Project Evaluation
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REPORT ON PROJECT EVALUATION FOR KALAHI-CIDSS PROJECT, PHILIPPINES
Introduction
This report considers the following project evaluation methodologies in the context of the
KALAHI – Comprehensive and Integrated Delivery of Social Services (CIDSS) Project in the
Philippines (“the Project”):
(a) financial analysis;
(b) economic analysis;
(c) social cost benefit analysis;
(d) other evaluation methods including willingness to pay, planning balance sheet and cost effectiveness analysis.
In order to analyse the relevance of the various evaluation methods to the Project, it is appropriate to have regard to the objectives of the Project. The overarching objectives of the
Project as outlined in the logical framework for the Project were to:
•
improve local governance;
•
reduce poverty; and
•
improve the quality of life of the poor.
By considering the various evaluation methodologies, it is possible to identify the evaluation methods that best apply to the Project, in light of its objectives.
FINANCIAL ANALYSIS
Overview of financial analysis
Financial analysis is an essential part of project appraisal which is necessary to estimate the financial profit generated by a project. Financial analysis “...attempts to determine the net financial benefit (or loss) to an agency rather than the net benefit (or loss) to the economy or society. Financial evaluations are only concerned with cash flows in and out of the organisation.” (Commonwealth of Australia 2006, p. 28) Assessing the financial benefit of a project may be achieved through a consideration of the following:
(a) net present value;
(b) financial internal rate of return.
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Net present value
Net present value is calculated by “...discounting a project’s cash receipts using the minimum required rate of return on new investment (cost of capital), summing them over the lifetime of the proposal and deducting the initial investment outlay.” (Levy and
REPORT ON PROJECT EVALUATION FOR KALAHI-CIDSS PROJECT, PHILIPPINES
Introduction
This report considers the following project evaluation methodologies in the context of the
KALAHI – Comprehensive and Integrated Delivery of Social Services (CIDSS) Project in the
Philippines (“the Project”):
(a) financial analysis;
(b) economic analysis;
(c) social cost benefit analysis;
(d) other evaluation methods including willingness to pay, planning balance sheet and cost effectiveness analysis.
In order to analyse the relevance of the various evaluation methods to the Project, it is appropriate to have regard to the objectives of the Project. The overarching objectives of the
Project as outlined in the logical framework for the Project were to:
•
improve local governance;
•
reduce poverty; and
•
improve the quality of life of the poor.
By considering the various evaluation methodologies, it is possible to identify the evaluation methods that best apply to the Project, in light of its objectives.
FINANCIAL ANALYSIS
Overview of financial analysis
Financial analysis is an essential part of project appraisal which is necessary to estimate the financial profit generated by a project. Financial analysis “...attempts to determine the net financial benefit (or loss) to an agency rather than the net benefit (or loss) to the economy or society. Financial evaluations are only concerned with cash flows in and out of the organisation.” (Commonwealth of Australia 2006, p. 28) Assessing the financial benefit of a project may be achieved through a consideration of the following:
(a) net present value;
(b) financial internal rate of return.
Page 1
ARCH1260
Net present value
Net present value is calculated by “...discounting a project’s cash receipts using the minimum required rate of return on new investment (cost of capital), summing them over the lifetime of the proposal and deducting the initial investment outlay.” (Levy and