College of Dry Lad

Agriculture
Department of ABVM
Agricultural Project
Planning And Analysis
Course Code: AgEc 412
LECTURE NOTE

Compiled by: Endris A.(MSc.)

February, 2025
 Chapter One
Concepts, features and importance of
agricultural projects
 1.1. Concept of project
 Project planning and analysis has a long history in financial and business analysis.
 It has always been used as a means of checking the profitability of a particular
investment by private firms.
 Project planning and analysis is essentially a process of “seeking alternative choices”
to reach an agreed upon set of objectives in the most efficient manner.
 Projects are now assessed from the economy’s viewpoint instead of only from the
firm’s perspective.
 The selection criteria have also included economic criteria on top of financial
criteria.
 Cont.…
 The main differentiating feature between agricultural projects and projects in other
economic sectors is the biological nature of agricultural pursuits, making it harder to predict
input-output relationships.
 The following are typical features of agriculture which are mainly the outcomes of its
dependency:
Risk and uncertainty,
Perishability of products,
Nature dependence,
Fixity of gestation period or growth period,
Sequential order of the growth pattern,
Unique role of land in production, and time sensitivity.
 Cont.…
 A project is an instrument of change.
 It is coordinated series of actions resulting from a policy decision to change resource
combinations and levels so as to contribute to the realization of the country’s development
priority objectives which may include agricultural production growth, improving income
definition, eradicating poverty and malnutrition, promoting larger public involvement in
producing goods and services.
 A project is people-oriented which responds to people’s actions.
 Example: Seeds project is oriented by farmer’s response to the improved seed. Hence,
projects should forecast the response of their ultimate beneficiaries.
 Cont.…
 A project within the framework of a national development changes plan into action at a
micro-level.
 Hence, a project is undertaken, among other things, for development reasons which may
include:
Executing national objectives at the micro level,
National increases in agricultural production,
Promoting exports,
Employment creation,
Utilizing non-utilized and under-utilized resources - full employment, and
Pursuing agricultural diversification policies (minimizing risk).
 Definition of Project
 The Webster’s New World Dictionary defined a Project as follows:
Project is a proposal of something to be done; plan; scheme. an organized undertaking;
specifically, a special unit of work, research, etc., as in school, etc., an extensive public
undertaking, as in conservation, construction, etc.
It originated from a Greek term-Projectum which means ‘what comes before
anything else’
A project can be defined as: “A temporary endeavor undertaken to create a unique
products, service, or results.”
Here, ‘Temporary’ means that every project has a definite end.
‘Unique’ means that the product or service is differentiated in some distinguished way
from all similar products or services.
 Cont.…
 Operations, on the other hand, is work done in organizations to sustain the business.
 Projects are different from operations in that they end when their objectives have been
reached or when the project has been terminated.
 A project is a unique set of coordinated and controlled activities, with definite starting and
finishing points, undertaken by an individual or organization to meet specific objectives
within defined schedule, cost and performance parameters.’
 A project is a set of proposal for investment of resources in to a clearly identified set of
actions that are expected to produce future benefits of a fairly specific kind, the whole series
of actions being the subject of individual planning and examination before being adapted and
implemented within a single overall financial and managerial framework
 Cont.….
Recently defined a development project as follows:
“Project can be defined as an investment activity in which financial
resources are expended to create capital assets over an extended period of
time in expectation of benefits that exceed the committed resource.
A project is a complex set of activities where resources are used in
expectation of return and which lends itself to planning, financing and
implementing as a unit.
 Features of a Project
A project has a location,
Project involves commitment of scarce resources in expectation of future benefits,
Involves a single definable purpose or end-item,
It most to be capable of being plan separately,
Has a defined life span with a beginning and an end,
A project is a temporary activity,
Dynamic in nature,
A project has a risk and uncertainty,
Projects are bounded by time, cost and quality constraints,
A project has a life cycle, and
A project should have a primary customer or sponsor.
 Importance of agricultural projects
 Agricultural projects provide various advantages to individuals, communities, and
countries. Some of the crucial benefits are as follows:
Food Security
Economic Growth
Poverty Alleviation
Rural Development
Environmental Benefits
Trade Opportunities
Technological Advancement
Diversification
Social Stability
 Project management
 Project Management is the process of planning, organizing, executing, controlling, and

completing a specific set of tasks to achieve defined objectives within a given timeframe and

budget. It involves the application of knowledge, skills, tools, and techniques to project

activities to meet stakeholder requirements.

 It is defined as managing and directing time, material, personnel/ labor, and cost to complete

a project in orderly, economical manner and to meet the established objectives of time, cost

and technical and/ or service results.

 A successful project using the project management approach will consist of three stages:
 Cont.….
1. Planning: understanding what work has to be done including
 Identifying the individual activities and necessary resources to complete the project.

 Developing a plan of action in a logical order.

2. Scheduling: Validating when the work activities need to be done.

 This stage details the time allowed for the project and each activity when they are to be started

and completed.

3. Controlling: Monitoring (tracking) progress of the project as

 it gets underway, analyzing performance, and then resolving concerns. It also manages status

report.
Advantage of using good project management

Better control of financial, physical, and

human resources
Improved customer relations
Shorter development times
Lower costs
Higher quality and increased reliability
Higher profit margins
Improved productivity
Better internal coordination
Higher worker morale
 1.2. The linkage between projects and programs
 It is necessary to distinguish between projects and programs because there is sometimes a
tendency to use them interchangeably.
 A project refers to an investment activity where resources are used to create capital assets,
which produce benefits over time and has a beginning and an end with specific objectives.
 A program is an ongoing development effort or plan which may not necessarily be time
bounded. It is a series of coordinated, related, multiple projects that continue over an
extended time and are intended to achieve a goal. For Example:
A road development program,
A health improvement program,
A nutritional improvement program,
A rural electrification program, etc.
 Cont.….
 A program is therefore a wider concept than a project.
 Programs can be further broken down into projects, short-term, more location specific, more
easily managed.
 For instance, a health program may include:
 A water project as well as
 A construction of health centers both aimed at improving the health of a given com-
munity
 Projects, which are not linked with others to form a program, are sometimes referred to as
“stand alone” projects.
 Cont.….
Projects in general need to be SMART.
S – Specific
 A project has a defined set of objectives and a specific start and end;
 Specific activities.
 Specific group of benefits.
 Specific group of people.
M – Measurable
 Investment and production activities and benefits expected should be identified and if
possible be valued (in monetary terms) in financial and economic terms.
Projects are thought to be measurable.
 Cont.….
A – Area bounded
 Specific and identifiable group of beneficiaries
 Its area of operation must clearly be identified and delineated.
 Though some secondary costs and benefits may go beyond the boundary, its major area of operation
must be identified.
R – Real
 Its analysis must be made based on real information.
 Planner must make sure whether the project fits with real social, economic, political, technical, etc sit-
uations.
T – Time bounded
A project has a clear starting and ending point.
The overall life of the project must be determined.
Moreover, investment and production activities have their own time sequence.
Every cost and benefit streams must be identified, quantified and valued and be presented year-by-year.
 Differences

Projects Programs

Have a specific objectives Have a general objectives

Are small in scope Are large in scope

Cover specific area Cover large area

Specific target group identified No specific beneficiary group

Clearly defined and allotted funds No clear and detailed resource allocation
Time bounded (a beginning and not necessarily be time bounded
an ending )
Similarities

 They both share the following characteristics:

 Have objectives.
 Require financial, human, material, etc. inputs.
 Generate output (goods, service or skill).
 Serve as instruments for the execution of development programs.
Why agricultural projects fail ?

 A lack of local ownership and responsibility, i.e. participative planning and

development.
 Problems of project design and implementation.
 The use of inappropriate technology, cropping systems and animal
husbandry.
 Inadequate or inappropriate infrastructure.
 Failure to appreciate the social and political environment.
 Administrative problems.
 Changing economic situations and market conditions.
 Problems related to poor project analysis.
 Unrealistic expectations.
 Unsupportive policy environment
Thank You!