff taking part in the action,; the cost of purchasing equipment (new or used) and services, provided they correspond to market rates; the cost of consumables and supplies; subcontracting expenditure; costs arising directly from the requirements of the contract (dissemination of information, evaluation specific to the action, audit, translation, printing, insurance) including financial service costs (in particular the cost of transfers and financial guarantees).
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Ineligible costs The following costs are not eligible: debts and provisions for losses or debts; interest owed; items already financed in another framework; purchases of land or buildings, except where necessary for the direct implementation of the action, in which case ownership must be transferred to the final beneficiaries at the end of the action; currency exchange losses; taxes, including VAT, unless the Beneficiary (or the Beneficiarys partners) cannot reclaim them and the applicable regulations authorise coverage of taxes.

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Contributions in kind

Any contributions in kind made by the Beneficiary or the Beneficiarys partners, which must be listed separately (Budget), do not represent actual expenditure and are not eligible costs. They may not be treated as co-financing by the Beneficiary. However, the Beneficiary must undertake to make such contributions as stated on the application form if the grant is awarded.

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Application forms and supporting documents

Applications

must be submitted on the application form annexed to these Guidelines. The application form is also available on the Europa web site. Applicants should keep strictly to the format of the application and fill in the pages in order. Complete the application form carefully and as clearly as possible so that it can be assessed properly. Be precise and provide enough detail to ensure the application is clear, particularly as to how the aims of the action will be achieved, the benefits that will flow from it and the way in which it is relevant to the programme's objectives. Hand-written applications will not be accepted.
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Supporting documents Applications must be accompanied by the following supporting documents: The statutes or articles of association of the applicant organisation and where appropriate, of each partner organisation; The applicants most recent annual report and accounts (the profit and loss account and the balance sheet for the previous financial year);
Where the grant requested exceeds EUR 300 000 (EUR 75 000 for an operating grant), an external audit report produced by an approved auditor, certifying the accounts for the last financial year available and stating to what extent the applicant has stable and sufficient sources of finance to maintain its activity. Other supporting documents required ( see format)
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Evaluation and selection of applications

Applications will be examined and evaluated by the contracting authority with the possible assistance of external assessors. All actions submitted by applicants will be assessed according to the following criteria: 1. Administrative compliance Verification that the application is complete in accordance with the checklist. 2. Eligibility of the applicants, partners and actions Verification that the applicant, the partners (and the associates where applicable), and the action are eligible according to the criteria set out in the notice
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Evaluation and selection of applications

Selection criteria are intended to help evaluate the applicants' financial and operational capacity to ensure that they:

have stable and sufficient sources of finance to maintain their activity throughout the period during which the action is being carried out and, where appropriate, to participate in its funding;
have the professional competencies and qualifications required to successfully complete the proposed action. This also applies to any partners of the applicant. The award criteria allow the quality of the proposals submitted to be evaluated in relation to the objectives and priorities set, and grants to be awarded to actions which Maximise the overall effectiveness of the call for proposals. They cover such aspects as the relevance of the action, its consistency with the objectives of the call for proposals, quality, expected impact, sustainability and cost effectiveness.
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Example of scoring matrix

Section 1. Financial and operational capacity 1.1 Do the applicant and partners have sufficient experience of project management? 1.2 Do the applicant and partners have sufficient technical expertise?(notably knowledge of the issues to be addressed.) 1.3 Do the applicant and partners have sufficient management capacity? (including staff, equipment and ability to handle the budget for the action)? Maximum Score 20 5 5 II.4.1 and III.1 II.4.1 and III.1 II.4.2 and III.1 Application Form

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Example of scoring matrix

Section 2. Relevance 2.1 How relevant is the proposal to the objectives and one or more of the priorities of the call for proposals? 2.2 How relevant to the particular needs and constraints of the target country/countries or region(s) is the proposal? Maximum Score 25 5 5 I.1.6(a)(b) I.1.6(c) Application Form

2.3 How clearly defined and strategically chosen are those involved (intermediaries, final beneficiaries, target groups)?
2.4 Have the needs of the target groups proposed and the final beneficiaries been clearly defined and does the proposal address them appropriately?

5
5

I.1.6(e)
I.1.6 (c)(f)

2.5 Does the proposal contain specific elements of added value?

Passim

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Example of scoring matrix

Section 3. Methodology 3.1 Are the activities proposed appropriate, practical, and consistent with the objectives and expected results? 3.2 How coherent is the overall design of the action? 3.3 Is the partners' level of involvement and participation in the action satisfactory? 3.4 Is the target groups' and final beneficiaries' level of involvement and participation in the action satisfactory? 3.5 Is the action plan clear and feasible 3.6 Does the proposal contain objectively verifiable indicators for the outcome of the action? Maximum Score 30 5 5 5 I.1.7 I.1.8 I.1.8(e) Application Form

5 5 5

I.1.8(e) I.1.9 Logframe

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Example of scoring matrix

Section Sustainability 4.1 Is the action likely to have a tangible impact on its target groups? Maximum Score 15 5 I.2.1 Application Form

4.2 Is the proposal likely to have multiplier effects?

I.2.2 & I.2.3

3 Are the expected results of the proposed action sustainable: - financially (how will the activities be financed after the EC funding ends?) - institutionally (will structures allowing the activities to continue be in place at the end of the action? Will there be local ownership of the results of the action?)

I.2.4

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Example of scoring matrix

Section

Maximum Score

Application Form

Budget and cost-effectiveness

10

5.1 is the ratio between the estimated costs and the expected results satisfactory? 5.2 Is the proposed expenditure necessary for the implementation of the action?

I.3

I.3

Note: Maximum Total score 100

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Payments
The Beneficiary usually receives some pre-financing. If the overall duration of the action does not exceed 12 months or if the grant does not exceed EURO 100 000, the pre-financing will be 80% of the grant. If the overall duration of the action exceeds 12 months and if the grant exceeds EUR 100 000, the first pre-financing instalment will be 80% of the forecast budget for the first 12 months of the action). In that case, subsequent pre-financing payments may be made upon submission by the Beneficiary, and approval by the contracting authority, of an interim report and a work plan and budget for the following period. The final balance will be paid upon submission by the Beneficiary and approval by the contracting authority of the final report Payments will be made to an Action-specific bank account or sub-account which identifies the funds paid by the Contracting Authority The Beneficiary must keep accurate and regular records and dedicated, transparent accounts of the implementation of the action It must keep these records for seven years after payment of the balance.
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Audit

An external audit of the accounts of the Actions implemented must be attached to:

any request for a further pre-financing payment if the sum total of the earlier and the new pre-financing payments exceeds EUR 750 000; any request for payment of the balance in the case of a grant of more than EUR 100 000;
any payment request of over EUR 75 000 for the financial year, in the case of an operating grant

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Example of Action Work Plan

Year 1 TIME Semester 1 Semester 2 Implementing body 12 Example Local partner 1 Local partner 2

Activity Example Execution Activity 1(title)

4 6

7 9

10

11

Preparation Activity 3 (title)

Local partner 1

Etc.

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Checklist
the
dossier is complete and complies with the application form's requirements one original and [] copies of all documents are annexed an electronic copy of the file is enclosed where required the dossier is typed and is in [language] the declaration by the applicant (per diem) is signed and attached if there are partners, the applicant has completed and signed a partnership statement, also included each partner has completed and signed a partnership statement and the statements are included the budget and the expected sources of funding are presented in the format of the application form, completed and drawn up in <Euro> in the budget <the Contracting Authority>'s contribution is identified and is a maximum of []% of the total eligible costs of the action in the budget, overheads do not exceed 7 % of direct eligible costs the logical framework matrix for the Action is included if requested

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Example of Action Budget

Annex B. Budget for the Action
Expenses
1

Unit

All Years # of units Unit rate (in EUR)

Costs (in EUR)3

Unit

Year 12 # of units Unit rate (in EUR)

Costs (in EUR)

1. Human Resources 1.1 Salaries (gross amounts, local staff)4 1.1.1 Technical 1.1.2 Administrative/ support staff 1.2 Salaries (gross amounts, expat/int. staff) 1.3 Per diems for missions/travel 5 1.3.1 Abroad (staff assigned to the Action) 1.3.2 Local (staff assigned to the Action) 1.3.3 Seminar/conference participants Subtotal Human Resources 2. Travel 6 2.1. International travel 2.2 Local transportation Subtotal Travel 3. Equipment and supplies7 3.1 Purchase or rent of vehicles 3.2 Furniture, computer equipment 3.3 Spare parts/equipment for machines, tools 3.4 Other (please specify) Subtotal Equipment and supplies 4. Local office/Action costs8 4.1 Vehicle costs 4.2 Office rent 4.3 Consumables - office supplies 4.4 Other services (tel/fax, electricity/heating, maintenance) Subtotal Local office/Action costs 5. Other costs, services9 5.1 Publications 10 5.2 Studies, research10 5.3 Auditing costs 5.4 Evaluation costs 5.5 Translation, interpreters 5.6 Financial services (bank guarantee costs etc.) 5.7 Costs of conferences/seminars 10 5.8 Visibility actions Subtotal Other costs, services

Per month Per month Per month Per diem Per diem Per diem

0 0 0 0 0 0 0

Per month Per month Per month Per diem Per diem Per diem

0 0 0 0 0 0 0

Per flight Per month

0 0 0

Per flight Per month

0 0 0

Per vehicle

0 0 0 0 0

Per vehicle

0 0 0 0 0

Per Per Per Per

month month month month

0 0 0 0 0

Per Per Per Per

month month month month

0 0 0 0 0

0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0

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Example of Logframe Matrix- Action

Overall objectives Intervention logic What are the overall broader objectives to which the action will contribute? LOGICAL FRAMEWORK Objectively verifiable Sources and means of indicators of achievement verification What are the k ey indicators related What are the sources of to the overall objectives? information for these indicators? Assumptions

Specific objective

What specific objective is the action intended to achieve to contribute to the overall objectives?

Which indicators clearly show that the objective of the action has been achieved?

What are the sources of Which factors and conditions outside information that exist or can be the Beneficiary's responsibility collected? What are the methods are necessary to achieve that required to get this information? objective? (external conditions) Which risk s should be tak en into consideration?

Complete Research

Expected results

The results are the outputs envisaged to achieve the specific objective. What are the expected results? (enumerate them)

What are the indicators to measure What are the sources of What external conditions must be met whether and to what extent the information for these indicators? to obtain the expected results action achieves the expected on schedule? results?

Activities

What are the k ey activities to be carried out Means: and in what sequence in order to produce What are the means required to the expected results? implement these activities, e. g. (group the activities by result) personnel, equipment, training, studies, supplies, operational facilities, etc.

What are the sources of information about action progress? Costs What are the action costs? How are they classified? (break down in the Budget for the Action)

What pre-conditions are required before the action starts? What conditions outside the Beneficiary's direct control have to be met for the implementation of the planned activities?

65

STATE AID PRINCIPLES

66

State Aid Regulations: DG Internal Market/Competition

Of course, whenever designing or launching a new scheme with SFs or other EC programmes, the authorities have to check that EC State Aid rules are met. This is very important once you are a Member of the EC, it is a cat-andmouse game between national and regional bodies and EC officials as to the interpretation of the Rules. Fights and investigations are commonplace.

Essentially simple: De Minimis rule applies (less than 100,000 EUR of aid in three years to a single firm or related firms, which is generally enough for most SMEs). All aid beyond that has to be justified ex-ante (better) or ex-post (when fairly sure, and unlikely the first few years after Accession). This can be done by ANMMIC, the RDAs, Counties, Associations, or whoever proposes a scheme within a grant application to benefit SMEs, cooperatives or self-employed.
The three Block Exemptions are usually accepted when justified in depressed areas. For the rest much more has to be justified to DG Competition, with good lawyers and expert justification.
67

State Aid Block Exemptions

Exemptions which apply to business support (excluding De Minimis):
- SME Aid; depressed regions, innovation, special sectors - Training: all situations - Financial Restructuring; financial distress in sectors The Block Exemptions are justified expost (in theory, but better check first), the others case by case.
68

State Aid Regulations

General Summaries (SCAD) of State Aid regulationshttp://europa.eu.int/scadplus/leg/en/s12002.htm - State Aid De Minimis Rule: http://europa.eu.int/scadplus/leg/en/lvb/l26065.htm - State Aid SME Block Exemption: http://europa.eu.int/scadplus/leg/en/lvb/l26064.htm - State Aid Training BE: http://europa.eu.int/scadplus/leg/en/lvb/l26063.htm - State Aid Employment BE: http://europa.eu.int/scadplus/leg/en/lvb/l26091.htm - State Aid in Agriculture (SCAD)http://europa.eu.int/scadplus/leg/en/s12006.htm - State Aid in Energy (SCAD) http://europa.eu.int/scadplus/leg/en/s1400EC - State Aid in Transporthttp://europa.eu.int/scadplus/leg/en/s12005.htm - State Aid in Telecoms http://europa.eu.int/scadplus/leg/en/s21012.htm#CADREJUR
69

Exercise
Export credit and subsidy support programme- AREAS OF SUPPORT: 1) SME receives grant for fair, trips, promotion , brochures for up to 50,000 EUR

2) SME has option for accessing export credit of up 100,000 EUR with rate of Euroibor (in Romania that implies a subsidy of 5% per year from market rates) for up to 5 years
3) business export consultant for up to 80 person-days, at 50% subsidy (max 600 EUR/day) 4)Junior trainee expert 12 months with 750 EUR/month subsidy (+ 25% at least by company) 5)Business premises can be rented for up to three years at 50% market rate for offices with max of 100 m2 (10 EUR/m2/month) 6) Investment subsidy (reimbursable grant) of up to 40% of IT and/or machinery acquisitions with up to 50,000 EUR. Oltenia SM regions10 m EUR. STATE AID 146,000 EUR, redo the 70 scheme as you wish.-

Examples of Business Support SF programmes from Spain and Portugal

71

Examples of SME Support Programmes: Spain

Competitiveness Training Programmes SME Internationalisation Innovation and technology development Financial Support Programmes Integrated schemes

Regional Programmes

72

Programme for Strengthening and Increasing SME Competitiveness

ERDF funded programme launched by the Directorate-General for SME Policy, aims to provide assistance and encouragement for small and medium-sized companies within the framework of a policy designed to strengthen the fabric of Spanish SMEs. Objective: To improve the competitiveness and quality of SMEs via the promotion of the implementation of innovative systems.

The Aim of the Programme, with funds of EUR 300.51 million for 2000-2006 are to implement:
Measures based on ITCs and innovative business techniques. Regarding innovative business techniques, there are four support programmes : design; quality systems; inter-company co-operation networks; and process innovation- centred mainly on aspects of SME management and organisation Intermediate organisations: IT investment 50% ceiling for investment or advisory services. Max 50,000 EUR maximum and fixed rates for consultants. SMEs: a maximum of 65% for investments (objective 1) and 50% for external consultants, max of 10,000 EUR and fixed rates for consultants.
73

Maximum % co-financing depends on the Region:

REDEPYME:Training, Information & Networking entrepreneurs

Redepyme is an ESF-funded programme, which has started a network of SMEs and entrepreneurs. The Madrid-based EOI Business School Business was awarded the management of the programme. The aim of the programme is to guide and assist the member companies and also promote cooperation among them. In order to achieve this aim, EOI maintains continual and individual contact with each of the business owners by conducting a series of activities to keep them trained and informed about issues of special interest for their business activity. SMEs and entrepreneurs benefit from: Up to three courses (short) per year for free Information sessions on important topics (taxes, registration, etc.) Insertion in Virtual Fair and design of simple website for free Small stand at a yearly Exhibition and Congress (60 EUR stand)
74

REDEPYME

RESULTS 2003:
More than 2,500 companies in this Network in all the Autonomous Communities and from all business sectors 340 courses / 7.640 trained entrepreneurs 6.250 counselling projects implemented (BPs, on going firms, etc.) 2.380 New companies assisted

75

Promotion of New Exporters- PIPE 2000

Instruments:

Technical Assistance: Consultancy during the 3 phases of the programme. First phase by public staff and 2nd and 3rd by external and certified consultants Financing rate: 80 % of total eligible costs subsidised. With a limit of 30.000 EUR per beneficiary company (33,000 EUR for Objective 1 regions). Chambers of Commerce co-finance the % between the EU (50-75% depending in region) co-financing rate and the final user rate.
Eligible expenditures: Hiring of consultants (compulsory), travels, fairs, brochures and promotional material

Methodology: With the assistance of experts in the beneficiary companies prepare a autodiagnostic, including SWOT, strategy, resources, commitment, etc. ( meetings and workshops). Phase 1 Auto-diagnostic: Maximum within 2 Months Output: With the results of the autodiagnostic, companies have to decide whether to go for phases 2 and 3
76

Innovation and Technology Development- NEOTEC

CDTI evaluates and finances R&D projects developed by companies regardless of their activity sector and size. The total amount of financing offered generally fluctuates between 240,000 and 900,000 euros, a sum that includes fixed assets (laboratory, pilot plant, etc.), personnel devoted to the projects, material and other project expenses. The entities that may receive financing in the form of credits granted by CDTI are Commercial Companies with the technical capacity to undertake a project involving research, development or technological innovation and sufficient financial capacity to cover a minimum of 30% of the total budget for the project with their own resources. The financing CDTI offers to companies consists of credits with a zero rate of interest and long-term amortization that covers up to 70% of the total budget for the project. CDTI only backs projects that are technically and economically viable, but does not demand real guarantees from the promoting company for the awarding of its credits. Interest Rate : 0,Term 77 7-9 years Credit % of the budget 60-70 %

SME Finance and credit

Only 15 % of external financing of Spanish SMEs is provided by external investors- which includes venture and equity funds Bank loans represent almost 60 % of external financing Venture capital as well as seed/start-up capital- is still relatively underdeveloped in most Spanis regions vs EU countries and USA (0,082 % of GDP vs 0,128% of GDP in EU and 0,646% in USA)

Moreover, only about 25% of venture capital goes to hi-tech industries vs. 80% in the USA and 84% in Israel (This 2004 lower)
Spanish regions have tried different equity and loan guarantee schemes, while other rely more on tax incentives Each public scheme has different cost, impact and market distortion relationship- generally national government schemes shy away from direct investment
78

Financial Assistance to SMEs: SME facility . ICO(Instituto de Crdito Oficial)

ERDF and ESF funds used, managed by State Bank ICO (second floor bank) and disbursed to SMEs by selected commercial banks. Instruments: Medium and long term financing of productive or facility investments made by SMEs, with a limit of 1,5 M EUR, with 3, 5 and 7 periods (grace period of 1 year for 5 and 7 years). Rate of Euribor + 0,4% with variable or fixed rate. Only covers 70% of fixed investment. A separate micro-credit scheme, also financed by 79 year (no ESF, has a limit of 25,000 EUR and three collateral security necessary). Rate fixed at 6%

Financial Assistance to SMEs: SME facility . ICO(Instituto de Crdito Oficial)

Results: Over nine years in which the SME Facility has been effective, ICO has provided SMEs with loans worth EUR 14,676 million, to over 180,000 enterprises. This has generated total investments of over EUR 28,000 million (2 to 1 leverage). The average loan was EUR 80,000 for the SME facility. SME facility: the application can include all investments made in fixed assets, with the following limits: If the project presented includes real estate investment, the investment will not exceed 80% of the amount of the total investment to be financed. If the project presented includes an investment in intangible assets, the investment will not exceed 50% of the amount of the total investment to be financed.

80

SF funded a network of 21 EC-accredited BICs, 18 regional venture funds and equity guarantee schemes plus partial funding for the National Reinsurance Guarantee Agency Some BICs were started up to 50% EU funds for infrastructure and 75% for services. Nowadays, their financing is marginal Similar to other EU countries, the central government first, and then regional governments, first invested directly and then moved back to guarantee or reinsure equity funds, so as to increase leverage and outreach Mutual guarantee funds (privately owned by subscribers) are as popular as in Italy. They started in areas with cooperative tradition- and are now backed and/or reinsured by regional and Reinsurance Guarantee Co.(CERSA), offering both loan and now equity guarantees Regional venture funds were started in all regions in the 80s with mixed results. Later they aimed at leveraging funds of equity guarantee schemes and seed capital. They are also supported through a National Innovation Enterprise participative credits (ENISA) (Convertible debt into equity at entrepreneurs 81 with EIF-funded), and through the 21 BICs and other bodies.

Today most Spanish Regions are heading towards mixed -or integrated- schemes combining seed capital with incubation and training support

Step Business Plan

Phase

Tools / Programmes

Awareness Identification of potential entrepreneurs/ ideas Testing, registration, IPR

- Seminars - Conferences - Road-shows/ PLUS prizes or awards

-Technology transfer offices

Identification/ Training Pre-incubation

- Universities/ RAICs

First sales payment delivery and payment Recruitment of first employees

Incubation

- Pre-incubation facilities PLUS grants at univ, incubators or technology centres - Seed capital PLUS incubation - Stand-alone incubators/ BICs - Incubators at science/technology parks - Incubators at technology or research centres
- Commercial offices

Post- incubation management Expansion of premises/staff

Post- Incubation

- Science/technology park premises PLUS tax incentives - Expansion venture capital

82

Spain: Lessons for Accession Countries

The Europe- requirement can help adopt necessary policies (SME upgrading and fiscal reform) which lack public osupport
There are short term costs to reform, but no pain, no gain Reform should not end with EU accession: EU countries are not necessarily the lead to follow

Productivity enhancing policies should be implemented with SFs (human capital, R&D,etc.), not only infrastructure or social programmes
83

Technological Innovation programme: Laboratory for Shoes cluster

Example: Spanish Aragon region, Laboratory for Quality Shoes in Aranda

ERDF-funded programme, yet helped design and within the policies of the Directorate-General for Enterprise (technology centres), aims to provide assistance and encouragement for small and medium-sized companies within the framework of a policy designed to strengthen the fabric of Spanish SMEs. Objective: To improve the competitiveness and quality of SME Shoes Industries via the promotion of the implementation of innovative systems with a Laboratory (small technology centre) for quality, training, etc.
Centre should deploy ICT and innovative management and production and design techniques. The Centre defined four support programmes : design; quality systems; inter-company co-operation networks; and process innovation - centred mainly on aspects of SME management and organisation.
84

Technological Innovation programme: Laboratory for Shoes Cluster

Spanish Aragon region- Laboratory for Quality Shoes in Aranda Beneficiaries: SMEs in Aragon of the leather and shoe sector, through their local shoe manufacturers association. Eligible expenses: External consulting costs, related services, technical equipment for laboratory and computers. Excluded were the investment in the buildings, furniture and operating costs. Procedures:With the laboratory the Aragon shoes industries have a tool for analysing the raw material and to improve the manufacture of shoes. And with the laboratory the SME Aragon Shoes getting a similar quality of final product in the differents industries. Programme costs, total funds of EU (ERDF) 50%: 240.500 EUR . Total costs of centre EUR 481.000 EUR for set-up. The centre later applied for R&D grants, regional grants, etc., for operational phase.
85

Portugals EU Accession and Convergence

In 1974, the isolation and the backlog between Portugal and the developed parts of Europe seemed to be enormous. The dictatorship and the colonial war - since 1961 - resulted in big economic, social, political and cultural underdevelopment. The European accession - result of a wide consensus of the Portuguese political elite- resulted in the transition to democracy and a basic element of its consolidation. After an agreement was reached in 1978 that Portugal would be accepted within the EC, negotiations took from October 1978 to March 1985 along side those negotiations between the Commission and Spain. In retrospect, there is no doubt that political factors played a major role in the admission of the country to the EC, mainly the need to consolidate democracy.

The period of 1978 to 1984 was characterised by large macroeconomic disequilibria. Portugal had to go through two IMF supported stabilisation programs and benefited from EU pre-accession funds and a large loan to support democracy.
86

Portugals EU Accession and Convergence

In 1974, the isolation and the backlog between Portugal and the developed parts of Europe seemed to be enormous. The dictatorship and the colonial war - since 1961 - resulted in big economic, social, political and cultural underdevelopment. The European accession - result of a wide consensus of the Portuguese political elite- resulted in the transition to democracy and a basic element of its consolidation. After an agreement was reached in 1978 that Portugal would be accepted within the EC, negotiations took from October 1978 to March 1985 along side those negotiations between the Commission and Spain. In retrospect, there is no doubt that political factors played a major role in the admission of the country to the EC, mainly the need to consolidate democracy.

The period of 1978 to 1984 was characterised by large macroeconomic disequilibria. Portugal had to go through two IMF supported stabilisation programs and benefited from EU pre-accession funds and a large loan to support democracy.
87

Portugals EU Accession and Convergence

The inflation rate in Portugal during pre-accession was particularly high and the government deficit was also high by developed country standards. The unemployment rate was reaching record levels after the crisis of 1982-83 Growth was also disappointing during the pre-accession period, from 1974 to 1986 Portugal lost about 6 percentage points in the convergence rate to the EU. In 1986 the GDP per capita was only 55% of the EU average, the smallest of all cohesion countries. Greece and Spain were also experiencing a process of nonconvergence A large part of the economy was in the hands of the state, and large parts of manufacturing and services were closed to the private sector. The press and radio stations were almost all state owned, the television was state property too. The labour market was heavily regulated with no possibility of laying people off. Wages were set by negotiations between the state and unions

88

Portugals EU Accession and Convergence

It was only after accession that Portugal had a cycle of high growth accompanied by structural reforms. From 1987 to 1991, GDP growth averaged 6.5%, about 3.5 percentage points above the EU average. A major factor behind the remarkable growth rate was a terms-ofexports improvement of 24% in 1984-85, and a real devaluation of 26% in the decade prior to 1985 Another factor was the structural reforms undertaken, which included: (i) fiscal reform (ii) privatisation (iii) labour market reforms (iv) financial sector modernisation (v) infrastructure build-up

89

Portugals EU Accession and Convergence

The investments in modernisation of the infrastructure for transportation - roads and highways - in the construction of the country's drainage network, in telecommunication and regional development, as well as in tourism infrastructure and key industriesfor example car production- reached a level without precedent in the history of Portugal. The large impact of trade in the economy is reflected in a jump in the ratio of average exports and imports over GDP from 29% in 1985 to 53% in 1995. Direct foreign investment also increased substantially in the early 1990s. Portuguese per capita GDP, in terms of the purchasing power rose from 54% of the 1986 EEC/EU average to 74% by 2001. In 1986 the per capita GDP was 4.200 euros and reached 11.100 by 2000.

90

The Community Funds: Financial Assistance

According to the Portuguese authorities, the financial support during Portugal's pre-accession period - between 1980 and 1985 - was rather poor, about EUR 165 million and also rather insignificant in the first three years following the accession in 1986 about EUR 1,8 billion. - I CSF ( Community Structural Funds, 1989-1993) billion. The extent of financial aid grew significantly from 1989 as a result of the reform of the Structural Funds by entering into force of the First Community Support Framework. Portugal has received the equivalent of 3% to 4% of GDP annually ( ceiling of 4 % of GDP) , from structural funds and other Community initiatives, from 1989 to 2001. Under the current Plan, the level of funds falls to slightly less than 3% in 2006 (Agenda 2000).
91

The Community Funds: Financial Assistance

Portugal received in Euros (at 1999 price) - 10,96 billion - I CSF (1989-1993) - 19,96 billion - II CSF (1994-1999) and has another - 22,82 billion by the III CSF (2000-2006) The impact of the community funds in percentage of the GDP was very significant, namely: - 3,1 % of the annual GDP during the period of the I CSF - 3,5 % of the annual GDP during the period if the II CSF Besides the decisive importance of the entering into force of the CSF, a clear conclusion has to be drawn: some years were necessary for Portugal to obtain an economic, political and administrative maturity and to present good projects, to develop good language skills and get acquainted with the eurocracy of the Brussels' corridors in order to be efficient receivers of the accessible community funds.
92

Conclusions
After 18 years the balance of the European option is undoubtedly positive and now we can confirm that no of other option could have protected the interests of Portugal better or created better conditions for the Portuguese people. The accession to the EC was a decisive step for the development and opening of the Portuguese economy. The overall structural reforms initiated at that time, the successful amendments the disequilibria of the macro-economy, the appropriate use of the community funds, transformed Portugal a clearly positive example of the European integration. This economic and social cohesion gave a unique opportunity to Portugal of modernisation and development. One of the most striking results was the construction of an important transport infrastructure. To mention one, in 1990 there were only 320 kms. of highway in Portugal, and by 2002 another 2.370 kms were built. In the field of the professional training, during the First CSF, an annual average of two hundred thousand people were employed and eighty thousand new jobs were created.
93

Conclusions : Spain and Portugal

Structural funds are not enough: also necessary are efficient public programmes of current and capital expenditure. Money is fungible, so the Commission may refuse to finance a white elephant, but the country can divert resources freed from Community contributions to other projects, to pursue those projects- which may be harmful to the efficiency and growth of the economy. Countries receiving large structural funds should be encouraged to prepare an overall investment strategy for the public (and SME sector), which should be discussed with the Commission. Programmes/ schemes submitted for financing should be drafted according to the economic/social development strategy; and attribute high priority to efficiency, equity and a substantial portion targeted to the poorest. As usual, targeted SME support schemes with clear beneficiary groups (sector or type of companies) have higher and more measurable impacts.
94

Conclusions: Spain and Portugal

It is now widely recognised that a high level of transfers may create a subsidy culture. So the 4% of GDP limit to those transfers is also a welcome ceiling. However, this limit discriminates against small poorer countries, and should be complemented by a GDP per-capita limit. The other negative impact of subsidies is the rent-seeking activities that it creates in the recipient countries. The Community is strengthening its auditing and procurement mechanisms, and establishing systems that are as competitive as possible in order to avoid corruption and favouritism by national governments.

This is of the utmost importance if we want to avoid the effects of the grabbing hand and promote a efficient and impact-oriented system in a competitive Europe.
95

Advice, consultancy, mentoring and Business Information

The Portuguese Business Association (AEP) provides technical assistance and information to companies as well as support through specific programmes. Company services are provided in the following areas: Company Formation, Tax and Labour Laws Innovation, Mediation and Industrial Ownership Energy, Quality, Environment, Hygiene and Work Safety Business Organisation and Management Digital Economy, Internet, Information Systems - Information to enterprises is available on line www.aeportugal.pt - Information services, with access to large world-wide data-bases - Information centre, reception and assistance with applications for different incentives and support schemes

96

Advice, consultancy, mentoring and business Information

Specific Programmes of AEP

INFANTE - Programme for the promotion of quality and security conditions of Portuguese food products. INTERVIR- Programme for the Implementation of measures leading to good environmental and energysaving practices in industry. PME - Training and Consultancy Support programme for business development, with a view to improving the competitive profile of companies. It is aimed at SMEs and Micros PRONACI - National Programme for training of middle Management for Industry. First national programme with the aim of improvement and qualification of middlemanagement posts in the Portuguese industry. 97

Advice, consultancy, mentoring and business Information

Enterprise spin-off incubators are office spaces and infrastructures- including technical and material support - targeted to young entrepreneurs for the start-up and/or development of their science and technology based activities, usually from universities. This measure is aimed at young graduates aged between 18 and 35, wishing to create a NTBF or in first phase of development for enterprises in their first year of activity Maximum 4 associates are allowed per enterprise. All necessary information and application documents are available online There are 3 enterprise nests in Portugal: Porto, Lisboa and Faro ( www.fjuventude.pt) 98

Regional Incentives; Scheme for the Aores islands

Strength and modernisation of the Regional Economy and the diversification of offer of goods and services, privileging innovative initiatives that can contribute towards environment protection, territory development, valuation of the endogenous resources, setting of the populations and job creation. Enterprises must: - Be legally constituted or in phase of creation. - Be in order with social security payments - Have an organized accountancy by the time of application - Have a healthy economic and financial situation - To have all necessary licenses and be registered to the 99 Industrial or Commercial Register Office

Regional Incentives; Scheme for Aores islands

Eligible investments: Investment in fixed assets: minimum 14 963 EUR and maximum149 639 EUR. For craft projects, minimum investment: 2.493 EUR. General conditions of eligibility:
a) Construction and adaptation of infrastructures and buildings; b) Equipment c) Software acquisition; d) Vehicles or other means of transport, since that demonstrated its essential for the project; e) Technical accompaniment of the project and related studies with exception of those carried out more than 12 months before application. f) Investments in intangible assets for the improvement of management, namely investments for the increase of competitiveness for internationalisation, innovation, sciences and technology, systems of quality, safety and environment management, introduction of 100 communication (IT), distribution techniques, commercialisation,

Support the investment activity of innovative SMEs through increased availability of loan finance. For SMEs of less than 100 employees, guarantees will normally be provided free of charge.

SME Guarantee facility

Guarantees are normally limited to 50% of the investment cost and are priced according to the perceived risk. The fund usually provides

guarantees to a group of firms in a form agreed with each financial

intermediary, rather than giving a direct guarantee for an individual SME. The risk covered by the facility must be additional to the risk the intermediary would have underwritten in the normal course of its business, for example enhanced access to debt finance for start-up companies through less stringent eligibility criteria.
101

SME Guarantee facility

Objective: To contribute to the adjustment of the financial environment, so that it constitutes a suitable framework for financial balance, and for the implementation of agressive business strategies by SMEs; - To stimulate innovative funding schemes, by broadening and diversifying the offer of financial products and services available to smaller enterprises. This will concur to correct residual market weaknesses in the access to financial services and products by SMEs; - To favour new enterprises start-ups and the access of new agents to business, by providing entrepreneurs with the possibility to secure funding in the adequate conditions. 102

Other types of financial support instruments available

Risk Capital Syndication Fund (RCSF) for SMEs Its goal is to perform joint operations within the risk capital area,

through investment and financing of entities specialising in this

domain, in view of strengthening SMEs own capital Establishment of a Loan Securitisation Guarantee Fund (LSGF) -

to share the risk assumed by investors when purchasing bonds

that give them credit rights on SMEs. Reinforcement of the Mutual Counter-Guarantee Fund (MCGF)

to ensure adequate levels of capitalisation and solvency.

Establishment of Mutual Guarantee Corporations to ensure the required regional and sector coverage of this mechanism, thus
103

significantly

Sector specific: Automobile INAUTO

To increase the national automobile industrys competitiveness, through the support of technical abilities and strategic capacities of the enterprises development, and by establishing organisational and economic co-operations that allow to get and to support competitive advantages as a form of guaranteeing a better positioning in the international markets. Produce strategic information, at market level, in order to contribute for the creation of a singular type of culture in this sector. To establish channels, between enterprises and scientific and technological system entities, that allow the increase of technological development and management, as a way of creating new qualifications in advanced production technologies and product development. Promote the interaction between components supplying companies, using cooperation nets. Encourage activities that promote the national automobile industry, 104 in order to contribute for the internationalisation and for the attraction of new foreign investments.

Sector specific Tourism: SIDET

To promote and diversify tourism activity and development in the Region of the Aores. The aim of this measure is to support Tourism activities which involve the following:
Fixed capital investment projects. Tourism promotion projects developed by SMEs. Tourism animation projects of developed by SMEs.

Companies whose speciality is the development of the agricultural space and the qualification of the human resources and the environment are supported through www.sre.raa.pt incentives.
105

Sector specific: Fishery- MARE

To increase competitiveness and strengthen the economy of the three basic sub sectors, namely fisheries, aquaculture and processing industry. To keep a sustainable exploitation of the fishing resources and develop additional sources for fish supplies. To encourage better knowledge and professional skills of the fisheries sector To promote diversity of the fishing communities and enlarge their importance through measures that develop small-scale coastal fishing. To promote the scientific potential of the fisheries sector, guiding and supporting Research & Development activities enabling more research regarding production and a better knowledge of the Exclusive Economical Zone. (EEZ) Minimum investment 15,000 - Projects exclusively related with production of vegetable oil and flour transformation are not allowed to present its project to this system. 106

DAY 2
EC Structural Funds Programming and Project Cycle Management

107

Classification of the tendering processes for technical assistance (services)

The following limits USUALLY apply to EC contracts (see General Conditions for EC Contracts): Up to 50.000 EUR contracts, Commission Framework Contract (short list of 3) or direct award Up to 200.000 EUR contracts, Framework Contracts or restricted bidding (short list of 3 within Lot of Framework) Above 200.000 EUR contracts, Awarded after international tender in EuropeAid (shortlist of 5 to 8)108

PART II
EC PROJECT CYCLE MANAGEMT

109

OVERVIEW OF EC PROJECT CYCLE MANAGEMENT

What is a project?
ISO/PMI: A series of activities aimed at achieving one or more specific objectives within a defined time frame and with a defined budget

EC: A project is an instrument which is used to contribute to the achievement of a larger goal (e.g. a programme), which will in its turn supports the implementation of a broader policy
110

What are project monitoring and evaluation?

Monitoring (EC): To assess whether the project is reaching and/or is likely to reach its objectives and results in a timely and efficient way

Evaluation (EC): To assess whether the project has had impact intended and reached its purpose and results in a timely and efficient way
111

The EC External Aid Project Cycle

Programming

Evaluation& Audit

Identification

Implementation

Formulation

112

The EC Project Cycle

EC: The way in which projects are planned and carried out; it follows a sequence beginning with an agreed strategy, which leads to an idea for a specific action, which then is formulated, implemented, and evaluated with a view to improve the strategy and define further action
113

Project Cycle Management

The management activities and the decision-making procedures used during the life-cycle of a project, including key tasks, roles and responsibilities, key documents and decision options

114

PCM is used to ensure that:

projects are supporting predefined overarching
policy objectives; projects are relevant to an agreed strategy and to the real problems of the target groups/beneficiaries; projects are feasible meaning that objectives can be achieved given the constraints of the operating environment; benefits are likely to be sustainable.

115

The essential PCM principles are:

use of Logical Framework Approach (LFA) to formulate the project and analyse the problems; production of good quality key documents in each phase to ensure structured and wellinformed decision making; consulting and involving key stakeholders as much as possible.

116

Key documents in the PCM:

Country Strategy Paper
Programming

Priority areas, Sectors, timetable Pre feasibility study Project Identification Sheet Which options to study further

Evaluation Report Decision on how to use results for planning

Evaluation

Identification

Progress & Monitoring Report

Implementation

Formulation

Feasibility study Financial Proposal

Decision whether to continue as planned or reorient the project

Decision on funding

Financing Agreement Decisions to take Documents to produce

117

Project Identification, Formulation and Analysis

What is Programming?
For EC development assistance: establishment of general guidelines and principles for EU co-operation with a country For other types of EC programming: establishment of main development priorities

118

What is Identification:
To add more details to the output of the programming phase by: identifying project ideas consistent with the set priorities; assessing their relevance and the feasibility; preparing a detailed Financing Proposal (MEDA and Tacis) or Project Fiche (ALA or ACP); preparing a financing decision for a Programme or projects, or call for further studies/analyses

119

Identification and Formulation

The core tools of the Identification and Formulation phases are:

Tools:

1. 2. 3. 4. 5. 6. 7.

Quality Assessment Criteria Logical Framework Approach (LFA) Institutional Capacity Assessment Promoting Participatory approaches Preparation of Terms of Reference Identification, Action Programme and Project Fiche Economic and Financial Analysis
120

Identification: Assessment Criteria and Standards

A. RELEVANT
1. 2. 3. 4. 5. Consistent with EC development and cooperation policies Consistent with partner government policies and sector programmes Key stakeholders identified, institutional issues and local ownership Problems appropiately analysed Lessons learned from experience and linkages to other projects and programmes incorporated

B. FEASIBLE
6. 7. 8. 9. 10. 11. Preliminary objectives are clear and logical, address needs Preliminary resource and costs clear and economic-financial analysis carried out Preliminary coordination and financing arrangements clear and support institutional strengthening (Not applicable to formulation) Assumptions and risks identified and appear reasonable Likely to be environmentally, technically and socially sustainable

C. WELL-MANAGED

121 16. Good practice principles of PCM applied by EC task managers

Identification: Outputs
Information produced at end of Identification phase:
Policy and programme context (Partner and EC) Stakeholder analysis Problem analysis Lessons learned and review of other planned initiatives Preliminary project description Indicative resource and costs implications Indicative coordination and management (including controls) Preliminary assessment of economic/ financial, environmental, technical and social sustainability 9. Workplan for Formulation stage - Terms of reference for EC-funded Feasibility studies (Framework contracts) - Identification Fiche, with Draft Terms of Reference for feasibility or design - A Financing Proposal for a programme or a package of projects (Action programme with Project Fiches) 1. 2. 3. 4. 5. 6. 7. 8.

With the following outputs

122

Formulation Phase: objectives

confirm the relevance and feasibility of the project ideas as presented in the initial identification fiche; prepare a detailed project design; prepare a financing proposal.

123

Information elements produced at the end of the project Formulation/design phase:

Situation Analysis/Assessment; Project Description; Management Arrangements; Feasibility and Sustainability.

124

Situation Analysis/Key assessment:

Policy and programme content Stakeholder analysis & institutional capacity assessment Problem analysis Lessons learned Strategy selection

125

Project Description:
Overall objective and purpose Target group, location and duration Results and indicative activities Resources and costs

126

Management Arrangements:
Coordination and management structures Financial management/financing arrangements Monitoring, evaluation and audit tools

127

Feasibility and Sustainability:

Economic and financial Environmental Technical Social and governance Risk management

128

Implementation:
deliver the results, achieve the purposed and contribute to the overall objective of the project; manage the resources efficiently; monitor and report on progress

129

Evaluation:
Evaluation is an assessment, as systematic and objective as possible, of an on-going or completed project, programme or policy, its design, implementation and results. The aim is to determine the relevance and fulfilment of objectives, developmental efficiency, effectiveness, impact and sustainability

130

Evaluation
An evaluation can be done during implementation (mid-term), at its end (final evaluation) or afterwards (ex-post evaluation), either to help steer the project or to draw lessons for future projects and programming

131

Principles underpinning Evaluation:

impartiality and independence (implementation from programming); credibility of the evaluation (skilled experts, transparency, dissemination); participation of the stakeholders to ensure different perspective; usefulness (through timely presentation of relevant, concise and clear information to key decision makers).

132

The main tools supporting Project Cycle Management:

The Project Fiche - or Terms of reference; The Project Logframe Matrix- especially to help assessing what has been achieved against plan; Monitoring reports; Evaluation reports- intermediate and final.

133

Monitoring and evaluation: scope and differences

MONITORING EVALUATION
usually incorporates external inputs periodic, mid term, completion, ex-post, ongoing

WHO? WHEN? WHY? Link to LF Criteria

internal management responsibility on-going check progress, take remedial action, etc Input, activities, results relevance, efficiency, and effectiveness

Lessons learnt
results, purpose, overall objective, relevance impact and sustainability

134

What do we mean by RELEVANCE?

the appropriateness of project objectives to the problems that it was supposed to address, and to the physical and policy environment within which it operated, and including an assessment of the quality of project preparation and design i.e. the logic and completeness of the project planning process, and the internal logic and coherence of the project design

135

What do we mean by EFFICIENCY?

The fact that the Results have been achieved at reasonable cost, i.e. how well inputs/means have been converted into Results, in terms of quality, quantity and time, and the quality of the Results achieved. This generally requires comparing alternative approaches to achieving the same outputs, to see whether the most efficient process has been adopted

136

What do we mean by EFFECTIVENESS?

An assessment of the contribution made by Results to achievement of the Project Purpose, and how Assumptions have affected project achievements

137

What do we mean by IMPACT?

The effect of the project on its wider environment, and its contribution to the wider sectoral objectives summarised in the projects Overall Objectives, and on the achievement of the overarching policy objectives of the EC

138

What do we mean by SUSTAINABILITY?

An assessment of the likelihood of benefits produced by the project to continue to flow after external funding has ended, and with particular reference to factors of ownership by beneficiaries, policy support, economic and financial factors, socio-cultural aspects, gender equality, appropriate technology, environmental aspects, and institutional and management capacity
139

Link with Logframe Matrix

sustainability
Overall objectives change
Project purpose + Assumptions

Have and will products and benefits be maintained?

impact

Which benefits on society and sector? How well did the results contribute to the achievement of the project purpose? How were the inputs and activities converted into results? Quality of planning and adaptation, including relevance of problems to correct beneficiaries, OVIs, means, cost, assumptions, risks

utilisation
Results + Assumptions

effectiveness

action Activities + Assumptions

efficiency

allocation Means + Pre-conditions

relevance

140

Logical Framework Approach

It is an analytical process and a set of tools developed to support project planning and management It allows information to be analysed and organised in a structures way so that important questions can be asked, weaknesses identified and decision makers can take informed decisions

141

Logical Framework Approach (LFA)

Versus

Logical Framework Matrix (LFM)

LFA which is an analytical process involving stakeholders analysis, problem analysis, objective setting and strategy selection
LFM is the product of the analysis and consists of a matrix of four columns and four (or more) rows summarising the key elements of a project

142

Logical Framework Matrix

Project Description
Overall objective: the projects contribution to policy or programme objectives (impact) Purpose (often called specific objectives) direct benefits to the target groups

Indicators
How the Overall Objective has to be measured including Quantity, Quality, and Time? How the Purpose has to be measured including Quantity, Quality, and Time?

Sources of verification
How will the information be collected, when and by whom?

Assumptions

What are general Assumptions? or major risks?

Same as above

If the purpose is achieved, what assumptions must hold true to achieve the Overall Objective? If results are achieved, what assumptions must hold true to achieve the Purpose?

Results (often called outputs) tangible products or services delivered by the project

How the Results have to be measured including Quantity, Quality, and Time?

Same as above

Activities (sometimes referred to Inputs) which have to be undertaken to deliver the desired results

If activities are completed, what assumptions must hold true to deliver the Results?

143

LFA and Project Cycle

Identification: it is used to help analyse the existing situation, investigate the relevance of the project ideas proposed and identify potential objectives and strategies; Formulation: it is used to support the preparation of a good project plan with clear objectives, measurable results, risk management strategy and defined levels of management responsibility; Implementation: it is used to support daily work, contracting and monitoring; Evaluation: it is used to assess the project performance against what was planned.

144

LFA has two separate stages:

Analysis Stage: Stakeholders Analysis, Problem Analysis, Analysis of Objectives, Analysis of Strategies Planning stage: Logframe matrix

145

4. Project Identification and Analysis

Stakeholders Analysis: identifies and characterises the main stakeholders and assesses their capacities; Problem Analysis: identifies the main problems, constraints and opportunities including the cause and effect relationship; Analysis of Objectives: develops solutions from the identified problems by picturing the image of an improved situation in the future; Analysis of Strategies: identifies different strategies to achieve the solutions selecting the most appropriate one.

146

Stakeholders Analysis
Who is a Stakeholder? Any individual or group of individuals who have a significant interest in the success or failure of a project; Often a stakeholder can also coincide with a beneficiary, a facilitator or an adversary; Different groups might have different concerns, interests and capacities and therefore it is very important that the first step is the identification of the different groups

147

Stakeholders Analysis
There are a number of steps to undertake: identify the problem to address; identify all those who might have an interest in the potential project; investigate their roles, interests, power and capacity to participate; interpret the findings and incorporate them in the project design in order to make sure that (1) resources are correctly targeted; (2) stakeholders ownership and participation is promoted; (3) existing or potential conflicts of interests are addressed.
148

Stakeholders Analysis
Tools to facilitate the stakeholders analysis Stakeholder analysis matrix SWOT analysis

149

Stakeholders Analysis Matrix

Stakeholders and basic characteristics
Stakeholder 1 Stakeholder 2 Stakeholder .

Interests and how affected by the problems

Capacity and motivation to bring about change

Possible action to address stakeholders interests

150

SWOT Analysis
STRENGTHS WEAKNESSES

OPPORTUNITIES

THREATS

151

Problem Analysis
STEP 1: brainstorm on problems considered to be a priority by the stakeholders STEP 2: select individual starter problem STEP 3: identify related problems to the starter problem STEP 4: begin to establish a cause-effect relationship STEP 5: all other problems are sorted in the same way (cause-effect) STEP 6: problems are connected with cause-effect arrows showing the links STEP 7: revise the diagram to find out if some problems have not been identified STEP 8: the diagram is revised accordingly and distributed

A different, yet similar, method for Problem analysis is the Fishbone diagramme, or Ishikawa Root -cause 152 analysis.

Ex. STEP 1: Brainstorm on problems considered to be a priority by the stakeholders

Lack of int. partnerships

SMEs do not access int. markets

Lack of export promotion strategy

Lack of int. exposure

No access to advisory services Lack of funds

Lack of specific skills

153

Ex. STEP 6: problems are connected with causeeffect arrows showing the links
SMEs do not access int. markets

Lack of int. partnerships

Lack of export promotion strategy

Lack of int. exposure

Lack of specific skills

Lack of funds

No access to advisory services

154

Problem tree represention of Problem analysis

155

Fishbone Analysis (Root Cause analysis or Ishikawa)

156

Analysis of objectives
1. describe the situation once the problems have
been removed; 2. verify the hierarchy of objectives;

3. illustrate the means-end relationship in a

diagram.

157

Analysis of objectives
Starting from the problem tree, the negative situations are converted into solutions expressed in positive achievements. The positive achievement are actually objectives which are presented into a diagram showing the hierarchy of means/end

158

Analysis of objectives
SMEs are able to better access int. markets

SMEs build Int. partnerships

SME develop Export Prom. Strategies

SMEs increase int. exposure

SMEs acquire specific skills

SMEs benefit of ad hoc funds

SMEs access advisory services

159

Analysis of strategies/options

We have to concentrate on the potential merits or difficulties associated with addressing problems in different ways by considering a number of issues:

160

Analysis of strategies/options
1. if all the problems have to be faced or only a selection of them; 2. positive opportunities on which we can build on (from SWOT); 3. combination of interventions which is likely to better achieve the results and ensure sustainability; 4. which option is best promoting local ownership; 5. which is the most cost effective option; 6. which option best impact on the needs of the poor/most vulnerable groups

161

Analysis of strategies/options
There are a number of general criteria for strategy selection and namely: 1.contribution to key policy objectives (poverty reduction, reduction of unemployment etc); 2.complimentary with other ongoing projects; 3.environmental impact; 4.etc..

162

4. Project Planning
Most of the work done in the analysis stage is aimed to facilitate the planning stage and more specifically the finalisation of the Logical Framework Matrix (LFM). The LFM is a summary of the project design. It is best between one and three-four pages in length. The first page ideally includes the Overall Objective, Purpose and Results, while Activities can be described in the second, third or successive pages.

163

Logical Framework Matrix

Project Description
Overall objective: the projects contribution to policy or programme objectives (impact) Purpose (often called specific objectives) direct benefits to the target groups

Indicators
How the Overall Objective has to be measured including Quantity, Quality, and Time? How the Purpose has to be measured including Quantity, Quality, and Time?

Sources of verification
How will the information be collected, when and by whom?

Assumptions

Same as above

If the purpose is achieved, what assumptions must hold true to achieve the Overall Objective? If results are achieved, what assumptions must hold true to achieve the Purpose?

Results (often called outputs) tangible products or services delivered by the project

How the Results have to be measured including Quantity, Quality, and Time?

Same as above

Activities tasks that have to be undertaken in order to deliver the desired results

If activities are completed, what assumptions must hold true to deliver the Results?

164

Sequence for completing LFM

Project Description Overall objective Indicators Sources of verification Assumptions

(1)
Purpose Purpose

(8)

(9)

(2)
(2)

(10)

(11)

(7)

Result
Results

(3)

(12)

(13)

(6)

Activities

(4)
Activities

(5)

165

First column: intervention logic

The first column of the Logframe matrix summarise the means-end logic of the project also known as the intervention logic

166

The objective hierarchy is read from the bottom up using an IF, THEN approach as follows:
IF adequate inputs/resources are provided, THEN activities will be undertaken IF activities are undertaken, THEN results can be produced IF results are produced, THEN the purpose can be achieved IF the purpose is achieved, THEN this should contribute to the overall objective

167

The LFM
The LFM helps to indicate the degree of control managers have over the different levels of the projects objectives Managers should have a significant control over inputs, activities and the delivery of results Managers can generally only exert influence over the achievement of the project purpose though the delivery of results Managers have no direct influence over the contribution the project makes to the overall objective.
168

If we apply the necessary and sufficient conditions to the first column of the Logframe matrix:

Achieving the purpose is necessary but not sufficient to attain the overall objective Producing the project results is necessary but may be not sufficient to achieve the purpose Carrying our project activities is necessary and sufficient to deliver the results Inputs/resources should be necessary and sufficient to implement the planned activities

169

Wording
Project Description Overall objective Purpose Results Activities Statement To contribute to.. Example: to contribute to the decrease of unemployment Benefits to the target groups being improved etc Example: improved legal environment Tangible result delivered/produced/conducted Example: improved training facilities available for Present tense starting with an active verb Example: prepare and deliver public information.

170

Fourth column: assumptions

Assumptions are external factors having the potential to influence the success of a project but are outside the direct control of the project management. They belong to the so called vertical logic in the Logframe

171

Assumptions
once activities have been carried out IF the assumptions on the relevant level hold true THEN results will be achieved; once results are achieved IF the assumptions of this upper level hold true THEN the project purpose will be achieve; once the purpose has been achieved IF the assumptions at this level hold true, THEN the project will contribute to the achievement of the overall objective

172

Second and third columns: OVIs and sources of verification

Objective Verifiable Indicators (OVIs) and Sources of Verification are very important for both monitoring and evaluation and they respond to the so called horizontal logic

173

Objectively Verifiable Indicators

OVIs are indicators which help to measure and report on the achievement of objectives OVIs describe the projects objectives in operationally measurable terms (QQT= Quantity, Quality and Time) Focussing on OVIs during the planning phase helps to check on the feasibility of the project and constitute the basis for monitoring and evaluation

174

A good OVI has to be SMART:

S M
specific to the objective it is supposed to measure measurable (either quantitatively or qualitatively) available at an acceptable cost relevant to the information needs of managers

A
R

time bound

175

Indicators

should be independent from each other namely related only one objective

are to be defined during the formulation stage and are specified in the implementation

176

Sources of verification
how the information is to be collected

who should collect it

when/how regularly to collect it

177

Activity schedule
is a format for analysing and graphically presenting project activities helps to identify their logical sequence, expected duration and any link existing between them provides the basis for allocating management responsibility

178

STEP STEP 1
STEP 2 STEP 2 STEP 3 STEP 3 STEP 4 STEP STEP 5 4 STEP 6 STEP 7 STEP 8

DESCRIPTION
List Main activities: Starting from the Logframe we make a list of all the activities to be performed Break activities into manageable tasks: The purpose is to make them simple to be organised and managed. Each task can be assigned to an individual. The breaking down process must stop as soon as the planner has sufficient detail Clarify sequence (which activity comes first) and dependencies (is an activity dependent on the start-up/completion of any other activity?) Estimate Start-up, duration and completion of activities: The planner makes a realistic estimate of the duration of each task in order to establish start-up and completion date. Summarise Scheduling of main activities

Define Milestones: Identify key events that provide a measure of progress and a target for the project team to aim at. Define expertise: Once the tasks are specified we can identify the type of expertise required Allocate tasks among team: This is not only a definition of who does what. It involves the responsibility for the achievement of the milestones.

179

Activity Schedule

180

An Activity Schedule for a small project can be simple

Egypt Textile & Ready-Made Garments' SMG proposal
Weeks after start-up ( TOTAL 5 MONTHS)

Text No. Task

Responsib.

9 10 11 12 13 14 15 16 17 18 19 20

Stage ( A) Preparation: M arkets Penetration and Product / M arket M atch 2.1 Introduction 2.2 Buyers identification and qualification Initial Approach to buyers and 2.3 consolidation of contacts 2.4 Completion of Sampling and Matchmaking Stage (B): Inward Buying M ission from THE EUROPEAN UNION and Egyptian companies visits to THE EUROPEAN UNION Stage (B-1): Implementation: Inward Buying Mission (IBM) Preparation of factories, buyers itineraries 2.5 and completion of buyers visits 2.6 Follow-up activities Stage (B)-2 : Implementation: In Country Marketing Support ( ICMS) Preparation of Individual SMG members 2.7 programs 2.8 SMG members Visits Follow- up
RR RR/JP/AG/AS RR/JP/AG/AS RR/JP/AG/AS

RR/JP/AG/AS RR/JP/AG/AS

RR/JP/AG/AS RR/JP/AG/AS

Total ManDays

181

Time Estimation/Schedule for experts should be included

Months Name Geoffry Cobb K Kappe Position Team Leader LT International Expert LT International Expert Total Man Months Months Name Pool of ST Experts Pool of ST Experts Pool of ST Experts Pool of ST Experts Pool of ST Experts Pool of ST Experts Pool of ST Experts Pool of ST Experts Pool of ST Experts Position Turnaround Finance Marketing Reg. Dev. / Policy Institutional Strengthenin g/ Training Trade Policy Quality Industry Specialist Bosnian Consultants International Local Total Man Days
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 18 20 21 22 23 24

Number of months 21 18

Javier Fargas

18

57 Estimated Number of days 175 150 75 100 120

30 50 200 350 900 350 1250

182

Resource and cost schedule

the list of activities should be copied into a Resource Schedule whereby each activity should be used as a checklist to ensure that all the necessary resource/inputs required are provided for for each activity a list of needed resources/input needs to be developed together with a cost estimation

183

Resource and cost schedule

STEP 1: Copy activities from Activity Schedule STEP 4: Specify units STEP 7: STEP 8: STEP 9: STEP 5: STEP 6: Identify funding Allocate cost codes Schedule costs Specify quantity Estimate unit cost source STEP 10: Calculate total

ACTIVITIES / INPUTS

Unit

Quantity per planning period 1st Q 2nd Q 3rd Q 4th Q

Cost per unit

Funding source Cost codes Donor Govt

Cost per planning period 1st Q 2nd Q 3rd Q

Project Total 4th Q

Annual recurrent costs

C1.2 Establish WGs in each region Equipm ent computers no. fax, modem no. furniture lump Salaries & allow ances office staff mm counterparts mm ETC

2 1 1 4 2

1000 500 3000 4 3 4 3 200 100

2000 500 3000 800 200

2000

4000 500 3000 800 300 800 300 3200 1100 3200 1100

4 3

800 300

STEP 2: Specify INPUTS

STEP 3: Put inputs into cost categories

STEP 11: Estimate recurrent costs

184

Project Fiches and Terms of Reference

Project Fiches is the name given to Documents at the end of the Formulation Stage (but can also be called after the Identification stage, albeit in a more preliminary form. Terms of Reference are the detailed descriptions of work at any stage of the Project Cycle, generally to contract: Pre-feasibility analysis Feasibility and design studies Appraisal or quality support missions Implementation of large and small contract Evaluations Technical or advisory support Audit
185

Contents of Project Fiches

Project Fiches must reflect the outputs and elements of Information required at the end of the Formulation Phase. Although the various EC programmes have differing formats for Project fiches- they are not as standardised as Terms of Reference- generally they will include: - Background to the Project - Justification /Situation Analysis Overall objective and purpose Target group, location and duration Results and indicative activities Resources and Expertise required Management Arrangements Risks Impacts and Indicators Sustanability Environmental, social, gender and other issues 186 Budget Appendices with studies, research, descriptions, etc.

Contents of Terms of Reference

Although it will change depending of the Scope of the project, the general format will include: 1. Background to the Assignment 2. Study /mission objectives 3. Issues to be studied 4. Methodology for the study or implementation 5. Expertise required 6. Reporting requirements 7. Workplan and timetable Appendices with background information or detailed 187 budget.

6. Implementation, Monitoring and Evaluation Implementation

Regarding Implementation of projects once tendered and contracted, the EC does not suggest any specific project management methodology, beyond the Logframe Matrix and Monitoring and Evaluation guidelines. Reason given by directors is that various standards and methodologies are in the market for the pure management of the project (PMI, IPMA, Prince 2, private companies, etc.- they will be described briefly in Section 7), and therefore the EC cannot impose one over the others. As long as both the operational and financial aspects of the Indicators, Means of Verification, Activities, Resources and Risks are properly followed and filed, any method can be used by project implementors and contractors.

188

Monitoring
Monitoring of projects is described by the EC PCM. It is aimed to support:
identification of successes and problems during the project implementation; informed and timely decision-making; accountability for the resources used and results achieved; stakeholders awareness and participation; evaluation and audit. Monitoring involves the collection, analysis, communication and use of information about the projects progress
189

Monitoring system
A good monitoring system should provide relevant information to the right people at the right time to help them take informed decisions.
Monitoring should highlight strengths and weaknesses in the project implementation and enable the responsible people to deal with problems, improve performance, build on success and adapt to changing circumstances

190

What to monitor
1. which activities are underway and what progress has been made? (efficiency) 2. at what rate are means being used and cost incurred in relation to progress implementation (efficiency) 3. are the desired results being achieved? (efficiency) 4. to what extent are these results furthering the Project purpose? (effectiveness) 5. what changes in the project environment occur? (impact) 6. Do assumptions hold true?
191

Who needs what information

The identification of what information to collect is determined by analysing the following: project objectives, stakeholders interest and capacity; institutional and management structures; decision making responsibilities

192

There are six main stages for developing a monitoring system

1. clarify project scope; 2. understand the nature of organisational relationships, management arrangements and capacity constraints; 3. determine the information needs of project implementers and key stakeholders; 4. review existing information collection systems and procedures; 5. develop and document monitoring system guidelines and formats; 6. provide training and resources to support systems development and implementation
193

LFA and monitoring

Analysis of existing situation: a stakeholders analysis including the information needs; strengths and weakness of existing monitoring system if any. Activity schedules: structure for preparing operational work plans against which implementation can be periodically assessed (key tasks, timing, duration, responsibilities); visual presentation of key tasks that can be used to promote participatory planning

194

LFA and monitoring

Logframe matrix: a diagram of objectives, indicators and sources of information to be used in developing and implementing a monitoring system; a list of key assumptions. Resource and budget schedules: format for preparing operational budgets linked to planned activities and results reference point for resource and financial monitoring (planned/actual) framework for identifying the resources and costs required to implement the monitoring
195

LFA and monitoring

Risk matrix: The achievement of project objectives is always subject to influences beyond project managers direct control (assumptions and risks). It is very important to monitor this external environment to identify whether or not the assumptions that have already been made are likely to hold true and what new risk may be emerging and which actions have to be taken to mitigate the risk if possible

196

Risk matrix
The achievement of project objectives is always subject to influences beyond project managers direct control (assumptions and risks). It is very important to monitor this external environment to identify whether or not the assumptions that have already been made are likely to hold true and what new risk may be emerging and which actions have to be taken to mitigate the risk if possible

197

Risk matrix
LF ref

Risk
Beneficiary staff is not motivated to participate in a comprehensive capacity building programme

Risk Potential level adverse impact (H/M/L)

A real danger of capacity building being sub optimal; activities might collapse once the TA is over M

Risk management strategy

Propose staff incentive plans Discuss with project partners Recommend to replace certain staff

Responsibility
Beneficiary Project management Donor

1.1

Lack of consultants ready to start serving in the

The voucher counselling system cannot be

More training for Local Service and Training

Project management Donor

198

Interviews
Monitoring often includes making short visits to a project site. It is very important to a checklist of things to consider as well as a list of specific questions to ask. Questions need to be targeted on the project.

199

How to analyse the information/data

Analysing data and effectively turning data into useful management information is different from merely collecting it.

The key issue in the monitoring activity is how to analyse and present the data collected. We should bear in mind that quantitative data involve numbers that can be subject to various forms of statistical analysis while qualitative data usually provide information on peoples views, opinion or observations and are presented in a narrative way.
200

Balancing quantity and quality

An appropriate balance of the two with an interpretation of the quantitative data being enriched by the qualitative analysis (what people think). In any analysis, objective opinions, surveys and interviews are required for

201

How to analyse the information/data

Planned vs Actual
Monitoring is primarily about comparing what was originally planned with what actually happened (including costs and resources). This analysis is the basis of any monitoring systems. If we learn from our records that something is not happening as planned, we should also analyse the causes of the problem and determine an appropriate remedial action

202

How to analyse the information/data

Percentage/ratios
Calculating percentages and ratios is a very useful way to present the performance of the project. Such ratios helps us to see how close we are to achieving what we originally planned. Low percentages figures immediately highlight a potential area of concern unless we have a valid explanation for this.

203

How to analyse the information/data

Trends over time and comparison between time periods
An analysis of data over different time periods can help to see how the project is performing. However, this is useful only if we have a clear and consistent set of indicators (measuring the same thing in the same way at different points in time).

204

How to analyse the information/data

Geographic variance
Projects that are implemented in different locations can be monitored in a way that they help identify geographic variations while aggregate data would not allow this

205

How to analyse the information/data

Group variance
It might be useful to observe variance in outcomes between different social groups (impact on men and women). This implies that data need to be processed and classified keeping in mind that they need to be disaggregated

206

Focus of the analysis Planned vs actual (efficiency)

Questions to answer
Is the project doing what was originally planned?

Information needed
Activity schedule Resource schedule Logframe matrix Project Reports Interviews Risk matrix Logframe matrix Logframe matrix Stakeholders Analysis (etc LFA)

Risk & Assumptions Design (relevance) Project results (effectiveness)

Sustainability Impact

Are the assumptions holding true? Are new risks emerging? Was the project design relevant? Is it still relevant? What difference is the project making? Are the project purposes likely to be sustainable? Will the project impact on the overall objective?

Logframe matrix, Project Reports Interviews

Logframe matrix

207

Evaluation
Ex ante
is the feasibility study of the project and it sets out the aims of it. Usually it is revised during the project implementation in the light of the finding of the Monitoring exercise

208

Evaluation
Mid-term/interim
is conducted approximately halfway during the project implementation. The mid-term/interim evaluation will use the information contained in the Programme and Project monitoring reports but will not be based exclusively upon them exercise

209

Mid-term/interim evaluation
A project can achieve its immediate objectives but not have the impact that had been anticipated. The midterm/interim evaluation should therefore address the following: have the right objectives been set for the Programme/project are the key problems being addressed/the key target groups being reached? have the right Projects/Programmes been identified to achieve the wider objectives of the Programme/Policy?
210

Mid-term/interim evaluation

. are the Programmes/Projects being implemented efficiently and effectively? are they having the desired and anticipated effects (achieving the desired results, objectives and impact)? are the management and implementation arrangements for the project effective?

211

Evaluation
Ex post

is usually carried out one or two years after the period of the strategy has elapsed. Although the ex post evaluation will analyse the relevancy, efficiency and effectiveness of the Project/Programme, the primary focus will be upon impact and sustainability

212

What information/data we need

The information need varies depending on what we are analysing and therefore it is useful to see which information is to be collected for each evaluation criterion

213

Focus of the analysis Relevance

Questions to answer
Is the project design relevant?

Information needed
Logframe matrix Stakeholders Analysis, Problem Analysis, Analysis of Objectives, Analysis of Strategies (if available) Monitoring Reports Logframe matrix

Efficiency Effectiveness Impact

How well the various activities transformed the available resources into the intended results? How far the projects results were used or their potential benefits were realised?

Logframe matrix

To what extent the benefits received by the target beneficiaries have had a wider overall effect?
Are the positive outcomes of the project at purpose level likely to continue after the external funding?

Logframe matrix Interviews

Sustainability

Interviews

214

How to analyse the information/data

The type of analysis we need to carry out depends on which questions we are answering and varies from project to project. However, a general overview can be given analysing more carefully the evaluation criteria and the type of question they are aimed to answer

215

Relevance
The relevance of a project relates primarily to its design and concerns the extent to which its stated objectives correctly address the identified problems or real needs. It needs to be kept under review throughout the life of the project in case changes occur either in the nature of the very problems originally identified, or in the circumstances - whether physical, political, economic, social, environmental, institutional or policy - in which the project takes place, necessitating a corresponding change of focus

216

Relevance

Relevance concerns the appropriateness of the project design to the problems to be resolved at two points in time: 1.when the projects was designed 2.at the time of the evaluation

217

Relevance focuses on:

identification of real (vs perceived) problems or needs, and of the correct beneficiaries, and how well the projects initial design addressed them; quality of assessment of local absorption capacities; quality of assessment of local implementation capacities; where possible, preparatory activities undertaken (policy assessments, sector reviews, pre-feasibility studies including financial and economic analysis, planning workshops, etc), by whom, how well the findings were incorporated into the final project document, and any obvious omissions; .
218

Relevance focuses on:

appropriateness of initial consultations with, and participation by, local key stakeholders, national authorities, intended beneficiaries, and other donors (the last-mentioned especially on complementarity aspects) before the design was confirmed and implementation started; complementarity and coherence with related activities undertaken elsewhere by government or other donors, at the same level or at a higher level, rather than duplication or conflict; the quality of the entries in assumptions, risks and conditions column of the LogFrame at the appropriate levels;
219

Relevance focuses on:

overall design strengths and weaknesses including: quality of the Logframe (or LogFrames if a multicomponent programme); clarity and internal consistency of the stated overall objectives, purpose, and results; whether the objectively-verifiable indicators of achievement (OVIs) were well-chosen and widely agreed; realism in choice and quantity of inputs; overall degree of flexibility and adaptability to facilitate rapid responses to changes in circumstances.
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Efficiency
The efficiency criterion concerns how well the various activities transformed the available resources into the intended results (sometimes referred to as outputs), in terms of quantity, quality and timeliness. A key question it asks is where things done right and thereby also addresses value-for-money, that is whether similar results could have been achieved more by other means at lower cost in the same time.

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Efficiency focuses on:

The quality of day-to-day management, for example in:
management of the budget (including whether an inadequate budget was a factor); management of personnel, information, property, etc.; whether management of risk was adequate, i.e. whether flexibility was demonstrated; in response to changes in circumstances; relations/co-ordination with local authorities, institutions, beneficiaries, other donors; respect for deadlines;
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Efficiency focuses on:

Cost and value for money:
how far the costs of the project were justified by the benefits - whether or not expressed in monetary terms that they generated, in comparison with similar projects or known alternative approaches, taking account of contextual differences

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Efficiency focuses on:

Contributions from local institutions and government (e.g offices, experts, reports,. tax exemption, as set out in the LogFrame resource schedule), target beneficiaries and other local parties:
were they provided as planned, could re-allocation of responsibilities have improved performance, were communications good?

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Effectiveness
The effectiveness criterion, in LogFrame terminology, concerns how far the projects results were used or their potential benefits were realised - in other words, whether they achieved the project purpose.
The key question is what difference the project made in practice, as measured by how far the intended beneficiaries really benefited from the products or services it made available.

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Effectiveness focuses on:

whether the planned benefits have been delivered and received, as perceived mainly by the key beneficiaries, but also taking account of the views of donor management, the responsible national Government authorities, and other concerned parties (NGOs, business associations etc)

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Effectiveness focuses on:

the appropriateness of the indicators of benefit used in the above assessment to measure achievement of the project purpose (this is also relevant to costeffectiveness analysis as referred to in the footnote on the previous page); this should include a judgement on how promptly and effectively the project management reacted to any changes that occurred following the initial design by amending indicators found no longer to be appropriate

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Effectiveness focuses on:

If the assumption and risks assessments at results level turned out to be inadequate or invalid, or unforeseen external factors intervened, how flexible management adapted to ensure that the results would still achieve the purpose; - how well it was supported in this by key stakeholders including Government, Commission (HQ and locally), etc.: in summary, were the right things done to ensure that the potential beneficiaries actually benefited?

- how unplanned results may have affected the benefits received

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Impact
The term impact, sometimes referred to as outcome, denotes the relationship between the projects purpose and overall objectives, that is the extent to which the benefits received by the target beneficiaries had a wider overall effect on larger numbers of people in the sector or region or in the country as a whole. The analysis, which should be both quantitative and qualitative wherever possible, will need to take account of the fact that, at this level, the project will normally be only one of a number of influences contributing to the wider outcome
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Impact focuses on:

to what extent the planned overall objectives have been achieved, and how far that was directly due to the project; if there were unplanned impacts, how they affected the overall impact; whether the projects LogFrame indicators at this level were suitable and, if not, whether management amended them; whether overall the desired wider impact could have been better achieved otherwise.

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Sustainability

The fifth and final - and often most important -criterion, sustainability, relates to whether the positive outcomes of the project at purpose level are likely to continue after the external funding, and also whether its longer-term impact on the wider development process can also be sustained at the level of the sector, region or country

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Clarifying project scope

The first step for a correct monitoring and evaluation exercise is to start from the policy framework to see how and why the project/programmes have been conceived. The SME strategy read: The Programme to support the access of SMEs to training and consultancy services covers the period 2002-2005 and directly responds to the Governmental Draft Strategy for Sustaining the Development of SMEs 2004-2008 updated in 2003, as well as to the Governmental Programme 2001-2004.
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Sustainability focuses on:

Ownership of objectives and achievements, e.g. how far all stakeholders were consulted on the objectives from the outset, and whether they agreed with them and remained in agreement throughout the duration of the project; Policy support and the responsibility of the beneficiary institutions e.g. how far donor policy and national policy corresponded, and the effects of any policy changes; how far the relevant national, sectoral and budgetary policies and priorities affected the project positively or adversely; the level of support from governmental, public, business and civil society organisations; and whether national bodies to provided resources;
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Sustainability focuses on:

Institutional capacity, e.g. the degree of commitment of all parties involved, such as Government (e.g. through policy and budgetary support) and counterpart institutions; the extent to which the project is embedded in local institutional structures; if it involved creating a new institution, how far good relations with existing institutions were established; whether the institution appears likely to be capable of continuing the flow of benefits after the project ends (is it well-led, with adequate and trained staff, sufficient budget and equipment?); whether counterparts were properly prepared for taking over, technically, financially and managerially
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Sustainability focuses on:

Adequacy of the project budget for its purpose and intended results; The socio-cultural factors, e.g. whether the project is in tune with local perceptions of needs and of ways of producing and sharing benefits; whether it respects local power-structures, status systems and beliefs, and if it seeks to change any of those, how well-accepted are the changes both by the target group and by others; i.e. how well it was based on the analysis of such factors, including target group/ beneficiary participation in design and implementation, the quality of relations between the external project staff and local communities.
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Sustainability focuses on:

Financial sustainability, e.g. whether the products or services provided were affordable for the intended beneficiaries and remained so after funding ended; whether enough funds were available to cover all costs (including recurrent costs, i.e. operating and maintenance costs), and continue to do so after funding ended; and economic sustainability, i.e. how well the benefits (returns) compared to those on similar undertakings once market distortions are eliminated.

And finally, on the replicability of such action and results in other regions, areas, countries or target groups.
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Performance ratings
EC evaluators usually include in their assessments an overall performance rating for each of the above five evaluation criteria, on the basis of the following scale: highly satisfactory (fully according to plan or better); satisfactory (on balance according to plan, positive aspects outweighing negative aspects); less than satisfactory (not sufficiently according to plan, taking account of the evolving context; a few positive aspects, but outweighed by negative aspects); highly unsatisfactory (seriously deficient, very few or no positive aspects)

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Project Monitoring & Evaluation: A pilot case

Programme to support the access of SMEs to training and consultancy services in Romania

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Clarifying project scope

The Programme is a multi annual grant scheme Develop the capacity of SMEs:

Measure 1 - Business infrastructure necessary to improve the competitiveness of SMEs a) Support innovative SME and technology transfer among SMEs b) Support consulting network
c) Support the access of SMMEs to training and consultancy services

d) Support access to business information

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The project purpose (specific objectives)

1. facilitate the access of SMEs staff with managing and executive responsibilities to training initiatives on management (including quality and financial management), marketing, strategy and planning, investment sources and financing methods, EU legislation and practices in the SME sector and in other sectors which are priorities for the SME activity;

2. facilitate the access to consulting services for the development of business plans and marketing plans, the access to finance, certification of standardisation systems, quality certification according to EU norms
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Organisational relationships, management arrangements and capacity constraints

The Agenia Naional pentru ntreprinderi Mici i Mijlocii i Cooperaie (ANIMMC, or National Agency for SMEs and Cooperatives) is the responsible body for the implementation of the annual programme Further to a decision of the President of the ANIMMC approving the implementation procedures, applicants for consulting and training can submit their requests for co-financing until the end of the year 2004.
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Organisational relationships, management arrangements and capacity constraints

The Agency will finalise the evaluation process within 30 days from the receipt of the complete application. The selection principle is first come, first served, once the application is fully compliant with all administrative requirements and eligible under the criteria stated in the implementation procedures.

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Organisational relationships, management arrangements and capacity constraints

Eligibility is related to:

legal status of the applicant and relevant documentary evidence (of the implementation procedures)
type of service for which financing is requested

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Organisational relationships, management arrangements and capacity constraints

Once the evaluation has been carried out, the Agency sends a Notification of Financing to the successful applications and notifies to the unsuccessful ones the reason of their exclusion, which can be as follows: application received after the deadline; application received after the maximum budget available has been allocated; application is not eligible.
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Organisational relationships, management arrangements and capacity constraints

The applicant has to send to the Agency a Formal Request of financing, together with the original Notification for Financing and a number of Supporting documents as well as a list of costs of the consulting or training, according to the instructions provided in Annex I of the implementation procedures.

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Financing mechanism
APPLICANTS

1
Approval of Implementation procedures

2
Application Form

3
Notification of Financing

4
Request for financing

ANIMMC

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Capacity constraints

The main constraints in monitoring and evaluating this programme is that the programming phase has focused exclusively on the disbursement of the funds, rather than planning monitoring and evaluation. The consequence is that all the documents produced by the Agency, as well as those requested to the applicant are aimed to facilitate the selection for financing and a proper disbursement and not the analysis of what the project has achieved and how has achieved it.
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Developing guidelines and formats

The first step in devising a monitoring and evaluation system for a programme under formulation is to define a Logframe Matrix for the programme. The criteria for future Evaluation must be understood and analysed so as to design a Monitoring and Evaluation system.

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Logical Framework Matrix

Project Description
Overall objective: to contribute to the development of SME competitiveness

Indicators
Increase in average turnover Increase in exports Increase in no. of employees Increased in labour productivity Increase in innovation exp. Decrease of mortality rate
Skills are improved Staff undertakes initiatives/operational improvements Companies improve their competitiveness Companies implement the financed plans Increase no. of training hours per employee Increased number of business and marketing plans

Sources of verification
National official statistics and SME surveys carried out by NAIMMC

Assumptions

Purposes: to develop entrepreneurship skills for facing market globalisation and EU integration; to increase the number of Results:successful Improved access to relevant entrepreneurs training courses Companies get contribution for financing business and marketing plans Activities: Approve the grant for training is approved Approve the grant for consulting services

Skills audit reports Project reports Interview after 5 year from the completion of the activities financed by the grant

The government policy towards SMEs remains unchanged or is improved There are no major international constraints to the development of Romanian SMEs People taking part in the training activities are properly selected and motivated Business and marketing plans are implemented by the companies Applications for grants are received There are a number of enterprise willing to undertake business and marketing development plans

Project reports MIS

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Evaluation criteria
Focus of the analysis
Relevance

Question to answer
Is the project design relevant? Does the project correctly address the identified problems/real needs?

Information needed
Planning documents Logframe SMEs surveys Interviews with assisted companies

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Evaluation criteria
Focus of the analysis
Efficiency

Question to answer
How well the grants have actually improved the access to training courses and enabled the companies to finance marketing and business plans?

Information needed
Data on training hours per employee before the project (reports/MIS) Data on business and marketing plans before the project (reports/MIS)

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Evaluation criteria
Focus of the analysis Question to answer
How far the improved access to training and the financing of marketing and business plans have led to an increased competitiveness?

Information needed
Comparison between the skills audit (before and after) Have operational improvements been undertaken in the areas covered by the training? (reports) Increase in turn over (report/MIS) Increase in no. of employees (report/MIS) Has the company implemented the plan? (report) 252

Effectiveness

Evaluation criteria
Focus of the analysis
Impact

Question to answer
To what extent have the benefits received by the target companies had an impact at the national level on SME competitiveness?

Information needed
Indicators on company competitiveness (national statistics and SME surveys)

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Logframe and evaluation criteria

Focus of the analysis
Sustainability

Question to answer
Are the positive outcomes of the programme likely to continue after the two years of financing? Will the companies make use of the skills improvements and will they implement and follow up the marketing and business plans?

Information needed
In which way the training courses are being capitalised? Any operational change/initiative is being discussed in the areas covered by training? Are the beneficiaries willing to implement the business/marketing plans? (Interview with companies) 254

Information needed
In the above table we have listed the type of information that we need in order to answer the questions related to the evaluation criteria.

Furthermore we will also require the following tools for the Monitoring system: Management Information System; Skills audit; Progress reports; Sample interviews with companies.
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Management Information System

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Management Information System

A Database is the best instrument to gather all the information on the beneficiary companies that will allow monitoring and evaluation. Once the fields have been identified, we have to establish how information can be obtained and when.

For instance the data needed for the above database can be obtained from: Application form Progress reports Final report Annual reports (for 5 years)
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Skills Audit
Name of the trainee Mr X Position in the company Marketing Director Title of training course Skill audit: Communications skills Market analysis Knowledge of the market Knowledge of bench. tech. Dev. Marketing campaign Dev. Mkt campaign results Eval. Marketing planning Identify comm. tools .. 1 2 3 4 5

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Reports
Reports in a programme like the one described will mainly aim to collect the data we have identified as necessary to conduct monitoring and evaluation and namely: update on turn over, number of employees, exports, labour productivity, innovation expenses, training hours; information on business/marketing plans drafted/implemented; information on any initiative/operational improvements in the areas covered by training
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Interviews with companies

Interviews with companies are very important for monitoring and even more important for evaluation as they are useful to assess all the quality part of the information which cannot be assessed. Interviews have to be targeted sub-project (for an individual SMEs) by sub-project. For sub-projects belonging to the same area, a common list of questions could be developed.

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 Financial Analysis:

Economic and Financial Analysis

- Classical techniques of cash-flow, profitability, return, discounting, etc., apply. The issue is to WHOM and in which manner, but various hypotheses (scenarios) should be made.

Economic Analysis:
- The Effects Method: tries to quantify the effects on the local, regional, national or supra-national economy, summing the Direct effects (goal), the Indirect effects and the Secondary effects (unintended frequently). The backward linkages of our project entities with other entities should be considered. - Shadow Prices method: Shadows prices can be estimated that reflect the acceptable prices for the identified society. These prices can be real prices adjusted because of market distortions, or simply, international prices or the opportunity cost (as a proxy). Eliminations of transfers (subsidies, taxes, etc.) should be made to avoid distortions. NPV and IRR can be calculated.
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Economic and Financial Analysis

Economic and Financial Analysis (EcoFin Analysis) is one of the relevant forms of analysis of a project among others (institutional, environmental, political, social, gender, etc.). It is not compulsory as is the LogFrame matrix and usedby EuropeAid mostly in developing regions, not so much transition or mid-level countries or regions. Financial Analysis focuses on the point of view of one entity or group of institutions (beneficiary, target group, etc.). This is done through Cost-benefit analysis or Cost-effectiveness analysis. Economic Analysis on the point of view of society at large... or at least the wider environment of the project. This is done through the Effects Method or the Shadow-pricing method. The philosophy of Eco-Fin analysis is to measure the incremental value of the with-project situation and the without-project situation.
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Economic and Financial Analysis:

EcoFin Analysis places first the Analysis in relation to the LogFrame Matrix, its stakeholders, results intended, indicators, risks, etc.
Second it analysis the main Entities involved and affected by the project (artisans, farmers, SMEs, consumers, government agencies, development agencies, etc.). Then, the flows (of money, materials, services, etc.) is charted and quantified:

Example Clyde Valley entrepreneurs credit and training scheme

Sales of goods

Village entrepreneurs

Savings Microcredits Retraining

Cooperatives

Deposits
Small loans

Interest

Rural Bank

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Economic and Financial Analysis

Cost-Benefit Analysis

- Values benefits by direct calculation of benefits (increase of production with real prices or reduction of costs) or by proxies, i.e. representative factors which are acknowledged to be a reliable estimate (e.g. reduction in Vehicle maintenance for a road improvement project). - Includes cost recovery , i.e. Payment by users or contributions, - Allows for profitability (highest cost-benefit proportion) criteria for selection of projects. Can also calculate usual profitability ratios of pay-back period, Net Present Value (NPV) and Internal Rate of Return (IRR).

- Cost-Effectiveness Analysis

:
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- Analysis intangibles (not possible to estimate monetary value) - Compares cost per unit of options (e.g. vaccination per child) - Is usually only applicable to a sector, as inter-sector (social or industrial are usually not applicable).

1) Cost Benefit analysis: Clyde Valley rural entrepreneurs credit scheme:

EcoFin Cases

Microcredits at 15% per year for average of 10,000 EUR and 3 years from Cooperatives (market rate: none) Credit at 8% for average of 100,000 EUR and 5 years from Rural Bank (market rate 12%) Cost of programme subsiding 50% of cooperatives costs as intermediaries; 3 million EUR 1000 microcredits and 500 loans given in 5 years

2) Cost- effectiveness analysis Clyde Valley re-training rural entrepreneurs scheme:

Unemployment benefit average for laid-off employee15,000 EUR per year New job obtained average earning 20,000 EUR 1000 trained over 2 years in IT/ new technologies Programme cost: 1,5 million EUR ESTIMATE COST- BENEFIT AND COST-EFFECTIVENESS OF EACH SCHEME FOR PROGRAMME JUSTIFICATION
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Conclusions
Project Cycle management
looks simple (one matrix, qualitative issues in stakeholder, problem and objectives analyses, frequently obvious objectives, results and indicators), but it is NOT easy to come up with realistic Indicators, Means of verification which satisfy the effectiveness-efficiency-impact measurement, a good Risk-assumptions analysis, and a concise, yet complete, summarised Activities and Resources chart. Writing Terms of reference (or Project fiches) consists of being concise- not wordy- informative, complete (in requirements of the work and analysis), and having experience as to how projects and situations really work (for realistic estimates and outcomes). When budgeting the project, a bottom up and a top-down estimation of prices is useful, unless freedom is left to tenderers, so as to see if they come up with new or innovative manners of solving the requirements which hasnt been foreseen.
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Conclusions
Economic and Financial Analysis requires some imagination
in the parameters, some knowledge of the underlying economics of the sector or products/services, and a bit of understanding of the desired level of certainty of the economic estimates which the main reader (s) of the analysis will accept (frequently a function of their educational background and their role at the beneficiary, implementing agency, EC Delegation or Brussels office, etc. Nothing beats experience - in improving ones skills of PCM , EcoFin or drafting ToRs as undertaking all the tasks required for a project from its idea to final evaluation and sustainability.

PRACTICE DOES MAKE PERFECTION IN THIS AREA. THANKS

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