Course on Project Development, Analysis, and Evaluation (Pr J.

P RABISA)

Ministry of Higher Education and University

Catholic University of Congo (UCC)
Faculty of Economics and Development (FED)
2, University Avenue
Kinshasa/Limete

Course notes on Elaboration,

analysis and evaluation of projects
Attention to students of the Third License / LMD in
Economy and Development

By the
Professor Jean-Paul Ramazani Bin Sabiti Rabisa

Academic year: 2018-2019

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Course on Project Development, Analysis and Evaluation (Pr J.P RABISA)

Introduction
The course on Project Development, Analysis and Evaluation is registered at
The course program in the Third Year of License is one of the subjects.
related to economic category. Thus, it allows the initiation of 'the student to
the planning of a comprehensive development project and preparing it for
assume management with skill1.

Moreover, aside from this introduction and the general conclusion,

the present course notes which are written to provide the student with the
main tools for controlling the project environment
development consists of four main parts, summarized below:

The first part mainly focuses on the concepts of development.

development projects;
The second part deals with the management of development projects;
The third part focuses on project planning.
development.

Finally, this course has two parts, namely the part

theoretical part which will be complemented by the practical part. Thus, at the end of each

Before starting the work, summative assessments are planned.

Practices proper, which will be organized at the end of the theoretical course.

1UCC (Ed.), Yearbook and Study Program, Kinshasa, 2014, p. 1...

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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

Part I.

Project development of
development

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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

Partial introduction

In this first part, it is about describing three

main basic concepts, namely the concepts of development project,
the development project setup and the selection criteria
of investment.

Chapter I. The concept of development project

Regarding the concept of development project, we will focus on

define this polysemic concept used in all sectors of active life,
pinpoint the process of assembling a development project and describe the
determinant criteria for investment choice.

I.1. The definition of development project

The development project can be defined as 'a set

coherent and organized activities aimed at achieving within deadlines and space
fixed and with a given budget, clearly defined objectives. This definition
very global, linked to the concept of investment, calls for some
commentaires :

Activity: the investment project corresponds to the realization of a

investment that can be the realization of a service activity,
of a commercial activity, of an industrial activity, the establishment
of institutional measures, the realization of an activity of
community development, major infrastructure, etc.
Coherent and organized ensemble: by definition, every project is a
"built" that appeals to group dynamics (decision making,
coordination, communication…) and the stakeholders involved.
includes stakeholders who are clearly identified (the
main actors, the final beneficiaries, ...

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Course on Project Development, Analysis and Evaluation (Pr J.P RABISA)

Purpose: as soon as one decides to embark on a project

of investment, it is clear that we are pursuing a specific objective. From
In a very general way, one can distinguish between profit objectives,
general interest objectives, social objectives, etc. And each project
must be assessed against this primary objective.
•Budget: the implementation of an investment project
involves the mobilization of scarce resources (human, financial,
technological, etc.) that we will compare to the revenues that will be
generated or monetary or non-monetary benefits that will result.
•Spatio-temporal: time plays an important role in the evaluation of a
investment project and this must be done in a good space
defined2.

In other words, a development project "is a

unique, innovative process consisting of a set of activities
coordinated and controlled with start and end steps, undertaken
in order to achieve a goal that meets specific requirements,
including constraints of deadlines, costs, and technique
(psychophysical)3.

Ultimately, a project is the concrete realization of one or more

investments related to new activities (new
investments) or the extension and improvement of those existing, in
view of expecting financial income or not, or of improving profitability
or the yield. In other words, it is a set of activities requiring
financial expenses by consuming various material resources and
human resources supported by investors (individual or legal entity) and
from which activities do they expect income or other returns
monetary or non-monetary benefits.

2CORHAY, Al. and MBANGALA, M., Engineering of Investment Projects, Liège, Ed. University of Liège, 2010, p.
13.
3MOINE, J.-Y., The Big Book of Project Management, Paris, Ed. AFNOR, 2013, p. 30.

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Course on Project Development, Analysis and Evaluation (Pr J.P RABISA)

I.2. The plan, the program, and the project

In summary, one can say that the plan groups together the
programmes, and the program groups the projects. Indeed, we can define,
besides the project mentioned above, as follows:

The plan is a set of programs or projects that can

to be interdependent, aligning on the same goals
strategic4;
The program is a set of related projects managed in a way
coordinate. A program can include a number of projects
distincts with similarities and/or common goals. The
programs are put in place to achieve a strategic goal. By
for example, we can find urban transport programs (metro,
trams, high service level buses, or rail transport
(classic lines, rapid rail networks, high-speed lines)5.

I.3. The project typology

Depending on the objectives, the importance of investment, the influence

spatial, the degree of autonomy and the economic weight in a company, we
can distinguish several types of development project. Thus according to:

1) The desired objectives, we can distinguish the project with objectives

economic, social, and cultural. Indeed:
a) A project with an economic objective primarily aims at
valuation of the economic resources invested by
making profitable or increasing the economic values of
activities pursued. He continues the quantitative increase of
physical flows of products or financials by the actors
economic;

4Same as above, p. 27.

5Ibidem, p. 29.
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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

A project with a social objective essentially aims to improve the

well-being of the population, by increasing social benefits
drawn from investments made by public authorities or
private sectors
c) A cultural objective project with a fundamental role of improvement
the environment in which man and others must operate
living beings, with the aim of ensuring a healthy life that is compatible with

the cultural values of a so-called developed society.

The importance of investment, we can have the big project and the small one.
project. Indeed:
a large project that ties up significant resources
(financial resources, human resources and resources
material) ;
b) A small project which, for its implementation, does not require
the immobilization of significant resources, in financial terms,
human and material.
3) The spatial influence, we can distinguish the local project, the project
provincial, the national project, the regional project, and the international project.
Indeed:
a) A local project concerns the lowest level of space
territorial. It identifies with a very small and homogeneous space,
point of view of the economic, social and cultural impacts
b) A provincial project is an activity that must have an impact.
socio-economic-cultural on an entire province. This project can
to be composed of sub-projects at the lower levels of space
territorial of the province.
c) A national project prioritizes economic and social interests.
cultural aspects related to a whole nation. It involves the different
provinces of a State.

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Course on Development, Analysis and Evaluation of Projects (Pr J.P RABISA)

d) A regional project includes activities that have an impact

on the economic, social and cultural situation of several States or
several provinces with common interests.
e) An international project corresponds to the implementation of activities
contributing to the improvement of the economic and social situation
cultural of humanity.
4) The degree of autonomy, we can distinguish the independent project, the
dependent project and the interdependent project. Indeed:
a) A project is said to be independent when its realization and its
operation are autonomous to those of others.
b) A project is said to be dependent when its execution and its
operation depends on another or others of which it is
the emanation, the complement or the economic-socio consequence
cultural.
c) Projects are said to be interdependent if their execution and their
functioning must to operate successively you
concurrently.
5) The economic weight in a company, we distinguish the projects
of type A, type B, and type C. Indeed:
a) A type A project corresponds to a configuration where a
dominant company, able to mobilize other companies, is
involved in very "big" projects, vital for its survival. It is
the case of the automotive industry. The project is organized and structured
strongly, he is very autonomous, which does not lack in
create problems within the company6;
b) A type B project is a project that is at the center of the
regulation: it corresponds to the strongest entity, equipped with a
legal and financial personality. The actors and the companies
that the coordinating project does not necessarily have the habit of

work together. It is in this second type that the model

6Same place, p. 42.

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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

the engineering standard is the most predominant. The relationships

contractual are much more developed7;
c) A type C project is one in which 'we are dealing with a
company that manages a large number of "small" projects,
relatively independent of each other, and none of which
calls into question on its own, the sustainability of the organization.

The autonomy of the project is lower than in the first type. It

there is not necessarily any specific organization, the role of the leader
of a project that can be combined with another8.

7Ibidem, p. 43.
8Ibidem, pp. 43-44.
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Chapter II. The assembly, management tools, and presentation of

development project

In this chapter, we will describe the assembly of a

development project, state the project cycle management tools and,
Finally, pinning down the presentation of a development project.

II.1. The development project setup

In this section, we will take turns describing the cycle of

development project and describe the criteria determining a good project
development.

II.1.1. The project cycle

The project cycle includes the stages through which the project idea passes.
must go through to reach maturity and become an economic and social reality
cultural. Thus, five steps can be distinguished, namely identification,
the formulation and feasibility study, the implementation and evaluation.

1. The identification

Identification is the first step in the realization cycle of

any development project. It includes three sub-steps, namely
precision and specification of the core idea, maturation of the core idea
and the exploration of the said mother idea.

At this stage, the fundamental question underpinning the main idea

is the 'What?'. At first, the idea may not be as clear, because it has to
subject to precision, clarification, specification, and maturation.
to be defensible, if only theoretically: it is the study of
pre-feasibility.

2. the formulation

During this second stage, we must manage to give the

project the body, that is to say to proceed with a formulation and materialization

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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

the physical form of the mother idea. It is the feasibility study. Thus, the actions to

the following are to undertake at this stage:

•The project description and the legal form of the project;

•the objective of the project, market study, and strategic planning:
the technical feasibility study;
the inventory of investments to be made;
the procurement plan and the production program;
the assessment of projected expenses and revenues;
the preparation of the projected income statement;
the financial and economic feasibility study;
sensitivity analysis;
the preparation of the cash budget;
the establishment of provisional balances9.

3. The implementation

The project implementation phase includes three sub-steps,

namely the start of the project, the establishment of activities and the
monitoring, i.e. the tracking or surveillance of activity execution.
effect the (the):

Starting is "the moment to set up the structure

organizational of the company. It is also the stage of mobilization
financial resources whose sources we already know
financing […]. In the case of a private project, one resorts to a
loan that is added to the share capital, hence the importance of realizing
a rigorous feasibility study proving that the project is
bankable. Regarding the development project, we can
benefit from public funding or grants from donors
funds. For large projects, the developer can still resort to

9CORHAY, Al. and MBANGALA, M.,O.C., p. 19.

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sophisticated financing forms such as PPP (public-private partnership)

public-private), the joint venture, etc.
•Setting up activities. It is the stage of implementation.
activities, resources (financial, technical, and human). The
The logical framework is a very valuable tool for definition and organization.
activities, the establishment of the activity timeline, etc.
As much, it is not complicated to set up the organization of a
small business, it is advisable to call on experts for
set up the organization of a large company.
•Monitoring. This is the step of monitoring the execution of the work, of the state

project progress. This monitoring of the proper conduct of

the project must be permanent and should not be confused with the stage
of the evaluation, even less with an audit. Monitoring is used to verify
if the forecasts are in line with the achievements and to be implemented
a risk management structure10.

4. The evaluation

The evaluation consists of making an assessment on the

project performance from design to implementation.
Generally, it intervenes ex post (at the end of activities) when we know
the results. This step can also occur as the state progresses.
progress of activities. One should not confuse the evaluation stage
to the concept of audit. The latter verifies the legality and regularity of the resources
mobilized regarding their use and destination.

Moreover, in a clearly established manner, the development of a

The development project proceeds through four fundamental stages, namely
the identification, feasibility, evaluation, and execution11Indeed:

10Ibidem, p. 18.
11BRIDIER, M., MICHAILOF, S., Practical Guide to Project Analysis, Paris, Ed. Economica, 1984, pp. 2-3.

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Course on Project Development, Analysis, and Evaluation (Prof. J.P RABISA)

The identification corresponds to the first maturation of the project idea.

We conduct a needs or market analysis, the diagnosis of a
situation that poses the dominant problem(s) as well as the
limiting factor(s). In light of possible innovations, it highlights
the first sketches of solution. One of its goals is finally to
raise the funding for the feasibility study that it defines
content.
In general, the project is therefore localized and roughly
sized. The different technical and economic options must be
statements and the overall consistency verified. The key parameters
are estimated summarily (but not justified, it will be the role of
the feasibility study).
Feasibility is a study aimed at proving that the technical choice
and economic ones are viable (feasible) and that they are the best
(optimization). Otherwise, the study must propose solutions
better suited or recommend abandoning the project. The
parameters roughly estimated during identification must be
justified. Therefore, it deepens the data of the study
previous and technically and economically justify the solution
proposed after discussing other possible solutions. It is the
stage of choice and its justification.
The evaluation is the study carried out by the body responsible for
project financing. It checks the feasibility study in order to prepare
decision-making. Are the project objectives yes or no
compatible with those of the economic sector in question? the choices
Are techniques and economics the best? In conclusion: should it be
abandon the project? Delay the decision? Restart the study of
feasibility? Financing the project in its current form or a
variant?
The execution is the step that provides for the practical implementation: specification

detailed means of all kinds to be implemented, evaluation

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more precise about their cost. This study must be accompanied by a schedule
detailed implementation of the work based, where applicable, on a
scheduling diagram. It finally includes the preparation and the
launching of call for tenders (or the preparation of a specifications document)
charges if it is a private contract), the opening of bids
of the offer as well as the contractors' obligation.

II.1.2. Feasibility studies for development projects

Feasibility studies encompass research

qualitative and quantitative that aim to establish the validity of a project
development. A feasibility study is therefore a set of information,
various information (historical, geographical, sociological,
economic and political) and calculations that will serve as a basis for reflection
to decide on the viability of a development project.

The expansion of the UCC/Limete Campus, the construction of

UCC/Mont-Ngafula Campus, the construction of University Clinics
Catholics (CUC) for the future Faculty of Medicine of the UCC,
construction of public toilets in the municipalities of Kinshasa,
the development of public landfills and waste management, the
construction of subway lines in Kinshasa, the reconstruction of the market
central, the construction of a new international airport in Kinshasa, the
the construction of the Basilica of Our Lady of the Congo in Kinshasa, etc. are projects

achievable within a certain duration, a certain period of time. During this

period, the initial market conditions can change. The studies of
feasibility are there to answer this kind of questions, to help the
investors to make the best decision. They are used to evaluate the
risks.

Feasibility studies do not follow a methodology

formal, but a "tradition" has established itself on the way to do this kind

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of studies. The important thing in this area is to adopt a logical approach,

to follow a rational process. Usually, one will carry out:

The feasibility study;

The pre-feasibility study;
The actual feasibility study.

II.1.2.1. The opportunity study

The feasibility study involves identifying, in a country, a

region, a province, a city, a municipality, a territory, a sector or a
chiefdom, a grouping, a village or a neighborhood, possibilities
investment ideas. It is a matter of considering certain
projects "to maintain or increase the profitability of the company or
the improvement of living conditions for the vast majority of the population.
It is primarily a qualitative approach. A portrait must be given.
gathering possible situations without going into details. It relies
on designs and reflections in response to future changes. In
In the opportunity study, we will analyze:

Schematic representation of the demand for the service or product;

The possibilities of diversification, specialization, grouping or

expansion;
The general situation of investment and credit;
Development policies;
The new economic programs in effect.

II.1.2.2. The prefeasibility study

Once the investment idea is selected, it must be analyzed.

empirically and make a quick assessment of the investment project, in order to
to determine its degree of viability. The objectives of the prefeasibility study
are of two kinds:

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Deepen the investment opportunity by highlighting the

negative and positive aspects: the anticipated risks and profits;
Make an estimate of the information that would be necessary for a
continuation of the project in a feasibility study, the need for data
Does it require specific and in-depth research and studies?

The prefeasibility study should be able to identify the dominant features of

project and evaluate, schematically, the consequences. Thus "the study of
pre-feasibility should be considered as an intermediate stage between the study
of the project's opportunity and the detailed feasibility study, the distinction residing
mainly in the level of detail of the information collected12.

Here are the main points to monitor in the study of

pre-feasibility of a development project:

A careful analysis of the demand, the market situation (price,

quantity, competition), the issues related to selling and to
consumption;
Geographical location, available land, and land cost
(if applicable);
The technical dimensions of the project (engineering) and the aspects
environmental;
The study of the needs for equipment and labor.
The study of the various types of costs according to the importance of each of them;

The main stages of the project;

The study of financial profitability (projection of costs and revenues,
necessary loans, etc.)

II.1.2.3. The feasibility study proper

The feasibility study is an extension of the studies.

opportunity and pre-feasibility. It must provide detailed information on their

12OMT (Ed.), Guide for local authorities: sustainable tourism development. Madrid, 1999, p.
57.
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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

elements listed in the pre-feasibility study. The feasibility study is

a search for coherence among the various elements of the project. Thus,
supply and demand, costs and revenues, planning over time, the
Financial arrangements must be analyzed in all their interactions.

The feasibility study can include a large number of

research and empirical analyses; we must extract the essence of these studies,
in order to minimize risks and uncertainty. These research efforts must be
exhaustive and go deep into the knowledge of the proposed project.
The information must allow for a decision with the smallest margin.
possible error.

Most feasibility studies introduce variants to

desired project; variants are different ways to fulfill a
same need. Variants of a project should be incompatible between
they. For example, to cross a river, three technical solutions are
possible: a ferry, a bridge, and a tunnel; technically and
financially, the three solutions are incompatible but fulfill the
same initial need.

The variants of the same project, in general, can

differ according to:

The size and scope of the project;

The location of the project;
Elements to add or subtract (for example, a variant may
to have a restaurant and a performance hall, a gym, a room for
thalassotherapy, and another, just one restaurant);
The different stakeholders involved in the project (the same project can ...

touch several territories or provinces.

Each of the variants must be coherent and plausible. From a

However, the number of variants should not exceed three or four. Each
variants of a project must maximize interactions and optimization of
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resources involved, while anticipating the consequences of the choices

carried out.

The variants can also take into account elements

qualitative; for example, in the construction of an establishment
of accommodation, if we build it near access roads, the costs
infrastructure is lower, but there are risks of noise, a loss of
cachet and prestige; however, when building further away, it will be necessary to widen or
build a road, therefore the costs are higher.

II.1.3.The qualities of a good project

Any development project must be capable of improving the

economic, social, and cultural situation of a community or an entity
administrative, and individuals benefiting from related activities. So,
the measure of this improvement can be summarized by the performance of
business activities. This arises from relevance, effectiveness,
the efficiency and sustainability of the development project.

The relevance of a development project

"The pursuit of the objective requires that we define it beforehand"

means we have to achieve it, which involves taking into account the
relevance criterion. This criterion is positioned ex ante (before the launch of
project) and consists of asking whether the project meets the identified needs, if
the chosen objective is a priority compared to others and if the means at our disposal
disposal allows to achieve this objective. Relevance concerns the standards
and budget programming. The variable "norm" refers to the
coherence of the project; coherence of the project with the resources, coherence of the

project with the prevailing customs, etc.13.

13Ibid., p. 20.
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2. The efficiency of a development project

The efficiency of a project is measured by the ratio of resources.

allocated to the activities of carrying out the said project and the expected results. In
In principle, this is an a posteriori criterion, since the means must
first to be released, affected, and consumed, so that we can compare with the
results achieved. Thus, we could discover waste, or the
diversion, in the case where there is a discrepancy between the two parameters
(means and results).

3. The effectiveness of a development project

This criterion can be qualitative or quantitative and is assessed ex-

post. It establishes the relationship between objectives and results because ultimately, the evaluation of

the project will consist of comparing the results achieved with the objectives that have been set.

fixed. We will distinguish between financial objectives and those of general interest,
short-term objectives to long-term ones. Short-term objectives are
specific and concern immediate achievements. Those long-term
concerns the strategic choices regarding the investments to be made or
general economic policy choices.

In the case of a private project, the two concepts 'efficiency' and

"efficience" and "effectiveness" are confused. It is necessary and sufficient for the project to be executed with

efficiency so that it is effective, since its primary objective is even this

financial profitability. However, the distinction between effectiveness and efficiency is,
on the contrary, has significant implications in the case of a public project.
Indeed, for its primary purpose, to achieve the objectives set for it by the
public authorities; its effectiveness should first be assessed in relation to its
objectives.

In any case, these two criteria (effectiveness and efficiency) are

essential for achieving the production objective. To dispel any
confusion, we will therefore say that efficiency concerns the use of resources
and the effectiveness is the degree of achievement of the defined objectives. One can be effective,

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without being efficient. The two concepts are therefore useful for understanding the
performance. Thus, if an effective company is also efficient, this
means that it achieves its objective and operates at the lowest cost14.

4. The sustainability of a development project

To be honest, the project is temporary. After its establishment, it must

to transform into a permanent structure that reflects sustainability
business activities. The said structure could be a company, a
establishment, a service, a non-profit organization... In this case, the
the project becomes sustainable because it continues under its form
definitely approved, specifying its identity, consolidating its legitimacy
and making use of these resources.

The sustainability criterion shows that the development project

sustainable must remain sustainable in economic, social and
ecological
From an economic perspective, the project needs to be viable in order to be sustainable.

fair; that is to say, to present the sustainable characteristics. The

durability can be understood as the duration of the capacity of an asset,
of a service or process to satisfy needs
to which it was created. While the duration is effective, the sustainability is
a faculty of endurance. Thus, the notion of sustainability is a
fundamental characteristic for determining the value of the
development of any project and, in any case, falls within the
economic calculations or the economic planning of agents of
development.
From a social perspective, the development project must remain
livable and equitable. This means that public authorities will have to
ensure the social importance of the project for the communities
respective locales.

14Ibidem, p. 21.
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Regarding the ecological aspect, for the project of

sustainable development must remain both viable and
livable, in strict respect of the carrying capacity.

II.2. Project Lifecycle Management Tools

This section deals with establishing the framework.

logic for mastering the cycle of a development project. The elaboration
the logical framework operates in two successive phases, namely the phase
of analysis and that of planning.

II.2.1. The analysis phase

During this phase, it will be about carrying out the analysis,

successively, actors, issues, goals and dominant strategy.

II.2.1.1. The analysis of actors

The stakeholder analysis is an essential step to identify the

stakeholders in the project. On one hand, we need to know the project leaders
whose main task is to get others to accept the project idea.
partners and provoke their support. On the other hand, we must identify the
beneficiaries of the project in order to generate their interest in the realization of the idea

project. Moreover, sometimes it would even be crucial to seek their

participation, especially if it concerns unprofitable projects undertaken by the authorities.
publics or non-governmental organizations.

II.2.1.2. Analysis of problems

The analysis of problems involves reflecting on a situation.

unsatisfactory that we wish to remedy. This analysis aims to
to identify the critical points that stakeholders attach importance to
a lot of importance, and which they wish to address. An analysis
identifying problems provides a solid foundation from which we
develop a set of objectives for the project that are both coherent and well-defined

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focused. To do this, we start with the problems considered as

prioritized by all stakeholders and we choose a problem point
start of a discussion on which other related issues will be attached
main problem. The analysis will consist of establishing a hierarchy of causes
(origin of the problem) and effects (consequences caused by the problem).
The problem tree can be used as a tool for problem analysis.
The problem tree provides a summary image of the negative situation.
existing. In many respects, problem analysis is the most decisive step
from project planning, as it conditions the analyses
and strategic decisions to be made afterwards15.

II.2.1.3. The analysis of objectives

At this stage, we need to seek to provide a solution to the problems.

negatives identified in the previous phase. So, we need to transform the
negative situation (problem) into positive realization (solution). However, it would be necessary to

that the said objectives are realistic and achievable, hence the search for
the alignment between the objective, activities, resources, and budget.

II.2.1.4. The analysis of the strategy

Here, we must, as far as possible, to succeed in the analysis

strategic, to proceed with:

A. The determination of the strategic plan and market study

The determination of the strategic plan allows for the examination of

different environmental components of the company, namely

the internal environment and the external environment, by proceeding to
micro and macro environmental analyses.

1). Micro-environmental analysis

15Ibidem, p. 24.
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It is an analysis close to the company's environment. Here,

We must list and study the main players located upstream and downstream.
the company's activities, as well as the competition. They are mainly
suppliers, funders, clients, and businesses
concurrent...

2). The macro-environmental analysis

In principle, for the analysis of the macro-environment of

In the company, we use the PESTE or PESTEL method. Indeed, it is 'a tool
of strategic diagnostic that identifies a set of macro factors
environmental factors that may influence the project in a way
durable. As indicated by the acronym PEST, the method cuts
the environment in four major dimensions: Political/Legal-Economic-
Sociocultural-Technological. We can add a fifth dimension that
has become essential today in terms of respect and protection of
the environment that is ecology or 'environment', in which case
the model is referred to as PESTE. Some isolate the legality of the
politics and make it a PESTEL method, to say Political, Economic,
Sociocultural, Technical, Ecological, and Legal16.

Thus, each component of the PESTE method can be

analyzed in detail, in order to understand the outline of each of the
realities. Indeed, for the:

•Political-legal factors, one could analyze political stability, the

country risk, labor legislation, legal forms of
economic organizations, the investment code, the regime
fiscal, etc.
Economic factors, it is necessary to examine the GDP per capita
of the resident, the interest rate, the inflation rate, the exchange rate, the rate

16Ibidem, p. 25.
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of salary, the propensity to consume, the propensity to save,

etc.
Social and cultural factors, one must take the situation into account.
demographic, the level of education, the structure of classes
social, cultural values, etc.
Technological factors, we must know the level of research,
new information and communication technologies,
technological changes, level of innovations, the protection of
industrial property...
Ecological factors, one must highlight the weather conditions.
climate change, the level of pollution, the protection of
nature, etc.

B. The development of the marketing strategy and the action plan

The development of the marketing strategy allows for understanding

of the functioning of the company, with a view to defining the resources to be allocated
in competitive fields, in order to achieve the set objectives.

Thus, when PESTE factors are combined with the factors

micro environmental, we would arrive at the knowledge of opportunities and
threats in the marketing strategy analysis. The latter
proceed with the SWOT analysis (Strengths, Weaknesses, Opportunities, Threats)
and the analysis of the components of the marketing mix.

1). The SWOT analysis17

The SWOT method, in French AFOM (Strengths or Forces—

Weaknesses—Opportunities—Threats) is a planning tool
strategic. It helps to assess strengths, weaknesses, opportunities, and threats
involved in a development project or in a nonprofit organization
lucrative.

17Ibidem, p. 29-30.
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Specifically, the method helps to clarify the objective of

the economic organization and to identify the internal and external factors that
are favorable and unfavorable to the achievement of this objective. An analysis
SWOT must first begin by defining a desired final state or
objective.

A SWOT analysis must be integrated into the model of

strategic planning. In doing so, the analysis helps to identify, through the
internal and external information, the factors that maximize potential
of strengths and opportunities and those who minimize the effects of weaknesses
and threats.

An effective conduct of SWOT analysis takes the form of

discussions within the framework of a meeting where the participants are chosen
with relevance (fair distribution of interest groups while avoiding influence
from certain actors), the choice of the level of analysis must be made with care:
internal analysis object (project)
where the project should be located), the identification of the four factors (strength,
weakness, opportunity, threat). In short, it is a subjective method because
it relies on the judgment of the participants. Thus, one can understand by:

Forces, the positive aspects that are under the control of the project, it is-
to state the strengths. These strengths must be listed and see how they
can be used to take advantage of opportunities or to minimize
Threats. Can we minimize weaknesses using strengths?
existing?
Weaknesses, the internal negative aspects for which the margins
improvements must exist. An inventory of weaknesses must be
carried out and see how to minimize them by taking advantage of opportunities
existing.
Opportunities, the positive possibilities but external to exploit.
Threats, pitfalls, problems coming from outside that we
will be confronted.
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As an example, we can pin a road project (service

of garbage removal and street cleaning). This is a project of
public service whose management is entrusted to private entities. The project consists of

sanitize the city by carrying out cleaning activities in the markets and streets
and the household waste collection service. In this case the matrix
SWOT could contain the elements below.

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Table 1. Example of the SWOT matrix

Factors Positives to achieve the goal Negatives to reach the objective

English French Examples English Examples
Origin
•Motivation of the pro-
engines; Lack
Labor equipment
Internal abundant and qualified; appropriate for the
(organizational) Strengths Motivation of Weaknesses cleaning of
staff; waste
Informative advertisement
Project appropriation Mindset of the
by the authorities of the population
town Standard of living
External (macro- Opportu- Opportu- Possible cooperation social of the
environmental nities units with the landlords of Threats Threats population
foreign funds; Level of education
•Cooperation with the of the population.
NGO.

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2). The marketing mix

The marketing mix refers to all the tools that the company
ready to achieve its objectives with the target market, using
variables likely to have an impact on buyer behavior. These
tools are generally divided into four categories also called the 4 P's: product,
Price, Placement and Promotion.

II.2.2. The planning phase18

It is the phase of constructing the logical framework. The logical framework

is a valuable tool for improving the planning system and

project management. It presents in a structured and synthetic way the logic
internal project showing the connection that exists between the means,
activities, expected results and objectives.

Indeed, the analysis of the logical framework is a tool for reflection that
allows for analyzing and organizing information in a structured way, so that
that important questions are asked, that the weaknesses are
identified and that decision-makers are able to make decisions
informed based on a better understanding of the purpose of
project, the objectives aimed at and the means by which these objectives will be achieved

to be affected.

From this definition, we can draw at least four advantages from this
tool :

It's a tool for reflection, as it allows, thanks to a

participatory approach (which involves all stakeholders)
to design the different elements of the project and their sequencing
logic;
It allows for the ownership of the project idea by the involved structures.
in the implementation for the success of the project and the sustainability of
results ;

18The same, pp. 32-38.

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•Tool that presents in a simplified, clear, and precise manner the different
constituent elements of the project to enable non-decision makers
just to agree (practical tool for the start), but
also and above all to make decisions based on a good
understanding of the project (due to the logical sequence of
elements that compose it;
It finally serves as a framework through which the execution of the project will be
followed up and evaluated effectively.

As a project cycle management tool, the logical framework

can be used at all stages of the project. Project planning by the
The logical framework method can be subdivided into two stages, namely
logic of the project and the logic of the modalities for implementing the project.

A. The logic of the project

A project is built logically starting from the set goal and in

defining gradually the results to be achieved, the activities and the
means to mobilize (See figure No. 1). The components of the logical framework are:

1) The overall objective that goes beyond the scope of the project, it motivates and the

justify everything by showing how the project can contribute to

to reach it;
The specific objective pursued by the project, it is good to have
a single specific objective per project. The means implemented and
the activities carried out precisely help to achieve this objective,
the one set by the project;
3) The results which are intermediate objectives in other words the
products inherent to the implementation of the activities carried out. With
with a specific objective, we can achieve multiple results;
4) The activities that are the concrete actions to be carried out in the framework

of the project and thanks to which the results will be achieved;

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The resources that are the necessary needs to carry out the activities.
The inventory of these means (in equipment, in personnel, etc.)
allows for the preparation of the budget;

6) The budget, which is the ultimate step of strategic planning, it is

defined as a short-term action plan over a period of one year
maximum. Its development involves taking into account all the
activities of the organization and at the same time indicates the level of

decentralization of project activities.

It should be noted from figure no. 1 that the downward arrow at

Left indicates the logic of the project design (top down) so then
that the upward arrow to the right (from bottom to top) indicates the logic of
operation of the project during its implementation.

To this logical framework, we must add three other elements.

necessary to know the objectively verifiable indicators (OVI), the
sources of information and the assumptions. This leads to the development of a
matrix of the logical framework allowing the availability of elements for monitoring
effective in the project execution phase and to have a framework
project evaluation, as indicated in the table below.

Table 2. The elements of the logical framework

Objective Objective Results Activities Means Budget

global specific expected
Result 1 Activity 1.1 Technique
Activity 1.2 Humans
Others
Objective Purpose Result 2 Activity 2.1 Technique Means
general (OS) Activity 2.2 Humans financiers
(OG) Others
Result 3 Activity 3.1 Technique
Activity 3.2 Humans
Others
Likewise, p. 35.

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Furthermore, it is worth noting, for better control of

logical framework that:

Indicators are quantitative or qualitative elements that

allow to objectively measure project results. A
indicator must be SMART (Specific to the objective it measures,
Measurable quantitatively or qualitatively, Acceptable from the point of view of
cost to be incurred,Respond to the information needs of
managers and time known and limited for the completion of the project and
the achievement of the objective). Furthermore, each indicator must relate to
a single objective or a single result;
The verification sources (SDV) indicate the collection methods.
data (survey, interview, poll, discussion, statistics,
reports), their frequency and the resource persons in charge of it
to do
The hypotheses to be formulated must specify the risks related to
important external elements on which the project has no
influence
Finally, at the bottom of the table, we find the prerequisites that must
to be gathered before starting the project (institutional authorization by
example, signing a certain number of contracts, etc.).

Moreover, the logical framework matrix includes

mainly four columns, as presented in table no. 3
below.

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Table 3. The Logical Framework Matrix

Logic of Indicators Sources of Hypotheses

Intervention (IOV) verification
(SDV)

Objective They provide the Collection of

global indicators of information
(OG) measurement of OG method of ———
collection and of
reporting

Objective Provide the Collection of If OS is reached, what

specific indicators of information hypotheses must be
(OS) measure (quantity, method of confirmed for
quality, deadline of collection and of reach OG?
the OS reporting

Results Provide the Collection of If RA are obtained,

expected indicators of information, what hypotheses
(RA) measure (quantity, method of must be confirmed
quality, deadlines) of collection and to reach OS?
RA reporting

Activities (A) Resources Costs If A have been carried out,

what assumptions
must be confirmed
to obtain RA?

Prerequisites
Ibidem, p. 36.

B. Implementation modalities of the project

Two main concerns surround the stage of the modalities.

implementation of the project, namely the schedule of activities and the
schedule of resources as well as the project's budget estimation.

At this stage, we know in detail all the activities to be carried out.

thanks to the logical framework matrix. It is time to clarify for each
activity the logic of its execution by considering the main points
following:

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Determine for each activity the expected duration for its implementation
work (the duration will be determined in months or in weeks and not in
date car we still don't know when the project will start);
Reflect on the arrangement of activities (which activity should be carried out
before the other activities) and their interdependence (realization of such
does one activity depend on the other?), what are the constraints
related to the planned execution period (institutional holiday, vacations,
bad season, etc.) ;
Disaggregate activities into operational tasks to facilitate their
execution
Form teams and distribute tasks and responsibilities
(delegation) taking into account abilities, skills and
each person's experience;
Identify the internal or external resource persons who need to
to take care of monitoring and evaluation.

Table No. 4. Chronogram model of

project activities
Activities Tasks Respon- Month
sabilities 1 2 3 4 5 6
A.1.1. A X X
Activity 1 A.1.2. B X
A.2.1. C X X
Activity 2 A.2.2. D X X X
The same source, p. 36.

For each activity and task, we must list the material resources.
and human resources necessary for their realization, that is to say to gather the means
we need for the implementation of the project. It is clear that the
the relevance of activities (avoiding what is superfluous) is crucial for
the inventory of resources. Based on the list of resources, we proceed to
the cost estimation whose calculations must be detailed in view of the
determination of the total cost.

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Figure no. 2. Diagram of budget preparation

A C T I V I T I E S

M O Y E N S

BUDGET

As soon as all the information is gathered, it is necessary to estimate.

the total cost by detailing the calculations: quantities, period of the activity, cost
unitary, source of financing, etc.

Table 5. Example of cost details (budget)

Cost Sources of financing

Activities P.U.
Own Others A
search
5 Week 1 2 10 10
Activity 1
3 Week 2 5 15 5 10
Activity 2
2 Week 3 5 10 — 10
Activity 3
5 Week 4 5 25 5 5 15
Activity 4
Total 10 1 month — 60 20 25 15
Same source, p. 38.

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II.3. The project presentation of development 19

This is the stage of drafting the document that presents and justifies
the project. The document must contain all the information, from the analysis to the
project planning. It must be clear, explicit, and concise with a logic
implacable. A well-presented document must convince the funders.
and/or banking financial institutions for the financing of the project. It
there is no stereotypical model for writing the project, however,
The project writing must include at least the following elements:

1) The project description consists of presenting the promoters of the

project, the reason for the project, its social purpose, its interest for the
affected population;
2) The strategic and operational analysis (activities) of the project
consisting of environmental studies, market studies, studies of
feasibility (technical, material, and human) and the sources of
financing;
3) The economic and financial evaluation of the project which is composed
the economic and financial figures of the project, the criteria
evaluation methods used and the different sources of funding;
4) The activity schedule consisting of the timeline of activities
per week, month, quarter, etc.;
5) The preparation of the budget, the process leading to its establishment
table outlining the detailed project budget, in order to facilitate the
monitoring during the execution of the work;
6) The annexes will consist of all the tables justifying the
calculations made and other documents relating to the project.

19Ibidem, p. 38.
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Chapter III. The criteria for investment choice

In order to make a better choice regarding investments

to undertake, determining the relevant criteria is a necessity for
any informed businessman. Thus, several criteria can be used,
however, four of them would be the most suitable and lend themselves to any
type of investment, especially economic. These are the following criteria:

Net Present Value

The Internal Rate of Return (IRR)
The Capital Recovery Period (CRP), in English Payback
Period.
The profitability index.

III.1. The Net Present Value (NPV) criterion

The NPV criterion can be used in the case of interests.

simple or compound interest. Thus:

In the case of simple interest, it will be a matter of determining the sum

V0who makes a person indifferent when given the choice to receive this
sum immediately or receive 1,000 USD in 6 months. We issue
the assumption that the discount rate is 6% per year and that all
Interest paid does not generate interest in turn.
It is therefore appropriate to equate 1,000 to V.0 increased by the generated interests in

6 months:

1.000 = V0+ V0n i = V0(1 + n i)

1.000 = V0(1 + 0.5 x 0.06)
V0917.43 USD
Generally speaking, the formula for discounting at simple interest
is :V0= Vn/1 + n i.
In the case of compound interest, the reasoning is similar.
in the previous one except that we capitalize based on interest

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compounded, meaning that it is considered that the interests are invested

and they themselves report interest at the end of a year. If one
take the above example, we have:
1,000 = V0(1 + i)n
1.000 = V0(1 + 0.06)0.5
V0971.29 USD
In general, the formula for discounting at compound interest
est :V0= Vn(1 + i).
To better understand the concept of present value, let's start
of a simple illustration. Let's consider that one places with a banker
in the form of a term deposit for one year, the sum of 500,000 USD. This
amount that constitutes the investment as of today. The banker guarantees to
his client at the end of this period an amount of 600,000 USD which includes
the capital and the gain. This project will be implemented if the current value of
600,000 USD is higher than the initial investment of 500,000 USD. This
the present value is the product of the future cash flow (600,000 USD) by the factor

of updating. Considering an annual rate of 6%, the present value of

this example will be:
Va = 600,000 x 1/(1 + 0.06)1566.038 USD.
1/(1 + 0.06)1is the discount factor.
If an investment of 500,000 USD can generate value
Current amount of 566,038 USD, this means we achieve a NPV of 66,038.
USD, equal to the difference between the Va and the initial stake. The latter
sum constitutes a net contribution to wealth.
3) The method of calculating NPV or Net Present Value
As part of the implementation of an investment project,
compare the inputs and outputs of the project without worrying about their
the realization period would amount to neglecting the fact that one is not indifferent
receive (or give) a sum of money today or at a certain time
time. The net present value method remedies this by discounting
these flows depending on the moment they appear. We obtain the value
net present value by calculating the difference between the present value of
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products and that of costs, or even by calculating the present value of cash flows
nets related to the project.

According to this method, an investment is profitable if its NPV

is positive. Mathematically, this translates as follows:
n F1
Σ-----------—I > 0
i=1 (1 + r)t

0ù F1represents the flow generated at time t, I the investment expenditures,

r is the discount rate and n is the chosen horizon.

Let's consider this time a productive investment project that

generate the revenues and forecasted costs at the end of the year from table no.
6. (There is no initial investment expenditure and it is assumed that all
transactions are done in cash.

Table 6. Forecasted Revenues and Costs

Year N n+1 n+2

Section
Recipes 1.000 15,000 15,000
Costs 20,000 5,000 5,000
Fact. of the moment. r=6 % 0.9434 0.8900 0.8396
Ibidem, p. 51.

If we assume a discount rate of 6% per year, the NPV is:

1.000 15.000 15.000 20.000 5.000 5.000

VAN = --------- + ---------- + ----------—--------- + ---------- + ---------
(1 + 0.06)1(1 + 0.06)2(1 + 0.06)3(1 + 0.06)1(1 + 0.06)2(1 + 0.06)3

1,000—20,000 15,000—5,000 15,000—5,000

------------------- + ------------------- + -------------------
(1 + 0.06)1 (1 + 0.06)2(1 + 0.06)3
VAN =—628,37
The NPV is negative and the investment is therefore considered unprofitable.

As can be seen, the total revenue (31,000 USD)

is greater than the sum of the costs (30,000 USD). Without discounting, we would have

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can believe that this investment was worth it and we would therefore have taken the
bad decision. This example therefore clearly shows the impact of the moment when
revenues and expenses are realized.

Let us now consider a more complete example in which

appear depreciation as well as taxes and where we intervene
initial investment expenses and working capital needs expenses
bearing.

A company is considering purchasing a new machine that costs

40,000 USD. The purchase of this machine generates costs and revenues.
Forecasts (excluding depreciation and taxes) from table no. 7. The working capital requirement is 1,250.

USD in the first year, 1,800 USD in the second year, 2,000 USD in the third and
2,100 USD in the fourth year. The machine is depreciated linearly over 4 years.
At the end of this period, it will be sold for 2,000 USD. The import rate is
36 %.

Table 7. Projected revenues and costs in USD

Sections Recipes Charges BFR

Periods
Year n 20,000 10,000 1.250
Year n+1 30,000 10,000 1.800
Year n+2 25,000 14.000 2,000
Year n+3 35,000 20,000 2.100
Ibidem, p. 52.

When calculating the NPV, one cannot limit oneself to the flows.
above, since the tax is also a charge related to this project
investment. The tax is calculated on the accounting profit, that is to say after
Amortization, we create table number 8 to know the net cash flows.
spawned by the project.

The working capital requirement being established before the start of operations, we

assume that the initial investment in working capital corresponds to the activity of the
first year (1,250 USD), is made in t0For the following years, we calculate the
variation of the working capital requirement. Year t0also records expenses in

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phase investments (40,000 USD). Investment and spending in

BFR (41,250 USD) must be updated as well as the net cash flows generated by the
project.

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Table 8. Determination of net flows generated by the project

D.I.I. Section Revenue Charges Amortis. EBT Taxes EAT Cash flow ∆BFR Flow
Year Brut nets
0 40,000 1.250 41.250
1 20,000 10,000 10,000 0 0 0 10,000 550 9.450
2 30,000 10,000 10,000 10,000 3.500 6,500 16,500 200 16.300
3 25,000 14,000 10,000 1.000 350 650 10.650 100 10.550
4 35,000 20,000 10,000 5,000 1.750 3.250 13.250 -2.100 15.350
2,000 — — 2,000 700 1,300 1,300 1.300
Total 40,000 112,000 54,000 40,000 18,000 6.300 11,700 51.700 0 11,700
Same source, p. 52.
Assuming a discount rate of 6%, we calculate the discounted net cash flows for each year and then the
VAN, which is the sum of the latter, is equal to 4,218.38 USD (see table no. 9).

Table 9. Determination of the net present value generated by the project

Years Flux nets (1.06)-t Updated

0 -41.250 10,000 -41,250.00
1 9.450 0.9434 8,915.09
2 16.300 0.8900 14,506.94
3 10.550 0.8396 8,857.98
4 15.350 0.7921 12,158.64
1.300 0.7921 1,029.72
Total 11.700 — 4,218.38

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The obtained NPV requires clarification, below:

Depreciation charges are not taken into account for

determine the cash flow to be updated because they do not lead to a
disbursement of funds.
It is worth noting that the initial investment expenses as well as the
Working capital expenses for the first year are discounted to time t.0.
In the absence of depreciation allowances, corporate tax is
of 20,300 USD [(112,000—54,000) x 0.35]. Thanks to the allocations to
depreciation, the investor achieves a tax saving of approximately
14,000 USD (20,300— 6,300). Indeed, this tax saving is
equal to the products of depreciation by the tax rate of
companies (40,000 x 0.35).
The transfer product is taxed at the same rate and updated for the period.
of the transfer.
At this level of analysis, the investment decision is made without
take into account the financing method.

4). The project has multiple discount rates

When an investment project presents, for each

deadline, a different discount rate, the net present value is
determined by updating the flows generated by each due date at its rate
corresponding update.

Let's consider a project that requires an investment expenditure of

20,000 USD made in two stages: 12,000 at time t = 0 and 8,000 at the end of
the first year. To simplify, the net cash flows generated by the
project over five years as well as the NPV are indicated in table no. 10 below
underneath.

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Table 10. NPV at multiple discount rates

Expenses Section Flow of Rate Fact. Value

Year very net investment acquired
(1+r)—t
0 -12,000 0 1 -12,000
1 -8,000 2.000 9% 0.9174—5,504.4
2 4,000 10% 0.8264 3,305.6
3 5.500 12 % 0.7118 3,914.9
4 6.200 14% 0.5921 3.671,0
5 8,000 15% 0.4972 3,977.6
VAN -2,635.3
Ibidem, p. 54.
5). The constant cash flow
When the cash flow generated by the project is constant or
when it is secreted over an infinite number of periods, the formula to calculate
The net present value can be simplified as follows:

When the net cash flow is constant and limited in time, the
VAN is calculated as follows:
1—(1+r)—n
VAN = F——————— — DI0
r
When the net cash flow is constant and is secreted on a
infinite number of periods, the NPV is obtained by applying the formula
next :

F
VAN =——— — DI0 ; car lim (1+r)—n 0
x tends to infinity
r
Comparison of projects with different lifespans

Comparing two investment projects is an easy task.

when they have the same lifespan. On the other hand, the comparison of values
net cash generated by projects of different lifespans
it is necessary to calculate for each of the projects the Equivalent Annuity (EA), in
English Equivalent Annual Benefit (EAB). Indeed, the EAB corresponds to the

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value of the annuity of length and net present value identical to that of
Considered project. It is obtained using the following formula:

r
NPV
1—(1+r)—n
The NPV, taking into account the AE, is obtained using the following formula:

1 - (1 + r)—n
VAN = AE————————
r
Ultimately, we will choose the project with the highest equivalent annual value.

Example:

Let there be two projects A and B evaluated using the NPV criterion.
Project A, lasting 5 years, requires an initial investment expenditure of
USD 20,000.00 and is expected to generate a cash flow every year
constant of USD 9,000.00. Project B, which lasts for 3 years, requires a
initial investment expenditure of USD 15,000.00 and is supposed to generate a
constant cash flow of USD 10,000.00.

Work required:

Choose the best project, knowing that the cost of capital is

identical and is 10%.

Solution :
The NPV of each of these projects is:
1—(1+r)—n
VAN = F ———————— — DI0
r
1—(1,1)—5
VANA9.000 x ————— — 20.000 = 14.119 USD.
0,1
1—(1,1)—3
VANB10,000 x ————— — 15,000 = 9,870 USD.
0,1
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The AE of each of the two projects is:

r
AE = NPV ——————
1—(1+r)—n
0.1
AEA14.119 x = 3,724.35 USD.
1—(1,1)—5
0.1
AEB= 9.870 x = 3,968.64 USD.
1—(1,1)—3
In conclusion, project B is better than project A.

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III.2. The Internal Rate of Return (IRR)

The IRR is the rate at which revenues and expenses

discounted values balance out, i.e. the discount rate that nullifies the value
update of the investment project. The investor will undertake the
project if the IRR is greater than the required rate of return. Thus, the
the general formula is as follows:

n F1
Σ-----------—I = VAN = 0
i=1 (1 + r)t
The calculation method involves determining this rate.
of updating. To determine the exact value of the IRR, it is necessary to
find a root of the polynomial of degree which relates to the equation. This
becomes a complex algebraic task as soon as n exceeds 2 or 3. As we
cannot be isolated, we search for it by trial and error.

Taking the example of table n° 7, this will consist of

calculate the NPV for different rates:

Taux3,00 % 3,50 % 4,00 %4.5% 5.00%

VAN130.77—2.95—133.71—261.55—386.57

We see that the IRR is between 3% and 4%, and it is slightly below 3.5.
This allows the calculation of the NPV for interest rate values close to 3.5%.

3.48% 3.50%
VAN2,338—0,309—2,954

One can say that the IRR is 3.489%. Therefore, a

investor who demands, for example, a return of 3% will accept this
investment because the NPV is positive, while an investor who requires 5%,
it will reject it because, at this rate, the NPV is negative.

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Other methods allow to determine the IRR. Below,

two of them:

The first involves exploiting the quasi-linearity of the NPV curve.

for a restricted field of discount rates. Thus, after having
I calculated two points quite close to the curve, we can interpolate.
or extrapolate, as needed, assuming that a line would pass
through these two points. One can thus proceed mathematically in
applying the properties of similar triangles, let:

Small base Small height

—————— =————————
Large base Large height
Considering the rates of 3% and 4%, we can have:
∆TRI —3 % 0—130.77
——————=————————
4% - 3% --133.71--130.77
∆TRI = 0.489
TRI = 3 % + ∆TRI = 3.489.
A second method more effective than the previous one consists of
use the Excel spreadsheet to perform trial and error or its
function "IRR" that gives the internal rate of return of a series of
financial flows.

As such, the IRR does not allow for judging the validity of the
project. It only takes its value in relation to a reference rate
corresponding to the opportunity cost of capital... In other words, when one
choose the projects whose IRR exceeds the cost of capital, we choose
exactly the same projects as using the positive NPV criterion. A
at first glance, one is tempted to say that the two criteria IRR or NPV are
concordant regarding the project choices they propose. And, one would be tempted to
to say that relying on just one of these criteria would be enough. However, there are
situations where the use of these two criteria does not offer the same choice. It is the

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case when one has to choose between two projects whose NPV curves
respective ones cut themselves.

In conclusion, we can say that the IRR as a criterion

the acceptance or rejection of investment projects is very useful for giving
more information to decision-makers; but it is not strictly
to speak, a criterion to be considered in isolation. Ultimately, the NPV remains the
best criterion to consider for project evaluation
investment. It is not said, however, that the criterion of NPV is without
weaknesses.

III.3. The Capital Recovery Period (CRP)

The recovery time is the time required for the flows

project nets balance the amount of the investment cost. According to this
criterion, a project is financially interesting when its expense
investment is recovered within a given critical timeframe, this one
being all the shorter as the project is risky. From this point of view, it will be said
the more the DRC planned for a project is less than the chosen critical deadline, the more the
the project is deemed interesting. This criterion is suitable in the context of countries with

risk (politically unstable).

To illustrate this, let us consider two projects X and Y, mutually

exclusive, to identical capital spending of USD 30,000 of which the
the critical deadline is set at 5 years with a discount rate of 10%. The cash flows
Scheduled are presented in table No. 11.

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Table 11. The payback period

Years 0 1 2 3 4 5
Projects and
sections
Flux -30000 10000 10000 10000 8000 5000
Cumulative flux -30000 -20000 -10000 0 8000 13000
X Updated feeds -30000 9.091 8.264 7513 5464 3105
Cumulative flux -30000 -20909 -12645 -5132 323 3437
Flux -30000 20000 5000 5000 15000 5000
Cumulative flux -30000 -10000 -5000 0 15000 20000
Y Updated flows -30000 18.182 4132 3757 10245 3105
Flux act. Cumul -30000 -11818 -7686 3930 6316 9420
Act fact (10%) 1,00 0,9091 0,82264 0,7513 0.6830 0.6209
Same source, p. 59.
Both projects X and Y are feasible from the DRC's perspective.
since they both allow for recovering the cost in three years
an investment of USD 30,000, while the critical DRC is at 5 years.

Furthermore, the updated payback period can be determined.

(DRA) projects X and Y at a rate of 10%, in this way:

3 years + (5132/5464) x 365 days

3 years + 11 months + 12.78 days
DRA (Y) = 3 years + (3930/10245) x 365 days
3 years + 4 months + 20.01 days.
The results obtained show that Project Y presents a
best DRA. But table number 11 highlights the constant superiority of
project Y, because its cumulative discounted value exceeds the value
correspondent of project X.

III.4. The profitability index

The profitability index measures the advantage generated by a CDF of

investment capital in relative terms. This is the Present Value per unit of the
initial investment expense.

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In
——— Σ F1(1 + r)t
Ii=1

The project is accepted when the index is greater than 1. The more this
the index is large, the investment project is more interesting.
considering the information from table no. 11, the profitability indices of
Projects X and Y are both positive. Given the initial investment
is identical for both projects, their comparison adds nothing to
new compared to the NPV comparison. Thus, we will have:

The profitability index of project X will be equal to 33.437/30.000 = 1.1146;

The profitability index of project Y will be equal to 39.420/30.000 = 1.3140.

Furthermore, for the analysis on the profitability of a project

For the development to be complete, it will be necessary to integrate the important aspects.

following:

1. Taking into account the project's funding mode;

2. Taking inflation into account in an investment project;
3. The accuracy regarding the sources of funding;
4. The determination of the discount rate.

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Part II.
Project management
of development

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Course on Project Development, Analysis, and Evaluation (Pr J.P RABISA)

Partial introduction

In this second part, two chapters are

developed, in order to master project management and the methods and
tools for managing a development project.

Chapter IV. Project Management for Development

Three sections make up the skeleton of this chapter.
to know the relationships between the project and its environment, the institution of the team

of project and the role of project management in the conduct.

IV.1. The relationship between the project and its environment

The relations between the project and its environment will be established.
if we understand the relationships between the people involved in the project, we operate
a relevant strategic analysis and we measure the socio-dynamics of
actors.

Moreover, "an actor is an individual or a group that, in

a given organization, faced with a situation of uncertainty, has a position to
defend, a role to play, and mobilizes energy to do it. An actor can
being individual or collective and its relevance does not necessarily depend on status
or the formal role he occupies within the organization20.

IV.1.1. Understanding the relationships between people

During this stage, it is a matter of identifying the individuals.

project resources, i.e. the people likely to play roles in it
fundamentals, to achieve the expected results. In general, we can distinguish
five main categories of actors in a project, namely the project team, the
decision-making bodies, members of the context, resource providers
external to the organization and the recipients of the project. Indeed:

20PICQ, Th.,O.C.,p. 48.

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The project team consists of almost permanent members who

dedicate all or part of their time to realizing, leading, and managing the
project management. The said team can be reduced to a single one.
person (in this case, the Project Manager represents the project team) or to
a structure made up of several people and complex but
temporary.
The decision-making bodies, that is to say those who decide on the launch,
the continuation or cessation of the project, as well as the resources that must be allocated to it

to be dedicated. These actors are rarely involved in the implementation of

work: they are however regularly informed to take the
decisions that must be made regarding the project, throughout its
proceedings. This is typically the case for leaders to whom a
The project team must report (management committee of a company,
or project committees for example).
The members of the context in which the project is embedded, but who do not make
not part of the project team and who are not in a decision-making position
officials. They are affected by the project, either because they provide it with
resources (technical, human, information, time, etc.) either because they
by directly or indirectly experiencing the consequences. It may involve
major traditional functions in the case of an industrial company or
of service (R & D, production, commercial, marketing, management-finance,
human resources, etc.), various national sports organizations
in the case of the Olympic Games (federations, Olympic committee, ministry
of youth and sports, etc.), of all the students of a
promotion of which some have taken charge to organize a project of
end-of-year weekend, etc.21.
The suppliers of external resources of the organization are the whole
actors involved in the implementation of the project without however
stay in the project team or the first beneficiaries. One can
distinguish between subcontractors, suppliers, partners, and
consultants, the funders, etc.

21Same, pp. 46-47.

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The recipients of the project: the term recipient is deliberately broad.

and includes clients, sponsors, project owners, etc.
that intermediate, end, direct, indirect users, etc. In short, everything
actor who buys and/or uses the project and/or benefits from it22.

IV.1.2. Strategic analysis

In light of the notion of actor as defined above, the analysis

Strategic is based on four main concepts, namely uncertainty,
the stakes, the resources, and the strategy. Thus:

Uncertainty is understood as an internal or external phenomenon that is not

not yet mastered at present and likely to disturb more or less
deeply the playing space of the organization in which they operate
different actors;
The stake is what every actor could hope for as a gain or fear of
lose by committing its financial and/or material resources in a
action. Every issue is more or less clear and conscious and, would explain in part
the actions or attitudes adopted by the actors;
Resources are the set of means (intellectual, material)
financial resources that an actor has to undertake within an organization.
The consistency of resources is a springboard for an actor to have a
power or more or less extensive influence over other participants.
In summary, resources can be an asset, a handicap, a
constraint or an opportunity for its actor;
The strategy is a set of coherent attitudes adopted by an actor.
to address a given situation, given the resources and the stakes
and related. Strategies can be offensive (achieving objectives
assigned), defensive (avoiding competitors' objectives), winning or
losers.

IV.1.3. The measurement of the social dynamics of the actors

Sociodynamic aims to better understand the attitudes of actors

individuals and collectives, in relation to a project, an action or a mental stance,

22Same place, p. 47.

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a global and evaluative orientation that a person or adopts at a certain moment

group on a specific topic: such a person is rather in favor of the death penalty,
she doesn't like foreigners, such group does not agree with the
development of nuclear energy... Attitudes are at the core of
behaviors (although they are not sufficient to fully explain them). It is therefore
particularly important to understand an actor's position in terms of attitude
to better attempt to decode observable concrete behaviors in situations
and give them meaning.

Sociodynamics is based on two types of foundational attitudes:

the synergy, which measures the potential support, the degree of common play of a
an actor with a given project, it is the energy that an actor is willing to expend
to bring the proposed project to fruition;
the antagonism, which measures the opposition, the degree of personal play of a
actor in relation to a given project, it is the energy they are willing to expend
actor to make a proposed project fail
Of course, contributing to the success of a project or to make it happen
Failing are two extremes among a whole spectrum of possible behaviors.
scales for measuring degrees of synergy and antagonisms at 4 levels
allow for the qualification of intermediate situations23.

Lasynergie is equipped with a four-degree scale as follows:

Minimalister degree) and Interested(2thdegree) composed of the actors who

do not take initiative;
Cooperator(3thdegree) and Engaged including the actors who are
likely to take initiatives.

Antagonism is endowed with a scale of four degrees as follows:

Conciliatoryerdegree) and Resistant(2emedegree) composed of actors who

submit
Opponent(3thdegree) and Uncompromising(4thdegree) including the actors
who is trying at all costs to win.

23Ibidem, pp. 57-58.

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These two simultaneous and non-competing attitudes (synergy and

antagonism) can be the source of many quite particular attitudes
susceptible to influencing the success or failure of any development project.
Among others, we can distinguish:

The committed ones who are the unconditional supporters of the project. These are

fanatical and capable of engaging blindly, which is not without

sometimes harmful consequence;
The stakeholders are initially in favor of the project, but may express
reservations and contradictory opinions. A participatory approach would be needed
open to debate and dialogue to gain their support;
•The stakeholders who are not really concerned by the project. They constitute
a project issue, since they are numerous and can compromise the good
project development
The hesitant can support or not support the project, it will depend on the benefits.
that they are supposed to derive from the activities undertaken. They are not in a hurry to
speak as quickly as possible, and find themselves in the situation of negotiating their
support
Those who disagree generally have a negative attitude towards the project;

The opponents are those who clearly oppose the implementation of the
project and have good reasons to oppose it;
The irreducibles are determined to thwart the project at all costs;
The torn present perplexing opinions, sometimes yes and sometimes no. But,
In general, these are people who support the project by preserving the
community interests.

The consideration of the attitudes of these different actors by

The investor aims for the success of the project. Therefore, we can say:

One of the golden rules of sociodynamics is, for example, not to

spending time with your opponents: prefer to invest in your allies, in the
rallying the hesitant to your cause, on the gradual adhesion of the passive ones
rather than exhausting your strength and resources in endless struggles with
opponents rooted in their positions.

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Another effective strategy is the one known as the commitment theory.

from recent psychosociology research, this theory develops the idea
who can be rallied to the cause of a project people who are presumably
opposed... simply by engaging them through concrete actions,
minors and modest.
•Concretely, this means that, in the face of hesitant or resistant actors
with regard to a project, it may be more effective to get them on board by their
entrust a modest action within the project rather than them
to convince, to reason with them or to appeal to good feelings or
noble causes (sense of duty, sense of responsibility, public interest...).
Only actions commit us, not our ideas, beliefs, or
sentiments24.

IV.2. The establishment of the project team

IV.2.1. The distinctive features of the team

A project team can be made up in different ways,

based on a certain number of determined criteria, namely the
categories of tasks to be performed, the nature of the context, the lifespan of the
project and the degree of heterogeneity of the members of the said team.

The constitution of the project team is a necessary step,

since it can have a fundamental impact on the implementation,
management and evaluation of the project, in general, and the activities to be undertaken or

companies, in particular.

Regarding the mode of organization, or structure

of project organization, there is no model that can be imposed on
All projects. It depends on the context, the situation, and the objectives.
However, there are models that could be adapted accordingly.
context. This concerns models of coordination, integration and
cooperation.

24Same, pp. 63-64.

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IV.2.2. The group dynamics of the project team

The group dynamics of the project team has as its source the
synergy that must preside over internal and external relations between the
team members. That is why a better functioning of a team
the project must take into account, absolutely, the profiles, skills,
qualifications and motivations of all the members.

There is no absolute ideal team, but teams

performers who, in a given context, result from the combination
adequate individual profiles and the skills that make it up.
However, the quality of a group's dynamics depends on the degree of
motivation of its members.

Everyday situations provide multiple opportunities to

to know the motivation criteria of his collaborators. Even if it is
it is impossible to motivate someone, a project manager can create the conditions for
the commitment of the members of his team.

The motivation of the stakeholders is never a given a priori and remains

fragile in time: the identity of the group and the symbolic management of the project
are two areas of action that can be mobilized by the project manager. Beliefs, the
The enthusiasm and personal training effort of the project manager are at
the basis of a 'Pygmalion effect' generating a collective dynamic25.

IV.2.3. The dynamics of the project team evolution

By nature, the project is a dynamic one, meaning it can evolve with

time and with the context. Likewise, the project team should adapt to
this dynamic evolution of the project, given the political changes,
economic, social and cultural factors likely to influence the course of activities.

Like a living being, a project is dependent on time that

its process and progress is marked by different phases. One cannot
25Idem, p. 111.
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certainly nothing against the passage of time, but the project stakeholders can
put in control of the dynamics of evolution over time. Everything
project can be seen as a dual dynamic of progressive learning
and simultaneous reduction of the capacities for action and evolution over time.
A project evolves in four phases:

In the initial phase, one should not decide too quickly but rather increase
the effectiveness of exploration;
The decision-making phase should be brief and decisive;
In the implementation phase, it is the organization of contributions
experts who prevail;
Finally, the key to managing a project: finding the optimal compromise between
the resources spent to reduce uncertainty and those preserved
to implement the chosen solution26.

IV.3. The project management process

IV.3.1. The role of the Project Manager in management

The project manager must be able to adapt to the project's developments and
of the project team. Thus, he must exercise a particular flexibility and
contextual in its management style during the different stages
of the project. The specificities of project management require diversifying
skills, to improve the traditional training system, in order to
comply with the requirements of the project mode.

Every true manager must equip themselves with a management style and

of a unique and contextual management style, to succeed in management

project. Indeed:

The management style is the preferred register used by a

responsible for managing his team members, in a given context,
depending on their level of maturity or, depending on the state
progress of a given project; for example, the
26Ibidem, p. 131.
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Hersey & Blanchard model based on 4 management styles:

directive, persuasive, participatory, delegative;
The management style is the original way a manager has
to apply a management style. One can thus envision a mode
directive marked by empathy and attention or conversely a mode
participatory conducted in a cold and unwelcoming manner.

This differentiation is fundamental because it allows for

distinguish the person (what the manager is, their profile, their experience...) from
these acts and the contingent justifications for them27.

IV.3.2. The role of project management in change

Project management involves many changes in and

requires developing attitudes that would allow for interactions and the
cooperation between stakeholders involved in the project. When the project is integrated
in an already existing commercial, industrial, or administrative structure, it
the Human Resources Management (HRM) will have to,
performance assessment, salary treatments or management of
careers take into account this new environment.

The challenge for project teams is not just to coordinate

disjoint expert contributions, but to develop capabilities to
cooperate. Individual expertise is only valuable through the network between
they, within the team, or with others, external to the team. Evaluate the
the result of a project team by the sole criterion of achieving the objective is
sometimes not enough: one must also take into account the method and the means
used, of the collective competence acquired and of personal development
individuals.

The introduction of multiple projects disrupts and calls into question

traditional HRM systems (performance evaluation, remuneration,

27In the same place, p. 141.

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career management, etc.). There are 4 levels of maturity of an organization

in terms of project culture: awareness, experimentation, instrumentation,
integration. In a voluntary, formal or informal way, the projects
they are tools and vectors of organizational change,
management and behaviors of men28.

Chapter V. The methods and tools of management29

V.1. The S-curve method

S-curves have the advantage of allowing the calculation of

the physical progress of the project or task group, to understand the
gaps, the margin and the trends. The gaps are detected globally, at
the help of said curves, and are corrected locally at the planning level or
budget lines.

28Ibid, p. 179.
29MOINE, Yv.O.C., p. 123-230
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The curves are plotted from the information provided by the

planning and its periodic updates. This results in S curves.
reference set as early as possible and as late as possible, and the S curve of the actual

(or even of the forecast). The comparison of these two types of curves provides
relevant information on the progress of the project in terms
quantitative. The two main S curves of the initial planning are the
earliest reference curve and the latest reference curve. These
curves, plotted using the dates provided by the reference schedule and the
weight of tasks, constitute the reference framework of the project.

V.2. The method of updating the schedule

There are two methods for updating the schedule, namely the
static method and dynamic method.

V.2.1. The static planning method

The status date (of update) is on day 9. Some percentages

physical progress are informed on the tasks of the diagram of
Gantt. A broken line (isochrone) in red highlights the progress
tasks. The dates are not updated. It should be noted that in this
type of planning, there is no reference, since there is no projection of
the end date: the schedule is static.

V.2.2. The dynamic planning method

The status date is day 9. Progress percentages

Physical attributes are reported in the field "% completed physical attributes". However,

the planning has been projected: depending on the progress and the estimate of
Remaining to be done, the earliest completion date has been pushed to day 19. It is to
note that the percentage of progress displayed on the Gantt is a
progress on deadlines. Additionally, a fine line under the tasks indicates the
initial planning (reference), which allows for measuring the gaps.

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V.3. The method of remaining tasks (RAF)

The objective of the RAF method is, based on regular analyses,

to determine 'where we are going if we continue as we have started'. It is about
to estimate the RAF based on physical progress for internal work,
and the rest to be engaged for the external work. It is first necessary to
define the different types of costs, then the different measurement methods
of physical progress. We will then see how to calculate the cost
Final Forecast (CPF) for engineering hours, equipment and
standardized materials, and finally for the construction contracts.

V.3.1. The different types of costs

The main costs that need to be taken into account in

The application of the RAF method is as follows:

1. The billed cost corresponding to the hours of engineering consumed and

valued. For external work, the billed cost corresponds to
amount written on the invoice. This cost is used to secure the CPF, which
is equal to the billed cost plus the remaining amount to be billed.

2. The cost incurred includes the costs billed after payment of the
invoices. The delay is three months or more. It represents the truth.
accountant.
3. The cost incurred for internal work corresponds to the hours
engineered resources consumed and valued. For external work: it is
the amount read on the order for materials, equipment and
services purchased in a package, and the product of the quantity by the price of
slip for standardized equipment.
4. The cost incurred corresponds to the actual cost of the work actually performed.

(CRTE) or real value, at a time t, corresponding to the progress

Physical. For internal work, the hours correspond to the incurred.
of engineering consumed and valued. For external work: it is
the product of the order amount by the physical progress, for

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the materials, equipment, and services purchased on a flat-rate basis; it is the

produces quantities confirmed by the unit price, for the materials
purchased on the invoice and the open orders and the amount of the
order for products purchased from catalogs.

V.3.2. Methods of measuring physical progress

Physical advancement is defined by the following formula:

Physical progress = Work done / Total estimated work.

Let’s assume that a task involves installing 1000 m of fencing.

intrusion detector on a construction site. To do this, a resource is dedicated to
100% of his time. The planned budget is 300 hours and two months of
work.

After a month, we find that the resource has indeed exceeded 150.
hours on the construction site, but instead of having completed 500 meters of installation, that is to say

50% progress, she has only completed 400 m, which is 40% progress.

Productivity is not as expected, and the task is at risk of

fall behind if the resource continues at the same pace as it has
started. In fact, the task is likely to last: 150 hours/40% = 375 hours,
that is two and a half months.

In this example, we see, on the one hand, that the progress in deadlines,

here 50% of the time is not representative of physical progress,

constant resource, if productivity is not as expected, and on the other hand
that consumption/ expenditure is not representative of progress
physics.

This method of measuring physical progress, 400 m of

Grills installed on 1000, or 40% completion, referred to as 'equivalent units'.
is the most relevant. Unfortunately, not all tasks in a schedule...
are not as simple to quantify.

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Furthermore, the main methods for measuring progress

The characteristics of a task are as follows:

a) Equivalent units
It is the ratio between the number of units produced and the number
total re-estimated of units to be completed. For example, 10 m 3of earth have been

cleared over a total of 100 m3The % of task progress

Excavation is therefore 10%. This technique is quite relevant,
when we weigh it 'physically' (extremely on a scale), even if
It is an image, the valuation of the work of a task (here a quantity
of earth, the volume).
b) The intermediate milestones
The intermediate milestones method is used in cases where
one can break down the task into a series of sequential tasks
punctuated by deliverables: the steps. Each step is weighted in
function of the workload, in man-days or man-hours.

10 % 40% 60% 100 %

T ache

Step 1 Step 2 Step 3 Step 4

When a milestone is reached, the percentage of physical progress

is reached. For example, it is calculated that the first broadcast of a
The document represents 50% progress, the consideration of
comments account for 70%, the second broadcast represents 80%, and
The final approval of the document corresponds to 100% completion.
When a milestone is reached, the progress percentage takes the
value defined in the progress measurement reference. This
the technique is quite relevant and appropriate for most types
of tasks.

c) The weighting of items

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The weighting of items is a technique that involves assigning a

weight for each task in the schedule or budget line. This weight can
be hours or costs. Through successive consolidations, we
calculate the progress in terms of work lots, phases,
zones, products, disciplines, the project. The consolidations
are done by summing the product (that is, weight x %
progress) on the tasks to consolidate, which divides the total weight of the
considered tasks.
The 50/50 technique
The 50/50 technique is used when the duration of the task is
generally less than two months. When the task is started,
the progress is 50%, when it is completed the progress is
100%. This technique has the merit of being binary. It works well.
on short-term tasks.

e) The 0/100 technique

The 0/100 technique is used when the duration of the task is
very short. When the task is completed, the progress is 100%,
otherwise it remains at 0%. Just like the previous technique, this
the technique has the merit of being binary. It works well on tasks
short-term.

f) The level of effort

For envelope tasks (or hammocks) such as
Project management, this technique is better suited.
The progress is the work completed in hours divided by the workload.
total re-estimated. This technique is suited for tasks that are
transversal and difficult to quantify in terms of progress; one does not
do not fall behind, by definition, because of this type of tasks,
such as project management for example!

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g) The distributed effort

The physical progress of the task is the same as another.

task that has been determined. For example, it seems correct to say
that a site supervision task has the same percentage
of progress than the site itself.

h) The calendar
The calendar is the actual duration that divides the total duration re-
estimated. This is a progress in deadlines that is representative of
physical progress only if resources remain constant
throughout the duration of the task, at constant productivity.

i) The 'Expert Opinion'

A subject matter expert assesses the progress of a task or a group.
of tasks. It is the most subjective method, but it is not
However, less relevant than the others, it is even far from being the case.
worse! An expert indeed has no difficulty estimating in one go
of the total physical progress of the realization of a gigantic
viaduct for example.
Very often, its assessment based on the reality on the ground is
much more accurate than all the calculations and theoretical models that one
can do. This method is also the easiest to implement, and
the most used in practice (due to lack of time to do
Otherwise). The subjective aspect of this method is a disadvantage.

V.3.3. The final forecast cost (FFC) of engineering hours

The CPF comes from the work of human resources, that is to say
hourly consumption. Additionally, it includes mission costs,
telecommunication, documentation, computing... engineering hours
integrate the hours of the design office, consultations, and follow-ups from

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suppliers, of the site and the commissioning, as well as the management.

The labor cost is calculated using the formula:

Cost = hours x hourly rate.

Hourly rates are calculated using the following formulas, for a period
data

Individual rates = (salary + charges) / Number of hours worked;

Average rates by category = Payroll by category / number
hours completed in the category;
Rate per service = Payroll per service / Number of hours
carried out by service.
Hourly rates may be:

Reduced: they only take into account salaries and charges.

social
Surrounded: they increasingly take into account charges such as the
lawyer fees, telephone, fax, and mailing costs;
Completes: a structural coefficient is applied to the unit rate
representative of the company's overhead costs.

It is necessary to establish a system for tracking hours.

individual assignment sheets must be filled out and provided to
project controller once a week or once a month, by
the intermediary of the information system generally. For studies and
subcontracted services, expense arrangements are used for calculation
the CPF. Tasks must have a start and an end identified by the deliverables,
one person responsible, a clearly defined content.

In order to avoid multiplying the number of tasks, it is preferable that

the document validation circuit should be included in the planning tasks,
notably for measuring physical progress.

For example:

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•1era% completion = 20%;

•1erareview with consideration of comments: % progress
= 50 % ;
Revision good for execution: % progress = 75%;
Final update: % progress = 100%.

The CPF is calculated using the following formulas:

Already done
CPF= -------------------------------- Already done + Remaining to do
% physical progress

The unit of work and the hour for calculating the CPF.

V.3.4. The CPF of standardized equipment and materials

1) The CPF equipment

The main equipment, by their characteristics

techniques cannot in any case be replaced by others
equipment, they are said to be "itemized". The procurement costs can
represent up to 80% of the amount of the work.

The different stages of equipment procurement

are:

The studies of principles that define the most parameters

significant equipment;
The basic studies that lead to the drafting of the specifications
particulars and purchase requisitions;
The detailed studies that allow for the placement of equipment in
their functional environment;
The call for tenders is the process of seeking a better
supplier

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The comparison table of offers that allow to operate a

wise choice of the best-ranked supplier offering the best
conditions;
The order, which is the formal placing of the purchase order;
The manufacturing is the realization of the equipment by the supplier
choose;
Addendums if there are additions or adjustments needed for a
perfection of the equipment;
Conditioning, that is to say the packaging of the manufactured equipment
and tested;
The transport for the final delivery of the equipment to
the buyer.

For manufacturing tasks, it is difficult to use the progress.

physical and the hours consumed to calculate the CPF, due to
supplier transparency that is not always clear. However, the
The intermediate milestones method can be used with agreed milestones.
eventually with the suppliers. The method to use for calculating the
CPF is that of the remaining to be engaged. The unit of work is the CDF, the USD, or the EUR.

(the project's motto) for the calculation of the CPF.

2) The CPF of standardized equipment (in bulk)

It consists of all the materials that make up the environment

functional main equipment. This type of material is defined by
quantities

Electrical equipment: cables, cabinets, circuit breakers, transformers,

paintings…

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Instrumentation materials: cables, control instruments,

tableaux…
Piping: carbon, steel, or cast iron pipes, valves, taps...
Metal framework: framework, locksmithing...
Etc.

These materials are supplied by suppliers.

specialists, often in the form of open orders. During the
basic study and then detailed study cycle, several are carried out
measurement campaigns on quantities. As the supply of
standardized materials consist of a multitude of commands to a large
number of suppliers, it is difficult to determine the progress on the
quantities. Moreover, we distinguish three types of orders:

•Global: they directly represent an incurred cost;

Open: the buyer commits to an amount corresponding to a
minimal quantitative, knowing that this quantitative can evolve, notably
during the detailed studies. The physical progress corresponds to
amount of equipment delivered compared to the total equipment planned to
date
Emergency: for which the timing often matters more than the cost.

The budget line for standardized equipment consists of two

terms, namely the unit quantity and the unit price. The method to use
To calculate the CPF is that of the remaining to be engaged. The unit of work is the CDF.
the USD or the EUR (the project's currency) for the calculation of the CPF.

V.3.5. The CPF of construction contracts

This involves the implementation, by the project manager, of the installation and

from the commissioning of the equipment at the geographical location required by the
client. The work is organized into three main categories, namely
public works and civil engineering, the assembly and commissioning.

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Most often, they are entrusted to a small number of companies.

with several levels of subcontracting. The adherence to deadlines, and therefore the

productivity is of major importance on a construction site.

The physical progress of construction tasks is measured.

by the method of equivalent unit: mL, tons, m3inches name
welded equivalents… It is necessary to establish a reporting system for
quantities achieved (knowing that budgets are requested in advance)
to the subcontractors). Assignment sheets by subcontracting company must
to be filled out and provided to the project controller once a week, via the
information system if possible. The same goes for the hours. The method to
Used to calculate the CPF is a combination of the remaining to be engaged and the
RAF in hours. The unit of work is the CDF, USD, or EUR (the currency of
project) and the time for calculating the CPF.

V.4. The critical chain method

The critical chain is the sequence of dependent events

which prevent the project from being completed as soon as possible. The dependencies of

resources are equivalent to the dependencies between tasks and especially the
dependencies between resources.

V.4.1. The presentation of the method

Project management according to the critical chain emphasizes the importance

of the planning. Generally speaking, this method:

Include the dependencies of the resources;

Use a task completion probability of 50%;
Use time margins as a control tool;
Modify team behavior by encouraging reporting
the advanced completion of tasks and eliminating 'multitasking'.

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The method uses three theoretical tools to improve the

performance of projects, which eliminate six undesirable effects. The three tools
theoretical are the following:

The theory of constraints ('every system has a constraint');

The variations due to ordinary causes (there is a tendency to realize the
task as late as possible) ;
The statistical laws that govern variations due to causes
Ordinary (the safety margins reduce the completion time
of a chain of tasks).

Moreover, we must note the six side effects that could

be triggered by the use of method. The said effects are as follows:

Excessive estimation of task durations;

The student syndrome (one tends to complete the task at the last minute)
possible)
Projects do not benefit from task completions in advance;
Delays caused by task integrations: most projects
have parallel paths that converge towards the critical path;
Multitasking;
The loss of attention, in the face of multiple planning issues
(new critical path with each update, availability of
resources…).
1. Clarifications on the excessive estimation of task durations
The completion time always adjusts automatically.
in the allocated time. When asked to estimate the longest duration by an actor
probability of completing one of his tasks, he generally includes a margin
of safety as indicated in the following curve (figure no. 3). The principle of
the estimation of durations in the critical chain method is to recover
this margin to integrate it into the stamps.

2. Details on task integration

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From figure no. 4, it can be observed that a single path is the cause.

the delay in the project completion date.

3. details on multitasking
Figure no. 5 shows three tasks: A, B, and C. It is noted that in
in multitask mode, task A takes longer.

V.4.2. The planning approach

The approach to follow to plan a project according to the method of

the critical chain is as follows:

1. Plan the project starting from the end date, define the scheduling to
against the grain

2. Plan the tasks at the latest;

3. Estimate the durations of activities, with a probability of completion of
50%;
4. Eliminate resource conflicts, level;
5. Identify the critical chain;
6. Add the stamps: for the project, for the secondary paths of
project (also called lateral reserves, LR), for resources.

The monitoring is done in the same way as for the method of

critical path, except that the project end date does not change as long as the
The project buffer is not consumed. Moreover, the critical chain does not change.
not for the entire duration of the project.

Buffer management is a key element of the method, we

distinguish three equal-sized zones:

Tampon

Green color Yellow color Red color

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Thus:

Green indicates that no action is necessary;

Yellow indicates that the problem needs to be assessed and action should be contemplated.

corrective
Red indicates that action must be taken immediately.

The lateral reserves (RL or buffer) are inserted into the network.
logic of the planning, in accordance with figure no. 5. And, the critical chain is
identified in accordance with figure No. 6.

V.5. The method of opening and closing lots

The opening and closing of work lots are very good

means of controlling the planning and costs. It is about unlocking the system
information to avoid time tracking on the work batches of which the
the realization is not urgent and not important. The opening and closing of
lots are operated through notes disseminated to the entire project team,
under the decision of the project leader.

V.6. the rational method for evaluating the total cost of the project

Determining the total cost of a project is no small task.

business that can be accomplished with a piece of pencil and a piece of paper
of the notebook. This is a work of expertise in economics to avoid many
reassessments, since we did not want to take this activity very seriously.

The best procedure for determining the total amount of

The investment is to do it after having thoroughly listed all
the activities, all the fixed assets and all the tasks coming into line with
account in the realization of the project (from reflection to materialization).

Moreover, the simplest but summary procedure is

the determination of the Necessary Initial Capital (CIN). The latter is the addition
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of the Necessary Initial Fixed Capital (CFIN) and of the Initial Working Capital
Necessary (CCIN). Thus:

To determine the NPV, we perform the arithmetic summation of all the

fixed assets (tangible and intangible assets)
what the project needs to function;
In order to determine the CCIN, financial flows must be assessed.
susceptible to being generated by the project, from the operations of
production and sale of goods and/or services forming the corporate purpose of
project.
At this level, we need to determine the expected charges of
production and operation of the project, as well as the products
projections (the expected revenue) that can be generated
by the project.
Then, after estimating these two variables, we need to determine the
successive margins (per month or per year), by totaling the
products (monthly or yearly) minus the total charges (monthly or
annual).
Finally, we must calculate the arithmetic sum of all the margins.
negatives (in absolute value), which must ultimately be added to
the total obtained from the CFIN.

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Part III.
Project planning of
development

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Partial introduction

In this section, it is about learning the techniques of

project development planning. Two chapters make it up.
skeleton, namely the formalization of a development project's network and
the actual planning.

Chapter VI. The formalization of the project network

In this chapter, the main steps are presented

the construction of a development project. Thus, after the
definition of the project network, we will describe the main links existing in
the network, the deadline; all of this before pinning a case study.

VI.1. Definition of the project network

The network of a development project is the set of links

what the project's activities maintain, that is to say the intrinsic logic
even from the development project. Thus, in any planning process
of the project, the construction of the network is the first step in the structuring
of the project plan.

The presentation of activity planning techniques and

resource scheduling techniques rely on a representation
activities called 'potential activities' which is the most commonly used.
Some software also uses another representation called 'potential'
"events." But in practice they also use representation.
potential activities

Each activity of a project is represented by a bar.

The left end of the bar represents the start of the activity, the extreme
right the end : Start

End

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The length of the bar does not represent the duration of the activity:
this representation is not a bar chart; it is simply
used to mark the logic (that is, the sequence) of activities.

A project is composed of several activities that are interconnected.

linking to each other. A link (or dependence or logical relation, these three terms
is a relationship between two activities represented by a
Arrow. A network (also called a "logical network") is a set of activities and
of links represented by a set of bars and arrows. Here is an example
of the link:

This link means that activityS can begin when activityA is

completed. For this link, the activity Aest is called the "antecedent," and the activity Sle

successor

The term 'antecedent' means 'starting point'. The term

"successor" means "the endpoint of a link." In some cases, the antecedent
is found chronologically before its successor, but in others, it
find in parallel; finally it happens that the antecedent must take place after its
successor. The following examples will illustrate this. The concepts of antecedent
and the successor represents the relationship of causality and not of pure
chronology30.

VI.2. Main links of the project network

A link refers to the relationship that exists between beginnings.

(beginnings) and the terms (ends) of two activities, one of which is considered as
antecedent is the other as successor. In other words, "a link is
a relationship between two events: the start or the end of the antecedent, of a
30VALLET, G., Project Planning Techniques, Paris, Ed. Dunod, 2011, p. 2.
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part; and the beginning or the end of the successor, on the other hand. The link means:

The successor event can take place at the same time as the event.
antecedent or after (in other words, not before)31.

Generally, there are four main types of links, namely

LFD, LDD, LFFetLDF. Indeed:

LFDest is the EndLink to the Beginning that characterizes the relationship between the end of

the predecessor at the beginning of the successor;

Beginning is the link that characterizes the start or

beginning of the predecessor at the beginning of the successor;

LFFest theEndLinkToEnd resulting from the term of the antecedent and that one
of the successor;
LDFest theLinkStart toEnd which materializes the start of
the antecedent and the term of the successor.

VI.2.1. LFD
A

LFD is the most commonly encountered type in the network.

means that the successor can only begin when the predecessor is
finished. This means that the successor can start right at the end of
the antecedent or a little later.

Example:

For the installation of a building's roof, the prerequisite is construction.

from the framework, the successor is the plating and finally the link is that the plating does not

cannot be completed as long as the framework is not finished.

31Same place, p. 5.

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VI.2.2. LDD
A

LDD is a link that is also frequently encountered in the network. It

means that the successor can start when the predecessor is
started. The successor can begin at the beginning of the predecessor or a
a little later. To do this, the bars for these two activities must be
placed in parallel.

An example of this type of link:

Activity A represents a series of interviews;

Activity S represents the writing of reports;
The link means that the writing of the reports can begin.
as soon as the series of interviews began (it is not necessary
to wait for the last interview to take place before starting to write
the report of the first).

Links of this type are encountered when activities are in

makes sets of elementary actions - the activities - that are not
represented each by an activity. At the most detailed level, each
The report can only be written after the corresponding interview (links to
type " end at beginning "). At the overall level of all the interviews and
the entirety of the reports, the link is of type "start to start".
In all fairness in this example, it should also be noted that
the final report can only be written after the last interview (link
of type "end to end" )"32.

32Same place, p. 4.

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VI.2.3. LFF
A

A commonly encountered link like that of LDD, it means that

the successor can be completed when the predecessor is finished; that is to say that the
The successor should take at the end of the previous term or a little more.
late. To do this, the two activities can be placed in parallel.

Example:

The antecedent represents the computer wiring of all

communities of the city of Kinshasa;
The successor represents the installation of the new system.
management computing of the civil status of all municipalities;
The link means that the wiring of the last municipality must be completed.
before the installation of the system in the last municipality.

VI.2.4. LDF
A

Even though this type of link is very rare in the

project network, it does happen that one can encounter it. It means
that the successor can finish when the predecessor has started, or again
that the successor ends at the start of the predecessor or a little more
late. Consequently, the successor can be placed chronologically before
the antecedent.

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Example:

The antecedent represents the operation of the new control tower of

N'Djili Airport
The successor represents the exploitation of the old control tower;
The link is that the old control tower must be operated until
the inauguration of the new control tower.

VI.3. The deadlines33

The positive or negative value of a link indicates its delay, which is the
minimum duration, noted algebraically, separating the successor from
the antecedent.

In the example of a 'start to start' type link, the activity S of

the writing of reports could begin as soon as the A activity started
conducting a series of interviews. In reality, the first report cannot
to be written only after the first interview which lasts a day, for example. In
As a result, activity S can really only start one day after the beginning.
of activity A. The 'start to start' type link must therefore be characterized by
a deadline of one day, which is represented as follows:

+ 1j S

This link (now characterized by a deadline) reads as follows: activity S can

start one day after the beginning of activity A, or later. The delay allows
to indicate a waiting period, and avoid creating a fictitious activity
intermediate, which would translate as follows:

33Ibidem, pp. 6-10.

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deadline 1 day

A negative delay on a link indicates that the event

A successor can occur before the preceding event. For example, the
The roof covering of a house can start one day before the end of the
installation of the framework:

- 1j
S

A positive delay is called a lag.

negative is called a lead.

The details of links can be expressed in units of time.

(calendar days, business days, weeks, months, etc.) or sometimes also in
percentage of the antecedent; by convention, the percentage of the delay of a
link concerns the duration of the antecedent. For example, saying that activity S can
begin when there is only 10% of the duration of activity A left for the
finish, is represented as follows:

10%
S

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The delay of a link is always explicit. A representation

The angle of the arrow does not mean a delay. In other words, the
the following representations are equivalent:

A A A

SS S

VI.5. Examples

Below, examples of translation of the phrases in terms

of links:

As long as activity A is not finished, activity B must continue.

A

This is about LFF, with Activity A as the predecessor, and Activity B.

is considered as the successor.
As long as activity A is not finished, activity B cannot.
start.
A

This sentence translates the LFD, with activity A as the antecedent, and
Activity B as successor.
Activity B must continue as long as activity A has not started.

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This example shows the LDF. Thus, activity A is the antecedent and
activity B the successor.
Activity A cannot start until activity B has.
started.
A

Here, we are facing LDD, in which activity B is the antecedent.

and, activity A has the successor.
5) Upon the completion of 50% of activity A, activity B can start.
A

We are in the presence of:

LFD, with activity A as the antecedent, and activity B for
successor, and a deadline of –50%;
Or else
LDD, with activity A as the predecessor, and activity B
as a successor, and a delay of + 50 %.
One must have at least two days between the end of activity A and the beginning.
of activity B.
It is the LFD. Thus, activity A is considered as antecedent.
and activity B is the successor, and a delay of two days (+ 2
days).

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VI.5. Example of an industrial project case

VI.4.1. Description of the case

The studied project involves the construction for a client

J.P.RABISA, from a prototype of a modern industrial refining equipment
palm oil. Such equipment includes mechanical components and
electronics. The implementation of the prototype is accompanied by the establishment
the necessary tools. The project ends with a first pre-series, which
demonstrates the ability to produce the developed prototype.

The project involves different Services of the company that are

represented as follows:

Methods

Ccialand Marketing Planning

Design office Purchases

Logistics

Quality Assurance

The identification of activities is supposed to be acquired. The remaining task is to

first determine the interconnection of activities, that is to say the network.

Below is the presentation of the project activity by activity.

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No. Activities
1. Activity "Proto" (Prototyping)
Commercial and Marketing Service Study Office
A marketing agent for 1 year for prototyping With a prototyping engineer
2. Activity "Planif" (Project Planning)
Service Planning Design Office
We will start from the beginning of the prototyping. An engineer will be part of the team
We will also work for 1 year;
Upon validation of the prototype, we will provide the
final execution plan.
3. Activity 'Etuprix' (Study of prices and suppliers)
Methods Service Purchasing Service

Upon validation of the prototype, we will conduct a price study. Two people from our company will also participate.
and suppliers. This should take 1 month.
4. Activity 'Conc' (Design)
Design Office
For a factory of this kind, the design should take 2 years;
The client must approve the design file;
The design can start as soon as the prototype has been validated.
5. Activity 'Elec' (Embedded Electronics)
Study Office

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As soon as the detailed schedule is finalized, we will be able to dive into the subsystem.
embedded microelectronics;
The development of the embedded microelectronic subsystem should take us 1 year.
6. Activity "Tooling" (Tool installation)
Purchasing Service Methods Services
The installation of the tooling will take 10 months. We will also participate. But we will need the subcontractor.
start as soon as the client has approved the design. embedded microelectronics system.
7. Activity 'Fiab' (Reliability Study)
Quality Assurance Service
It will take 6 months. But, we will only start when the installation of the equipment has been done.
launched;
The reliability study results will be needed to start the software development.
8. Activity 'Logic' (Software Development)
Study Office
The software is not even defined... So, let's say 1 year!
9. Activity 'Memp' (Implementation)
Logistics Service
We will be responsible for setting up the pre-series;
With the study of suppliers and design, it will take 1 month.

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10. Activity "Prés" (Pre-series)

Quality Service Assurance Methods Service
The software will be needed to complete the pre-series; We will be three to follow the pre-series
The pre-series lasts 1 week: there will be two of us. (after the installation of the equipment).

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VI.4.2. Construction of the logical network

The construction of the logical network must be based on the activities.

planned for the construction of the palm oil refinery. We must proceed
step by step or sequence by sequence. Thus:

1erasequence: Prototyping
Prototyping is the first activity of the network. It involves
two resources, namely the Sales & Marketing Service and the Office
studies. This 1-year activity ends with the validation of
prototype of the refinery. We are facing a single activity
which can be represented as follows:
Proto 12 m

2thsequence: Project planning (Plan)

Project planning is related to the activity "Proto". But, we must
point this out:
The expression 'from the beginning of prototyping, we will start'
implies that the 'Planif' activity could start as soon as the start.
of the "Proto" activity. This leads to LDD.
Then, the validation of the prototyping in question is the event.
of the 'Proto' activity. In addition, the provision of the schedule
The final execution is the end event of the 'Planning' activity.
The expression 'we will also work for a year' implies a
duration of 12 months for the activity "Planif", equal to that of "Proto".
Proto 12 m

12-month planning

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3emesequence: the study of prices and suppliers

The "Etuprix" activity could start "as soon as approved".
prototyping. This is about LFD whose Antecedent is 'Proto' and the
Successor is 'Etuprix'.
Etuprix 1 m
Proto 12 m

Planning 12 m

4thsequence: The design

The design will be launched or can start after the
validation of the "prototype". This expression implies LFD which has for
Proto
Etuprix 1 m
Proto 12 m
Conc 24 m

12 m Planning

5èmesequence: Embedded electronics

The "Elec" activity can start as soon as the detailed schedule is completed.

stopped. This is the end event of the 'Planif' activity.

conduit to the LFD whose Antecedent is "Planif" and the Successor is
Elec
Etuprix 1m

Proto 12 m

Concentration 24m

Plan 12 m

Elec 12m

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6thsequence: The installation of the tooling

The 'Outill' activity is carried out after the client's agreement on the

conception. Also, the activity 'Elec' is necessary to do this

activity. It should be noted that the client's agreement for the design is
the end event of the 'Conc' activity. Therefore, the 'Outill' activity
has two backgrounds of LFD, namely 'Conc' and 'Elec'.

Etuprix 1m

Proto 12 m

Conc 24m
Tool 10m

Plan 12 m

Elec 12m

7thSequence: The study of reliability

The 'Fiab' activity can start when 'Outill' is launched, otherwise
said when it started. Also, does the term of the "Fiab" activity allow for
start the software development. The activity 'Fiab' is the
Successor of the 'Outill' activity of LDD type and is the Antecedent of
LFD type logic.

Etuprix 1m

Proto 12 m

Conc 24m
Tool 10m

Plan 12 m Logic

Electric 12m Fiab 6m

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8thsequence: Software development

The activity 'Logic' has as its sole antecedent the activity 'Fiab'. The link
of dependence had already been defined during the description of
The Antecedent. Thus, the network is identical to the previous one.
present sequence we define the duration of the activity.

Etuprix 1m

Proto 12 m

Conc 24m
Tool 10m

Plan 12 m Logic 12m

Electric 12m Fiab 6m

9thsequence: The setup of the pre-series

The 'Memp' activity can begin when the price study and the
plans have been made available. Also, should the design have
place before the pre-series is implemented. Thus:
The activity 'Memp' has two LFD type Antecedents.
know 'Etuprix' and 'Conc';
Then, the activity 'Memp' is the Antecedent type of LFD of
the activity "Presence".

Etuprix 1m

Proto 12 m Memp 0.5m

Conc 24m Presents

Tool 10m

Plan 12 m Logic 12m

Electric 12m Fiab 6m

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10thsequence : The pre-series

The 'Prés' activity can begin when the tooling is returned.
available (LFD) from the "Tooling" activity. Then, the "Present" activity has
need the software to finish (LFF"" from the activity "Logic"). The
Dependency link of type LFD from the activity "Menp" has been the subject of
of the activity "Menp". Finally, the complete network is developed as follows:
Etuprix 1m

Proto 12 m Memp 0.5m

Conc 24m Press 0.25m

Tool 10m

Plan 12 m Logic 12m

Electric 12m Fiab 6m

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Chapter VII. The study of project planning

In this chapter, the objective is to study the ways and means
objectives of development project planning. Thus, two
sections form its skeleton, namely planning without consideration
resources and planning taking into account the resources.
However, within the scope of this course, we will limit ourselves to the first
The second section will be studied in a later class.

VII.1. Study of planning without counting the resources 34

In this first section of the chapter, we tackle

describe project planning techniques without taking into account
resources. These are the PERT-Time techniques, critical path and
PERT-Time dates.

VII.1.1. The basic technique: PERT-Time

PERT is an acronym meaning Program Evaluation and

Review Technique or Performance Evaluation and Review Technique. This
The technique is based on a series of four main steps, namely the "
dates au plus tôt", les "dates au plus tard", les "marges" et le "chemin
critique

The "earliest dates" are obtained by processing the network.

logic on a timeline that starts at a date t0, and takes place around
the future. The calculation of 'earliest dates' corresponds intuitively to the
question: if the project starts at t0, when will it end? and what about it
What will the intermediate dates be?

The term 'earliest dates' is established by use.

However, its meaning in everyday French is a bit different in the
measure where it encompasses meanings like 'if all goes well...'

34In the same place, pp. 27-85.

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or even "if we go fast…". However, these additional meanings do not, in

in some cases, nothing to do with the earliest calculation of PERT-Time (of
examples in this section will show it). This is why the
"earliest dates" is sometimes replaced by "dates before" (time)
sequence of t0forward).

The 'latest dates' are obtained by processing the network.

logic on a timeline starting from a date t0and takes place towards
the past. The calculation of "latest dates" intuitively corresponds to the
question: if the project is supposed to finish at t0When should it start? And what

What will be the intermediate dates?

Here again, the term "by dates at the latest" is established by

usage. In everyday French, the expression at the latest is associated with meanings
like 'at worst...' or 'final deadline...'. These common meanings do not have
in some cases, nothing to do with the latest calculation of PERT-Time (see
(examples further on). This is why the term "latest dates" is sometimes
replaced by 'rear dates' (time elapsed from 1tto the back). It is
also the meaning of 'retro-planning'.

VII.1.2. The Critical Path Technique

The 'critical path' is defined as the set (and not the

) succession of activities with no margin. It's nothing more. And in
in any case, not systematically a chain of activities that constitutes the most
longest minimum path between the start and the end of the project.

VII.1.3. The margin

The margin of each activity is defined as the difference between
the latest start date for the activity and its earliest start date.
margin calculations can only be performed after an earliest calculation and a
calculating at the latest. It requires bringing the two calculations together, in other words,

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to match the two timelines (the 'latest' one and the

at the earliest

Once again, be careful of an intuitive interpretation like 'if a'

activity has a zero margin, it cannot fall behind without delaying everything
the project " (see the example further on).

Furthermore, we can distinguish between the free margin and the total margin.

Indeed:

The total margin of an activity is the margin calculated by the algorithm.

PERT-Time (difference between its latest start and its earliest start)
earlier). It represents the number of days for which the activity can be
shifted (and not 'extended') without delaying the end of the project;
Inside the total margin, the free margin is defined as the
number of days which the activity can be postponed without delaying it
no other. By definition, the free margin of an activity is less than
or equal to its total margin.
Free margins are of particular importance in the
large projects, in which each activity (or set of works)
often represents a specific craft and a company
specific. The adherence to intermediate delivery dates must be
to operate within the free margins (otherwise, the company in charge of
successor is penalized.
The complete calculation of the free margins of an activity is as follows:
Let a = MIN (earliest start dates of all successors
of activity T with LDDs);
Let b = MIN (earliest end dates of all successors of
activity T with LDF
Let c = MIN (earliest start dates of all successors)
of activity T with LFDs;
Let d = MIN (earliest end dates of all successors of
the activity T with LFF) ;
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Let e be the duration of activity T, then: free margin of T = MIN(a, b,

c-e, d-e) - earliest start date of T.

VII.1.3. The technique of Fixed Dates in PERT-Time

The handling of imposed dates is a delicate point of the

PERT-Time technique. The algorithms available in different software
which treat dates according to approaches that can vary greatly. A
the same software can handle several types of imposed dates.

The treatment presented here is the basic technique (the most

common) around which many variants exist. In the
basic technique, there are theoretically four types of imposed dates:

Do not start before: activity T cannot start before

the 1orOctober (because, for example, the necessary equipment will not be
available only on that date). This type of imposed date allows for
taking into account an external entry point to the project;

Not to end before: activity T cannot end before the

1erOctober (because, for example, the activity T consists of maintaining in
a piece of old equipment that will be available on this date) ;
Do not start after: activity T cannot start after
the 1erOctober (because, for example, activity T consists of maintaining
in a new equipment that will be available on that date) :
Cannot end after: activity T cannot end after the
1orOctober (in the case of a deadline for the project).

These four types of mandated dates are classified into two

categories

The imposed dates cannot start before

cannot end before;
The imposed dates cannot start after and not
cannot end afterwards.

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The basic rule is as follows: the imposed dates of the

category 'not before' is taken into account in the calculation at the earliest and
ignored in the calculation at the latest; the imposed dates of the category " not
after " are taken into account in the calculation at the latest and ignored in the
calculation at the earliest.

The four types of dates that exist in theory are not all
also frequent in reality. Imposed dates of the type 'cannot be
end after (the target dates) " and those of the type " cannot start
"before (the entry points)" are the most commonly encountered.

As a result, a common simplification involves adopting as

basic rule:

The imposed start dates are taken into account in the calculation " at
earlier ' and ignored in the calculation ' at the latest ';
The imposed end dates are taken into account in the calculation "at most
"and ignored in the calculation" at the earliest.

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Practical work

I. The water supply project through spring capture in the new

town of Namoya (Salamabila Sector, Kabambare Territory)
lacking running water requires financing in the order of
20,000,000 USD. The financing is carried out through two loans to
contracted by Régideso, namely the FPI 60% released at the beginning of
project and at Rawbank 40% at the end of the first year. The Agency
of Régideso having to run this socioeconomic project
forecasts, in addition to these investment expenses, the cash flows
net of USD 20,000 (1erayear), USD 40,000 (2thyear), USD
55,000 (3emeyear), USD 62,000 (4emeyear), USD 80,000 (5th
year), USD 105,000 (6thyear), USD 120,000 (7èmeyear),
USD 135,000thyear), USD 145,000 (9thyear) and USD
195,000 (10thyear). The relevant discount rates are
respectively 1.5%, 1.75%, 2%, 2.5%, 2.75%, 3%, 3.50%, 3.75
4%, 4%, and 4.5%.
Work requested:
Calculate the NPV and propose the decision to Régideso.
II. A waste management project at the Grand Market of
Kinshasa demands an investment expenditure of 200,000 USD
carried out in two phases: 120,000 before the start of activities,
and 80,000 at the end of the first year. The net cash flows
forecasts to be generated by the project over the first five years
are USD 20,000, 40,000, 55,000, 62,000, and 80,000. The rates
The annual updates are respectively 9.5%, 10.75%, 11.5%
%, 12.5% and 13.75%.
Work requested:
Calculate the NPV and conclude.
III. There are two projects to be launched in the city of Kinshasa, namely
management of public toilets (GTPK) and management of spaces
funeral (GEFK), assessed using the NPV criterion. The project
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A GTPK with a duration of 10 years requires an investment expenditure.

initial of USD 2,000,000.00 and is expected to generate each year a

constant cash flow of USD 90,000.00. The GEFK project of a
A duration of 7 years requires an initial investment expenditure of USD
1,500,000.00 and is expected to generate a constant cash flow of
USD 100,000.00

Requested work:

Knowing that the cost of capital is 12.75%, choose the

best project

IV. Let there be a network composed of four activities, namely A lasting 10

days, B with a duration of 20 days, C with a duration of 10 days
and D for 10 days. The following successions are noted:
Activity B can only start when activity A is
completed
Activity C can only start when Activity A is
finished;
Activity D can only start when activity B is
completed and when the activity has ended.

Work requested:
a. Build the logical network of the project;
b. Determine the earliest dates;
c. To clear the dates at the latest;
d. Calculate the margins and the critical path.
V. Let there be a development project consisting of ten activities labeled from
A to J with the following relationships:
In order for the B that lasts 15 days to start, A would need to
which lasts 10 days or started;
For B to be completed, A would need to be completed;

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In order for the C which lasts 20 days to start, it would be necessary for the A
let it be completed;

For the Dqui to last 5 days, it would need for the A

may it be finished;

In order for the Equi to last 10 days to start, it would require that the B
let it be completed;

For the F that lasts 15 days to start, it would require that the C
let it be completed and that the D is finished;

For the Gqui that lasts 25 days to start, it would need the
D should be completed and E should be completed;

For the Hqui lasting 20 days to start, it would require the G

to be started;
For the Jqui to last 20 days, it must be started by the H
be finished;
In order for the Iqui to last 10 days, it would need to be started by the F
Let it be finished and for the I to start, the G would need to.
let it be finished and for the I to be completed, it would require that the J
let it be finished.

Requested work:
a. Build the logical network of the project;
b. Determine the earliest dates;
c. Clear the dates at the latest;
d. Calculate the margins and the critical path.
VI. Cf. No. 1, but activity D cannot end after t0+ 35 days.
Work requested:
a. Determine the earliest dates;
b. Release the dates at the latest;
c. Calculate the margins and the critical path.
VII. See n° 2, but activity F cannot start before t 0+ 50 days
and activity I cannot finish after t0+ 70 days.
Work requested:
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a. Determine the earliest dates;

b. Clear the dates at the latest;
c. Calculate the margins and the critical path.
VIII. Here is the situation regarding the formation of a Company
Aerial Bel'Isa Airlines:
Operating license 126,000 USD;
Buildings 1,345,000 USD, furniture 500,000 USD;
Matériels de transport : véhicules de service 1.750.000 USD, 10
transfer cars 1,345,000 USD, 10 Airbus A320 aircraft
220 for passenger transport 6,200,000,000 USD;
Personnel costs 4,800,000 USD/year, materials and supplies
consumed 51,440,000 USD/year, other services consumed
75,000,000 USD / semester
quarter
Production costs of flights stopped at 800,000 USD/month and 35
USD / passenger, respectively for fixed and variable costs;
Flux des passagers : 105.000, 125.000, 155.000, 175.000,
220,000 and 250,000, respectively for January, February, March,
April, May and the rest of the months;
Ticket price: 245 USD;
Sales conditions: 50% in cash, 25% on credit of 1
month and the remainder payable in 2 months.

Work requested:

1) Calculate the CIN for the establishment of Bel'IsaAirlines.

2) Calculate the DRC in months and years.
IX. Let there be a business project requiring an investment expenditure
initial of 100,000,000 USD for the acquisition and installation of
complete equipment, a multi-peeler for various products
agricultural, whose duration of operation is set at 5 years according to the
constant depreciation method.

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In addition, we can note the provisions, below, made by the

investors:
At the end of the project, the sale of the factory is valued at 10% of its
acquisition value
The required return rate for the project is 9%;
The corporate tax applied to the project is 35%;
The project is financed half by a loan from the BCDC at the cost
of 6%;
The projected revenues and expenses for the next five years are
presented in the table below:
Table 1. Projected revenues and expenses from 2018 to 2022
Years 2018 2019 2020 2021 2022
Sections
Ch.expl. 18,000,000 24,000,000 32,000,000 46,000,000 46,000,000
Chif. d’aff. 35.000.000 45.000.000 55.000.000 88.000.000 90.000.000

Work requested:
Using the NPV criterion, does this project deserve to be undertaken?
X. You are asked to develop a project for the creation of a company.
international airline responsible for ensuring direct flights departing from
Kinshasa, Lubumbashi, Goma and Kisangani. The collected data is
present as follows:

I). The technical aspects of the future company are the

following:

Vehicles: 1,750,000 USD for service vehicles,

1,345,000 USD for transfer buses;
2) 10 Airbus A320-300 aircraft with a capacity of 355 seats
each for the transport of passengers: 7,800,000,000
USD
3) Equipment and tools for the repair workshop and
aircraft maintenance of the company: 15,345,000
USD
Furnishings and office equipment for administration and
technical services: 500,000 USD.

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II). The administrative and tax aspects of the future company:

All the administrative documents for the constitution of

projects invoiced by the Single Window at 126,000 USD.
2) Corporate tax of 35%, except for disposals of
materials and furniture at the end of the project are exempt,
since the project is turning into a commercial business.

III). The economic aspects of the project are as follows:

1) The operating expenses are as follows: Expenses of

personnel $31,850,000 USD/year a maximum staff of
1000 agents, materials and supplies consumed 8,440,000
USD/semester, other services consumed 500,000 USD
/semester, contributions and taxes 1,080,000 USD /quarter;
Production costs of flights halted at 899,900 USD/month and
45 USD /passenger, respectively for fixed costs and
variables ;
3) Projected passenger numbers, knowing that
each aircraft will perform two (2) long-haul flights round trip
return per week:
a) 1eraYear: 80% of capacity for a rate of 595
USD
b) 2thyear: 83% of available spots at the price of
710 USD
c) 3thyear: 85% of the capacity available at the rate of
920 USD
d) 4thyear: 88% of capacity at the price of 937 USD;
e) 5thyear: 90% of available seats for a price
of 985 USD, it is the cruising speed of
operation of the project.

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For the return flights, we anticipate a filling capacity.

20% less than for the outbound.

4) Transactions are conducted in cash.

IV). The financial aspects of the project are as follows:

The project is financed half by a debt whose duration

the repayment period is 4 years, at a rate of 6%;
2. The duration of the project is 5 years, as it needs to be transformed.
in a true commercial company, Public Limited Company;
3. The project materials are depreciated according to the method

linear depreciation;
4. At the end of the project, the transfers are made as follows:

a) The aircraft, having a lifespan of 25 years, will be

sold at 80% of their original value;
b) The maintenance and repair materials, available
with a lifespan of 10 years, will be sold at 50%
their acquisition cost;
c) The vehicles, which have a lifespan of 10 years, will be
sold at 60% of their original value;
d) The furniture, having a lifespan of 7 years, will be
sold at 10% of their purchase value.
The required discount rate for the project is 10%.

Work requested:

A. Using the NPV criterion, is this project feasible?

B. Same question as A, but the working capital needs of the
The projects for the five years amount to 180,200,000.
USD 260,950,500 USD 295,950,500 USD 365,600,000 USD and
405,920,800 USD

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Selective bibliography
1. BRIDIER, M., MICHAILOF, S., Practical Guide to Project Analysis. Paris,
Economic Edition, 1984. 294 p.
2. CORHAY, A. and MAPAPA MBANGALA, Project Engineering
Investment. Liège, Ed. University of Liège, 2010. 252 p.
3. HELLRIEGEL, D., W. SLOCUM, J., Management of organizations.
Brussels, Ed. De Boeck, 2014. 727 p.
Financial Mathematics
5. MOINE, J.-Y., The Big Book of Project Management. Paris, Ed. Afnor, 2013.
359 p.
6. OMT (Ed.), Guide for Local Authorities: Development
durable tourism. Madrid, 1999. 223 p.
7. PICQ, Th., Managing a project team. Steering, Challenges, Performance.
Paris, Ed. Dunod, 2011. 221 p.
8. VALLET, G., Project planning techniques. Paris, Ed. Dunod,
2011. 243 p.

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Table of contents
Introduction _________________________________________________________ 1
Part One: Development Project Elaboration________________________ 2
Chapter I. The concept of development project ___________________________ 3
I.1. The definition of development project ______________________________ 3
I.2. The plan, the program and the project __________________________________ 5
I.3. The project typology ______________________________________________ 5
Chapter II. The assembly, the management tools and the presentation of the project
development 9
II.1. The development project setup ______________________________ 9
II.1.1. The project cycle _______________________________________________ 9
II.1.2. The feasibility studies of development projects _________________ 13
II.1.2.1. The opportunity study__________________________________________ 14
II.1.2.2. The pre-feasibility study________________________________________ 14
II.1.2.3. The feasibility study propere_____________________________ 15
II.1.3. The qualities of a good project______________________________________ 17
II.2. The tools for managing a project's lifecycle_____________________________ 20
II.2.1. The analysis phase_____________________________________________ 20
II.2.1.1. The analysis of actors__________________________________________ 20
II.2.1.3. The analysis of objectivess_________________________________________ 21

II.2.1.4. The analysis of the strategy_______________________________________ 21

II.3. The presentation of the development project __________________________ 34
CHAPTER III. THE CRITERIA FOR INVESTMENT CHOICEST_________________ 35
III.1. The criterion of Net Present Value (NPV) __________________________ 35
III.2. The Internal Rate of Return (IRR) ________________________________ 45
III.3. The Capital Recovery Period (CRP) ___________________________ 47
III.4. The profitability index___________________________________________ 48
Part II: Development Project Management ________________________ 50
Chapter IV. Development project management ___________________ 51
IV.1. The relationships between the project and its environment _______________________ 51

IV.1.1. The understanding of relationships between peoples_____________________ 51

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IV.1.2. Strategic Analysis___________________________________________ 53

IV.1.3. The measurement of the sociodynamics of the actors ________________________ 53

IV.2. The establishment of the project team___________________________________ 56

IV.2.1. The distinctive characteristics of the team _________________________ 56
IV.2.2. The dynamics ofproject team groupt_______________________ 57
IV.2.3. The dynamics of evolution of the project team_t ________________________ 57

IV.3. The project management process______________________________ 58

IV.3.1. The role of the Project Manager in management ______________________ 58
IV.3.2. The role of project management in change ________________ 59
CHAPTER V. MANAGEMENT METHODS AND TOOLS _____________________ 60
V.1. The S-curve method _______________________________________ 60
V.2. The method for updating the schedule ______________________________ 61
V.2.1. The static planning method __________________________________ 61
V.2.2. The dynamic planning methode________________________________ 61
V.3. The Method of Remaining Work (RAF)___________________________________ 62
V.3.1. The different types of costs _____________________________________ 62
V.3.2. Methods of measuring physical progress___________________ 63
V.3.3. The final estimated cost (FEC) of engineering hours ________________ 66
V.3.4. The CPF of standardized equipment and materials _______________________ 68
V.3.5. The CPF of construction contracts ___________________________________ 70
V.4. The critical chain methode_____________________________________ 71
V.4.1. The presentation of the method ____________________________________ 71
V.4.2. The planning process _____________________________________ 73
V.5. The method of opening and closing lots_______________________ 74
V.6. the rational method for evaluating the total project cost_______________ 74
Part III: Project Development Planningt___________________ 77
CHAPTER VI. THE FORMALIZATION OF THE PROJECT NETWORK __________________ 78
VI.1. Definition of the project network _____________________________________ 78
VI.2. Main links of the project network_________________________________ 79
VI.2.1. LFD_________________________________________________________ 80
VI.2.2. LDD ________________________________________________________ 81

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VI.2.3. LFF _________________________________________________________ 82

VI.2.4. LDF_________________________________________________________ 82
VI.5. Example of an industrial project casel________________________________ 87
VI.4.1. Description of the case _____________________________________________ 87

VI.4.2. Logical network construction ___________________________________ 91

CHAPTER VII. THE STUDY OF PROJECT PLANNING________________ 96
VII.1. Study of planning without considering resources __________________ 96
VII.1.1. The basic technique: PERT-Time ______________________________ 96
VII.1.2. The Critical Path Technique _________________________________ 97
VII.1.3. The margin____________________________________________________ 97
VII.1.3. The technique of Fixed Dates in PERT-Time ____________________ 99
Selective bibliography _______________________________________________ 108
Table of contents__________________________________________________ 109

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