Project Cycle Management Manual for End Recipients of EU Funds in the Environmental Sector

4.

PROJECT IDENTIFICATION & DEFINITION

The purpose of this chapter is to familiarise the reader with: The purpose of the project identification stage The main steps / tasks involved in identifying and defining a major project Some of the analytical tools which can be used to identify and define a project The outputs that typically need to be generated during the project identification stage

4.1

Project Identification
The purpose of project identification is to:

Identify project ideas / concepts that are consistent with national and EC development goals and priorities. Provide a preliminary assessment of the relevance and likely feasibility of these project ideas / concepts. Prepare a project description or identification fiche which defines the scope, rationale and objectives of a proposed project in a clear and systematic manner. Determine the nature and scope of further work required during the detailed project formulation phase.

Following consultations with prospective End Recipients and other partners, indicative ideas / concepts for major projects for EU co-financing are incorporated and described in broad terms in the Operational Programme. Thereafter, it is the responsibility of the prospective End Recipients (project developers) to define and develop their project ideas / concepts, to undertake the preliminary assessments and to prepare the documentation required in order to proceed to the project formulation phase. The main tasks of the project developer / End Recipient during the project identification phase are typically to:

Identify and review / analyse the key policy and legislative documents of relevance to the project regional, national, EU and international. Define the wider project objectives and justification for the project, i.e. what is / are the environmental problem(s) which the project will aim to address? Define the immediate project objectives, i.e. what is the project directly intended to achieve? Define the project outputs the measurable results after project implementation. Define the project inputs these are the resources and activities needed to generate the project outputs. Set out the project assumptions. Complete a Logframe for the project (see section 2.2 and Annex A). Make a preliminary estimate of project cost the approximate costs for all inputs over the whole life of the project. Prepare a brief but well presented project description (but without trying to cover every aspect in detail). Identify the appropriate type and potential sources of project co-financing local, national, international.

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Contact potential co-funder(s) in writing and present the project description, together with the contact details of the project developer's / End Recipient's designated representative.

The key assessments and analyses normally required to ensure the relevance and feasibility of a project idea / concept are:

Assessment of the policy and legal framework for the project; Stakeholder analysis, including institutional capacity assessment; Problem analysis; Assessment of other on-going and planned initiatives; Preliminary objectives and strategy analysis; Preliminary assessment of resource requirements and costs; Preliminary assessment arrangements; and of project management, coordination and financing

Preliminary assessment of economic / financial, environmental, technical and social sustainability issues.

These analyses and assessments should be sufficient to demonstrate convincingly that a proposed project is: Relevant: It addresses demonstrated, high priority needs. Feasible: It is well-designed and likely to deliver tangible and sustainable benefits to the intended target groups. Well-Managed: Preparation of the project is being well-managed.

It is therefore important that the process of identifying and defining a project is consistent with the major analytical elements and outputs of the Logical Framework Approach.

4.2

Policy & Legal Analysis

An essential element of project identification and definition is an analysis of the policy context and legal framework for the project. This entails a detailed review and analysis of all relevant policies and legislation (EU and Croatian) currently in force, as well as those which are likely to enter into force in the foreseeable future. The body of EU polices and legislation relating to environmental protection is substantial, complex and continuously evolving. 20 EU directives of particular importance for the planning and preparation of major municipal waste management infrastructure projects include:

Waste Framework Directive (2008/98/EC) Waste Landfill Directive (1999/31/EC) Environmental Impact Assessment (EIA) Directive (85/337/EEC) Integrated Pollution Prevention and Control (IPPC) Directive (2008/1/EC)

At the national level, the principal policy and legislative instruments relating to waste management are:

National Environmental Strategy (2002) Waste Act (2004, 2006) National Waste Management Strategy (2005) National Waste Management Plan 2007 2015 (2007)

Detailed information on current EU policies and legislation relating to environmental protection may be obtained from http://ec.europa.eu/environment/policy_en.htm

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For the purposes of planning and implementing a major infrastructure project in this sector, it is vital that all of the specific requirements and practical implications of relevant policies and legislation are analysed and then taken into account during the project identification and formulation phases. The extent to which a project contributes to achieving compliance with EU and national environmental policy goals and legislation is a key factor in assessing and determining applications for EU grant support.

4.3

Stakeholder Analysis
A stakeholder is any organisation or individual who, directly or indirectly, is influenced by and / or exerts an influence on the various activities and decisions that take place within a project. Stakeholders can be either for or against changes in the current situation. Developing and implementing a major waste management project and related strategy is likely to involve numerous changes in the existing arrangements for managing wastes, for example:

Legislative changes; Institutional / organisational changes; The development and operation of new waste management methods and facilities; Changes in public behaviour (e.g. attitudes to paying for waste management services).

All these types of change will require cooperation and support from other organisations and the general public in order to implement successfully. One of the most significant and difficult challenges is to gain support and approval for the construction of new waste management facilities such as new treatment facilities and landfill sites. There is always a body of opinion which will oppose such changes, even if they can be shown to be providing environmental benefits for the common good. Thus, the fundamental purpose of stakeholder communication and participation is to identify and then manage stakeholder concerns, expectations and behaviour in a way that avoids negative or extreme reactions and builds support for a proposed project. A stakeholder analysis is the starting point for developing an appropriate strategy for stakeholder communication and participation in the formulation and implementation of a project. Stakeholder analysis helps to ensure that:

Resources are appropriately targeted to meet distributional / equity objectives and the needs of priority target groups. Project management and coordination arrangements promote stakeholder ownership, cooperation and participation. Conflicts of stakeholder interest are recognised and explicitly addressed in the project concept / definition.

The Logical Framework Approach provides a transparent structure for on-going dialogue between different stakeholders in a project. However, preparing a sound Logical Framework with the active participation of appropriate stakeholders is often not easy. Participation requires the active involvement of stakeholders in the project development and decisionmaking process, and experience suggests that such participation ultimately leads to greater project effectiveness, ownership, efficiency, transparency, equity and sustainability. The main steps involved in conducting a stakeholder analysis are to:

Identify all those organisations, groups or individuals who have a significant interest in the proposed project. Investigate their respective roles, different interests, relative power and capacity to participate (strengths and weaknesses). Identify the extent of cooperation or conflict in the relationships between stakeholders. Interpret the findings of the analysis and incorporate relevant information into the project concept / definition.

Stakeholders can be generally divided into one of the following categories:

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Primary stakeholders are those whose interests lie at the heart of the project. They include potential mainstream providers of environmental services, and target groups / beneficiaries who are experiencing the problems that the project is aiming to solve and are usually users of the services. Secondary stakeholders need to be involved if the project is to achieve its objectives. This group would include regional / local authorities, statutory agencies (such as government departments), voluntary groups, private-sector organisations and potential funders. These stakeholders are where the primary support will come from and usually where potential project partners can be found. Tertiary stakeholders may not be closely involved at the beginning but may be important in the project formulation and implementation phases. These will include policy makers, practitioners and other organisations working with similar projects and / or target groups. These stakeholders can be an important for the long-term sustainability of a project.

The key questions which a stakeholder analysis should endeavour to answer are:

What are the stakeholders' expectations of the project? What benefits is the stakeholder likely to receive? What resources is the stakeholder willing and able to commit to the project? What interests does the stakeholder have which may conflict with the project? How does a stakeholder regard other categories of stakeholders? What other tasks and activities do stakeholders think the project developer / End Recipient should or should not carry out? Does the stakeholder have the ability and resources to be a partner?

Some stakeholders will also be important sources of information that can be invaluable in defining and formulating a project. Stakeholder analysis and problem analysis are closely connected (see section 4.4 below), and a very cost-effective method of collecting information from different stakeholders is through a series of project planning workshops, commencing with a problem analysis workshop for key stakeholders.

4.4

Problem Analysis
Problem analysis is without doubt one of the most valuable analytical tools available for defining and formulating a project and, if conducted thoroughly with full stakeholder participation, will greatly enhance the design, quality and beneficial impact of a project. A common reason for the failure of a project to deliver the expected results and benefits is that the original project concept failed to identify and address the "core problem" associated with an existing situation, or recognise its underlying causes and effects. No problem exists by itself it is always part of a chain of cause-and-effect relationships. If the core problem and its underlying causes are not identified correctly, the proposed solution is unlikely to be either appropriate or effectual. For this reason, it is vital that existing problems and their underlying causes are identified and expressed in concrete and factual terms, and not in vague or general terms. The causes are analysed in order to understand the reasons for the core problem and, thereby, to develop an appropriate solution and related activities (i.e. a well-conceived and planned project). The effects demonstrate the arguments (the needs) for implementing the project. Thus, by identifying and defining all of the specific problems and underlying causes that need to be addressed by the project, a fundamental logic is introduced into the project definition and formulation process. Problem analysis involves three main steps:

Definition of the framework and subject of analysis (e.g. waste management in a county or region); Identification and analysis of the major problems faced by potential target groups and beneficiaries;

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Visualisation of the problems and their cause-and-effect relationships in the form of a problem analysis matrix and / or diagram (problem tree).

The basic questions that a problem analysis should endeavour to answer are:

What is the core (main) problem that should be solved with the aid of the project? (Why is the project needed?) What are the causes of this problem? (Why does it exist?) What effects does the problem have? (Why is it important to solve the problem?) Who is affected by the problem? Who can contribute to solving the problem?

Further information and advice on problem analysis is provided in Annex A. A very effective way of undertaking a problem analysis is to conduct one or more problem analysis workshops with key stakeholders. Besides helping to identify the problems associated with an existing situation and their underlying causes, such workshops can be a valuable source of information and also help to build consensus and support amongst stakeholders for an appropriate and feasible solution and related project activities. In order to define and formulate a major waste management project, it is essential that a comprehensive survey and assessment of the significant problems, causes and effects associated with the existing waste management arrangements in the subject area is undertaken at an early stage. A check-list for a typical baseline survey and assessment of the existing waste management situation is shown in Table 7.

4.5

Objectives Analysis
The project objectives describe the situation in the future once identified problems and their causes have been remedied (i.e. following project implementation). If the problem analysis has been carried out thoroughly and comprehensively, defining the project objectives is then a relatively straightforward task. The problems and causes defined in the problem analysis matrix and / or problem tree are simply transposed (inverted) from negative to positive conditions in order to create an objectives matrix and / or tree. If necessary, new objectives may be added where these seem appropriate and necessary in order to achieve the overall project objective. Likewise, objectives which are unnecessary or clearly unrealistic should be deleted. Once completed, the objectives analysis should provide clear answers to the following key questions:

What is the long-term policy objective or goal to which the project will contribute (the overall objective in the Logical Framework Matrix)? What will be achieved as a direct effect of the project (the project purpose)? Which different components / sub-objectives are required in order to achieve the purpose and overall objective (results)?

In essence, the objectives describe what the project is expected to achieve in the short, medium and long run.

4.6

Strategy Development
Strategy development essentially involves consolidating and documenting the findings and outputs from the preceding analytical steps, and then:

Identifying and selecting appropriate options or alternatives ("the means") for achieving the overall project objective, purpose and results ("the ends"). Developing an overall strategic framework for the formulation and implementation phases of the proposed project.

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Table 7: Check-List for a Typical Survey & Assessment of an Existing Waste Management Situation

Regional / Local Characteristics: Demographic and socio-economic characteristics Land use and water resources Environmental characteristics, quality and sensitivity Existing transportation networks Nature, distribution and stage of development of commerce and industry Nature and Scale of Waste-Related Issues: Sources, types and quantities of wastes Current health risks / impacts from waste-related pollution Current impacts of wastes on air and water quality Extent of land contamination related to existing / past waste management practices Occurrence of major incidents involving wastes Adequacy of the existing institutional and organisational arrangements for managing wastes Current level of activity directed towards resource efficiency, waste minimisation and recycling Standard / quality of existing waste storage and collection arrangements Standard / quality of waste transport systems Quality and adequacy of existing waste processing / treatment facilities Standard / quality of existing landfill sites Extent of uncontrolled dumping of wastes Extent and nature of stockpiling of wastes Legislation and Enforcement: Requirements of existing EU and national waste management policies and legislation Status and anticipated requirements of impending EU and national policies and legislation Adequacy of the existing regulatory regime Adequacy of existing monitoring arrangements Efficacy of the existing arrangements and procedures for enforcement Current and proposed environmental quality objectives and emission standards Stakeholder Perceptions and Attitudes: Stakeholder perceptions and attitudes towards wastes management generally e.g. existing public concerns and expectations Is the community willing and able to accept higher financial costs of improved waste management standards? Attitudes to the selection and siting of new waste management facilities Attitudes of business to the goals of improved waste management performance and standards Economic / Financial Issues and Constraints: Current arrangements for financing and recovering the costs of wastes management services and facilities Scope for private sector involvement in the provision of waste management services and facilities Nature and efficacy of any existing economic policy measures / instruments Are waste producers willing / able to afford the short-run financial costs of moving to higher waste management standards? Is the public sector able to finance the transition to higher standards and, if so, to what extent? Are external sources of finance available in the form of loans and grants?

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In the context of waste management, an option is one discrete process or measure for managing waste, such as the establishment of a public waste management company to be responsible for managing municipal waste within a county or region; source segregation and separate collection of recyclable materials; Mechanical-Biological Waste Treatment (MBT); or the use of a Design-and-Build contract for procurement of a new waste management facility. For a waste management project, the process of identifying and selecting appropriate options usually involves:

Identifying different options for achieving the strategic objectives (institutional, technical,
environmental, organisational, financial, economic, etc.).

Developing and agreeing a set of criteria for initial screening and evaluation of options. Coarse screening the options identified against the agreed criteria. Identifying a short-list of options for more detailed analysis / assessment. Identifying and defining all major components / equipment for the short-listed options. Defining roles and outline performance requirements for each short-listed option. Preparing basic cost estimates for each short-listed option. Conducting a technical / financial / environmental evaluation of short-listed options. Preparing a sensitivity and risk analysis of short-listed options. Assessing, comparing and ranking the short-listed options. Selecting a preferred set of options.
The criteria used for the screening, evaluation and selection of options will depend on local needs and circumstances but, for example, these might typically include:

Technical feasibility, operational performance, reliability and risks Contribution to the achievement of strategic policy objectives and legislation Costs and cost-effectiveness Revenue generating potential Financial feasibility and affordability Other (non-financial) benefits Scope for, and potential implications of, private sector participation Potential environmental impacts (positive and negative) Social acceptability Long-term sustainability

Multi-Criteria Analysis (MCA) can be a useful tool for selecting a preferred set of options. Guidance on MCA is provided in Annex A. Having selected a preferred set of options for achieving the overall project objective, purpose and results, the final step is to configure these options into an overall strategic framework for project formulation and implementation. It should be noted that the existence of such a strategic framework / master plan is an essential pre-requisite for obtaining EU financial support.

4.7

Project Definition & Terms of Reference

Once the strategic framework for project formulation and implementation is established, it should then be possible to define the scope, rationale and objectives of a proposed project in a clear and systematic manner. The key outputs of the project identification and definition phase are:

Description of the policy and programme context (National and EU);

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Project Cycle Management Manual for End Recipients of EU Funds in the Environmental Sector

Stakeholder analysis; Problem analysis; Objectives analysis; Strategic framework for project development and implementation; Review of other on-going or planned initiatives; Preliminary project description including initial Logframe and indicative resource / cost estimates; Indicative project coordination, management (including financial management / control) and financing arrangements; Preliminary assessment of economic / financial, environmental, technical and social sustainability; Follow-up project work plan / timetable and Terms of Reference for Technical Assistance (if required) during the detailed project formulation phase.

General guidance on the preparation of Terms of Reference for Technical Assistance to be financed by the EU is provided in Annex C.

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