on a project should, sooner or later, be in a position to be briefed on the merits of the
Project: is it worth spending money upon?
If the Client is convinced, then the Promoter can proceed further, namely to
present the study to a third party who would be willing to finance the project. As may
be imagined, this funding agency or banker would wish to ensure that its funds will
be spent properly and would wish to see it back with some interest as well. It has
been said that a banker is somebody who lends you his umbrella while the sun shines
and takes it back from you before it rains.
It may therefore be expected that this third party will subject the Project Study to a
thorough investigation, trying to find pitfalls.
22.3.3 Appraisal (Review) by Third Party
For a small project, or usually for a private sector project, the third party is a private
banker. However, for big projects national projects emanating from the ministries,
the bankers cannot provide such funds. Sometimes, private sector projects are quite
huge and are of national interest so that the Government may be called in to help.
In those cases, it may be expected that a sub committee consisting of government
officials will try to pick holes in the project. Once, the project has gone through this
sieving process, it has to convince the funding agency, this time an international one.
Funding agencies have, by experience, become sceptical because sometimes
money voted for projects seems to have been diverted elsewhere.
The position of a Government when asking for Project financing from a funding
agency is implicitly saying “I am satisfied that this is a good project; can you lend me
money to implement it?”. In fact, the funding agency will be asking many questions
to make sure that the government is satisfied with the project before recommending a
loan to the country. If the banker’s officials are not happy about the answers, they
will clearly indicate that some further investigation or studies are required in the
report.
Thus, because the funding agency is going to make a thorough investigation of
the project, this appraisal report has to be well prepared and both the Client and the
Government will or should ensure that it addresses all the questions that might
possibly be asked. But what questions are likely to be asked?
22.4 The Project Cycle
Project work can be divided into several different stages, commonly known as the
“project cycle”, as shown in Table 22.1. The various stages of the project cycle are
often described under different terms. The, most usual terms, for these different
stages are:
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Project: is it worth spending money upon?
If the Client is convinced, then the Promoter can proceed further, namely to
present the study to a third party who would be willing to finance the project. As may
be imagined, this funding agency or banker would wish to ensure that its funds will
be spent properly and would wish to see it back with some interest as well. It has
been said that a banker is somebody who lends you his umbrella while the sun shines
and takes it back from you before it rains.
It may therefore be expected that this third party will subject the Project Study to a
thorough investigation, trying to find pitfalls.
22.3.3 Appraisal (Review) by Third Party
For a small project, or usually for a private sector project, the third party is a private
banker. However, for big projects national projects emanating from the ministries,
the bankers cannot provide such funds. Sometimes, private sector projects are quite
huge and are of national interest so that the Government may be called in to help.
In those cases, it may be expected that a sub committee consisting of government
officials will try to pick holes in the project. Once, the project has gone through this
sieving process, it has to convince the funding agency, this time an international one.
Funding agencies have, by experience, become sceptical because sometimes
money voted for projects seems to have been diverted elsewhere.
The position of a Government when asking for Project financing from a funding
agency is implicitly saying “I am satisfied that this is a good project; can you lend me
money to implement it?”. In fact, the funding agency will be asking many questions
to make sure that the government is satisfied with the project before recommending a
loan to the country. If the banker’s officials are not happy about the answers, they
will clearly indicate that some further investigation or studies are required in the
report.
Thus, because the funding agency is going to make a thorough investigation of
the project, this appraisal report has to be well prepared and both the Client and the
Government will or should ensure that it addresses all the questions that might
possibly be asked. But what questions are likely to be asked?
22.4 The Project Cycle
Project work can be divided into several different stages, commonly known as the
“project cycle”, as shown in Table 22.1. The various stages of the project cycle are
often described under different terms. The, most usual terms, for these different
stages are:
628
22 Infrastructure Implementation