AIM

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SIMPLIFICATION OF PC-I / PC-II (Project
Preparation and Approval Process) Presentatio
n to the President Islamic Republic of
Pakistan By DEPUTY CHAIRMAN PLANNING
COMMISSION 23rd September, 2005
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OBJECTIVE

• To review and simplify the PC-I / PC-II and
  other procedures required for expediting the
  approval of projects without compromising the
  quality of project appraisal.

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CONTENTS

• PC-I Project Document containing detailed
  information for pre-investment appraisal
• PC-II Required for conducting Surveys and
  Feasibility Studies in respect of larger
  Projects

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KEY FUNCTION / ROLE OF THE PLANNING COMMISSION

• Preparation of comprehensive short, medium and
  long term National Plans for the economic and
  social development
• Continuous evaluation and coordination of
  economic situation and policies
• Formulation of Annual Plan and Annual Development
  Programme
• Develop databases to assist economic decision
  makers
• Association with the EAD in matters relating to
  external assistance of projects from stage prior
  to preliminary discussion

Cont.
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KEY FUNCTION / ROLE OF THE PLANNING COMMISSION

• Identification and stimulation of regions and
  sectors lacking adequate portfolio of projects to
  achieve balanced development
• Review and evaluation of progress achieved in the
  implementation of National Plans
• Monitoring and Evaluation of on-going and
  completed projects / programmers

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MANDATED GUIDELINES FOR PROJECT PREPARATION AND
APPROVAL

• Development programme fits into and carries
  forward the general policy, objectives and
  pattern of development set out in the five year
  plan
• Development projects and programmes are
  economically and technically sound
• Financial and administrative aspects are
  carefully examined
• Sanctioning machinery must integrate various
  development schemes
• Project document to include measures to ensure
  timely completion and achievement of objectives

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PROJECT PREPARATION, APPROVAL AND IMPLEMENTATION
Plan objectives
Project Completion
Project Implementation
Project Preparation by Depts. / Ministries

• Project Appraisal
• Financial
• Economic
• Technical
• Managerial and
• Social analyses

Release of Funds
Project Processing by Planning Commission
PSDP Allocation
CDWP Consideration final approval for projects
upto Rs 500 million
ECNEC Consideration and approval of projects
above Rs 500 million
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BRIEF HISTORY OF PC-I

• Original PC-I 1952
• 1st Revision 1961 One Composite Form
• 2nd Revision 1974 - 12 Sectoral PC-Is
• 3rd Revision 1995 - 14 Sectoral PC-Is
• Low cost projects One page proforma

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LIST OF EXISTING 14 PC-Is

• Agriculture Extension
• Agriculture Production
• Culture, Sports, Tourism, Youth and Mass Media
• Education Training and Management
• Energy (Sub Sector Fuel)
• Energy (Sub Sector Power)
• Health, Family Planning and Social Welfare
• Housing, Buildings Town Planning
• Industry Sector
• Irrigation Drainage and Flood Control
• Research
• Tele-Communication
• Transport Communication
• Water and Sewerage Projects

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REVISED PROJECT PREPARATION AND APPROVAL PROCEDURE

• Consolidation of 14 PC-Is to 3 simplified PC-Is
• Production
• Social
• Infrastructure
• On line project facilitation
• Panel of experts for mega projects
• Boards to approve self-financed projects of
  autonomous organizations
• Provincial governments to approve self-financed
  projects upto Rs 5.0 billion excluding projects
  relating to irrigation
• Consideration by CDWP within 6 weeks
• Monthly CDWP meetings to continue and
  authorization for approved projects to be issued
  within 30 days

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PROPOSED SIMPLIFIED PC- I

• 1. Name of the project
• 2. Location
• 3. Authorities responsible for
•      i) Sponsoring
• ii) Execution
• iii) Operation and maintenance
• 4. Plan Provision
• 5. Project objectives and its relationship with
  sector objectives
• 6. Description, justification, technical
  parameters and technology transfer aspects
  (enclose Feasibility Study for Projects costing
  Rs 300 million and above)

Cont.
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PROPOSED SIMPLIFIED PC- I

• 7. Capital cost estimates
• 8. Annual operating cost after completion of
  project
• 9. Demand and supply (if applicable)
• 10. Financial plan and mode of financing
• 11. Project benefits and analysis
• Financial
• Economic
• Social benefits with indicators
• Impact of delays on project cost and viability
• Employment generation (direct and indirect)
• Environment impact

Cont.
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PROPOSED SIMPLIFIED PC- I

• 12. Implementation Schedule (indicate starting
  and completion dates)
•  13. Management structure and manpower
  requirement including specialized skills during
  construction and operational phases
• Additional projects/decisions required to
  maximize socio-economic benefits from the
  proposed project

Note Instructions to facilitate preparation of
PC-I to be issued separately
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REVISED PC-II 2005

• PC-II FORM
• PERFORMA FOR DEVELOPMENT PROJECTS
• (SURVEY AND FEASIBILITY STUDIES)
• 1. Name by which survey will be identified
• 2. Administrative authorities responsible for
• i) Sponsoring
• ii) Execution
• 3. Details of survey/Feasibility study
•   i) General Description and justification
•    ii) Implementation period
•   iii) Year-wise, item-wise estimated cost
• iv) Manpower requirements
•   v) Financial Plan
• 4. Expected outcome of the survey, feasibility
  study and details of projects likely to be
  prepared after the survey

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SUMMRY
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NUMBER OF PROJECTS
PC-Is Received
PC-Is Approved
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COST OF PROJECTS APPROVED
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TIME TAKEN IN PROJECTS APPROVAL
53
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34
42
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PERFORMANCE DURING JULY-SEPTEMBER 2005
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RELEASE TREND
Typical Project
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RELEASE TREND
Project Requiring Upfront Releases
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PROJECT EVALUATION CRITERIONS

• Sanctioned Cost
• Schedule Completion Date
• Physical Progress 30/6/2005 viz-a-viz Schedule
  (age)
• Expenditure 30/6/2005 viz-a-viz Schedule (Rs
  age)
• Expected Completion Date viz-a-viz Schedule
• Estimated Completion Cost viz-a-viz Sanctioned
  Cost
• Progress During 2004-2005 Planned/Actual Physical
  Financial
• Adverse Effect of Delays on
• i) Project Cost Including IDC
• ii) Loss to the Economy
• Major Issues if any

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ISSUES

• 1. Project Preparation
• Not entirely satisfactory for lack of capacity
• Under estimation of cost and overstating benefits
• Unnecessary details and duplication in PC-I
  proforma
• Project Appraisal and Approval Process
• Limited professional capacity of Planning
  Commission to appraise projects in time

Cont.
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ISSUES

• Project Implementation
• Projects seldom completed in time due to many
  factors including limited implementation
  capacity, inadequate allocation and delayed
  releases
• Change of specifications and scope of work by
  executing agencies without reference to approval
  forum
• Cost over runs in majority of cases requiring
  project revision
• Independent project director not appointed in
  many cases
• Inexperienced project directors especially in
  social sectors
• Where project director appointed, financial and
  administrative powers not delegated

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EXAMPLES OF PROJECT PREPARATION / IMPLEMENTATION

• MIRANI DAM
• Project execution Satisfactory
• Cost to increase due to acquisition of 10,000
  acres of additional land. (Underestimated in PC
  I Additional Cost around Rs One Billion)
• GHAZI BAROTHA HYDRO POWER PROJECT
• Quality of PC-I Good
• Contracted Cost Very low
• Project implementation Delayed by 33
  months
• Cost of Delays
• (a) Generation loss 10,000 GWTT
• (b) Additional cost to economy for purchasing
  electricity from IPPs About Rs. 30
  billion

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CONCLUSION

• Project approval process significantly speeded up
• Quarterly Review Meetings with PAOs Initiated
• Modern concepts of project management including
  Work Breakdown Structure built in the proposed
  PC-I Performa to ensure accountability and timely
  completion of project
• Simplified PC-I and PC-II planned to be
  implemented from 1st January 2006 to further
  streamline the process as desired
• Ministries/Divisions and Planning Commission need
  to strengthen professional capacity
• PSDP funds release procedure to be further
  streamlined in consultation with Finance Division
  to ensure timely completion of projects
• Principal Accounting Officers to be encouraged to
  take ownership of the project / sectors and
  ensure quality results
• Finance and EAD to assist Planning Commission to
  avoid donor driven approach to need based
  development project funding as already directed
  by the Honourable President and Prime Minister

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Thank You
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PRODUCTION

• Agriculture Extension
• Agriculture Production
• Industry Sector

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SOCIAL

• Culture, Sports, Tourism, Youth and Mass Media
• Education Training and Management
• Health, Family Planning and Social Welfare
• Research
• Water and Sewerage Projects

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INFRASTRUCTURE

• Energy (Sub Sector Fuel)
• Energy (Sub Sector Power)
• Housing, Buildings Town Planning
• Irrigation Drainage and Flood Control
• Tele-Communication
• Transport Communication

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TIME TAKEN IN PROJECTS APPROVAL
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TIME TAKEN IN PROJECTS APPROVAL
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TIME TAKEN IN PROJECTS APPROVAL
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PC-II FORM (EXISTING)

• GOVERNMENT OF PAKISTAN
• PLANNING COMMISSION
•  
• PERFORMA FOR DEVELOPMENT PROJECTS
• (SURVEY AND FEASIBILITY STUDIES)
• ?1. Name by which survey will be identified
• ? 2. Administrative authorities responsible for
• i) Sponsoring
• ii) Execution
• 3. Central Ministry concerned with
• i) Sponsoring
• ii) Execution

Cont.
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PC-II FORM (EXISTING)

• ? 4. Details of survey/Feasibility study (partly
  modified)
• (a) General Description
• (b) Justification
• (c) Month of commencement and completion
  (give detail of phasing)
• (d) Estimated Cost Local Foreign Total
• Year
• 1.
• 2.
• (e) i) Personnel required
• Category No. Pakistan Foreign
• Personnel Personnel
• ii) Give period of contract for local and
  foreign consultants and term of their
  appointment
• (f) Mode of financing (Give budget
  provision). If Foreign exchange expenditure is
  involved indicate whether a firm commitment is
  available

Cont.
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PC-II FORM (EXISTING)

• 5. Details of scheme likely to be submitted
  after survey (Give information wherever
  possible)
• (a) General description
• (b) Location
• (c) Estimated Cost Local Foreign
  Total
• Year
• 1.
• 2.
• 3.
• (d) Benefits of project (Economic financial
  and
• non-quantifiable)
• (e) Probable mode of financing
• (f) Number of persons likely to be employed
  during
• implementation of scheme and after
  completion
• Category Local Foreign
• No Personnel Personnel
• (g) Materials and parts required yearly
  after completion of project (Local
  costs and Foreign costs)

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TIME TAKEN IN PROJECTS APPROVALJULY-SEPTEMBER
2005
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